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	Only the German text of this Agreement is legally binding. This English translation is for convenience only.

Agreement for the Purchase of Shares

and

Granting of Shares

with respect to the Messer Griesheim Group GmbH & Co. KGaA
  (Share Purchase and Option Agreement) 

among 

	1.
	Messer
Griesheim Group GmbH & Co. KGaA

	2.
	MWW
Einundneunzigste Vermögensverwaltungs GmbH, in future to be named Messer Griesheim MIP GmbH

	3.
	Messer
Employee GmbH & Co. KG

	4.
	GS
Capital Partners 2000 GmbH & Co. Beteiligungs KG; 

GS
Capital Partners 2000 Employee Fund, L.P. (USA); 

GS
Capital Partners 2000 Offshore, L.P. (Cayman Island); 

GS
Capital Partners 2000, L.P. (USA); 

Stone
Street Fund 2000, L.P. (USA) and 

Bridge
Street Special Opportunities Fund 2000, L.P. (USA) 

—in
the following together "Goldman Sachs"— 

	5.
	Allianz
Capital Partners GmbH 

	
	 	

Mr./MS.,]

—in
the following the "Participant"— 

  

 
 

Index    
  

	Defined Terms	 	iii
	Preamble	 	1
	I. Own Investment	 	2
	§ 1 Acquisition of Shares	 	2
	§ 2 Acquisition Price	 	3
	§ 3 Warranties	 	3
	II. Granting of Free Options	 	4
	§ 4 The Options	 	4
	§ 5 Waiting Period, Exercise Period	 	5
	§ 6 Exercise Condition Exit	 	5
	§ 7 Performance Targets	 	6
	§ 8 Exercise	 	8
	§ 9 Alternative Settlement	 	11
	§ 10 Dilution Protection	 	12
	III. Exit, Co-Sale-Right and -Obligation	 	15
	§ 11 Exit by IPO	 	16
	§ 12 Tag Along-Right	 	17
	§ 13 Drag-Along Right	 	19
	IV. Termination of the Employment Agreement	 	20
	§ 14. Forfeiture of Options	 	20
	§ 15 Call Option over the Shares	 	22
	§ 16 Put Option over the Shares	 	25
	V. Miscellaneous	 	25
	§ 17 Taxes, Duties and other Expenditures	 	25
	§ 18 Choice of Law, Court of Arbitration	 	27
	§ 19 Transfer of Shares, Limitation on Disposals, Repurchase Right	 	27
	§ 20 Confidentiality/Insider Rules	 	28
	§ 21 Miscellaneous	 	28
	§ 22 Risks	 	29
	Exhibit 1—Internal rate of Return	 	31
	Exhibit 2—EBITDA Targets	 	33
	Exhibit 3—Definition of EBITDA	 	34
	Exhibit 4—List of Neutral Experts	 	35
	Exhibit 5—Arbitration Agreement 	 	 

2

 
 
 

Defined Terms    
  

	A	 	 
	Acceptance Notice	 	23
	ACP	 	1
	Acquisition Costs	 	24
	Acquisition Price	 	3
	Actual EBIDTDA	 	7
	
C	
 	

 
	Call Option	 	23
	Cash Settlement	 	11
	
D	
 	

 
	Dilution	 	12
	Disability	 	21
	
E	
 	

 
	EBITDA Targets	 	7
	Employment Agreement	 	21
	Exercise Notice	 	10
	Exercise Period	 	5
	Exercise Price	 	4
	Exit Event	 	6
	
F	
 	

 
	Financial Investors	 	1
	
G	
 	

 
	Goldman Sachs	 	1
	
I	
 	

 
	IPO	 	6
	
M	
 	

 
	Market Value	 	23
	Messer Employee	 	2
	Messer Employee Participation	 	22

3

 

	Messer Griesheim GmbH	 	1
	Messer Griesheim Group	 	1
	Messer Group	 	1
	MIG	 	1
	
N	
 	

 
	New Shares	 	4
	
O	
 	

 
	Old Shares	 	2,3
	Options	 	4
	Own Investment	 	2
	
P	
 	

 
	Participant	 	1
	Participants	 	1
	Pro Rata Market Value	 	23
	Put Option	 	25
	Recapitalisation	 	 
	
R	
 	

 
	Recapitalisation	 	6
	Repurchase Price	 	23
	
S	
 	

 
	Sales Notice	 	17
	Seller	 	1
	Shares	 	16
	
T	
 	

 
	Tag Along Offer	 	17
	Termination	 	21
	Third Party	 	6
	Trade Sale	 	6
	
W	
 	

 
	Waiting Period	 	5

4

  

 
 

Preamble    
  

	1.
	The
Messer Griesheim Group GmbH & Co. KGaA ("the Messer Group") is the sole shareholder
of Messer Griesheim Holding AG which in turn is the sole shareholder of Messer Griesheim Gesellschaft mit beschränkter Haftung ("Messer Griesheim
GmbH") having its seat in Frankfurt am Main. The shareholders of Messer Group are Messer Industrie GmbH ("MIG"), in which the
members of the Messer family have pooled their interest in Messer Group, Allianz Capital Partners GmbH ("ACP") and Goldman Sachs. 

ACP
and Goldman Sachs will be referred to in the following together with any other comparable financial investors to which ACP and Goldman Sachs might in future transfer all or a part of their
participation in Messer Group or which become shareholders by means of a capital increase, as the "Financial Investors". 

	2.
	The
Financial Investors have acquired their participation in Messer Group and therewith their indirect participation in Messer Griesheim GmbH in the year 2001 and they intend to sell
this participation within a period of between three and seven years. Key managers of Messer Group and its affiliates, in particular the Messer Griesheim GmbH and its group companies
(Konzerngesellschaftert) (together the "Messer Griesheim Group") shall be offered the possibility to
participate in any success of the investment by the Financial Investors and any future restructuring of the Messer Griesheim Group. All such key managers with whom agreements have been entered into
similar to this agreement are referred to together with the Participant as the "Participants." 

For
this purpose the Financial Investors and MIG have made available shares in Messer Group to Messer Griesheim MIP GmbH (in the following the "Seller")
to sell such shares to the Participants having their residence outside the USA. With respect to Participants with residence in the USA such Participants have been offered the opportunity to acquire
new shares in Messer Group from a capital increase to which the Seller shall subscribe on account of such Participants (the "Own Investment"). an
additional Investment the Messer Group will grant without charge to the Participants options to receive shares in the Company. 

	3.
	The
Financial Investors and MIG have agreed that the Participants shall be offered the opportunity to make the Own Investment only on the condition that the voting rights of shares in
Messer Group acquired by the Participants be exercised jointly by the Participants and therefore that such shares shall not be held by the Participants themselves but by the Messer Employee
GmbH & Co. KG (in the following the "Messer Employee") which has been formed by the Participants for the purpose of managing their Own
Investment. 

        Therefore
the Parties now agree: 

 
 

I.
  Own Investment
  1 §
  Acquisition of Shares    
  

        [For Employees resident outside the US: 

	(1)
	The
Seller hereby sells and the Participant hereby acquires from the Seller in accordance with the terms of this Agreement [        ] registered shares
in Messer Group without par value and only transferable with the issuing company's consent (the "Old Shares").] 

        [For
Employees resident in the US: 

	(1)
	The
Seller will subscribe [        ] on behalf of the Participant registered shares in Messer Group without par value and only be transferred with the
issuing company's consent under a capital increase of Messer Group made for that purpose (the "Old Shares").] 

5

 
	(2)
	The
Participant has with agreement as of today joined Messer Employee as a limited partner (Kommanditist) and has undertaken
vis-à-vis Messer Employee to contribute his Old Shares. The Parties therefore agree that the Seller hereby undertakes following the complete payment of the
Acquisition Price for the Old Shares to the Seller [For US: and the registration of the execution (Durchführung) of the
capital increase] to transfers (übereignen) to Messer Employee by way of a separate agreement the Old Shares in fultilment of
the contribution obligation of the Participant under §5 section 1 of the Shareholder Agreement of Messer Employee.

	(3)
	The
Old Shares are entitled to payment of dividends for the entire year 2001. 

 
 

§2
  Acquisition Price    
  

	(1)
	The
Acquisition Price for each Old Share shall be Euro 74.25 (in words: Euro seventy-four and twenty-five cent). This results in a total purchase price for the
Old Shares of Euro [        ] (in words:        ) (in the following the "Acquisition Price").

	(2)
	The
Acquisition Price is payable free of costs and expenses to an account to be notified by the Seller within a period of two weeks following the demand for payment by the Seller. 

 
 

§3
  Warranties    
  

The
Seller warrants that it can freely dispose of the Old Shares and that the Old Shares are not encumbered with rights of any third parties. Additional warranties, liabilities and responsibilities
are excluded. §22 of this Agreement is incorporated into this provision as if fully set out herein. 

6

  

 
 

II.
  Granting of Free Options    
  

 
  §4
  The Options    
  

	(1)
	For
each Old-Share acquired by the Participant Messer Group hereby grants to the Participant three options for the acquisition of new shares in Messer Group (the
"Options").

	(2)
	Each
Option entitled the Participant—subject to this Agreement and in particular the substitution right of Messer Group in accordance with §9—to
subscribe for one new registered share without par value of the company (the "New Shares") for an amount of Euro 74.25 (in words: Euro
seventy-four and twenty-five cent) (the "Exercise Price") which is the current market value of a share in the Messer Group.

	(3)
	The
Options, if not otherwise provided for in this Agreement, cannot be sold or transferred or, except in the case of a pledge of the Options to secure rights of the Messer Group,
Messer Griesheim GmbH or its affiliates, not pledged and they may not be publicly traded. The Options can be bequeathed and be subject of a bequest. The Options will not be certificated.

	(4)
	The
Options are deemed to be granted at the day at which the Acquisition Price for the Old Shares shall be made available to the Seller by the Participant.

	(5)
	The
New Shares which shall be issued by Messer Group after the exercise of the Options shall carry dividends from the beginning of the fiscal year in which they are issued. In the
event that the New
Shares are issued prior to the annual meeting of Messer Group which decides on the appropriation of the net earnings of the previous fiscal year, then, but only if the shares of the Messer Group are
traded on a stock exchange, the New Shares shall participate in the profits of the fiscal year which ended prior to their issuance. The New Shares shall not be certified (Ausschluß der
Einzelverbriefing).

 
 

§5
  Waiting Period, Exercise Period    
  

	(1)
	The
Options can be exercised for the first time after twenty-four months after the date on which they were granted (the "Waiting
Period"), but in any case not before an Exit Event in accordance with §6 has occurred.

	(2)
	The
exercise period for the Options shall be four years after expiry of the Waiting Period (the "Exercise Period"). If at the expiry of
the Exercise Period (a) an Exit Event (see §6) has not occurred yet or (b) the New Shares to be acquired by exercising the Options could not be sold by the Participant
or Messer Invest to a third party in accordance with the provisions set fourth under Part III of this Agreement, then the Exercise Period will be extended until three months from the date on
which the condition under (b) above has been fulfilled. If the Options are not exercised within the Exercise Period, they shall become null and void without entitlement to compensation or
reinstatement. 

 
 

§6
  Exercise Condition Exit    
  

	(1)
	Irrespective
of the expiry of the Waiting Period and whether or not the Performance Targets pursuant to §7 have been met, the Options can only be exercised after an Exit
Event has occurred. 

7

 
	(2)
	Exit
Events for the purposes of this Agreement (in the following each an "Exit Event") are:

	(a)
	the
listing of the shares of the Messer Group on a Stock Exchange in Germany, the European Union or the USA (the "IPO"); or

	(b)
	the
sale (in the following the "Trade Sale") to a third party (including another financial investor) of more than 50% of the shares
held by the Financial Investors in Messer Group at the time of such sale provided that such third party is not an affiliate (in the sense defined in Section 15 of the German Stock Corporation
Act (Aktiengesetz)) of the Financial Investors or a fund managed by them (in the following a "Third Party"); or

	(c)
	the
distribution of an amount of at least Euro 500,000,000 by the Messer Group to the Financial Investors (as a result of the sale of shares in the Messer Griesheim Holding AG by the
Messer Group or the distribution of dividends or other payments by the Messer Griesheim Holding AG to the Messer Group) ("Recapitalisation"). 

§7

Performance Targets  

	(1)
	After
the expiry of the Waiting Period and the occurrence of an Exit Event the Options may be exercised during the Exercise Period subject to the fulfilment of the following
performance targets:

	(a)
	100%
of the granted Options can be exercised if the annual Internal Rate of Return (as defined in Exhibit 1) achieved by the Financial Investors at the time of the occurrence
of an Exit Event averages to at least 30% per year since April 30, 2001;

	(b)
	100%
of the Options can be exercised irrespective of sub-paragraph (a) if an Exit Event in the meaning of §6 sub-paragraph 2
(a) and (b) has occurred on or by September 30, 2004 at the latest;

	(c)
	if
100% of the Options cannot be exercised in accordance with subparagraphs (a) or (b), the Options can only be exercised subject to the fulfilment of the EBITDA-Targets for
the Messer 

8

 

Griesheim Group (the "EBITDA Targets") set forth in Exhibit 2, as defined in Exhibit 3. In detail the following shall apply: 

	(i)
	In
the event the EBITDA-Targets for the business years (in each case including) 2001 to 2005 are met for each specific year then—after expiry of the Waiting Period and the
occurrence of an Exit Event—the Options can be exercised as follows: 

	EBITDA in the relevant year as a percentage of the EBITDA-Target for the relevant year

("Actual EBITDA")
	 	Exercisable Options as proportion to the aggregated number of Options granted to the Participant

	? 100%	 	20%
	

	< l00% > 95%	 	16%
	

	< 95%	 	12%
	> 90%	 	 
	

	< 90%	 	8%
	> 85%	 	 
	

	< 85%	 	4%
	> 80%	 	 
	

	< 80%	 	0%

	(ii)
	If
for one business year the EBITDA-Target has not been met but the EBITDA-Target for the subsequent year has been met by at least 100% then the EBITDA-Target for the previous year
will be deemed to have been met with retrospective effect.

	(iii)
	In
the event of the sale of an affiliate of the Messer Griesheim Group which has not been considered in the determination of the EBITDA-Targets or in the event that affiliates which
are included in the determination of the EBITDA-Targets are not included in the consolidated accounts of Messer Griesheim Holding AG any longer, Messer Group will effect an adequate adjustment of the
EBITDA-Targets in the event of significant change.

	(iv)
	The
Actual EBITDA will be determined on the basis of the certified consolidated annual IAS accounts of the Messer Griesheim Holding AG which shall be binding on the Parties. 

If
in the event of sub-paragraph 1 (c) only fractions of Options can be exercised, the exercise of such fractions shall not be permitted. Such fractions shall be combined and
the Participant shall be entitled to the acquisition of a New-Share when the combination of such fractions results in the exerciseability of one Option. 

	(2)
	If
the performance targets in accordance with sub-paragraph 1 have not been fulfilled by the end of the Exercise Period, then the Options shall become null and void
without entitlement to compensation or replacement. To the extent the conditions to exercise Options in accordance with sub-paragraph 1 and §6 (Exit Event) have been
fulfilled, such Options can be exercised during the entire Exercise Period. The Participant will be informed in an appropriate way if and for how many Options the preconditions for exercise are
fulfilled.

	(3)
	In
the case of a Recapitalisation (see §6 sub-paragraph 2 (c)) the Messer Group and the Financial Investors will ensure in an appropriate way that
distributions in excess of Euro 500,000,000 to the Financial Investors will only be made after the Participant has had the opportunity to acquire New Shares by exercising the Options which can be
exercised in accordance with §7 sub-paragraph 1. 

9

 
 
 

§8
  Exercise    
  

	(1)
	Subject
to the right of Messer Group under §9 to provide for an alternative settlement, the Participant may choose from three different variations of exercising the
Options:

	(a)
	the
Participant shall make available to the Seller or any other exercise agent to be nominated by the Messer Group for this purpose by crediting to an account specified by the Messer
Group the Exercise Price plus handling charges and where applicable an amount on account for taxes and other duties to be withheld which the Seller on account of the Participant will pay to the
relevant employer. The Seller (or, as the case may be, the exercise agent nominated by Messer Group) will subscribe on behalf of the Participant for the New Shares and will pay to the Messer Group the
Exercise Price. In the case of an Exit Event pursuant to §6 sub-paragraph 2 (b) and (c) the New Shares will be transferred by the Seller to Messer Employee
as an additional contribution and Messer Employee will acquire such shares as an additional contribution by the Participant;

	(b)
	the
Exercise Price for the New Shares to be granted based on the exercise of the Options shall be financed in advance by the Seller (if necessary using appropriate financing through a
credit institution) for the account of the Participant. With respect to the delivery of the New Shares sub-paragraph (a) will be applicable mutatis
mutandis. The Seller shall sell on account of the Participant—and in accordance with the restrictions on sales pursuant to Part III. of this
Agreement—

	(aa)
	the
number of New Shares the sales proceeds of which are necessary to cover the Exercise Price as well as the handling charges and where applicable the taxes and duties which the
Seller for the account of the Participant will pay to the relevant employer; with respect to the remaining New Shares subparagraph (a) shall be applicable mutatis
mutandis;

	(bb)
	all
New Shares and pay the sales proceeds to the Participant after deduction of the Exercise Prices, the handling charges and where applicable the taxes and duties to be withheld
which the Seller shall pay to the relevant employer for the account of the Participant. 

	(2)
	The
Options shall be exercised by submission of an irrevocable declaration of exercise to the General Partner of the Messer Group. The Messer Group will in a timely manner provide the
Participant with a form for the declaration of exercise (the "Exercise Notice"). Unless provided otherwise in the Exercise Notice, the Participant shall
sign such Exercise Notice in person. The Exercise Notice may provide that the Participant authorises the Messer Employee or the Seller or a third party irrevocably to submit to Messer Group on the
Participant's account but in his own name all declarations necessary under the German Stock Corporation Act (Aktiengesetz) to exercise the Options. The
Exercise Notice must inter alia state how many Options are exercised and which method (see sub-paragraph 1) has been chosen. An
Exercise Notice shall only become effective if it is submitted to the relevant office stated in the Exercise Notice on the last business day of the Exercise Period at the latest without any deletions
having been made and without any pre-determined conditions. Submission via telefax is sufficient unless the Exercise Notice contains a provision to the contrary. Messer Group can provide
for a different kind of Exercise Notice. The Exercise Notice may contain additional requirements with respect to the validity of the form of submission of the Exercise Notice. In the event that a
payment is required with respect to taxes and duties to be withheld, Messer Group will inform the Participant of the amount of such instalment. 

10

 
	(3)
	The
Participant may only exercise the Options in tranches of at least 10 Options, or, if the number of Options is below 10, the remaining number held by him.

	(4)
	In
the event that the Messer Group shall make use of the right to provide for an alternative settlement (§9), an exemption or modification from certain requirements set
forth under §2 may be provided for. Moreover, Messer Group is entitled to replace the procedure for exercising provided for under sub-paragraph 2 the Options by another
procedure which fulfils the legal requirements under the Stock Corporation Act.

	(5)
	If
the requirements set forth under §13 sub-paragraph 2 are fulfilled, the Financial Investors may request that the Participant exercises all Options to
fulfil its obligations under the Drag-Along-Right or that it waives its rights under the Options. This shall apply mutatis mutandis in the
case of §12 sub-paragraph 4. 

 
 

§9
  Alternative Settlement    
  

	(1)
	Messer
Group is entitled at its full and free discretion to determine (as the case may be only with respect to a part of the Options) that the Participant will receive for each
exercised Option instead of New Shares:

	(a)
	an
amount (the "Cash Settlement") equal to the difference between the Exercise Price and

	(aa)
	in
the event that an IPO has occurred, the average closing price of the shares of Messer Group during the previous five (5) days of trading prior to the day the Option is
exercised; or

	(bb)
	in
the event that a Trade Sale has occurred, the amount for which the Participant could sell its New Shares from the relevant exercise of the Options under the Tag Along Right
pursuant to §12; 

	(b)
	or
in own shares of the Messer Group. 

	(2)
	The
Cash Settlement will be paid by Messer Group within a period of two weeks on an account to be named by the Participant with respect thereto net of any taxes and duties which
Messer Group will pay on the account of the Participant to the respective employer. In the event Messer Group shall choose Cash Settlement there shall be no obligation to pay the Exercise Price. 

 
 

§10
  Dilution Protection    
  

	(1)
	In
the event that during the validity period of the Options the share capital of Messer Group is altered or restructuring measures occur which have a direct impact on the registered
share capital of Messer Group causing the value of the Options to change (the "Dilution") then the Exercise Price and the number of New Shares to be
delivered per Option shall be adjusted accordingly to the extent this is necessary to compensate a change of the value of the Options caused by such capital measures. To effect such adjustment the
Exercise Price shall be increased or decreased in a way that the ratio between the adjusted Exercise Price and the market value per share after the relevant capital measure is the same as the ratio
between the Exercise Price before the execution of the relevant capital measure and the market value per share before the execution of the relevant capital measure (for the time being Euro 74.25). The
adjustment shall be effected in accordance with the following formula: 

	 
	 	 
	 	 

	AP-New	 	=	 	AP-Old × Value-New
Value-Old

11

 

where:

	 
	 	 
	 	 
	 	 

	

 	
 	

AP-New	
 	

=	
 	

Adjusted Exercise Price
	

 	
 	

AP-Old	
 	

=	
 	

Exercise Price before the relevant capital measures (as the case may be adjusted with respect to previous capital measures)
	

 	
 	

Value-Old	
 	

=	
 	

Value per share (number of shares "on a fully diluted basis" in accordance with International Accounting Standards (IAS 33)) before the execution of the capital measure
	

 	
 	

Value-New	
 	

=	
 	

Market value per share after execution of the capital measure

The
adjusted Exercise Price must at least be equal to the minimum issue price (Ausgabepreis) required by law (§9 sub-paragraph 1 of the Stock Corporation Act). 

To
the extent that in addition to the adjustment of the Exercise Price it is necessary to increase the number of shares to be delivered per Option to equalise the difference of the value of the
Options before the capital increase and after the capital increase (taking into account the adjusted Exercise Price) the number of shares to be delivered per Option shall be increased in accordance
with the following formula: 

12

 

	 
	 	 
	 	 

	New-Number	 	=	 	Old-Number × AP-Old
AP-New

Fractions
will be treated in accordance with sub-paragraph 4. 

	(2)
	If
with respect to an adjustment of the Exercise Price in accordance with subparagraph 1 an evaluation of Messer Group is necessary Messer Group will upon request of a group of
Participants holding at least 50% of the Options granted by the Messer Group to the Participants obtain an evaluation by one of the Investment Banks listed in Exhibit 4 acting as arbitral
expert (Schiedsgutachter) or by any other Investment Bank or accountancy firm of international standing to be determined by the Messer Group. The result
of such evaluation shall be binding for all Parties. Any right pursuant to sentence 1 shall not be given if Messer Group has for other reasons obtained such evaluation in connection with the relevant
capital measures upon request of one of its shareholders or a third party which holds comparable rights as the Participants in the Messer Group. In such case this evaluation shall be binding on the
Parties also in connection with this Agreement. This shall be true accordingly if such evaluation has been obtained upon request of one of its shareholders or a third party which holds comparable
rights as the Participants in the Messer Group within a period of six months before the occurrence of the event that made the adjustment necessary. In the event that the Value Old has been determined
in accordance with the above the Value New may also be determined on the basis of accepted methods of financial mathematics.

	(3)
	No
adjustment in accordance with sub-paragraph 1 shall be made and a request for the review of the adjustment in accordance with sub-paragraph 2
shall not be available if the registered capital of Messer Group is increased by way of capital increase against contribution in kind or contribution in cash if the subscription right of the existing
shareholders is excluded and the new shares are issued to a Third Party. Sentence 1 shall be applicable mutatis mutandis in the event of the issue of
convertible bonds or the issue of shares under such convertible bonds to (a) Third Parties in connection with the acquisition of Messer Griesheim GmbH by Messer Group or (b) as a
compensation for consultants or members of the corporate bodies of Messer Group or group entities of the Messer Griesheim Group or (c) to banks or comparable financial institutions in
connection with the granting of loans to Messer Group, Messer Griesheim Holding AG or any group entity of the Messer Griesheim Group, or (d) if a right to subscribe for new shares or to the
convertible bonds or bonds with options is offered to the Participant as if the Participant would already have exercised all its Options.

	(4)
	In
the event of a capital increase from capital reserves by way of the issue of new shares (a) the Exercise Price will be adjusted in accordance with subparagraph 1 and
(b) the contingent capital of the Messer Group provided for with respect to the issue of the shares under the Options will be increased
in accordance with §218 of the Stock Corporation Act (Aktiengesetz) in the same ratio as the contingent capital. Therefore the subscription
right of the Participant under the Options will be increased in the same proportion as the contingent capital. The increased number of shares to be delivered shall be rounded to three decimals. Any
fractions of shares per Option shall be combined. Any fractions of shares which remain after combination of fractions shall be realised by Messer Employee on account of the Participant.
§213 of the Stock Corporation Act shall not be applicable. In the event that a capital increase out of the company's reserves is not effected by the issuance of new shares but in
accordance with §207 sub-paragraph 2 sentence 2 of the Stock Corporation Act by the increase of the amount of the registered capital to be allotted to each share, the
number of shares to be delivered when the Options are exercised will not be increased and the Exercise Price will not be adjusted.

	(5)
	In
the event of a capital reduction in accordance with §229 sub seq. of the Stock Corporation Act by which the number of shares issued by Messer Group will not be affected
neither the Exercise 

13

 

Price
nor the conversion ratio will be adjusted. In the event that the registered capital will be reduced by a reduction of the number of issued shares the exchange ratio attached to the Option will
be reduced in the same proportion as the registered capital. 

	(6)
	In
the event that during the validity period maturity of the Options a dividend which has been earned by any transaction other than in the ordinary course of business of the Company
or in connection with the scheduled sale of business activities of the Messer Group or if in any other way assets of the Company will be distributed then the Messer Group will at its discretion
compensate the dilution of the value of the Options caused thereby by increasing the number of shares per Option to be delivered or by reducing the Exercise Price. 

 
 

III.
  Exit, Co-Sale-Right and -Obligation    
  

        The Participant is aware that the Financial Investors will divest their investment in Messer Group after an appropriate period of time by way of an IPO or by way
of a Trade Sale. The Parties agree that with respect thereto Messer Employee shall sell the Old Shares and the New Shares (in the following the
"Shares") contributed by the Participant to Messer Employee only in accordance with the following provisions of this Agreement if and when the Financial
Investors are able at the same time to sell their participation in Messer Group (in whole or in part). The Participant and Messer Employee shall in particular not be entitled to sell, assign or
otherwise encumber or transfer the Shares in the Messer Group in any other way than provided for under this Agreement. With respect thereto the Parties agree: 

 
 

§11
  Exit by IPO    
  

	(1)
	In
the event of an IPO (see §6) Messer Employee, and, to the extent the Participant is holding Shares, the Participant may within a period of three years after the
listing of the shares of Messer Group sell the Shares only in a proportion which is equal to the proportion of the shares which the Financial Investors may sell during this period (as the case may be
in tranches) of the total number of shares held by them in Messer Group. After the expiry of this period Messer Employee and the Participant shall be entitled—subject to the restrictions
set forth under sub-paragraph 2—to freely dispose of their shares. With respect to the calculation of the number of Shares which may be sold in accordance with sentence
1 the number of New Shares to be acquired by the Participant by exercising his Options in accordance with §7 shall also be taken into account. For the purposes of this calculation the
condition pursuant to §6 (Exit Event) shall be deemed to have been fulfilled.

	(2)
	Messer
Employee and the Participant are obliged to agree—to the same extent as the Financial Investors—within the 3 year period pursuant to
sub-paragraph 1 with respect to all Shares held by them to lock-up agreements (if any) that may be required under the relevant listing rules or which are deemed to be
necessary by the banks leading the underwriting syndicate. To avoid the infringement of insider rules Messer Group may determine that in the event of an IPO during the complete Exercise Period the
Options may only be exercised during certain fixed time periods to be set by Messer Group.

	(3)
	Messer
Employee and the Participant hereby undertake to perform all measures which in the view of the Financial Investors are necessary for the listing of Messer Group. Messer
Employee and the Participant undertake that upon request of the Financial Investors they will enter into any underwriting or similar agreement and make certain customary representations and warranties
with respect to the Shares held by them to the extent required by the banks leading or co-ordinating the underwriting syndicate require in agreement with Messer Group and the Financial
Investors. 

14

 
 
 

§12
  Tag Along-Right    
  

	(1)
	In
the event that the Financial Investors intend to sell more than 50% of the shares held by them (in aggregate) in Messer Group to a Third Party the Financial Investors will inform
Messer Employee and the Participant in writing about all major conditions of the intended sale and in particular about the number of shares to be sold and the consideration and any circumstance which
may affect the amount of the consideration (the "Sales Notice"). Together with the Sales Notice the Financial Investors will offer to Messer Employee
and the Participant (the "Tag Along Offer") to include a proportion of their shares (Old Shares and New Shares) which is equal to the proportion of
shares
which the Financial Investors can sell in such sale to the total number of shares held by them in Messer Group at the relevant time or which they have sold in the past respectively. With respect to
the calculation of the number of Shares Messer Employee and the Participants respectively may sell in accordance with sentence 1 the number of New Shares to be acquired by the Participant by
exercising its Options in accordance with §7 shall also be taken into account. For the purposes of this calculation the condition pursuant to §6 (Exit Event) shall be deemed to
have been fulfilled. The commercial (and other) terms of such Tag Along sale shall be the same as the terms of the sale by the Financial Investors provided, however, that it has to be ensured that any
liability of Messer Employee and the Participant to the relevant buyer is limited to a maximum equal to the sales proceeds of each sale.

	(2)
	The
Tag Along Offer can only be accepted by a written declaration to an agency nominated by the Financial Investors in the Tag Along Offer, provided that upon request of the Financial
Investors such acceptance must be notarised. If Messer Employee or the Participant have accepted the Tag Along Offer, they are obliged to sell the relevant proportion of the Shares held by them to the
buyer at the same price, on the same terms as the Financial Investors, and subject to the same representations, warranties and other restrictions and limitations which have been agreed with the
Financial Investors. As the case may be the Participant is obliged to exercise Options tc the extent necessary. The Tag Along Offer may provide that Messer Employee and the Participant will grant a
power of attorney pursuant to which the Financial Investors or any third party nominated by them are authorised to conclude a sale and purchase agreement with respect to the Shares with the potential
buyer or subject to the same conditions with any third party as determined by the Financial Investors. In the event the Tag Along Offer provides for such power of attorney, the Tag Along Offer can
only be accepted if the Participant grants the relevant power of attorney.

	(3)
	To
the extent that the Participant has financed the acquisition of the Shares by a loan arranged by Messer Group, the Participant undertakes to enter into all agreements which are
necessary to provide for a direct repayment of such loan out of the sale proceeds from the sale of the Shares sold by him or Messer Employee respectively.

	(4)
	In
the event that the Financial Investors have sold 50% or more of the shares held by them to a Third Party (as described under sub-paragraph l), subparagraph 1 to
3 shall be applicable with respect to all further transactions entered into by the Financial Investors with Third Parties, provided that Messer Employee and the Participant shall in the event of the
sale of all shares held by the Financial Investors be offered the opportunity to sell all their remaining Shares. In this case, §13 sub-paragraph 2 shall be applicable  mutatis mutandis.

	(5)
	In
the event Messer Employee and the Participant do not accept the Tag Along Offer, they may—as long as the Financial Investors hold shares in Messer
Group—sell the Shares held by them only after another event has occurred of which pursuant to the terms of this Agreement triggers the right or obligation sell Shares. 

15

  

 
 

§13
  Drag-Along Right    
  

	(1)
	In
the event that the Financial Investors intend to sell to a Third Party more than 50% of the shares held by them (in aggregate) in Messer Group, the Financial Investors shall be
entitled to require Messer Employee and the Participant to sell all or a proportion of their Shares which is equal to the proportion of the shares which the Financial Investors sell to the total
number of shares held by them in Messer Group. With respect to the calculation of the Shares to be sold in accordance with sentence 1 the number of New Shares to be acquired by the Participant by
exercise of its Options in accordance with §7 shall be taken into account. For the purposes of this calculation the conditions set forth in §6 (Exit Event) shall be deemed to
have been fulfilled. Upon request of the Financial Investors the Participant is obliged to exercise the relevant number of exercisable Options. In the event that the sales proceeds per share from such
sale (after deduction of transaction costs) will be below the Exercise Price a Participant will not be obliged to exercise the relevant number of Options and instead the Financial Investors may
request that the Participant waives the relevant number of exercisable Options. These Options shall become null and void without entitlement to compensation or replacement. The obligation to
co-sell Shares will in such case be fulfilled by such waiver. Moreover, the provisions of §12 shall be applicable mutatis
mutandis.

	(2)
	In
the event that the Financial Investors sell all shares (as the case may be after previous sales still) held by them in Messer Group to a Third Party subparagraph 1 shall be
applicable, provided that Messer Employee and the Participant shall be obliged to sell all shares held by them (including New Shares from Options not exercised) and, in the case of the Participant,
shall be obliged to exercise all of his non-exercised but exercisable Options. In the event that the Financial Investors make use of this right after September 30, 2004 but before
the end of the business year 2005 and if in such case all Options are not yet exercisable in accordance with §7 sub-paragraph 1(a), the Financial Investors may request
that the Participant waives his right to all non-exercisable Options which have not become null and void because the EBITDA-Targets pursuant to §7
sub-paragraph 1 (c) have not been fulfilled. As a compensation for the waiver of his Options the Participant shall receive for each Option to be waived cash compensation in
an amount equal to the difference between the Exercise Price and the average purchase price received by the Financial Investors for the shares sold by them in accordance with sentence 1. 

The
compensation shall only be paid for the number of Options which the Participant could have exercised in accordance with §7 sub-paragraph 1 (c) if the
percentage of the fulfilment of the EBITDA-
Target for the business years which have not expired at the time the Participant waives the Options would have been equal to the relevant percentage in the business year ending before the waiver,
provided that any catch-up in accordance with §7 subparagraph 1(c)(ii) shall be taken into account. 

 
 

IV.
  Termination of the Employment Agreement    
  

 
 

§14.
  Forfeiture of Options    
  

	(1)
	In
the event that the service- or employment agreement (the "Employment Agreement") of the Participant ends or if a limited Employment
Agreement is not extended without entering into a new Employment Agreement with another entity of the Messer Griesheim Group or if the Participant is released from the performance of his obligations
under the Employment Agreement for an indefinite time (together the "Termination"), then all Options which at the time of the 

15

 

Termination
could not be exercised in accordance with §§5,6 or 7 shall become null and void without any right to compensation or reinstatement if not otherwise provided in
sub-paragraph 2. Options which are exercisable Termination shall be exercised within a period of 12 weeks after the Termination. If the Options are not exercised within this period
they shall become null and void without any right to compensation or reinstatement. In the event the Employment Agreement is terminated by death and the Options pass to more than one heir, the Options
have to be exercised by all such heirs acting together. 

	(2)
	In
the event that the Employment Agreement is terminated by death or by partial or full disability ("Disability") or by retirement or
early retirement or if a limited Employment Agreement is not extended because of retirement or early retirement or if the Employment Agreement is terminated by the respective employer without good
cause or without any infringement of contractual obligations by the Participant or if the Employment Agreement is terminated by the Participant with good cause, then in contrast to subparagraph 1, any
Options which could not be exercised in accordance with §6 or §7 at the time of Termination will not become null and void. These Options can be exercised after the occurrence
of an Exit Event (§6) provided and to the extent that at the time of the Termination the exercise conditions pursuant to §7 sub-paragraph 1(c)
(fulfilment of EBITDA-Targets) were fulfilled. With respect to the calculation of the number of exercisable Options in accordance with §7 sub-paragraph 1(c), only
business years which ended before the date of the Termination shall be taken into account. The number of exercisable Options shall be increased in accordance with §7
sub-paragraph 1(c)(ii). With
respect to the Exercise Period sub-paragraph 1 shall apply mutatis mutundis provided that the period of 12 weeks shall only
begin at the time at which Messer Group has notified the Participant or his heirs (notification of one heir is sufficient) that the Options are exercisable.

	(3)
	In
the event that the Employment Agreement is terminated by retirement or early retirement, the Participant may exercise the Options, in modification of
sub-paragraph 1 and 2, until the end of Exercise Period. In the event of the death of the retired Participant, sub-paragraphs 1 and 2 shall be applicable  mutatis mutandis.

	(4)
	Sub-paragraph 1
and 2 shall be applicable mutatis mutandis if an entity of the Messer Griesheim Group by which the
Participant is employed shall cease to be a member of the Messer Griesheim Group. Messer Group or Messer Griesheim GmbH will determine by notice to the Participant the time when the relevant entity
ceases to be a member of the Messer Griesheim Group. The above shall be applicable mutatis muntandis if the Employment Agreement of the Participant
passes over to a third party outside of the Messer Griesheim Group as a result of the sale of a business (Betrieb) or parts of a business  (Betriebsteile)
(e.g. under §613a Civil Code). 

 
 

§15
  Call Option over the Shares    
  

	(1)
	In
the event of a Termination (see §14 sub-paragraph 1) before the occurrence of an Exit Event, the Seller may, in accordance with the provisions set
forth below, demand from the Participant within a period of 6 months after the Termination the acquisition of his participation in Messer Employee (the "Messer Employee
Participation") against payment of the purchase price (the "Repurchase Price") determined in accordance with
subparagraph 4 (the "Call Option"). This shall be true mutatis mutandis in the events referred to
in §14 sub-paragraph 4.

	(2)
	With
respect to the obligations assumed under sub-paragraph 1 the Participant hereby unconditionally and irrevocably offers to the Seller the sale and transfer of
his Messer Employee Participation in accordance with this Agreement. The Seller can accept this offer by written notice (the "Acceptance Notice") to the
Participant. Such Acceptance Notice shall not be required if the acceptance is declared before a German notary. In this case the Seller has to instruct the notary to 

16

 

send
a certified copy of the declaration of acceptance to the last known address of the Participant. With the acceptance by the Seller the sale and transfer agreement will be concluded with respect
to the Messer Employee Participation by which the Seller acquires the Messer Employee Participation in accordance with this Agreement. The Seller may designate a third party of incontestable
creditworthiness who shall assume the rights and obligations under the CallOption and the agreement made in accordance with this subparagraph instead of the Seller. 

	(3)
	The
Repurchase Price to be paid by the Seller for the Messer Employee Participation shall be:

	(a)
	if
not otherwise provided under (b) and (c) the pro rata market value (the "Pro Rata Market Value") of the Shares
purchased and contributed to Messer Employee by the Participant. The Market Value (the "Market Value") on which the calculation of the Pro Rata Market
Value is based shall be in the event that (i) the Exit Event is an IPO, the weighted average closing price of the Messer Group shares at the stock exchange at which the Shares are listed at the
first 10 days of trading after listing and (ii) the Exit Event is a Trade-Sale, the price per share (after deduction of all costs and reductions related to the sale) which a
Third Party pays to the Financial Investors. 

The
Pro Rata Market Value shall be determined as follows: 

	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

	Pro Rata Market Value = AP +	 	[	 	(MV-AP)×TB

TI	 	]	 	 

	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

	MV	 	=	 	Market Value per share
	AP	 	=	 	Acquisition Price pursuant to §2 paid by the Participant per (contributed) share
	TI	 	=	 	time (in whole months) between the acquisition of the shares relevant for the determination of the Market Value by the Financial Investors and the Exit Event
	TB	 	=	 	time (in whole months) between the acquisition by the Participant of the sold shares and the Termination

	(b)
	in
the event that the Employment Agreement is terminated by death or Disability, the Pro Rata Market Value or, if the Pro Rata Market Value should be lower, the sum of the Acquisition
Price paid by the Participant in accordance with §2 of this Agreement for the Participant's Old Shares and interest in the amount of 5.5% p.a. for the period between the acquisition of the
Old Shares and the Termination (the "Acquisition Costs"); or

	(c)
	in
the event that the Employment Agreement is terminated (i) for good cause (wichtiger Grund) or for the infringement of
contractual obligations by the Participant by the relevant employer (by termination notice, termination agreement or otherwise) or (ii) without good cause by the Participant (by termination
notice, termination agreement or otherwise), the Pro Rata Market Value but not more than the Acquisition Price pursuant to §2. 

	(4)
	The
Repurchase Price shall be paid within a period of one month after the occurrence of an Exit Event. In the event that the Employment Agreement is terminated in accordance with
sub-paragraph 3(b), the Acquisition Costs shall be paid within one month after the exercise of the Call Option by the Seller. With respect to the payment of the difference (if any)
between the Acquisition Costs and the Pro Rata Market Value sentence 1 shall be applicable mutatis mutandis. If the Employment Agreement is terminated
by retirement or early retirement, non-extension of a time limited Employment Agreement because of retirement or early retirement or without good cause or for the infringement of
contractual obligations by the Participant by the relevant employer (by termination notice, termination agreement or otherwise) or for good cause by the Participant 

17

 

(by
termination notice, termination agreement or otherwise) and in the cases referred to under §14 sub-paragraph 4 the Participant will be paid as an instalment on the
Repurchase Price an amount equal to the Acquisition Price paid by the Participant for his Old Shares in accordance with §2 within one month after the exercise of the Call Option; if this
instalment exceeds the Pro Rata Market Value the Participant is obliged to repay any difference. With respect to the payment of a difference (positive or negative) between the instalment and the Pro
Rata Market Value sentence 1 shall be applicable mutatis mutandis.

	(5)
	The
Seller may choose that the Messer Group will exercise the rights of the Seller under this §15. In this case the Seller shall be obliged to fulfil the payment
obligations of the Messer Group. 

 
 

§16
  Put Option over the Shares    
  

	(1)
	In
the event of a Termination of the Employment Agreement for other reasons than referred to under §15 sub-paragraph 3(c) or in the cases
referred to in §14 sub-paragraph 4 the Participant or any of his heirs or legatees may within a period of 6 months after the Termination demand from the Seller
the acquisition of his Messer Employee Participation (the "Put Option", but only insofar as no new Employment Agreement with an affiliate of the Messer
Griesheim Group has been entered into.

	(2)
	In
the event that the Participant or, in the event of his death, his heirs exercise the Put Option then §15 sub-paragraph 1, 3 and 4 shall be applicable  mutatis mutandis. With respect to the due
date of the Repurchase Price §15 sub-paragraph 5 shall be applicable  mutatis mutandis, provided that the Repurchase Price shall—except for the payment of the Acquisition Costs—only be due
and
payable if the Seller has itself liquidated the Messer Employee Participation by withdrawal and sale of the Old Shares to one of the other shareholders of Messer Group or a Third Party. The Seller
will undertake all reasonable measures to sell the Messer Employees Participation. The Participant acknowledges that the Seller may only sell the Shares in accordance with the same restrictions a set
forth in Part III. of this Agreement. 

 
 

V.
  Miscellaneous    
  

 
 

§17
  Taxes, Duties and other Expenditures    
  

	(1)
	Any
taxes, duties and other expenditures on behalf of the Participant arising in connection with the issuing of the Options, the exercise of the Options, the delivery of the New
Shares or the Cash Settlement or the sale of the Old Shares by Messer Employee shall be borne by the Participant.

	(2)
	The
relevant employer will in accordance with the laws at the relevant time (as the case may be) deduct any income tax or other taxes or duties (as the case may be), including social
security
contributions, from any monetary benefits (geldwerter Vorteil) from the granting or the exercise of the Options or the sale of the Old Shares by Messer
Employee which are received by the Participant and which are subject to German taxation. The relevant employer or Messer Group may request that the Participant deposits a sum of money in advance with
respect to the taxes and duties to be withheld. In the event such deposit is not sufficient to pay the deductible taxes and duties the relevant employer of the Participant is entitled to deduct the
difference from the wage or salary payment and, to the extent this will not be sufficient, to request payment from the Participant. In the event that such deposit exceeds the amount of taxes and
duties, the difference will be paid to the Participant with the next regular wage and salary payment. 

18

 
	(3)
	The
provisions above do not release the Participant from his other legal obligations to declare his income and, as a case may be, to pay taxes and duties.

	(4)
	With
respect to Participants which are subject to taxation outside Germany the provisions set forth under sub-paragraph 1, 2 and 3 shall be applicable  mutatis mutandis to the extent an obligation to pay
taxes arises when the Options are granted or exercised or in the event of the acquisition or sale of
the Shares and the respective employer is obliged to withhold such taxes and duties in accordance with applicable law. 

 
 

§18
  Choice of Law, Court of Arbitration    
  

	(1)
	This
Agreement is subject to the laws of the Federal Republic of Germany. All rights and obligations of the Participant and the Messer Group and the other Parties arising under this
Agreement shall be governed in any respect by the laws of the Federal Republic of Germany.

	(2)
	The
Place of performance for all obligations under this Agreement shall be at the corporate seat of Messer Group.

	(3)
	An
arbitration court shall be competent to hear all disputes arising from or in connection with this Agreement between the Participants, the Financial Investors, Messer Group, Messer
Employee and the Seller in preference to a court of law. The details have been agreed between the Parties in accordance with §1031 of the German Civil Procedures Act  (Zivilprozeßordnung) in a
separate arbitration agreement which is attached to this Agreement as Exhibit 5.
 

 
 

§19
  Transfer of Shares, Limitation on Disposals, Repurchase Right    
  

	(1)
	The
Participant and Messer Employee are aware that any transfer of or creation of rights over shares in the Messer Group requires the approval of the company pursuant to
§6 sub-paragraph 5 of its articles and that the competence to give such approval is vested to the General Partner of the Partnership. The Messer Group hereby declares
its approval with respect to any transfer of shares in accordance with §1 and §§15 and 16 of this Agreement.

	(2)
	In
the event that any insolvency proceedings are initiated over the assets of the Participant or in the event of attachment proceedings with respect to the Shares held by the
Participant or the Messer Employee Participation the Seller has the right, if the insolvency proceedings are not suspended within a period of six months or if any such attachment is not released
within a period of one month, to purchase the Shares and the Messer Employee Participation. §15 shall be applicable mutatis mutandis. With
respect to the amount of the Repurchase Price §15 sub-paragraph 3 (b) shall be applicable. 

 
 

§20
  Confidentiality/Insider Rules    
  

	(1)
	The
Participant will treat this Agreement and all information about the Messer Group, its shareholders, Messer Griesheim GmbH and its affiliates and Messer Employee made available to
him as confidential and will, if not otherwise required by law, make such information available only to his legal and tax advisors bound to professional secrecy rules.

	(2)
	In
the event of an IPO, the Participant is obliged at any time when exercising his rights under the Options, the Messer Employee Participation or when selling his Shares to comply
with any legal rules on insider trading and all other insider rules of the Messer Group. The Participant is aware that Messer Griesheim Holding AG has issued bonds and that he therefore may generally
not make insider information about the Messer Griesheim Group available to third parties. 

19

 
 
 

§21
  Miscellaneous    
  

	(1)
	Any
amendments or additions to this Agreement must be executed in writing unless a stronger form is required by law. This also applies with respect to the amendment of this clause.

	(2)
	The
granting of the Options constitutes a voluntary benefit offered by Messer Group to the Participant. Even if Options should be offered continuously (even if this is made without
any reservation that this is a voluntary benefit), no entitlement shall be created to receive additional Options or similar or comparable rights.

	(3)
	If
any provision of this Agreement should be or become invalid or unfeasible, the validity or feasibility of the remaining provisions of this Agreement shall not be affected. The
invalid or unfeasible provision shall be deemed to be replaced by provision of a comparable purpose and object. This shall apply equally to all unforeseen gaps of this Agreement.

	(4)
	The
English translation of this Agreement is for convenience only. Only the German version of this Agreement shall be legally binding.

	(5)
	The
Seller, the Messer Employee and the Financial Investors are entitled to transfer their respective rights and/or obligations under this Agreement in whole or in part to
(i) affiliates or (ii) with the approval of the Messer Group, to a third party provided it is of comparable creditworthiness. 

 
 

§22
  Risks    
  

	(1)
	The
Messer Group, the Financial Investors, Messer Employee and the Seller do not assume any responsibility for the development of the value of the Old Shares or the New Shares and the
Options. There is in particular no guarantee that the Participant may be able to exercise the Options or that Messer Employee or the Participant will be able to sell the Old Shares or New Shares with
a profit. The Participant therefore accepts and exercises the Options and acquires the Old Shares and the Messer Employee Participation at his own risk and accepts responsibility accordingly.

	(2)
	The
Participant confirms by signing this Agreement that he is aware that participation in this Management Investment Program of Messer Group is voluntary. The Participant is aware
that he takes a full value risk of the Shares acquired by him and that he may completely lose his investment and that in such case he shall also be obliged to fully repay any debt (if any) he may have
incurred to finance the acquisition of the Shares.

	(3)
	The
Participant has the responsibility to obtain legal and tax advice which may be necessary before signing this Agreement. In particular the Participant acknowledges that he has not
received any advice from the other Parties hereto with respect to the taxation of eventual benefits that may be gained by the Participant under this Agreement or its participation in Messer Employee.
The Participant has had the opportunity to discuss all relevant questions (regard to his own investment decision) relating to the provisions of this Agreement and the conditions of the companies with
representatives of the Messer Group and Messer Griesheim GmbH. 

[Exhibits intentionally omitted]  

20

QuickLinks

Index

Defined Terms

Preamble

I. Own Investment 1 § Acquisition of Shares

§2 Acquisition Price

§3 Warranties

II. Granting of Free Options

§4 The Options

§5 Waiting Period, Exercise Period

§6 Exercise Condition Exit

§8 Exercise

§9 Alternative Settlement

§10 Dilution Protection

III. Exit, Co-Sale-Right and -Obligation

§11 Exit by IPO

§12 Tag Along-Right

§13 Drag-Along Right

IV. Termination of the Employment Agreement

§14. Forfeiture of Options

§15 Call Option over the Shares

§16 Put Option over the Shares

V. Miscellaneous

§17 Taxes, Duties and other Expenditures

§18 Choice of Law, Court of Arbitration

§19 Transfer of Shares, Limitation on Disposals, Repurchase Right

§20 Confidentiality/Insider Rules

§21 Miscellaneous

§22 Risks<Page>

                                                                   Exhibit 4(a)

                      AGREEMENT AND PLAN OF REORGANIZATION

         This Agreement and Plan of Reorganization (the "Agreement") is made as
of April 30, 2002 in Boston, Massachusetts, by and between Putnam International
Growth Fund, a Massachusetts business trust ("Acquiring Fund"), Putnam Asia
Pacific Growth Fund, a Massachusetts business trust ("Acquired Fund"), and
Putnam Investment Management, LLC, a Delaware limited liability company.

                             PLAN OF REORGANIZATION

(a) Acquired Fund will sell, assign, convey, transfer and deliver to Acquiring
Fund on the Exchange Date (as defined in Section 6) all of its properties and
assets existing at the Valuation Time (as defined in Section 3(d)). In
consideration therefor, Acquiring Fund shall, on the Exchange Date, assume all
of the liabilities of Acquired Fund existing at the Valuation Time and deliver
to Acquired Fund (i) a number of full and fractional Class A shares of
beneficial interest of Acquiring Fund (the "Class A Merger Shares") having an
aggregate net asset value equal to the value of the assets of Acquired Fund
attributable to Class A shares of Acquired Fund transferred to Acquiring Fund on
such date less the value of the liabilities of Acquired Fund attributable to
Class A shares of Acquired Fund assumed by Acquiring Fund on such date; (ii) a
number of full and fractional Class B shares of beneficial interest of Acquiring
Fund (the "Class B Merger Shares") having an aggregate net asset value equal to
the value of the assets of Acquired Fund attributable to Class B shares of
Acquired Fund transferred to Acquiring Fund on such date less the value of the
liabilities of Acquired Fund attributable to Class B shares of Acquired Fund
assumed by Acquiring Fund on such date; (iii) a number of full and fractional
Class C shares of beneficial interest of Acquiring Fund (the "Class C Merger
Shares") having an aggregate net asset value equal to the value of the assets of
Acquired Fund attributable to Class C shares of Acquired Fund transferred to
Acquiring Fund on such date less the value of the liabilities of Acquired Fund
attributable to Class C shares of Acquired Fund assumed by Acquiring Fund on
such date; and (iv) a number of full and fractional Class M shares of beneficial
interest of Acquiring Fund (the "Class M Merger Shares") having an aggregate net
asset value equal to the value of the assets of Acquired Fund attributable to
Class M shares of Acquired Fund transferred to Acquiring Fund on such date less
the value of the liabilities of Acquired Fund attributable to Class M shares of
Acquired Fund assumed by Acquiring Fund on such date. The Class A Merger Shares,
the Class B Merger Shares, the Class C Merger Shares, and the Class M Merger
Shares shall be referred to collectively as the "Merger Shares." It is intended
that the reorganization described in this Plan shall be a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"). Prior to the Exchange Date, Acquired Fund will declare and pay to its
shareholders a dividend and/or other distribution in an amount such that it will
have distributed all of its net investment income and capital gains as described
in Section 8(l) hereof.

(b) Upon consummation of the transactions described in paragraph (a) of this
Agreement, Acquired Fund shall distribute in complete liquidation to its Class
A, Class B, Class C and Class

                                      -1-
<Page>

M shareholders of record as of the Exchange Date Class A, Class B, Class C and
Class M Merger Shares, each shareholder being entitled to receive that
proportion of such Class A, Class B, Class C or Class M Merger Shares that
the number of Class A, Class B, Class C or Class M shares of beneficial
interest of Acquired Fund held by such shareholder bears to the number of
such Class A, Class B, Class C or Class M shares of Acquired Fund outstanding
on such date. Certificates representing the Merger Shares will be issued only
if the shareholder so requests.

                                    AGREEMENT

Acquiring Fund and Acquired Fund agree as follows:

1. REPRESENTATIONS AND WARRANTIES OF ACQUIRING FUND. Acquiring Fund represents
and warrants to and agrees with Acquired Fund that:

(a) Acquiring Fund is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts, and has power to own all of
its properties and assets and to carry out its obligations under this Agreement.
Acquiring Fund is not required to qualify as a foreign association in any
jurisdiction. Acquiring Fund has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to carry out
this Agreement.

(b) Acquiring Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.

(c) A statement of assets and liabilities, statement of operations, statement of
changes in net assets and schedule of investments (indicating their market
values) of Acquiring Fund for the fiscal year ended June 30, 2001, such
statements and schedule having been audited by PricewaterhouseCoopers LLP,
independent accountants, and an unaudited statement of assets and liabilities,
statement of operations, statement of changes in net assets and schedule of
investments (indicating their market values) of Acquiring Fund for the six
months ended December 31, 2001, have been furnished to Acquired Fund. Such
statements of assets and liabilities and schedules of investments fairly present
the financial position of Acquiring Fund as of the dates thereof and such
statements of operations and changes in net assets fairly reflect the results of
its operations and changes in net assets for the periods covered thereby in
conformity with generally accepted accounting principles.

(d) The prospectus and statement of additional information dated October 30,
2001, as revised March 30, 2002, previously furnished to Acquired Fund, and any
amendment or supplement thereto or any superseding prospectus or statement of
additional information in respect thereof in effect prior to the Exchange Date,
which will be furnished to Acquired Fund (collectively, the "Acquiring Fund
Prospectus") do not, as of the date hereof, and will not, as of the Exchange
Date, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided however, that Acquiring Fund makes no
representation or warranty as to any information in the Acquiring Fund
Prospectus that does not specifically relate to Acquiring Fund.

                                     -2-
<Page>

(e) There are no material legal, administrative or other proceedings pending or,
to the knowledge of Acquiring Fund, threatened against Acquiring Fund which
assert liability or may, if successfully prosecuted to their conclusion, result
in liability on the part of Acquiring Fund, other than as have been disclosed in
the Prospectus (as defined below).

(f) Acquiring Fund has no known liabilities of a material nature, contingent or
otherwise, other than those shown as belonging to it on its statement of assets
and liabilities as of June 30, 2001 and those incurred in the ordinary course of
Acquiring Fund's business as an investment company since such date.

(g) No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Acquiring Fund of the transactions
contemplated by this Agreement, except such as may be required under the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the 1940 Act, state securities or blue sky
laws (which term as used herein shall include the laws of the District of
Columbia and of Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "H-S-R Act").

(h) The registration statement and any amendment thereto (including any
post-effective amendment) (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") by Acquiring Fund on Form
N-14 relating to the Merger Shares issuable hereunder, and the proxy statement
of Acquired Fund included therein (the "Proxy Statement"), on the effective date
of the Registration Statement (i) will comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 7(a) and at the Exchange Date, the
prospectus contained in the Registration Statement (the "Prospectus"), as
amended or supplemented by any amendments or supplements filed or requested to
be filed with the Commission by Acquired Fund, will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the Registration
Statement, the Prospectus or the Proxy Statement made in reliance upon and in
conformity with information furnished by Acquired Fund for use in the
Registration Statement, the Prospectus or the Proxy Statement.

(i) There are no material contracts outstanding to which Acquiring Fund is a
party, other than as disclosed in the Registration Statement, the Prospectus, or
the Proxy Statement.

(j) All of the issued and outstanding shares of beneficial interest of Acquiring
Fund have been offered for sale and sold in conformity with all applicable
federal securities laws.

(k) Acquiring Fund is and will at all times through the Exchange Date qualify
for taxation as a "regulated investment company" under Sections 851 and 852 of
the Code.

                                     -3-
<Page>

(l) Acquiring Fund has filed or will file all federal and state tax returns
which, to the knowledge of Acquiring Fund's officers, are required to be filed
by Acquiring Fund and has paid or will pay all federal and state taxes shown to
be due on said returns or on any assessments received by Acquiring Fund. All tax
liabilities of Acquiring Fund have been adequately provided for on its books,
and to the knowledge of Acquiring Fund, no tax deficiency or liability of
Acquiring Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid. As of the Exchange Date, Acquiring
Fund is not under audit by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.

(m) The issuance of the Merger Shares pursuant to this Agreement will be in
compliance with all applicable federal securities laws.

(n) The Merger Shares to be issued to Acquired Fund have been duly authorized
and, when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable by Acquiring Fund, and
no shareholder of Acquiring Fund will have any preemptive right of subscription
or purchase in respect thereof.

2. REPRESENTATIONS AND WARRANTIES OF ACQUIRED FUND. Acquired Fund represents and
warrants to and agrees with Acquiring Fund that:

(a) Acquired Fund is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts, and has power to own all of
its properties and assets and to carry out its obligations under this Agreement.
Acquired Fund is not required to qualify as a foreign association in any
jurisdiction. Acquired Fund has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to carry out
this Agreement.

(b) Acquired Fund is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect.

(c) A statement of assets and liabilities, statement of operations, statement of
changes in net assets and schedule of investments (indicating their market
values) of Acquired Fund for the fiscal year ended September 30, 2001, such
statements and schedule having been audited by KPMG LLP, independent
accountants, have been furnished to Acquiring Fund. Such statement of assets and
liabilities and schedule of investments fairly present the financial position of
Acquired Fund as of September 30, 2001, and such statement of operations and
changes in net assets fairly reflect the results of its operations and changes
in net assets for the period covered thereby in conformity with generally
accepted accounting principles.

(d) The prospectus and statement of additional information dated January 30,
2002, previously furnished to Acquiring Fund, and any amendment or supplement
thereto or any superseding prospectus or statement of additional information in
respect thereof in effect prior to the Exchange Date, which will be furnished to
Acquiring Fund (collectively the "Acquired Fund Prospectus"), do not, as of the
date hereof, and will not, as of the Exchange Date, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided
however, that Acquired Fund

                                     -4-
<Page>

makes no representation or warranty as to any information in the Acquired
Fund Prospectus that does not specifically relate to Acquired Fund.

(e) There are no material legal, administrative or other proceedings pending or,
to the knowledge of Acquired Fund, threatened against Acquired Fund which assert
liability or may, if successfully prosecuted to their conclusion, result in
liability on the part of Acquired Fund, other than as have been disclosed in the
Registration Statement.

(f) Acquired Fund has no known liabilities of a material nature, contingent or
otherwise, other than those shown as belonging to it on its statement of assets
and liabilities as of September 30, 2001 and those incurred in the ordinary
course of Acquired Fund's business as an investment company since such date.
Prior to the Exchange Date, Acquired Fund will advise Acquiring Fund of all
material liabilities, contingent or otherwise, incurred by it subsequent to
September 30, 2001, whether or not incurred in the ordinary course of business.

(g) No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by Acquired Fund of the transactions
contemplated by this Agreement, except such as may be required under the 1933
Act, the 1934 Act, the 1940 Act, state securities or blue sky laws, or the H-S-R
Act.

(h) The Registration Statement, the Prospectus and the Proxy Statement, on the
Effective Date of the Registration Statement and insofar as they do not relate
to Acquiring Fund (i) will comply in all material respects with the provisions
of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder and (ii) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and at the time of the shareholders'
meeting referred to in Section 7(a) below and on the Exchange Date, the
Prospectus, as amended or supplemented by any amendments or supplements filed or
requested to be filed with the Commission by Acquiring Fund, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided however, that the representations and warranties in this
subsection shall apply only to statements of fact relating to Acquired Fund
contained in the Registration Statement, the Prospectus or the Proxy Statement,
or omissions to state in any thereof a material fact relating to Acquired Fund,
as such Registration Statement, Prospectus and Proxy Statement shall be
furnished to Acquired Fund in definitive form as soon as practicable following
effectiveness of the Registration Statement and before any public distribution
of the Prospectuses or Proxy Statements.

(i) There are no material contracts outstanding to which Acquired Fund is a
party, other than as will be disclosed in the Prospectus or the Proxy Statement.

(j) All of the issued and outstanding shares of beneficial interest of Acquired
Fund have been offered for sale and sold in conformity with all applicable
federal securities laws.

(k) Acquired Fund is and will at all times through the Exchange Date qualify for
taxation as a "regulated investment company" under Sections 851 and 852 of the
Code.

                                     -5-
<Page>

(l) Acquired Fund has filed or will file all federal and state tax returns
which, to the knowledge of Acquired Fund's officers, are required to be filed by
Acquired Fund and has paid or will pay all federal and state taxes shown to be
due on said returns or on any assessments received by Acquired Fund. All tax
liabilities of Acquired Fund have been adequately provided for on its books, and
to the knowledge of Acquired Fund, no tax deficiency or liability of Acquired
Fund has been asserted, and no question with respect thereto has been raised, by
the Internal Revenue Service or by any state or local tax authority for taxes in
excess of those already paid. As of the Exchange Date, Acquired Fund is not
under audit by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.

(m) At both the Valuation Time and the Exchange Date, Acquired Fund will have
full right, power and authority to sell, assign, transfer and deliver the
Investments and any other assets and liabilities of Acquired Fund to be
transferred to Acquiring Fund pursuant to this Agreement. At the Exchange Date,
subject only to the delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, Acquiring Fund will acquire the
Investments and any such other assets and liabilities subject to no
encumbrances, liens or security interests whatsoever and without any
restrictions upon the transfer thereof (except for such restrictions as
previously disclosed to Acquiring Fund by Acquired Fund). As used in this
Agreement, the term "Investments" shall mean Acquired Fund's investments shown
on the schedule of its investments as of September 30, 2001 referred to in
Section 2(c) hereof, as supplemented with such changes as Acquired Fund shall
make, and changes resulting from stock dividends, stock splits, mergers and
similar corporate actions.

(n) No registration under the 1933 Act of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a public
distribution by either of Acquiring Fund or Acquired Fund, except as previously
disclosed to Acquiring Fund by Acquired Fund.

(o) At the Exchange Date, Acquired Fund will have sold such of its assets, if
any, as necessary to ensure that, after giving effect to the acquisition of the
assets of Acquired Fund pursuant to this Agreement, Acquiring Fund will remain
in compliance with its mandatory investment restrictions as set forth in the
Registration Statement.

3. REORGANIZATION.

(a) Subject to the requisite approval of the shareholders of Acquired Fund and
to the other terms and conditions contained herein (including Acquired Fund's
obligation to distribute to its shareholders all of its net investment income
and capital gains as described in Section 8(l) hereof), Acquired Fund agrees to
sell, assign, convey, transfer and deliver to Acquiring Fund, and Acquiring Fund
agrees to acquire from Acquired Fund, on the Exchange Date all of the
Investments and all of the cash and other properties and assets of Acquired
Fund, whether accrued or contingent (including cash received by Acquired Fund
upon the liquidation by Acquired Fund of any investments purchased by Acquired
Fund after September 30, 2001 and designated by Acquiring Fund as being
unsuitable for it to acquire), in exchange for that number of Merger Shares
provided for in Section 4 and the assumption by Acquiring Fund of all of the
liabilities of Acquired Fund, whether accrued or contingent, existing at the
Valuation Time.

                                     -6-
<Page>

Pursuant to this Agreement, Acquired Fund will, as soon as practicable after
the Exchange Date, distribute all of the Class A, Class B, Class C and Class
M Merger Shares received by it to the Class A, Class B, Class C and Class M
shareholders, respectively, of Acquired Fund, in complete liquidation of
Acquired Fund.

(b) As soon as practicable following the requisite approval of the shareholders
of Acquired Fund, Acquired Fund will, at its expense, liquidate such of its
portfolio securities as Acquiring Fund shall indicate it does not wish to
acquire. Such liquidation will be substantially completed prior to the Exchange
Date, unless otherwise agreed by Acquired Fund and Acquiring Fund.

(c) Acquired Fund will pay or cause to be paid to Acquiring Fund any interest,
cash or such dividends, rights and other payments received by it on or after the
Exchange Date with respect to the Investments and other properties and assets of
Acquired Fund, whether accrued or contingent, received by it on or after the
Exchange Date. Any such distribution shall be deemed included in the assets
transferred to Acquiring Fund at the Exchange Date and shall not be separately
valued unless the securities in respect of which such distribution is made shall
have gone "ex" such distribution prior to the Valuation Time, in which case any
such distribution which remains unpaid at the Exchange Date shall be included in
the determination of the value of the assets of Acquired Fund acquired by
Acquiring Fund.

(d) The Valuation Time shall be 4:00 p.m. Boston time on August 16, 2002 or such
earlier or later day as may be mutually agreed upon in writing by the parties
hereto (the "Valuation Time").

4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, Acquiring Fund will
deliver to Acquired Fund (i) a number of full and fractional Class A Merger
Shares having an aggregate net asset value equal to the value of assets of
Acquired Fund attributable to Class A shares of Acquired Fund transferred to
Acquiring Fund on such date less the value of the liabilities of Acquired Fund
attributable to the Class A shares of Acquired Fund assumed by Acquiring Fund on
that date; (ii) a number of full and fractional Class B Merger Shares having an
aggregate net asset value equal to the value of the assets of Acquired Fund
attributable to Class B shares of Acquired Fund transferred to Acquiring Fund on
such date less the value of the liabilities of Acquired Fund attributable to
Class B shares of Acquired Fund assumed by Acquiring Fund on that date; (iii) a
number of full and fractional Class C Merger Shares having an aggregate net
asset value equal to the value of the assets of Acquired Fund attributable to
Class C shares of Acquired Fund transferred to Acquiring Fund on such date less
the value of the liabilities of Acquired Fund attributable to Class C shares of
Acquired Fund assumed by Acquiring Fund on that date; and (iv) a number of full
and fractional Class M Merger Shares having an aggregate net asset value equal
to the value of the assets of Acquired Fund attributable to Class M shares of
Acquired Fund transferred to Acquiring Fund on such date less the value of the
liabilities of Acquired Fund attributable to Class M shares of Acquired Fund
assumed by Acquiring Fund on that date.

(a) The net asset value of the Merger Shares to be delivered to Acquired Fund,
the value of the assets attributable to the Class A, Class B, Class C and Class
M shares of Acquired Fund and the

                                     -7-
<Page>

value of the liabilities attributable to the Class A, Class B, Class C and
Class M shares of Acquired Fund to be assumed by Acquiring Fund shall in each
case be determined as of the Valuation Time.

(b) The net asset value of the Class A, Class B, Class C and Class M Merger
Shares, and the value of the assets and liabilities of the Class A, Class B,
Class C and Class M shares of Acquired Fund shall be determined by Acquiring
Fund, in cooperation with Acquired Fund, pursuant to procedures customarily used
by Acquiring Fund in determining the fair market value of Acquiring Fund's
assets and liabilities.

(c) No adjustment shall be made in the net asset value of either Acquired Fund
or Acquiring Fund to take into account differences in realized and unrealized
gains and losses.

(d) Reserved.

(e) Acquiring Fund shall issue the Merger Shares to Acquired Fund in four
certificates registered in the name of Acquired Fund, one for Class A Merger
Shares, one for Class B Merger Shares, one for Class C Merger Shares and one for
Class M Merger Shares (excluding any fractional shares). Acquired Fund shall
distribute the Class A Merger Shares to the Class A shareholders of Acquired
Fund by redelivering such certificates to Acquiring Fund's transfer agent which
will as soon as practicable set up open accounts for each Class A shareholder of
Acquired Fund in accordance with written instructions furnished by Acquired
Fund. Acquired Fund shall distribute the Class B Merger Shares to the Class B
shareholders of Acquired Fund by redelivering such certificates to Acquiring
Fund's transfer agent which will as soon as practicable set up open accounts for
each Class B shareholder of Acquired Fund in accordance with written
instructions furnished by Acquired Fund. Acquired Fund shall distribute the
Class C Merger Shares to the Class C shareholders of Acquired Fund by
redelivering such certificates to Acquiring Fund's transfer agent which will as
soon as practicable set up open accounts for each Class C shareholder of
Acquired Fund in accordance with written instructions furnished by Acquired
Fund. Acquired Fund shall distribute the Class M Merger Shares to the Class M
shareholders of Acquired Fund by redelivering such certificates to Acquiring
Fund's transfer agent which will as soon as practicable set up open accounts for
each Class M shareholder of Acquired Fund in accordance with written
instructions furnished by Acquired Fund. With respect to any Acquired Fund
shareholder holding share certificates as of the Exchange Date, Acquiring Fund
will not permit such shareholder to receive dividends and other distributions on
the Merger Shares (although such dividends and other distributions shall be
credited to the account of such shareholder), receive certificates representing
the Merger Shares, or pledge such Merger Shares until such shareholder has
surrendered his or her outstanding Acquired Fund certificates or, in the event
of lost, stolen, or destroyed certificates, posted adequate bond. In the event
that a shareholder shall not be permitted to receive dividends and other
distributions on the Merger Shares as provided in the preceding sentence,
Acquiring Fund shall pay any such dividends or distributions in additional
shares, notwithstanding any election such shareholder shall have made previously
with respect to the payment, in cash or otherwise, of dividends and
distributions on shares of Acquired Fund. Acquired Fund will, at its expense,
request the

                                     -8-
<Page>

shareholders of Acquired Fund to surrender their outstanding Acquired Fund
certificates, or post adequate bond, as the case may be.

(f) Acquiring Fund shall assume all liabilities of Acquired Fund, whether
accrued or contingent, in connection with the acquisition of assets and
subsequent dissolution of Acquired Fund or otherwise.

5. EXPENSES, FEES, ETC.

(a) All fees and expenses, including legal and accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the consummation by Acquired Fund and Acquiring Fund of the transactions
contemplated by this Agreement (together with the costs specified in (i) below,
"Expenses") will be allocated ratably between Acquiring Fund and Acquired Fund
in proportion to their net assets as of the Valuation Time, except that (i) the
costs of proxy materials and proxy solicitation will be borne by Acquired Fund,
and (ii) the costs of liquidating such of Acquired Fund's portfolio securities
as Acquiring Fund shall indicate it does not wish to acquire prior to the
Exchange Date shall be borne by Acquired Fund; provided however, that the
Expenses to be borne by the Acquiring Fund will not exceed $77,550, the Expenses
to be borne by the Acquired Fund will not exceed $444,910, and the remainder of
any such Expenses will be borne by Putnam Investment Management, LLC; and
provided further that such Expenses will in any event be paid by the party
directly incurring such expenses if and to the extent that the payment by the
other party of such Expenses would result in the disqualification of Acquiring
Fund or Acquired Fund, as the case may be, as a "regulated investment company"
within the meaning of Section 851 of the Code.

(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of Acquiring Fund's being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to Acquiring Fund's obligations referred to in Section 8), or by reason of the
nonfulfillment or failure of any condition to Acquired Fund's obligations
referred to in Section 9, Acquiring Fund shall pay directly all reasonable fees
and expenses incurred by Acquired Fund in connection with such transactions,
including, without limitation, legal, accounting and filing fees.

(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of Acquired Fund's being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to Acquired Fund's obligations referred to in Section 9), or by reason of the
nonfulfillment or failure of any condition to Acquiring Fund's obligations
referred to in Section 8, Acquired Fund shall pay directly all reasonable fees
and expenses incurred by Acquiring Fund in connection with such transactions,
including without limitation legal, accounting and filing fees.

(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) Acquiring Fund's or Acquired Fund's
being either unwilling or unable to go forward or (ii) the nonfulfillment or
failure of any condition to Acquiring Fund's or Acquired Fund's obligations
referred to in Section 8 or Section 9 of this Agreement, then each of

                                     -9-
<Page>

Acquiring Fund and Acquired Fund shall bear all of its own expenses incurred
in connection with such transactions.

(e) Notwithstanding any other provisions of this Agreement, if for any reason
the transactions contemplated by this Agreement are not consummated, no party
shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.

6. EXCHANGE DATE. Delivery of the assets of Acquired Fund to be transferred,
assumption of the liabilities of Acquired Fund to be assumed and the delivery of
the Merger Shares to be issued shall be made at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts, at 7:30 A.M. on the next full
business day following the Valuation Time, or at such other time and date agreed
to by Acquiring Fund and Acquired Fund, the date and time upon which such
delivery is to take place being referred to herein as the "Exchange Date."

7. MEETING OF SHAREHOLDERS; DISSOLUTION.

(a) Acquired Fund agrees to call a meeting of its shareholders as soon as is
practicable after the effective date of the Registration Statement for, among
other things, the purpose of considering the matters contemplated by this
Agreement.

(b) Acquired Fund agrees that the liquidation and dissolution of Acquired Fund
will be effected in the manner provided in the Agreement and Declaration of
Trust of Acquired Fund in accordance with applicable law and that on and after
the Exchange Date, Acquired Fund shall not conduct any business except in
connection with its liquidation and dissolution.

(c) Acquiring Fund has, after the preparation and delivery to Acquiring Fund by
Acquired Fund of a preliminary version of the Proxy Statement which was
satisfactory to Acquiring Fund and to Ropes & Gray for inclusion in the
Registration Statement, filed the Registration Statement with the Commission.
Each of Acquired Fund and Acquiring Fund will cooperate with the other, and each
will furnish to the other the information relating to itself required by the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
set forth in the Registration Statement, including the Prospectus and the Proxy
Statement.

8. CONDITIONS TO ACQUIRING FUND'S OBLIGATIONS. The obligations of Acquiring Fund
hereunder shall be subject to the following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of (i) at
least a majority of the Trustees of Acquired Fund (including a majority of those
Trustees who are not "interested persons" of Acquired Fund, as defined in
Section 2(a)(19) of the 1940 Act); (ii) at least a majority of the Trustees of
Acquiring Fund (including a majority of those Trustees who are not "interested
persons" of Acquiring Fund, as defined in Section 2(a)(19) of the 1940 Act); and
(iii) a majority of the shares of Acquired Fund voted at a duly constituted
meeting.

                                     -10-
<Page>

(b) That Acquired Fund shall have furnished to Acquiring Fund a statement of
Acquired Fund's net assets, with values determined as provided in Section 4 of
this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Acquired Fund's behalf by
Acquired Fund's President (or any Vice President) and Treasurer (or any
Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Effective Date there has been no material adverse change in the financial
position of Acquired Fund since September 30, 2001 other than changes in the
Investments and other assets and properties since that date or changes in the
market value of the Investments and other assets of Acquired Fund, changes due
to net redemptions or changes due to dividends paid or losses from operations.

(c) That Acquired Fund shall have furnished to Acquiring Fund a statement, dated
the Exchange Date, signed on behalf of Acquired Fund by Acquired Fund's
President (or any Vice President) and Treasurer (or any Assistant Treasurer)
certifying that as of the Valuation Time and as of the Exchange Date all
representations and warranties of Acquired Fund made in this Agreement are true
and correct in all material respects as if made at and as of such dates, and
that Acquired Fund has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied at or prior to each of
such dates.

(d) That Acquired Fund shall have delivered to Acquiring Fund an agreed upon
procedures letter from KPMG LLP dated the Exchange Date, setting forth findings
of KPMG LLP pursuant to its performance of the agreed upon procedures set forth
therein relating to management's assertions that (i) for the short taxable
period from September 30, 2001 to the Exchange Date Acquired Fund qualified as a
regulated investment company under the Internal Revenue Code (the "Code"), (ii)
as of the Exchange Date, has no liability other than liabilities stated for
federal or state income taxes and (iii) as of the Exchange Date, has no
liability for federal excise tax purposes under section 4982 of the Code.

(e) That there shall not be any material litigation pending with respect to the
matters contemplated by this Agreement.

(f) That Acquiring Fund shall have received an opinion of Ropes & Gray, in form
satisfactory to Acquiring Fund and dated the Exchange Date, to the effect that
(i) Acquired Fund is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts, and, to the knowledge of
such counsel, is not required to qualify to do business as a foreign association
in any jurisdiction except as may be required by state securities or blue sky
laws, (ii) this Agreement has been duly authorized, executed, and delivered by
Acquired Fund and, assuming that the Registration Statement, the Prospectus and
the Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by
Acquiring Fund, is a valid and binding obligation of Acquired Fund, (iii)
Acquired Fund has power to sell, assign, convey, transfer and deliver the assets
contemplated hereby and, upon consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement, Acquired Fund will have
duly sold, assigned, conveyed, transferred and delivered such assets to
Acquiring Fund, (iv) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated

                                     -11-
<Page>

hereby will not, violate Acquired Fund's Agreement and Declaration of Trust,
as amended, or Bylaws or any provision of any agreement known to such counsel
to which Acquired Fund is a party or by which it is bound, it being
understood that with respect to investment restrictions as contained in
Acquired Fund's Agreement and Declaration of Trust, Bylaws, then current
prospectus or statement of additional information or the Registration
Statement, such counsel may rely upon a certificate of an officer of Acquired
Fund's whose responsibility it is to advise Acquired Fund with respect to
such matters, and (v) no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by Acquired
Fund of the transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act, and (vi)
such other matters as Acquiring Fund may reasonably deem necessary or
desirable.

(g) That Acquiring Fund shall have received an opinion of Ropes & Gray dated the
Exchange Date (which opinion would be based upon certain factual representations
and subject to certain qualifications), to the effect that, on the basis of the
existing provisions of the Code, current administrative rules and court
decisions, for federal income tax purposes: (i) the acquisition by Acquiring
Fund of substantially all of the assets of Acquired Fund solely in exchange for
Merger Shares and the assumption by Acquiring Fund of liabilities of Acquired
Fund followed by the distribution of Acquired Fund to its shareholders of Merger
Shares in complete liquidation of Acquired Fund, all pursuant to the plan of
reorganization, constitutes a reorganization within the meaning of Section
368(a) of the Internal Revenue Code and Acquired Fund and Acquiring Fund will
each be a "party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code, (ii) no gain or loss will be recognized by Acquiring
Fund or its shareholders upon receipt of the Investments transferred to
Acquiring Fund pursuant to this Agreement in exchange for the Merger Shares,
(iii) the basis to Acquiring Fund of the Investments will be the same as the
basis of the Investments in the hands of Acquired Fund immediately prior to such
exchange, (iv) Acquiring Fund's holding periods with respect to the Investments
will include the respective periods for which the Investments were held by
Acquired Fund; and (v) Acquiring Fund will succeed to and take into account the
items of Acquired Fund described in Section 381(c) of the Internal Revenue Code,
subject to the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Internal Revenue Code and Regulations thereunder.

(h) That the assets of Acquired Fund to be acquired by Acquiring Fund will
include no assets which Acquiring Fund, by reason of charter limitations or of
investment restrictions disclosed in the Registration Statement in effect on the
Exchange Date, may not properly acquire.

(i) That the Registration Statement shall have become effective under the 1933
Act, and no stop order suspending such effectiveness shall have been instituted
or, to the knowledge of Acquiring Fund, threatened by the Commission.

(j) That Acquiring Fund shall have received from the Commission, any relevant
state securities administrator, the Federal Trade Commission (the "FTC") and the
Department of Justice (the "Department") such order or orders as Ropes & Gray
deems reasonably necessary or desirable under the 1933 Act, the 1934 Act, the
1940 Act, any applicable state securities or blue sky laws

                                     -12-
<Page>

and the H-S-R Act in connection with the transactions contemplated hereby,
and that all such orders shall be in full force and effect.

(k) That all proceedings taken by Acquired Fund in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
shall be satisfactory in form and substance to Acquiring Fund and Ropes & Gray.

(l) That, prior to the Exchange Date, Acquired Fund shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to the shareholders of Acquired Fund (i) all of
the excess of (X) Acquired Fund's investment income excludable from gross income
under Section 103 of the Code over (Y) Acquired Fund's deductions disallowed
under Sections 265 and 171 of the Code, (ii) all of Acquired Fund's investment
company taxable income (as defined in Section 852 of the Code) for its taxable
years ending on or after September 30, 2001, and on or prior to the Exchange
Date (computed in each case without regard to any deduction for dividends paid),
and (iii) all of its net capital gain realized after reduction by any capital
loss carryover in each of its taxable years ending on or after September 30,
2001, and on or prior to the Exchange Date.

(m) That Acquired Fund's custodian shall have delivered to Acquiring Fund a
certificate identifying all of the assets of Acquired Fund held by such
custodian as of the Valuation Time.

(n) That Acquired Fund's transfer agent shall have provided to Acquiring Fund
(i) the originals or true copies of all of the records of Acquired Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a certificate
setting forth the number of shares of Acquired Fund outstanding as of the
Valuation Time, and (iii) the name and address of each holder of record of any
such shares and the number of shares held of record by each such shareholder.

(o) That all of the issued and outstanding shares of beneficial interest of
Acquired Fund shall have been offered for sale and sold in conformity with all
applicable state securities or blue sky laws and, to the extent that any audit
of the records of Acquired Fund or its transfer agent by Acquiring Fund or its
agents shall have revealed otherwise, either (i) Acquired Fund shall have taken
all actions that in the opinion of Acquiring Fund or its counsel are necessary
to remedy any prior failure on the part of Acquired Fund to have offered for
sale and sold such shares in conformity with such laws or (ii) Acquired Fund
shall have furnished (or caused to be furnished) surety, or deposited (or caused
to be deposited) assets in escrow, for the benefit of Acquiring Fund in amounts
sufficient and upon terms satisfactory, in the opinion of Acquiring Fund or its
counsel, to indemnify Acquiring Fund against any expense, loss, claim, damage or
liability whatsoever that may be asserted or threatened by reason of such
failure on the part of Acquired Fund to have offered and sold such shares in
conformity with such laws.

(p) That Acquiring Fund shall have received from KPMG LLP an agreed upon
procedures letter addressed to Acquiring Fund dated as of the Exchange Date
satisfactory in form and substance to Acquiring Fund setting forth the findings
of KPMG LLP pursuant to its performance of the agreed upon procedures set forth
therein relating to management's assertion that as of the Valuation Time the
value of the assets of Acquired Fund to be exchanged for the Merger Shares has
been determined in accordance with the provisions of Article 10, Section 5 of
Acquiring

                                     -13-
<Page>

Fund's Bylaws pursuant to the procedures customarily utilized by Acquiring
Fund in valuing its assets and issuing its shares.

(q) That Acquired Fund shall have executed and delivered to Acquiring Fund an
instrument of transfer dated as of the Exchange Date pursuant to which Acquired
Fund will assign, transfer and convey all of the assets and other property to
Acquiring Fund at the Valuation Time in connection with the transactions
contemplated by this Agreement.

9. CONDITIONS TO ACQUIRED FUND'S OBLIGATIONS. The obligations of Acquired Fund
hereunder shall be subject to the following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of (i) at
least a majority of the Trustees of Acquired Fund (including a majority of those
Trustees who are not "interested persons" of Acquired Fund, as defined in
Section 2(a)(19) of the 1940 Act); (ii) at least a majority of the Trustees of
Acquiring Fund (including a majority of those Trustees who are not "interested
persons" of Acquiring Fund, as defined in Section 2(a)(19) of the 1940 Act); and
(iii) a majority of the shares of Acquired Fund voted at a duly constituted
meeting.

(b) That Acquiring Fund shall have furnished to Acquired Fund a statement of
Acquiring Fund's net assets, together with a list of portfolio holdings with
values determined as provided in Section 4 of this Agreement, all as of the
Valuation Time, certified on behalf of Acquiring Fund by Acquiring Fund's
President (or any Vice President) and Treasurer (or any Assistant Treasurer),
and a certificate of both such officers, dated the Exchange Date, to the effect
that as of the Valuation Time and as of the Exchange Date there has been no
material adverse change in the financial position of Acquiring Fund since June
30, 2001, other than changes in its portfolio securities since that date,
changes in the market value of its portfolio securities, changes due to net
redemptions or changes due to dividends paid or losses from operations.

(c) That Acquiring Fund shall have executed and delivered to Acquired Fund an
Assumption of Liabilities dated as of the Exchange Date pursuant to which
Acquiring Fund will assume all of the liabilities of Acquired Fund existing at
the Valuation Time in connection with the transactions contemplated by this
Agreement.

(d) That Acquiring Fund shall have furnished to Acquired Fund a statement, dated
the Exchange Date, signed on behalf of Acquiring Fund by Acquiring Fund's
President (or any Vice President) and Treasurer (or any Assistant Treasurer)
certifying that as of the Valuation Time and as of the Exchange Date all
representations and warranties of Acquiring Fund made in this Agreement are true
and correct in all material respects as if made at and as of such dates, and
that Acquiring Fund has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied at or prior to each of
such dates.

(e) That there shall not be any material litigation pending or threatened with
respect to the matters by this Agreement.

                                     -14-
<Page>

(f) That Acquired Fund shall have received an opinion of Ropes & Gray, in form
satisfactory to Acquired Fund and dated the Exchange Date, to the effect that
(i) Acquiring Fund is a business trust duly established and validly existing in
conformity with the laws of The Commonwealth of Massachusetts, and, to the
knowledge of such counsel, is not required to qualify to do business as a
foreign association in any jurisdiction except as may be required by state
securities or blue sky laws, (ii) this Agreement has been duly authorized,
executed and delivered by Acquiring Fund and, assuming that the Prospectus, the
Registration Statement and the Proxy Statement comply with the 1933 Act, the
1934 Act and the 1940 Act and assuming due authorization, execution and delivery
of this Agreement by Acquired Fund, is a valid and binding obligation of
Acquiring Fund, (iii) the Merger Shares to be delivered to Acquired Fund as
provided for by this Agreement are duly authorized and upon such delivery will
be validly issued and will be fully paid and nonassessable by Acquiring Fund and
no shareholder of Acquiring Fund has any preemptive right to subscription or
purchase in respect thereof, (iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated hereby will not,
violate Acquiring Fund's Agreement and Declaration of Trust, as amended, or
Bylaws, or any provision of any agreement known to such counsel to which
Acquiring Fund is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in Acquiring Fund's Agreement
and Declaration of Trust, Bylaws, then current prospectus or statement of
additional information or the Registration Statement, such counsel may rely upon
a certificate of an officer of Acquiring Fund whose responsibility it is to
advise Acquiring Fund with respect to such matters, (v) no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by Acquiring Fund of the transactions contemplated herein,
except such as have been obtained under the 1933 Act, the 1934 Act and the 1940
Act and such as may be required under state securities or blue sky laws and the
H-S-R Act, and (vi) the Registration Statement has become effective under the
1933 Act, and to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act.

(g) That Acquired Fund shall have received an opinion of Ropes & Gray dated the
Exchange Date (which opinion would be based upon certain factual representations
and subject to certain qualifications), to the effect that, on the basis of the
existing provisions of the Code, current administrative rules and court
decisions, for federal income tax purposes: i) the acquisition by Acquiring Fund
of substantially all of the assets of Acquired Fund solely in exchange for
Merger Shares and the assumption by Acquiring Fund of liabilities of Acquired
Fund followed by the distribution of Acquired Fund to its shareholders of Merger
Shares in complete liquidation of Acquired Fund, all pursuant to the plan of
reorganization, constitutes a reorganization within the meaning of Section
368(a) of the Internal Revenue Code and Acquired Fund and Acquiring Fund will
each be a "party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code, (ii) no gain or loss will be recognized by Acquired
Fund upon the transfer of the Investments to Acquiring Fund and the assumption
by Acquiring Fund of the liabilities of Acquired Fund, or upon the distribution
of the Merger Shares by Acquired Fund to its shareholders, pursuant to this
Agreement, (iii) no gain or loss will be recognized by the Acquired Fund
shareholders on the exchange of their shares of the Acquired Fund for Merger
Shares; (iv) the aggregate basis of the Merger Shares a Acquired Fund
shareholder receives in connection

                                     -15-
<Page>

with the transaction will be the same as the aggregate basis of his or her
Acquired Fund shares exchanged therefor, and (v) a Acquired Fund
shareholder's holding period for his or her Merger Shares will be determined
by including the period for which he or she held Acquired Fund shares
exchanged therefore, provided that the shareholder held the Acquired Fund's
shares as a capital asset.

(h) That all proceedings taken by or on behalf of Acquiring Fund in connection
with the transactions contemplated by this Agreement and all documents
incidental thereto shall be satisfactory in form and substance to Acquired Fund
and Ropes & Gray.

(i) That the Registration Statement shall have become effective under the 1933
Act, and no stop order suspending such effectiveness shall have been instituted
or, to the knowledge of Acquiring Fund, threatened by the Commission.

(j) That Acquired Fund shall have received from the Commission, any relevant
state securities administrator, the FTC and the Department such order or orders
as Ropes & Gray deems reasonably necessary or desirable under the 1933 Act, the
1934 Act, the 1940 Act, any applicable state securities or blue sky laws and the
H-S-R Act in connection with the transactions contemplated hereby, and that all
such orders shall be in full force and effect.

10. INDEMNIFICATION.

(a) Acquired Fund will indemnify and hold harmless, out of the assets of
Acquired Fund but no other assets, Acquiring Fund, its trustees and its officers
(for purposes of this subparagraph, the "Indemnified Parties") against any and
all expenses, losses, claims, damages and liabilities at any time imposed upon
or reasonably incurred by any one or more of the Indemnified Parties in
connection with, arising out of, or resulting from any claim, action, suit or
proceeding in which any one or more of the Indemnified Parties may be involved
or with which any one or more of the Indemnified Parties may be threatened by
reason of any untrue statement or alleged untrue statement of a material fact
relating to Acquired Fund contained in the Registration Statement, the
Prospectus, the Proxy Statement or any amendment or supplement to any of the
foregoing, or arising out of or based upon the omission or alleged omission to
state in any of the foregoing a material fact relating to Acquired Fund required
to be stated therein or necessary to make the statements relating to Acquired
Fund therein not misleading, including, without limitation, any amounts paid by
any one or more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding, or threatened claim,
action, suit or proceeding made with the consent of Acquired Fund. The
Indemnified Parties will notify Acquired Fund in writing within ten days after
the receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against such Indemnified Party
as to any matters covered by this Section 10(a). Acquired Fund shall be entitled
to participate at its own expense in the defense of any claim, action, suit or
proceeding covered by this Section 10(a), or, if it so elects, to assume at its
expense by counsel satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and if Acquired Fund elects to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their expense.

                                     -16-
<Page>

Acquired Fund's obligation under this Section 10(a) to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of payment so
that Acquired Fund will pay in the first instance any expenses, losses,
claims, damages and liabilities required to be paid by it under this Section
10(a) without the necessity of the Indemnified Parties' first paying the same.

(b) Acquiring Fund will indemnify and hold harmless, out of the assets of
Acquiring Fund but no other assets, Acquired Fund, its trustees and its officers
(for purposes of this subparagraph, the "Indemnified Parties") against any and
all expenses, losses, claims, damages and liabilities at any time imposed upon
or reasonably incurred by any one or more of the Indemnified Parties in
connection with, arising out of, or resulting from any claim, action, suit or
proceeding in which any one or more of the Indemnified Parties may be involved
or with which any one or more of the Indemnified Parties may be threatened by
reason of any untrue statement or alleged untrue statement of a material fact
relating to Acquiring Fund contained in the Registration Statement, the
Prospectus, the Proxy Statements, or any amendment or supplement to any thereof,
or arising out of, or based upon, the omission or alleged omission to state in
any of the foregoing a material fact relating to Acquiring Fund required to be
stated therein or necessary to make the statements relating to Acquiring Fund
therein not misleading, including without limitation any amounts paid by any one
or more of the Indemnified Parties in a reasonable compromise or settlement of
any such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of Acquiring Fund. The Indemnified Parties will
notify Acquiring Fund in writing within ten days after the receipt by any one or
more of the Indemnified Parties of any notice of legal process or any suit
brought against or claim made against such Indemnified Party as to any matters
covered by this Section 10(b). Acquiring Fund shall be entitled to participate
at its own expense in the defense of any claim, action, suit or proceeding
covered by this Section 10(b), or, if it so elects, to assume at its expense by
counsel satisfactory to the Indemnified Parties the defense of any such claim,
action, suit or proceeding, and, if Acquiring Fund elects to assume such
defense, the Indemnified Parties shall be entitled to participate in the defense
of any such claim, action, suit or proceeding at their own expense. Acquiring
Fund's obligation under this Section 10(b) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that Acquiring
Fund will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by it under this Section 10(b) without the
necessity of the Indemnified Parties' first paying the same.

11. NO BROKER, ETC. Each of Acquired Fund and Acquiring Fund represents that
there is no person who has dealt with it who by reason of such dealings is
entitled to any broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement.

12. TERMINATION. Acquired Fund and Acquiring Fund may, by mutual consent of
their trustees, terminate this Agreement, and Acquired Fund or Acquiring Fund,
after consultation with counsel and by consent of their trustees or an officer
authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by December 31, 2002, this Agreement shall
automatically terminate on that date unless a later date is agreed to by
Acquired Fund and Acquiring Fund.

                                     -17-
<Page>

13. RULE 145. Pursuant to Rule 145 under the 1933 Act, Acquiring Fund will, in
connection with the issuance of any Merger Shares to any person who at the time
of the transaction contemplated hereby is deemed to be an affiliate of a party
to the transaction pursuant to Rule 145(c), cause to be affixed upon the
certificates issued to such person (if any) a legend as follows:

     "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO PUTNAM
     INTERNATIONAL GROWTH FUND OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A
     REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, OR (II) IN THE OPINION OF COUNSEL
     REASONABLY SATISFACTORY TO PUTNAM INTERNATIONAL GROWTH FUND SUCH
     REGISTRATION IS NOT REQUIRED."

and, further, Acquiring Fund will issue stop transfer instructions to Acquiring
Fund's transfer agent with respect to such shares. Acquired Fund will provide
Acquiring Fund on the Exchange Date with the name of any Acquired Fund
shareholder who is to the knowledge of Acquired Fund an affiliate of Acquired
Fund on such date.

14. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements, representations
and warranties made under this Agreement and any certificates delivered pursuant
to this Agreement shall be deemed to have been material and relied upon by each
of the parties, notwithstanding any investigation made by them or on their
behalf.

15. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.

16. AGREEMENT AND DECLARATION OF TRUST. Copies of the Agreements and
Declarations of Trust of Acquired Fund and Acquiring Fund are on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed by the Trustees of each Trust,
respectively, as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or shareholders of
Acquired Fund or Acquiring Fund individually but are binding only upon the
assets and property of Acquired Fund and Acquiring Fund, respectively.

       [The rest of this page is intentionally left blank.]

                                     -18-
<Page>

This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be deemed to be an original.

                           PUTNAM INTERNATIONAL GROWTH FUND

                           By:  /s/ Charles E. Porter
                           Title:  Executive Vice President and Treasurer

                           PUTNAM ASIA PACIFIC GROWTH FUND

                           By:  /s/ Charles E. Porter
                           Title:  Executive Vice President and Treasurer

                           PUTNAM INVESTMENT MANAGEMENT, LLC

                           By:  /s/ Gordon H. Silver
                           Title:  Senior Managing Director

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