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                                                                   Exhibit 4(b)

                      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
Investment Funds, a Massachusetts business trust, on behalf of its Putnam
Emerging Markets Fund series ("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; (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; and (v) a number of full and
fractional Class Y shares of beneficial interest of Acquiring Fund (the
"Class Y Merger Shares") having an aggregate net asset value equal to the
value of the assets of Acquired Fund attributable to Class Y shares of
Acquired Fund transferred to Acquiring Fund on such date less the value of
the liabilities of Acquired Fund attributable to Class Y 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, the Class M Merger Shares
and the Class Y 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

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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, Class M and Class Y shareholders of record as of the
Exchange Date Class A, Class B, Class C, Class M and Class Y Merger Shares, each
shareholder being entitled to receive that proportion of such Class A, Class B,
Class C, Class M or Class Y Merger Shares that the number of Class A, Class B,
Class C, Class M or Class Y shares of beneficial interest of Acquired Fund held
by such shareholder bears to the number of such Class A, Class B, Class C, Class
M or Class Y 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

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"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.

(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.

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(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.

(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 series of Putnam Investment Funds, 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. Putnam Investment Funds is not
required to qualify as a foreign association in any jurisdiction. Putnam
Investment Funds has all necessary federal, state and local authorizations to
carry on its business as now being conducted and to carry out this Agreement.

(b) Putnam Investment Funds 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 August 31, 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 August 31, 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.

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(d) The prospectus and statement of additional information dated December 30,
2001, 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 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 August 31, 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 August 31,
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.

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(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.

(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 August 31, 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)

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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 August 31, 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. 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, Class M and Class Y
Merger Shares received by it to the Class A, Class B, Class C, Class M and
Class Y 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

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that date, (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; and (v) a number of full and fractional Class Y
Merger Shares having an aggregate net asset value equal to the value of the
assets of Acquired Fund attributable to Class Y shares of Acquired Fund
transferred to Acquiring Fund on such date less the value of the liabilities
of Acquired Fund attributable to Class Y 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, Class M
and Class Y shares of Acquired Fund and the value of the liabilities
attributable to the Class A, Class B, Class C, Class M and Class Y 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, Class M and Class Y
Merger Shares, and the value of the assets and liabilities of the Class A, Class
B, Class C, Class M and Class Y 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 five
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, one for
Class M Merger Shares and one for Class Y 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. Acquired Fund shall distribute the Class Y Merger Shares to the Class Y

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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 Y 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 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 Acquired Fund will not exceed $497,560, 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.

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(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 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 Putnam Investment Funds 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.

                                     -10-
<Page>

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.

(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 August 31, 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 August 31, 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 series of Putnam Investment Funds, 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

                                     -11-
<Page>

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 hereby will
not, violate Putnam Investment Funds' Agreement and Declaration of Trust, as
amended, or Bylaws or any provision of any agreement known to such counsel to
which Acquired Fund or Putnam Investment Funds, on behalf of Acquired Fund,
is a party or by which it is bound, it being understood that with respect to
investment restrictions as contained in Putnam Investment Funds' Agreement
and Declaration of Trust, Bylaws, Acquired Fund's 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.

                                     -12-
<Page>

(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 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 August 31, 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 August 31, 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)

                                     -13-
<Page>

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
Putnam Investment Funds' 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.

                                     -14-
<Page>

(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.

(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

                                     -15-
<Page>

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 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

                                     -16-
<Page>

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. 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.

                                     -17-
<Page>

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.

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.

                                     -18-
<Page>

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.]

                                     -19-
<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 INVESTMENT FUNDS,
                        on behalf of its Putnam Emerging Markets Fund series

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

                        PUTNAM INVESTMENT MANAGEMENT, LLC

                        By:  /s/ Gordon H. Silver
                        Title:  Senior Managing DirectorQuickLinks
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Exhibit 4.2    
  

 
 

NIKE, Inc.
  
    OFFICERS' CERTIFICATE    
  

Dated:
May 29, 2002 

        We,
Lindsay D. Stewart and Marcia A. Stilwell, do hereby certify that we are the duly elected Assistant Secretary and Treasurer, respectively, of NIKE, Inc., an Oregon corporation
(the "Company"). We further certify that, pursuant to resolutions of the Board of Directors of the Company and the Finance Committee of the Board of Directors of the Company, duly adopted on
February 15-16 and February 15, respectively, a series of senior debt securities of the Company, entitled "Medium-Term Notes, Series B" (the "Notes"), was
established in an aggregate principal amount of $500,000,000 pursuant to Section 2.2 of the Indenture dated as of December 13, 1996 (the "Indenture") between the Company and Bank One
Trust Company, National Association (successor in interest to The First National Bank of Chicago), as trustee. We further certify that, pursuant to resolutions of the Board of Directors of the
Company, duly adopted by unanimous written consent on February 16, 2001, the aggregate initial offering price of the Notes shall be $500,000,000, and that such series of Notes shall have the
following terms and provisions: 

        (a)  the
title of these securities, which shall constitute a separate series of Securities under the Indenture, shall be the "Medium-Term Notes, Series B"; 

        (b)  the
aggregate principal amount of Notes which may be outstanding is $500,000,000 (or the equivalent thereof in one or more foreign or composite currencies) (except as
otherwise provided in Sections 2.7, 2.8, 2.11, 3.6 and 9.6 of the Indenture); 

        (c)  the
Notes shall be issued in such principal amounts (in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof) and mature on such dates of
no less than nine months from the date of issue, so selected by the purchasers of the Notes and agreed to by the Board of
Directors or by any officer of the Company designated by the Board of Directors (each, an "Authorized Officer"); 

        (d)  the
Notes shall be issuable as registered securities only which may be issued in definitive form or may be represented by permanent global certificates registered in the
name of The Depository Trust Company or its nominee, and the beneficial owners of interests of any such global certificates may not exchange any such interests (except as provided by
Section 2.7 of the Indenture); 

        (e)  unless
otherwise specified by the Company as determined by the Board of Directors or any Authorized Officer, Notes issued in the form of permanent global certificates
shall be dated the date of their issuance; 

        (f)    the
rate or rates at which each of the Notes shall bear interest and the date or dates from which such interest shall accrue, shall be established by the Company as
determined by the Board of Directors or any Authorized Officer, and such rate or rates may be either a fixed interest rate or may vary from time to time in accordance with one or more interest rate
formulas; 

        (g)  the
Interest Payment Dates and the Record Dates with respect to each Note shall be specified by the Board of Directors or any Authorized Officer; 

        (h)  interest
on each Note shall be calculated on the basis specified by the Company with respect to such Note as determined by the Board of Directors or any Authorized
Officer; 

        (i)    principal
of and interest on the Notes will be payable, Notes may be surrendered for registration for transfer and exchange, and notices or demands to or upon the
Company in respect of the Notes and the Indenture may be served, at the office of the Trustee in The City of New York, designated for such purpose; provided that payment of interest, other than
interest payable at Maturity, 

may be made at the option of the Company by check mailed by first class mail to the address of the persons entitled thereto as shown on the Security Register; 

        (j)    unless
specified by the Company as determined by the Board of Directors or any Authorized Officer, the Notes shall not be subject to redemption or repayment, by sinking
fund or otherwise, at the option of the Company or the holder; the Company shall specify, as determined by the Board of Directors or any Authorized Officer, the period or periods within which, the
price or prices at which and the other terms and conditions upon which such Notes may be redeemed and/or repaid, if any; 

        (k)  if
other than the principal amount of any Note is to be paid upon the declaration of acceleration of Maturity of any Note pursuant to Section 6.2 of the
Indenture, such amount shall be specified by the Company, as determined by the Board of Directors or any Authorized Officer; 

        (l)    if
other than U.S. dollars, the currency in which payment of the principal of and any premium or interest on the Notes shall be payable shall be specified by the Company
as determined by the Board of Directors or any Authorized Officer; 

        (m)  if
the principal of, or any premium or interest on any of the Notes is to be payable, at the election of the Company or a holder or otherwise, in a currency other than
that in which the related Note is stated to be payable, the Company shall specify, as determined by the Board of Directors or any Authorized Officer, the period or periods within which, and the other
terms and conditions upon which, such election may be made, and the time and manner of determining the exchange rate between the currency in which the related Note is denominated or stated to be
payable and the currency in which such Note is to be so payable; 

        (n)  if
the amount of payments of principal of and any premium or interest on the Notes may be determined with reference to an index, formula or other method or methods, the
Company shall specify, as determined by the Board of Directors or any Authorized Officer, the terms and conditions upon which and the manner in which such amounts shall be determined and paid or
payable; 

        (o)  there
are no deletions from, modifications of or additions to the events of default or covenants of the Company with respect to the Notes other than as provided below; 

        Section 5.1
of the Indenture is hereby replaced in its entirety with the following: 

"When
Company May Merge, Etc. 

The
Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a "successor person") unless: 

          (i)  the
surviving corporation or the successor person (if other than the Company) is a corporation organized and validly existing under the laws of any U.S. domestic
jurisdiction and expressly assumes the Company's obligations on such series of securities and under the Indenture; and 

        (ii)  immediately
after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default
shall have occurred and be continuing under the Indenture. 

The
foregoing will not prohibit a merger of any of the Company's Subsidiaries with or into the Company or a merger effected solely for the purpose of reincorporating the Company in another
jurisdiction. 

The
Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such Officers' Certificate comply with this Indenture." 

        (p)  any
other terms with respect to the Notes may be specified by the Company as determined by the Board of Directors or any Authorized Officer; 

        (q)  Bank
One Trust company, National Association shall act as trustee with respect to the Notes; 

        (r)  the
Notes shall be in the forms attached hereto as Annex A or such other forms as may be specified by the Company as determined by the Board of Directors or any
Authorized Officer, the terms of which are hereby incorporated by reference, and to the extent any term thereof conflicts with or modifies any term in the Indenture, the terms of the Notes shall
supercede such terms in the Indenture; 

        (s)  attached
hereto as Annex B are true copies of the letters addressed to the Trustee entitling the Trustee to rely on the Opinions of Counsel attached thereto, which
Opinions relate to the Notes and comply with Section 10.4(b) of the Indenture; and 

        (t)    each
of the undersigned is authorized to approve the terms and conditions of the Notes pursuant to the Resolutions. 

        We
further certify, having read the Indenture and the definitions in the Indenture and certain other corporate documents and records, and having made such examination or investigation as
we deemed necessary to enable us to express an informed opinion, that all conditions precedent to the authentication and delivery of the Notes have been complied with. 

        Capitalized
terms used herein that are not otherwise defined shall have the meaning ascribed thereto in the Indenture or the Notes, as the case may be. 

        [SIGNATURE
PAGE FOLLOWS] 

        IN
WITNESS WHEREOF, each of the undersigned have executed this Officers' Certificate as of the date first written above. 

	

 	
 	

/s/  LINDSAY D. STEWART      
 Lindsay D. Stewart
 Assistant Secretary
	

 	
 	

/s/  MARCIA A. STILWELL      
 Marcia A. Stilwell
 Treasurer

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Exhibit 4.2

NIKE, Inc. OFFICERS' CERTIFICATE

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