PUTNAM INVESTMENTS TRUST

 

EQUITY PARTNERSHIP PLAN

 

(Amended and Restated as of September 6, 2005)

 

 

 

 

TABLE OF CONTENTS

Section 1. Purpose

1

Section 2. Definitions

1

Definitions

1

Gender and Number

6

Section 3. Eligibility and Participation

7

Section 4. Administration

7

Power to Grant

7

Administration

7

Section 5. Awards Under the Plan

7

Types of Awards

7

Number of Class B Shares Subject to Awards

7

Cancelled, Terminated or Forfeited Awards

8

Adjustment in Capitalization

8

Legend

8

Section 6. Terms of Awards

8

Restricted Stock

8

Options

9

Section 7. Termination of Employment; Unforeseen Personal Hardship

10

Special Termination

10

Termination for Cause

10

Involuntary Termination Other Than for Cause

11

Other Termination of Employment

12

Treatment of Class B Shares Held upon Termination of Employment or Acquired
Thereafter

13

Unforeseen Personal Hardship

13

Section 8. Transfer of Awards

13

Nontransferability of Awards

13

Sales of Class B Shares and Restricted Stock to Putnam; Cancellation of Options

14

Certain Other Permitted Transfers of Class B Shares

16

Automatic Exchange of Shares or Units

17

Section 9. Change in Control; Sale by MMC; Public Offering; Special Transaction

17

Change in Control

17

Public Offering

19

Tag-Along Rights

19

Special Transaction

21

Section 10. Amendment, Modification, and Termination of the Plan

22

Amendment, Modification and Termination

22

Term of Plan; Plan Review

23

Section 11. Miscellaneous Provisions

23

Dividends

23

 

 

ii

 

 

 

Beneficiary Designation

23

No Guarantee of Employment or Participation

23

Tax Withholding

23

Indemnification

23

No Limitation on Compensation

24

Securities Laws Compliance

24

Voting Rights

24

Certain Accounting Considerations

24

Governing Law

24

Limitation of Liability

24

Section 409A

25

EXHIBIT A

A-1

EXHIBIT B

B-1

EXHIBIT C

C-1

EXHIBIT D

D-1

EXHIBIT E

E-1

EXHIBIT F

F-1

 

iii

 

 

 

 

PUTNAM INVESTMENTS TRUST EQUITY PARTNERSHIP PLAN

 

 

Section 1. Purpose

 

The purpose of this Putnam Investments Trust Equity Partnership Plan is to
foster and promote the long-term financial success of Putnam and MMC and to
increase materially stockholder value by (a) enabling Putnam to attract and
retain the services of an outstanding management team upon whose judgment,
interest and special effort the successful conduct of its operations is
dependent, (b) motivating superior performance by participants in the Plan and
(c) providing participants in the Plan with an ownership interest in Putnam.

 

Section 2. Definitions

 

(a) Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:

 

A. "Accredited Investor" means an "accredited investor" under the individual net
worth test set forth in paragraph (a)(5) of Rule 501 ("Rule 501") of Regulation
D under the Securities Act of 1933 (the "Securities Act"), the individual net
income test set forth in paragraph (a)(6) of Rule 501 or any provision that the
Committee may determine is a successor or comparable provision to said
paragraphs (a)(5) or (a)(6).

 

B. "Award Agreement" means an agreement between Putnam and the Participant
embodying the terms of any Restricted Stock or Option granted or purchased
hereunder, which agreement shall, unless the Committee otherwise determines, be
substantially in the form attached hereto as Exhibit A.

 

C. "Board" means the Board of Trustees of Putnam.

 

D. "Cause" means misappropriation of assets of Putnam or any Subsidiary, willful
misconduct in the performance of the duties of the Participant's position,
refusal to perform the duties of the Participant's position, violation of the
Participant's Non-Solicitation Agreement or Confidentiality Agreement or other
restrictive covenant with Putnam or any Subsidiary, violation of the Putnam Code
of Ethics, violation of rules and regulations issued by any regulatory
authority, breach of fiduciary duty or breach of trust, willful violation of an
important Putnam policy, conviction of a felony, imprisonment for any crime, or
any other action likely to bring substantial discredit to Putnam.

 

E. "Change in Control of MMC" means the first to occur of the following events
after the Effective Date:

 

i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
MMC, any trustee or other fiduciary holding securities under an employee benefit
plan of MMC or any corporation owned, directly or indirectly, by the
stockholders of MMC in substantially the same proportions as their ownership of
stock of MMC), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or

 

 

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indirectly, of securities of MMC representing 50% or more of the combined voting
power of MMC's then outstanding voting securities; or

 

ii) during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the MMC Board, and any new director (other
than a director designated by a person who has entered into an agreement with
MMC to effect a transaction described in clause (i), (iii) or (iv) of this
Section 2(a)(E)) whose election by the MMC Board or nomination for election by
MMC's stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or

 

iii) the stockholders of MMC approve a merger or consolidation of MMC with any
other corporation, other than (A) a merger or consolidation that would result in
the voting securities of MMC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving or parent entity) more than 50% of the combined
voting power of the voting securities of MMC or such surviving or parent entity
outstanding immediately after such a merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of MMC (or similar
transaction) in which no "person" (as hereinabove defined) acquired 50% or more
of the combined voting power of MMC's then outstanding securities; or

 

iv) the stockholders of MMC approve a plan of complete liquidation of MMC or an
agreement for the sale or disposition by MMC of all or substantially all of
MMC's assets (or any transaction having a similar effect).

 

F. "Change in Control of Putnam" means the first to occur of the following
events after the Effective Date:

 

i) MMC approves a plan of complete liquidation of Putnam or a sale or other
disposition of all or substantially all of its assets to an entity of which MMC
holds less than 50% of the voting power of securities; or

 

ii) MMC, together with its subsidiaries, trustees or other fiduciaries holding
securities of Putnam under an employee benefit plan maintained by MMC or by a
subsidiary of MMC, ceases for any reason (including by reason of a sale or other
disposition, including a spinoff or public offering) to be a beneficial owner of
securities of Putnam representing more than 50% of the voting power of the
securities of Putnam.

 

G. "Class A Share" means a Class A Common Share, par value $.01 per share, of
Putnam.

 

H. "Class B Share" means a nonvoting Class B Common Share, par value $.01 per
share, of Putnam.

 

I. "Committee" means a committee appointed by the Board that shall consist of
two (2) or more members of the Board, including the Chief Executive Officer of
Putnam and one (1) or more other members of the Board who shall be appointed and
serve at the pleasure of the Board.

 

J. "Common Shares" means Class A Shares and Class B Shares, collectively.

 

 

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K. "Dividends" means dividends payable with respect to Restricted Stock and
Class B Shares in accordance with Section 11(a).

 

L. "Effective Date" means September 30, 1997.

 

M. "Employee" means any executive or senior officer or other key employee of
Putnam or any Subsidiary who is an Accredited Investor or, subject to the
determination by the Committee with the approval of the MMC Committee (such
determination to occur only in individual isolated situations), who is not an
Accredited Investor, but whose designation as an Employee would not cause the
issuance of Class B Shares, Restricted Stock or Options under this Plan not to
qualify for the exemption from registration provided by Regulation D promulgated
under the Securities Act.

 

N. “Fair Market Value means (i) as of any Valuation Date, the fair market value
of a Class B share as of such Valuation Date and (ii) as of any date which is
not a Valuation Date, the fair market value of a Class B Share as of the
preceding Valuation Date, as determined in good faith by the Committee in
accordance with the valuation methodology set forth in Exhibit B hereto (which
may be modified at any time by the Committee with the approval of the MMC
Committee), subject, however, to the following provisions of this Section
2(a)(N).

 

i) A valuation of the Class B Shares shall be performed reasonably promptly
following, and effective as of the last day of each of the four fiscal quarters
each year (or the business day immediately preceding either such date if it is
not a business day), by a nationally recognized independent valuation firm. For
purposes of such valuation, the independent valuation firm will use the fully
distributed trading value of Putnam (“FDTV”) as set forth in Section 3(i) of
Exhibit B for calculation of the June 30 Price and the December 31 Price (the
“Independent Value”), and the FDTV as set forth in Section 3(ii) of Exhibit B
for calculation of the March 31 Price and the September 30 Price (the
“Calculated Value”).

 

ii) If, however, both the Committee and the MMC Committee agree that the
Independent Value (or a value determined by an independent valuation firm in
accordance with Section 2(a)(N)(iii) below) does not fairly represent the Fair
Market Value at a particular Valuation Date on which these values are
determined, the two committees may jointly choose a second nationally recognized
independent valuation firm that will perform its own independent valuation of
the Class B Shares (the "Second Independent Value"). If the midpoint of the
range of values set forth in the Second Independent Value is within 10% of the
midpoint of the range of values set forth in the Independent Value, then the
Fair Market Value of a Class B Share as of the applicable Valuation Date shall,
for purposes of the Plan, equal the average of the two (2) midpoints described
herein. If the midpoint of the range of values set forth in the Second
Independent Value is not within 10% of the midpoint of the range of values set
forth in the Independent Value, then the MMC Committee shall recommend three (3)
other nationally recognized independent valuation firms (and the Committee shall
choose one such firm) that shall have the authority to determine which of the
midpoints of the two (2) ranges of independent values described herein shall be
the Fair Market Value of a Class B Share as of the applicable Valuation Date for
purposes of the Plan.

 

iii) If the Committee believes that the Calculated Value as of a particular
Valuation Date fails to incorporate a material change in Putnam’s business
circumstances, or otherwise

 

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does not fairly represent Putnam’s current and projected business results, the
Committee may, with the approval of the MMC Committee, engage a nationally
recognized independent valuation firm to determine the Fair Market Value as of
the applicable Valuation Date, using methodology consistent with that set forth
in Section 3(i) of Exhibit B.

 

iv) Notwithstanding the above, if, as of any Valuation Date, no Fair Market
Value has been established (as described herein), then, unless otherwise
determined by the Committee with the approval of the MMC Committee, there shall
be no purchases or sales of Class B Shares or grants of Restricted Stock or
Options pursuant to the Plan until such time that a valuation of Class B Shares
shall have been finalized.

 

v) If Putnam at any time subdivides (by any stock split, stock dividend or
otherwise) the Class B Shares into a greater number of shares, or combines (by
reverse stock split or otherwise) the Class B Shares into a smaller number of
shares, the Fair Market Value shall be appropriately adjusted to reflect such
subdivision or combination. In the event of any other extraordinary
circumstances as a result of which the Fair Market Value needs to be adjusted,
such adjustments may be made by the Committee with the approval of the MMC
Committee.

 

vi) For the purpose of determining Fair Market Value in connection with a Change
in Control of Putnam, Change in Control of MMC or minority sale of Putnam under
Section 9(c) (each, an "Event"), the Fair Market Value shall be determined
without regard to the occurrence of such an Event.

 

vii) Notwithstanding the foregoing, the "Fair Market Value" of a Class B Share
on any date on or after the occurrence of a Special Transaction shall equal the
closing price per share of the publicly traded class of common stock of Putnam
(or, in the case of a Special Transaction, other entity resulting from such
Special Transaction) on such date, adjusted for the Discount (as defined in
Exhibit B hereto).

 

O. "Grant Date" means, with respect to any Option, the date on which such Option
is granted pursuant to the Plan and, with respect to any Restricted Stock, the
date on which such Restricted Stock is granted or sold, as applicable, pursuant
to the Plan.

 

P. "MMC" means Marsh & McLennan Companies, Inc., a Delaware corporation and any
successor thereto.

 

Q. "MMC Board" means the Board of Directors of MMC.

 

R. "MMC Committee" means the Compensation Committee of the MMC Board.

 

S. "Non-Solicitation Agreement" shall mean the Non-Solicitation Agreement or any
similar agreement or provision in effect from time to time between the
Participant and Putnam.

 

T. "Option" means the right granted pursuant to the Plan to purchase one Class B
Share at a price determined in accordance with Section 6(b)(ii).

 

U. "Participant" means any Employee designated by the Committee, with the
approval of the MMC Committee, to participate in the Plan.

 

 

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V. "Plan" means the Putnam Investments Trust Equity Partnership Plan, as amended
from time to time.

 

W. "post-Special Termination Exercise Period" means (x) twelve (12) months (or,
if shorter, the remaining term of the Option), in case of death or Total
Disability, or (y) eighteen (18) months (or, if shorter, the remaining term of
the Option), in case of Retirement. The post-Special Termination Exercise Period
with respect to a Participant shall terminate immediately upon such
Participant's breach of the Non-Solicitation Agreement or Participant’s breach
of any noncompetition agreement between Participant and Putnam.

 

X. "post-Termination Holding Period" means (x) the twelve-month period
immediately following termination of Participant's employment due to death or
Total Disability, (y) the twenty-four month period immediately following
termination of Participant's employment due to Retirement or (z) the thirty-day
period following termination of Participant's employment (in all other
circumstances other than a termination for Cause). The post-Termination Holding
Period with respect to a Participant shall terminate immediately upon such
Participant's breach of the Non-Solicitation Agreement or Participant’s breach
of any noncompetition agreement between Participant and Putnam.

 

Y. "Public Offering" means the occurrence of any event (including an initial
public offering or a partial spinoff, but excluding (1) any event that
constitutes a Change in Control of MMC or a Change in Control of Putnam and (2)
a Special Transaction) as a result of which shares of Putnam common stock become
listed on a national or regional securities exchange or traded over the counter
on the Nasdaq Stock Market.

 

Z. "Putnam" means Putnam Investments Trust, a Massachusetts business trust, and
any successor thereto.

 

AA. "Restricted Stock" means a Class B Share subject to restrictions set forth
in the Plan and the applicable Award Agreement.

 

BB. "Retirement" means a termination of Participant's employment under
circumstances that the Committee determines as qualifying as retirement for
purposes of the Plan and not inconsistent with the treatment of the Participant
under other Putnam plans; provided, however, that as a condition of electing
Retirement for purposes of the Plan, a Participant must execute a noncompetition
agreement in form and on terms satisfactory to Putnam.

 

CC. "Special Option Window" means the first five (5) business days of each
Window Period, and such other periods as the Committee may designate with the
approval of the MMC Committee.

 

DD. "Special Retention Grant" means a grant of Restricted Stock made for the
purpose of providing an incentive for the Participant to continue the
Participant's employment with Putnam and specifically designated as a Special
Retention Grant by the Committee.

 

EE. "Special Termination" means termination of a Participant's employment by
reason of Participant's death, Total Disability or Retirement.

 

FF. "Special Transaction" shall mean a business combination involving Putnam
with

 

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another party (other than a Transaction (as defined in Section 9(c)) (i) that is
consummated within three (3) years after the Effective Date, (ii) after giving
effect to which MMC is the beneficial owner, directly or indirectly, of
securities of Putnam (or other entity resulting from such business combination)
representing more than 50% of the voting power of the securities of Putnam (or
such resulting entity) and (iii) in connection with which the shares of Putnam
(or such resulting entity) become listed on a national or regional securities
exchange or traded over the counter on the Nasdaq Stock Market. Notwithstanding
the above, no transaction will be deemed a Special Transaction unless the value
of the other party to such business combination with Putnam exceeds 10% or more
of the value of Putnam immediately prior to such business combination. If such
party to the business combination does not exceed 10% of the value of Putnam
immediately prior to such business combination, such transaction shall be
treated as a Public Offering.

 

GG. "Subsidiary" means any corporation, limited liability company or limited
partnership a majority of whose outstanding voting securities is owned, directly
or indirectly, by Putnam.

 

HH. "Total Disability" means a total disability within the meaning of any
long-term disability plan maintained for the benefit of the Employee in question
or, if the Employee is not covered by such a disability plan, then as determined
by the Committee. A person will be considered to have terminated due to "Total
Disability" on the first day of his continuous absence from work on account of
the disability supporting his certification as having a Total Disability.

 

II. "Unforeseen Personal Hardship" means financial hardship arising from (i)
extraordinary medical expense or other expenses directly related to illness or
disability of the Participant, a member of the Participant's immediate family or
one of the Participant's parents, (ii) payments necessary or required to prevent
the eviction of Participant from Participant's principal residence or
foreclosure on the mortgage on that residence or (iii) such other comparable
circumstances as determined by the Committee in its discretion. The Committee's
reasoned and good faith determination of Unforeseen Personal Hardship shall be
binding on Putnam and the Participant.

 

JJ. "Window Period" means each of (i) the period of not less than ten (10) and
not more than twenty (20) consecutive business days designated by the Committee
in September of each calendar year commencing in 1998, (ii) the period of not
less than ten (10) and not more than twenty (20) consecutive business days
designated by the Committee in March of each calendar year commencing in 1998
and (iii) such other periods as the Committee may designate with the approval of
the MMC Committee.

 

KK. “Good Reason” means, with respect to an Employee, the occurrence of one or
more of the following events, without such Employee’s consent, following a
Change in Control of Putnam: (i) any material diminution in such Employee’s
positions, duties, responsibilities or authority immediately prior to such
Change in Control of Putnam; (ii) the assignment to such Employee of duties or
responsibilities that are inconsistent with such Employee’s position immediately
prior to such Change in Control of Putnam; (iii) any material adverse change to
such Employee’s compensation or benefits structure; (iv) a relocation of
Putnam’s principal executive office to any location outside the Boston
metropolitan area or a relocation of such Employee’s office away from Putnam’s
principal executive office.

 

(b) Gender and Number. Except when otherwise indicated by the context, words in
the masculine gender used in the Plan shall include the feminine gender, the
singular shall include the plural, and the plural shall include the singular.

 

 

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Section 3. Eligibility and Participation

 

Participants in the Plan shall be those Employees selected by the Committee with
the approval of the MMC Committee. The selection of an Employee as a Participant
at any time shall neither entitle such Employee to nor disqualify such Employee
from participation in the Plan in the future or from participation in any other
award or incentive plan.

 

Section 4. Administration

 

(a) Power to Grant. The Committee shall, with the approval of the MMC Committee,
determine the Participants to whom Options and Restricted Stock shall be granted
or sold and the terms and conditions of any and all Options and Restricted Stock
granted or sold to Participants. The Board shall determine whether to repurchase
Class B Shares pursuant to the Plan and the terms and conditions of any such
repurchase.

 

(b) Administration. Except as set forth in the Plan, the Committee shall be
responsible for the administration of the Plan. Any authority exercised by the
Committee under the Plan shall be exercised by the Committee in its sole
discretion. Subject to the terms of the Plan and except as set forth in the
Plan, the Committee, by majority action thereof, is authorized to prescribe,
amend and rescind rules and regulations relating to the administration of the
Plan, to provide for conditions and assurances deemed necessary or advisable to
protect the interests of Putnam and MMC, and to make all other determinations
necessary or advisable for the administration and interpretation of the Plan in
order to carry out its provisions and purposes. Except as set forth in the Plan,
determinations, interpretations or other actions made or taken pursuant to the
provisions of the Plan by the Committee and, where applicable, the Board shall
be final, binding and conclusive for all purposes and upon all persons.
Notwithstanding the foregoing or any other provision of the Plan, the Committee
shall advise the MMC Committee of any determinations, interpretations or any
other actions it intends to make or to take pursuant to the provisions of the
Plan with respect to Section 8(b)(ii) or Section 9 prior to making any such
determination or interpretation or taking other action. In the event the MMC
Committee disagrees with such intended determination, interpretation or action,
the Committee and the MMC Committee shall negotiate in good faith to arrive at a
resolution to such disagreement; failing which the Committee and the MMC
Committee shall submit the matter to arbitration under the rules of the American
Arbitration Association. Nothing in the Plan shall limit the right of members of
the Committee who are Employees to receive awards hereunder.

 

Section 5.

Awards Under the Plan

 

(a) Types of Awards. Options and Restricted Stock may be granted to Participants
under the Plan and Restricted Stock may be sold to Participants under the Plan.
Grants of Options may be made in tandem with grants or sales of Restricted Stock
or independently.

 

(b) Number of Class B Shares Subject to Awards. Subject to the provisions of
Sections 5(c) and 5(d), the number of Class B Shares (including those subject to
Options and Restricted Stock) that may be granted or sold under the Plan shall
be equal to, as of the date of any such grant or award, the sum of (1) the
product of (a) the sum of the number of (i) 88,000,000, being the original
number of Class A Shares under the Plan plus (ii) 3,592,343 Class A Shares
issued pursuant to Section 1 of that certain Agreement dated as of July 7, 1999
by and between Putnam and Marsh & McLennan Companies, Inc. (the "Agreement")
plus (iii) Class A Shares issued from time to time pursuant to Section 1(b) of
the Agreement, and (b) the quotient of 12 divided by 88, plus (2) 4,000,000.
Class B Shares to be delivered upon the exercise of Options granted under the
Plan and the sale or grant of Restricted Stock under the Plan may consist, in
whole or in

 

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part, of treasury Class B Shares or authorized but unissued Class B Shares.

 

(c) Cancelled, Terminated or Forfeited Awards. Any Option or Restricted Stock
that for any reason is cancelled, terminated or otherwise forfeited, in whole or
in part, without having been exercised (including any Class B Shares purchased
by Putnam pursuant to Sections 7 or 8), shall again be available for grant under
the Plan.

 

(d) Adjustment in Capitalization. The number of Class B Shares available for
issuance upon exercise of Options and upon grant or sale of Restricted Stock
under the Plan, the number of Class B Shares subject to outstanding Options, the
number of outstanding shares of Restricted Stock and the exercise price of
outstanding Options may be adjusted by the Committee, subject to the approval of
the MMC Committee, if the Committee shall deem such an adjustment to be
necessary or equitable to reflect any dividend, stock split or share combination
or any recapitalization, merger, consolidation, exchange of shares, liquidation
or dissolution of Putnam or similar corporate event.

 

(e) Legend. While it is not generally contemplated that certificates be issued,
any share certificate representing Class B Shares that may be issued shall bear
a legend substantially in the following form:

 

"Ownership of the shares represented by this certificate is generally restricted
to employees of Putnam Investments Trust or its subsidiaries and subject to
other restrictions set forth in the Putnam Investments Trust Equity Partnership
Plan and in the Declaration of Trust of Putnam Investments Trust. Class B Shares
represented by this certificate may not be sold, pledged, mortgaged, encumbered,
disposed of or otherwise transferred to any person except Putnam Investments
Trust or otherwise in accordance with the provisions of the Putnam Investments
Trust Equity Partnership Plan and the Declaration of Trust of Putnam Investments
Trust; any other attempt to sell, pledge, mortgage, encumber, dispose of or
otherwise transfer these shares will be null, void and of no effect ab initio,
will not be recognized by Putnam Investments Trust and will not entitle the
purported transferee to any rights of a shareholder or impose any obligations on
Putnam Investments Trust either with respect to these shares or the purported
transferee. If, however, a court determines that a transfer is nonetheless
valid, the shares so transferred will be repurchased from the transferee
forthwith at Fair Market Value, as defined in the Putnam Investments Trust
Equity Partnership Plan. The Class B Shares represented by this certificate have
not been registered under the Securities Act of 1933, as amended, or any state
securities law. Except as required by law or by Section 11(h) of the Putnam
Investments Trust Equity Partnership Plan, the holders of Class B Shares shall
not be entitled to vote on any matter submitted to the vote of the stockholders
of Putnam Investments Trust. Putnam Investments Trust will provide upon request
of the Clerk of Putnam Investments Trust a copy of the Putnam Investments Trust
Equity Partnership Plan and the Declaration of Trust of Putnam Investments
Trust."

 

Any "book entry" in the records of Putnam evidencing such Class B Shares shall
bear a notation of similar effect to the legend set forth above.

 

Section 6. Terms of Awards

 

(a) Restricted Stock.

 

i) Restricted Stock may be granted or sold to Participants at such time or
times, in such amounts and for such prices as may be determined by the
Committee, subject to the approval of the MMC Committee. Each grant or sale of
Restricted Stock shall be evidenced by an Award Agreement that shall specify the
number of shares of Restricted Stock, the purchase price, if any, for each share
of Restricted

 

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Stock and such other terms consistent with the Plan as the Committee, subject to
the approval of the MMC Committee, shall determine, including customary
representations, warranties and covenants with respect to securities law matters
and provisions calling for execution by Participant of a General Release of all
claims against Putnam (and any of its officers, directors or employees) in form
satisfactory to Putnam, and/or forfeiture of all or any portion of Restricted
Stock or Class B Shares (or all or any portion of the proceeds from any sales
thereof) upon violation of the Participant's Non-Solicitation Agreement or
noncompetition agreement between Participant and Putnam. As soon as practicable
following the grant of Restricted Stock, or, with respect to purchased
Restricted Stock, as soon as practicable following receipt of payment in full of
the purchase price of such Restricted Stock, a "book entry" shall be made in the
records of Putnam to evidence such award or sale of Restricted Stock. No
certificate or certificates representing the Restricted Stock acquired shall be
issued to the Participants.

 

ii) Unless determined otherwise by the Committee with the approval of the MMC
Committee, Restricted Stock shall only be sold for a purchase price per share of
Restricted Stock equal to the Fair Market Value as of the Grant Date. Subject to
all of the terms and conditions of the Award Agreement, the Committee shall
establish procedures governing the payment of purchase price for Restricted
Stock that is sold under the Plan.

 

iii) Subject to Sections 7, 8 and 9, and unless otherwise determined by the
Committee with the approval of the MMC Committee, all Restricted Stock granted
or sold to a Participant at any time shall vest in accordance with the vesting
schedule set forth in the applicable Award Agreement, provided that the
Committee, subject to the approval of the MMC Committee, may accelerate the
vesting of any Restricted Stock, at any time and from time to time. Upon
vesting, a share of Restricted Stock ceases to be a share of Restricted Stock
and shall be treated, pursuant to the Plan, as a Class B Share.

 

iv) Within 30 days of the Grant Date, the Participant shall give notice to
Putnam if he or she has made an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Restricted Stock
purchased by or granted to the Participant, and in absence of such notification
the Participant shall be deemed to not have made such election. The Participant
will be solely responsible for any and all tax liabilities payable by him or her
in connection with his or her receipt of the Restricted Stock or attributable to
his or her making or failing to make such an election.

 

v) Special Retention Grants may be made with such terms and conditions as are
determined by the Committee to be consistent with the purpose of such grant,
subject to the approval of the MMC Committee.

 

(b) Options.

 

i) Options may be granted to Participants at such time or times and covering
such number of Class B Shares as shall be determined by the Committee, subject
to the approval of the MMC Committee, either independently or in tandem with a
grant or sale of Restricted Stock. Each Option granted to a Participant shall be
evidenced by an Award Agreement that shall specify the exercise price at which a
Class B Share may be purchased pursuant to such Option, the duration of such
Option and such other terms consistent with the Plan as the Committee, subject
to the approval of the MMC Committee, shall determine, including customary
representations, warranties and covenants with respect to securities law matters
and provisions calling for forfeiture of all or any portion of the Option, all
or any portion of the Class B Shares acquired upon exercise thereof, or all or
any portion of the proceeds from the cancellation of the Option or from any
sales of such Class B Shares upon violation of the Participant's
Non-Solicitation Agreement.

 

ii) Unless determined otherwise by the Committee, with the approval of the MMC

 

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Committee, the exercise price per Class B Share to be purchased upon exercise of
an Option shall be the Fair Market Value as of the Grant Date.

 

iii) Subject to Sections 7, 8 and 9, Options granted to a Participant shall
become exercisable in accordance with the vesting schedule set forth in the
applicable Award Agreement; provided that the Committee, subject to the approval
of the MMC Committee, may accelerate the exercisability of any Option at any
time and from time to time; and provided further that Options may not be
exercised during the period commencing with the public announcement of a
proposed Public Offering and ending on the earliest of (1) consummation of such
Public Offering, (2) abandonment of such Public Offering and (3) the six-month
anniversary of such public announcement. Notwithstanding any other provision of
the Plan, unless an earlier termination is otherwise prescribed in an Award
Agreement, each Option shall terminate on and shall not be exercisable after the
tenth anniversary of the Grant Date of such Option.

 

iv) Options may be exercised only during any Special Option Window or, in
accordance with the provisions of Section 7, following the termination of
Participant's employment and, unless such condition is waived by the Committee,
only if the Participant is an Accredited Investor at the time of such exercise.
The Committee shall establish procedures governing the exercise of Options,
which procedures shall generally require that written notice of the exercise
thereof be given, which notice shall be substantially in the form attached
hereto as Exhibit D, and that the exercise price thereof be paid in full in cash
or cash equivalents, including by personal check, or, at the Committee's
election, by tendering Class B Shares with the aggregate Fair Market Value equal
to the exercise price, or by combination of the above at the time of exercise;
provided, however, that any Class B Shares so tendered must have been held by
the Participant for six (6) months or more following the date of vesting of such
shares. As soon as practicable after receipt of a written exercise notice and
payment in full of the exercise price of any exercisable Options, a "book entry"
shall be made in the records of Putnam to evidence such exercise. No certificate
or certificates representing the Class B Shares acquired upon such exercise
shall be issued to the Participants.

 

Section 7. Termination of Employment; Unforeseen Personal Hardship

 

(a) Special Termination. Unless otherwise determined by the Committee with the
approval of MMC (such determination to occur only in individual isolated
situations), and except to the extent specified in the applicable Award
Agreement, in the event that a Participant's employment with Putnam and the
Subsidiaries terminates by reason of a Special Termination:

 

i) each Option then held by the Participant, whether or not exercisable as of
the date of such termination, shall immediately vest and become fully
exercisable and shall remain exercisable until expiration of the post-Special
Termination Exercise Period (or, if shorter, until expiration of the remaining
term of such Option). Any Options held by the Participant that are not exercised
prior to expiration of the post-Special Termination Exercise Period (or prior to
expiration of the remaining term of such Option, if shorter) shall terminate and
be cancelled upon the expiration of such period (or, if shorter, the expiration
of the term of such Option);

 

ii) subject to such conditions as the Committee may prescribe (including (x)
Participant’s execution of a general release of all claims against Putnam (and
any of its officers, directors or employees) in form and on terms satisfactory
to Putnam, and/or (y) forfeiture of all or any portion of the Class B Shares, or
all or any portion of the proceeds from the sale thereof, upon violation of the
Participant's Non-Solicitation Agreement or any noncompetition agreement between
Participant and Putnam), any Restricted Stock held by the Participant shall be
fully vested as of the date of such termination.

 

(b) Termination for Cause. Unless otherwise determined by the Committee with the
approval of

 

10

 

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MMC (such determination to occur only in individual isolated situations), in the
event that a Participant's employment with Putnam and the Subsidiaries is
terminated for Cause:

 

i) any Options then held by such Participant (whether or not then exercisable)
shall terminate and be cancelled immediately upon such termination of
employment;

 

ii) except as provided in (iii) below, any Class B Shares and Restricted Stock
that are then held by such Participant shall terminate and be cancelled
immediately upon such termination, and the Participant shall no longer have any
rights with respect to such Class B Shares and shares of Restricted Stock;

 

iii) subject to authorization by the Board and to such conditions as the
Committee may prescribe (including (x) Participant’s execution of a general
release of all claims against Putnam (and any of its officers, directors or
employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of
all or any portion of the amounts received pursuant to this clause (iii) upon
violation of the Participant's Non-Solicitation Agreement or any noncompetition
agreement between Participant and Putnam), with respect to any Class B Shares or
Restricted Stock then held by such Participant that relate to shares of
Restricted Stock that, as specifically set forth in the applicable Award
Agreement, were sold to the Participant ("Purchased Shares"), such Class B
Shares or Restricted Stock shall terminate and be cancelled immediately upon
such termination in exchange for payment in cash, with respect to each Class B
Share or share of Restricted Stock so cancelled, of an amount equal to the
lesser of (x) the Fair Market Value as of the date of termination and (y) the
purchase price per share paid by the Participant for such Class B Share or share
of Restricted Stock (plus interest from the date of purchase at a variable rate
equal to the ninety day United States Treasury rate, compounded), and upon such
cancellation the Participant shall no longer have any rights with respect to
such Class B Shares or shares of Restricted Stock except for the right to
receive the payment set forth herein; and

 

iv) to the extent provided for in the Award Agreement, all or any portion of the
proceeds received by the Participant from any sales of Class B Shares or shares
of Restricted Stock or from the cancellation of Class B Shares, Restricted Stock
or Options shall be returned to Putnam.

 

(c) Involuntary Termination Other Than for Cause. Unless otherwise determined by
the Committee with the approval of MMC (such determination to occur only in
individual isolated situations), in the event that a Participant’s employment
with Putnam and the Subsidiaries is terminated by Putnam other than for Cause:

 

i) each Option then held by the Participant, whether or not exercisable as of
the date of such termination, shall immediately vest and become fully
exercisable and shall remain exercisable at any time during the thirty (30) days
following such termination (or, if shorter, until expiration of the remaining
term of such Option).

 

ii) subject to such conditions as the Committee may prescribe (including (x)
Participant's execution of a general release of all claims against Putnam (and
any of its officers, directors or employees) in form and on terms satisfactory
to Putnam and/or (y) forfeiture of all or any portion of the Class B Shares, or
all or any portion of the proceeds from the sale thereof, upon violation of the
Participant's Non-Solicitation Agreement or any noncompetition agreement between
Participant and Putnam),

 

(1) any Restricted Stock (except any Restricted Stock granted pursuant to a
Special Retention Grant) held by the Participant shall be fully vested as of the
date of

 

11

 

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such termination;

 

(2) of the shares of Restricted Stock held by the Participant which were granted
pursuant to a Special Retention Grant, a number equal to the product (rounded
down to the nearest whole number) of (A) the quotient of (i) the number of full
months of service the Participant completed from the Grant Date to the date of
termination, divided by (ii) the total number of months in the applicable
vesting period, as set forth in the applicable Award Agreement and (B) the total
number of shares of Restricted Stock granted pursuant to a Special Retention
Grant, shall become fully vested as of the date of such termination; and

 

(3) any Restricted Stock held by the Participant granted pursuant to a Special
Retention Grant which does not become fully vested according to Section
7(c)(ii)(2) shall terminate and be cancelled immediately upon such termination,
and the Participant shall no longer have any rights with respect to such
cancelled shares of Restricted Stock, except the right to receive Dividends
declared on a date when the Participant was holder of record of such Restricted
Stock.

 

(d) Other Termination of Employment. Unless otherwise determined by the
Committee with the approval of MMC (such determination to occur only in
individual isolated situations), in the event that a Participant's employment
with Putnam and the Subsidiaries is terminated other than in the circumstances
described in Sections 7(a) through 7(c) above:

 

i) each Option held by such Participant, to the extent exercisable as of the
date of such termination, may be exercised at any time during the thirty (30)
days following such termination (or, if shorter, until expiration of the
remaining term of the Option). Each Option held by the Participant, to the
extent not exercisable at the date of the Participant's termination of
employment, shall terminate and be cancelled immediately upon such termination,
and any Options described in the preceding sentence that are not exercised prior
to expiration of the applicable period described in such sentence shall
terminate and be cancelled upon the expiration of such period;

 

ii) except as provided in (iii) below, any Restricted Stock that is then held by
such Participant shall terminate and be cancelled immediately upon such
termination, and the Participant shall no longer have any rights with respect to
such shares of Restricted Stock, except the right to receive any Dividends
declared on a date when the Participant was holder of record of such Restricted
Stock; and

 

iii) subject to authorization by the Board and to such conditions as the
Committee may prescribe (including (x) Participant’s execution of a general
release of all claims against Putnam (and any of its officers, directors or
employees) in form and on terms satisfactory to Putnam, and/or (y) forfeiture of
all or any portion of the amounts received pursuant to this clause (iii) upon
violation of the Participant's Non-Solicitation Agreement or any noncompetition
agreement between Participant and Putnam), with respect to any shares of
Restricted Stock that relate to Purchased Shares, such Restricted Stock shall
terminate and be cancelled immediately upon such termination in exchange for
payment in cash, with respect to each share of Restricted Stock so cancelled, of
an amount equal to (1) if the termination was by Putnam or its Subsidiaries, the
Fair Market Value as of the date of termination, and (2) if the termination was
by the Participant, the lesser of (x) the Fair Market Value as of the date of
termination and (y) the purchase price per share paid by the Participant for
such Restricted Stock (plus interest from the date of purchase at a variable
rate equal to the ninety-day United States Treasury rate, compounded). Upon any
such cancellation the Participant shall no longer have any rights with respect
to such shares of Restricted Stock

 

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except for the right to receive the payment set forth herein.

 

(e) Treatment of Class B Shares Held upon Termination of Employment or Acquired
Thereafter.

 

i) If the Participant's employment with Putnam and its Subsidiaries terminates
for any reason whatsoever (other than a termination for Cause), Putnam (in the
discretion of the Board) shall have an option ("Repurchase Option") to purchase
all or less than all of the Class B Shares then held or thereafter acquired by
the Participant (or, if his employment was terminated by his death, his estate)
at any time following the expiration of the post-Termination Holding Period,
upon giving notice in writing to the Participant (or his estate) of its election
to exercise such Repurchase Option. Notwithstanding the above, the Repurchase
Option may not be exercised by Putnam prior to the date six (6) months following
(A) the vesting date of the Class B Shares or (B) date of exercise in the case
of Class B Shares acquired upon exercise of Options.

 

ii) Each Participant may request, in a written notice delivered to the Committee
during the post-Termination Holding Period, that Putnam (in the discretion of
the Board) purchase all or some of the Class B Shares then held by the
Participant, but Putnam shall have no obligation to purchase such Class B
Shares. Notwithstanding the above, no Participant may offer to Putnam any Class
B Shares that have been held by the Participant for less than six (6) months
from the date of vesting of such shares.

 

iii) So long as the Repurchase Option is exercisable but not exercised as
provided herein, the Participant (or his or her estate) shall be entitled to
retain or transfer such Class B Shares, subject to all of the provisions of this
Plan (including, without limitation, Sections 8 and 9) and the Declaration of
Trust of Putnam.

 

iv) Following any exercise of the Repurchase Option by Putnam, the Participant
shall no longer have any rights with respect to the Class B Shares so purchased
except for the right to receive the payment set forth herein. All purchases
pursuant to this Section 7(d) by Putnam shall be for a purchase price per Class
B Share equal to Fair Market Value as of the date of sale and shall be subject
to such further conditions as the Committee may prescribe (including forfeiture
by the Participant of all or any portion of the amounts received pursuant to
this Section 7(d) upon violation of the Participant's Non-Solicitation
Agreement).

 

v) The provisions of this Section 7(d) shall apply only to Class B Shares that
have not been forfeited or purchased pursuant to Sections 7(a), (b) and (c)
hereof.

 

(f) Unforeseen Personal Hardship. In the event that a Participant, while in the
employment of Putnam or any Subsidiary, experiences Unforeseen Personal
Hardship, the Board will carefully consider any request by the Participant that
Putnam purchase the Participant's Class B Shares at a price per Class B Share
equal to Fair Market Value, but Putnam shall have no obligation to purchase such
Class B Shares. The Board shall consider such request with respect to Unforeseen
Personal Hardship as soon as practicable after receipt by the Committee of a
written request by the Participant, such request to include sufficient details
of the Participant's Unforeseen Personal Hardship to permit the Board to review
the request and the circumstances in an informed manner, and the Board may
prescribe such conditions to Putnam's purchase of such Class B Shares as it
deems appropriate.

 

Section 8. Transfer of Awards

 

(a) Nontransferability of Awards.

 

 

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i) Except as provided in the Plan or as determined by the Committee, neither the
Participant nor any of his heirs or representatives shall sell, assign,
transfer, pledge or otherwise directly or indirectly dispose of or encumber any
of the Options, Restricted Stock or Class B Shares to or with any other person,
firm or corporation (including, without limitation, transfers to any other
holder of Putnam's capital stock, dispositions by gift, by will and by operation
of law) other than a transfer of Options, Restricted Stock or Class B Shares by
will or by operation of law to the estate of the Participant upon the death of
the Participant, provided that such estate agrees to be bound by all provisions
of the Plan and the applicable Award Agreement.

 

ii) A Participant may not transfer Options, Restricted Stock and Class B Shares,
except that, upon the approval of the Committee (such approval to be granted
only in individual isolated situations), a Participant may transfer Options,
Restricted Stock and Class B Shares to members of such Participant's Immediate
Family (as defined below) if the Participant does not receive any consideration
for the transfer. "Immediate Family" refers to children, grandchildren and
spouse of the Participant or one or more trusts exclusively for the benefit of
the Participant and/or such family members or partnerships in which the
Participant and/or such family members are the only partners; provided such
transfer may not be consummated unless such intended transferee shall have
agreed in writing to make and be bound by the representations, warranties and
covenants set forth in the Plan and the applicable Award Agreement, pursuant to
an instrument of assumption satisfactory in substance and form to Putnam; and
provided further that such transferee holds such transferred Options, Class B
Shares and Restricted Stock as if no such transfer had occurred. For example, if
a Participant transfers Class B Shares pursuant to this Section 8(a)(ii) to his
or her child and such Participant is subsequently terminated for Cause, the
child must forfeit such transferred Class B Shares in accordance with the terms
of the Plan as if the Participant held such Class B Shares at the time of such
termination.

 

iii) If, notwithstanding provisions of the Plan, a court determines that a
transfer that is not permitted pursuant to the terms hereof is nonetheless
valid, the Class B Shares, Restricted Stock or Options so transferred will be
repurchased from the transferee forthwith at a price per Class B Share (or share
of Restricted Stock) equal to Fair Market Value (or, in the case of an Option,
at a price per Class B Share underlying such Option equal to the excess, if any,
of the Fair Market Value over the exercise price per Class B Share of such
Option) and in no case will any such transferee have any rights with respect to
such Class B Shares, Restricted Stock or Options except for the right to receive
the payment set forth herein.

 

(b) Sales of Class B Shares and Restricted Stock to Putnam; Cancellation of
Options.

 

i) Each Participant may request, in a written notice delivered to the Board
during a Window Period, or, in accordance with Section 7, following the
termination of a Participant's employment, that Putnam purchase all or some of
the Class B Shares then held by the Participant, but Putnam shall have no
obligation to purchase such Class B Shares. Notwithstanding the above, no
Participant may offer to Putnam any Class B Shares that have been held by the
Participant for less than six (6) months from the date of vesting of such
shares. All purchases by Putnam pursuant to this Section 8(b)(i) shall be made
effective as of the last day of the applicable Window Period or, in the event of
termination, as of the date of purchase, shall be for a purchase price per Class
B Share equal to Fair Market Value as of the date of the sale and shall be
subject to such conditions as the Committee or the Board may prescribe in the
Award Agreement or otherwise (including forfeiture of all or any portion of the
proceeds of such purchase upon violation of the Participant's Non-Solicitation
Agreement).

 

ii) Putnam may (A) cancel all or some of the Options then held by the
Participant in exchange for a payment in cash, with respect to each Option so
cancelled, of an amount equal to the number

 

14

 

 

of Class B Shares subject to the Option multiplied by the excess, if any, of the
Fair Market Value per Class B Share on the date of such cancellation over the
exercise price per Class B Share for such Option and (B) cancel all or some of
the Class B Shares and shares of Restricted Stock in exchange for a payment in
cash, with respect to each Class B Share or share of Restricted Stock so
cancelled, of an amount equal to Fair Market Value of a Class B Share on the
date of the cancellation; provided, however, that (1) a determination to effect
a complete cancellation of Options, Class B Shares and Restricted Stock can be
made only (x) if directed by the MMC Committee (in which case the Board shall
authorize such complete cancellation) or (y) by the Board (with the approval of
the MMC Committee); (2) a determination to effect a partial cancellation of
Options, Class B Shares and Restricted Stock can be made only by the Board (with
the approval of the MMC Committee); and (3) amounts otherwise payable under this
paragraph (ii) may be subject to such conditions (including forfeiture of all or
any portion of amounts received pursuant to this paragraph (ii) upon violation
of the Participant's Non-Solicitation Agreement or any noncompetition agreement
between Participant and Putnam), as may be prescribed in the Award Agreement or
otherwise. In the event of a complete cancellation of Options, Class B Shares
and Restricted Stock, the Plan shall terminate. It is generally intended that
any partial cancellation pursuant to this Section 8(b)(ii) shall be accomplished
in a manner calculated, in the Board's sole discretion, to affect all
Participants ratably and equitably; provided, however, that nothing herein shall
prohibit such cancellation on an individual or any other basis. Notwithstanding
the foregoing, if within a twelve-month period immediately following a
cancellation pursuant to this Section 8(b)(ii), there occurs a Change in Control
of MMC, a Change in Control of Putnam, a Transaction (as defined in Section 9(c)
hereof), a Public Offering or a Special Transaction (collectively, an "Event");

 

(1) in the case of a Change in Control of MMC or a Change in Control of Putnam,
each Participant shall be entitled to receive, with respect to each Class B
Share, share of Restricted Stock and Option so cancelled, (x) in the case of
Class B Shares or shares of Restricted Stock, an additional amount in cash equal
to the excess, if any, of the Fair Market Value of a Class B Share on the date
of such Change in Control over the Fair Market Value of a Class B Share on the
date of cancellation, or, in the case of an Option so cancelled, an additional
amount in cash equal to the excess, if any, of the Fair Market Value of a Class
B Share on the date of such Change in Control over the higher of the Fair Market
Value of a Class B Share on the date of cancellation and the exercise price per
Class B Share subject to such Option, and (y) an additional amount in cash equal
to the Additional Payment (as defined in Section 9(a) hereof), as if the awards
had not been so cancelled, the entitlement to the Additional Payment being
subject to the same terms and conditions set forth in said Section 9(a);

 

(2) in the case of a Transaction, each Participant shall be entitled to receive,
with respect to that percentage (equal to the MMC Percentage, as defined in
Section 9(c) hereof) of the Class B Shares, shares of Restricted Stock and
Options so cancelled, (x) in the case of Class B Shares or shares of Restricted
Stock, an additional amount in cash equal to the excess, if any, of the Fair
Market Value of a Class B Share as of the date of the Transaction over the Fair
Market Value of a Class B Share as of the date of cancellation, or, in the case
of an Option so cancelled, an additional amount in cash equal to the excess, if
any, of the Fair Market Value of a Class B Share as of the date of the
Transaction over the higher of the Fair Market Value of a Class B Share on the
date of cancellation and the exercise price per Class B Share subject to such
Option, and (y) an additional amount in cash equal to the Additional Tag-Along
Payment (as defined in Section 9(c) hereof), as if the awards had not been so
cancelled and the Participant had exercised the rights referred to in Section
9(c) hereof, the entitlement to the Additional Tag-Along Payment being subject
to the same terms and conditions set forth in said

 

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Section 9(c);

 

(3) in the case of a Public Offering, each Participant shall be entitled to
receive, with respect to each Class B Share, share of Restricted Stock and Class
B Share subject to an Option so cancelled, an additional amount in cash equal to
the excess, if any, of the per share price paid in respect of shares of capital
stock of Putnam issued or sold in the Public Offering (which price shall be
equitably adjusted, to the extent appropriate, by the Committee with the
approval of the MMC Committee in the event that the shares of Putnam common
stock issued or sold in the Public Offering are not Class A Shares) over (x) in
the case of Class B Shares or Restricted Stock so cancelled, the Fair Market
Value of a Class B Share as of the date of cancellation and (y) in the case of
an Option so cancelled, the higher of the Fair Market Value of a Class B Share
as of the date of cancellation or the exercise price per Class B Share subject
to such Option; and

 

(4) in the case of a Special Transaction, each Participant shall be entitled to
receive, with respect to that percentage (equal to the Publicly Traded
Transaction Percentage, as defined in Section 9(d) hereof) of the Class B
Shares, shares of Restricted Stock and Options so cancelled, an additional
amount in cash equal to the excess, if any, of the per share price of the shares
of capital stock of Putnam issued to the public in connection with the Special
Transaction (which price shall be equitably adjusted, to the extent appropriate,
by the Committee with the approval of the MMC Committee in the event that the
shares of Putnam common stock issued or sold in the Special Transaction are not
Class A Shares) over (x) in the case of Class B Shares or Restricted Stock so
cancelled, the Fair Market Value of a Class B Share as of the date of
cancellation and (y) in the case of an Option so cancelled, the higher of the
Fair Market Value of a Class B Share as of the date of cancellation or the
exercise price per Class B Share subject to such Option.

 

iii) Following any receipt of notice from Putnam relating to any cancellation
pursuant to Section 8(b)(ii), the Participant shall no longer have any rights
with respect to the Class B Shares, Restricted Stock and Options so cancelled,
except for the right to receive the payments described herein on the terms and
conditions provided herein. All purchases pursuant to this Section 8(b) by
Putnam shall be for a purchase price per Class B Share equal to Fair Market
Value as of the date of sale.

 

(c) Certain Other Permitted Transfers of Class B Shares. If a Participant
requests that Putnam purchase all or some of the Class B Shares then held by the
Participant in accordance with Section 8(b)(i) and Putnam does not purchase the
Class B Shares so offered ("Refused Shares") then, during the thirty-day period
immediately following the date the Class B Shares were refused by Putnam, the
Participant may accept an offer (which must be in writing and for Fair Market
Value as of the date that the Class B Shares were refused by Putnam) from, and
sell to, any Participant who (unless such condition is waived by the Committee
with the approval of the MMC Committee) is then an Accredited Investor and an
Employee seeking to purchase all or any part of the Refused Shares. Upon receipt
of such offer (and prior to acceptance thereof), the Participant shall give
notice in writing to Putnam (i) designating the number of Refused Shares to be
sold, (ii) naming the purchaser of such Refused Shares and (iii) specifying the
price and terms of the sale; provided such sale may not be consummated unless
such intended purchaser shall have agreed in writing to make and be bound by the
representations, warranties, covenants and conditions set forth in the Plan and
the applicable Award Agreement, pursuant to an instrument of assumption
satisfactory in substance and form to Putnam. Any Class B Shares so transferred
shall be subject to all of the terms and conditions of the Plan and the
applicable Award Agreement, except that the transferee-Participant shall be
substituted for the transferor-Participant with respect to any such applicable
terms and

 

16

 

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conditions.

 

(d) Automatic Exchange of Shares or Units. Putnam, by action of the Committee
(with the approval of the MMC Committee), may exchange the then Class B Shares
and shares of Restricted Stock for shares or units and restricted shares or
units, as the case may be, of another entity and substitute shares and units of
another entity for Class B Shares subject to options in one or more transactions
at one or more times, provided that (x) immediately following each such
exchange, the sole assets of such other entity shall be shares of, or other
equity interest in, Putnam (or a successor or parent of Putnam) and assets of
Putnam (including, without limitation, any right under the Plan, any other
equity plan of Putnam, or related to such plans) and (y) the rights of the then
holders of Class B Shares and shares of Restricted Stock shall not, in the
judgment of the Committee, be materially adversely affected (defined so as to
include, without limitation, for purposes of this subsection, being “adversely
affected” under Section 77 of the Massachusetts Business Corporation Law (or any
successor statute thereto), as may be in effect or amended from time to time, to
the extent such Section would have been applicable to, and as a consequence of
its application voting rights would have been granted in connection with, such
transaction if a corporate entity incorporated under the laws of the
Commonwealth of Massachusetts were engaged in such transaction) as a result of
such exchange (it being understood that an exchange (by merger, consolidation or
an exchange of units or shares) of units of a business trust for shares of a
corporate entity shall not be deemed to have such a material adverse affect as a
result of the different entity level taxes to be paid by a business trust and a
corporation and that an exchange (by merger, consolidation or an exchange of
units and shares) of units of a business trust for shares of a corporate entity
incorporated under the laws of the Commonwealth of Massachusetts with terms
substantially similar to those set forth in Putnam Investment, Inc.’s Articles
of Organization in effect on the date shares were first issued pursuant to the
Plan and as such terms may have been modified in the declaration of trust of the
business trust or under Massachusetts corporate law, shall automatically be
deemed to not have such a material adverse affect). Following any such exchange,
references in the Plan to Class B Shares or Class A Shares shall be deemed to
refer to the shares or units issued in exchange therefor, references in the Plan
to shares of Restricted Stock shall be deemed to refer to the shares or units
issued in exchange therefor which, following any such exchange, shall remain
subject to the restrictions and other terms of the Restricted Stock and
references in the Plan to Putnam and the Articles of Organization of Putnam
shall be deemed, respectively, to refer to the entity whose shares or units were
issued in the exchange and the corresponding sections of the organizational
documents of such entity. In addition, following any exchange and in accordance
with Section 5(d), all options to purchase Class B Shares shall thereafter be
options to purchase shares or units issued in exchange for the Class B Shares.
Following any such exchange, the officers of Putnam are authorized and directed
to take all appropriate actions to reflect the exchange and the share/unit
ownership transfers and issuances effected thereby.

 

Section 9. Change in Control; Sale by MMC; Public Offering; Special Transaction

 

(a) Change in Control. In the event of a Change in Control of MMC or a Change in
Control of Putnam, subject to such conditions as may be prescribed by the
Committee in the Award Agreement or otherwise (including forfeiture of all or
any portion of the amounts paid or payable pursuant to this Section 9(a) upon
violation of the Participant's Non-Solicitation Agreement):

 

i) unless otherwise specified in the applicable Award Agreement, all outstanding
Options and Restricted Stock shall become fully vested immediately prior to the
consummation of either such Change in Control;

 

ii) all outstanding Options shall be cancelled as of the date of either such
Change in Control in exchange for a cash payment by Putnam equal to the amount
determined under clause (A) of the first sentence of Section 8(b)(ii) hereof;

 

 

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iii) all Class B Shares shall be cancelled as of the date of either such Change
in Control in exchange for a cash payment by Putnam equal to the amount
determined under clause (B) of the first sentence of Section 8(b)(ii) hereof;

 

iv) subject to the succeeding provisions of this Section 9(a), each holder of an
Option ("Optionee") and each holder of Class B Shares shall be entitled to
receive from Putnam, with respect to each Option or Class B Share (as the case
may be) then outstanding, an additional cash amount (the "Additional Payment")
equal to (A) the product of (I) the number of Class B Shares subject to the
Options cancelled hereunder (in the case of an Optionee) or the number of Class
B Shares cancelled hereunder (in the case of a holder of Class B Shares) and
(II) the excess, if any, of (1) the per share price payable in respect of Class
A Shares in connection with a Change in Control of Putnam (or, in the event of a
Change in Control of MMC, the "fully distributed trading value" of a Class B
Share as of the date of such Change in Control, determined in accordance with
Exhibit B hereof) over (2) in the case of a Class B Share so cancelled, the Fair
Market Value of such Class B Share as of the date of the applicable Change in
Control, and in the case of an Option so cancelled, the higher of the Fair
Market Value of a Class B Share as of the date of the applicable Change in
Control and the exercise price per Class B Share subject to such Option, plus or
minus (B) any earnings or losses (as hereinafter described) on the amount
determined under (A) above; and

 

v)

the Plan shall terminate.

 

Unless otherwise specified in the applicable Award Agreement, the rights of an
Optionee or a holder of Class B Shares to the Additional Payment shall vest and
be paid at the rate of 33.33% on each of the first three anniversaries of the
applicable Change in Control if such Optionee or holder of Class B Shares
remains continuously employed with Putnam or any of its Subsidiaries or
affiliates and any nonvested amounts shall be forfeited upon the Optionee's or
Class B Share holder's termination of employment for any reason; provided,
however, that, in the event of a Special Termination or an involuntary
termination without Cause (in either case, determined in the manner in effect
immediately prior to the applicable Change in Control), the Optionee's or Class
B Share holder's rights to the Additional Payment shall fully vest and be paid.
Any Additional Payment forfeited by a Participant shall revert to Putnam. Upon
occurrence of either such Change in Control, Putnam shall establish one or more
grantor trusts and promptly contribute thereto the aggregate amount described in
clause (iv)(A) above in respect of each Optionee and holder of Class B Shares.
Such grantor trust shall permit each such Optionee and holder of Class B Shares
to direct the investment of funds held for his benefit in the trust among the
various Putnam funds and such other investments as may be designated by the
Committee.

 

Notwithstanding the foregoing, if and to the extent specified in the applicable
Award Agreement, (I) the provisions of Section 9(a)(i) shall not apply, (II) the
provisions of Sections 9(a)(ii), 9(a)(iii) and 9(a)(iv) shall apply solely with
respect to Options vested immediately prior to the Change in Control and/or
Class B Shares, and (III) any unvested Options and/or shares of Restricted Stock
shall be forfeited and revert to Putnam; provided, however, subject to the terms
of the applicable Award Agreement, each holder of an Option or Restricted Stock
not vested immediately prior to the consummation of such Change in Control shall
be entitled to receive from Putnam (1) with respect to each such unvested Option
then outstanding, a cash amount (the “Unvested Option Payment”) equal to the
excess, if any, of (x) the per share price payable in respect of Class A Shares
in connection with a Change in Control of Putnam (or, in the event of a Change
in Control of MMC, the “Fully Distributed Trading Value” of a Class B Share as
of the date of such Change in Control, determined in accordance with Exhibit B
of the Plan) over (y) the exercise price per Class B

 

18

 

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Share subject to such Option and (2) with respect to each such unvested share of
Restricted Stock then outstanding, a cash amount (the “Unvested Share Payment”)
equal to the per share price payable in respect of Class A Shares in connection
with a Change in Control of Putnam (or, in the event of a Change in Control of
MMC, the “Fully Distributed Trading Value” of a Class B Share as of the date of
such Change in Control, determined in accordance with Exhibit B of the Plan).

 

(b) Public Offering. Upon a Public Offering, subject to such conditions as may
be prescribed by the Committee in the Award Agreement or otherwise (including
(x) Participant’s execution of a general release of all claims against Putnam
(and any of its officers, directors of employees) in form and on terms
satisfactory to Putnam, and/or (y) forfeiture of all or any portion of the
amounts paid or payable pursuant to this Section 9(b) upon violation of the
Participant's Non-Solicitation Agreement or any noncompetition agreement between
Putnam and Participant):

 

i) in accordance with Section 4.2.6 of the Declaration of Trust of Putnam, each
Class B Share and each share of Restricted Stock shall be converted into one
Class A Share;

 

ii) all Restricted Stock shall remain subject to the same vesting schedule and
other terms and conditions as were in effect immediately prior to such Public
Offering. In addition, all Class A Shares issued pursuant to clause (i) above
shall be subject to such customary transfer restrictions as shall be reasonably
required by the managing underwriter of such Public Offering;

 

iii) each Option that is outstanding immediately prior to such Public Offering
shall be converted into an Option for that number of Class A Shares equal to the
number of Class B Shares subject to such Option, at an exercise price equal to
the exercise price of such Option immediately prior to the Public Offering. With
respect to any Option (or portion of an Option) that is vested immediately prior
to the Public Offering, such Option (or such portion of an Option) shall be
otherwise subject to the same terms and conditions to which such Option (or such
portion of an Option) was subject immediately prior to the Public Offering.
Unless otherwise specified in the applicable Award Agreement, with respect to
any Option (or a portion of an Option) that is not vested immediately prior to
the Public Offering, such Option (or such portion of an Option) shall vest with
respect to 25% of shares subject thereto on each of the first, second, third and
fourth anniversaries of the Public Offering and shall be otherwise subject to
the same terms and conditions to which such Option (or such portion of an
Option) was subject immediately prior to the Public Offering;

 

iv) holders of vested Class A Shares resulting from the conversion described
herein shall be entitled to such registration rights as may be deemed
appropriate by the Committee with the approval of the MMC Committee; provided
however, nothing contained herein shall limit the rights of such holders to sell
their vested Class A Shares pursuant to Rule 144 promulgated under the
Securities Act; and

 

v) if a Public Offering occurs in connection with a Transaction, then, first,
the applicable provisions of Section 9(c) will apply and then, with respect to
any Class B Shares, Restricted Stock or Options held by the Participant
following the application of such provisions, this Section 9(b) shall apply.

 

(c) Tag-Along Rights. If MMC determines to sell any of the Class A Shares owned
by it to a

 

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person or entity other than MMC, Putnam, a subsidiary of one of them, a trustee
or other fiduciary holding securities of Putnam under an employee benefit plan
maintained by MMC or Putnam, or by a subsidiary of one of them, or an employee,
trustee or director of MMC or Putnam, in a transaction ("Transaction") that, if
consummated, would not constitute a Change in Control of Putnam, a Public
Offering or a Special Transaction, then, subject to such conditions as may be
prescribed by the Committee in the Award Agreement or otherwise (including (x)
Participant’s execution of a general release of all claims against Putnam (and
any of its officers, directors or employees) in form and on terms satisfactory
to Putnam, and/or (y) forfeiture of all or any portion of the amounts paid or
payable pursuant to this Section 9(c) upon violation of the Participant's
Non-Solicitation Agreement or any noncompetition agreement between Putnam and
Participant), the Participant may give written notice (such notice to be given
by a Participant within twenty-one (21) days of being advised of the
Transaction) to the Committee of his desire:

 

i) to sell to Putnam in connection with the Transaction such percentage of the
aggregate number of Class B Shares and shares of Restricted Stock held by the
Participant at such time (rounded to the nearest whole share) as equals the
percentage that the Class A Shares proposed to be sold by MMC in such
Transaction bears to the total number of Class A Shares held by MMC immediately
prior to the Transaction (the "MMC Percentage"), such sale to be effected at a
price per share equal to the Fair Market Value of a Class B Share as of the date
of the Transaction and otherwise on materially the same terms and conditions as
are applicable to Class A Shares sold by MMC (with Class B Shares being sold
prior to the sale of any shares of Restricted Stock and any shares of Restricted
Stock so sold becoming fully vested and no longer subject to restrictions);
and/or

 

ii) to cancel (as of the date of such Transaction) such percentage of each
Option granted to such Participant that is outstanding immediately prior to such
Transaction (rounded to the nearest whole share) as equals the MMC Percentage,
such cancellation to be in exchange for a cash payment from Putnam equal to the
product of (A) the number of shares then subject to such Option, (B) the MMC
Percentage and (C) the excess, if any, of the Fair Market Value per Class B
Share on the date of cancellation over the exercise price per Class B Share for
such Option (and Putnam and MMC shall take all actions necessary to implement
the Participant's elections upon consummation of the Transaction).

 

Subject to the provisions of the following sentence, (I) each holder of Class B
Shares and shares of Restricted Stock who elects to sell the applicable
percentage of such shares, as described in clause (i) above, shall be entitled
to receive from Putnam an additional cash payment equal to (A) the number of
Class B Shares and shares of Restricted Stock sold hereunder multiplied by (B)
the excess, if any, of (i) the per share price payable in respect of Class A
Shares in connection with such Transaction over (ii) the Fair Market Value of a
Class B Share as of the date of such Transaction, and (II) each Optionee who
elects to have a percentage of his Options cancelled, as described in clause (2)
above, shall be entitled to receive from Putnam an additional cash payment with
respect to each Class B Share subject to an Option or portion of an Option so
cancelled, equal to the excess, if any, of (i) the per share price payable in
respect of Class A Shares in connection with the Transaction over (ii) the
higher of the Fair Market Value of a Class B Share as of the date of such
cancellation and the exercise price per Class B Share subject to such Option or
portion of an Option (the additional payments referred to in clause (I) or (II),
as the case may be, plus or minus earnings and losses thereon, as hereinafter
described, being referred to herein as the "Additional Tag-Along Payment"). The
rights of an Optionee or a holder of Class B Shares (or shares of Restricted
Stock) to the Additional Tag-Along Payment shall vest at the rate of 33.33% on
each of the first three anniversaries of the Transaction if such Optionee or
holder of Class B Shares (or shares of Restricted Stock) remains

 

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continuously employed with Putnam or any of its Subsidiaries or affiliates and
any nonvested amounts shall be forfeited upon the termination of employment of
such Optionee or holder of Class B Shares (or shares of Restricted Stock) for
any reason; provided, however, that in the event of a Special Termination or an
involuntary termination without Cause (in either case, determined in the manner
in effect immediately prior to the Transaction), the rights of such Optionee or
holder of Class B Shares (or shares of Restricted Stock) to the Additional
Tag-Along Payment shall become fully vested. Any Additional Tag-Along Payment
forfeited by a Participant shall revert to Putnam. Upon occurrence of the
Transaction, Putnam shall establish one or more grantor trusts and promptly
contribute thereto an amount equal to the aggregate amount set forth in clauses
(I) and (II) above. Such grantor trust shall permit each such Optionee and
holder of Class B Shares (or shares of Restricted Stock) to direct the
investment of funds held for his benefit in the trust among the various Putnam
funds and such other investments as may be designated by the Committee.
Notwithstanding anything to the contrary contained in this Section 9(c), any and
all Class B Shares and shares of Restricted Stock that are not sold pursuant to
this Section 9(c), and any and all Options that are not cancelled pursuant to
this Section 9(c), shall remain outstanding in accordance with their respective
terms and the terms of this Plan. If for any reason MMC does not consummate the
proposed Transaction, the provisions of this Section 9(c) shall cease to apply
with respect to such proposed Transaction, provided that such provisions shall
again apply to any subsequently proposed Transaction.

 

(d) Special Transaction. In the event of a Special Transaction, subject to such
conditions as may be prescribed by the Committee in the Award Agreement or
otherwise (including (x) Participant’s execution of a general release of all
claims against Putnam (and any of its officers, directors or employees) in form
and on terms satisfactory to Putnam, and/or (y) forfeiture of all or any portion
of the amounts paid or payable pursuant to this Section 9(d) upon violation of
the Participant's Non-Solicitation Agreement or any noncompetition agreement
between Participant and Putnam):

 

i) a percentage of the Class B Shares and a percentage of the shares of
Restricted Stock held by each Participant that is equal to (i) the number of
shares of common stock of Putnam issued to the public in connection with the
Special Transaction (which number of shares shall be equitably adjusted, to the
extent appropriate, by the Committee with the approval of the MMC Committee in
the event that the shares of Putnam common stock issued to the public are not
Class A Shares) divided by (ii) the total number of Class A Shares, Class B
Shares, shares of Restricted Stock and Class B Shares subject to Options
outstanding immediately prior to the Special Transaction (the "Publicly Traded
Special Transaction Percentage") shall be converted into Class A Shares (rounded
to the nearest whole share). Each share of Restricted Stock remaining shall be
subject to the same vesting schedule and other terms and conditions as were in
effect immediately prior to such conversion and each Class B Share remaining
shall be subject to the same terms and conditions as were in effect immediately
prior to such conversion;

 

ii) a percentage of each Option that is outstanding immediately prior to such
Special Transaction equal to the Publicly Traded Special Transaction Percentage
shall be converted into an option for the number of Class A Shares, rounded to
the nearest whole share, equal to the number of the Class B Shares that was
previously subject to such percentage of each such Option, at an exercise price
equal to the exercise price of such Option immediately prior to the Special
Transaction. With respect to any Option (or portion of an Option) that is vested
immediately prior to the Special Transaction, such Option (or such portion of an
Option) shall be otherwise subject to the same terms and conditions to which
such Option (or such portion of an Option) was subject immediately prior to the
Special Transaction. With respect to any Option (or a portion of an Option) that
is not vested immediately prior to the Special Transaction, such Option (or such
portion of an Option) shall vest with respect to 25% of the shares subject
thereto on each of the first, second, third and fourth anniversaries of the
Special Transaction and shall be otherwise subject to the same terms and
conditions to which such Option (or such portion of an Option) was subject
immediately prior to the Special Transaction; and

 

 

21

 

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iii) holders of vested Class A Shares resulting from the conversion described
herein shall be entitled to such registration rights as may be deemed
appropriate by the Committee with the approval of the MMC Committee; provided,
however, nothing contained herein shall limit the rights of such holders to sell
their vested Class A Shares pursuant to Rule 144 promulgated under the
Securities Act.

 

As soon as practicable following consummation of the Special Transaction, the
Committee (or the Committee of the resulting entity) and the MMC Committee shall
conduct a formal review of the Plan with a view toward adopting an amended, new
or successor plan (the "New Plan"). Upon the adoption of such New Plan, no
additional awards will be made under this Plan, but any awards previously
granted pursuant to this Plan shall remain subject to the terms and conditions
of this Plan. If, however, by the third anniversary of the Special Transaction,
the Committee and the MMC Committee are unable to agree to the adoption of the
New Plan, then

 

(1) each Class B Share and each share of Restricted Stock shall be converted
into one (1) Class A Share;

 

(2) all Restricted Stock shall remain subject to the same vesting schedule and
other terms and conditions as were in effect immediately prior to such third
anniversary;

 

(3) each Option that is outstanding immediately prior to such third anniversary
shall be converted into an Option for that number of Class A Shares equal to the
number of Class B Shares subject to such Option, at an exercise price equal to
the exercise price of such Option immediately prior to such third anniversary
and otherwise subject to the same terms and conditions as such Option was
subject to immediately prior to the Public Offering; and

 

(4) holders of vested Class A Shares resulting from the conversion described
herein shall be entitled to such registration rights as may be deemed
appropriate by the Committee with the approval of the MMC Committee; provided
however, nothing contained herein shall limit the rights of such holders to sell
their vested Class A Shares pursuant to Rule 144 promulgated under the
Securities Act.

 

Section 10. Amendment, Modification, and Termination of the Plan

 

(a) Amendment, Modification and Termination. The MMC Committee at any time may
terminate or suspend the Plan, and the Committee (with the approval of the MMC
Committee) may from time to time amend or modify the Plan. No right of the MMC
Committee under this Plan may be amended in absence of approval of the MMC
Committee of such amendment. No amendment, modification, termination or
suspension of the Plan shall in any manner materially adversely affect any award
theretofore granted under the Plan; provided, however, that notwithstanding the
above, the MMC Committee may amend, modify, terminate or suspend the Plan in any
manner if such amendment, modification, termination or suspension is approved by
holders of not less than 75% of the outstanding Class B Shares, shares of
Restricted Stock and Class B Shares subject to Options (in each case, whether or
not vested) who vote with respect to such amendment, modification, termination
or suspension; provided further that the Committee (with the approval of the MMC
Committee) may amend the Plan at any time without any such consent to the extent
necessary to ensure compliance with tax, securities or any other applicable
laws; and provided further that the MMC Committee, after consultation with the
Committee, may amend the Plan and the terms of any outstanding shares of
Restricted Stock, Class B Shares or Options, at any time and to the extent
necessary,

 

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in the opinion of MMC's independent public accountants, to insure (while
maintaining, to the extent practical, the economic and other rights of the
holders of Class B Shares, Restricted Stock and Options) that the Plan and the
Class B Shares, Restricted Stock and Options continue to qualify for "fixed
accounting" under United States generally accepted accounting principles.

 

(b) Term of Plan; Plan Review. The Plan shall be effective as of the Effective
Date. The Plan shall continue in effect unless terminated in accordance with
Section 10(a). The provisions of the Plan, however, shall continue thereafter to
govern all outstanding Options, Restricted Stock and Class B Shares theretofore
acquired by Participants pursuant to the Plan. During 2007, the Committee and
the MMC Committee shall conduct a formal review of the Plan to determine its
continued appropriateness.

 

Section 11. Miscellaneous Provisions

 

(a) Dividends. In accordance with Section 4.2.3 of the Declaration of Trust of
Putnam, a Participant shall have the right to receive such dividends per share
with respect to the Participant's Restricted Stock and Class B Shares as are
declared from time to time per share with respect to Class A Shares, except that
(i) Restricted Stock and Class B Shares issued prior to January 1, 1998, shall
not be entitled to any dividends declared or paid on or prior to December 31,
1997, (ii) dividends payable with respect to Class A Shares in additional Class
A Shares, shall be payable with respect to Class B Shares in additional Class B
Shares, (iii) Putnam may pay dividends on Class A Shares without paying a
dividend on the Class B Shares provided such dividend is approved by holders of
not less than 75% of the outstanding Class B Shares and shares of Restricted
Stock who vote with respect to such proposed dividend payment and (iv) Putnam
may pay dividends on shares of Class A Common Stock payable in additional shares
of Class A Common Stock without paying a dividend on the Class B Shares and
Restricted Stock provided that the dividend, liquidation and conversion rights
of the Class B Shares and Restricted Stock are equitably adjusted, including by
amendment to the Plan pursuant to Section 10(a) hereof, if appropriate, so that
the economic and other rights of the Class B Shares and Restricted Stock are not
adversely affected. The foregoing notwithstanding, the Committee may provide for
optional or mandatory deferral of any cash dividends with respect to Restricted
Stock, provided that no additional shares of Restricted Stock become issuable.
The Participant shall not have a right to receive dividends with respect to any
Options.

 

(b) Beneficiary Designation. Each Participant under the Plan may from time to
time name any beneficiary or beneficiaries (who may be named contingently or
successively) by whom any right under the Plan is to be exercised in case of his
death. Each designation will revoke all prior designations by the same
Participant, shall be in a form reasonably prescribed by the Committee, and will
be effective only when filed by the Participant in writing with the Committee
during his lifetime.

 

(c) No Guarantee of Employment or Participation. Nothing in the Plan or the
Award Agreement shall interfere with or limit in any way the right of Putnam,
MMC or any Subsidiary to terminate any Participant's employment at any time, or
confer upon any Participant any right to continue in the employ of Putnam, MMC
or any Subsidiary. No Employee shall have a right to be selected as a
Participant or, having been so selected, to receive or purchase any Options or
Restricted Stock.

 

(d) Tax Withholding. Putnam or the Subsidiary employing a Participant shall have
the power to withhold, or to require such Participant to remit to Putnam or such
Subsidiary, subject to such other arrangements as the Committee may make, an
amount sufficient to satisfy all federal, state, local and foreign withholding
tax requirements in respect of any Option or Restricted Stock granted or sold
under the Plan.

 

(e) Indemnification. Each person who is or shall have been a member of the
Committee or of the Board or of the MMC Committee shall be indemnified and held
harmless by Putnam to the fullest extent

 

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permitted by law from and against any and all losses, costs, liabilities and
expenses (including any related attorneys' fees and advances thereof) in
connection with, based upon or arising or resulting from any claim, action, suit
or proceeding to which he may be made a party or in which he may be involved by
reason of any action taken or failure to act under the Plan and from and against
any and all amounts paid by him in settlement thereof, with Putnam's approval,
or paid by him or her in satisfaction of any judgment in any such action, suit
or proceeding against him or her, provided that he or she shall give Putnam an
opportunity, at its own expense, to defend the same before he or she undertakes
to defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive and shall be independent of any other rights of
indemnification to which such persons may be entitled under Putnam's Declaration
of Trust or By-laws, by contract, as a matter of law or otherwise.

 

(f) No Limitation on Compensation. Nothing in the Plan shall be construed to
limit the right of Putnam, MMC or any Subsidiary to establish other plans or to
pay compensation to its employees, in cash or property, in a manner that is not
expressly authorized under the Plan.

 

(g) Securities Laws Compliance. The granting of Options, the granting or sale of
Restricted Stock and the issuance of Class B Shares shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. No
Options shall be granted under the Plan, and no Class B Shares or Restricted
Stock shall be issued under the Plan, if such grant, sale or issuance would
result in a violation of applicable law, including the federal securities laws
and any applicable state securities laws.

 

(h) Voting Rights. Except as otherwise required by law or by this Plan, no
Participant holding any Options granted under the Plan shall have any right, in
respect of such Options, to vote on any matter submitted to Putnam's
stockholders. Except as otherwise required by law or provided below, no
Participant holding any Restricted Stock granted or sold under the Plan or any
Class B Shares acquired pursuant to the Plan shall have any right, with respect
to such Restricted Stock or Class B Shares, to vote on any matter submitted to
Putnam's stockholders. Notwithstanding the above, at such time as requested by
the MMC Committee, the Board shall take all steps as may be necessary to amend
the Declaration of Trust so that each Class B Share shall be entitled to
one-tenth of one vote per share (or such other voting rights as may be
determined by the MMC Committee) and to vote together with the Class A Shares on
all matters on which shareholders are generally entitled to vote. In approving
any such amendments to the Declaration of Trust, only the holders of Class A
Shares shall be entitled to vote, except to the extent holders of Class B Shares
have been granted voting rights prior thereto.

 

(i) Certain Accounting Considerations. The Options and Restricted Stock granted
or sold pursuant to the Plan are intended to be subject to "fixed accounting"
under the United States Generally Accepted Accounting Principles and shall be so
interpreted to the extent such interpretation is consistent with the purpose of
the provisions being so interpreted.

 

(j) Governing Law. The Plan, and all agreements thereunder, shall be construed
in accordance with and governed by the laws of the Commonwealth of
Massachusetts.

 

(k) Limitation of Liability. To the extent that Putnam is a business trust, the
shareholders, trustees, officers, employees or agents of the trust, in their
capacity as such, shall not be personally liable for any claims arising against
the business trust related to the business trust’s obligations or duties under
the Plan and all Participants and other parties to the Plan shall look solely to
the Trust Estate (as such term is defined in the Declaration of Trust for the
trust) for the payment of any claim arising against the business trust related
to the business trust’s obligations or duties under the Plan or for the
performance of any obligations of the business trust under the Plan.
Notwithstanding the foregoing, Participants and other parties to the

 

24

 

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Plan shall remain liable for any claims related to their individual obligations,
duties and performance imposed by the Plan.

 

(l) Section 409A. Notwithstanding anything herein to the contrary, this Plan and
any Award Agreement hereunder shall be interpreted or if necessary amended, in
order to comply with Section 409A of the Internal Revenue Code of 1986, as
amended, to the extent subject thereto.

 

25

 

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EXHIBIT A

 

 

RESTRICTED STOCK AND OPTION AWARD AGREEMENT

 

This Restricted Stock and Option Award Agreement (the "Award Agreement") is
executed and delivered as of the Grant Date by and between Putnam Investments
Trust ("Putnam") and the undersigned Participant (“Participant”). The
Participant and Putnam hereby agree as follows:

 

1.

Putnam, pursuant to the Putnam Investments Trust Equity Partnership Plan (the
"Plan"), which is incorporated herein by reference, and subject to the terms and
conditions thereof, hereby grants to the Participant an award of Restricted
Stock and hereby grants to the Participant an Option to purchase Class B Shares.

 

2.

Certain general terms relating to the award of Restricted Stock and Options are
set forth in the Plan, and certain specific terms relating to this Award
Agreement are set forth in the attached certificate. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Plan.

 

3.

The exercise price of Options may be paid in full in cash or cash equivalents,
including by personal check, or by tendering fully vested Class B Shares with an
aggregate Fair Market Value equal to the exercise price, or by combination of
the above at the time of exercise; provided, however, that any Class B Shares so
tendered must have been held by the Participant for six months or more following
(A) the vesting date of such Class B Shares or (B) the date such Class B Shares
were acquired upon the exercise of fully-vested Options.

 

4.

The Participant agrees to comply with and be bound by all the terms and
conditions contained in the Non-Solicitation Agreement (the "Non-Solicit
Agreement") by and between Participant and Putnam, which is incorporated herein
by reference. The Participant acknowledges that his or her compliance with the
Non-Solicit Agreement or any noncompetition agreement between Participant and
Putnam is a condition of participation in the Plan, and that upon violation by
the Participant of the Non-Solicit Agreement or any such noncompetition
agreement, Putnam shall be entitled to relief including, but not limited to, the
following: (a) forfeiture of all or any portion of the Restricted Stock then
held by the Participant; (b) cancellation and termination of all or any portion
of the outstanding Options then held by the Participant (whether or not then
exercisable); (c) forfeiture of all or any portion of the Class B Shares then
held by the Participant; (d) forfeiture of all rights with respect to other
payments to which Participant may become entitled pursuant to the Plan; (e)
repayment of 50% of all amounts previously received by the Participant upon
repurchase by Putnam of Class B Shares and upon cancellation by Putnam of
Options pursuant to the Plan; and (f) repayment of 50% of all other cash
payments received by the Participant from Putnam pursuant to the Plan.
Participant further understands and agrees that, as set forth in the Plan, as a
condition of participation in the Plan or eligibility for certain benefits
thereunder, Participant may be required to execute (x) a general release of all
claims against Putnam (and any of its officers, directors or employees), and/or
(y) a noncompetition agreement, in each case in form and on terms satisfactory
to Putnam.

 

5.

Any notice by the Participant to Putnam hereunder, including written notice of
the exercise of

 

A-1

 

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Options, which notice shall be substantially in the form attached to the Plan as
Exhibit D, shall be in writing and shall be deemed duly given only upon receipt
thereof by Putnam, c/o the Committee, at its principal office. Any notice by
Putnam to the Participant shall be in writing and shall be deemed duly given if
mailed to the Participant at the address last specified to Putnam by the
Participant.

 

6.

The validity and construction of this Agreement shall be governed by the laws of
the Commonwealth of Massachusetts.

 

7.

The Participant represents and warrants to Putnam as follows (check one):

 

__

The Participant is an "accredited investor" under the net worth test set forth
in paragraph (a)(5) of Rule 501 of Regulation D of the Securities Act of 1933,
as amended (the "Securities Act"), in that Participant has an individual net
worth, or joint net worth with the Participant's spouse, at the time of the
grant of the award which exceeds $1,000,000.

 

__

The Participant is an "accredited investor" under the net income test set forth
in paragraph (a)(6) of Rule 501 of Regulation D under the Securities Act in that
the Participant had an individual income in excess of $200,000 in each of the
two most recent years or joint income with the Participant's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year.

 

__

The Participant is not an accredited investor, as described above.

 

8.

The Participant further represents and warrants to Putnam as follows:

 

(a)

The Participant is acquiring Class B Shares hereunder, and any Class B Shares
acquired pursuant to the exercise of Options granted hereunder will be acquired,
solely for investment and not with a view toward or for resale, or with any
intention of distributing or selling Class B Shares in violation of the
Securities Act, the Plan, this Award Agreement, or the Declaration of Trust of
Putnam, and the Participant will not sell or offer to sell or otherwise transfer
Class B Shares in violation of the Securities Act, the Plan, this Award
Agreement, or the Declaration of Trust of Putnam.

 

(b)

The Participant acknowledges that the Participant has been provided an
opportunity to examine all documents and ask questions of, and has received
answers thereto from Putnam and its representatives regarding the business,
management, and financial affairs of Putnam and its subsidiaries, and the
Participant has obtained all information requested by him or her of Putnam and
its subsidiaries with respect to the acquisition of Class B Shares.

 

(c)

The Participant has reviewed the terms and conditions of the Plan and the
Confidential Memorandum, dated March 15, 2005, provided to the Participant by
Putnam, as supplemented through the date of this Award Agreement, and the
Participant has conducted his or her own examination of Putnam, the offering of
Class B Shares, the grating of Options and the Plan, including the merits and
risks involved, in making an investment decision with respect to Class B Shares.
The Participant represents that the offering of Class B Shares was made only
through direct, personal communication

 

A-2

 

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between the Participant and Putnam and its representatives and not through
public solicitation or advertising.

 

(d)

The Participant understands that (i) Class B Shares have not been registered
under the Securities Act, in reliance on an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof; (ii) Putnam
has no obligation to register Class B Shares under the Securities Act or any
state securities laws; (iii) Class B Shares are subject to strict restrictions
on transferability and may only be transferred in accordance with the Plan, this
Award Agreement, the Declaration of Trust of Putnam and the Securities Act; (iv)
the certificates, if any, representing shares of Class B Shares will bear a
legend to such effect, and (v) Putnam will make a notation on its transfer books
to such effect.

 

(e)

The Participant is able to bear the economic risk of an investment in Class B
Shares and has adequate income independent of any income produced from an
investment in Class B Shares to sustain a loss of all of his or her investment
in Class B Shares without economic hardship if such loss should occur.

 

(f)

The Participant understands and acknowledges that Putnam will be relying on the
Participant's representations and warranties set forth herein in the offering of
Class B Shares and the granting of Options to the Participant.

 

(g)

The Participant will provide any information reasonably requested by Putnam to
enable Putnam to file a Form D with the Securities and Exchange Commission under
the Securities Act.

                                          
                                                

* * *

 

This Award Agreement is made under and subject to the provisions of the Plan
referred to herein, the provisions of which Plan are incorporated in this Award
Agreement by reference. By signing this Award Agreement, the Participant accepts
and agrees to comply with and be bound by all of the foregoing terms and
provisions and all of the terms and provisions of the Plan, and confirms that he
or she has received the Confidential Memorandum dated March 15, 2005, relating
to the Plan, as supplemented through the date of this Award Agreement.

 

IN WITNESS WHEREOF, Putnam has caused this Award Agreement to be executed by a
duly authorized representative and the Participant has hereunto set his hand as
of the Grant Date.

 

PUTNAM INVESTMENTS TRUST:

 

 

By:_________________________________________

Name:

Title:

 

 

 

____________________________________________

Participant

 

A-3

 

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RESTRICTED STOCK AND OPTION AWARD CERTIFICATE

 

 

Name of Participant:

Participant

 

 

Grant Date:

September 29, 2005

 

 

Restricted Stock:

Participant is hereby granted _____ Class B Shares.

 

 

Fair Market Value per Share:

$

 

 

Dates Stock Vests*:

[#] Shares on September 1, 2006,

 

[#] Shares on September 1, 2007,

 

[#] Shares on September 1, 2008,

 

[#] Shares on September 1, 2009.

 

 

Options:

Participant is hereby awarded the option to purchase __ Class B Shares.

 

 

Exercise Price per Share:

$

 

 

Expiration Date of Option:

September 29, 2011

 

 

Dates Option Vests* and

[#] Shares on September 1, 2006,

may be Exercised:

[#] Shares on September 1, 2007,

 

[#] Shares on September 1, 2008,

 

[#] Shares on September 1, 2009.

 

 

* Vesting is subject to continuous employment as described in the Plan and the
Confidential Memorandum dated March 15, 2005, as supplemented through the date
of this Award Agreement. In the event of a Public Offering, any Options (or
portions of such Options) which are unvested as of the date immediately prior to
such Public Offering shall vest with respect to 25% of the shares subject
thereto on each of the first, second, third and fourth anniversary of any such
Public Offering.

 

 

 

A-4

 

 

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EXHIBIT B

 

 

Valuation Methodology

to Determine the

Fair Market Value

of Class B Stock

 

The methodology for determining the Fair Market Value of a Class B Share ("FMV")
as of a particular date (the "Valuation Date") shall be as follows (any
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan):

 

1. FMV = the fully distributed trading value of a Class B Share as of the
Valuation Date (the "FDTV"), adjusted for the Discount.

 

2. Discount = a 30% discount representing the illiquidity and restrictions on
transfers of the Class B Shares.

 

3. FDTV =

 

(i)

For the last day of the second fiscal quarter (the “June 30 Price”) and the last
day of the fourth fiscal quarter (the “December 31 Price”), the value of 100% of
Putnam as the midpoint of the range of values determined by a nationally
recognized independent valuation firm chosen by the Committee with the approval
of the MMC Committee, in accordance with guidelines set forth in Exhibit C.

(ii)

For the last day of the first fiscal quarter (the “March 31 Price”) and the last
day of the third fiscal quarter (the “September 30 Price”), the prior
quarter-end Putnam P/E (prior quarter-end FDTV divided by prior quarter-end
Putnam Earnings), adjusted up or down for the percentage change in the median
P/E of the Asset Manager Basket from the prior quarter-end to the current
quarter-end, multiplied by current quarter-end Putnam Earnings (illustrative
example in Exhibit E). The calculation of the March 31 Price and September 30
Price will be performed by Putnam and verified by a nationally recognized
independent valuation firm chosen by the Committee with the approval of the MMC
Committee.

 

4. Putnam Earnings = the consolidated after-tax earnings per share on a fully
diluted basis of Putnam over the twelve (12) months ending on the last business
day of Putnam's fiscal quarter ending immediately prior to the Valuation Date,
as reported in the Putnam consolidated financial statements, with such
statements as of the end of any fiscal year to be as audited by Deloitte &
Touche LLP or other such accounting firm used by MMC, and such statements as of
the end of a period other than a fiscal year to be unaudited, all such
statements to be prepared in accordance with United States generally accepted
accounting principles on a consistent basis. For purposes of

 

B-1

 

 

 

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this methodology, Putnam earnings will exclude (i) any discontinued operations
and/or extraordinary items, as defined under United States generally accepted
accounting principles, (ii)

overhead expenses (net of applicable tax effect) incurred by MMC (as described
in Section 6.2 of the Intercompany Agreement by and between MMC and Putnam dated
as of September 30, 1997) and (iii) any material nonrecurring items (excluding,
however, any such items arising pursuant to the Plan, except for Sections
8(b)(ii) and 9 thereof) as determined by the Committee (with the approval of
MMC), in each instance that are included in such consolidated financial
statements. For purposes of clause (iii) of this Section 4, for any individual
charge or credit to be eligible to be determined material by MMC, the net of the
aggregate charges and credits under said clause (iii) must exceed 3% of Putnam's
pretax earnings for such twelve (12) month period.

 

5. Asset Manager Basket = group of asset management companies (listed on Exhibit
F) that have common stock or American Depositary Receipts (“ADR”) trading on a
major United States stock exchange, and a large enough presence in the asset
management industry to warrant inclusion in the Asset Manager Basket, as
determined by the Committee. The Committee, with the approval of the MMC
Committee, shall have the authority to add or delete asset management companies
from the Asset Manager Basket to reflect privatizations, mergers, acquisitions,
dispositions or new listings, or any other events that the Committee deems
relevant.

 

6. Asset Manager Basket Median P/E = the median P/E of all the individual Asset
Manager Basket Company P/Es. The P/E of an individual Asset Manager Basket
Company equals that Asset Manager Basket Company’s Price divided by that Asset
Manager Basket Company’s Earnings ("Basket Company Price" and "Basket Company
Earnings" each as defined below) of each of the asset management companies in
the Asset Manager Basket.

 

(a) Basket Company Price = the closing price per share of common stock or ADR of
an asset management company included in the Asset Manager Basket as of the last
business day of Putnam's fiscal quarter ending immediately prior to the
Valuation Date

 

(b) Basket Company Earnings = the diluted earnings per share of an asset
management company included in the Asset Manager Basket for the twelve (12)
months ending on the last business day of Putnam's fiscal quarter ending
immediately prior to the Valuation Date (or, if such information is not then
available for such twelve-month period, over the most recent twelve-month period
for which information is then available, as determined by the Committee with
approval of MMC). The fully diluted earnings per share shall exclude the results
of discontinued operations and extraordinary items as defined under United
States generally accepted accounting principles with respect to companies based
in the United States. With respect to companies based outside the United States
(i) earnings shall exclude the results of discontinued operations and
extraordinary items as defined under United States generally accepted accounting
principles if such company provides a reconciliation of its financial statements
to United States generally accepted accounting principles or (ii) if no such
reconciliation is provided, then (x) discontinued operations and extraordinary
items as reported in the non-United States financial statements shall be
excluded, (y) any individual exceptional item in such non-United States
financial statements representing less than 3% of pre-tax earnings shall be
excluded and (Z) any individual exceptional item in such non-United States
financial statements representing 3% or more of pre-tax earnings may be excluded
if the Committee and the MMC Committee agree.

 

 

B-2

 

 

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EXHIBIT C

 

Guidelines for Independent Valuation

 

The Fair Market Value shall equal the fully distributed trading value ("FDTV"),
adjusted for the Discount. The FDTV of 100% of Putnam shall be determined on the
basis of Putnam's then prevailing business, assets, financial condition and
results of operations, based on the assumptions that (i) Putnam is a going
concern with long-term stable management, (ii) Putnam's cost structure is
generally consistent with that of a stand-alone business, (iii) the common stock
of Putnam is fully distributed and traded in a public securities market without
any premium for a change-in-control and (iv) all Options to purchase Class B
Shares, which exercise price is less than or equal to the value of the Class B
Shares to be obtained upon exercise thereof have been exercised and all amounts
payable upon the exercise of such Options have been paid in full and in cash.

 

 

 

C-1

 

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EXHIBIT D

 

FORM OF NOTICE OF EXERCISE

 

In accordance with the terms and conditions of the Putnam Investments Trust
Equity Partnership Plan (the “Plan”) and the Restricted Stock and Option Award
Agreement (the “Agreement”) between Putnam Investments Trust (“Putnam”) and the
undersigned dated ___________, the undersigned hereby elects to exercise the
Option granted under such Agreement in the manner indicated below.

 

Total shares purchased hereunder:

__________

Exercise price per share:

$_________

Total exercise price:

$_________

Withholding taxes due:

$_________

Total amount due:

$_________

 

Payment is made by submitting:

 

1.

Cash, in the amount of:

$_________

 

2.

Check, payable in the amount of:

$_________

 

3.

Class B Shares, owned by me for

at least six months (following the

date of vesting or the date of exercise,

as the case may be), as follows:

 

(a) Number of shares

__________

 

(b) Fair Market value per share

$_________

 

(c) Total value of Class B Shares:

$_________

 

4.

Total Value Submitted:

$_________

 

I understand and agree that the Class B Shares received pursuant to this
exercise are subject to all the terms and conditions of the Plan, the Agreement
and the Declaration of Trust of Putnam, and are subject to forfeiture also in
the event of a violation of the Non-Solicitation Agreement by and between Putnam
and me. I understand that I will not, by virtue of having exercised this Option,
be receiving certificates representing the Class B Shares purchased hereunder,
but that, as soon as practicable following receipt of this notice and the
payment of the total exercise price hereunder, a “book entry” shall be made in
the records of Putnam to evidence this exercise.

 

I acknowledge that I have received and reviewed a copy of the Confidential
Memorandum dated March 15, 2005.

 

I represent and warrant to Putnam as follows (check one):

 

__

I am an "accredited investor" under the net worth test set forth in paragraph
(a)(5) of Rule 501 of Regulation D of the Securities Act of 1933, as amended
(the "Securities Act"), in that I have an in

 

D-1

 

--------------------------------------------------------------------------------

 

dividual net worth, or joint net worth with my spouse, at the time of the grant
of the Option and the exercise of the Option which exceeds $1,000,000.

 

__

I am an "accredited investor" under the net income test set forth in paragraph
(a)(6) of Rule 501 of Regulation D under the Securities Act in that I had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with my spouse in excess of $300,000 in each of those years and
have a reasonable expectation of reaching the same income level in the current
year.

 

__

I am not an accredited investor, as described above.

 

 

Signature: __________________________

Date: _________________________

 

Print Name: _________________________

Social Security #: _______________

 

 

D-2

 

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EXHIBIT E

 

Example of Calculated FDTV

 

Prior Quarter-end

 

Independent Value FDTV:

$60.00*

Putnam Earnings:

$3.50

 

Putnam P/E:

17.14

 

Asset Manager Basket Median P/E:

18.00

 

 

*Independent Value FMV (70% of FDTV):

$42.00

 

 

Current Quarter-end

 

Asset Manager Basket Median P/E:

19.00

 

Change in Asset Manager Basket Median P/E:

5.56%

 

Putnam Earnings:

$3.60

 

Putnam P/E:

18.10 (17.14 x (1+0.0556))

Calculated Value FDTV:

$65.14**

 

 

**Calculated Value FMV (70% of FDTV):                                  $45.60

 

 

E-1

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EXHIBIT F

 

 

Asset Manager Basket Companies

 

1.

Affiliated Managers Group, Inc.

 

2.

Alliance Capital Management Holding L.P.

 

3.

AMVESCAP PLC

 

4.

BlackRock, Inc.

 

5.

Eaton Vance Corp.

 

6.

Federated Investors, Inc.

 

7.

Franklin Resources, Inc.

 

8.

Gabelli Asset Management Inc.

 

9.

Janus Capital Group, Inc. (f/k/a Stilwell Financial, Inc.)

10.

The John Nuveen Company

 

11.

Legg Mason, Inc.

 

12.

T. Rowe Price Group, Inc.

 

13.

Waddell & Reed Financial, Inc.

 

14.

W.P. Stewart & Co., Ltd.

 

 

 

 

F-1