Employment Agreement [Amendment No. 2] - Putnam Investments LLC and Lawrence J. Lasser
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
This amendment (the "Amendment") is made by and between Putnam
Investments, L.L.C. ("Putnam") and Lawrence J. Lasser (the "Executive") to amend
the employment agreement between the Executive and Putnam, dated December 31,
1997 and amended on January 1, 2001 (the "Agreement"). Except as may be
otherwise herein modified, all provisions of the Agreement shall continue in
full force and effect. Any capitalized term not defined in this Amendment shall
have the meaning ascribed to it in the Agreement. In consideration of the
covenants and agreements set forth herein, Putnam hereby agrees that the
Executive shall continue to be employed by Putnam, and the Executive hereby
agrees to continue his employment with Putnam, on the terms and conditions
contained in the Agreement, as amended hereby.
1. The first sentence of Paragraph 1 of the Agreement is hereby amended
by substituting "December 31, 2005" for "December 31, 2001" therein.
2. The first sentence of paragraph 2.B of the Agreement is hereby
amended by the substitution of "year 2003 annual meeting" for the words "year
2000 annual meeting" therein.
3. Paragraph 3.B of the Agreement is hereby amended by the addition of
the following language immediately after the second sentence thereof:
"The intent is to provide an Annual Bonus reflecting the Compensation
Committee's assessment, based on the recommendation of the Chief Executive
Officer of MMC, of your performance, which will be the sum of (a) an
amount ranging from 80% to 120% of two times the bonus attributable to a
Pre-Assigned Partnership Interest (as defined in the Partners Plan) in the
Putnam Investments, L.L.C. Partners Incentive Compensation Plan (the
"Partners Plan") of a 5% Partner (as defined in paragraph 4.E) and (b)
bonus attributable to one unit under the Putnam Investments L.L.C.
Operating Heads Incentive Compensation Plan (the "Operating Heads
Agreement")."
4. The fourth sentence of paragraph 3.B of the Agreement is hereby
restated in its entirety to read as follows:
"The Annual Bonus shall be paid in cash in the first quarter of the
calendar year following the year to which such Annual Bonus shall relate."
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5. The third sentence of paragraph 3.D (i) is hereby amended by the
addition of the following language immediately after the words "Fair Market
Value" therein:
"(as used here and, unless otherwise provided herein, as used hereafter,
Fair Market Value with respect to a Class B Share shall be as defined in the
Putnam Investments, L.L.C. Equity Partnership Plan (the "Equity Partnership
Plan"))"
6. Paragraph 3.D of the Agreement is hereby amended by the addition of
new paragraphs, 3.D(vii), (viii), (ix) and (x) which shall read as follows:
"(vii) NEW PUTNAM STOCK OPTIONS. Effective as of March 15, 2001, Putnam
Investments Trust, a Massachusetts business trust (the "Business Trust") shall
grant to you a nonqualified option (the "Fifth Putnam Option") to purchase
50,000 Class B Shares. You shall also receive, in March 2002, a nonqualified
option (the "Sixth Putnam Option", and, together with the Fifth Putnam Option,
the "New Putnam Options") to purchase an additional 50,000 Class B Shares. The
per share exercise price shall be equal to the Fair Market Value of a Class B
Share as of the date of the applicable grant. Each New Putnam Option shall
expire on the tenth anniversary of the date of grant of such option. The Fifth
Putnam Option shall become exercisable with respect to 25% of the Class B Shares
subject thereto on March 10 in each of 2002, 2003, 2004 and 2005. The Sixth
Putnam Option shall become exercisable with respect to 25% of the Class B Shares
subject thereto on March 10 in each of 2003, 2004, 2005 and 2006. In all other
respects, the New Putnam Options granted pursuant to the Amendment shall be
treated as if they were subject to the terms and conditions of the Equity
Partnership Plan and as if such New Putnam Options had been granted thereunder,
except that (a) any amounts paid to you with respect to the exercise of any and
all rights or obligations of Putnam or the Business Trust pursuant to the Equity
Partnership Plan (including with respect to cancellation, forfeiture, purchase,
sale, exchange, conversion or similar events affecting New Putnam Options or
Class B Shares acquired by exercise of New Putnam Options) shall be paid to you
as soon as practicable following the Payment Date as defined in paragraph
3.D(iii) and (b) the New Putnam Options shall be subject to subparagraph (b),
(c), (e) and the next to last sentence of paragraph 3.D(i) hereof as if such New
Putnam Options were Putnam Options granted under paragraph 3.D(i) (except that
subparagraphs (b) and (e) thereof shall be read as if the words "December 31,
2005" replaced the words "December 31, 2001" therein). Furthermore,
notwithstanding anything in the Equity Partnership Plan to the contrary, Putnam,
the Business Trust
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and MMC, as applicable, may exercise the rights set forth in the first sentence
of Section 8(b)(ii) of the Equity Partnership Plan, to cancel New Putnam Options
or Class B Shares acquired by exercise of the New Putnam Options only if all
options granted under the Equity Partnership Plan or all Class B Shares, as
applicable, are also cancelled. Each New Putnam Option granted to you shall be
evidenced by an Award Agreement substantially in the form of the award agreement
attached hereto as Exhibit D, or with respect to the Sixth Putnam Option, in the
form then used for option grants to Putnam senior executives. Notwithstanding
anything herein to the contrary, the Sixth Putnam Option may be granted subject
to the terms and conditions of a successor plan to the Equity Partnership Plan
and relate to a different class of Putnam Common Shares (in each case, to the
same extent as applies to awards then being made to other Putnam senior
executives).
(viii) NEW MMC STOCK OPTIONS. Effective as of March 15, 2001, the
Compensation Committee shall grant to you, pursuant to and subject to the terms
of the MMC 2000 Senior Executive Incentive and Stock Award Plan (such plan, or
any amended or successor plan, the "2000 Plan") a nonqualified option (the
"Second MMC Option") to purchase 50,000 MMC Shares at an exercise price per
share equal to the Fair Market Value (for all purposes hereunder with respect to
the New MMC Options (as defined below), Fair Market Value shall be as defined in
the 2000 Plan) of an MMC Share as of such date, which shall expire on March 14,
2011 and shall vest with respect to 25% of the shares subject thereto on each
anniversary of the date of grant in each of 2002, 2003, 2004 and 2005. You shall
also receive, in each of March 2002, March 2003 and March 2004, pursuant to and
subject to the terms of the 2000 Plan, a nonqualified option (collectively with
the Second MMC Option, the "New MMC Options") to purchase 50,000 MMC Shares at
an exercise price per share equal to the Fair Market Value of an MMC Share as of
the applicable date of grant, which shall expire on the day preceding the tenth
anniversary of the applicable date of grant and shall vest with respect to 25%
of the shares subject thereto per year on each anniversary of the applicable
date of grant. In all other respects, unless otherwise noted herein, each New
MMC Option shall be treated as an MMC Option granted pursuant to Paragraph
3.D(ii) hereof. Each New MMC Option granted to you shall be evidenced by an
Award Agreement substantially in the form of the award agreement attached as
Exhibit E.
(ix) NEW PUTNAM RESTRICTED STOCK UNITS. Effective as of March 15, 2001,
the Business Trust shall grant to you 100,000 Putnam Restricted Stock Units (the
"New Putnam Restricted Stock Units"). The New Putnam Restricted Stock Units
shall vest at
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the rate of 25% per year on March 10 in each of 2002, 2003, 2004 and 2005 and
shall otherwise be treated as if they were subject to the terms and conditions
of the Equity Partnership Plan applicable to the shares of Restricted Stock
awarded under the Equity Partnership Plan except that any amounts paid to you
with respect to the exercise of any and all rights or obligations of Putnam or
the Business Trust pursuant to the Equity Partnership Plan (including with
respect to cancellation, forfeiture, purchase, sale, exchange, conversion, or
similar events affecting New Putnam Restricted Stock Units or Class B Shares)
shall be paid to you as soon as practicable following the Payment Date. Each
individual New Putnam Restricted Stock Unit shall represent and shall have a
Fair Market Value equal to the Fair Market Value of one Class B Share. In
addition, notwithstanding anything to the contrary contained in the Equity
Partnership Plan, the New Putnam Restricted Stock Units shall be subject to the
terms of subparagraphs (a), (b), (e), (f) and the first sentence of the next to
last paragraph of paragraph 3.D(iii) hereof as if such New Putnam Restricted
Stock Units were Putnam Restricted Stock Units granted pursuant to paragraph
3.D(iii) hereof (except that subparagraph (f) thereof shall be read as if the
words "December 31, 2005" replaced the words "December 31, 2001" therein).
Notwithstanding anything in the Equity Partnership Plan to the contrary, Putnam,
the Business Trust and MMC, as applicable, may exercise the rights, set forth in
the first sentence of Section 8(b)(ii) of the Equity Partnership Plan, to cancel
the New Putnam Restricted Stock Units, or Class B Shares acquired by payment
with respect to New Putnam Restricted Stock Units, only if all restricted stock
granted under the Equity Partnership Plan, or all Class B Shares, as applicable,
are also cancelled. The New Putnam Restricted Stock Units granted to you shall
be evidenced by an Award Agreement substantially in the form of the award
agreement attached hereto as Exhibit D.
(x) The Putnam Class B Shares related to the New Putnam Stock
Options and the New Putnam Restricted Stock Units shall reduce the four million
additional Putnam Class B Shares authorized by MMC's Board of Directors in
October of 2000 to be sold or granted to Putnam participants under plans or
related agreements approved by the Compensation Committee.
7. Paragraph 3.D(v) of the Agreement is hereby amended by the insertion of the
following words between the words "Restricted Stock Units" and "referred" in the
first sentence thereof:
"(but not with respect to the New Putnam Options or the New Putnam
Restricted Stock Units)."
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8. Paragraph 3 of the Agreement is hereby amended by the addition of
the following new paragraph 3.F, with the existing paragraphs 3.F, 3.G and 3.H
being re-designated as paragraphs 3.G, 3.H and 3.I respectively and existing
cross references to such paragraphs being re-designated accordingly.
"F. PUTNAM FUND PAYMENT. You are hereby granted a deferred special
payment in an amount equal to the Fair Market Value (as defined in the 2000
Plan) as of February 15, 2001, of 150,000 MMC Shares. Such amount shall be
deemed invested, pursuant to your investment direction, among the various Putnam
funds. On the later of (a) December 31, 2005 and (b) the Payment Date, you shall
be entitled to receive in cash the amount referenced in the immediately
preceding sentence, plus the earnings, if any, net of any losses, if any, of the
deemed investment thereof (such total, the "Putnam Fund Payment"). The Putnam
Fund Payment shall vest on December 31, 2005. If your employment with Putnam is
terminated by Putnam or MMC (acting through its Compensation Committee) pursuant
to paragraph 4.A of this Agreement or by you prior to December 31, 2005 for any
reason other than pursuant to paragraph 4.E of this Agreement, then you shall
forfeit all of the Putnam Fund Payment granted pursuant to this paragraph 3.F.
If your employment with Putnam is terminated in accordance with paragraphs 4.B,
4.C, 4.D or 4.E of this Agreement prior to December 31, 2005, then the Putnam
Fund Payment granted to you pursuant to this paragraph 3.F shall vest as of the
date of such termination and shall be paid to you on the later of (a) the date
of such termination or (b) the Payment Date."
9. Paragraph 3 of the Agreement is hereby amended by the addition of a
new paragraph 3.J which shall read as follows:
"J. SPLIT DOLLAR LIFE INSURANCE. In accordance with the Compensation
Committee approval of September 16, 1999, you were permitted to participate in
the Putnam Estate Enhancement Program, pursuant to which you have previously
chosen to forego $2 million with respect to a certain Annual Bonus in exchange
for two (2) so called "split dollar" life insurance policies of $1 million each.
You are hereby permitted to elect to forego an additional $2 million in the
aggregate with respect to future Annual Bonuses as a premium for additional
split dollar life insurance policies under such program."
10. Paragraph 4.A is hereby amended by the addition of ", the 2000 Plan"
after each occurrence of the words "1997 Plan" therein.
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11. Paragraph 4.A is hereby amended by the addition of the following
sentence immediately after the last sentence thereof:
"Notwithstanding anything herein to the contrary, after December 31, 2001,
the forfeiture provisions contained in this paragraph 4.A shall be of no further
force and effect with respect to the Putnam Options, the MMC Stock Option,
Putnam Restricted Stock Units, MMC Restricted Stock Units or any Class B Shares
which were issued in settlement of such awards; provided, however that such
provisions shall continue to be applicable to the New Putnam Options, New MMC
Options and New Putnam Restricted Stock Units."
12. Paragraph 4.D of the Agreement is hereby amended by substituting
"December 31, 2005" for the words "December 31, 2001" therein.
13. The third sentence of paragraph 4.E of the Agreement is hereby
restated in its entirety to read as follows:
"For purposes of this Agreement, the phrase "Good Cause" shall mean (a) a
breach by MMC, the Business Trust or Putnam of a material term of this Agreement
which is not cured within 30 business days from receipt of written notice
thereof from you, (b) relocation of Putnam's executive offices outside of the
Boston area, (c) reassignment of you to a location outside of the Boston area,
(d) failure to pay you an annual bonus, as contemplated by paragraph 3.B above,
with respect to each full year of your employment during the term commencing
with year 2001 of at least the sum (such sum, the "Minimum Amount") of (1) two
times an amount equal to a bonus attributable to a 5% Pre-Assigned Partnership
Interest (as such term is defined in the Partners Plan) under the Partners Plan
(a participant with such 5% Pre-Assigned Partnership Interest, a "5% Partner)
for a 5% Partner with a Base Partnership Percentage (as such term is defined in
the Partners Plan) of 80%, plus (ii) the bonus with respect to such year
determined under the Putnam Investments, L.L.C. Operating Heads Incentive
Compensation Plan with respect to one Unit (as defined in such plan), (e) a
Change in Control of MMC or a Change in Control of Putnam, each as defined
below, or (f) failure to grant to you the New Putnam Options, the New MMC
Options or the New Putnam Restricted Stock Units."
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14. The first sentence of paragraph 4.F is hereby amended by the
addition of ", the New MMC Options, Putnam Fund Payment" immediately after the
words "the MMC Option" therein.
15. Paragraph 4.F is hereby amended by the addition of the following
immediately at the end thereof:
"Notwithstanding anything herein to the contrary, no Gross-Up Payments
shall be payable to you with respect to any Excise Tax attributable to the New
Putnam Options or the New Putnam Restricted Stock Units."
16. Paragraphs 7.A and 7.B of the Agreement are hereby amended by
substituting "68" for each occurrence of "65" therein.
17. The third from the last sentence of paragraph 7.A shall be amended
by the addition of "and the Putnam Fund Payment" after "Special Retirement
Benefit", by the addition of "and New Putnam Options" after each occurrence of
"Putnam Options" and by the addition of "and New Putnam Restricted Stock Units"
after each occurrence of "Putnam Restricted Stock Units" therein.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
as of this 22nd day of March, 2001.
PUTNAM INVESTMENTS, L.L.C.
By: PUTNAM INVESTMENTS TRUST,
its sole member
By:
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J.W. Greenberg
Trustee
Agreed and Accepted:
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Lawrence J. Lasser
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The Business Trust hereby agrees to perform any and all obligations and
duties owed to the Executive pursuant to paragraph 3D(vii) and 3D(ix) of the
Agreement, and the Executive agrees to perform any and all obligations owed to
the Business Trust by the Executive pursuant to the terms and conditions of the
Agreement and acknowledges all of the rights of the Business Trust under the
Agreement.
Notice is hereby given that the shareholders of the Business Trust shall
not be personally liable for any claims arising from obligations of the Business
Trust under the Agreement and the Executive shall look solely to the Trust
Estate (as such term is defined in the Declaration of Trust for the Business
Trust) for the payment of any claim arising from obligations of the Business
Trust under the Agreement.
PUTNAM INVESTMENTS TRUST
By:
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J.W. Greenberg
Trustee
Agreed and Accepted:
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Lawrence J. Lasser