Contents
Employment Agreement
                Noncompetition, Nonsolicitation, and Other Restrictive Covenants
                Change in Control Agreement
                Prior Works, Inventions, Discoveries, etc.
Amendment to Employment Agreement
EMPLOYMENT AGREEMENT 2
 
 
 
 
  ADVO, INC.
 
 EMPLOYMENT AGREEMENT
 
To S. SCOTT HARDING:
 
 This Agreement establishes the terms of your employment with ADVO, Inc., a
Delaware corporation (the "COMPANY") and is contingent upon approval of this
Agreement by the Company's Board of Directors (the "BOARD") and upon your
satisfying the Company's normal requirements for employability.
 
EMPLOYMENT AND DUTIES You and the Company agree to your employment as
 Chief Executive Officer ("CEO") on the terms
 contained below. In such position, you will report
 directly to the Board. You agree to perform
 whatever duties the Board may assign you from time
 to time that are reasonably consistent with
 services performed by the chief executive officers
 of similar companies. You will also, without
 further compensation, serve in such other offices
 at the Company or its subsidiaries to which you
 are elected or appointed. During your employment,
 you agree to devote your full business time,
 attention, and energies to performing those duties
 (except as the Board otherwise agrees from time to
 time). You agree to comply with the
 noncompetition, secrecy, and other provisions of
 Exhibit A to this Agreement and with the Company's
 Stock Ownership Guidelines.
 
BOARD MEMBERSHIP The Board will appoint you to a seat on the Board.
 
TERM OF EMPLOYMENT Your employment under this Agreement begins as of
 October 15, 2004 (the "EFFECTIVE DATE"). Unless
 sooner terminated or later extended under this
 Agreement, your employment ends at 6:00 p.m.
 Eastern Time on the third anniversary of the
 Effective Date (the "INITIAL TERM"). Unless, at
 least 90 days before the Initial Term (including
 any extensions) would otherwise expire (an
 "EXPIRATION DATE"), either you or the Company has
 notified the other of an intent to terminate this
 Agreement as of the then upcoming Expiration Date,
 the Term will automatically extend for one year at
 a time beginning on each succeeding anniversary of
 the Effective Date following such Expiration Date.
 
 The period running from the Effective Date to the
 end of your employment under this Agreement is the
 "TERM."
 
 Termination or expiration of this Agreement ends
 your employment but does not end your obligation
 to comply with
 Exhibit A or the Company's obligation, if any, to
 make payments under the Payments on Termination
 and Severance provisions as specified below. If
 the Company continues to employ you after the Term
 (such as after a notice of nonrenewal), you will
 continue to be an at-will employee, but with the
 notice periods for termination by the Company
 reduced to 30 days and with no Severance, as
 provided under EXPIRATION below.
 
COMPENSATION
 
 Salary The Company will pay you a monthly salary
 beginning on the Effective Date at the rate of not
 less than $64,583.33 in accordance with the
 Company's generally applicable payroll practices,
 which is equivalent on an annualized basis to
 $775,000 (the "SALARY"). The Board will review
 your Salary annually (beginning in January 2006)
 for increases but will not reduce your Salary
 during the Term.
 
 Signing Bonus You will receive a lump sum payment of $250,000
 as soon as practicable after the Effective Date.
 You agree that you will repay this amount if,
 before May 1, 2005, you resign without Good Reason
 or are terminated for Cause.
 
 Equity You will be eligible for such option, restricted
 Incentives stock, and other equity based incentives in
 connection with your initial employment and in the
 future as the Compensation and Nomination
 Committee (the "COMMITTEE") determines. The
 Committee has approved an initial grant (the
 "INITIAL GRANT") to you, effective on November 1,
 2004, of (i) an option for 100,000 shares of the
 Company's common stock vesting in four equal
 annual installments beginning on November 1, 2005
 and (ii) a restricted stock grant for 60,000
 shares of common stock, of which 10,000 shares
 will vest on November 1, 2005, 2006, and 2007, and
 the remaining 30,000 shares will vest on November
 1, 2007. The initial grants are under and subject
 to the Company's 1998 Incentive Compensation Plan
 (the "1998 PLAN"), require continued employment
 for grant and vesting (except as specified below),
 and expire in accordance with the terms of the
 1998 Plan. If either you or the Company provides
 notice of nonextension of this Agreement as of an
 upcoming Expiration Date (other than on a
 termination for Cause) before the final tranche of
 the options and restricted stock in your Initial
 Grant has vested and your employment ends
 accordingly, that tranche will continue to vest as
 though you had remained employed through the
 vesting dates for those options and that stock,
 and you will be treated for purposes of the 1998
 Plan as if your employment ended on that later
 date; provided, however, that
 if the Severance provision would vest your options
 and restricted stock under the Initial Grant more
 rapidly, the Severance provision will govern.
 
 Bonus The Board or the Committee will establish annual
 bonus targets under which you will be eligible for
 a target annual bonus equal to 100% of your
 Salary, determined in a manner consistent with the
 Company's bonus programs applicable to senior
 executives.
 
 Relocation You agree to relocate to the Windsor, Connecticut
 area by March 31, 2005 or such later date to which
 the Board agrees. The Company will cover you under
 and subject to the terms of its Relocation Policy
 (Grade Levels M through Q).
 
 Employee Benefits While the Company employs you under this
 Agreement, the Company will provide you with the
 same benefits as the Company makes generally
 available from time to time to the Company's
 senior executives, as those benefits are amended
 or terminated from time to time. Your
 participation in the Company's benefit plans will
 be subject to the terms of the applicable plan
 documents and the Company's generally applied
 policies, and the Company in its sole discretion
 may from time to time adopt, modify, interpret, or
 discontinue such plans or policies.
 
 Car Allowance You will receive a monthly car allowance of $600,
 which you acknowledge is taxable to you.
 
 Air Travel The Company will make its corporate aircraft
 available to you for personal use to a maximum
 annual value of such use during this Agreement of
 $150,000 (prorated from the Effective Date for
 2004), with that balance to be reduced using the
 applicable tax rules for valuation of personal air
 travel. You acknowledge that the use of the plane
 will, in some instances, be taxable to you.
 
 Vacation The Company will provide you with annual vacation,
 accruing at a rate of 2.08 days per month, and
 subject to the Company's normal policies regarding
 vacation.
 
PLACE OF EMPLOYMENT Your principal place of employment will be at the
 corporate offices at Windsor, Connecticut or such
 other offices as the Company may establish from
 time to time as its executive offices and to which
 it assigns you. You understand and agree that your
 employment will require travel from time to time.
 
EXPENSES The Company will reimburse you for reasonable and
 necessary travel and other business-related
 expenses you incur in performing
 your duties for the Company under this Agreement.
 You must itemize and substantiate all requests for
 reimbursements. You must submit requests for
 reimbursement in accordance with the policies and
 practices of the Company.
 
NO OTHER EMPLOYMENT While the Company employs you, you agree that you
 will not, without the Board's prior written
 consent, directly or indirectly, provide services
 for which you receive compensation to any other
 person or organization, nor will you otherwise
 engage in activities that would conflict or
 interfere with your faithful performance of your
 duties as an employee of the Company. (This
 prohibition excludes any work performed at the
 Company's direction.) You may be involved in
 charitable and professional activities and, with
 the Board's consent, serve on for profit boards
 and advisory committees, provided that this
 permission does not override your other
 obligations under this Agreement and Exhibit A.
 You may manage your personal investments, as long
 as the management takes only minimal amounts of
 time, is consistent with the provisions of the NO
 CONFLICTS OF INTEREST Section and the NO
 COMPETITION Section in Exhibit A, and is otherwise
 consistent with the policies and practices of the
 Company.
 
 You represent to the Company that you are not
 subject to any agreement, commitment, or policy of
 any third party or current or former employer that
 would prevent you from entering into or performing
 your duties under this Agreement, and you agree
 that you will not enter into any agreement or
 commitment or agree to any policy that would
 prevent or hinder your performance of duties and
 obligations under this Agreement, including
 Exhibit A.
 
NO CONFLICTS OF INTEREST You confirm that you have fully disclosed to the
 Company, to the best of your knowledge, all
 circumstances under which you, your spouse, your
 immediate relatives, and other persons who reside
 in your household have or may have a conflict of
 interest with the Company. You further agree to
 fully disclose to the Company any such
 circumstances that might arise during your
 employment upon your becoming aware of such
 circumstances. You agree to comply fully with the
 Company's policy and practices relating to
 conflicts of interest and its Code of Business
 Ethics and Conduct.
 
TERMINATION The Company may terminate your employment or you
 may resign at any time in accordance with this
 section.
 
 For Cause The Company may terminate your employment for
 "CAUSE" if you:
 
 (i) fail to comply with any of the material
 terms of this Agreement, including Exhibit
 A, or neglect or refuse to attend to the
 material duties you have been assigned;
 
 (ii) commit an act of fraud, material
 dishonesty, intentional misappropriation, or
 gross negligence with respect to the Company
 or otherwise act with willful disregard for
 the Company's best interests, or engage in
 conduct likely to result in any of the
 foregoing; or
 
 (iii) commit, are convicted of or plead
 guilty or no contest to a felony (or to a
 felony charge reduced to misdemeanor), or,
 with respect to your employment, to any
 misdemeanor (other than a traffic violation)
 or, with respect to your employment,
 knowingly violate any federal or state
 securities or tax laws.
 
 Your termination for Cause will be effective
 immediately upon the Company's mailing or written
 transmission of notice of such termination. Before
 terminating your employment for Cause under
 clauses (i) - (ii) above, the Company will specify
 in writing to you the nature of the act, omission,
 refusal, or failure that it deems to constitute
 Cause and, if the Board reasonably considers the
 situation to be correctable, give you 30 days
 after you receive such notice to correct the
 situation (and thus avoid termination for Cause),
 unless the Company agrees to extend the time for
 correction. You agree that the Board will have the
 discretion to determine Cause and whether your
 correction is sufficient.
 
 Without Cause Subject to the provisions below under Payments on
 Termination and Severance, the Company may
 terminate your employment without Cause.
 
 Disability If you become "disabled" (as defined below), the
 Company may terminate your employment. You are
 "DISABLED" if you are unable, for more than 90
 consecutive days or for shorter periods
 aggregating six months during the Term, despite
 whatever reasonable accommodations the law
 requires, to render services to the Company
 because of physical or mental disability,
 incapacity, or illness.
 
 Good Reason You may resign for Good Reason. "GOOD REASON" for
 this purpose means that, without your consent, the
 Company has materially breached this Agreement
 (and your actions or omissions did not primarily
 cause or materially contribute to the breach) or
 the Board assigns you duties materially
 inconsistent with, or
 substantially diminishes, your status or
 responsibilities as CEO without your consent. GOOD
 REASON excludes the results of any action the
 Company takes to comply with the directions of a
 governmental entity (such as placing you on
 administrative leave) and also excludes, for the
 first 90 days following a Change in Control (as
 defined in Exhibit C), any diminution in your
 position as a result of a Change in Control
 (during which 90 day period you agree to assist
 with any transition). You agree that this
 employment relationship does not contemplate any
 grounds for constructive termination other than as
 Good Reason provides.
 
 You must give written notice to the Company of
 your intention to resign for Good Reason within 30
 days after the occurrence of the event that you
 assert entitles you to resign for Good Reason or
 you will waive your rights as to that reason. In
 the notice, you must state the condition that you
 consider provides you with Good Reason and you
 must give the Company an opportunity to cure the
 condition within 30 days after your notice (with
 the 30 day period shortened to 10 days if the
 failure relates to a nonpayment of Salary and such
 nonpayment is not cured within five days after you
 provide written notice of such nonpayment to the
 Company). If the Company fails to cure the
 condition, your resignation will be effective on
 the 45th day (or the 20th day for nonpayment of
 Salary) after your notice (unless the Board has
 previously waived such notice period in writing or
 agreed to a shorter notice period).
 
 You will not be treated as resigning for Good
 Reason if the Company already had Cause to
 terminate your employment as of the date of your
 notice of resignation.
 
 Without Good You may resign without Good Reason upon 60 days'
 Reason prior written notice to the Company (unless the
 Board has, in writing, previously waived such
 notice or authorized a shorter notice period).
 Your notice to the Company of nonextension of the
 Term will be a resignation.
 
 Death If you die during the Term, the Term will end as
 of the date of your death.
 
 Payments on Upon any termination of your employment under
 Termination this Agreement, the Company will pay you any
 unpaid portion of your Salary pro-rated through
 the last day of the Term (and, in the Committee's
 discretion, part or all of any annual bonuses
 already determined by such date but not yet paid),
 reimburse any substantiated but unreimbursed
 business expenses, pay any accrued and unused
 vacation time (to the extent consistent with the
 Company's policies
 and applicable laws), and provide such other
 benefits as applicable laws or the terms of the
 benefits require. Except to the extent the law
 requires otherwise or as provided in the Severance
 paragraph, neither you nor your beneficiary or
 estate will have any rights or claims under this
 Agreement or otherwise to receive severance or any
 other compensation, or to participate in any other
 plan, arrangement, or benefit, after such
 termination or resignation.
 
 Because you will hold a senior executive position
 at a public company, you agree that if the Board
 determines it had Cause to terminate your
 employment within 90 days after your termination
 without Cause or resignation for Good Reason, the
 Company may instead treat the termination or
 resignation as termination for Cause, and you
 agree to repay any payments the Company made since
 the date of termination of employment that the
 Company would not have paid on a termination for
 Cause and to forfeit any incentive compensation
 that would have been forfeited, provided that this
 provision does not require any restitution with
 respect to medical benefits you or your family has
 received.
 
Severance In addition to the foregoing payments, if, before
 the next scheduled Expiration Date and except as
 EXPIRATION provides, the Company terminates your
 employment without Cause or you resign for Good
 Reason, the Company will
 
 pay you severance equal to your Salary, as
 then in effect, for 24 months on the same
 schedule as though you had remained employed
 during such period, even though you are no
 longer employed (the "SEVERANCE PERIOD"),
 
 in lieu of any bonus for the year of
 termination, pay you an additional year's
 Salary, ratably over the Severance Period,
 
 fully vest the options and restricted stock
 in your Initial Grant and allow those
 options to be exercised (subject to any
 overriding provisions in the plans under
 which they are granted) during the Severance
 Period, and
 
 pay any premiums for your continued coverage
 under post-employment health coverage for
 the shorter of the Severance Period or the
 period for which you are eligible for and do
 elect continuation coverage from the Company
 under COBRA.
 
 If the payments under Severance are in connection
 with a termination without Cause or resignation
 for Good Reason within
 six months following a Change in Control, the
 Company will make any cash payments in a single
 lump sum payment within 30 days after completion
 of the determination under PARACHUTE PAYMENTS
 below.
 
 You are not required to mitigate amounts payable
 under the Severance paragraph by seeking other
 employment or otherwise, nor must you pay over to
 the Company amounts earned under subsequent
 employment; however, you agree to return any
 Severance payments if you fail to comply with
 Exhibit A.
 
 You agree that the Company's payment of Severance
 is conditioned on your providing a customary
 general release of all claims relating to your
 employment, compensation, and termination and such
 other matters as the Company requests on
 termination.
 
EXPIRATION Expiration of this Agreement, whether because of
 notice of non-renewal or otherwise, does not
 constitute termination without Cause nor provide
 you with Good Reason and does not entitle you to
 Severance.
 
ASSIGNMENT The Company may assign or otherwise transfer this
 Agreement and any and all of its rights, duties,
 obligations, or interests under it
 
 to any of its affiliates or subsidiaries or
 
 to any business entity that at any time by
 merger, consolidation, or otherwise acquires
 substantially all of the Company's stock or
 assets or to which the Company transfers
 substantially all of its assets.
 
 Upon such assignment or transfer, any such
 business entity will be treated as substituted for
 the Company for all purposes. You agree that such
 assignment or transfer does not by itself entitle
 you to Severance. This Agreement binds and
 benefits the Company, its successors or assigns,
 and your heirs and the personal representatives of
 your estate. Without the Board's prior written
 consent, you may not assign or delegate this
 Agreement or any rights, duties, obligations, or
 interests under it.
 
 You specifically agree that the assignment will,
 unless the Company provides otherwise, include the
 restrictive covenants of Exhibit A, including the
 noncompetition and nonsolicitation provisions.
 
SEVERABILITY If the final determination of an arbitrator or a
 court of competent jurisdiction declares, after
 the expiration of the time within which judicial
 review (if permitted) of such determination may be
 perfected, that any term or provision of this
 Agreement (including any provision of Exhibit A)
 is invalid or unenforceable, the remaining terms
 and provisions will be unimpaired, and the invalid
 or unenforceable term or provision will be deemed
 replaced by a term or provision that is valid and
 enforceable and that comes closest to expressing
 the intention of the invalid or unenforceable term
 or provision.
 
AMENDMENT; WAIVER Neither you nor the Company may modify, amend, or
 waive the terms of this Agreement other than by a
 written instrument signed by you and by another
 executive officer of the Company duly authorized
 by the Board. Either party's waiver of the other
 party's compliance with any provision of this
 Agreement is not a waiver of any other provision
 of this Agreement or of any subsequent breach by
 such party of a provision of this Agreement.
 
WITHHOLDING The Company will reduce its compensatory payments
 to you for withholding and FICA taxes and any
 other withholdings and contributions required by
 law.
 
GOVERNING LAW The laws of the State of Connecticut (other than
 its conflict of laws provisions) govern this
 Agreement.
 
NOTICES Notices must be given in writing by personal
 delivery or by overnight delivery. You should send
 or deliver your notices to the Company's corporate
 headquarters, addressed to the Chair of the
 Committee. The Company will send or deliver any
 notice given to you at your address as reflected
 on the Company's personnel records. You and the
 Company may change the address for notice by like
 notice to the other. You and the Company agree
 that notice is received on the date it is
 personally delivered or the date of guaranteed
 delivery by the overnight service.
 
PARACHUTE PAYMENTS The Company will make the payments under this
 Agreement without regard to whether the
 deductibility of such payments (or any other
 payments or benefits) would be limited or
 precluded by Section 280G of the Internal Revenue
 Code of 1986 (the "CODE") and without regard to
 whether such payments would subject you to the
 federal excise tax levied on certain "excess
 parachute payments" under Section 4999 of the
 Code; provided, however, that if the Total
 After-Tax Payments (as defined below) would be
 increased by the reduction or elimination of any
 payment and/or other benefit (including the
 vesting of your options) under this
 Agreement, then the amounts payable under this
 Agreement will be reduced or eliminated as
 follows: (i) first, by reducing or eliminating any
 cash payments or other benefits (other than the
 vesting of any options or stock) and (ii) second,
 by reducing or eliminating the vesting of your
 options and stock that occurs as a result of such
 Change of Control, to the extent necessary to
 maximize the Total After-Tax Payments. The
 Company's independent, certified public accounting
 firm will determine whether and to what extent
 payments or vesting under this Agreement are
 required to be reduced in accordance with the
 preceding sentence. If there is an underpayment or
 overpayment under this Agreement (as determined
 after the application of this paragraph), the
 amount of such underpayment or overpayment will be
 immediately paid to you or refunded by you, as the
 case may be, with interest at the applicable
 federal rate provided for in Section 7872(f)(2) of
 the Code. For purposes of this Agreement, "TOTAL
 AFTER-TAX PAYMENTS" means the total of all
 "parachute payments" (as that term is defined in
 Section 280G(b)(2) of the Code) made to you or for
 your benefit (whether made under the Agreement or
 otherwise), after reduction for all applicable
 federal taxes (including, without limitation, the
 tax described in Section 4999 of the Code).
 
SUPERSEDING EFFECT This Agreement supersedes any prior oral or
 written agreements between you and the Company.
 This Agreement supersedes all prior or
 contemporaneous negotiations, commitments,
 agreements, and writings with respect to the
 subject matter of this Agreement. All such other
 negotiations, commitments, agreements, and
 writings will have no further force or effect; and
 the parties to any such other negotiation,
 commitment, agreement, or writing will have no
 further rights or obligations thereunder.
 
 
If you accept the terms of this Agreement, please sign in the space indicated
below. We understand that you have consulted with counsel to help you understand
your obligations under this Agreement, and we encourage you to consult with any
other advisers you think appropriate.
 
 ADVO, INC.
 
 By: /s/ DONALD S. SCHNEIDER
 --------------------------------------
 Name: Donald S. Schneider
 
 Title: Senior Vice President, Human Resources
 
I accept and agree to the terms of employment set
forth in this Agreement:
 
/s/ S. SCOTT HARDING
--------------------------------
 S. SCOTT HARDING
 
Dated: October 11, 2004
 
 
 
 
 Exhibit A
 
 NONCOMPETITION, NONSOLICITATION, AND OTHER RESTRICTIVE COVENANTS
 
 You agree to the provisions of this Exhibit A in consideration of your
employment by the Company and salary and benefits under this Agreement. You
acknowledge that you will perform services for the Company in a position that
will allow you access to various trade secrets and confidential information
belonging to the Company and its affiliates. You agree that the Company has a
legitimate business interest in preserving its confidential information and
business secrets from unauthorized disclosure, and in protecting its goodwill.
While the Company (or its successor or transferee) employs you and to the end of
the Restricted Period (as defined below), you agree as follows:
 
NO COMPETITION You will not, directly or indirectly, be employed
 by, lend money to, or engage in any Competing
 Business within the Market Area (each as defined
 below). That prohibition includes, but is not
 limited to, acting, either singly or jointly or as
 agent for, or as an employee of or consultant to,
 any one or more persons, firms, entities, or
 corporations directly or indirectly (as a
 director, independent contractor, representative,
 consultant, member, or otherwise) that constitutes
 such a Competing Business. You also will not
 invest or hold equity or options in any Competing
 Business, provided that you may own up to 1% of
 the outstanding capital stock of any corporation
 that is actively publicly traded without violating
 this NO COMPETITION covenant, so long as you have
 no involvement beyond passive investing in such
 business and you comply with the second sentence
 of this paragraph. You further agree not to use,
 incorporate, or otherwise create any business
 organization or domain name using, any name
 confusingly similar to "ADVO, INC." or any other
 name under which the Company does business.
 
 If, during the Restricted Period, you are offered
 and want to accept employment with an existing
 business or you start or join a new business that
 engages in activities similar to the Company's,
 you will inform the Board in writing of the
 identity of the business, your proposed duties
 with an existing business or the proposed business
 plan of your new business, and the proposed
 starting date of your employment or that new
 business. You will also inform any existing
 business of the terms of this Exhibit A. The
 Company will analyze the proposed employment or
 the creation of your new business and make a good
 faith determination as to whether it would
 threaten the Company's legitimate competitive
 interests. If the Company determines that the
 proposed employment or the creation of your new
 business would not pose an unacceptable
 threat to its interests, the Company will notify
 you that it does not object to the employment or
 the creation of your new business.
 
 You acknowledge that, during the portion of the
 Restricted Period that follows your employment,
 you may engage in any business activity or gainful
 employment of any type and in any place except as
 described above. You acknowledge that you will be
 reasonably able to earn a livelihood without
 violating the terms of this Agreement.
 
 You understand and agree that the rights and
 obligations set forth in this NO COMPETITION
 Section will continue and will survive through the
 Restricted Period.
 
Definitions
 
 Competing Competing Business means any service or product of
 Business any person or organization other than the
 Company and its successors, assigns, or
 subsidiaries (collectively, the "COMPANY GROUP")
 that competes with any service or product of the
 Company Group provided by any member of the
 Company Group during your employment or upon which
 or with which you have worked for the Company or
 the Company Group or about which you acquire
 knowledge while working for the Company or the
 Company Group.
 
 Market Area The Market Area consists of the United States of
 America. You agree that the Company provides goods
 and services both at its facilities and at the
 locations of its customers or clients and that, by
 the nature of its business, it operates throughout
 the Market Area.
 
 Restricted For purposes of this Agreement, the RESTRICTED
 Period PERIOD begins on the Effective Date and ends on
 the first anniversary of the date your employment
 with the Company Group ends for any reason (or, if
 later, the end of the Severance Period, if any).
 
NO INTERFERENCE; During the Restricted Period, you agree that you
NO SOLICITATION will not, directly or indirectly, whether for
 yourself or for any other individual or entity
 (other than the Company or its affiliates or
 subsidiaries),
 
 solicit for any Competing Business any
 person or entity who is, or was, within the
 12 months preceding the end of your
 employment with the Company, a customer,
 customer representative (such as an agency),
 a prospect (with respect to which any member
 of the Company Group has incurred
 substantial costs or with which you have
 been involved), or a client of the Company
 Group within the Market Area,
 with the 12 month period reduced to six
 months for prospects with which you have not
 been involved;
 
 hire away or endeavor to entice away from
 the Company Group any employee (other than
 your personal assistant) or any other person
 or entity whom the Company Group engages to
 perform services or supply products and
 including, but not limited to, any
 independent contractors, consultants,
 engineers, or sales representatives or any
 contractor, subcontractor, supplier, or
 vendor; or
 
 hire any person (other than your personal
 assistant) whom the Company Group employs or
 employed within the 12 months preceding the
 date as of which you attempt to hire the
 person.
 
SECRECY
 
 Preserving Your employment with the Company under (and, if
 Company applicable, before) this Agreement will give you
 Confidences access to Confidential Information (as defined
 below). You acknowledge and agree that using,
 disclosing, or publishing any Confidential
 Information in an unauthorized or improper manner
 could cause the Company or Company Group to incur
 substantial loss and damages that could not be
 readily calculated and for which no remedy at law
 would be adequate. Accordingly, you agree with the
 Company that you will not at any time, except in
 performing your employment duties to the Company
 or the Company Group under this Agreement (or with
 the Board's prior written consent), directly or
 indirectly, use, disclose, or publish, or
 knowingly or negligently permit others not so
 authorized to use, disclose, or publish any
 Confidential Information that you may learn or
 become aware of, or may have learned or become
 aware of, because of your prior or continuing
 employment, ownership, or association with the
 Company or the Company Group or any of their
 predecessors, or use any such information in a
 manner detrimental to the interests of the Company
 or the Company Group.
 
 Preserving You agree not to use in working for the Company
 Others' Group and not to disclose to the Company Group any
 Confidences trade secrets or other information you do not have
 the right to use or disclose and that the Company
 Group is not free to use without liability of any
 kind. You agree to inform the Company promptly in
 writing of any patents, copyrights, trademarks, or
 other proprietary rights known to you that the
 Company or the Company Group might violate because
 of information you provide.
 
 Confidential "CONFIDENTIAL INFORMATION" includes, without
 Information limitation, any matters protected under the
 Uniform Trade Secrets Act and any information that
 the Company or the Company Group has not
 previously disclosed to the public or to the trade
 with respect to the Company's or the Company
 Group's present or future business, including its
 operations, services, products, research,
 inventions, invention disclosures, discoveries,
 drawings, designs, plans, processes, models,
 technical information, facilities, methods,
 systems, trade secrets, copyrights, software,
 source code, object code, patent applications,
 procedures, manuals, specifications, any other
 intellectual property, confidential reports, price
 lists, pricing formulas, customer lists, consumer
 targeting techniques, financial information
 (including the revenues, costs, or profits
 associated with any of the Company's or the
 Company Group's products or services), business
 plans, lease structure, projections, prospects,
 opportunities or strategies, acquisitions or
 mergers, advertising or promotions, personnel
 matters, legal matters, any other confidential and
 proprietary information, and any other information
 not generally known outside the Company or the
 Company Group that may be of value to the Company
 or the Company Group, but excludes any information
 already properly in the public domain or hereafter
 acquired from a source other than you in a manner
 that did not involve a breach of the disclosing
 party's obligations, or that you prove through
 documentation you knew other than through your
 association with the Company. "Confidential
 Information" also includes, without limitation,
 confidential and proprietary information and trade
 secrets that third parties entrust to the Company
 or the Company Group in confidence.
 
 You understand and agree that the rights and
 obligations set forth in this SECRECY Section will
 continue indefinitely and will survive termination
 of this Agreement and your employment with the
 Company or the Company Group.
 
EXCLUSIVE PROPERTY You confirm that all Confidential Information is
 and must remain the exclusive property of the
 Company or the relevant member of the Company
 Group. Any office equipment (including computers)
 you receive from the Company Group in the course
 of your employment and all business records,
 business papers, and business documents you keep
 or create, whether on digital media or otherwise,
 in the course of your employment by the Company
 relating to the Company or any member of the
 Company Group must be and remain the property of
 the Company or the relevant member of the Company
 Group. Upon the termination of this Agreement with
 the Company or upon the Company's request at
 any time, you must promptly deliver to the Company
 or to the relevant member of the Company Group any
 such office equipment (including computers) and
 any Confidential Information or other materials
 (written or otherwise) not available to the public
 or made available to the public in a manner you
 know or reasonably should recognize the Company
 did not authorize, and any copies, excerpts,
 summaries, compilations, records, or documents you
 made or that came into your possession during your
 employment. You agree that you will not, without
 the Company's consent, retain copies, excerpts,
 summaries, or compilations of the foregoing
 information and materials. You understand and
 agree that the rights and obligations set forth in
 this EXCLUSIVE PROPERTY Section will continue
 indefinitely and will survive termination of this
 Agreement and your employment with the Company
 Group.
 
COPYRIGHTS, You agree that all records (in whatever media),
DISCOVERIES, including written works, documents, papers,
INVENTIONS, AND notebooks, drawings, designs,technical
PATENTS information, source code, object code, processes,
 methods or other copyrightable or otherwise
 protected works you conceive, create, author,
 prepare derivative works from, make, invent, or
 discover that relate to or result from any work
 you perform or performed for the Company or the
 Company Group or that arise from the use or
 assistance of the Company Group's facilities,
 materials, personnel, or Confidential Information
 in the course of your employment (whether or not
 during usual working hours), whether conceived,
 created, authored, discovered, made, or invented
 individually or jointly with others, will be and
 remain the absolute property of the Company (or
 another appropriate member of the Company Group,
 as specified by the Company), as will all the
 worldwide patent, copyright, trademark, service
 mark, trade secret, or other intellectual property
 rights in all such works. (All references in this
 section to the Company include the members of the
 Company Group, unless the Company determines
 otherwise.) You irrevocably and unconditionally
 waive all rights, wherever in the world
 enforceable, that vest in you (whether before, on,
 or after the date of this Agreement) in connection
 with your authorship of any such copyrightable
 works in the course of your employment with the
 Company Group or any predecessor. Without
 limitation, you waive the right to be identified
 as the author, inventor, creator, or facilitator
 (whether solely or jointly) of any such
 copyrightable works and the right not to have any
 such works subjected to derogatory treatment. You
 recognize any such works are "works for hire" for
 which the Company Group retains all rights, title,
 and interest to any underlying intellectual
 property rights, including copyright protections.
 
 You will promptly disclose, and hereby grant, and
 assign all rights, title, and interest in
 ownership to the Company (or other member of the
 Company Group, as specified by the Company) for
 its or their sole use and benefit any and all
 intellectual property, including all ideas,
 processes, inventions (whether patentable or not),
 invention disclosures, discoveries, improvements,
 technical information, trademarks, service marks,
 and copyrightable works (whether patentable or
 not) that you develop, acquire, conceive, reduce
 to practice, author, or prepare derivative works
 from (whether or not during usual working hours)
 while the Company or the Company Group employs
 you. You will promptly disclose and hereby grant
 and assign ownership to the Company of all
 intellectual property, including utility and
 design patents, copyrights, and trademarks, or
 service marks, including any associated
 registrations, applications, renewals, extensions,
 continuations, continuations-in-part, requests for
 continued examination, divisions, or reissues
 thereof or any foreign equivalents thereof (such
 intellectual property and related rights being
 referred to collectively as "PROTECTED
 INTERESTS"), that may at any time be filed or
 granted for or upon any such intellectual
 property. In connection therewith:
 
 You will, without charge but at the
 Company's expense, promptly execute and
 deliver such applications, assignments,
 descriptions, and other instruments as the
 Company may consider reasonably necessary or
 proper to vest title to any Protected
 Interests in the Company and to enable it to
 obtain and maintain the entire worldwide
 right and title thereto; and
 
 You will provide to the Company at its
 expense all such assistance as the Company
 may reasonably require in the prosecution of
 applications for such Protected Interests,
 in the prosecution or defense of
 interferences that may be declared involving
 any such Protected Interests, and in any
 litigation in which the Company or the
 Company Group may be involved relating to
 any such Protected Interests. The Company
 will reimburse you for reasonable
 out-of-pocket expenses you incur and pay you
 reasonable compensation for your time if the
 Company Group no longer employs you.
 
 You and the Company agree that Exhibit C lists and
 briefly describes works, inventions, discoveries,
 proprietary information, patents and patent
 applications, and copyrighted or copyrightable
 works (including contemplated works) that the
 Company will not contest are owned (or will be
 owned) by you or any entity to which you have
 assigned them. You agree that you have no
 ownership interest in any other such works or
 related patents or copyrights that relate in any
 way to the business of the Company or the Company
 Group.
 
 To the extent, if any, that you own rights to
 works, inventions, discoveries, proprietary
 information, and copyrighted or copyrightable
 works, or other forms of intellectual property
 that have been or become incorporated in the work
 product you create for the Company Group, you
 agree that the Company (and/or, as the Company
 specifies, other members of the Company Group)
 will have an unrestricted, non-exclusive,
 royalty-free, perpetual, transferable license in
 such intellectual property, including the rights
 to make, use, sell, offer for sale, and sublicense
 (through multiple tiers), reproduce, prepare
 derivative works from, distribute copies of,
 publicly perform, or publicly display such works
 and property in whatever form, and you hereby
 grant such license to the Company (and the Company
 Group).
 
 This COPYRIGHTS, DISCOVERIES, INVENTIONS AND
 PATENTS section does not apply to an invention
 that you developed entirely on your own time
 without using the Company Group's equipment,
 supplies, facility, or trade secret information
 except for those inventions that (i) relate to the
 Company Group's business, or actual or
 demonstrably anticipated research or development,
 or (ii) result from any work performed by you for
 the Company Group.
 
MAXIMUM LIMITS You agree that the time, territory, and scope of
 this Exhibit A are reasonable and necessary for
 protection of the Company's legitimate business
 interests. If any of the provisions of Exhibit A
 are ever deemed to exceed the time, geographic
 area, or activity limitations the law permits, you
 and the Company agree to reduce the limitations to
 the maximum permissible limitation, and you and
 the Company authorize a court or arbitrator having
 jurisdiction to reform the provisions to the
 maximum time, geographic area, and activity
 limitations the law permits; provided, however,
 that such reductions apply only with respect to
 the operation of such provision in the particular
 jurisdiction with respect to which such
 adjudication is made.
 
NO IMPROPER You will neither pay nor knowingly or negligently
PAYMENTS permit payment of any remuneration to or on behalf
 of any governmental official other than payments
 required or permitted by applicable law. You
 will comply fully with the Foreign Corrupt
 Practices Act of 1977, as amended. You will not,
 directly or indirectly,
 
 make or knowingly or negligently permit any
 contribution, gift, bribe, rebate, payoff,
 influence payment, kickback, or other
 payment to any person or entity, private or
 public, regardless of what form, whether in
 money, property, or services
 
 to obtain favorable treatment for
 business secured,
 
 to pay for favorable treatment for
 business secured,
 
 to obtain special concessions or for
 special concessions already obtained,
 or
 
 in violation of any legal requirement,
 or
 
 establish or maintain any fund or asset
 related to the Company that is not recorded
 in the Company's books and records, or
 
 take any action that would violate (or would
 be part of a series of actions that would
 violate) any U.S. law relating to
 international trade or commerce, including
 those laws relating to trading with the
 enemy, export control, and boycotts of
 Israel or Israeli products.
 
INJUNCTIVE RELIEF Without limiting the remedies available to the
 Company, you acknowledge
 
 that a breach of any of the covenants in
 this Exhibit A will result in material
 irreparable injury to the Company and
 Company Group for which there is no adequate
 remedy at law, and
 
 that it will not be possible to measure
 damages for such injuries precisely.
 
 You agree that, if there is a breach or threatened
 breach, the Company or any member of the Company
 Group may be entitled to obtain a temporary
 restraining order and/or a preliminary or
 permanent injunction restraining you from engaging
 in activities prohibited by any provisions of this
 Exhibit A or such other relief as may be required
 to specifically enforce any of the covenants in
 this Exhibit A. The Company or any member of the
 Company Group will, in addition to the remedies 
 Provided in this Agreement, be entitled to avail 
 itself of all such other remedies as may now or 
 hereafter exist at law or in equity for compensation 
 and for the specific enforcement of the covenants
 contained in this Agreement. Resort to any remedy
 provided for in this Section or provided for by
 law will not prevent the concurrent or subsequent
 employment of any other appropriate remedy or
 remedies, or preclude the Company's or the Company
 Group's recovery of monetary damages and
 compensation. You also agree that the Restricted
 Period or such longer period during which the
 covenants hereunder by their terms survive will
 extend for all periods for which a court with
 personal jurisdiction over you finds that you
 violated the covenants contained in this Exhibit
 A.
 
 
 
 Exhibit B
 
 CHANGE IN CONTROL
 
 A Change in Control for this purpose means the occurrence of any one or
more of the following events:
 
 (i) sale of all or substantially all of the assets of the
 Company to one or more individuals, entities, or groups acting
 together;
 
 (ii) complete or substantially complete dissolution or
 liquidation of the Company;
 
 (iii) a person, entity, or group acting together acquires or
 attains ownership of more than 30% of the undiluted total
 voting power of the Company's then-outstanding securities
 eligible to vote to elect members of the Board ("COMPANY
 VOTING SECURITIES");
 
 (iv) completion of a merger, consolidation, or reorganization
 of the Company with or into any other entity unless the
 holders of the Company Voting Securities outstanding
 immediately before such completion, together with any trustee
 or other fiduciary holding securities under a Company benefit
 plan, hold securities that represent immediately after such
 merger or consolidation at least 50% of the combined voting
 power of the then outstanding voting securities of either the
 Company or the other surviving entity or its ultimate parent;
 
 (v) the individuals who constitute the Board immediately
 before a proxy contest cease to constitute at least a majority
 of the Board (excluding any Board seat that is vacant or
 otherwise unoccupied) immediately following the proxy contest;
 
 (vi) during any two year period, the individuals who
 constitute the Board at the beginning of the period (the
 "INCUMBENT DIRECTORS") cease for any reason to constitute at
 least a majority of the Board (excluding any Board seat that
 is vacant or otherwise unoccupied), provided that any
 individuals that two-thirds of Incumbent Directors approve for
 service on the Board are treated as Incumbent Directors; or
 
 (vii) any other event occurs that the Board determines, in its
 discretion, would materially alter the structure of the
 Company's ownership.
 
 The Board or the Committee will have the same authority to determine
 the existence of a Change in Control under this definition as each
 has under the Company's 1998 Incentive Compensation Plan.
 
 
 
 Exhibit C
 
 PRIOR WORKS, INVENTIONS, DISCOVERIES, ETC.
 
 None
 

 

 

 
 AMENDMENT TO EMPLOYMENT AGREEMENT
 
 This Amendment (the "Amendment") is entered into as of the 10th day of
October, 2004 by and between ADVO, Inc., a Delaware corporation (the "Company"),
and Bobbie Gaunt (the "Executive").
 
 WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated as of the 15th day of June, 2004 (the "Agreement")
pursuant to which she serves as Interim Chief Executive Officer;
 
 WHEREAS, the Board of Directors has elected a permanent Chief Executive
Officer effective October 15, 2004 and the Executive has resigned her position
and terminated the Agreement as of the close of business on the 14th day of
October, 2004 (the "Early Termination Date");
 
 WHEREAS, the Compensation and Nomination Committee has approved a
restricted stock grant to the Executive as a bonus in recognition of her
outstanding service as Interim Chief Executive Officer; and
 
 WHEREAS, the parties desire to amend the Agreement to reflect these
developments;
 
 NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
 
 1. RESIGNATION; TERMINATION OF AGREEMENT. The Executive hereby resigns
from her position as Interim Chief Executive Officer effective as of the close
of business on the Early Termination Date and the Agreement is terminated as of
such date. The Executive shall receive her salary through the Early Termination
Date.
 
 2. RESTRICTED STOCK GRANT. On or before the Early Termination Date and
pursuant to the Company's 1998 Incentive Compensation Plan, the Executive shall
receive a grant of 10,000 shares of the Company's restricted common stock, which
shall cliff vest on the second anniversary of the grant date. The restricted
stock grant shall be in form and substance satisfactory to the Compensation and
Nomination Committee of the Company's Board of Directors.
 
 3. INTERPRETATION. Except as set forth in this Amendment, the other
terms and conditions of the Agreement shall not be affected. Any capitalized
term used herein but not defined shall have the meaning assigned to it in the
Agreement.
 
 4. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but together shall
constitute one and the same instrument.
 
 
 
 
 IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
as of the day and the year first above written.
 
 ADVO, Inc., a Delaware corporation
 
 /s/ JOHN MAHONEY
 -----------------------------------------------
 By: John Mahoney
 Its: Non-executive Chairman and Lead Director
 
 /s/ DAVID DYER
 -----------------------------------------------
 By: David Dyer
 Chair, Compensation and Nomination
 and Corporate Governance Committees
 
 /s/ BOBBIE GAUNT
 -----------------------------------------------
 Bobbie Gaunt
 "Executive"
 ADVO, INC.
 
 
 
 
EMPLOYMENT AGREEMENT
 
To S. SCOTT HARDING:
 
 This Agreement establishes the terms of your employment with ADVO, Inc., a
Delaware corporation (the "COMPANY") and is contingent upon approval of this
Agreement by the Company's Board of Directors (the "BOARD") and upon your
satisfying the Company's normal requirements for employability.
 
EMPLOYMENT AND DUTIES You and the Company agree to your employment as
 Chief Executive Officer ("CEO") on the terms
 contained below. In such position, you will report
 directly to the Board. You agree to perform
 whatever duties the Board may assign you from time
 to time that are reasonably consistent with
 services performed by the chief executive officers
 of similar companies. You will also, without
 further compensation, serve in such other offices
 at the Company or its subsidiaries to which you
 are elected or appointed. During your employment,
 you agree to devote your full business time,
 attention, and energies to performing those duties
 (except as the Board otherwise agrees from time to
 time). You agree to comply with the
 noncompetition, secrecy, and other provisions of
 Exhibit A to this Agreement and with the Company's
 Stock Ownership Guidelines.
 
BOARD MEMBERSHIP The Board will appoint you to a seat on the Board.
 
TERM OF EMPLOYMENT Your employment under this Agreement begins as of
 October 15, 2004 (the "EFFECTIVE DATE"). Unless
 sooner terminated or later extended under this
 Agreement, your employment ends at 6:00 p.m.
 Eastern Time on the third anniversary of the
 Effective Date (the "INITIAL TERM"). Unless, at
 least 90 days before the Initial Term (including
 any extensions) would otherwise expire (an
 "EXPIRATION DATE"), either you or the Company has
 notified the other of an intent to terminate this
 Agreement as of the then upcoming Expiration Date,
 the Term will automatically extend for one year at
 a time beginning on each succeeding anniversary of
 the Effective Date following such Expiration Date.
 
 The period running from the Effective Date to the
 end of your employment under this Agreement is the
 "TERM."
 
 Termination or expiration of this Agreement ends
 your employment but does not end your obligation
 to comply with
 
 
 Exhibit A or the Company's obligation, if any, to
 make payments under the Payments on Termination
 and Severance provisions as specified below. If
 the Company continues to employ you after the Term
 (such as after a notice of nonrenewal), you will
 continue to be an at-will employee, but with the
 notice periods for termination by the Company
 reduced to 30 days and with no Severance, as
 provided under EXPIRATION below.
 
COMPENSATION
 
 Salary The Company will pay you a monthly salary
 beginning on the Effective Date at the rate of not
 less than $64,583.33 in accordance with the
 Company's generally applicable payroll practices,
 which is equivalent on an annualized basis to
 $775,000 (the "SALARY"). The Board will review
 your Salary annually (beginning in January 2006)
 for increases but will not reduce your Salary
 during the Term.
 
 Signing Bonus You will receive a lump sum payment of $250,000
 as soon as practicable after the Effective Date.
 You agree that you will repay this amount if,
 before May 1, 2005, you resign without Good Reason
 or are terminated for Cause.
 
 Equity You will be eligible for such option, restricted
 Incentives stock, and other equity based incentives in
 connection with your initial employment and in the
 future as the Compensation and Nomination
 Committee (the "COMMITTEE") determines. The
 Committee has approved an initial grant (the
 "INITIAL GRANT") to you, effective on November 1,
 2004, of (i) an option for 100,000 shares of the
 Company's common stock vesting in four equal
 annual installments beginning on November 1, 2005
 and (ii) a restricted stock grant for 60,000
 shares of common stock, of which 10,000 shares
 will vest on November 1, 2005, 2006, and 2007, and
 the remaining 30,000 shares will vest on November
 1, 2007. The initial grants are under and subject
 to the Company's 1998 Incentive Compensation Plan
 (the "1998 PLAN"), require continued employment
 for grant and vesting (except as specified below),
 and expire in accordance with the terms of the
 1998 Plan. If either you or the Company provides
 notice of nonextension of this Agreement as of an
 upcoming Expiration Date (other than on a
 termination for Cause) before the final tranche of
 the options and restricted stock in your Initial
 Grant has vested and your employment ends
 accordingly, that tranche will continue to vest as
 though you had remained employed through the
 vesting dates for those options and that stock,
 and you will be treated for purposes of the 1998
 Plan as if your employment ended on that later
 date; provided, however, that
 
 
 
 if the Severance provision would vest your options
 and restricted stock under the Initial Grant more
 rapidly, the Severance provision will govern.
 
 Bonus The Board or the Committee will establish annual
 bonus targets under which you will be eligible for
 a target annual bonus equal to 100% of your
 Salary, determined in a manner consistent with the
 Company's bonus programs applicable to senior
 executives.
 
 Relocation You agree to relocate to the Windsor, Connecticut
 area by March 31, 2005 or such later date to which
 the Board agrees. The Company will cover you under
 and subject to the terms of its Relocation Policy
 (Grade Levels M through Q).
 
 Employee Benefits While the Company employs you under this
 Agreement, the Company will provide you with the
 same benefits as the Company makes generally
 available from time to time to the Company's
 senior executives, as those benefits are amended
 or terminated from time to time. Your
 participation in the Company's benefit plans will
 be subject to the terms of the applicable plan
 documents and the Company's generally applied
 policies, and the Company in its sole discretion
 may from time to time adopt, modify, interpret, or
 discontinue such plans or policies.
 
 Car Allowance You will receive a monthly car allowance of $600,
 which you acknowledge is taxable to you.
 
 Air Travel The Company will make its corporate aircraft
 available to you for personal use to a maximum
 annual value of such use during this Agreement of
 $150,000 (prorated from the Effective Date for
 2004), with that balance to be reduced using the
 applicable tax rules for valuation of personal air
 travel. You acknowledge that the use of the plane
 will, in some instances, be taxable to you.
 
 Vacation The Company will provide you with annual vacation,
 accruing at a rate of 2.08 days per month, and
 subject to the Company's normal policies regarding
 vacation.
 
PLACE OF EMPLOYMENT Your principal place of employment will be at the
 corporate offices at Windsor, Connecticut or such
 other offices as the Company may establish from
 time to time as its executive offices and to which
 it assigns you. You understand and agree that your
 employment will require travel from time to time.
 
EXPENSES The Company will reimburse you for reasonable and
 necessary travel and other business-related
 expenses you incur in performing
 
 
 your duties for the Company under this Agreement.
 You must itemize and substantiate all requests for
 reimbursements. You must submit requests for
 reimbursement in accordance with the policies and
 practices of the Company.
 
NO OTHER EMPLOYMENT While the Company employs you, you agree that you
 will not, without the Board's prior written
 consent, directly or indirectly, provide services
 for which you receive compensation to any other
 person or organization, nor will you otherwise
 engage in activities that would conflict or
 interfere with your faithful performance of your
 duties as an employee of the Company. (This
 prohibition excludes any work performed at the
 Company's direction.) You may be involved in
 charitable and professional activities and, with
 the Board's consent, serve on for profit boards
 and advisory committees, provided that this
 permission does not override your other
 obligations under this Agreement and Exhibit A.
 You may manage your personal investments, as long
 as the management takes only minimal amounts of
 time, is consistent with the provisions of the NO
 CONFLICTS OF INTEREST Section and the NO
 COMPETITION Section in Exhibit A, and is otherwise
 consistent with the policies and practices of the
 Company.
 
 You represent to the Company that you are not
 subject to any agreement, commitment, or policy of
 any third party or current or former employer that
 would prevent you from entering into or performing
 your duties under this Agreement, and you agree
 that you will not enter into any agreement or
 commitment or agree to any policy that would
 prevent or hinder your performance of duties and
 obligations under this Agreement, including
 Exhibit A.
 
NO CONFLICTS OF INTEREST You confirm that you have fully disclosed to the
 Company, to the best of your knowledge, all
 circumstances under which you, your spouse, your
 immediate relatives, and other persons who reside
 in your household have or may have a conflict of
 interest with the Company. You further agree to
 fully disclose to the Company any such
 circumstances that might arise during your
 employment upon your becoming aware of such
 circumstances. You agree to comply fully with the
 Company's policy and practices relating to
 conflicts of interest and its Code of Business
 Ethics and Conduct.
 
TERMINATION The Company may terminate your employment or you
 may resign at any time in accordance with this
 section.
 
 For Cause The Company may terminate your employment for
 "CAUSE" if you:
 
 
 (i) fail to comply with any of the material
 terms of this Agreement, including Exhibit
 A, or neglect or refuse to attend to the
 material duties you have been assigned;
 
 (ii) commit an act of fraud, material
 dishonesty, intentional misappropriation, or
 gross negligence with respect to the Company
 or otherwise act with willful disregard for
 the Company's best interests, or engage in
 conduct likely to result in any of the
 foregoing; or
 
 (iii) commit, are convicted of or plead
 guilty or no contest to a felony (or to a
 felony charge reduced to misdemeanor), or,
 with respect to your employment, to any
 misdemeanor (other than a traffic violation)
 or, with respect to your employment,
 knowingly violate any federal or state
 securities or tax laws.
 
 Your termination for Cause will be effective
 immediately upon the Company's mailing or written
 transmission of notice of such termination. Before
 terminating your employment for Cause under
 clauses (i) - (ii) above, the Company will specify
 in writing to you the nature of the act, omission,
 refusal, or failure that it deems to constitute
 Cause and, if the Board reasonably considers the
 situation to be correctable, give you 30 days
 after you receive such notice to correct the
 situation (and thus avoid termination for Cause),
 unless the Company agrees to extend the time for
 correction. You agree that the Board will have the
 discretion to determine Cause and whether your
 correction is sufficient.
 
 Without Cause Subject to the provisions below under Payments on
 Termination and Severance, the Company may
 terminate your employment without Cause.
 
 Disability If you become "disabled" (as defined below), the
 Company may terminate your employment. You are
 "DISABLED" if you are unable, for more than 90
 consecutive days or for shorter periods
 aggregating six months during the Term, despite
 whatever reasonable accommodations the law
 requires, to render services to the Company
 because of physical or mental disability,
 incapacity, or illness.
 
 Good Reason You may resign for Good Reason. "GOOD REASON" for
 this purpose means that, without your consent, the
 Company has materially breached this Agreement
 (and your actions or omissions did not primarily
 cause or materially contribute to the breach) or
 the Board assigns you duties materially
 inconsistent with, or
 
 
 
 substantially diminishes, your status or
 responsibilities as CEO without your consent. GOOD
 REASON excludes the results of any action the
 Company takes to comply with the directions of a
 governmental entity (such as placing you on
 administrative leave) and also excludes, for the
 first 90 days following a Change in Control (as
 defined in Exhibit C), any diminution in your
 position as a result of a Change in Control
 (during which 90 day period you agree to assist
 with any transition). You agree that this
 employment relationship does not contemplate any
 grounds for constructive termination other than as
 Good Reason provides.
 
 You must give written notice to the Company of
 your intention to resign for Good Reason within 30
 days after the occurrence of the event that you
 assert entitles you to resign for Good Reason or
 you will waive your rights as to that reason. In
 the notice, you must state the condition that you
 consider provides you with Good Reason and you
 must give the Company an opportunity to cure the
 condition within 30 days after your notice (with
 the 30 day period shortened to 10 days if the
 failure relates to a nonpayment of Salary and such
 nonpayment is not cured within five days after you
 provide written notice of such nonpayment to the
 Company). If the Company fails to cure the
 condition, your resignation will be effective on
 the 45th day (or the 20th day for nonpayment of
 Salary) after your notice (unless the Board has
 previously waived such notice period in writing or
 agreed to a shorter notice period).
 
 You will not be treated as resigning for Good
 Reason if the Company already had Cause to
 terminate your employment as of the date of your
 notice of resignation.
 
 Without Good You may resign without Good Reason upon 60 days'
 Reason prior written notice to the Company (unless the
 Board has, in writing, previously waived such
 notice or authorized a shorter notice period).
 Your notice to the Company of nonextension of the
 Term will be a resignation.
 
 Death If you die during the Term, the Term will end as
 of the date of your death.
 
 Payments on Upon any termination of your employment under
 Termination this Agreement, the Company will pay you any
 unpaid portion of your Salary pro-rated through
 the last day of the Term (and, in the Committee's
 discretion, part or all of any annual bonuses
 already determined by such date but not yet paid),
 reimburse any substantiated but unreimbursed
 business expenses, pay any accrued and unused
 vacation time (to the extent consistent with the
 Company's policies
 
 
 and applicable laws), and provide such other
 benefits as applicable laws or the terms of the
 benefits require. Except to the extent the law
 requires otherwise or as provided in the Severance
 paragraph, neither you nor your beneficiary or
 estate will have any rights or claims under this
 Agreement or otherwise to receive severance or any
 other compensation, or to participate in any other
 plan, arrangement, or benefit, after such
 termination or resignation.
 
 Because you will hold a senior executive position
 at a public company, you agree that if the Board
 determines it had Cause to terminate your
 employment within 90 days after your termination
 without Cause or resignation for Good Reason, the
 Company may instead treat the termination or
 resignation as termination for Cause, and you
 agree to repay any payments the Company made since
 the date of termination of employment that the
 Company would not have paid on a termination for
 Cause and to forfeit any incentive compensation
 that would have been forfeited, provided that this
 provision does not require any restitution with
 respect to medical benefits you or your family has
 received.
 
Severance In addition to the foregoing payments, if, before
 the next scheduled Expiration Date and except as
 EXPIRATION provides, the Company terminates your
 employment without Cause or you resign for Good
 Reason, the Company will
 
 pay you severance equal to your Salary, as
 then in effect, for 24 months on the same
 schedule as though you had remained employed
 during such period, even though you are no
 longer employed (the "SEVERANCE PERIOD"),
 
 in lieu of any bonus for the year of
 termination, pay you an additional year's
 Salary, ratably over the Severance Period,
 
 fully vest the options and restricted stock
 in your Initial Grant and allow those
 options to be exercised (subject to any
 overriding provisions in the plans under
 which they are granted) during the Severance
 Period, and
 
 pay any premiums for your continued coverage
 under post-employment health coverage for
 the shorter of the Severance Period or the
 period for which you are eligible for and do
 elect continuation coverage from the Company
 under COBRA.
 
 If the payments under Severance are in connection
 with a termination without Cause or resignation
 for Good Reason within
 
 
 six months following a Change in Control, the
 Company will make any cash payments in a single
 lump sum payment within 30 days after completion
 of the determination under PARACHUTE PAYMENTS
 below.
 
 You are not required to mitigate amounts payable
 under the Severance paragraph by seeking other
 employment or otherwise, nor must you pay over to
 the Company amounts earned under subsequent
 employment; however, you agree to return any
 Severance payments if you fail to comply with
 Exhibit A.
 
 You agree that the Company's payment of Severance
 is conditioned on your providing a customary
 general release of all claims relating to your
 employment, compensation, and termination and such
 other matters as the Company requests on
 termination.
 
EXPIRATION Expiration of this Agreement, whether because of
 notice of non-renewal or otherwise, does not
 constitute termination without Cause nor provide
 you with Good Reason and does not entitle you to
 Severance.
 
ASSIGNMENT The Company may assign or otherwise transfer this
 Agreement and any and all of its rights, duties,
 obligations, or interests under it
 
 to any of its affiliates or subsidiaries or
 
 to any business entity that at any time by
 merger, consolidation, or otherwise acquires
 substantially all of the Company's stock or
 assets or to which the Company transfers
 substantially all of its assets.
 
 Upon such assignment or transfer, any such
 business entity will be treated as substituted for
 the Company for all purposes. You agree that such
 assignment or transfer does not by itself entitle
 you to Severance. This Agreement binds and
 benefits the Company, its successors or assigns,
 and your heirs and the personal representatives of
 your estate. Without the Board's prior written
 consent, you may not assign or delegate this
 Agreement or any rights, duties, obligations, or
 interests under it.
 
 You specifically agree that the assignment will,
 unless the Company provides otherwise, include the
 restrictive covenants of Exhibit A, including the
 noncompetition and nonsolicitation provisions.
 
 
SEVERABILITY If the final determination of an arbitrator or a
 court of competent jurisdiction declares, after
 the expiration of the time within which judicial
 review (if permitted) of such determination may be
 perfected, that any term or provision of this
 Agreement (including any provision of Exhibit A)
 is invalid or unenforceable, the remaining terms
 and provisions will be unimpaired, and the invalid
 or unenforceable term or provision will be deemed
 replaced by a term or provision that is valid and
 enforceable and that comes closest to expressing
 the intention of the invalid or unenforceable term
 or provision.
 
AMENDMENT; WAIVER Neither you nor the Company may modify, amend, or
 waive the terms of this Agreement other than by a
 written instrument signed by you and by another
 executive officer of the Company duly authorized
 by the Board. Either party's waiver of the other
 party's compliance with any provision of this
 Agreement is not a waiver of any other provision
 of this Agreement or of any subsequent breach by
 such party of a provision of this Agreement.
 
WITHHOLDING The Company will reduce its compensatory payments
 to you for withholding and FICA taxes and any
 other withholdings and contributions required by
 law.
 
GOVERNING LAW The laws of the State of Connecticut (other than
 its conflict of laws provisions) govern this
 Agreement.
 
NOTICES Notices must be given in writing by personal
 delivery or by overnight delivery. You should send
 or deliver your notices to the Company's corporate
 headquarters, addressed to the Chair of the
 Committee. The Company will send or deliver any
 notice given to you at your address as reflected
 on the Company's personnel records. You and the
 Company may change the address for notice by like
 notice to the other. You and the Company agree
 that notice is received on the date it is
 personally delivered or the date of guaranteed
 delivery by the overnight service.
 
PARACHUTE PAYMENTS The Company will make the payments under this
 Agreement without regard to whether the
 deductibility of such payments (or any other
 payments or benefits) would be limited or
 precluded by Section 280G of the Internal Revenue
 Code of 1986 (the "CODE") and without regard to
 whether such payments would subject you to the
 federal excise tax levied on certain "excess
 parachute payments" under Section 4999 of the
 Code; provided, however, that if the Total
 After-Tax Payments (as defined below) would be
 increased by the reduction or elimination of any
 payment and/or other benefit (including the
 vesting of your options) under this
 
 
 
 Agreement, then the amounts payable under this
 Agreement will be reduced or eliminated as
 follows: (i) first, by reducing or eliminating any
 cash payments or other benefits (other than the
 vesting of any options or stock) and (ii) second,
 by reducing or eliminating the vesting of your
 options and stock that occurs as a result of such
 Change of Control, to the extent necessary to
 maximize the Total After-Tax Payments. The
 Company's independent, certified public accounting
 firm will determine whether and to what extent
 payments or vesting under this Agreement are
 required to be reduced in accordance with the
 preceding sentence. If there is an underpayment or
 overpayment under this Agreement (as determined
 after the application of this paragraph), the
 amount of such underpayment or overpayment will be
 immediately paid to you or refunded by you, as the
 case may be, with interest at the applicable
 federal rate provided for in Section 7872(f)(2) of
 the Code. For purposes of this Agreement, "TOTAL
 AFTER-TAX PAYMENTS" means the total of all
 "parachute payments" (as that term is defined in
 Section 280G(b)(2) of the Code) made to you or for
 your benefit (whether made under the Agreement or
 otherwise), after reduction for all applicable
 federal taxes (including, without limitation, the
 tax described in Section 4999 of the Code).
 
SUPERSEDING EFFECT This Agreement supersedes any prior oral or
 written agreements between you and the Company.
 This Agreement supersedes all prior or
 contemporaneous negotiations, commitments,
 agreements, and writings with respect to the
 subject matter of this Agreement. All such other
 negotiations, commitments, agreements, and
 writings will have no further force or effect; and
 the parties to any such other negotiation,
 commitment, agreement, or writing will have no
 further rights or obligations thereunder.
 
 SIGNATURES ON THE PAGE FOLLOWING
 
 
If you accept the terms of this Agreement, please sign in the space indicated
below. We understand that you have consulted with counsel to help you understand
your obligations under this Agreement, and we encourage you to consult with any
other advisers you think appropriate.
 
 ADVO, INC.
 
 By: /s/ DONALD S. SCHNEIDER
 --------------------------------------
 Name: Donald S. Schneider
 
 Title: Senior Vice President, Human Resources
 
I accept and agree to the terms of employment set
forth in this Agreement:
 
/s/ S. SCOTT HARDING
--------------------------------
 S. SCOTT HARDING
 
Dated: October 11, 2004
 
 
 
 Exhibit A
 
 NONCOMPETITION, NONSOLICITATION, AND OTHER RESTRICTIVE COVENANTS
 
 You agree to the provisions of this Exhibit A in consideration of your
employment by the Company and salary and benefits under this Agreement. You
acknowledge that you will perform services for the Company in a position that
will allow you access to various trade secrets and confidential information
belonging to the Company and its affiliates. You agree that the Company has a
legitimate business interest in preserving its confidential information and
business secrets from unauthorized disclosure, and in protecting its goodwill.
While the Company (or its successor or transferee) employs you and to the end of
the Restricted Period (as defined below), you agree as follows:
 
NO COMPETITION You will not, directly or indirectly, be employed
 by, lend money to, or engage in any Competing
 Business within the Market Area (each as defined
 below). That prohibition includes, but is not
 limited to, acting, either singly or jointly or as
 agent for, or as an employee of or consultant to,
 any one or more persons, firms, entities, or
 corporations directly or indirectly (as a
 director, independent contractor, representative,
 consultant, member, or otherwise) that constitutes
 such a Competing Business. You also will not
 invest or hold equity or options in any Competing
 Business, provided that you may own up to 1% of
 the outstanding capital stock of any corporation
 that is actively publicly traded without violating
 this NO COMPETITION covenant, so long as you have
 no involvement beyond passive investing in such
 business and you comply with the second sentence
 of this paragraph. You further agree not to use,
 incorporate, or otherwise create any business
 organization or domain name using, any name
 confusingly similar to "ADVO, INC." or any other
 name under which the Company does business.
 
 If, during the Restricted Period, you are offered
 and want to accept employment with an existing
 business or you start or join a new business that
 engages in activities similar to the Company's,
 you will inform the Board in writing of the
 identity of the business, your proposed duties
 with an existing business or the proposed business
 plan of your new business, and the proposed
 starting date of your employment or that new
 business. You will also inform any existing
 business of the terms of this Exhibit A. The
 Company will analyze the proposed employment or
 the creation of your new business and make a good
 faith determination as to whether it would
 threaten the Company's legitimate competitive
 interests. If the Company determines that the
 proposed employment or the creation of your new
 business would not pose an unacceptable
 
 
 threat to its interests, the Company will notify
 you that it does not object to the employment or
 the creation of your new business.
 
 You acknowledge that, during the portion of the
 Restricted Period that follows your employment,
 you may engage in any business activity or gainful
 employment of any type and in any place except as
 described above. You acknowledge that you will be
 reasonably able to earn a livelihood without
 violating the terms of this Agreement.
 
 You understand and agree that the rights and
 obligations set forth in this NO COMPETITION
 Section will continue and will survive through the
 Restricted Period.
 
Definitions
 
 Competing Competing Business means any service or product of
 Business any person or organization other than the
 Company and its successors, assigns, or
 subsidiaries (collectively, the "COMPANY GROUP")
 that competes with any service or product of the
 Company Group provided by any member of the
 Company Group during your employment or upon which
 or with which you have worked for the Company or
 the Company Group or about which you acquire
 knowledge while working for the Company or the
 Company Group.
 
 Market Area The Market Area consists of the United States of
 America. You agree that the Company provides goods
 and services both at its facilities and at the
 locations of its customers or clients and that, by
 the nature of its business, it operates throughout
 the Market Area.
 
 Restricted For purposes of this Agreement, the RESTRICTED
 Period PERIOD begins on the Effective Date and ends on
 the first anniversary of the date your employment
 with the Company Group ends for any reason (or, if
 later, the end of the Severance Period, if any).
 
NO INTERFERENCE; During the Restricted Period, you agree that you
NO SOLICITATION will not, directly or indirectly, whether for
 yourself or for any other individual or entity
 (other than the Company or its affiliates or
 subsidiaries),
 
 solicit for any Competing Business any
 person or entity who is, or was, within the
 12 months preceding the end of your
 employment with the Company, a customer,
 customer representative (such as an agency),
 a prospect (with respect to which any member
 of the Company Group has incurred
 substantial costs or with which you have
 been involved), or a client of the Company
 Group within the Market Area,
 
 
 
 with the 12 month period reduced to six
 months for prospects with which you have not
 been involved;
 
 hire away or endeavor to entice away from
 the Company Group any employee (other than
 your personal assistant) or any other person
 or entity whom the Company Group engages to
 perform services or supply products and
 including, but not limited to, any
 independent contractors, consultants,
 engineers, or sales representatives or any
 contractor, subcontractor, supplier, or
 vendor; or
 
 hire any person (other than your personal
 assistant) whom the Company Group employs or
 employed within the 12 months preceding the
 date as of which you attempt to hire the
 person.
 
SECRECY
 
 Preserving Your employment with the Company under (and, if
 Company applicable, before) this Agreement will give you
 Confidences access to Confidential Information (as defined
 below). You acknowledge and agree that using,
 disclosing, or publishing any Confidential
 Information in an unauthorized or improper manner
 could cause the Company or Company Group to incur
 substantial loss and damages that could not be
 readily calculated and for which no remedy at law
 would be adequate. Accordingly, you agree with the
 Company that you will not at any time, except in
 performing your employment duties to the Company
 or the Company Group under this Agreement (or with
 the Board's prior written consent), directly or
 indirectly, use, disclose, or publish, or
 knowingly or negligently permit others not so
 authorized to use, disclose, or publish any
 Confidential Information that you may learn or
 become aware of, or may have learned or become
 aware of, because of your prior or continuing
 employment, ownership, or association with the
 Company or the Company Group or any of their
 predecessors, or use any such information in a
 manner detrimental to the interests of the Company
 or the Company Group.
 
 Preserving You agree not to use in working for the Company
 Others' Group and not to disclose to the Company Group any
 Confidences trade secrets or other information you do not have
 the right to use or disclose and that the Company
 Group is not free to use without liability of any
 kind. You agree to inform the Company promptly in
 writing of any patents, copyrights, trademarks, or
 other proprietary rights known to you that the
 Company or the Company Group might violate because
 of information you provide.
 
 
 Confidential "CONFIDENTIAL INFORMATION" includes, without
 Information limitation, any matters protected under the
 Uniform Trade Secrets Act and any information that
 the Company or the Company Group has not
 previously disclosed to the public or to the trade
 with respect to the Company's or the Company
 Group's present or future business, including its
 operations, services, products, research,
 inventions, invention disclosures, discoveries,
 drawings, designs, plans, processes, models,
 technical information, facilities, methods,
 systems, trade secrets, copyrights, software,
 source code, object code, patent applications,
 procedures, manuals, specifications, any other
 intellectual property, confidential reports, price
 lists, pricing formulas, customer lists, consumer
 targeting techniques, financial information
 (including the revenues, costs, or profits
 associated with any of the Company's or the
 Company Group's products or services), business
 plans, lease structure, projections, prospects,
 opportunities or strategies, acquisitions or
 mergers, advertising or promotions, personnel
 matters, legal matters, any other confidential and
 proprietary information, and any other information
 not generally known outside the Company or the
 Company Group that may be of value to the Company
 or the Company Group, but excludes any information
 already properly in the public domain or hereafter
 acquired from a source other than you in a manner
 that did not involve a breach of the disclosing
 party's obligations, or that you prove through
 documentation you knew other than through your
 association with the Company. "Confidential
 Information" also includes, without limitation,
 confidential and proprietary information and trade
 secrets that third parties entrust to the Company
 or the Company Group in confidence.
 
 You understand and agree that the rights and
 obligations set forth in this SECRECY Section will
 continue indefinitely and will survive termination
 of this Agreement and your employment with the
 Company or the Company Group.
 
EXCLUSIVE PROPERTY You confirm that all Confidential Information is
 and must remain the exclusive property of the
 Company or the relevant member of the Company
 Group. Any office equipment (including computers)
 you receive from the Company Group in the course
 of your employment and all business records,
 business papers, and business documents you keep
 or create, whether on digital media or otherwise,
 in the course of your employment by the Company
 relating to the Company or any member of the
 Company Group must be and remain the property of
 the Company or the relevant member of the Company
 Group. Upon the termination of this Agreement with
 the Company or upon the Company's request at
 
 
 any time, you must promptly deliver to the Company
 or to the relevant member of the Company Group any
 such office equipment (including computers) and
 any Confidential Information or other materials
 (written or otherwise) not available to the public
 or made available to the public in a manner you
 know or reasonably should recognize the Company
 did not authorize, and any copies, excerpts,
 summaries, compilations, records, or documents you
 made or that came into your possession during your
 employment. You agree that you will not, without
 the Company's consent, retain copies, excerpts,
 summaries, or compilations of the foregoing
 information and materials. You understand and
 agree that the rights and obligations set forth in
 this EXCLUSIVE PROPERTY Section will continue
 indefinitely and will survive termination of this
 Agreement and your employment with the Company
 Group.
 
COPYRIGHTS, You agree that all records (in whatever media),
DISCOVERIES, including written works, documents, papers,
INVENTIONS, AND notebooks, drawings, designs,technical
PATENTS information, source code, object code, processes,
 methods or other copyrightable or otherwise
 protected works you conceive, create, author,
 prepare derivative works from, make, invent, or
 discover that relate to or result from any work
 you perform or performed for the Company or the
 Company Group or that arise from the use or
 assistance of the Company Group's facilities,
 materials, personnel, or Confidential Information
 in the course of your employment (whether or not
 during usual working hours), whether conceived,
 created, authored, discovered, made, or invented
 individually or jointly with others, will be and
 remain the absolute property of the Company (or
 another appropriate member of the Company Group,
 as specified by the Company), as will all the
 worldwide patent, copyright, trademark, service
 mark, trade secret, or other intellectual property
 rights in all such works. (All references in this
 section to the Company include the members of the
 Company Group, unless the Company determines
 otherwise.) You irrevocably and unconditionally
 waive all rights, wherever in the world
 enforceable, that vest in you (whether before, on,
 or after the date of this Agreement) in connection
 with your authorship of any such copyrightable
 works in the course of your employment with the
 Company Group or any predecessor. Without
 limitation, you waive the right to be identified
 as the author, inventor, creator, or facilitator
 (whether solely or jointly) of any such
 copyrightable works and the right not to have any
 such works subjected to derogatory treatment. You
 recognize any such works are "works for hire" for
 which the Company Group retains all rights, title,
 and interest to any underlying intellectual
 property rights, including copyright protections.
 
 
 You will promptly disclose, and hereby grant, and
 assign all rights, title, and interest in
 ownership to the Company (or other member of the
 Company Group, as specified by the Company) for
 its or their sole use and benefit any and all
 intellectual property, including all ideas,
 processes, inventions (whether patentable or not),
 invention disclosures, discoveries, improvements,
 technical information, trademarks, service marks,
 and copyrightable works (whether patentable or
 not) that you develop, acquire, conceive, reduce
 to practice, author, or prepare derivative works
 from (whether or not during usual working hours)
 while the Company or the Company Group employs
 you. You will promptly disclose and hereby grant
 and assign ownership to the Company of all
 intellectual property, including utility and
 design patents, copyrights, and trademarks, or
 service marks, including any associated
 registrations, applications, renewals, extensions,
 continuations, continuations-in-part, requests for
 continued examination, divisions, or reissues
 thereof or any foreign equivalents thereof (such
 intellectual property and related rights being
 referred to collectively as "PROTECTED
 INTERESTS"), that may at any time be filed or
 granted for or upon any such intellectual
 property. In connection therewith:
 
 You will, without charge but at the
 Company's expense, promptly execute and
 deliver such applications, assignments,
 descriptions, and other instruments as the
 Company may consider reasonably necessary or
 proper to vest title to any Protected
 Interests in the Company and to enable it to
 obtain and maintain the entire worldwide
 right and title thereto; and
 
 You will provide to the Company at its
 expense all such assistance as the Company
 may reasonably require in the prosecution of
 applications for such Protected Interests,
 in the prosecution or defense of
 interferences that may be declared involving
 any such Protected Interests, and in any
 litigation in which the Company or the
 Company Group may be involved relating to
 any such Protected Interests. The Company
 will reimburse you for reasonable
 out-of-pocket expenses you incur and pay you
 reasonable compensation for your time if the
 Company Group no longer employs you.
 
 You and the Company agree that Exhibit C lists and
 briefly describes works, inventions, discoveries,
 proprietary information, patents and patent
 applications, and copyrighted or copyrightable
 
 works (including contemplated works) that the
 Company will not contest are owned (or will be
 owned) by you or any entity to which you have
 assigned them. You agree that you have no
 ownership interest in any other such works or
 related patents or copyrights that relate in any
 way to the business of the Company or the Company
 Group.
 
 To the extent, if any, that you own rights to
 works, inventions, discoveries, proprietary
 information, and copyrighted or copyrightable
 works, or other forms of intellectual property
 that have been or become incorporated in the work
 product you create for the Company Group, you
 agree that the Company (and/or, as the Company
 specifies, other members of the Company Group)
 will have an unrestricted, non-exclusive,
 royalty-free, perpetual, transferable license in
 such intellectual property, including the rights
 to make, use, sell, offer for sale, and sublicense
 (through multiple tiers), reproduce, prepare
 derivative works from, distribute copies of,
 publicly perform, or publicly display such works
 and property in whatever form, and you hereby
 grant such license to the Company (and the Company
 Group).
 
 This COPYRIGHTS, DISCOVERIES, INVENTIONS AND
 PATENTS section does not apply to an invention
 that you developed entirely on your own time
 without using the Company Group's equipment,
 supplies, facility, or trade secret information
 except for those inventions that (i) relate to the
 Company Group's business, or actual or
 demonstrably anticipated research or development,
 or (ii) result from any work performed by you for
 the Company Group.
 
MAXIMUM LIMITS You agree that the time, territory, and scope of
 this Exhibit A are reasonable and necessary for
 protection of the Company's legitimate business
 interests. If any of the provisions of Exhibit A
 are ever deemed to exceed the time, geographic
 area, or activity limitations the law permits, you
 and the Company agree to reduce the limitations to
 the maximum permissible limitation, and you and
 the Company authorize a court or arbitrator having
 jurisdiction to reform the provisions to the
 maximum time, geographic area, and activity
 limitations the law permits; provided, however,
 that such reductions apply only with respect to
 the operation of such provision in the particular
 jurisdiction with respect to which such
 adjudication is made.
 
NO IMPROPER You will neither pay nor knowingly or negligently
PAYMENTS permit payment of any remuneration to or on behalf
 of any governmental official other than payments
 required or permitted by applicable law. You
 
 
 will comply fully with the Foreign Corrupt
 Practices Act of 1977, as amended. You will not,
 directly or indirectly,
 
 make or knowingly or negligently permit any
 contribution, gift, bribe, rebate, payoff,
 influence payment, kickback, or other
 payment to any person or entity, private or
 public, regardless of what form, whether in
 money, property, or services
 
 to obtain favorable treatment for
 business secured,
 
 to pay for favorable treatment for
 business secured,
 
 to obtain special concessions or for
 special concessions already obtained,
 or
 
 in violation of any legal requirement,
 or
 
 establish or maintain any fund or asset
 related to the Company that is not recorded
 in the Company's books and records, or
 
 take any action that would violate (or would
 be part of a series of actions that would
 violate) any U.S. law relating to
 international trade or commerce, including
 those laws relating to trading with the
 enemy, export control, and boycotts of
 Israel or Israeli products.
 
INJUNCTIVE RELIEF Without limiting the remedies available to the
 Company, you acknowledge
 
 that a breach of any of the covenants in
 this Exhibit A will result in material
 irreparable injury to the Company and
 Company Group for which there is no adequate
 remedy at law, and
 
 that it will not be possible to measure
 damages for such injuries precisely.
 
 You agree that, if there is a breach or threatened
 breach, the Company or any member of the Company
 Group may be entitled to obtain a temporary
 restraining order and/or a preliminary or
 permanent injunction restraining you from engaging
 in activities prohibited by any provisions of this
 Exhibit A or such other relief as may be required
 to specifically enforce any of the covenants in
 this Exhibit A. The Company or any member of the
 Company
 
 
 Group will, in addition to the remedies provided
 in this Agreement, be entitled to avail itself of
 all such other remedies as may now or hereafter
 exist at law or in equity for compensation and for
 the specific enforcement of the covenants
 contained in this Agreement. Resort to any remedy
 provided for in this Section or provided for by
 law will not prevent the concurrent or subsequent
 employment of any other appropriate remedy or
 remedies, or preclude the Company's or the Company
 Group's recovery of monetary damages and
 compensation. You also agree that the Restricted
 Period or such longer period during which the
 covenants hereunder by their terms survive will
 extend for all periods for which a court with
 personal jurisdiction over you finds that you
 violated the covenants contained in this Exhibit
 Exhibit B
 
 CHANGE IN CONTROL
 
 A Change in Control for this purpose means the occurrence of any one or
more of the following events:
 
 (i) sale of all or substantially all of the assets of the
 Company to one or more individuals, entities, or groups acting
 together;
 
 (ii) complete or substantially complete dissolution or
 liquidation of the Company;
 
 (iii) a person, entity, or group acting together acquires or
 attains ownership of more than 30% of the undiluted total
 voting power of the Company's then-outstanding securities
 eligible to vote to elect members of the Board ("COMPANY
 VOTING SECURITIES");
 
 (iv) completion of a merger, consolidation, or reorganization
 of the Company with or into any other entity unless the
 holders of the Company Voting Securities outstanding
 immediately before such completion, together with any trustee
 or other fiduciary holding securities under a Company benefit
 plan, hold securities that represent immediately after such
 merger or consolidation at least 50% of the combined voting
 power of the then outstanding voting securities of either the
 Company or the other surviving entity or its ultimate parent;
 
 (v) the individuals who constitute the Board immediately
 before a proxy contest cease to constitute at least a majority
 of the Board (excluding any Board seat that is vacant or
 otherwise unoccupied) immediately following the proxy contest;
 
 (vi) during any two year period, the individuals who
 constitute the Board at the beginning of the period (the
 "INCUMBENT DIRECTORS") cease for any reason to constitute at
 least a majority of the Board (excluding any Board seat that
 is vacant or otherwise unoccupied), provided that any
 individuals that two-thirds of Incumbent Directors approve for
 service on the Board are treated as Incumbent Directors; or
 
 (vii) any other event occurs that the Board determines, in its
 discretion, would materially alter the structure of the
 Company's ownership.
 
 The Board or the Committee will have the same authority to determine
 the existence of a Change in Control under this definition as each
 has under the Company's 1998 Incentive Compensation Plan.