Document:

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                                                                    EXHIBIT 4(a)

                                   ADVO, INC.
                               401(k) SAVINGS PLAN
                                (PLAN NUMBER 004)

                            Effective January 1, 2004

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                ADVO, Inc. 401(k) Savings Plan (Plan Number 004)

                            Effective January 1, 2004

This ADVO, Inc. 401(k) Savings Plan (Plan Number 004) (the "Plan") is the
benefit of eligible employees of the Company and its participating affiliates
who are (i) designated as Sales Associates and (ii) are not highly compensated
employees (within the meaning of Section 414(q) of the Internal Revenue Code,
without regard to Section 414(q)(1)(A)). The Plan is intended to constitute a
qualified profit sharing plan, as described in Code section 401(a), which
includes a qualified cash or deferred arrangement, as described in Code section
401(k).

The Plan is intended to comply with the qualification requirements as amended by
the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA),
the Uruguay Round Agreements Act (GATT), the Small Business Job Protection Act
of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA `97), the Restructuring
and Reform Act of 1998 (RRA `98), the Community Renewal Tax Relief Act of 2000,
and is intended to comply in operation therewith. To the extent that the Plan,
as set forth below, is subsequently determined to be insufficient to comply with
such requirements and any regulations issued under these qualification
requirements, the Plan shall later be amended to so comply.

This Plan reflects certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"). This Plan intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance
with EGTRRA and guidance issued thereunder. The EGTRRA Provisions of this
restatement shall supersede the other provisions of the Plan to the extent those
provisions are inconsistent with the EGTRRA Provisions.
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                                TABLE OF CONTENTS

<TABLE>
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1    DEFINITIONS......................................................................................        1

     1.1         "Account"............................................................................        1
     1.2         "Administrator"......................................................................        1
     1.3         "Associate"..........................................................................        1
     1.4         "Beneficiary"........................................................................        1
     1.5         "Code"...............................................................................        1
     1.6         "Committee"..........................................................................        1
     1.7         "Company"............................................................................        1
     1.8         "Company Stock"......................................................................        1
     1.9         "Compensation".......................................................................        2
     1.10        "Contribution".......................................................................        2
     1.11        "Contribution Dollar Limit"..........................................................        2
     1.12        "Eligible Associate".................................................................        3
     1.13        "Employer"...........................................................................        3
     1.14        "ERISA"..............................................................................        3
     1.15        "HCE" or "Highly Compensated Employee"...............................................        3
     1.16        "Highly Compensated Sales Associate".................................................        4
     1.17        "Hour of Service"....................................................................        4
     1.18        "Ineligible".........................................................................        4
     1.19        "Investment Fund"....................................................................        5
     1.20        "Leased Associate"...................................................................        5
     1.21        "Leave of Absence"...................................................................        5
     1.22        "NHCE" or "Non-Highly Compensated Employee"..........................................        5
     1.23        "Non-Highly Compensated Sales Associate".............................................        5
     1.24        "Normal Retirement Date".............................................................        5
     1.25        "Owner"..............................................................................        5
     1.26        "Participant"........................................................................        5
     1.27        "Pay"................................................................................        6
     1.28        "Plan"...............................................................................        6
     1.29        "Plan Year"..........................................................................        6
     1.30        "QDRO"...............................................................................        6
     1.31        "Related Company"....................................................................        6
     1.32        "Required Beginning Date"............................................................        7
     1.33        "Sales Associate"....................................................................        7
     1.34        "Settlement Date"....................................................................        7
     1.35        "Spousal Consent"....................................................................        7
     1.36        "Subsidiary".........................................................................        7
     1.37        "Taxable Income".....................................................................        7
     1.38        "Trade Date".........................................................................        8
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
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     1.39        "Trust"..............................................................................        8
     1.40        "Trustee"............................................................................        8
     1.41        "USERRA".............................................................................        8

2    ELIGIBILITY......................................................................................        9

     2.1         Eligibility..........................................................................        9
     2.2         Ineligible Associates................................................................        9
     2.3         Ineligible or Former Participants....................................................        9
     2.4         Highly Compensated Sales Associates..................................................        9
     2.5         Plan-to-Plan Transfers...............................................................        9
     2.6         Employment Transfers.................................................................       10

3    PARTICIPANT CONTRIBUTIONS........................................................................       11

     3.1         Associate Pre-Tax Contribution Election..............................................       11
     3.2         Changes..............................................................................       11
     3.3         Stopping Contributions...............................................................       11
     3.4         Contribution Percentage Limits.......................................................       11
     3.5         Refunds When Contribution Dollar Limit Exceeded......................................       11
     3.6         Timing, Posting and Tax Considerations...............................................       12
     3.7         Catch-Up Contributions...............................................................       12

4    ROLLOVERS & TRUST-TO-TRUST TRANSFERS.............................................................       13

     4.1         Rollovers............................................................................       13
     4.2         Transfers From Other Qualified Plans.................................................       14

5    EMPLOYER CONTRIBUTIONS...........................................................................       15

     5.1         ADVO Matching Contributions..........................................................       15
     5.2         Contributions Following Qualified Military Service...................................       15

6    ACCOUNTING.......................................................................................       17

     6.1         Individual Participant Accounting....................................................       17
     6.2         Trade Date Accounting and Investment Cycle...........................................       17
     6.3         Accounting for Investment Funds......................................................       17
     6.4         Payment of Fees and Expenses.........................................................       17
     6.5         How Fees and Expenses are Charged to Participants....................................       17
     6.6         Accounting for Participant Loans.....................................................       18
     6.7         Error Correction.....................................................................       18
     6.8         Participant Statements...............................................................       18
     6.9         Special Accounting During Conversion Period..........................................       18
     6.10        Accounts for QDRO Beneficiaries......................................................       18

7    INVESTMENT FUNDS AND ELECTIONS...................................................................       20

     7.1         Investment Funds.....................................................................       20
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

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     7.2         Investment Fund Elections............................................................       20
     7.3         Responsibility for Investment Choice.................................................       20
     7.4         Ineligibility if No Election.........................................................       20
     7.5         Timing...............................................................................       20
     7.6         Switching Fees.......................................................................       20

8    VESTING & FORFEITURES............................................................................       21

     8.1         Fully Vested Contribution Accounts...................................................       21

9    PARTICIPANT LOANS................................................................................       22

     9.1         Participant Loans Permitted..........................................................       22
     9.2         Loan Funding Limits..................................................................       22
     9.3         Maximum Number of Loans..............................................................       22
     9.4         Source of Loan Funding...............................................................       22
     9.5         Interest Rate........................................................................       23
     9.6         Repayment............................................................................       23
     9.7         Repayment Hierarchy..................................................................       23
     9.8         Loan Application, Note and Security..................................................       23
     9.9         Default, Suspension and Call Feature.................................................       23
     9.10        Spousal Consent......................................................................       24
     9.11        Plan Loans for Owner-Employees and Shareholder Employees.............................       24

10   IN-SERVICE WITHDRAWALS...........................................................................       25

     10.1        In-Service Withdrawals Permitted.....................................................       25
     10.2        Withdrawals for Hardship.............................................................       25
     10.3        Rollover Account Withdrawals.........................................................       26
     10.4        Withdrawals for Participants over Age 70-1/2.........................................       27
     10.5        Withdrawal Processing................................................................       27
     10.6        Spousal Consent......................................................................       28
     10.7        Over Age 59-1/2 Withdrawals..........................................................       28

11   DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S REQUIRED BEGINNING DATE.......       29

     11.1        Benefit Information, Notices and Election............................................       29
     11.2        Payment Form and Medium..............................................................       29
     11.3        Distribution of Small Amounts........................................................       29
     11.4        Latest Commencement Permitted........................................................       30
     11.5        Payment Within Life Expectancy.......................................................       30
     11.6        Incidental Benefit Rule..............................................................       30
     11.7        Payment to Beneficiary...............................................................       30
     11.8        Beneficiary Designation..............................................................       31
     11.9        Spousal Consent......................................................................       31
     11.10       Distributions Upon Severance from Employment.........................................       31
     11.11       EGTRRA Modifications to Required Minimum Distributions...............................       32
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

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12   ADP AND ACP TESTS................................................................................       37

13   MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS.....................................................       38

     13.1        "Annual Addition" Defined............................................................       38
     13.2        Maximum Annual Addition..............................................................       38
     13.3        Avoiding an Excess Annual Addition...................................................       38
     13.4        Correcting an Excess Annual Addition.................................................       38
     13.5        Correcting a Multiple Plan Excess....................................................       39

14   TOP HEAVY RULES..................................................................................       40

     14.1        Top Heavy Definitions................................................................       40
     14.2        Special Contributions................................................................       41
     14.3        EGTRRA Modifications.................................................................       41

15   PLAN ADMINISTRATION..............................................................................       44

     15.1        Plan Delineates Authority and Responsibility.........................................       44
     15.2        Fiduciary Standards..................................................................       44
     15.3        Company is ERISA Plan Administrator..................................................       44
     15.4        Administrator Duties.................................................................       44
     15.5        Advisors May be Retained.............................................................       45
     15.6        Delegation of Administrator Duties...................................................       45
     15.7        Committee Operating Rules............................................................       46

16   RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION................................................       47

     16.1        Plan Does Not Affect Employment Rights...............................................       47
     16.2        Limited Return of Contributions......................................................       47
     16.3        Assignment and Alienation............................................................       48
     16.4        Facility of Payment..................................................................       48
     16.5        Reallocation of Lost Participant's Accounts..........................................       48
     16.6        Claims Procedure.....................................................................       48
     16.7        Construction.........................................................................       49
     16.8        Jurisdiction and Severability........................................................       49
     16.9        Indemnification by Employer..........................................................       50
     16.10       Direct Rollovers.....................................................................       50

17   AMENDMENT, MERGER, AND TERMINATION...............................................................       52

     17.1        Amendment............................................................................       52
     17.2        Merger...............................................................................       52
     17.3        Plan Termination.....................................................................       52
     17.4        Termination of Employer's Participation..............................................       53
     17.5        Replacement of the Trustee...........................................................       53
     17.6        Final Settlement and Accounting of Trustee...........................................       53
</TABLE>

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1        DEFINITIONS

         When capitalized, the words and phrases below have the following
         meanings unless different meanings are clearly required by the context:

         1.1      "Account". The records maintained for purposes of accounting
                  for a Participant's interest in the Plan. "Account" may refer
                  to one or all of the following accounts which have been
                  created on behalf of a Participant to hold specific types of
                  Contributions under the Plan:

                  (a)      "Associate Pre-Tax Account". An account created to
                           hold Associate Pre-Tax Contributions.

                  (b)      "Rollover Account". An account created to hold
                           Rollover Contributions.

                  (c)      "ADVO Matching Account". An account created to hold
                           ADVO Matching Contributions.

         1.2      "Administrator". The Company, which may delegate all or a
                  portion of the duties of the Administrator under the Plan to a
                  Committee in accordance with Section 15.6.

         1.3      "Associate". An individual who is:

                  (a)      directly employed by any Related Company and for whom
                           any income for such employment is subject to
                           withholding of income or social security taxes, or

                  (b)      a Leased Associate.

         1.4      "Beneficiary". The person or persons who is to receive
                  benefits after the death of the Participant pursuant to the
                  "Beneficiary Designation" paragraph in Section 11, or as a
                  result of a QDRO.

         1.5      "Code". The Internal Revenue Code of 1986, as amended.
                  Reference to any specific Code section shall include such
                  section, any valid regulation promulgated thereunder, and any
                  comparable provision of any future legislation amending,
                  supplementing or superseding such section.

         1.6      "Committee". If applicable, the committee which has been
                  appointed by the Company to administer the Plan in accordance
                  with Section 15.6.

         1.7      "Company". ADVO, Inc. or any successor by merger, purchase or
                  otherwise.

         1.8      "Company Stock". Shares of common stock of the Company, its
                  predecessor(s), or its successors or assigns, or any
                  corporation with or into which said corporation may be merged,
                  consolidated or reorganized, or to which a majority of its
                  assets may be sold.

                                     - 1 -

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         1.9      "Compensation".

                  (a)      The sum of a Participant's Taxable Income and salary
                           reductions, if any, pursuant to Code section 125,
                           402(e)(3), 402(h)(1)(B), 403(b), 408(p)(2)(A)(i) or
                           457, and 132(f)(4).

                  (b)      For purposes of determining HCEs and key employees
                           and for purposes of Sections 13.2 and Section 14.2,
                           Compensation for the entire Plan Year shall be used.

                  (c)      The annual Compensation of each Participant taken
                           into account in determining allocations for any Plan
                           Year shall not exceed $200,000, as adjusted for
                           cost-of-living increases in accordance with section
                           401(a)(17)(B) of the Code. "Annual Compensation"
                           means Compensation during the Plan Year or such other
                           consecutive 12-month period over which Compensation
                           is otherwise determined under the Plan (the
                           determination period). The cost-of-living adjustment
                           in effect for a calendar year applies to annual
                           Compensation for the determination period that begins
                           with or within such calendar year.

         1.10     "Contribution". An amount contributed to the Plan by the
                  Employer or an Eligible Associate, and allocated by
                  contribution type to Participants' Accounts, as described in
                  Section 1.1. Specific types of contribution include:

                  (a)      "Associate Pre-Tax Contribution". An amount
                           contributed on a pre-tax basis in conjunction with a
                           Participant's Code section 401(k) salary deferral
                           election.

                  (b)      "Rollover Contribution". An amount contributed by an
                           Eligible Associate which originated from another
                           employer's qualified plan.

                  (c)      "ADVO Matching Contribution". An amount contributed
                           by the Employer based upon the amount contributed by
                           the eligible Participant.

         1.11     "Contribution Dollar Limit".

                  No Participant shall be permitted to have Associate Pre-Tax
                  Contributions made under this Plan, or elective deferrals
                  under any other qualified plan maintained by the Employer
                  during any taxable year, in excess of the dollar limitation
                  contained in Section 402(g) of the Code in effect for such
                  taxable year, except to the extent permitted under Section 3.7
                  and Section 414(v) of the Code, if applicable. For purposes of
                  this Section, a Participant's Associate Pre-Tax Contributions
                  shall include (i) any employer contribution under a qualified
                  cash or deferred arrangement (as defined in Code section
                  401(k)) to the extent not includible in gross income for the
                  taxable year under Code section 402(e)(3) (determined without
                  regard to Code section 402(g)), (ii) any employer contribution
                  to the extent not includible in gross income for the taxable
                  year under Code section 402(h)(1)(B) (determined without
                  regard to Code section 402(g)), (iii) any

                                     - 2 -

<PAGE>

                  employer contribution to purchase an annuity contract under
                  Code section 403(b) under a salary reduction agreement (within
                  the meaning of Code section 3121(a)(5)(D)) and (iv) any
                  elective employer contribution under Code section
                  408(p)(2)(A)(i).

         1.12     "Eligible Associate". Any Non-Highly Compensated Sales
                  Associate of an Employer, except any such Associate:

                  (a)      whose Compensation and conditions of employment are
                           covered by a collective bargaining agreement to which
                           an Employer is a party, unless the agreement calls
                           for the Associate's participation in the Plan;

                  (b)      who is treated as an Associate because he or she is a
                           Leased Associate. "Eligible Associate" shall not
                           include any person characterized by an Employer or
                           Related Company as an "independent contractor" or any
                           other person who is not treated by the Employer or
                           Related Company as an employee for purposes of
                           withholding federal employment taxes, regardless of
                           any contrary Internal Revenue Service, governmental
                           or judicial determination relating to such employment
                           status or tax withholding. In the event that a person
                           is engaged in an independent contractor or similar
                           capacity and is subsequently classified by the
                           Employer or Related Company, the Internal Revenue
                           Service or a court as an employee, such person, for
                           purposes of this Plan, shall be deemed an Eligible
                           Associate from the actual (and not the effective)
                           date of such classification.

         1.13     "Employer". The Company and any Subsidiary or other Related
                  Company of either the Company or a Subsidiary which adopts
                  this Plan with the approval of the Company.

         1.14     "ERISA". The Employee Retirement Income Security Act of 1974,
                  as amended. Reference to any specific section shall include
                  such section, any valid regulation promulgated thereunder, and
                  any comparable provision of any future legislation amending,
                  supplementing or superseding such section.

         1.15     "HCE" or "Highly Compensated Employee". With respect to all
                  Related Companies, an Associate who (in accordance with Code
                  section 414(q)):

                  (a)      Was a more than 5% Owner (within the meaning of Code
                           section 414(q)(2)) at any time during the Plan Year
                           or the preceding Plan Year; or

                  (b)      Received Compensation during the preceding Plan Year
                           in excess of $80,000 (as adjusted for such Year
                           pursuant to Code sections 414(q)(1) and 415(d)).

                                     - 3 -

<PAGE>

                  A former Associate shall be treated as an HCE if (1) such
                  former Associate was an HCE when he or she separated from
                  service, or (2) such former Associate was an HCE in service at
                  any time after attaining age 55.

         1.16     "Highly Compensated Sales Associate". With respect to any Plan
                  Year, an Associate who (i) is designated by the Employer as a
                  "Sales Associate," and (ii) is a Highly Compensated Employee
                  for such Plan Year (determined without regard to Section
                  414(q)(1)(A) of the Code).

         1.17     "Hour of Service". Each hour for which an Associate is
                  entitled to:

                  (a)      payment for the performance of duties for any Related
                           Company;

                  (b)      payment from any Related Company for any period
                           during which no duties are performed (irrespective of
                           whether the employment relationship has terminated)
                           due to vacation, holiday, sickness, incapacity
                           (including disability), layoff, leave of absence,
                           jury duty or military service;

                  (c)      back pay, irrespective of mitigation of damages, by
                           award or agreement with any Related Company (and
                           these hours shall be credited to the period to which
                           the agreement pertains); or

                  (d)      no payment, but is on a Leave of Absence (and these
                           hours shall be based upon his or her normally
                           scheduled hours per week or a 40 hour week if there
                           is no regular schedule).

                  The crediting of hours for which no duties are performed shall
                  be in accordance with Department of Labor regulation sections
                  2530.200b-2(b) and (c). Actual hours shall be used whenever an
                  accurate record of hours are maintained for an Employee.
                  Otherwise, an equivalent number of hours shall be credited for
                  each payroll period in which the Employee would be credited
                  with at least 1 hour. An Employee will be credited with the
                  payroll period equivalency that corresponds to the frequency
                  with which he or she is paid as follows; an Employee paid on a
                  weekly basis shall be credited with 45 hours weekly, an
                  Employee paid on a biweekly basis shall be credited with 90
                  hours biweekly, an Employee paid on a semimonthly basis shall
                  be credited with 95 hours semimonthly and an Employee paid on
                  a monthly basis shall be credited with 190 hours monthly.

                  An Associate's service with a predecessor or acquired company
                  shall only be counted in the determination of his or her Hours
                  of Service for eligibility and/or vesting purposes if (1) the
                  Company directs that credit for such service be granted, or
                  (2) a qualified plan of the predecessor or acquired company is
                  subsequently maintained by any Employer or Related Company.

         1.18     "Ineligible". An individual during the period in which he or
                  she is (1) an Associate of a Related Company which is not then
                  an Employer, (2) an Associate, but not an Eligible Associate,
                  or (3) not an Associate.

                                     - 4 -

<PAGE>

         1.19     "Investment Fund". Any fund in which Trust assets are
                  invested.

         1.20     "Leased Associate". An individual, not otherwise an employee,
                  who, pursuant to an agreement between a Related Company and a
                  leasing organization, has performed, on a substantially
                  full-time basis, for a period of at least 12 months, services
                  under the primary direction or control of the Related Company,
                  unless:

                  (a)      the individual is covered by a money purchase pension
                           plan maintained by the leasing organization and
                           meeting the requirements of Code section
                           414(n)(5)(B), and

                  (b)      such individuals do not constitute more than 20% of
                           all Non-Highly Compensated Employees of all Related
                           Companies (within the meaning of Code section
                           414(n)(5)(C)(ii)).

         1.21     "Leave of Absence". A period during which an individual is
                  deemed to be an Associate, but is absent from active
                  employment, provided that the absence:

                  (a)      was authorized by a Related Company; or

                  (b)      was due to military service in the United States
                           armed forces and the individual returns to active
                           employment within the period during which he or she
                           retains employment rights under USERRA.

         1.22     "NHCE" or "Non-Highly Compensated Employee". An Associate who
                  is not a Highly Compensated Employee.

         1.23     "Non-Highly Compensated Sales Associate". With respect to any
                  Plan Year, an Associate who (i) is designated by the Employer
                  as a "Sales Associate," and (ii) is a Non-Highly Compensated
                  Employee for such Plan Year (determined without regard to
                  Section 414(q)(1)(A) of the Code).

         1.24     "Normal Retirement Date". The date of a Participant's 65th
                  birthday.

         1.25     "Owner". A person with an ownership interest in the capital,
                  profits, outstanding stock or combined voting power of a
                  Related Company within the meaning of Code section 318 or 416
                  (which exclude indirect ownership through a qualified plan).

         1.26     "Participant". An Eligible Associate who begins to participate
                  in the Plan after completing the eligibility requirements as
                  described in Section 2. An Eligible Associate who makes a
                  Rollover Contribution prior to completing the eligibility
                  requirements as described in Section 2.1 shall also be
                  considered a Participant except for purposes of provisions
                  related to Contributions (other than a Rollover Contribution).
                  A Participant's participation continues until his or her
                  employment with all Related Companies ends and his or her
                  Account is distributed or forfeited or until his or her
                  eligibility to participate terminates in accordance with
                  Section 2.4.

                                     - 5 -

<PAGE>

         1.27     "Pay". The base pay, overtime, bonus and commissions paid to
                  an Eligible Associate by an Employer while a Participant
                  during the current period.

                  Pay is neither increased nor decreased by any salary credit or
                  reduction pursuant to Code sections 125 or 402(e)(3), or
                  132(f)(4). The annual Pay of each Participant taken into
                  account in determining allocations for any Plan Year shall not
                  exceed $200,000, as adjusted for cost-of-living increases in
                  accordance with section 401(a)(17)(B) of the Code. "Annual
                  Pay" means Pay during the Plan Year or such other consecutive
                  12-month period over which Pay is otherwise determined under
                  the Plan (the determination period). The cost-of-living
                  adjustment in effect for a calendar year applies to annual Pay
                  for the determination period that begins with or within such
                  calendar year. The annual Pay of each Participant taken into
                  account in determining allocations for any Plan Year beginning
                  after December 31, 2001, shall not exceed $200,000, as
                  adjusted for cost-of-living increases in accordance with
                  section 401(a)(17)(B) of the Code. "Annual Pay" means Pay
                  during the Plan Year or such other consecutive 12-month period
                  over which Pay is otherwise determined under the Plan (the
                  determination period). The cost-of-living adjustment in effect
                  for a calendar year applies to annual Pay for the
                  determination period that begins with or within such calendar
                  year. If a Plan Year consists of fewer than 12 months, the
                  limitation on Pay is an amount equal to the otherwise
                  applicable limit for such Plan Year multiplied by a fraction,
                  the numerator of which is the number of months in the short
                  Plan Year and the denominator of which is 12.

                  "Pay" means the Pay, as defined herein, that the Participant
                  would have received during any period of service in the
                  uniformed services (as defined in chapter 43 of title 38,
                  United States Code) where the Participant's right to
                  reemployment is protected by USERRA, (or, if the amount of
                  such Pay is not reasonably certain, the Participant's average
                  earnings from the Employer or a Related Company for the
                  twelve-month period immediately preceding such period of
                  service); provided, however, that the Participant returns to
                  work within the period during which his right to reemployment
                  is protected by USERRA.

         1.28     "Plan". The ADVO, Inc. 401(k) Savings Plan (Plan Number 004)
                  set forth in this document, as from time to time amended.

         1.29     "Plan Year". The annual accounting period of the Plan which
                  ends on each December 31.

         1.30     "QDRO". A domestic relations order which the Administrator has
                  determined to be a qualified domestic relations order within
                  the meaning of Code section 414(p).

         1.31     "Related Company". With respect to any Employer, that Employer
                  and any corporation, trade or business which is, together with
                  that Employer, a member of the same controlled group of
                  corporations, a trade or business under common control, or an
                  affiliated service group within the meaning of Code sections
                  414(b),

                                     - 6 -

<PAGE>

                  (c), (m) or (o). For purposes of Section 13, "Related Company"
                  will mean a Related Company, but determined with "more than 50
                  percent" substituted for the phrase "at least 80 percent" in
                  sections 1563(a)(1) of the Code when applying sections 414(b)
                  and (c) of the Code.

         1.32     "Required Beginning Date". The latest date benefit payments
                  shall commence to a Participant. Such date shall mean:

                  (a)      with regard to a Participant who is not a 5% Owner,
                           the April 1 of the calendar year that follows the
                           later of (i) the calendar year in which the
                           Participant attained age 70-1/2, or (ii) the calendar
                           year in which the Participant terminates employment
                           with all Related Companies; and

                  (b)      with regard to a Participant who is a 5% Owner, the
                           April 1 of the calendar year that follows the
                           calendar year in which the Participant attains age
                           70-1/2.

                  A Participant shall be considered a 5% Owner for this purpose
                  if such Participant is a 5% Owner with respect to the Plan
                  Year ending in the calendar year in which the Participant
                  attains age 70-1/2.

         1.33     "Sales Associate". An Associate who is designated by the
                  Employee as a Sales Associate.

         1.34     "Settlement Date". The date on which the transactions from the
                  most recent Trade Date are settled.

         1.35     "Spousal Consent". The written consent given by a spouse to a
                  Participant's election (or waiver) of a specified form of
                  benefit, including a loan or an in-service withdrawal, or
                  Beneficiary designation. The spouse's consent must acknowledge
                  the effect on the spouse of the Participant's election, waiver
                  or designation, and be duly witnessed by a Plan representative
                  or notary public. Spousal Consent shall be valid only with
                  respect to the spouse who signs the Spousal Consent and only
                  for the particular choice made by the Participant which
                  requires Spousal Consent. A Participant may revoke (without
                  Spousal Consent) a prior election, waiver or designation that
                  required Spousal Consent at any time before payments begin.
                  Spousal Consent also means a determination by the
                  Administrator that there is no spouse, the spouse cannot be
                  located, or such other circumstances as may be established by
                  applicable law.

         1.36     "Subsidiary". A company which is 50% or more owned, directly
                  or indirectly, by the Company.

         1.37     "Taxable Income". Compensation in the amount reported by the
                  Employer as "Wages, tips, other compensation" on Form W-2, or
                  any successor method of reporting under Code section 6051.

                                     - 7 -

<PAGE>

         1.38     "Trade Date". Each day the Investment Funds are valued, which
                  is normally every day the assets of such Funds are traded.

         1.39     "Trust". The trust established in connection with the Plan, as
                  it may be amended from time to time.

         1.40     "Trustee". The person(s) or entity, or combination of them,
                  serving from time to time as the trustee(s) of the Trust.

         1.41     "USERRA". The Uniformed Services Employment and Reemployment
                  Rights Act of 1994, as amended.

                                     - 8 -

<PAGE>

2        ELIGIBILITY

         2.1      Eligibility

                  Each Eligible Associate shall become a Participant (a) for
                  purposes of Associate Pre-Tax Contributions, on the first day
                  of the next month after the date he or she first performs an
                  Hour of Service for an Employer; and (b) for purposes of ADVO
                  Matching Contributions, on the first day of the next month
                  after the date he or she completes a 6 month eligibility
                  period in which he or she is credited with at least 500 Hours
                  of Service. The initial eligibility period for ADVO Matching
                  Contributions begins on the date an Associate first performs
                  an Hour of Service, and subsequent eligibility periods begin
                  on the first day of each subsequent month.

         2.2      Ineligible Associates

                  If an Associate completes the above eligibility requirements,
                  but is Ineligible at the time participation would otherwise
                  begin (if he or she were not Ineligible), he or she shall
                  become a Participant on the first subsequent date on which he
                  or she is an Eligible Associate.

         2.3      Ineligible or Former Participants

                  A Participant may not make or share in Plan Contributions, nor
                  generally be eligible for a new Plan loan, during the period
                  he or she is Ineligible, but he or she shall continue to
                  participate for all other purposes. An Ineligible Participant
                  or former Participant shall automatically become an active
                  Participant on the date he or she again becomes an Eligible
                  Associate.

         2.4      Highly Compensated Sales Associates

                  Notwithstanding the foregoing, (i) a Sales Associate who is an
                  Eligible Associate for a Plan Year, and who becomes a Highly
                  Compensated Sales Associate for the subsequent Plan Year shall
                  continue to be eligible to participate in the Plan during such
                  subsequent Plan Year until the Administrator determines that
                  such Sales Associate is a Highly Compensated Sales Associate
                  for such subsequent Plan Year, and (ii) a Sales Associate who
                  is a Highly Compensated Sales Associate for a Plan Year and
                  who ceases to be a Highly Compensated Sales Associate for the
                  subsequent Plan Year shall not be eligible to participate in
                  this Plan during such subsequent Plan Year until the
                  Administrator determines that such Sales Associate is an
                  Eligible Associate for such subsequent Plan Year.

         2.5      Plan-to-Plan Transfers

                  In the event that an Associate ceases to be a Participant in
                  this Plan and becomes eligible to participate in the ADVO,
                  Inc. 401(k) Savings Plan (Plan Number 001), the Company shall
                  cause such Participant's Account to be transferred to the
                  ADVO, Inc. 401(k) Savings Plan (Plan Number 001). In the event
                  that an

                                     - 9 -

<PAGE>

                  Associate ceases to be a participant in the ADVO, Inc. 401(k)
                  Savings Plan (Plan Number 001) and becomes eligible to
                  Participate in this Plan, the Company shall cause such
                  Associate's account under the ADVO, Inc. 401(k) Savings Plan
                  (Plan Number 001) to be transferred to this Plan. The
                  foregoing transfers shall be made as soon as administratively
                  practicable following the date on which eligibility to
                  participate in the subsequent plan begins.

         2.6      Employment Transfers

                  Notwithstanding any other provision of this Plan, (i) in the
                  event an Associate who is not a Sales Associate and who is
                  eligible to participate in the ADVO, Inc. 401(k) Savings Plan
                  (Plan Number 001) transfers employment to a Sales Associate
                  position, and such Sales Associate is a Non-Highly Compensated
                  Sales Associate, such Associate shall not become eligible to
                  participate in this Plan until January 1 of the year following
                  the year in which such employment transfer occurs. Such
                  Associate shall be eligible to make Pre-Tax Contributions from
                  and after such January 1 and to receive ADVO Matching
                  Contributions upon completion of the eligibility period
                  specified in Section 2.1(b) taking into account all Hours of
                  Service completed as a Participant in this Plan and as a
                  participant in the ADVO, Inc. 401(k) Retirement Savings Plan
                  (Plan Number 001) and (ii) in the event a Participant
                  transfers employment to a non-Sales Associate position, such
                  Participant shall be immediately ineligible to participate in
                  this Plan and shall become eligible to participate in the
                  ADVO, Inc. 401(k) Savings Plan (Plan Number 001) in accordance
                  with the terms of that Plan.

                                     - 10 -

<PAGE>

3        PARTICIPANT CONTRIBUTIONS

         3.1      Associate Pre-Tax Contribution Election

                  Upon becoming a Participant, an Eligible Associate may elect
                  to reduce his or her Pay by an amount which does not exceed
                  the Contribution Dollar Limit, within the limits described in
                  the Contribution Percentage Limits paragraph of this Section
                  3, and have such amount contributed to the Plan by the
                  Employer as an Associate Pre-Tax Contribution. The election
                  shall be made in advance as a whole percentage of Pay on such
                  form and with such advance notice as may be prescribed by the
                  Administrator. In no event shall an Associate's Associate
                  Pre-Tax Contributions under the Plan and all other plans,
                  contracts or arrangements of all Related Companies exceed the
                  Contribution Dollar Limit for the Associate's taxable year
                  beginning in the Plan Year.

         3.2      Changes

                  A Participant may change his or her Associate Pre-Tax
                  Contribution election at any time by giving the Administrator
                  such advance notice as it requires. The changed percentage
                  shall become effective as soon as administratively practicable
                  after the Administrator receives such notice. Participants'
                  Contribution election percentages shall automatically apply to
                  Pay increases or decreases.

         3.3      Stopping Contributions

                  A Participant may revoke his or her Contribution election at
                  any time in accordance with procedures established by the
                  Administrator from time to time, and such election shall be
                  effective with the first payroll paid after such date. A
                  Participant may contribute again by making a new Contribution
                  election at the same time and in the same manner in which a
                  Participant may change his or her election.

         3.4      Contribution Percentage Limits

                  The Administrator may establish (and subsequently change) the
                  maximum Associate Pre-Tax Contribution percentage,
                  prospectively or retrospectively (for the current Plan Year),
                  for all Participants. The Associate Pre-Tax Contribution
                  maximum percentage is 16%.

                  Irrespective of the limits that may be established by the
                  Administrator in accordance with this paragraph, in no event
                  shall the contributions made by or on behalf of a Participant
                  for a Plan Year exceed the maximum allowable under Code
                  section 415.

         3.5      Refunds When Contribution Dollar Limit Exceeded

                  A Participant who makes Associate Pre-Tax Contributions for a
                  calendar year to this and any other qualified defined
                  contribution plan in excess of the

                                     - 11 -

<PAGE>

                  Contribution Dollar Limit may notify the Administrator in
                  writing by the following March 1 (or as late as April 14 if
                  allowed by the Administrator) that an excess has occurred. In
                  this event, the amount of the excess specified by the
                  Participant, adjusted for investment gain or loss, shall be
                  refunded to him or her by April 15 and shall not be included
                  as an Annual Addition under Code section 415 for the year
                  contributed. Refunds shall not include investment gain or loss
                  for the period between the end of the applicable Plan Year and
                  the date of distribution. Any ADVO Matching Contributions
                  attributable to refunded excess Associate Pre-Tax
                  Contributions as described in this Section shall be deemed a
                  Contribution made by reason of a mistake of fact and removed
                  from the Participant's Account.

         3.6      Timing, Posting and Tax Considerations

                  Participants' Contributions, other than Rollover
                  Contributions, may only be made through payroll deduction.
                  Such amounts shall be paid to the Trustee in cash and posted
                  to each Participant's Account(s) as soon as such amounts can
                  reasonably be separated from the Employer's general assets and
                  balanced against the specific amount made on behalf of each
                  Participant. In no event, however, shall such amounts be paid
                  to the Trustee more than 15 business days following the end of
                  the month that includes the date amounts are deducted from a
                  Participant's Pay (or as that maximum period may be otherwise
                  extended by ERISA). Pre-Tax Contributions shall be treated as
                  Contributions made by an Employer in determining tax
                  deductions under Code section 404(a).

         3.7      Catch-Up Contributions

                  All Associates who are eligible to make Associate Pre-Tax
                  Contributions under this Plan and who have attained age 50
                  before the close of the Plan Year shall be eligible to make
                  catch-up contributions in accordance with, and subject to the
                  limitations of Section 414(v) of the Code. Such catch-up
                  contributions shall not be taken into account for purposes of
                  the provisions of the Plan implementing the required
                  limitations of Sections 402(g) and 415 of the Code. The Plan
                  shall not be treated as failing to satisfy the provisions of
                  the Plans implementing the requirements of Section 401(k)(3),
                  401(k)(11), 401(k)(12), 410(b), or 416 of the Code, as
                  applicable, by reason of the making of such catch-up
                  contributions.

                                     - 12 -

<PAGE>

4        ROLLOVERS & TRUST-TO-TRUST TRANSFERS

         4.1      Rollovers

                  (a)      The Administrator may authorize the Trustee to accept
                           a rollover contribution, within the meaning of Code
                           section 402(c) or 408(d)(3)(A)(ii), either from a
                           Participant or from an Eligible Associate (even if he
                           or she is not yet a Participant) in cash or as a
                           Direct Rollover, as such term is defined in Section
                           11, from another qualified plan on behalf of the
                           Participant or Eligible Associate. The Associate
                           shall be responsible for furnishing satisfactory
                           evidence to the Administrator that the amount is
                           eligible for rollover treatment. A rollover
                           contribution received directly from an Eligible
                           Associate must be paid to the Trustee in cash within
                           60 days after the date received by the Eligible
                           Associate from a qualified plan or conduit individual
                           retirement account.

                  (b)      If it is later determined that an amount transferred
                           pursuant to the above paragraph did not in fact
                           qualify as a rollover contribution under Code section
                           402(c) or 408(d)(3)(A)(ii), the balance credited to
                           the Associate's Rollover Account shall immediately be
                           (1) segregated from all other Plan assets, (2)
                           treated as a nonqualified trust established by and
                           for the benefit of the Associate, and (3) distributed
                           to the Associate. Any such nonqualifying rollover
                           shall be deemed never to have been a part of the
                           Plan.

                  (c)      The Plan will accept the following Participant
                           rollover contributions and/or direct rollovers of
                           distributions:

                           (1)      A direct rollover of an eligible rollover
                                    distribution from a qualified plan described
                                    in Section 401(a) or 403(a) of the Code,
                                    excluding after-tax employee contributions.

                           (2)      A direct rollover of an eligible rollover
                                    distribution from an annuity contract
                                    described in Section 403(b) of the Code,
                                    excluding after-tax employee contributions.

                           (3)      A direct rollover of an eligible rollover
                                    distribution from an eligible plan under
                                    Section 457(b) of the Code which is
                                    maintained by a state, political subdivision
                                    of a state, or any agency or instrumentality
                                    of a state or political subdivision of a
                                    state.

                           (4)      A Participant contribution of an eligible
                                    rollover distribution from a qualified plan
                                    described in Section 401(a) or 403(a) of the
                                    Code.

                           (5)      A Participant contribution of an eligible
                                    rollover distribution from an annuity
                                    contract described in Section 403(b) of the
                                    Code.

                                     - 13 -

<PAGE>

                           The Plan will accept a Participant rollover
                           contribution of the portion of a distribution from an
                           individual retirement account or annuity described in
                           Section 408(a) or 408(b) of the Code that is eligible
                           to be rolled over and would otherwise be includible
                           in gross income.

         4.2      Transfers From Other Qualified Plans

                  The Administrator may instruct the Trustee to receive assets
                  in cash or in kind directly from another qualified plan, in
                  accordance with procedures established by the Trustee.

                                     - 14 -

<PAGE>

5        EMPLOYER CONTRIBUTIONS

         5.1      ADVO Matching Contributions

                  (a)      Frequency and Eligibility. For each period for which
                           Participants' Contributions are made, the Employer
                           shall make ADVO Matching Contributions as described
                           in the following Allocation Method paragraph on
                           behalf of each Participant who contributed during the
                           period.

                  (b)      Allocation Method. The ADVO Matching Contributions
                           for each period shall total 100% of each eligible
                           Participant's Associate Pre-Tax Contributions for the
                           period, provided that no ADVO Matching Contributions
                           shall be made based upon a Participant's
                           Contributions in excess of 6% of his or her Pay. For
                           purposes of this Section 5.1(b), the maximum amount
                           of Pay that may be taken into account for a Plan Year
                           is $50,000.

                  (c)      Timing and Medium. The Employer shall make each
                           period's ADVO Matching Contribution in cash as soon
                           as is feasible, and not later than the Employer's
                           federal tax filing date, including extensions, for
                           deducting such Contribution.

         5.2      Contributions Following Qualified Military Service

                  (a)      Associate Pre-Tax Contributions. A Participant who
                           returns to employment with an Employer or a Related
                           Company following a period of qualified military
                           service under USERRA shall be permitted to make
                           additional Associate Pre-Tax Contributions, within
                           the limits of Sections 3.1 and 3.4, up to an amount
                           equal to the Associate Pre-Tax Contributions that the
                           Participant would have been permitted to contribute
                           to the Plan if he had continued to be employed and
                           received Pay during the period of qualified military
                           service. Associate Pre-Tax Contributions under this
                           Section may be made during the period which begins on
                           the date such Participant returns to employment and
                           which has the same length as the lesser of (i) 3
                           multiplied by the period of qualified military
                           service under USERRA, and (ii) 5 years.

                  (b)      ADVO Matching Contributions. The Employer shall
                           contribute to the Plan, on behalf of each Participant
                           who has made Associate Pre-Tax Contributions as
                           described in subsection (a) above, an amount equal to
                           the ADVO Matching Contribution that would have been
                           required under Section 5.1 had such Associate Pre-Tax
                           Contributions been made during the period of
                           qualified military service.

                  (c)      Limitation on Crediting of Earnings and Forfeitures.
                           Nothing in this Section 5.2 shall be construed as
                           requiring (i) any crediting of earnings to a
                           Participant with respect to any Participant or
                           Employer Contributions

                                     - 15 -

<PAGE>

                           before such Contribution is actually made, or (ii)
                           any allocation of any forfeiture with respect to any
                           period of qualified military service.

                  (d)      Application of Certain Limitations. To the extent
                           required by Code section 414(u), the Associate
                           Pre-Tax Contributions and ADVO Matching
                           Contributions, made under this Section shall be
                           subject to the limitations described in Sections 12,
                           13 and 14 in the Plan Year to which such
                           Contributions relate.

                                     - 16 -

<PAGE>

6        ACCOUNTING

         6.1      Individual Participant Accounting

                  The Administrator shall maintain an individual set of Accounts
                  for each Participant in order to reflect transactions both by
                  type of Contribution and investment medium. Financial
                  transactions shall be accounted for at the individual Account
                  level by "posting" each transaction to the appropriate Account
                  of each affected Participant. Participants' Account values
                  shall be maintained in shares for the Investment Funds and in
                  dollars for their Participant loan Accounts. At any point in
                  time, the Account value shall be determined using the most
                  recent Trade Date values provided by the Trustee.

         6.2      Trade Date Accounting and Investment Cycle

                  Participant Account values shall be determined as of each
                  Trade Date.

         6.3      Accounting for Investment Funds

                  Investments in each Investment Fund shall be maintained in
                  shares. The Trustee is responsible for determining the share
                  values of each Investment Fund as of each Trade Date. To the
                  extent an Investment Fund is comprised of collective
                  investment funds of the Trustee, the net asset and share
                  values shall be determined in accordance with the rules
                  governing such collective investment funds, which are
                  incorporated herein by reference. All other net asset and
                  share values shall be determined by the Trustee. The net asset
                  value of each Investment Fund shall be based on the fair
                  market value of its underlying assets.

         6.4      Payment of Fees and Expenses

                  Plan fees and expenses including administrative fees, Trustee
                  fees, fees for government annual report preparation, audit and
                  legal fees, and fees for any special services shall be paid
                  from the Trust, and charged to Participants in the form of an
                  Account maintenance fee to the extent that such fees and
                  expenses are not paid by the Employer directly. The Trustee
                  shall have the authority to pay any such fees and expenses,
                  which remain unpaid by the Employer for 60 days, from the
                  Trust.

         6.5      How Fees and Expenses are Charged to Participants

                  Account maintenance fees which are not paid by the Employer
                  shall be charged to each Participant's Account on a per
                  Participant basis, provided that no fee shall reduce a
                  Participant's Account balance below zero. Transaction type
                  fees (such as investment election change fees, loan fees,
                  etc.) shall be charged to the Participant's Account involved
                  in the transaction. Fees and expenses incurred for the
                  management and maintenance of Investment Funds shall be
                  charged at the Investment Fund level and reflected in the net
                  gain or loss of each Fund (unless the Employer makes such
                  payment directly). The Employer may pay a lower

                                     - 17 -

<PAGE>

                  portion of the fees and expenses allocable to the Accounts of
                  Participants who are no longer Associates or Beneficiaries
                  than for active Associates.

         6.6      Accounting for Participant Loans

                  Participant loans shall be held in a separate Account of the
                  Participant and accounted for in dollars as an earmarked asset
                  of the borrowing Participant's Account.

         6.7      Error Correction

                  The Administrator may correct any errors or omissions in the
                  administration of the Plan by restoring any Participant's
                  Account balance with the amount that would be credited to the
                  Account had no error or omission been made. Funds necessary
                  for any such restoration shall be provided through payment
                  made by the Employer.

         6.8      Participant Statements

                  The Administrator shall provide Participants with statements
                  of their Accounts as soon after the end of each quarter of the
                  Plan Year as is administratively feasible.

         6.9      Special Accounting During Conversion Period

                  The Administrator and Trustee may use any reasonable
                  accounting methods in performing their respective duties
                  during the period of converting the prior accounting system of
                  the Plan and Trust to conform to the individual Participant
                  accounting system described in this Section. This includes,
                  but is not limited to, the method for allocating net
                  investment gains or losses and the extent, if any, to which
                  contributions received by and distributions paid from the
                  Trust during this period share in such allocation. Trust
                  assets may be held, during the conversion period, in any
                  investment vehicle permitted by the Plan, as directed by the
                  Administrator, irrespective of Participant investment
                  elections.

         6.10     Accounts for QDRO Beneficiaries

                  A separate Account shall be established for an alternate payee
                  entitled to any portion of a Participant's Account under a
                  QDRO as of the date and in accordance with the directions
                  specified in the QDRO. In addition, a separate Account may be
                  established during the period of time the Administrator, a
                  court of competent jurisdiction or other appropriate person is
                  determining whether a domestic relations order qualifies as a
                  QDRO. Such a separate Account shall be valued and accounted
                  for in the same manner as any other Account.

                  (a)      Distributions Pursuant to QDROs. If a QDRO so
                           provides, the portion of a Participant's Account
                           payable to an alternate payee may be distributed, in
                           a form as permissible under Section 11, to the
                           alternate payee at the

                                     - 18 -

<PAGE>

                           time specified in the QDRO, regardless of whether the
                           Participant is entitled to a distribution from the
                           Plan at such time.

                  (b)      Participant Loans. To the extent permitted by law, an
                           alternate payee, on whose behalf a separate Account
                           has been established, shall not be entitled to borrow
                           from such Account. If a QDRO specifies that the
                           alternate payee is entitled to any portion of the
                           Account of a Participant who has an outstanding loan
                           balance, all outstanding loans shall generally
                           continue to be held in the Participant's Account and
                           shall not be divided between the Participant's and
                           alternate payee's Accounts.

                  (c)      Investment Direction. Where a separate Account has
                           been established on behalf of an alternate payee and
                           has not yet been distributed, the alternate payee may
                           direct the investment of such Account in the same
                           manner as if he or she were a Participant.

                                     - 19 -

<PAGE>

7        INVESTMENT FUNDS AND ELECTIONS

         7.1      Investment Funds

                  Except for Participants' loan Accounts, the Trust shall be
                  maintained in various Investment Funds. The Administrator
                  shall select the Investment Funds available to Participants
                  and may change the number or composition of the Investment
                  Funds, subject to the terms and conditions agreed to with the
                  Trustee.

         7.2      Investment Fund Elections

                  Each Participant (or Beneficiary) shall make a single election
                  covering all of his or her Contribution Accounts. A
                  Participant (or Beneficiary) shall make his or her investment
                  election in any combination of whole percentage increments of
                  one or any number of the Investment Funds offered. Each
                  election shall specify whether it applies only to the amounts
                  not yet received by the Trustee, only to the current Account
                  balance or to both such future amounts and the current Account
                  balance. The Administrator may set a maximum percentage of the
                  total election that a Participant may direct into any specific
                  Investment Fund.

         7.3      Responsibility for Investment Choice

                  Each Participant shall be solely responsible for the selection
                  of his or her Investment Fund choices. No fiduciary with
                  respect to the Plan is empowered to advise a Participant as to
                  the manner in which his or her Accounts are to be invested,
                  and the fact that an Investment Fund is offered shall not be
                  construed to be a recommendation for investment.

         7.4      Ineligibility if No Election

                  Notwithstanding the provisions of Article 2, a Participant who
                  does not make an investment election in accordance with this
                  Article 7 shall not be eligible to participate in the Plan.

         7.5      Timing

                  A Participant shall make his or her initial investment
                  election upon becoming a Participant and may change his or her
                  election at any time in accordance with the procedures
                  established by the Administrator.

         7.6      Switching Fees

                  A reasonable processing fee may be charged directly to a
                  Participant's Account for investment election changes in
                  excess of a specified number per Plan Year as determined by
                  the Administrator.

                                     - 20 -

<PAGE>

8        VESTING & FORFEITURES

         8.1      Fully Vested Contribution Accounts

                  A Participant shall be fully vested in all Accounts at all
                  times.

                                     - 21 -

<PAGE>

9        PARTICIPANT LOANS

         9.1      Participant Loans Permitted

                  Loans to Participants are permitted pursuant to the terms and
                  conditions set forth in this Section. All loan limits are
                  determined as of the date the Trustee reserves funds for the
                  loan. The funds will be disbursed to the Participant as soon
                  as is administratively feasible after the next following
                  Settlement Date.

         9.2      Loan Funding Limits

                  The loan amount must meet all of the following limits:

                  (a)      Plan Minimum Limit. The minimum amount for any loan
                           is $1,000.

                  (b)      Plan Maximum Limit. Subject to the legal limit
                           described in (c) below, the maximum a Participant may
                           borrow is 100% of the following Accounts which are
                           fully vested:

                           Associate Pre-Tax Account
                           ADVO Matching Account
                           Rollover Account

                  (c)      Legal Maximum Limit. The maximum a Participant may
                           borrow, including the outstanding balance of existing
                           Plan loans, is 50% of his or her vested Account
                           balance, not to exceed $50,000. However, the $50,000
                           maximum is reduced by the Participant's highest
                           outstanding loan balance during the 12 month period
                           ending on the day before the date on which the loan
                           is made. For purposes of this paragraph, the
                           qualified plans of all Related Companies shall be
                           treated as though they are part of this Plan to the
                           extent it would decrease the maximum loan amount.

         9.3      Maximum Number of Loans

                  A Participant may have only one loan outstanding at any given
                  time.

         9.4      Source of Loan Funding

                  A loan to a Participant shall be made solely from the assets
                  of his or her own Accounts. The available assets shall be
                  determined first by Account type and then by investment type
                  within each type of Account. Within each Account used for
                  funding, amounts shall be taken from each type of investment
                  in direct proportion to the market value of the Participant's
                  interest in each Investment Fund as of the date on which the
                  loan is made.

                                     - 22 -

<PAGE>

         9.5      Interest Rate

                  The interest rate charged on Participant loans shall be a
                  fixed reasonable rate of interest, determined from time to
                  time by the Administrator, which provides the Plan with a
                  return commensurate with the prevailing interest rate charged
                  by persons in the business of lending money for loans which
                  would be made under similar circumstances.

         9.6      Repayment

                  Substantially level amortization shall be required of each
                  loan with payments made at least monthly, generally through
                  payroll deduction. Loans may be prepaid in full at any time.
                  The loan repayment period shall be as mutually agreed upon by
                  the Participant and Administrator, not to exceed 5 years.
                  However, the term may be for any period not to exceed 15 years
                  if the purpose of the loan is to acquire the Participant's
                  principal residence.

         9.7      Repayment Hierarchy

                  Prior to migration to MLII, loan principal payments shall be
                  credited to the Participant's Accounts in the inverse of the
                  order used to fund the loan. After migration to MLII, loan
                  principal payments shall be credited to the Participant's
                  Accounts in the same order used to fund the loan. Loan
                  payments credited to Accounts for which the Participant
                  directs investment as described in section 7 are credited to
                  the Investment Funds based upon the Participant's current
                  investment election for new Contributions. Loan Payments
                  credited to Accounts for which the Participant does not direct
                  investment as described in Section 7 are credited to the
                  Investment Funds specified by the Administrator for such
                  Accounts.

         9.8      Loan Application, Note and Security

                  A Participant shall apply for any loan in such manner and with
                  such advance notice as prescribed by the Administrator. All
                  loans shall be evidenced by a promissory note, secured only by
                  the portion of the Participant's Account from which the loan
                  is made, and the Plan shall have a lien on this portion of his
                  or her Account.

         9.9      Default, Suspension and Call Feature

                  (a)      Repayment Suspension. The Administrator may agree to
                           a suspension of loan payments for up to six months
                           for a Participant who is on a Leave of Absence
                           without pay. During the suspension period, interest
                           shall continue to accrue on the outstanding loan
                           balance. At the expiration of the suspension period
                           all outstanding loan payments and accrued interest
                           thereon shall be due unless otherwise agreed upon by
                           the Administrator.

                  (b)      Default. A loan is treated as in default if a
                           scheduled loan payment is not made at the time
                           required. A Participant shall then have a grace
                           period to

                                     - 23 -

<PAGE>

                           cure the default before it becomes final. Such grace
                           period shall be for a period that does not extend
                           beyond the last day of the calendar quarter following
                           the calendar quarter in which the scheduled loan
                           payment was due or such lesser or greater maximum
                           period as may later be authorized by Code section
                           72(p).

                           In the event a default is not cured within the grace
                           period, the Administrator may direct the Trustee to
                           report the outstanding principal balance of the loan
                           and accrued interest thereon as a taxable
                           distribution to the Participant. As soon as a Plan
                           withdrawal or distribution to such Participant would
                           otherwise be permitted, the Administrator may
                           instruct the Trustee to execute upon its security
                           interest in the Participant's Account by distributing
                           the note to the Participant.

         9.10     Spousal Consent

                  A Participant is not required to obtain Spousal Consent in
                  order to take out a loan under the Plan.

         9.11     Plan Loans for Owner-Employees and Shareholder Employees

                  Plan provisions prohibiting loans to any owner-employee or
                  shareholder employee shall cease to apply.

                                     - 24 -

<PAGE>

10       IN-SERVICE WITHDRAWALS

         10.1     In-Service Withdrawals Permitted

                  In-service withdrawals to a Participant who is an Employee are
                  permitted pursuant to the terms and conditions set forth in
                  this Section and pursuant to the terms and conditions set
                  forth in Section 11 with regard to an in-service withdrawal
                  made in accordance with a Participant's Required Beginning
                  Date.

         10.2     Withdrawals for Hardship

                  (a)      Requirements. A Participant who is an Associate may
                           request the withdrawal of any amount necessary to
                           satisfy a financial need, including amounts necessary
                           to pay any federal, state or local income taxes or
                           penalties reasonably anticipated to result from the
                           distribution, by submitting a completed withdrawal
                           request form to the Administrator. The Administrator
                           shall only approve those requests for withdrawals (1)
                           on account of a Participant's "Deemed Financial
                           Need," and (2) which are "Deemed Necessary" to
                           satisfy the financial need.

                  (b)      "Deemed Financial Need." Financial commitments
                           relating to:

                           (1)      unreimbursable medical expenses described
                                    under Code section 213(d) incurred (or to be
                                    incurred) by the Associate, his or her
                                    spouse or his or her dependents;

                           (2)      the purchase (excluding mortgage payments)
                                    of the Associate's principal residence;

                           (3)      the payment of unreimbursable tuition and
                                    related educational fees for up to the next
                                    12 months of post-secondary education for
                                    the Associate, his or her spouse or
                                    dependents;

                           (4)      the need to pay for the funeral expenses of
                                    a family member;

                           (5)      the need for the Associate to prevent losing
                                    his or her principal residence through
                                    eviction or foreclosure on the mortgage; or

                           (6)      any other circumstance specifically
                                    permitted under Code section
                                    401(k)(2)(B)(i)(IV).

                  (c)      "Deemed Necessary." A withdrawal is "deemed
                           necessary" to satisfy the financial need only if all
                           of these conditions are met:

                           (1)      the withdrawal amount does not exceed the
                                    financial need;

                                     - 25 -

<PAGE>

                           (2)      the Associate has obtained all other
                                    possible withdrawals and nontaxable loans
                                    available from all plans maintained by
                                    Related Companies;

                           (3)      the Administrator shall suspend the
                                    Associate from making any contributions to
                                    this Plan, all other qualified and
                                    nonqualified plans of deferred compensation
                                    and all stock option or stock purchase plans
                                    maintained by any Related Company for 12
                                    months from the date the withdrawal payment
                                    is processed; and

                           (4)      the Administrator shall reduce the
                                    Contribution Dollar Limit for the calendar
                                    year next following the calendar year of the
                                    hardship withdrawal by the amount of the
                                    Associate's Associate Pre-Tax Contributions
                                    for the calendar year of the hardship
                                    withdrawal.

                  (d)      Account Sources for Withdrawal. The withdrawal amount
                           shall come only from the Participant's fully vested
                           Accounts:

                           Rollover Account
                           Associate Pre-Tax Account

                  The amount that may be withdrawn from a Participant's
                  Associate Pre-Tax Account shall not include any earnings
                  credited to his or her Associate Pre-Tax Contribution Account.

                  (e)      Permitted Frequency. There is no restriction on the
                           number of times a Participant may withdraw from these
                           Accounts on account of hardship.

                  (f)      Notwithstanding Section 10.2(c)(3), a Participant who
                           receives a distribution of Associate Pre-Tax
                           Contributions on account of hardship shall be
                           prohibited from making Associate Pre-Tax
                           Contributions, elective deferrals and employee
                           contributions under this Plan and all other plans of
                           the Employer for 6 months after receipt of the
                           distribution.

         10.3     Rollover Account Withdrawals

                  (a)      Amount Permitted. A Participant who is an Associate
                           may withdraw up to the entire balance from his or her
                           Rollover Account.

                  (b)      Permitted Frequency. There is no restriction on the
                           number of times a Participant may withdraw from this
                           Account.

                  (c)      Suspension from Further Contributions. A withdrawal
                           from a Participant's Rollover Account shall not
                           affect his or her ability to make further
                           Contributions.

                                     - 26 -

<PAGE>

         10.4     Withdrawals for Participants over Age 70-1/2

                  (a)      Requirements. A Participant who is an Associate and
                           over age 70-1/2 may withdraw from the Contribution
                           Accounts listed in paragraph (b) below.

                  (b)      Account Sources for Withdrawal. The withdrawal amount
                           shall come only from the Participant's fully vested
                           Accounts:

                                   Rollover Account
                                   Associate Pre-Tax Account
                                   ADVO Matching Account

                  (c)      Permitted Frequency. There is no restriction on the
                           number of times a Participant may withdraw from these
                           Accounts after age 70-1/2.

                  (d)      Suspension from Further Contributions. A withdrawal
                           from a Participant's Accounts after age 70-1/2 shall
                           not affect his or her ability to make further
                           Contributions.

         10.5     Withdrawal Processing

                  The terms Direct Rollover, Distributee, Eligible Rollover
                  Distribution and Eligible Retirement Plan as referenced below
                  are defined in Section 11.

                  (a)      Minimum Amount. The minimum amount for any type of
                           withdrawal is $500.

                  (b)      Application and Notice. A Participant shall apply for
                           any in-service withdrawal in such manner and with
                           such advance notice as prescribed by the
                           Administrator. The Participant shall be provided the
                           notice prescribed by Code section 402(f).

                           If an in-service withdrawal is one to which Code
                           sections 401(a)(11) and 417 do not apply, such
                           in-service withdrawal may commence less than 30 days
                           after the aforementioned notice is provided, if:

                           (1)      the Participant is clearly informed that he
                                    or she has the right to a period of at least
                                    30 days after receipt of such notice to
                                    consider his or her option to elect or not
                                    elect a Direct Rollover for the portion, if
                                    any, of his or her in-service withdrawal
                                    which will constitute an Eligible Rollover
                                    Distribution; and

                           (2)      the Participant after receiving such notice,
                                    affirmatively elects a Direct Rollover for
                                    the portion, if any, of his or her
                                    in-service withdrawal which will constitute
                                    an Eligible Rollover Distribution or
                                    alternatively elects to have such portion
                                    made payable directly to him or her, thereby
                                    not electing a Direct Rollover.

                                     - 27 -

<PAGE>

                  (c)      Approval by Administrator. The Administrator is
                           responsible for determining that an in-service
                           withdrawal request conforms to the requirements
                           described in this Section and granting such request.

                  (d)      Time of Processing. The Trustee shall process all
                           withdrawal requests which it receives by a date,
                           based on the value as of the date, and fund them on
                           the next Settlement Date.

                  (e)      Medium and Form of Payment. The medium of payment for
                           withdrawals is either cash or direct deposit. The
                           form of payment for withdrawals shall be a single
                           installment.

                  (f)      Investment Fund Sources. Within each Account type
                           used for funding a withdrawal, amounts shall be taken
                           from each type of investment in direct proportion to
                           the market value of the Participant's interest in
                           each Investment Fund (which excludes Participant
                           loans) at the time the withdrawal is made.

         10.6     Spousal Consent

                  A Participant is not required to obtain Spousal Consent in
                  order to make an in-service withdrawal under the Plan.

         10.7     Over Age 59-1/2 Withdrawals

                  (a)      Requirements. Effective January 1, 2000, a
                           Participant who is an Employee and over age 59-1/2
                           may make Over Age 59-1/2 withdrawals.

                  (b)      Account Sources and Funding Order. A Participant may
                           make a withdrawal from his or her Accounts as
                           follows:

                                    Rollover
                                    Associate Pre-Tax
                                    ADVO Matching

                  (c)      Minimum Amount. The minimum amount for an Over Age
                           59-1/2 withdrawal is $500.

                  (d)      Permitted Frequency. There is no restriction on the
                           number of Over Age 59-1/2 withdrawals permitted to a
                           Participant.

                  (e)      Suspension from Further Contributions. An Over Age
                           59-1/2 withdrawal shall not affect a Participant's
                           ability to make or be eligible to receive further
                           Contributions.

                                     - 28 -

<PAGE>

11       DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
         REQUIRED BEGINNING DATE

         11.1     Benefit Information, Notices and Election

                  A Participant, or his or her Beneficiary in the case of his or
                  her death, shall be provided with information regarding all
                  optional times and forms of distribution available under the
                  Plan, including the notices prescribed by Code sections 402(f)
                  and 411(a)(11). Subject to the other requirements of this
                  Section, a Participant, or his or her Beneficiary in the case
                  of his or her death, may elect, in such manner and with such
                  advance notice as prescribed by the Administrator, to have his
                  or her vested Account balance paid to him or her beginning
                  upon any Settlement Date following the Participant's
                  termination of employment with all Related Companies and a
                  reasonable period of time during which the Administrator shall
                  process, and inform the Trustee of, the Participant's
                  termination or, if earlier, at the time of the Participant's
                  Required Beginning Date.

                  Notwithstanding the foregoing, if a Participant's termination
                  of employment with all Related Companies does not constitute a
                  separation from service for purposes of Code section
                  401(k)(2)(B)(i)(1) or otherwise constitute an event set forth
                  under Code section 401(k)(10)(A)(ii) or (iii) as described in
                  Section 17.3, the portion of a Participant's Account subject
                  to the distribution rules of Code section 401(k) may not be
                  distributed until such time as he or she separates from
                  service for purposes of Code section 401(k)(2)(B)(i)(I) or, if
                  earlier, upon such other event as described in Code section
                  401(k)(2)(B) and as provided for in the Plan.

         11.2     Payment Form and Medium

                  A Participant may elect to be paid in any of these forms:

                  (a)      a lump sum

                  (b)      a portion paid in a lump sum, and the remainder paid
                           later, or

                  (c)      periodic installments over a period not to exceed the
                           life expectancy of the Participant and his or her
                           Beneficiary.

                  Payments will generally be made in cash (by check).

         11.3     Distribution of Small Amounts

                  If after a Participant's employment with all Related Companies
                  ends, the Participant's vested Account balance is $5,000 or
                  less, the Participant's benefit shall be paid as a single lump
                  sum as soon as administratively feasible in accordance with
                  procedures prescribed by the Administrator, without regard to
                  whether the Account balance exceeded $5,000 at any prior date.

                                     - 29 -

<PAGE>

         11.4     Latest Commencement Permitted

                  In addition to any other Plan requirements and unless a
                  Participant elects otherwise, his or her benefit payments
                  shall begin not later than 60 days after the end of the Plan
                  Year in which he or she attains his or her Normal Retirement
                  Date or retires, whichever is later. However, if the amount of
                  the payment or the location of the Participant (after a
                  reasonable search) cannot be ascertained by that deadline,
                  payment shall be made no later than 60 days after the earliest
                  date on which such amount or location is ascertained but in no
                  event later than the Participant's Required Beginning Date. A
                  Participant's failure to elect in such manner as prescribed by
                  the Administrator to have his or her vested Account balance
                  paid to him or her, shall be deemed an election by the
                  Participant to defer his or her distribution but in no event
                  shall his or her benefit payments commence later than his or
                  her Required Beginning Date.

                  If benefit payments cannot begin at the time required because
                  the location of the Participant cannot be ascertained (after a
                  reasonable search), the Administrator may, at any time
                  thereafter, treat such person's Account as forfeited subject
                  to the provisions of Section 17.6.

         11.5     Payment Within Life Expectancy

                  The Participant's payment election must be consistent with the
                  requirement of Code section 401(a)(9) that all payments are to
                  be completed within a period not to exceed the lives or the
                  joint and last survivor life expectancy of the Participant and
                  his or her Beneficiary. The life expectancies of a Participant
                  and his or her Beneficiary may not be recomputed annually.

         11.6     Incidental Benefit Rule

                  The Participant's payment election must be consistent with the
                  requirement that, if the Participant's spouse is not his or
                  her sole primary Beneficiary, the minimum annual distribution
                  for each calendar year, beginning with the calendar year
                  preceding the calendar year that includes the Participant's
                  Required Beginning Date, shall not be less than the quotient
                  obtained by dividing (a) the Participant's vested Account
                  balance as of the last Trade Date of the preceding year by (b)
                  the applicable divisor as determined under the incidental
                  benefit requirements of Code section 401(a)(9).

         11.7     Payment to Beneficiary

                  Payment to a Beneficiary must either: (1) be completed within
                  five years of the Participant's death or (2) begin within one
                  year of his or her death and be completed within the period of
                  the Beneficiary's life or life expectancy, except that:

                                     - 30 -

<PAGE>

                  (a)      If the Participant dies after his or her Required
                           Beginning Date, payment to his or her Beneficiary
                           must be made at least as rapidly as provided in the
                           Participant's distribution election;

                  (b)      If the surviving spouse is the Beneficiary, payments
                           need not begin until the date on which the
                           Participant would have attained age 70-1/2 and must
                           be completed within the spouse's life or life
                           expectancy; and

                  (c)      If the Participant and the surviving spouse who is
                           the Beneficiary die (i) before the Participant's
                           Required Beginning Date and (ii) before payments have
                           begun to the spouse, the spouse shall be treated as
                           the Participant in applying these rules.

         11.8     Beneficiary Designation

                  Each Participant may complete a beneficiary designation form
                  indicating the Beneficiary who is to receive the Participant's
                  remaining Plan interest at the time of his or her death. The
                  designation may be changed at any time. However, a
                  Participant's spouse shall be the sole primary Beneficiary
                  unless the designation includes Spousal Consent for another
                  Beneficiary. If no proper designation is in effect at the time
                  of a Participant's death or if the Beneficiary does not
                  survive the Participant, the Beneficiary shall be, in the
                  order listed, the:

                  (a)      Participant's surviving spouse,

                  (b)      Participant's children, in equal shares, per stirpes
                           (by right of representation), or

                  (c)      Participant's estate.

         11.9     Spousal Consent

                  A Participant is not required to obtain Spousal Consent in
                  order to receive a distribution under the Plan.

         11.10    Distributions Upon Severance from Employment

                  A Participant's elective deferrals, qualified nonelective
                  contributions, qualified matching contributions, and earnings
                  attributable to these contributions shall be distributed on
                  account of the Participant's severance from employment.
                  However, such a distribution shall be subject to the other
                  provisions of the Plan regarding distributions, other than
                  provisions that require a separation from service before such
                  amounts may be distributed.

                                     - 31 -

<PAGE>

         11.11    EGTRRA Modifications to Required Minimum Distributions

                  (a)      General

                           (1)      Precedence. The requirements of this Section
                                    11.11 will take precedence over any
                                    inconsistent provisions of the Plan.

                           (2)      Requirements of Treasury Regulations
                                    Incorporated. All distributions required
                                    under this Section 11.11 will be determined
                                    and made in accordance with the Treasury
                                    Regulations under Section 401(a)(9) of the
                                    Code.

                           (3)      TEFRA Section 242(b)(2) Elections.
                                    Notwithstanding the other provisions of this
                                    article, distributions may be made under a
                                    designation made before January 1, 1984, in
                                    accordance with Section 242(b)(2) of the Tax
                                    Equity and Fiscal Responsibility Act (TEFRA)
                                    and the provisions of the Plan that relate
                                    to Section 242(b)(2) of TEFRA.

                  (b)      Time and Manner of Distribution

                           (1)      Required Beginning Date. The Participant's
                                    entire interest will be distributed, or
                                    begin to be distributed, to the Participant
                                    no later than the Participant's Required
                                    Beginning Date.

                           (2)      Death of Participant Before Distributions
                                    Begin. If the Participant dies before
                                    distributions begin, the Participant's
                                    entire interest will be distributed, or
                                    begin to be distributed, no later than as
                                    follows:

                                    (i)      If the Participant's surviving
                                             spouse is the Participant's sole
                                             designated beneficiary, then
                                             distributions to the surviving
                                             spouse will begin by December 31 of
                                             the calendar year immediately
                                             following the calendar year in
                                             which the Participant died, or by
                                             December 31 of the calendar year in
                                             which the Participant would have
                                             attained age 70-1/2, if later.

                                    (ii)     If the Participant's surviving
                                             spouse is not the Participant's
                                             sole Designated Beneficiary, then
                                             distributions to the Designated
                                             Beneficiary will begin by December
                                             31 of the calendar year immediately
                                             following the calendar year in
                                             which the Participant died.

                                    (iii)    If there is no Designated
                                             beneficiary as of September 30 of
                                             the year following the year of the
                                             Participant's death, the
                                             Participant's entire interest will
                                             be distributed by December 31 of
                                             the calendar year containing the
                                             fifth anniversary of the
                                             Participant's death.

                                     - 32 -

<PAGE>

                                    (iv)     If the Participant's surviving
                                             spouse is the Participant's sole
                                             Designated Beneficiary and the
                                             surviving spouse dies after the
                                             Participant but before
                                             distributions to the surviving
                                             spouse begin, this Section
                                             11.11(b)(2), other than Section
                                             11.11(b)(2)(i), will apply as if
                                             the surviving spouse were the
                                             Participant.

                                    For purposes of this Section 11.11(b)(2) and
                                    Section 11.11(d), unless Section
                                    11.11(b)(2)(iv) applies, distributions are
                                    considered to begin on the Participant's
                                    Required Beginning Date. If Section
                                    11.11(b)(2)(iv) applies, distributions are
                                    considered to begin on the date
                                    distributions are required to begin to the
                                    surviving spouse under Section
                                    11.11(b)(2)(i). If distributions under an
                                    annuity purchased from an insurance company
                                    irrevocably commence to the Participant
                                    before the Participant's Required Beginning
                                    Date (or to the Participant's surviving
                                    spouse before the date distributions are
                                    required to begin to the surviving spouse
                                    under Section 11.11(b)(2)(i)), the date
                                    distributions are considered to begin is the
                                    date distributions actually commence.

                           (3)      Forms of Distribution. Unless the
                                    Participant's interest is distributed in the
                                    form of an annuity purchased from an
                                    insurance company or in a single sum on or
                                    before the Required Beginning Date, as of
                                    the first Distribution Calendar Year
                                    distributions will be made in accordance
                                    with Sections 11.11(c) and 11.11(d). If the
                                    Participant's interest is distributed in the
                                    form of an annuity purchased from an
                                    insurance company, distributions thereunder
                                    will be made in accordance with the
                                    requirements of Section 401(a)(9) of the
                                    Code and the Treasury Regulations.

                  (c)      Required Minimum Distributions During Participant's
                           Lifetime

                           (1)      Amount of Required Minimum Distribution For
                                    Each Distribution Calendar Year. During the
                                    Participant's lifetime, the minimum amount
                                    that will be distributed for each
                                    Distribution Calendar Year is the lesser of:

                                    (i)      the quotient obtained by dividing
                                             the Participant's Account Balance
                                             by the distribution period in the
                                             Uniform Lifetime Table set forth in
                                             Section 1.401(a)(9)-9 of the
                                             Treasury Regulations, using the
                                             Participant's age as of the
                                             Participant's birthday in the
                                             Distribution Calendar Year; or

                                    (ii)     if the Participant's sole
                                             Designated Beneficiary for the
                                             Distribution Calendar Year is the
                                             Participant's spouse, the quotient
                                             obtained by dividing the
                                             Participant's Account Balance by
                                             the number in the Joint and Last
                                             Survivor Table

                                     - 33 -

<PAGE>

                                             set forth in Section 1.401(a)(9)-9
                                             of the Treasury regulations, using
                                             the Participant's and spouse's
                                             attained ages as of the
                                             Participant's and spouse's
                                             birthdays in the Distribution
                                             Calendar Year.

                       (2)   Lifetime Required Minimum Distributions Continue
                             Through Year of Participant's Death. Required
                             minimum distributions will be determined under this
                             Section 11.11(c) beginning with the first
                             Distribution Calendar Year and up to and including
                             the Distribution Calendar Year that includes the
                             Participant's date of death.

                  (d)  Required Minimum Distributions After Participant's Death.

                       (1)   Death On or After Date Distributions Begin

                             (i)  Participant Survived by Designated
                                  Beneficiary. If the Participant dies on or
                                  after the date distributions begin and there
                                  is a Designated Beneficiary, the minimum
                                  amount that will be distributed for each
                                  Distribution Calendar Year after the year of
                                  the Participant's death is the quotient
                                  obtained by dividing the Participant's Account
                                  Balance by the longer of the remaining Life
                                  Expectancy of the Participant or the remaining
                                  Life Expectancy of the Participant's
                                  Designated Beneficiary, determined as follows

                                  (A)  The Participant's remaining Life
                                       Expectancy is calculated using the age of
                                       the Participant in the year of death,
                                       reduced by one for each subsequent year.

                                  (B)  If the Participant's surviving spouse is
                                       the Participant's sole Designated
                                       Beneficiary, the remaining Life
                                       Expectancy of the surviving spouse is
                                       calculated for each Distribution Calendar
                                       Year after the year of the Participant's
                                       death using the surviving spouse's age as
                                       of the spouse's birthday in that year.
                                       For Distribution Calendar Years after the
                                       year of the surviving spouse's death, the
                                       remaining Life Expectancy of the
                                       surviving spouse is calculated using the
                                       age of the surviving spouse as of the
                                       spouse's birthday in the calendar year of
                                       the spouse's death, reduced by one for
                                       each subsequent calendar year.

                                     - 34 -

<PAGE>

                                  (C)  If the Participant's surviving spouse is
                                       not the Participant's sole Designated
                                       Beneficiary, the Designated Beneficiary's
                                       remaining Life Expectancy is calculated
                                       using the age of the beneficiary in the
                                       year following the year of the
                                       Participant's death, reduced by one for
                                       each subsequent year.

                           (ii)   No Designated Beneficiary. If the Participant
                                  dies on or after the date distributions begin
                                  and there is no Designated Beneficiary as of
                                  September 30 of the year after the year of the
                                  Participant's death, the minimum amount that
                                  will be distributed for each Distribution
                                  Calendar Year after the year of the
                                  Participant's death is the quotient obtained
                                  by dividing the Participant's Account Balance
                                  by the Participant's remaining Life Expectancy
                                  calculated using the age of the Participant in
                                  the year of death, reduced by one for each
                                  subsequent year.

                  (2)      Death Before Date Distributions Begin.

                           (i)    Participant Survived by Designated
                                  Beneficiary. If the Participant dies before
                                  the date distributions begin and there is a
                                  Designated Beneficiary, the minimum amount
                                  that will be distributed for each Distribution
                                  Calendar Year after the year of the
                                  Participant's death is the quotient obtained
                                  by dividing the Participant's Account Balance
                                  by the remaining Life Expectancy of the
                                  Participant's Designated Beneficiary,
                                  determined as provided in Section 11.11(d)(1).

                           (ii)   No Designated Beneficiary.  If the Participant
                                  dies before the date distributions begin and
                                  there is no Designated Beneficiary as of
                                  September 30 of the year following the year of
                                  the Participant's death, distribution of the
                                  Participant's entire interest will be
                                  completed by December 31 of the calendar year
                                  containing the fifth anniversary of the
                                  Participant's death.

                           (iii)  Death of Surviving Spouse Before Distributions
                                  to Surviving Spouse Are Required to Begin. If
                                  the Participant dies before the date
                                  distributions begin, the Participant's
                                  surviving spouse is the Participant's sole
                                  Designated Beneficiary, and the surviving
                                  spouse dies before distributions are required
                                  to begin to the surviving spouse under Section
                                  11.11(b)(2)(i), this Section 11.11(d)(2) will
                                  apply as if the surviving spouse were the
                                  Participant.

                                     - 35 -

<PAGE>

                  (e)      Definitions.

                           (1)      Designated Beneficiary. The individual who
                                    is designated as the beneficiary under
                                    Section 11.8 of the Plan and is the
                                    designated beneficiary under Section
                                    401(a)(9) of the Internal Revenue Code and
                                    Section 1.401(a)(9)-1, Q&A-4, of the
                                    Treasury Regulations.

                           (2)      Distribution Calendar Year. A calendar year
                                    for which a minimum distribution is
                                    required. For distributions beginning before
                                    the Participant's death, the first
                                    Distribution Calendar Year is the calendar
                                    year immediately preceding the calendar year
                                    which contains the Participant's Required
                                    Beginning Date. For distributions beginning
                                    after the Participant's death, the first
                                    Distribution Calendar Year is the calendar
                                    year in which distributions are required to
                                    begin under Section 11.11(b). The required
                                    minimum distribution for the Participant's
                                    first Distribution Calendar Year will be
                                    made on or before the Participant's required
                                    beginning date. The required minimum
                                    distribution for other Distribution Calendar
                                    Years, including the required minimum
                                    distribution for the Distribution Calendar
                                    Year in which the Participant's Required
                                    Beginning Date occurs, will be made on or
                                    before December 31 of that Distribution
                                    Calendar Year.

                           (3)      Life Expectancy. Life Expectancy as computed
                                    by use of the Single Life Table in Section
                                    1.401(a)(9)-9 of the Treasury regulations.

                           (4)      Participant's Account Balance. The Account
                                    balance as of the last valuation date in the
                                    calendar year immediately preceding the
                                    Distribution Calendar Year (valuation
                                    calendar year) increased by the amount of
                                    any contributions made and allocated or
                                    forfeitures allocated to the Account balance
                                    as of dates in the valuation calendar year
                                    after the valuation date and decreased by
                                    distributions made in the valuation calendar
                                    year after the valuation date. The Account
                                    balance for the valuation calendar year
                                    includes any amounts rolled over or
                                    transferred to the Plan either in the
                                    valuation calendar year or in the
                                    Distribution Calendar Year if distributed or
                                    transferred in the valuation calendar year.

                           (5)      Required Beginning Date. The date specified
                                    in Section 1.32 of the Plan.

                                     - 36 -

<PAGE>

12       ADP AND ACP TESTS

         The Plan does not benefit any Highly Compensated Employees; accordingly
         the Plan automatically satisfies Sections 401(k)(3) and 401(m)(2) of
         the Code.

                                     - 37 -

<PAGE>

13       MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS

         13.1     "Annual Addition" Defined

                  The sum for a Plan Year of all (i) contributions (excluding
                  rollover contributions) and forfeitures allocated to the
                  Participant's Account and his or her account in all other
                  defined contribution plans maintained by any Related Company,
                  (ii) amounts allocated to the Participant's individual medical
                  account (within the meaning of Code section 415(l)(2)) which
                  is part of a defined benefit plan maintained by any Related
                  Company, and (iii) if the Participant is a key employee
                  (within the meaning of Code section 419A(d)(3)) for the
                  applicable or any prior Plan Year, amounts attributable to
                  post-retirement medical benefits allocated to his or her
                  separate account under a welfare benefit fund (within the
                  meaning of Code section 419(e)) maintained by any Related
                  Company. The Plan Year refers to the year to which the
                  allocation pertains, regardless of when it was allocated. The
                  Plan Year shall be the Code section 415 limitation year.

         13.2     Maximum Annual Addition

                  Except to the extent permitted under Section 3.7 and section
                  414(v) of the Code, if applicable, the Annual Addition that
                  may be contributed or allocated to a Participant's Account
                  under the Plan for any limitation year shall not exceed the
                  lesser of: (1) $40,000 as adjusted for increases in the
                  cost-of-living under section 415(d) of the Code, or (2) 100
                  percent of the Participant's compensation, within the meaning
                  of section 415(c)(3) of the Code, for the limitation year. The
                  compensation limit referred to in (2) shall not apply to any
                  contribution for medical benefits after separation from
                  service (within the meaning of section 401(h) or section
                  419A(f)(2) of the Code) which is otherwise treated as an
                  annual edition.

         13.3     Avoiding an Excess Annual Addition

                  If, at any time during a Plan Year, the allocation of any
                  additional Contributions would produce an excess Annual
                  Addition for such year, Contributions to be made for the
                  remainder of the Plan Year shall be limited to the amount
                  needed for each affected Participant to receive the maximum
                  Annual Addition.

         13.4     Correcting an Excess Annual Addition

                  Upon the discovery of an excess Annual Addition to a
                  Participant's Account (resulting from forfeitures,
                  allocations, reasonable error in determining Participant
                  compensation or the amount of elective contributions, or other
                  facts and circumstances acceptable to the Internal Revenue
                  Service) the excess amount (adjusted to reflect investment
                  gains) shall first be returned to the Participant to the
                  extent of his or her Associate Pre-Tax Contributions (however
                  to the extent Associate Pre-Tax Contributions were matched,
                  the applicable ADVO Matching Contributions shall be forfeited
                  in proportion to the returned matched Associate Pre-Tax
                  Contributions) and the remaining excess, if any, plus returned
                  ADVO

                                     - 38 -

<PAGE>

                  Matching Contributions, shall be forfeited by the Participant
                  and used to reduce subsequent Contributions as soon as is
                  administratively feasible.

         13.5     Correcting a Multiple Plan Excess

                  If a Participant, whose Account is credited with an excess
                  Annual Addition, received allocations to more than one defined
                  contribution plan, the excess shall be corrected by reducing
                  the Annual Addition to the Plan only after all possible
                  reductions have been made to the other defined contribution
                  plans.

                                     - 39 -

<PAGE>

14       TOP HEAVY RULES

         14.1     Top Heavy Definitions

                  When capitalized, the following words and phrases have the
                  following meanings when used in this Section:

                  (a)      "Aggregation Group". The group consisting of each
                           qualified plan of an Employer (and its Related
                           Companies) (1) in which a Key Associate is a
                           participant or was a participant during the
                           determination period (regardless of whether such plan
                           has terminated), or (2) which enables another plan in
                           the group to meet the requirements of Code sections
                           401(a)(4) and 410(b). The Employer may also treat any
                           other qualified plan as part of the group if the
                           group would continue to meet the requirements of Code
                           sections 401(a)(4) and 410(b) with such plan being
                           taken into account.

                  (b)      "Determination Date". The last day of the preceding
                           Plan Year, or with regard to the Plan's initial Plan
                           Year, the last day of that Plan Year.

                  (c)      "Key Associate". A current or former Associate (or
                           his or her Beneficiary) who at any time during the
                           five year period ending on the Determination Date
                           was:

                           (1)      an officer of a Related Company whose
                                    Compensation (i) exceeds 50% of the amount
                                    in effect under Code section 415(b)(1)(A)
                                    and (ii) places him within the following
                                    highest paid group of officers:

<TABLE>
<CAPTION>
NUMBER OF ASSOCIATES NOT                      NUMBER OF
     EXCLUDED UNDER                          HIGHEST PAID
  CODE SECTION 414(q)(8)                  OFFICERS INCLUDED
------------------------                  -----------------
<S>                                <C>
      Less than 30                                 3
        30 to 500                  10% of the number of Associates not
                                   excluded under Code section 414(q)(8)
     More than 500                                50
</TABLE>

                           (2)      a more than 5% Owner,

                           (3)      a more than 1% Owner whose Compensation
                                    exceeds $150,000, or

                           (4)      a more than 0.5% Owner who is among the 10
                                    Associates owning the largest interest in a
                                    Related Company and whose Compensation
                                    exceeds the amount in effect under Code
                                    section 415(c)(1)(A).

                  (d)      "Plan Benefit". The sum as of the Determination Date
                           of (1) an Associate's Account, (2) the present value
                           of his or her other accrued

                                     - 40 -

<PAGE>

                           benefits provided by all qualified plans within the
                           Aggregation Group, and (3) the aggregate
                           distributions made within the five year period ending
                           on such date. Plan Benefits shall exclude rollover
                           contributions and plan to plan transfers made after
                           December 31, 1983 which are both employee initiated
                           and from a plan maintained by a non-related employer.

                  (e)      "Top Heavy". The Plan's status when the Plan Benefits
                           of Key Associates account for more than 60% of the
                           Plan Benefits of all Associates who have performed
                           services at any time during the five year period
                           ending on the Determination Date. The Plan Benefits
                           of Associates who were, but are no longer, Key
                           Associates (because they have not been an officer or
                           Owner during the five year period), are excluded in
                           the determination.

         14.2     Special Contributions

                  (a)      Minimum Contribution Requirement. For each Plan Year
                           in which the Plan is Top Heavy, the Employer shall
                           not allow any contributions (other than a Rollover
                           Contribution) to be made by or on behalf of any Key
                           Employee unless the Employer makes a contribution
                           (other than Associate Pre-Tax and ADVO Matching
                           Contributions) on behalf of all Participants who were
                           Eligible Employees as of the last day of the Plan
                           Year in an amount equal to at least 3% of each such
                           Participant's Taxable Income.

                  (b)      Overriding Minimum Benefit. Notwithstanding,
                           contributions shall be permitted on behalf of Key
                           Employees if the Employer also maintains a defined
                           benefit plan which automatically provides a benefit
                           which satisfies the Code section 416(c)(1) minimum
                           benefit requirements, as modified by substituting "3
                           percent" for "2 percent" and by increasing (but not
                           by more than 10 percentage points) 20 percent by 1
                           percentage point for each year for which such plan
                           was taken into account, if applicable. If this Plan
                           is part of an aggregation group in which a Key
                           Employee is receiving a benefit and no minimum is
                           provided in any other plan, a minimum contribution of
                           at least 3% of Compensation shall be provided to the
                           Employees specified in the preceding paragraph of
                           this plan. In addition, the Employer may offset a
                           defined benefit minimum by contributions (other than
                           Pre-Tax and ADVO Matching Contributions) made to this
                           Plan.

         14.3     EGTRRA Modifications

                  (a)      General. This Section 14.4 amends Sections 14.1 and
                           14.2 of the Plan.

                  (b)      Determination of Top-Heavy Status.

                           (1)      Key Associate. Key Associate means any
                                    Associate or former Associate (including any
                                    deceased Associate) who at any time during
                                    the Plan Year that includes the
                                    Determination Date was an officer of the
                                    Employer having annual Compensation greater
                                    than

                                     - 41 -

<PAGE>

                                    $130,000 (as adjusted under Section
                                    416(i)(1) of the Code for Plan Years
                                    beginning after December 31, 2002), a
                                    5-percent owner of the Employer, or a
                                    1-percent owner of the Employer having
                                    annual Compensation of more than $150,000.
                                    For this purpose, annual Compensation means
                                    Compensation within the meaning of Section
                                    415(c)(3) of the Code. The determination of
                                    who is a Key Associate will be made in
                                    accordance with Section 416(i)(1) of the
                                    Code and the applicable regulations and
                                    other guidance of general applicability
                                    issued thereunder.

                           (2)      Determination of Present Values and Amounts.
                                    This Section 14.4(b)(2) shall apply for
                                    purposes of determining the present values
                                    of accrued benefits and the amounts of
                                    account balances of Associates as of the
                                    Determination Date.

                                    (i)      Distributions During Year Ending on
                                             the Determination Date. The present
                                             values of accrued benefits and the
                                             amounts of account balances of an
                                             Associate as of the Determination
                                             Date shall be increased by the
                                             distributions made with respect to
                                             the Associate under the Plan and
                                             any plan aggregated with the Plan
                                             under Section 416(g)(2) of the Code
                                             during the 1-year period ending on
                                             the Determination Date. The
                                             preceding sentence shall also apply
                                             to distributions under a terminated
                                             plan which, had it not been
                                             terminated, would have been
                                             aggregated with the Plan under
                                             Section 416(g)(2)A)(i) of the Code.
                                             In the case of a distribution made
                                             for a reason other than separation
                                             from service, death, or disability,
                                             this provision shall be applied by
                                             substituting "5-year period" for
                                             "1-year period."

                                    (ii)     Employees Not Performing Services
                                             During Year Ending on the
                                             Determination Date. The accrued
                                             benefits and accounts of any
                                             individual who has not performed
                                             services for the Employer during
                                             the 1-year period ending on the
                                             Determination Date shall not be
                                             taken into account.

                  (c)      Minimum Benefits.

                           (1)      Matching Contributions. Employer matching
                                    contributions shall be taken into account
                                    for purposes of satisfying the minimum
                                    contribution requirements of Section
                                    416(c)(2) of the Code and the Plan. The
                                    preceding sentence shall apply with respect
                                    to ADVO Matching Contributions under this
                                    Plan or, if the Plan provides that the
                                    minimum contribution requirement shall be
                                    met in another plan, such other plan.
                                    Employer matching contributions that are
                                    used to satisfy the minimum contribution
                                    requirements shall be treated as matching
                                    contributions for purposes of the actual

                                     - 42 -

<PAGE>

                                    contribution percentage test and other
                                    requirements of Section 401(m) of the Code.

                                     - 43 -

<PAGE>

15     PLAN ADMINISTRATION

       15.1   Plan Delineates Authority and Responsibility

              Plan fiduciaries include the Company, the Administrator, the
              Committee and/or the Trustee, as applicable, whose specific duties
              are delineated in this Plan and any separate trust agreement
              between the Company and the Trustee. In addition, Plan fiduciaries
              also include any other person to whom fiduciary duties or
              responsibility is delegated with respect to the Plan. Any person
              or group may serve in more than one fiduciary capacity with
              respect to the Plan. To the extent permitted under ERISA section
              405, no fiduciary shall be liable for a breach by another
              fiduciary.

       15.2   Fiduciary Standards

              Each fiduciary shall:

              (a)    discharge his or her duties in accordance with this Plan
                     and Trust to the extent they are consistent with ERISA;

              (b)    use that degree of care, skill, prudence and diligence that
                     a prudent person acting in a like capacity and familiar
                     with such matters would use in the conduct of an enterprise
                     of a like character and with like aims;

              (c)    act with the exclusive purpose of providing benefits to
                     Participants and their Beneficiaries, and defraying
                     reasonable expenses of administering the Plan;

              (d)    diversify Plan investments so as to minimize the risk of
                     large losses, unless under the circumstances it is clearly
                     prudent not to do so; and

              (e)    treat similarly situated Participants and Beneficiaries in
                     a uniform and nondiscriminatory manner.

       15.3   Company is ERISA Plan Administrator

              The Company is the plan administrator, within the meaning of ERISA
              section 3(16), which is responsible for compliance with all
              reporting and disclosure requirements, except those that are
              explicitly the responsibility of the Trustee under applicable law.
              The Administrator and/or Committee shall have any necessary
              authority to carry out such functions through the actions of the
              Administrator, duly appointed officers of the Company, and/or the
              Committee.

       15.4   Administrator Duties

              The Administrator shall have the discretionary authority to
              construe the Plan, and to do all things necessary or convenient to
              effect the intent and purposes of the Plan, whether or not such
              powers are specifically set forth in the Plan and Trust.

                                     - 44 -

<PAGE>

              Actions taken in good faith by the Administrator shall be
              conclusive and binding on all interested parties, and shall be
              given the maximum possible deference allowed by law. In addition
              to the duties listed elsewhere in the Plan and Trust, the
              Administrator's authority shall include, but not be limited to,
              the discretionary authority to:

              (a)    Determine who is eligible to participate, the allocation of
                     Contributions, and the eligibility for withdrawals, loans
                     and distributions;

              (b)    Provide each Participant with a summary plan description no
                     later than 90 days after he or she has become a Participant
                     (or such other period permitted under ERISA section
                     104(b)(1)), as well as informing each Participant of any
                     material modification to the Plan in a timely manner;

              (c)    Make a copy of the following documents available to
                     Participants during normal work hours: the Plan and Trust
                     (including subsequent amendments), all annual and interim
                     reports of the Trustee related to the entire Plan, the
                     latest annual report and the summary plan description;

              (d)    Determine the fact of a Participant's death and of any
                     Beneficiary's right to receive the deceased Participant's
                     interest based upon such proof and evidence as it deems
                     necessary;

              (e)    Establish and review at least annually a funding policy
                     bearing in mind both the short-run and long-run needs and
                     goals of the Plan. To the extent Participants may direct
                     their own investments, the funding policy shall focus on
                     which Investment Funds are available for Participants to
                     use; and

              (f)    Adjudicate claims pursuant to the claims procedure
                     described in Section 16.

       15.5   Advisors May be Retained

              The Administrator may retain such agents and advisors (including
              attorneys, accountants, actuaries, consultants, record keepers,
              investment counsel and administrative assistants) as it considers
              necessary to assist it in the performance of its duties. The
              Administrator shall also comply with the bonding requirements of
              ERISA section 412.

       15.6   Delegation of Administrator Duties

              The Company, as Administrator of the Plan, has appointed a
              Committee to administer the Plan on its behalf. The Company shall
              provide the Trustee with the names and specimen signatures of any
              persons authorized to serve as Committee members and act as or on
              its behalf. Any Committee member appointed by the Company shall
              serve at the pleasure of the Company, but may resign by written
              notice to the Company. Committee members shall serve without
              compensation from the Plan for such services. Except to the extent
              that

                                     - 45 -

<PAGE>

              the Company otherwise provides, any delegation of duties to a
              Committee shall carry with it the full discretionary authority of
              the Administrator to complete such duties.

       15.7   Committee Operating Rules

              (a)    Actions of Majority. Any act delegated by the Company to
                     the Committee may be done by a majority of its members. The
                     majority may be expressed by a vote at a meeting or in
                     writing without a meeting, and a majority action shall be
                     equivalent to an action of all Committee members.

              (b)    Meetings. The Committee shall hold meetings upon such
                     notice, place and times as it determines necessary to
                     conduct its functions properly.

              (c)    Reliance by Trustee. The Committee may authorize one or
                     more of its members to execute documents on its behalf and
                     give written direction to the Trustee in the performance of
                     its duties.

                                     - 46 -

<PAGE>

16     RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION

       16.1   Plan Does Not Affect Employment Rights

              The Plan does not provide any employment rights to any Associate.
              The Employer expressly reserves the right to discharge an
              Associate at any time, with or without cause, without regard to
              the effect such discharge would have upon the Associate's interest
              in the Plan.

              (a)    Compliance with USERRA

              Notwithstanding any provision of the Plan to the contrary, with
              regard to an Associate who after serving in the uniformed services
              is reemployed within the time required by USERRA, contributions
              shall be made and benefits and service credit shall be provided
              under the Plan with respect to his or her qualified military
              service (as defined in Code section 414(u)(5)) in accordance with
              Code section 414(u). Furthermore, notwithstanding any provision of
              the Plan to the contrary, Participant loan payments may be
              suspended during a period of qualified military service.

       16.2   Limited Return of Contributions

              Except as provided in this paragraph, (1) Plan assets shall not
              revert to the Employer nor be diverted for any purpose other than
              the exclusive benefit of Participants or their Beneficiaries; and
              (2) a Participant's vested interest shall not be subject to
              divestment. As provided in ERISA section 403(c)(2), the actual
              amount of a Contribution (or the current value of the Contribution
              if a net loss has occurred) may revert to the Employer if:

              (a)    such Contribution is made by reason of a mistake of fact;

              (b)    initial qualification of the Plan under Code section 401(a)
                     is not received and a request for such qualification is
                     made within the time prescribed under Code section 401(b)
                     (the existence of and contributions under the Plan are
                     hereby conditioned upon such qualification); or

              (c)    such contribution is not deductible under Code section 404
                     (such Contributions are hereby conditioned upon their
                     deductibility) in the taxable year of the Employer for
                     which the contributions are made.

                     The reversion to the Employer must be made (if at all)
                     within one year of the mistaken payment of the
                     Contribution, the date of denial of qualification, or the
                     date of disallowance of deduction, as the case may be. A
                     Participant shall have no rights under the Plan with
                     respect to any such reversion.

                                     - 47 -

<PAGE>

              16.3   Assignment and Alienation

                     As provided by Code section 401(a)(13) and to the extent
                     not otherwise required by law, no benefit provided by the
                     Plan may be anticipated, assigned or alienated, except:

                     (a)    to create, assign or recognize a right to any
                            benefit with respect to a Participant pursuant to a
                            QDRO;

                     (b)    to use a Participant's vested Account balance as
                            security for a loan from the Plan which is permitted
                            pursuant to Code section 4975;

                     (c)    to satisfy a federal tax levy made pursuant to Code
                            section 6331; or

                     (d)    subject to the provisions of Code section
                            401(a)(13), pursuant to the terms of a judgment,
                            order, decree or settlement agreement between the
                            Participant and the Secretary of Labor or the
                            Pension Benefit Guaranty Corporation relating to a
                            violation (or an alleged violation) of part 4 of
                            subtitle B or title I of ERISA.

              16.4   Facility of Payment

                     If a Plan benefit is due to be paid to a minor or if the
                     Administrator reasonably believes that any payee is legally
                     incapable of giving a valid receipt and discharge for any
                     payment due him or her, the Administrator shall have the
                     payment of the benefit, or any part thereof, made to the
                     person (or persons or institution) whom it reasonably
                     believes is caring for or supporting the payee, unless it
                     has received due notice of claim therefor from a duly
                     appointed guardian or conservator of the payee. Any payment
                     shall to the extent thereof, be a complete discharge of any
                     liability under the Plan to the payee.

              16.5   Reallocation of Lost Participant's Accounts

                     If the Administrator cannot locate a person entitled to
                     payment of a Plan benefit after a reasonable search, the
                     Administrator may at any time thereafter treat such
                     person's Account as forfeited and use such amount to offset
                     any Employer Contributions. If such person subsequently
                     presents the Administrator with a valid claim for the
                     benefit, such person shall be paid the amount treated as
                     forfeited, plus the interest that would have been earned
                     had the amount been invested in the Investment Fund
                     provided for in Section 7.4 to the date of determination.
                     The Administrator shall direct the Trustee to pay the
                     amount through an additional Employer Contribution.

              16.6   Claims Procedure

                     (a)    Right to Make Claim. An interested party who
                            disagrees with the Administrator's determination of
                            his or her right to Plan benefits must submit a
                            written claim and exhaust this claim procedure
                            before legal

                                     - 48 -

<PAGE>

                            recourse of any type is sought. The claim must
                            include the important issues the interested party
                            believes support the claim. The Administrator,
                            pursuant to the authority provided in this Plan,
                            shall either approve or deny the claim.

                     (b)    Process for Denying a Claim. The Administrator's
                            partial or complete denial of an initial claim must
                            include an understandable, written response covering
                            (1) the specific reasons why the claim is being
                            denied (with reference to the pertinent Plan
                            provisions) and (2) the steps necessary to perfect
                            the claim and obtain a final review.

                     (c)    Appeal of Denial and Final Review. The interested
                            party may make a written appeal of the
                            Administrator's initial decision, and the
                            Administrator shall respond in the same manner and
                            form as prescribed for denying a claim initially.

                     (d)    Time Frame. The initial claim, its review, appeal
                            and final review shall be made in a timely fashion,
                            subject to the following time table:

<TABLE>
<CAPTION>
                                                             DAYS TO RESPOND
                ACTION                                      FROM LAST ACTION
---------------------------------------                     ----------------
<S>                                                         <C>
Administrator determines benefit                                      NA
Interested party files initial request                           60 days
Administrator's initial decision                                 90 days
Interested party requests final review                           60 days
Administrator's final decision                                   60 days
</TABLE>

                            However, the Administrator may take up to twice the
                            maximum response time for its initial and final
                            review if it provides an explanation within the
                            normal period of why an extension is needed and when
                            its decision will be forthcoming.

              16.7   Construction

                     Headings are included for reading convenience. The text
                     shall control if any ambiguity or inconsistency exists
                     between the headings and the text. The singular and plural
                     shall be interchanged wherever appropriate.

              16.8   Jurisdiction and Severability

                     The Plan and Trust shall be construed, regulated and
                     administered under ERISA and other applicable federal laws
                     and, where not otherwise preempted, by the laws of the
                     State of California. If any provision of the Plan and Trust
                     is or becomes invalid or otherwise unenforceable, that fact
                     shall not affect the validity or enforceability of any
                     other provision of the Plan and Trust. All provisions of

                                     - 49 -

<PAGE>

                  the Plan and Trust shall be so construed as to render them
                  valid and enforceable in accordance with their intent.

              16.9   Indemnification by Employer

                     The Employers hereby agree to indemnify all Plan
                     fiduciaries against any and all liabilities resulting from
                     any action or inaction, in relation to the Plan or Trust
                     (1) including (without limitation) expenses reasonably
                     incurred in the defense of any claim relating to the Plan
                     or its assets, and amounts paid in any settlement relating
                     to the Plan or its assets, but (2) excluding liability
                     resulting from actions or inactions made in bad faith, or
                     resulting from the negligence or willful misconduct of the
                     Trustee. The Company shall have the right, but not the
                     obligation, to conduct the defense of any action to which
                     this Section applies. The Plan fiduciaries are not entitled
                     to indemnity from the Plan assets relating to any such
                     action.

              16.10  Direct Rollovers

                     (a)    Direct Rollovers. Notwithstanding any provision of
                            the Plan to the contrary that would otherwise limit
                            a Distributee's election under this Section 16.10, a
                            Distributee may elect, at the time and in the manner
                            prescribed by the Administrator, to have any portion
                            of an Eligible Rollover Distribution paid directly
                            to an Eligible Retirement Plan specified by the
                            Distributee in a Direct Rollover.

                     (b)    Definitions. For purposes of this Section 16.10, the
                            following capitalized terms shall have the following
                            meanings:

                            (1)    "Direct Rollover" means a payment by the Plan
                                   to the Eligible Retirement Plan specified by
                                   the Distributee.

                            (2)    "Distributee" means an Associate or former
                                   Associate. In addition, the Associate's or
                                   former Associate's surviving spouse and the
                                   Associate's or former Associate's spouse or
                                   former spouse who is the alternate payee
                                   under a qualified domestic relations order,
                                   as defined in Section 414(p) of the Code, are
                                   Distributees with regard to the interest of
                                   the spouse or former spouse.

                            (3)    "Eligible Retirement Plan" means an
                                   individual retirement account described in
                                   Section 408(a) of the Code, an individual
                                   retirement annuity described in Section
                                   408(b) of the Code, an annuity plan described
                                   in Section 403(a) of the Code, or a qualified
                                   trust described in Section 401(a) of the
                                   Code, that accepts the Distributee's Eligible
                                   Rollover Distribution. However, in the case
                                   of an Eligible Rollover Distribution to the
                                   surviving spouse, an Eligible Retirement Plan
                                   is an individual retirement plan or
                                   individual retirement annuity.

                                     - 50 -

<PAGE>

                            (4)    "Eligible Rollover Distribution" means any
                                   distribution of all or any portion of the
                                   balance to the credit of the Distributee,
                                   except that an Eligible Rollover Distribution
                                   does not include: any distribution that is
                                   one of a series of substantially equal
                                   periodic payments (not less frequently than
                                   annually) made for life (or life expectancy)
                                   of the Distributee or the joint lives (or
                                   joint life expectancies) of the Distributee
                                   and the Distributee's designated Beneficiary,
                                   or for a specified period of ten years or
                                   more; any distribution to the extent such
                                   distribution is required under Section
                                   401(a)(9) of the Code; the portion of any
                                   distribution that is not includable in gross
                                   income (determined without regard to the
                                   exclusion for net unrealized appreciation
                                   with respect to employer securities); and,
                                   the portion of any distribution that is a
                                   hardship distribution described in Section
                                   401(k)(2)(B)(IV) of the Code.

                     (c)    EGTRRA Modifications

                            (1)    Modification of Definition of Eligible
                                   Retirement Plan. For purposes of the direct
                                   rollover provisions in this Section 16.10 of
                                   the Plan, an Eligible Retirement Plan shall
                                   also mean an annuity contract described in
                                   Section 403(b) of the Code and an eligible
                                   plan under Section 457(b) of the Code which
                                   is maintained by a state, political
                                   subdivision of a state, or any agency or
                                   instrumentality of a state or political
                                   subdivision of a state and which agrees to
                                   separately account for amounts transferred
                                   into such plan from this Plan. The definition
                                   of Eligible Retirement Plan shall also apply
                                   in the case of a distribution to a surviving
                                   spouse, or to a spouse or former spouse who
                                   is the alternate payee under a qualified
                                   domestic relation order, as defined in
                                   Section 414(p) of the Code.

                            (2)    Modification of Definition of Eligible
                                   Rollover Distribution to Exclude Hardship
                                   Distributions. For purposes of the direct
                                   rollover provisions in this Section 16.10 of
                                   the Plan, any amount that is distributed on
                                   account of hardship shall not be an Eligible
                                   Rollover Distribution and the Distributee may
                                   not elect to have any portion of such a
                                   distribution paid directly to an Eligible
                                   Retirement Plan.

                                     - 51 -

<PAGE>

17     AMENDMENT, MERGER, AND TERMINATION

       17.1   Amendment

              The Company reserves the right to amend the Plan and Trust at any
              time, to any extent and in any manner it may deem necessary or
              appropriate. The Company (and not the Trustee) shall be
              responsible for adopting any amendments necessary to maintain the
              qualified status of this Plan and Trust under Code Sections 401(a)
              and 501(a). The Administrator shall have the authority to adopt
              Plan amendments which have no substantial adverse financial impact
              upon an Employer or the Plan. All interested parties shall be
              bound by any amendment, provided that no amendment shall:

              (a)    Become effective until it is accepted in writing by the
                     Trustee (which acceptance shall not unreasonably be
                     withheld);

              (b)    Except to the extent permissible under ERISA and the Code,
                     make it possible for any portion of the Trust assets to
                     revert to an Employer or to be used for, or diverted to,
                     any purpose other than for the exclusive benefit of
                     Participants and Beneficiaries entitled to Plan benefits
                     and to defray reasonable expenses of administering the
                     Plan;

              (c)    Decrease the rights of any Associate to benefits accrued
                     (including the elimination of optional forms of benefits)
                     to the date on which the amendment is adopted, or if later,
                     the date upon which the amendment becomes effective, except
                     to the extent permitted under ERISA and the Code; nor

              (d)    Permit an Associate to be paid the balance of his or her
                     Associate Pre-Tax Account unless the payment would
                     otherwise be permitted under Code section 401(k).

       17.2   Merger

              The Plan and Trust may not be merged or consolidated with, nor may
              its assets or liabilities be transferred to, another plan unless
              each Participant and Beneficiary would, if the resulting plan were
              then terminated, receive a benefit just after the merger,
              consolidation or transfer which is at least equal to the benefit
              which would be received if either plan had terminated just before
              such event.

       17.3   Plan Termination

              The Company may, at any time and for any reason, terminate the
              Plan, or completely discontinue contributions. Upon either of
              these events, or in the event of a partial termination of the Plan
              within the meaning of Code section 411(d)(3), the Accounts of each
              affected Associate shall be fully vested.

                                     - 52 -

<PAGE>

              Distributions or withdrawals will be made in accordance with the
              terms of the Plan as in effect at the time of the Plan's
              termination or as thereafter amended provided that a
              post-termination amendment will not be effective to the extent
              that it violates Section 17.1 unless it is required in order to
              maintain the qualified status of the Plan upon its termination.
              The Trustee's and the Employer's authority shall continue beyond
              the Plan's termination date until all Trust assets have been
              liquidated and distributed. The Employers hereby agree to
              indemnify the Trustee against any and all liabilities resulting
              from the termination of the Plan or Trust (1) including (without
              limitation) any expenses reasonably attributable to the Company's
              failure to apply for a favorable determination from the Internal
              Revenue Service with respect to the qualification of the Plan upon
              its termination, any other expenses reasonably incurred in the
              defense of any claim relating to this Plan's termination, and
              amounts paid in any settlement relating to any such liability, but
              (2) excluding liability resulting from actions or inactions made
              in bad faith, or resulting from the gross negligence or willful
              misconduct of the Trustee.

       17.4   Termination of Employer's Participation

              Any Employer may terminate its Plan participation upon written
              notice executed by the Employer and delivered to the Company. Upon
              the Employer's request, the Company may instruct the Trustee and
              Administrator to spin off all affected Accounts and underlying
              assets into a separate qualified plan under which the Employer
              shall assume the powers and duties of the Company. Alternatively,
              the Company may treat the event as a partial termination described
              above or continue to maintain the Accounts under the Plan.

       17.5   Replacement of the Trustee

              The Trustee may resign as Trustee under the Plan and Trust or may
              be removed by the Company at any time upon at least 90 days
              written notice (or less if agreed to by both parties). In such
              event, the Company shall appoint a successor trustee by the end of
              the notice period. The successor trustee shall then succeed to all
              the powers and duties of the Trustee under the Plan and Trust. If
              no successor trustee has been named by the end of the notice
              period, the Company's chief executive officer shall become the
              trustee, or if he or she declines, the Trustee may petition the
              court for the appointment of a successor trustee.

       17.6   Final Settlement and Accounting of Trustee

              (a)    Final Settlement. As soon as is administratively feasible
                     after its resignation or removal as Trustee, the Trustee
                     shall transfer to the successor trustee all property
                     currently held by the Trust. However, the Trustee is
                     authorized to reserve such sum of money as it may deem
                     advisable for payment of its accounts and expenses in
                     connection with the settlement of its accounts or other
                     fees or expenses payable by the Trust.

                                     - 53 -

<PAGE>

                     Any balance remaining after payment of such fees and
                     expenses shall be paid to the successor trustee.

              (b)    Final Accounting. The Trustee shall provide a final
                     accounting to the Administrator within 90 days of the date
                     Trust assets are transferred to the successor trustee.

              (c)    Administrator Approval. Approval of the final accounting
                     will automatically occur 90 days after such accounting has
                     been received by the Administrator, unless the
                     Administrator files a written objection with the Trustee
                     within such time period. Such approval shall be final as to
                     all matters and transactions stated or shown therein and
                     binding upon the Administrator.

                                       ADVO, INC.

                                       /s/ ED HARLESS
                                       -------------------------
                                       By: Ed Harless

                                       Title: Executive Vice President & Chief
                                              Administrative Officer

                                       Date:  April 14, 2004

                                     - 54 -<PAGE>

                                                                    EXHIBIT 10.1

                                 GENERAL RELEASE
                             AND COVENANT NOT TO SUE

      THIS GENERAL RELEASE AND COVENANT NOT TO SUE (hereinafter referred to as
the "Agreement"), made as of this 5th day of May, 2004, by and between Thomas C.
Shull ("Mr. Shull"), residing at 28 Leeward Lane, Riverside, Connecticut 06878,
and Hanover Direct, Inc., with a principal place of business at The Hudson River
Pier, 115 River Road, Edgewater, New Jersey 07020 (the "Company").

      WHEREAS, the Company and Mr. Shull are parties to an Employment Agreement
dated as of September 1, 2002, as amended (the "Employment Agreement");

      WHEREAS, notwithstanding the terms of the Employment Agreement, Mr.
Shull's employment with the Company shall terminate effective May 5, 2004 and
Mr. Shull has conditionally resigned from the Board of Directors of the Company
effective such date (the "Termination Date"); and

      WHEREAS, the Company and Mr. Shull (the "parties") seek to dispose fully
and finally of all issues which now exist or may arise between the parties from
the commencement of Mr. Shull's relationship with the Company to the date of
execution of this Agreement.

      NOW, THEREFORE, in consideration of the above recitals and in further
consideration of the mutual promises and covenants set forth below, the parties
hereto, intending to be legally bound, hereby agree as follows:

      1.    Termination and Termination Benefits. Mr. Shull's employment with
the Company shall terminate effective the Termination Date and Mr. Shull shall
unconditionally resign from the Board of Directors of the Company effective such
date. The Company and Mr. Shull acknowledge, confirm and agree that (i) the
termination of Mr. Shull's employment with the Company is by resignation
following mutual discussion and agreement; and (ii) the termination of Mr.
Shull's employment with the Company is not "For Cause" or "For Good Reason" as
such terms are defined in the Employment Agreement. As consideration for Mr.
Shull's agreement to be bound by the terms of this Agreement and in full and
final settlement of all potential claims by Mr. Shull against the Company,
including but not limited to claims arising under the Hanover Direct, Inc. Key
Executive Eighteen Month Compensation Continuation Plan and the Employment
Agreement, dated as of September 1, 2002, as amended, the Company agrees:

            (a) to pay to Mr. Shull the sum of $900,000 ("Severance"), as
provided in clause (c) below;

            (b) for a period of eighteen (18) months from and after the
Effective Date, to pay the cost of continuing Mr. Shull's group health and
dental benefits under COBRA and Exec-U-Care plan coverage ("Benefits
Continuation" and together with Severance, "Termination Benefits");

            (c) The Severance shall be paid in multiple installments, the first
installment in the amount of $300,000 to be paid on the Effective Date of this
Agreement and the remaining

<PAGE>

amount of $600,000 to be payable in 16 installments of $35,625 payable every two
weeks commencing May 21, 2004 with a final payment in the amount of $30,000 to
be payable on or about December 31, 2004. The Benefits Continuation shall
commence in the month following the Effective Date of this Agreement. The
Termination Benefits shall be subject to all applicable federal, state and local
withholding taxes and deductions and the Company has no express or implied
obligation or duty to "gross-up" Mr. Shull for any of such tax or other payments
that are the obligation of Mr. Shull; and

            (d) If any Severance pay described in paragraph 1(c) is not made on
or before the date due, Mr. Shull shall provide written notice by facsimile to
the President of the Company (facsimile no. 201-272-3465). If the failure to pay
is not cured within five (5) business days of receipt by the Company of such
notice, the entire unpaid balance of the $900,000 shall become due and owing
immediately.

      2.    No Other Monies or Benefits Due or Payable. The parties agree that,
except for the Termination Benefits and the reimbursement of previously
submitted out of pocket expenses, no other monies or benefits will be due,
become due or be paid to Mr. Shull by the Company, including without limitation,
under any plan, policy, program or agreement with the Company, including without
limitation the Employment Agreement, including without limitation, change in
control benefits, transaction bonus, severance pay, salary continuation,
incentive or bonus pay, profit sharing, commissions, notice pay, vacation pay,
attorneys' fees or costs.

      3.    General Release. In consideration for the promises herein, Mr. Shull
agrees to release, remise and forever discharge, and by these presents does, for
himself, his heirs, executors, administrators and assigns (collectively referred
to hereafter as "Releasors"), release, remise and forever discharge each of the
Company, its past and present and future parent and affiliate corporations,
partnerships and other entities, and their past and present and future
divisions, subsidiaries and related companies, partnerships and other entities,
and their successors and assigns, and the directors, officers, employees,
shareholders, agents, partners, advisors and representatives of each of them,
personally and as directors, officers, employees, shareholders, agents,
partners, advisors and representatives and all benefit plans of the Company and
the administrators of same (collectively referred to hereafter as the
"Releasees"), of and from all manner of action and actions, causes and causes of
action, sums of money, covenants, contracts, controversies, agreements,
promises, damages, claims and demands whatsoever, in law or in equity, which
Releasors ever had, may have had, now have or which they hereinafter can, shall
or may have, whether known or unknown, asserted or unasserted, suspected or
unsuspected, as a result of any act or omission which has occurred at any time
up to and including the date of Mr. Shull's execution of this Agreement,
including without limitation, claims, demands and causes of action under
federal, state or local law or regulation, including without limitation, any
rights to bring any demands, complaints, causes of action, claims and charges in
any forum, judicial, administrative or quasi-judicial, arising out of, involving
or related to any employment agreement, or other contract, side-letter,
resolution, promise, policy or understanding of any kind, whether written or
oral or express or implied, the right to bring any demands, complaints, causes
of actions, claims and charges arising under any federal, state or local human
or civil rights, wage, labor or employment law and/or regulation, including
without limitation, the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C.
Sec. 626, the Older Workers' Benefit

                                       2
<PAGE>

Protection Act ("OWBPA"), 29 U.S.C. Sec. 626(f)(1), Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. Sec. 1983, Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. Sec. 1001, et seq., the
Rehabilitation Act of 1973, the Americans with Disabilities Act ("ADA"), 42
U.S.C. Sec. 12011, et. seq., the Family and Medical Leave Act ("FMLA"), and the
right to bring demands, complaints, causes of action, grievances, claims and
charges under any other federal, state or local law, statute, regulation or
decision, including laws that prohibit discrimination on the basis of sex or age
or disability or any claims for invasion of privacy, infliction of emotional
distress, assault, misrepresentation, battery or other common law claims, and
any claims, demands or causes of action for injunctive and declaratory relief,
breach of contract, wrongful discharge, compensation for lost wages and
benefits, emotional distress, compensatory and punitive damages and costs
including attorneys' fees, expenses and costs of litigation, and such other and
additional relief as may be appropriate.

      4.    Limited Release. In consideration for the promises herein, the
Releasees agree to release, remise and forever discharge, and by these presents
do, for themselves, their successors and assigns, release, remise and forever
discharge Releasors of and from all manner of action and actions, causes and
causes of action, sums of money, covenants, contracts, controversies,
agreements, promises, damages, claims and demands, in law or in equity, solely
related to (1) those matters brought before the Corporate Governance Committee
of the Board of Directors of the Company in December 2003, (2) actions of Mr.
Shull in his capacity as the CEO of the Company related or connected to asset
sales or prospective asset sales and financing and refinancing matters and the
process employed in connection therewith, including prospective redemptions, (3)
actions of Mr. Shull in his capacity as the CEO of the Company related to
existing litigation and administrative proceedings to which the Company is a
party, (4) actions of Mr. Shull in his capacity as the CEO of the Company in
supervision of operational matters, including treasury and accounting functions,
labor and employee relations and vendor and customer issues, and (5) actions of
Mr. Shull in his capacity as the CEO of the Company in connection with
transactions and relationships with the Company's majority stockholder and its
affiliates, including all communications connected or related thereto (excluding
any securities law filings), including without limitation, claims, demands and
causes of action under federal, state or local law or regulation, including
without limitation, any rights to bring any demands, complaints, causes of
action, claims and charges in any forum, judicial, administrative or
quasi-judicial.

      5.    Covenant Not to Sue. Releasors further covenant and agree that they
will forever forbear from pursuing any legal proceedings, administrative,
judicial or quasi-judicial, and they will not in any other way make or continue
to make any demands or claims against any of the Releasees based on actions or
omissions that occurred at any time up to and including the date of Mr. Shull's
execution of this Agreement. Releasees further covenant and agree that they will
forever forbear from pursuing any legal proceedings, administrative, judicial or
quasi-judicial, and they will not in any other way make or continue to make any
demands or claims against Releasors solely related to the matters and actions
described in clauses (1) through (5) of paragraph 4 above that occurred at any
time up to and including the date of the Company's execution of this Agreement.

      6.    Presently Unknown Claims. Mr. Shull acknowledges that (a) he may
subsequently discover facts in addition to or different from those that he now
believes to be true with respect to

                                       3
<PAGE>

the claims or potential claims described above, and (b) that he may have
sustained or may yet sustain costs or expenses that are presently unknown and
that relate to those claims. Mr. Shull acknowledges, however, that he had
negotiated, agreed upon and entered into this Agreement in light of that
situation.

      7.    Mutual Nondisparagement. Mr. Shull agrees that he will not initiate
action to harm the Company's name and reputation or that of its officers,
directors, shareholders or agents and shall make no disparaging statements
orally or in writing concerning the Company based on Mr. Shull's association as
an employee or otherwise that occurred at any time up to and including the date
of Mr. Shull's execution of this Agreement except as required by law or legal
process. The Company agrees for itself and on behalf of its officers, directors,
shareholders and agents that they will not initiate action to harm Mr. Shull's
name and reputation and shall make no disparaging statements orally or in
writing concerning Mr. Shull based on the Company's association as an employer
or otherwise that occurred at any time up to and including the date of the
Company's execution of this Agreement except as required by law or legal
process.

      8.    No Assistance. Mr. Shull agrees that he shall not solicit,
encourage, assist or participate in claims or litigation against the Releasees
in any forum by any individual or entity, including any governmental or
administrative agency or authority, except by subpoena or other court order or
as required by law.

      9.    Survival. Notwithstanding anything contained in this Agreement to
the contrary, this Agreement is in no way intended to and in no way shall effect
the validity or enforceability of the Indemnity or Confidentiality provisions of
the Employment Agreement or any provision of the General Release dated November
30, 2003 from Chelsey Direct, LLC to the Company and its officers and others
benefiting Mr. Shull, which shall both specifically survive the termination of
Mr. Shull's employment with the Company and shall not be superceded or modified
or deemed to be superceded or modified in any respect by this Agreement;
provided that, other than the Indemnity and Confidentiality provisions of the
Employment Agreement and those provisions of the Employment Agreement relating
to stock options, the balance of the Employment Agreement shall be terminated as
of the Termination Date.

      10.   Cooperation. Following the Termination Date, Mr. Shull agrees:

            (a) To make himself available for a maximum of five business days
per year for eighteen months from the date of this Agreement to respond to all
reasonable inquiries by the Company, its management, employees, agents,
attorneys, representatives and advisors regarding all matters associated with
his employment at the Company including, without limitation, his prior
responsibilities, and all the processes and procedures of which he acquired
knowledge while employed by the Company. In this regard, the parties acknowledge
and agree that in providing such responses Mr. Shull shall not be required to be
present at the Company's offices on a regular basis, but Mr. Shull agrees to
make himself available at reasonable times to meet by phone with the Company or
its employees, agents, representatives and advisors. The Company shall reimburse
Mr. Shull for any reasonable and necessary expenses he incurs in fulfilling this
obligation. For purposes of this section, any phone discussion or appearance by
Mr. Shull for any period of time in excess of one hour on any business day shall
count as participation for a full business day.

                                       4
<PAGE>

            (b) To make himself available for a maximum of five additional
business days per year for eighteen months from the date of this Agreement
without the requirement of being subpoenaed to confer with counsel by phone upon
reasonable notice concerning any knowledge he had or may have with respect to
actual and/or potential disputes arising out of the activities of the Company
during his period of employment by the Company. The Company shall reimburse Mr.
Shull for any reasonable and necessary expenses he incurs in fulfilling this
obligation. For purposes of this section, any phone discussion or appearance by
Mr. Shull for any period of time on any business day in excess of one hour shall
count as participation for a full business day.

            (c) To submit to deposition and/or testimony and/or participate in
an investigation by any government agency in accordance with the laws of the
forum involved concerning any knowledge he has or may have with respect to
actual and/or potential disputes or issues arising out of the activities of the
Company during his period of employment by the Company. The Company shall
reimburse Mr. Shull for any reasonable and necessary expenses he incurs in
fulfilling this obligation.

      11.   Confidentiality. Mr. Shull agrees and covenants that the contents of
this Agreement shall remain confidential and shall not be discussed with or
divulged to any entity or entities, person or persons, including but not limited
to employees or former employees of the Company; provided, however, that Mr.
Shull may disclose the content of this Agreement: (a) to members of his
immediate family and his legal, financial and personal advisors (provided such
individuals agree not to divulge it) and (b) to the extent he is required or
compelled by law to disclose this Agreement or its contents. Mr. Shull
acknowledges, confirms and agrees that the Company may be required by disclose
the content of this Agreement and to file a copy of this Agreement with the
Securities and Exchange Commission pursuant to applicable securities laws.

      12.   Acknowledgement of Full and Final Release. Mr. Shull further
represents that except for the obligations expressly provided herein, he
understands and agrees that by his execution of this Agreement, he has fully and
finally released all of his claims of every nature and kind against the
Releasees whether known or unknown, asserted or unasserted, suspected or
unsuspected, including punitive damages, claims for attorneys' fees, expenses
and costs of litigation.

      13.   Attorneys' Fees. In the event either party proves that the other
party has breached this Agreement, the breaching party will be responsible to
pay all reasonable attorneys' fees and costs incurred by the non-breaching party
in connection with its enforcement of this Agreement or related to the breach
thereof.

      14.   Breach. Mr. Shull agrees that in the event he breaches (or threatens
to breach) or otherwise violates any material term or condition of paragraphs 7,
9 (to the extent it incorporates by reference the Confidentiality provisions of
the Employment Agreement) or 11 of this Agreement, the Company shall be entitled
to obtain in a court of competent jurisdiction a temporary or permanent
injunction enjoining and restraining him from committing, continuing to commit
or threatening to commit any such violation or breach.

                                       5
<PAGE>

      15.   Review Period. Mr. Shull shall have up to twenty-one (21) days
within which to review and consider this Agreement. In the event Mr. Shull fails
to execute this Agreement and deliver same to the Company prior to the
expiration of such twenty-one (21) day period, this Agreement and the terms
offered herein shall automatically terminate and be deemed revoked for all
purposes.

      16.   Revocation Period. Mr. Shull shall have up to seven (7) days
following his execution of this Agreement within which to revoke it. If he
chooses to revoke this Agreement, he must notify Lisa Green, Company Counsel,
Hanover Direct, Inc., 1500 Harbor Boulevard, Weehawken, New Jersey 07087, in
writing on or before the seventh day following the execution of this Agreement
and state "I hereby revoke my acceptance of the Agreement." In the event this
Agreement is revoked pursuant to this Paragraph, Mr. Shull shall not be eligible
to nor shall he receive any of the Termination Benefits described in Paragraph 1
hereof and all of the terms and provisions of this Agreement shall be null and
void and each of the parties to this Agreement shall have all of the rights and
remedies available to it under the Employment Agreement or otherwise. In the
event this Agreement is not revoked in the manner set forth herein, it shall
become final and binding on the 8th day following Mr. Shull's execution of this
Agreement (the "Effective Date").

      17.   Severability. Mr. Shull specifically acknowledges that he has
considered carefully all of the covenants outlined above and intends that each
covenant shall be enforced fully in accordance with its terms. However, if, in
any judicial proceeding, a court shall determine that such covenants are
unenforceable for any reason, then the parties intend that such covenants shall
be deemed to be limited in such manner as the court may determine to permit
enforceability by such court and the remainder of this Agreement shall remain
enforceable as executed.

      18.   Governing Law and Jurisdiction. This Agreement shall be governed by
and construed under the laws of the State of New York. The parties agree to
submit to the jurisdiction of state and federal courts in New York for the
purposes of enforcing and/or resolving any disputes arising under this
Agreement.

      19.   Entire Agreement. This Agreement constitutes the full and complete
understanding between the parties. There are no other agreements or
understandings, either oral or in writing, which are not reflected in this
Agreement. Mr. Shull warrants and agrees that the Company has not made any other
agreement, promise or assurance, except those expressed in this document, to
induce or persuade Mr. Shull to enter into this Agreement.

      20.   No Modification. This Agreement shall not be modified or discharged,
in whole or in part, except by agreement in writing signed by the parties
hereto.

      21.   No Liability. It is understood and agreed that this Agreement is not
to be construed as an admission of liability by the Company.

      22.   Counterparts. This Agreement may be signed in counterparts.

      23.   Notice Under the OWBPA. Mr. Shull represents that he has executed
this Agreement knowingly and voluntarily. In particular, he represents that:

                                       6
<PAGE>

            a.    He is able to read the language, and understand the meaning
                  and effect, of this Agreement;

            b.    He has been advised in writing to consult with an attorney
                  prior to signing this Agreement;

            c.    He understands that he is waiving any right he may have to
                  bring a claim against the Company under the Age Discrimination
                  in Employment Act;

            d.    He has had or could have had up to twenty-one (21) days to
                  review and consider this Agreement and that, if he has
                  executed it prior to the expiration of the 21-day period, he
                  has done so of his own free will and without any duress or
                  compulsion; and

            e.    He understands that he has seven (7) days following execution
                  of this Agreement within which to revoke it.

                       [SIGNATURES ON THE FOLLOWING PAGE]

                                       7
<PAGE>

Agreed:

                                            Hanover Direct, Inc.

/s/ Thomas C. Shull                         By: /s/ Wayne P. Garten
-------------------                             --------------------------------
Thomas C. Shull                                 Name:  Wayne P. Garten
                                                Title: President and Chief
                                                       Executive Officer

Date: May 11, 2004                               Date: May 11, 2004

                                        8

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