ADVO INC, DEF 14A, 1997-12-18

ADVO INC
DEF 14A, 1997-12-18
DIRECT MAIL ADVERTISING SERVICES

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<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

ADVO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

ADVO, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:
<PAGE>

[LOGO OF ADVO APPEARS HERE]

December 18, 1997

Dear Stockholder:

You are cordially invited to the Annual Meeting of Stockholders of ADVO,
Inc., to be held on Thursday, January 22, 1998, at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, commencing at 10:30
A.M. (EST). Your Board of Directors and management look forward to greeting
personally those of you who are able to attend.

At the Meeting, you will be asked to elect the members of the Board of
Directors; to approve an amendment to the Company's 1986 Employee Restricted
Stock Plan, as amended; to approve an amendment to the Company's 1988 Non-
qualified Stock Option Plan and the 1993 Stock Option Subplan, as amended; to
ratify the appointment of independent auditors for the fiscal year ending
September 26, 1998; and to transact such other business as may properly be
brought before the Meeting.

In addition to the specific matters to be acted upon, there will be a report
on the progress of the Company and an opportunity for you to ask questions of
general interest. Important information is contained in the accompanying proxy
statement, which you are urged to read carefully.

It is important that your shares are represented and voted at the Meeting,
regardless of the number you own and whether or not you plan to attend.
Accordingly, you are requested to mark, sign, date and return the enclosed
proxy in the envelope provided at your earliest convenience.

Your interest and participation in the affairs of the Company are greatly
appreciated.

Sincerely,

/s/ Robert Kamerschen

Robert Kamerschen
Chairman and Chief Executive Officer
<PAGE>

[LOGO OF ADVO APPEARS HERE]

ADVO, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Annual Meeting of Stockholders of ADVO, Inc. (the "Company") will be
held at the Sheraton Hotel at Bradley International Airport, Windsor Locks,
Connecticut, on Thursday, January 22, 1998, at 10:30 A.M. (EST), to consider
and take action on the following items:

1. The election of eight Directors, as described in the attached proxy
statement, to serve until the Annual Meeting of Stockholders in 1999;

2. The approval of an amendment to the 1986 Employee Restricted Stock
Plan, as amended;

3. The approval of an amendment to the 1988 Non-qualified Stock Option
Plan and the 1993 Stock Option Subplan, as amended;

4. The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 26,
1998; and

5. The transaction of such other business as may properly come before
said meeting or any adjournment thereof.

Only holders of Common Stock of record at the close of business on November
28, 1997 are entitled to vote at the Meeting or any adjournment thereof. A
list of the stockholders entitled to vote at the Meeting will be available for
examination by any stockholder for any purpose germane to the Meeting during
ordinary business hours for ten days prior to the Meeting at the Sheraton
Hotel at Bradley International Airport, Windsor Locks, Connecticut.

By Order of the Board of Directors

/s/ David M. Stigler

David M. Stigler, Secretary

Windsor, Connecticut
December 18, 1997

YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE MARK, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY
AS POSSIBLE.
<PAGE>

ADVO, INC.
ONE UNIVAC LANE
P.O. BOX 755
WINDSOR, CONNECTICUT 06095-0755

PROXY STATEMENT

This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Stockholders of ADVO, Inc. (the "Company"
or "ADVO"), a Delaware corporation, to be held at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, on Thursday,
January 22, 1998 at 10:30 A.M. (EST).

The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Company.

The cost of soliciting proxies on the accompanying form has been or will be
borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting
instructions, if necessary. The Company will reimburse such banks, brokers,
custodians, nominees and fiduciaries for their expenses in so doing.
Directors, officers, and regular employees of the Company, who will receive no
compensation for their services other than their regular salaries, may solicit
proxies personally, by telephone and by telegram from stockholders. The
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies at an estimated cost of $10,000 including expenses, which will be paid
by the Company. These proxy materials are first being mailed to stockholders
on or about December 18, 1997.

A stockholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted, by
notifying the Secretary of the Company in writing of such revocation, by
filing a duly executed proxy bearing a later date, or by attending the Meeting
and voting in person. Properly executed proxies, not revoked, will be voted in
accordance with the instructions contained thereon. Unless a contrary
specification is made thereon, it is the intention of the attorneys named in
the enclosed form of proxy to vote FOR the election of the nominees named
herein as Directors and FOR Proposals 2, 3 and 4.

OUTSTANDING VOTING SECURITIES

Only holders of ADVO Common Stock, par value $.01 per share ("Common
Stock"), of record at the close of business on November 28, 1997 (the "Record
Date") are entitled to notice of and to vote at the Meeting. On the Record
Date, there were 22,487,846 shares of Common Stock outstanding. Each share of
Common Stock is entitled to one vote.
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of the Record Date, those persons known to the Company who beneficially
owned 5% or more of the outstanding Common Stock were as follows:

<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
FMR Corporation(1)
82 Devonshire Street
Boston, Massachusetts 02109...................... 3,047,000 13.5%
T. Rowe Price Associates, Inc.(1)
100 East Pratt Street
Baltimore, Maryland 21202........................ 2,854,300 12.7
Capital Group Companies(1)
333 South Hope Street
Los Angeles, California 90071.................... 1,305,000 5.8
Robert Kamerschen(2)
ADVO, Inc.
One Univac Lane
Windsor, Connecticut 06095....................... 1,116,396 5.0
</TABLE>
- --------
(1) The information relating to the ownership of the Common Stock by this
entity or individual is based on a statement on Schedule 13D or Schedule
13G filed by such entity or individual with the Securities and Exchange
Commission (the "SEC").

(2) Includes shares awarded under the 1986 Employee Restricted Stock Plan, as
amended, and 64,864 shares Mr. Kamerschen has the right to acquire within
60 days of the Record Date pursuant to the exercise of options granted
under the Company's stock option plans.

GOVERNANCE OF THE COMPANY

In accordance with the Company's Bylaws, as amended, and the applicable laws
of Delaware, responsibility for the management of the Company is vested in the
Board of Directors. During the fiscal year ended September 27, 1997, the Board
of Directors met nine times. Each Director attended 100% of the aggregate
number of meetings of the Board of Directors and the total number of the
committees on which he served, except John Vogelstein, Bruce Crawford and
James Eskridge who attended 78% of the meetings, Jack Fritz and Lawrence
Lachman who attended 92% of the meetings, and David Dyer who attended 75%. Mr.
Eskridge will retire from the Board of Directors as of January 22, 1998. It is
with regret that the Company announced the passing of Mr. Lachman in October
1997.

The Board has delegated responsibilities with respect to certain audit
matters to the Audit Committee. The members of the Audit Committee for the
fiscal year ended September 27, 1997 were Messrs. Fritz (Chairman), Newman and
Lachman. The Audit Committee is responsible for reviewing the adequacy of
financial controls and the adequacy and accuracy of financial reporting. The
Audit Committee met two times during the fiscal year ended September 27, 1997,
and no member of the Audit Committee missed a meeting. At the last Audit
Committee meeting of fiscal 1997, Messrs. Crawford and Eskridge were elected
as members to the Committee.

2
<PAGE>

The Board has delegated responsibilities with respect to certain
compensation matters to the Compensation Committee. The members of the
Compensation Committee were Messrs. Newman (Chairman), Fritz, Lachman and
Rockwell. The Compensation Committee has the responsibility to help formulate
short and long-term compensation plans and help develop the Company's
compensation philosophy. The committee also reviews specific proposals
regarding executive compensation and other aspects of the terms of employment
of the Company's senior management. The Compensation Committee met once during
the fiscal year ended September 27, 1997, and no member of the Compensation
Committee missed a meeting. At the last Compensation Committee meeting of
fiscal 1997, Mr. Dyer was elected as a member to the Committee.

The Company has no executive committee, nominating committee or other
committees, except for the above. Total attendance was 91% for all board and
committee meetings.

Directors, other than those who are full-time employees of the Company or a
subsidiary, each are currently eligible to receive an annual fee of $20,000, a
fee of $1,000 for each Board meeting attended and $500 for each committee
meeting attended. Directors serving as chairmen of any committees of the Board
of Directors receive an additional $2,000 per year for each chairmanship held.
Directors who are full-time employees of the Company receive no remuneration
for serving on the Board of Directors or its committees. Messrs. Vogelstein
and Newman have declined to receive compensation as Directors due to their
status as beneficial owners of the Company's Common Stock. (See "Security
Ownership of Management.") All Directors' expenses for attending Board of
Directors' meetings are reimbursed by the Company.

Under the 1990 Non-Employee Directors' Restricted Stock Plan (the "Non-
Employee Directors' Plan") a grant was made to Mr. Eskridge of 6,000
restricted shares in fiscal 1997. Upon the granting of these restricted
shares, restrictions lapsed immediately on 2,000 of the shares and the
remaining 4,000 shares will be returned to the Company because of Mr.
Eskridge's retiring from the Board. In addition, grants were made in fiscal
1997 to each of Mr. Fritz, Mr. Lachman, Mr. Rockwell, Mr. Eskridge,
Mr. Crawford and Mr. Dyer of options to purchase 2,500 shares at an exercise
price of $16.625 per share. The options will become exercisable in equal
annual installments over the next four years, if the recipients remain on the
Board.

1. ELECTION OF DIRECTORS

The Bylaws of the Company, as amended, provide for a Board of Directors
consisting of not less than three nor more than 15 members, the exact number
to be fixed from time to time by the Board of Directors. The Board of
Directors has determined that the Company will have eight Directors at this
time. Each person elected as a Director of the Company will hold office until
the next Annual Meeting of Stockholders or until his successor is duly elected
and qualified.

All of the nominees set forth below were elected by the stockholders to
their present terms at the 1997 Annual Meeting, except Mr. Dyer, who became a
Director of the Company on May 21, 1997. Each nominee has consented to being
named herein and has agreed to serve if elected. In case any such nominee
shall have become, at the time of the meeting, unable or unwilling to serve
(an event which the Board of Directors of the Company has no reason to
expect), the attorneys named in the enclosed form of proxy intend to vote for
another person designated by the Board of Directors.

3
<PAGE>

The affirmative vote of a plurality of the voting power represented at the
meeting is required for a nominee to be elected as a Director of the Company.
"Plurality" means that the nominees who receive the largest number of votes
cast "FOR" are elected as directors up to the maximum number of Directors to
be chosen at the meeting. Votes withheld and broker non-votes are not counted
towards the plurality vote calculation.

NOMINEES FOR ELECTION

ROBERT KAMERSCHEN, age 61. Mr. Kamerschen has been the Chairman of the Board
since January 1989. From November 1988 to February 1989, he was President of
the Company, and he has been Chief Executive Officer and a Director since
November 1988. Mr. Kamerschen is also a Director of Micrografx, Inc., Domain,
Inc., and Cognizant Corporation.

GARY M. MULLOY, age 52. Mr. Mulloy became President and Chief Operating
Officer on November 4, 1996 and was elected to the Board of Directors on
December 3, 1996. From 1990 to October 1996 he was President and Chief
Executive Officer of Pilkington Barnes-Hind, Inc., a division of Pilkington
Vision Care.

BRUCE CRAWFORD, age 68. Mr. Crawford has been a Director of the Company
since December 1996. Mr. Crawford is Chairman of Omnicom Group, Inc., the
second largest marketing communications company in the world. Mr. Crawford
served as CEO of Omnicom Group from 1989 to 1996. Mr. Crawford is also
President and Chief Executive Officer of the New York Metropolitan Opera
Association.

DAVID F. DYER, age 48. Mr. Dyer has been a Director of the Company since May
1997. Mr. Dyer was the Chief Operating Officer of the Home Shopping Network,
Inc. from 1994 to 1995. Previous to that from 1989 to 1994, Mr. Dyer held
senior management positions with Lands' End, Inc.

JACK W. FRITZ, age 70. Mr. Fritz has been a Director of the Company since
March 1984. Until January 1987, Mr. Fritz was President, Chief Executive
Officer and a Director of John Blair & Company, and had held those positions
for more than five years. Mr. Fritz serves as a Director of the Warburg,
Pincus Funds board, and is also a Director of Fritz Broadcasting, Inc. and
Fritz Communications.

JOHN R. ROCKWELL, age 69. Mr. Rockwell has been a Director of the Company
since May 1990. Until April 1, 1990, he was Senior Vice President, Group
Executive and a Director of Booz, Allen & Hamilton, Inc., a management
consulting firm, a position he held for more than five years. Mr. Rockwell is
also a Director of Forum Corporation, Tom's of Maine, Inc. and Zygo
Corporation.

HOWARD H. NEWMAN, age 50. Mr. Newman has been a Director of the Company
since August 1986. He has been associated with E.M. Warburg, a specialized
financial services company, since January 1984 and has been a Managing
Director since January 1987. Mr. Newman is also a Director of Newfield
Exploration Company, Renaissance Re Holdings Ltd., Comcast UK Cable Partners
Limited and Cox Insurance Holdings, plc.

JOHN L. VOGELSTEIN, age 63. Mr. Vogelstein has been a Director of the
Company since November 1988. Mr. Vogelstein was previously a Director of the
Company from August 1986 to December 1987. He has been Vice Chairman of the
Board of Directors of E.M. Warburg for more than the past five years and was
appointed President of E.M. Warburg on January 1, 1994. Mr. Vogelstein is also
a Director of Aegis Group, plc., Mattel, Inc., Journal Register Company,
Knoll, Inc., LCI International, Golden Books Family Entertainment, Inc. and
Vanstar Corporation.

4
<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information with respect to the
Common Stock beneficially owned by the Directors, nominees, the persons named
in the Summary Compensation Table on pages 6 and 7 of this Proxy Statement and
by all Directors and executive officers as a group, as of the Record Date.
Except as otherwise indicated, each person listed has sole voting and
investment power with respect to shares beneficially owned.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF INDIVIDUAL OF COMMON STOCK OF CLASS
- ------------------ ---------------- --------
<S> <C> <C>
Robert Kamerschen.................................... 1,116,396(1) 5.0%
Gary M. Mulloy....................................... 75,000(2) .3
Myron L. Lubin....................................... 38,150(3) .2
Rick Kurz............................................ 44,112(4) .2
Bruce Crawford....................................... -- --
David F. Dyer........................................ 2,000 *
James A. Eskridge.................................... 6,000(5) *
Jack W. Fritz........................................ 41,953(6) .2
John R. Rockwell..................................... 20,875(7) .1
Howard H. Newman..................................... 730,999(8) 3.2
John L. Vogelstein................................... 730,999(8) 3.2
All Directors and executive officers as a group (14
persons)............................................ 2,148,625(9) 9.5
</TABLE>
- --------
* Less than .1%.
(1) Includes 222,716 shares awarded under the 1986 Employee Restricted Stock
Plan, as amended (the "Restricted Stock Plan"), and 64,864 shares Mr.
Kamerschen has the right to acquire within 60 days of the Record Date
pursuant to the exercise of options granted under the Company's stock
option plans.
(2) Includes 30,000 shares of restricted stock awarded by the Company, 10,000
shares awarded under the Restricted Stock Plan and 25,000 shares Mr.
Mulloy has the right to acquire within 60 days of the Record Date pursuant
to the exercise of options granted under the Company's stock option plans.
(3) Includes 3,437 shares awarded under the Restricted Stock Plan and 26,448
shares Mr. Lubin has the right to acquire within 60 days of the Record
Date pursuant to the exercise of options granted under the Company's stock
option plans.
(4) Includes 2,203 shares awarded under the Restricted Stock Plan, as amended,
and 39,039 shares Mr. Kurz has the right to acquire within 60 days of the
Record Date pursuant to the exercise of options granted under the
Company's stock option plans.
(5) Includes 6,000 shares awarded under the Non-Employee Directors' Plan.
(6) Includes 13,000 shares awarded under the Non-Employee Directors' Plan,
1,625 shares Mr. Fritz has the right to acquire within 60 days of the
Record Date pursuant to option grants awarded by the Company and 18,347
shares owned by Mr. Fritz's wife, as to which shares Mr. Fritz disclaims
beneficial ownership.
(7) Includes 10,500 shares awarded under the Non-Employee Directors' Plan and
1,625 shares Mr. Rockwell has the right to acquire within 60 days of the
Record Date pursuant to option grants awarded by the Company.
(8) All of the shares indicated as owned by Messrs. Newman and Vogelstein are
owned directly by Warburg, Pincus & Co., a New York general partnership
("WP"). Lionel I. Pincus is the managing Partner of WP and may be deemed
to control it. Messrs. Newman and Vogelstein are directors of

5
<PAGE>

the Company and general partners of WP. As such, Messrs. Newman and
Vogelstein may be deemed to have an indirect pecuniary interest (within the
meaning of Rule 16a-1 under the Securities Exchange Act of 1934) in a
portion of the shares beneficially owned by WP. Messrs. Newman and
Vogelstein disclaim "beneficial ownership" of these shares within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934.
(9) Includes 329,506 shares awarded under the Restricted Stock Plan and the
Non-Employee Directors' Plan, and 187,647 shares all executive officers as
a group have the right to acquire within 60 days of the Record Date
pursuant to the exercise of options granted under the Company's stock
option plans.

SECTION 16 REPORTS

Under the securities laws of the United States, the Company's Directors, its
executive (and certain other) officers and any persons holding ten percent or
more of the Company's Common Stock are required to report their ownership of
the Company's Common Stock and any changes in that ownership to the SEC.
Specific due dates for these reports have been established. In fiscal 1997,
all required reports of beneficial ownership of the Company's Common Stock
were timely filed.

EXECUTIVE COMPENSATION

The following table shows compensation paid by the Company and its
subsidiaries for services in all capacities during fiscal 1997, 1996 and 1995
to each of the following named executive officers of the Company, including
the Chief Executive Officer.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
----------------- ------------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(1) AWARDS(2) OPTIONS(#)(3) COMPENSATION(4)
- ------------------------ ---- -------- -------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert Kamerschen,...... 1997 $507,200 $440,625 -- 496,299 $ 34,096
Chairman and Chief 1996 503,731 93,274 -- 662,705 40,067
Executive Officer 1995 481,303 196,076 -- 48,000 50,147

Gary M. Mulloy,......... 1997 352,123 212,404 $367,200 100,000 100,000
President and 1996 -- -- -- -- --
Chief Operating Officer 1995 -- -- -- -- --

Myron L. Lubin,......... 1997 240,077 123,909 -- 24,037 14,892
Senior Vice President-- 1996 232,931 25,568 -- 61,246 15,903
Chief Sales Officer 1995 219,357 49,458 -- 15,400 16,504

Rick Kurz,.............. 1997 221,015 114,230 -- 19,615 14,354
Senior Vice President-- 1996 211,246 23,192 -- 61,700 14,291
Chief Strategic Growth 1995 199,883 32,330 -- 14,700 9,774
Officer

Lowell W. Robinson,..... 1997 184,139 89,485 -- 36,083 385,089
Former Executive Vice 1996 250,269 27,408 -- 93,552 11,668
President and 1995 237,442 57,096 -- 45,000 4,827
Chief Financial Officer
</TABLE>
- --------
(1) Amounts for each fiscal year represent bonus compensation earned for that
year payable in the subsequent year.

6
<PAGE>

(2) The number of restricted shares of Common Stock held at fiscal year end
and the value of such holdings, based on the number of restricted shares
times the closing market price at September 27, 1997 are 30,000 shares and
$532,500 for Mr. Mulloy. Restricted shares vest equally over a three-year
period from the date of grant (one-third on each anniversary date).
Holders of restricted shares are eligible to receive dividends to the same
extent as holders of Common Stock, when dividends are declared and
payable.
(3) Includes reload option grants received from surrendering previously owned
shares of ADVO Common Stock to pay the exercise price on option exercises
and shares withheld to satisfy income tax withholding requirements.
(4) Amounts represent contributions made on behalf of the named executives to
the Company's 401(k) plan and non-qualified savings plan. In addition, for
fiscal 1997, these amounts include $368,300 of wage continuation and bonus
for Mr. Robinson, accrued under his severance agreement and $100,000 for
Mr. Mulloy represents a cash payment upon signing of his employment
agreement.

OPTIONS

Set forth below is certain information concerning stock options granted
during fiscal 1997 by the Company to the named executive officers.

The hypothetical present value on the date of grant of stock options granted
in fiscal 1997 shown below are presented pursuant to the SEC proxy rules and
are calculated under the modified Black-Scholes model for pricing options. The
actual before-tax amount, if any, realized upon the exercise of stock options
will depend upon the excess, if any, of the market price of the Common Stock
over the exercise price per share of the stock option at the time the stock
option is exercised. There is no assurance that the hypothetical present
values of the stock options reflected in this table will be realized.

OPTION GRANTS IN LAST FISCAL YEAR

7
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
GRANTED (#) FISCAL YEAR ($/SHARE) DATE VALUE(3)
----------- ------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Myron L. Lubin........... 4,962 * $18.250 02/04/2004 $17,317
2,518 * 18.250 01/24/2005 8,788
2,102 * 18.250 01/25/2000 7,336
455 * 18.250 01/24/2001 1,588
Rick Kurz................ 2,638 * 12.875 02/04/2004 6,331
2,311 * 18.250 01/24/2005 8,065
1,523 * 18.250 02/04/2004 5,315
143 * 18.250 05/06/2003 499
Lowell W. Robinson....... 5,887 * 12.875 07/24/2005 14,129
4,491 * 12.875 05/04/2004 10,778
1,407 * 12.875 01/24/2005 3,337
4,420 * 12.625 05/04/2004 10,520
1,404 * 12.625 01/24/2005 3,342
1,474 * 12.625 03/12/2006 3,508
</TABLE>
- --------
*less than 1%
(1) Stock options granted in fiscal 1997 will become exercisable in 25%
increments at one-year intervals from the date of grant. All options are
subject to the reload feature of the 1988 Non-qualified Stock Option Plan
and the 1993 Stock Option SubPlan. See Exhibit B attached hereto.
(2) Represent reload option grants received upon the exercise of previously
outstanding exercisable options (the "original options"). The number of
reload options awarded upon the exercise of original options is equal to
the number of previously held shares an optionee tenders to pay the
exercise price of the original options and the number of shares an
optionee elects to have withheld from the exercise of the original options
to pay statutory tax withholding requirements. The reload options retain
the expiration date of the original options and have an exercise price
equal to the fair market value of the Common Stock on the date of exercise
of the original options. Reload options must be held for one year from the
date of grant before they become exercisable or upon termination from the
Company.
(3) The present values on grant date are calculated under the modified Black-
Scholes model, which is a mathematical formula used to value options
traded on stock exchanges, modified for pricing employee stock options.
This formula considers a number of factors in order to estimate the
option's present value, including the stock's historical volatility (32%),
the exercise period of the option and the risk free rate of return (4.75%-
5.88% depending on the option's grant and expiration dates).

Set forth below is certain information concerning the named executive
officers and the number of shares acquired, amounts realized on stock option
exercises during fiscal 1997 and the number and value of specified options at
September 27, 1997. The value of exercised and unexercised in-the-money stock
options at September 27, 1997 shown below is presented pursuant to SEC rules.
The actual before-tax amount, if any, realized upon exercise of stock options
will depend upon the excess, if any, of the market price of the Common Stock
over the exercise price per share of the stock option at the time the stock
option is exercised. There is no assurance that the values of unexercised in-
the-money stock options reflected in this table will actually be realized.

8
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END (#) AT YEAR-END (1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Kamerschen....... 549,017 $2,152,329 -- 609,987 $ -- $3,236,879
Gary M. Mulloy.......... -- -- -- 100,000 -- 550,000
Myron L. Lubin.......... 14,548 133,642 5,398 65,337 33,212 375,769
Rick Kurz............... 9,485 75,293 21,315 50,515 122,561 313,401
Lowell W. Robinson...... 23,701 93,860 14,351 83,458 140,331 559,823
</TABLE>
- --------
(1) Value is calculated by determining the difference between the fair market
value at September 27, 1997 of the securities underlying the options
($17.750) and the exercise price of the options.

REPORT OF THE COMPENSATION COMMITTEE

The role of the Compensation Committee of the Board of Directors is to
represent the Board of Directors in its dealings with management in overseeing
the process and substance of ADVO's Executive Compensation Policy and
Philosophy, aligning the interests of shareholders and the needs of
management. The Compensation Committee's policy regarding Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), is that any
compensation above the threshold specified in that Section be based on
performance objectives in order to retain the Company's Federal tax deduction
as permitted under the Code. The Compensation Committee is composed entirely
of non-employee Directors.

Compensation Philosophy:

ADVO's compensation programs are designed to:

. Provide a fair, competitive and dynamic compensation program.
. Attract, retain, and develop a highly skilled and motivated workforce.
. Tie compensation directly to the accomplishment of superior Company
performance, creation of long term shareholder value and attainment of
specific strategic initiatives by emphasizing variable rather than fixed
compensation.
. Align stockholders' and management's interests.

To accomplish this philosophy, ADVO's executive compensation program is
composed of base salary, short term incentives and long term incentives, which
taken together provide a competitive compensation package that is highly
leveraged toward the attainment of superior Company performance.

Base Salary:

ADVO's philosophy is to pay competitive base salaries as compared with a
broad spectrum of organizations. To assess its competitive position, ADVO
participates in and reviews salary surveys with participant companies from
multiple industry segments. These companies represent a cross section of
organizations in all industries and are of similar size and scope. These
companies may or may not be

9
<PAGE>

included in the peer group analysis under "Company Financial Performance,"
since many of the Company's competitors for executive talent are outside the
Company's business competitor peer group of companies or are privately held
companies. The surveys are professionally administered by third parties and
represent the different functional areas of ADVO's organization, e.g.,
marketing, finance and information systems. In general, ADVO's salary position
is within the third quartile of the marketplace (better than the bottom 50%
and less remunerative than the top 25%). Based on these surveys, ADVO annually
reviews its salary structure and adjusts it as necessary to reflect the
market. Individual base pay is determined by considering:

. The individual's background, experience and current salary in relation to
the market (as represented by the salary range assigned to the
individual's position).
. Accomplishments as determined by the individual's performance appraisal.
. The financial spending guidelines of the Company.

Short Term Incentive:

ADVO's philosophy is to provide significant financial incentives for key
managers to attain and exceed the Company's financial objectives. The
Corporate Management Incentive Plan for its eligible associates and the
Division/Regional Plan for certain associate populations remain as approved by
shareholders in 1995, while new regional and middle management plans were
created in fiscal 1996. These plans provide a strong link between the
associate's accountabilities, scope of impact and business performance through
the use of operationally tailored measurement criteria focusing on margin
improvement and/or operating income goals. These plans provide a competitively
benchmarked target award based on the level of the individual's job. The
target awards range from 10% to 75% of salary. To realize the target award,
certain Company financial performance objectives must be attained. These
objectives include corporate, regional and business unit measures, and are
measured in terms of achievement versus the annually established plan. The
corporate measure is based on consolidated operating income. Regional and
business unit objectives incorporate profitability objectives that are margin
based in the form of operating income or contribution margin. The mix and
weighting of these objectives is dependent on the organizational role of the
individual. All individuals have at least a portion of their incentive based
on the corporate measure as described above. The specific plan targets are not
disclosed herein because they are considered confidential and disclosure of
such could competitively injure ADVO's business. The performance attainment
and resulting payout for each objective is evaluated and calculated
independently. Performance below plan, results in ratably lower payouts and
performance above plan, results in ratably higher payouts. The combined payout
percentage based upon these results are limited only by the combined business
performance. A minimum threshold of plan attainment is in place, below which
no payout is made. The Compensation Committee has the discretion to modify the
actual awards. The bonuses of the CEO and any associate subject to Section
162(m) of the Code are based solely on corporate consolidated operating income
financial results as defined above, and are subject to a capped individual
payout.

The Company's financial performance for the fiscal 1997 year exceeded its
operating income target. This resulted in adjusted corporate awards which
were, on average, higher than target awards. Regional performance varied, with
results both above and below target levels set under the plan. After adjusting
for corporate and regional financial results, individual award payouts ranged
from 35.3% to 176.1% (to participants in a specific business unit who greatly
exceeded plan) of target awards. Approved awards for those disclosed in the
Summary Compensation Table were 117.5% of target awards.

10
<PAGE>

Long Term Incentive:

The 1988 Non-qualified Stock Option Plan, as amended, and the 1993 Stock
Option Subplan are the primary vehicles for long term incentives. These plans:

. Link compensation opportunities to Company achievements.

. Balance annual results with ADVO's long term performance.

. Strengthen the partnership between ADVO's executives and stockholders.

Participation in this plan is limited to key management and executives in
the Company. Long term compensation targets vary by the level of the
individual's position and were established based on market analysis provided
from third party external consultants. Periodically these targets will be
reviewed. These targets are expressed as a percentage of base pay. The
resulting target values are translated into shares based on the market value
of the shares. Stock options granted in fiscal 1997 were granted at market
price with 10 year terms.

The Company's executives were also given the opportunity to receive "reload
options." To receive such options, the plan requires executives to exercise
their options by tendering mature shares of stock to "pay" for the underlying
cost of the options and withholding shares to meet mandatory federal tax
obligations. In return, they receive reload options in the same number as the
number of shares utilized in the exercise. Any profit that resulted from the
exercise was returned to the executive in the form of stock, which is to be
retained for two years.

Service based options are also used for employment, promotion and retention
situations and are determined in the same manner as described above.

In addition, the Company has a restricted stock plan. While the governing
plan allows for broader usage, historically, this plan has been used for
employment, promotion and retention situations. ADVO granted restricted stock
for the purposes of employment and promotion to a limited number of key
positions during fiscal 1997. When these situations arise, the number of
shares granted is based upon the level of the job.

To foster greater alignment with shareholders, ADVO expects that executives
who receive stock options should also make a personal financial commitment to
acquire and hold significant amounts of ADVO stock. Effective with the
beginning of the 1997 calendar year, these associates were asked to acquire a
portion or multiple of their salary in ADVO stock over a four year period.
These guidelines range from 150% of base salary for the CEO to 12.5% of base
salary for entry level stock option recipients. This plan covers approximately
90 associates.

CEO Compensation and Company Performance:

As discussed on page 14, the Company and Mr. Kamerschen entered into an
employment agreement on May 29, 1996, outlining some specific conditions of
employment concerning compensation arrangements, not all of which are under
the governance of the Compensation Committee. Under this

11
<PAGE>

agreement Mr. Kamerschen's salary is reviewed annually, and may be increased,
but not decreased by the Committee. As such, the Committee reviews Mr.
Kamerschen's salary at the beginning of the calendar year using the same base
salary guidelines utilized for other executives as described in the "Base
Salary" section on pages 9 and 10, and adjusts his salary in light of Company
performance for the preceding fiscal year. Due to the timing of his increase
during fiscal 1997, the review relates to fiscal 1996 performance. ADVO
experienced a confluence of external and internal events during fiscal 1996.
Externally, the business was challenged by a soft retail economy, an increase
in both postal rates and paper prices, and intense competition. Additionally,
several internal initiatives were set in motion to enhance ADVO's long term
potential, which were disruptive in the short term to ADVO associates and the
normal flow of business. These include reengineering to leverage operations,
the strategic exploration for enhancing shareholder value which resulted in
the $10 per share special dividend and the implementation of a new margin
focused sales compensation plan for the sales force. ADVO successfully emerged
from these disruptions and finished the year with a strong fourth quarter.
These factors were taken under consideration qualitatively and at the
discretion of the Committee. Upon Mr. Kamerschen's own recommendation, this
past year the Committee declined to grant an increase for Mr. Kamerschen,
including a cost-of-living adjustment in a contractual benefit.

As provided in the Agreement, Mr. Kamerschen's short term incentive is
determined under the Corporate Management Incentive Plan. Under this plan, the
CEO's bonus is determined based solely on financial results and is awarded at
the discretion of the Board of Directors. Consistent with the plan as
described previously, as measured by Company performance in fiscal 1997, Mr.
Kamerschen was granted an incentive award of $440,625, representing 117.5% of
his target award.

Mr. Kamerschen was awarded 57,000 options in the annual grant using the
approach described above.

Benefits:

ADVO offers benefits to its key executives, serving a different purpose than
do the above described elements of compensation. In general, these provide a
level of security against financial misfortune which may result from illness,
disability or death. The benefits are principally those that are offered to
the ADVO employee population, with some variations, and generally promote tax
efficiency and replacement of benefit opportunities afforded other employees,
but which are lost to executives due to regulatory limits.

COMPENSATION COMMITTEE:
Howard H. Newman (Chair)
Jack W. Fritz
David F. Dyer
John R. Rockwell

12
<PAGE>

COMPANY FINANCIAL PERFORMANCE

The following graph compares the performance of the Company's Common Stock
with the S&P 500 Index and a Selected Peer Group Index constructed by the
Company. The comparison of total return for each of the years assumes $100 was
invested on October 1, 1992 in each of the Company, the S&P 500 Index and the
Selected Peer Group Index with investment return weighted on the basis of
market capitalization. The Peer Group is comprised of Acxiom Corp., Catalina
Marketing, R.R. Donnelley & Sons Co., Dunn & Bradstreet, Information
Resources, Inc., Knight-Ridder, Inc., Readers Digest, Scholastic Corp., Times
Mirror Co., Tribune Co., Valassis Communications and the Washington Post. The
Peer Group represents a mix of newspaper, publishing, database and marketing
services companies that ADVO competes with in several of its major markets.

Comparison of Five Year Cumulative Total Return*
Among ADVO, Inc., S&P 500 Index and a Selected Peer Group**

[LINE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
------- ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
ADVO, Inc........ $100.00 $81.25 $87.50 $122.86 $124.56 $191.42
S&P 500.......... 100.00 113.00 117.17 152.02 182.93 256.68
Peer Group....... 100.00 103.67 105.05 120.62 132.40 162.60
</TABLE>

Assumes $100 invested October 1, 1992 in ADVO, Inc. Common Stock, S&P 500
Index & the Peer Group Index.

* Total Return assumes reinvestment of dividends.
** ADVO's fiscal year ends on the last Saturday in September.

13
<PAGE>

EMPLOYMENT AGREEMENTS
On May 29, 1996, the Company renewed its employment agreement with Mr.
Kamerschen pursuant to which he is employed as Chief Executive Officer of the
Company. The employment agreement has a term of five years, continuing through
November 14, 2001. Under the employment agreement, Mr. Kamerschen receives an
annual salary of $500,000 per year, subject to annual increases as determined
by the Board of Directors. The employment agreement provides that annual
bonuses may be awarded under the Company's bonus plan. The employment
agreement also provides that if the Company terminates Mr. Kamerschen's
employment for any reason other than for cause (as defined), the Company shall
continue to pay a salary to Mr. Kamerschen at the same rate, plus a bonus of
75% of such salary, and allow him to continue to participate in other benefit
programs for the duration of the employment period. For the duration of the
severance period, Mr. Kamerschen's granted, but unvested stock rights, shall
continue to vest on their regularly scheduled dates. If at the time of
termination there are more than two years left in the employment period, for
the period in excess of two years, the severance compensation will not include
any bonus. In addition, Mr. Kamerschen receives a housing allowance (currently
$3,287 per month) as long as he remains employed by the Company.

On November 4, 1996, the Company entered into an employment agreement with
Mr. Mulloy, pursuant to which he is employed as President and Chief Operating
Officer of the Company for a term of three years, at a salary of $400,000 per
year, subject to increases as determined by the Board of Directors plus
bonuses pursuant to the Company's bonus plan. Per the employment agreement,
Mr. Mulloy received 30,000 restricted shares of Common Stock. Under the terms
of the agreement, the restrictions on such shares will lapse one-third each
year on December 3, 1997, 1998 and 1999. Mr. Mulloy also received options
under the 1988 Non-qualified Stock Option Plan, as amended, to purchase
100,000 shares of the Company's Common Stock at a price of $12.25 per share,
such options becoming exercisable in installments of one-fourth each year on
December 3, 1997, 1998, 1999 and 2000. In addition, Mr. Mulloy received a cash
payment of $100,000 upon signing of the agreement. This agreement provides for
automatic renewal every two years, on the anniversary date of the agreement,
unless the Company gives Mr. Mulloy six months' notice prior to the renewal
date that it does not intend to renew the agreement. The employment agreement
also provides that if the Company terminates Mr. Mulloy's employment for any
reason other than for cause (as defined), the Company shall continue to pay a
salary to Mr. Mulloy at the same rate, plus a bonus of 50% of such salary, and
allow him to continue to participate in other benefit programs for one year
after the date of termination.

EXECUTIVE SEVERANCE AGREEMENTS

The Board of Directors has authorized the Company to enter into individual
Executive Severance Agreements (the "Agreements") with Messrs. Kamerschen,
Mulloy, Lubin, and Kurz (the "Executives"). The structure of the Agreements is
substantially similar, but the terms of the individual Agreements differ in
some important respects as noted below.

The Agreements' provisions become effective upon the occurrence of a Change
of Control (as described below) and continue for the duration of the Severance
Period. With regard to Messrs. Kamerschen and Mulloy, the Severance Period is
two years following a Change of Control. With regard to Messrs. Lubin and
Kurz, the Severance Period is one and one-half years following a Change of
Control. In all cases, the Severance Period ends with the death of the
Executive. If, during the Severance Period, an Executive's employment is
terminated by the Company for any reason other than death, disability or cause
(as described below), or if the Executive terminates his employment for good
reason

14
<PAGE>

(as described below) the Company must pay to the Executive a lump sum
severance payment. With regard to Messrs. Kamerschen and Mulloy, the severance
payment due upon such a termination of employment is equal to two times the
sum of (i) the Executive's annual base pay at the highest rate in effect at
any time within the 90-day period preceding the date a notice of termination
of employment is given or, if higher, at the highest rate of base pay in
effect within the 90-day period immediately preceding the Change of Control
and (ii) the greatest amount of incentive (bonus) pay received by the
Executive for any calendar year or portion thereof from and including the
third year prior to the first occurrence of a Change of Control. With regard
to Messrs. Lubin and Kurz, the severance payment is equal to one and one-half
times the foregoing sum. Additionally, upon termination, Messrs. Kamerschen
and Mulloy will be entitled to receive medical and life insurance benefits for
the period of two years from the date of the termination or cash in lieu
thereof. Messrs. Lubin and Kurz will be entitled to receive medical and life
insurance benefits for the period of one and one-half years from the date of
termination or cash in lieu thereof.

Under the Agreements, "cause" means an Executive's intentional act of fraud,
embezzlement, theft, damage to Company property or disclosure of confidential
information that causes material harm to the Company. "Good reason" means (i)
an adverse change in the Executive's responsibilities; (ii) a reduction in the
Executive's base salary, bonus pay, or benefits; (iii) a failure of any
successor to the Company to assume the obligations under the Agreement; (iv)
any material breach of the Agreement by the Company; or (v) any action of the
Company requiring the Executive to perform his or her services at a location
which is more than thirty five miles from the location where the Executive was
employed immediately preceding the date of the Change in Control.

A "Change of Control" means the occurrence of any of the following events:
(i) the acquisition by any individual, entity or group other than Warburg (a
"Person"), of beneficial ownership of voting securities of the Company where
such acquisition causes such Person to own 30% or more of the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of Directors (the "Outstanding Company Voting
Securities") other than certain acquisitions; or (ii) individuals who
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board. Any individual becoming a
Director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the Directors
then comprising the Incumbent Board shall be considered as though such
individuals were a member of the Incumbent Board, (excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the
election or removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board) and any
nominee of Warburg proposed by Warburg to be elected to the Board shall be
considered a member of the Incumbent Board; or (iii) the approval by the
stockholders of the Company of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation ("Business
Combination") or, if consummation of such Business Combination is subject, at
the time of such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding a Business Combination pursuant to
which (A) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be,
of the corporation resulting from such

15
<PAGE>

Business Combination in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company
Voting Securities, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of Common Stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or (iv) approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.

Each Executive is solely responsible for all federal, state, local or
foreign taxes due with respect to any payment received under the Agreement,
including, without limitation, any excise tax imposed by Section 4999 of the
Code. However, all payments under the Agreement would be reduced to the extent
necessary so that no portion of the payments would be subject to the excise
tax imposed by Section 4999 of the Code, but only if, by reason of such
reduction, the net after-tax benefit received by the Executive exceeds the net
benefit received by the Executive if no such reduction was made.

If the Company fails to comply with any of its obligations under the
Agreement or in the event that the Company or any other person takes or
threatens to take action to declare the Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or
to recover from the Executive, the benefits provided or intended to be
provided to the Executive by the Company, the Executive is authorized by the
Agreement to retain counsel of the Executive's choice, at the expense of the
Company, to advise and represent the Executive in connection with any such
interpretation, enforcement, or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any member of the Board of Directors, officer,
stockholder, or other person or entity affiliated with the Company, in any
jurisdiction.

Benefits under the Agreements are in addition to severance amounts payable
under an Executive's employment agreement.

Under a revised termination agreement dated July 21, 1997 between Lowell W.
Robinson, former Executive Vice President and Chief Financial Officer, and the
Company, Mr. Robinson was entitled to wage continuation for a period of one
year commencing on May 31, 1997. Mr. Robinson will receive $368,300 in wage
continuation and incentive compensation in connection with the above
referenced agreement. This agreement supersedes the severance agreement dated
April 28, 1994 between the Company and Mr. Robinson.

RELATED PARTY TRANSACTIONS

At November 22, 1997, the Company had $10,863,000 invested in money market
mutual funds managed by Warburg, Pincus Counsellors, Inc. ("Counsellors").
Income earned on such investments during fiscal 1997 amounted to approximately
$458,000. Counsellors is controlled by WP, the general partner of Warburg. The
Company bases all investment decisions upon the available rates of return, and
the investments described above were made because of the competitive rates
available from Counsellors.

16
<PAGE>

On September 29, 1997, the Company increased its stock buyback program
authorization to 3.2 million shares. In connection with the increased
authorization, the Company purchased 1,936,098 shares of its common stock from
Warburg for approximately $34,800,000.

2. APPROVAL OF AMENDMENTS TO THE
1986 EMPLOYEE RESTRICTED STOCK PLAN, AS AMENDED

On October 9, 1997, the Board of Directors approved an amendment to the
Company's Restricted Stock Plan to increase the number of shares available for
grant pursuant to such Plan from 2,467,500 to 2,567,500 shares.

The following description of the Restricted Stock Plan as proposed to be
amended is a summary and is qualified in its entirety by reference to the text
of such plan, a copy of which is attached hereto as Exhibit A. The Restricted
Stock Plan is sometimes referred to in this Proposal 2 as the "Plan".

Purpose: The purpose of the Plan is to advance the interests of the Company
by encouraging and enabling the acquisition of a larger personal proprietary
interest in the Company by officers and employees of the Company and its
subsidiaries. Key officers and employees of the Company and its subsidiaries,
upon whose judgement and keen interest the Company and its subsidiaries are
largely dependent for the successful conduct of their operations, are eligible
to receive shares pursuant to the Plan. Directors who are not employees are
not eligible to receive shares under the Plan.

Administration: The Plan is currently administered by the Board of
Directors. The Board may, however, appoint a committee of at least two Non-
employee Directors as defined in Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, (the "Act") to administer the Plan (the "Committee"). The
Board of Directors or the Committee has the authority to determine the
participants to whom shares are issued under the Plan and the number of shares
issued to each participant, subject to the terms and conditions of the Plan.

Shares Subject to Award: Currently, a maximum of 2,467,500 shares of Common
Stock may be awarded under the Plan, except that such amount may be adjusted
for stock dividends, stock splits, stock conversions, exchanges,
reclassifications or substitutions. (If this Proposal 2 is adopted by the
stockholders, an additional 100,000 shares would be available for award under
the Plan.) As of the Record Date, 2,440,417 shares have been awarded under the
Plan. Approximately 30 persons are eligible to participate in the plan.

Awards of Shares: Under the Plan, the Board of Directors or the Committee
may in its sole discretion award to a participant the right to receive a
number of shares specified by the Board of Directors or the Committee. The
Plan provides that the participant has 30 business days (the "Payment Period")
from the date of such award to pay to the Company an amount equal to the par
value of a share multiplied by the number of shares issued to such participant
by the Board of Directors or the Committee. Upon receipt of the payment, the
Company is required to issue to the participant a certificate representing the
shares. If a participant fails to make the required payment within the Payment
Period, the award of the shares may lapse and the Board or the Committee may
again issue the shares to participants pursuant to the Plan. No shares may be
awarded after September 22, 2006.

17
<PAGE>

Restrictions, Voting, Dividend, and Vesting: The Board of Directors or the
Committee may provide that the shares issued to the participant may not be
sold, assigned, transferred or otherwise disposed of or encumbered until the
expiration of time (the "Restricted Period") or the satisfaction of conditions
specified by the Board or the Committee at the time the shares are issued.
(Such shares are hereinafter referred to as "Restricted Shares".) Each holder
of Restricted Shares is the beneficial and record owner of such Restricted
Shares and has full voting rights with respect thereto. During the Restricted
Period, all dividends and distributions paid on any Restricted Shares are held
by the Company for the account of the holder. The Board of Directors may in
its sole discretion permit reinvestment of cash dividends paid on any
Restricted Shares. Such Shares shall be treated as subject to the same terms
and restrictions as the Restricted Shares upon which the reinvested cash
dividend was paid, including cash dividend reinvestment. Upon the expiration
of the Restricted Period, all dividends and shares purchased through the
reinvestment of cash dividends and distributions are paid to the holder,
unless such shares are forfeited, as described below.

Forfeiture of Restricted Shares: If a participant who has been issued
Restricted Shares thereafter during the Restricted Period ceases to be
eligible to receive shares under the Plan, or if any of the conditions imposed
upon the issue of such shares by the Board of Directors or Committee are not
satisfied during the time prescribed by the Board of Directors or Committee,
the Restricted Shares held by such participant which are subject to such
restrictions automatically revert to and become the property of the Company.
However, in the event of a participant's death or the termination of his
eligibility to receive shares under the Plan due to his disability (the
existence of which disability shall be determined by the Board of Directors or
Committee, in its sole discretion), all restrictions on the Restricted Shares
held by such Participant shall immediately cease. In the sole discretion of
the Board of Directors or Committee, the restrictions upon the shares may
lapse, in whole or in part, and upon such conditions as the Board of Directors
or Committee may impose and such Restricted Shares may be retained by the
participant irrespective of his continued eligibility to receive shares under
the Plan. In addition, restrictions on any outstanding Restricted Shares lapse
in the event of "Change of Control" as defined under "Executive Severance
Agreements" above. In the event that any Restricted Shares revert to and
become the property of the Company, the stock certificate or certificates
representing such Restricted Shares must be returned to the Company. Upon the
reversion of shares, the Company is required to repay to the participant the
full amount paid to the Company for such shares.

Amendment: The Board of Directors or the Committee may at any time withdraw
or, from time to time, amend the Plan as it relates to, and the terms and
conditions of, any shares not theretofore issued. The Board of Directors or
the Committee may withdraw or from time to time amend the Plan as it relates
to, and the terms and conditions of, any Restricted Shares issued pursuant to
the Plan with the consent of each holder of Restricted Shares adversely
affected thereby.

Withholding: When a participant is required to pay the Company an amount
required to be withheld under the applicable income tax laws in connection
with the lapse of restrictions on Restricted Shares under the Plan, the
participant may satisfy the obligation, in whole or in part, by electing to
have the Company withhold shares of Common Stock or by delivering shares
already owned by the participant having a fair market value sufficient to
satisfy the applicable withholding taxes.

Federal Income Tax Consequences: A recipient of Restricted Shares will have
ordinary income in an amount equal to the fair market value of the shares at
the time of the lapse of restrictions on the shares plus the amount of any
dividends or other distributions received with respect to such shares,

18
<PAGE>

less the amount paid for the Restricted Shares, unless the recipient makes an
election to include such award in ordinary income at the time of award. In
addition, unless such an election is made, a recipient subject to Section
16(b) of the 1934 Act who receives Restricted Shares will recognize ordinary
income at the later of the time of the lapse of restrictions or six months
after the date of the award. The Company is entitled to a Federal income tax
deduction in the same amount and at the same time the participant recognizes
ordinary income.

Vote Required: The affirmative vote of the holders of a majority of the
voting power of the shares of outstanding Common Stock represented at the
Annual Meeting in person or by proxy is required for approval of the proposed
amendment to the Plan. Abstaining votes and broker non-votes are counted as
votes cast in tabulating the majority requirements and have the same effect as
a vote cast against this Proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.

3. APPROVAL OF AMENDMENTS TO THE 1988 NON-QUALIFIED
STOCK OPTION PLAN AND 1993 STOCK OPTION SUBPLAN, AS AMENDED

On October 9, 1997, the Board of Directors approved an amendment to the
Company's 1988 Non-qualified Stock Option Plan and the 1993 Stock Option
Subplan, as amended (the "1988 Plan"), subject to stockholder approval, to
increase the number of shares available for grant under the 1988 Plan from
4,800,000 to 5,200,000 shares and to extend the term of the plan for an
additional ten years from January 31, 1998 to January 31, 2008. The following
discussion is a summary of the 1988 Plan as proposed to be amended, a copy of
which is attached hereto as Exhibit B.

Administration: The 1988 Plan is administered by the Board of Directors. The
Board may appoint a Stock Option Committee composed of not less than two
members of the Board of Directors who are "Non-Employee Directors" as defined
in Rule 16b-3 under the Act. The Board or Committee, as applicable, determines
those individuals to whom options are granted under the 1988 Plan.

Subplans: The Board of Directors or the Committee may establish such
subplans under the Plan as it may deem desirable in order to qualify options
thereunder as "performance-based compensation" as defined in the Code. The
Board has established the 1993 Stock Option Subplan (the "1993 Subplan").

Options: Options granted under the 1988 Plan are non-qualified stock
options; that is, they are not qualified for special tax treatment under the
Code.

The 1988 Plan permits the granting of "reload" options with respect to
options granted under the 1988 Plan (the "original options"). A "reload"
option is an option granted on the date of exercise of an original option to
purchase a number of shares which is equal to the number of shares surrendered
to pay the exercise price of the original option, the number of shares
surrendered or withheld to pay tax withholding due on exercise of the original
options or such other number of shares not to exceed the total number of
shares with respect to which the original option is exercised. The expiration
date of a reload option would be the same as that of the original option
unless otherwise determined by the Board or Committee. "Reload" options may be
authorized with respect to options that are themselves granted as reload
options.

19
<PAGE>

Vesting: The Board may in its discretion establish certain conditions under
which options become exercisable or "vested'. These conditions may include
time and service requirements, the achievement of performance objectives or
other events or a combination thereof. In general, options vest over four
years. Reload options vest over one year.

Eligibility: One or more options may be granted under the 1988 Plan by the
Committee to such officers or key employees of the Company, or of a parent or
subsidiary of the Company, at such time and in such amounts as the Board or
Committee determines. A member of the Board of Directors is eligible to
participate in the 1988 Plan only if such Board member is also an employee of
the Company. Approximately 90 persons are eligible to participate in the 1988
Plan.

Shares Subject to Options: Currently, the 1988 Plan provides that an
aggregate of 4,800,000 shares of Common Stock, subject to adjustment to
prevent dilution in the event of stock splits, stock dividends or other
changes in the Company's capitalization, may be subject to options under the
1988 Plan. Such shares may be treasury shares or authorized but unissued
shares. If any outstanding option expires or terminates prior to its exercise
in full, or if any option exercise is settled in cash, the shares of Common
Stock that are allocable to the unexercised portion of such option will become
available for the grant of other options. In addition, if in connection with
any option exercises, any shares of Common Stock are tendered to the Company
in satisfaction of tax withholding obligations or in payment of the option
price, an equal number of shares shall be available for option grants under
the Plan. If Proposal 3 is adopted by the stockholders, the number of shares
that may be subject to options under the 1988 Plan would be increased from an
aggregate of 4,800,000 shares to an aggregate of 5,200,000 shares. As of the
Record Date, options to purchase 4,290,427 shares had been issued under the
1988 Plan.

Option Price: The price at which shares may be purchased pursuant to an
option cannot be less than the greater of the par value of the shares of
Common Stock or the fair market value of the Common Stock on the date the
option is granted. Optionees may be granted, in exchange for the surrender and
cancellation of outstanding options, new options having option prices lower
than the option price of the options so surrendered and cancelled.

Exercise of Options: Under the 1988 Plan, no option may be exercised after
the expiration of ten years from the date it is granted. Currently, the 1988
Plan provides that no option may be granted under the 1988 Plan after January
31, 2008.

Each optionee to whom an option is granted, who has not already done so,
must agree in writing, as a condition to the granting of the option, not to
enter into a business in direct competition with the Company for one year
after the termination of employment with the Company. Each option shall be
exercisable as determined by the Committee. In addition to vesting based upon
future service, the Plan permits vesting to be conditioned upon the
achievement of performance objectives or other events. Under certain
conditions, such as the receipt of approval from the Committee, or in the
event of certain mergers, consolidations, reorganizations, the approval by the
stockholders of the Company of the liquidation or dissolution of the Company
or the sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the consolidated
assets of the Company, the time at which an option is exercisable may be
accelerated to allow the exercise of the option, in whole or in part, at a
time earlier than that otherwise provided at the time of the original grant of
the option. In addition, all or any part of any remaining unexercised options
may be exercised in full, whether or not then exercisable, upon a "Change of
Control" as defined under "Executive Severance Agreements".

20
<PAGE>

The option price for the number of shares with respect to which the option
is exercised shall be paid in full to the Company upon exercise of an option.
The optionee may pay all or part of the option price by delivering shares of
the Company's Common Stock which shall be credited against the option price at
the fair market value of such stock on the date of exercise. In addition, the
optionee may use the shares received upon the exercise of an option to pay the
option price and acquire additional shares. This technique allows optionees to
exercise the option which they have been granted by using any appreciation
present in the shares which they own. The Plan also permits payment to be made
by a full recourse promissory note for a term of up to two years for the
lesser of up to 90% of the option price or that portion of the option price
which exceeds the par value of the shares at an interest rate equal to or
greater than the applicable federal rate determined under Section 1274(d) of
the Code.

Withholding Tax: Under the 1988 Plan, optionees have the opportunity to
satisfy withholding tax obligations, in whole or in part, either by having the
Company withhold from the shares to be issued upon exercise that number of
shares that would satisfy the withholding amount due or by delivering to the
Company already owned Common Stock to satisfy the withholding amount.

Transfer: Unless the Board or Committee otherwise determines, options are
not transferable by the optionee other than by will or under the laws of
descent and distribution and are exercisable, during the optionee's lifetime,
only by the optionee.

Termination: Options shall terminate, unless exercised, upon the earlier of
the date of expiration of the option or three months after the date of the
severance of the employment relationship between the optionee and the Company,
or a parent or subsidiary of the Company; provided, however, that all options
held by an optionee shall terminate immediately upon receipt by an optionee of
notice of termination if the optionee is terminated for deliberate, willful or
gross misconduct as determined by the Company.

If, before the date of expiration of the option, the optionee retires from
the employ of the Company, or a parent or subsidiary of the Company, for
reasons of age or for reasons of disability, the option shall terminate on the
earlier of such date of expiration or one year after the date of such
retirement. In the event of such retirement, the optionee shall have the right
prior to the termination of such option to exercise the option to the extent
to which the optionee was entitled to exercise such option immediately prior
to such retirement provided that in the event of retirement due to disability
all options then held by the optionee shall become immediately exercisable. If
the retired optionee shall die before the termination of the option, the
optionee's executors, administrators or any person or persons to whom the
option may be transferred by will or by the laws of descent and distribution
shall have the right, at any time prior to the earlier of the date of the
expiration of the option or the end of the one-year period beginning on the
date of the optionee's death, to exercise the option to the same extent as
said retired optionee.

In the event of the death of the holder of an option while in the employ of
the Company, or a parent or subsidiary of the Company, and before the date of
expiration of such option, such option shall become immediately exercisable.
Such option shall terminate on the earlier of such date of expiration or one
year following the date of such death. After the death of the optionee, the
optionee's executors, administrators or any person or persons to whom the
option may be transferred by will or by the laws of descent and distribution
shall have the right, at any time prior to such termination, to exercise the
option to the same extent to which the deceased optionee was entitled to
exercise such option.

21
<PAGE>

Modification: The Board of Directors may amend, suspend or terminate the
1988 Plan at any time; subject to applicable law. However, stockholder
approval will still be required to increase the number of shares which may be
issued under the Plan pursuant to New York Stock Exchange guidelines.

Registration of Option Shares: No shares shall be issued and delivered upon
exercise of any option unless a registration statement under the Securities
Act of 1933 with respect to the shares of Common Stock to be reserved for
issuance upon the exercise of options to be granted under the 1988 Plan has
become effective, and unless all other applicable laws and regulations have
been complied with.

Federal Income Tax Consequences: Upon the exercise of an option, an optionee
will recognize ordinary compensation income in an amount equal to the excess
of the fair market value of the Common Stock on the date of exercise over the
option price. Any gain or loss recognized by the optionee on the subsequent
disposition of the stock will be a capital gain or loss.

The Company will generally be entitled to a deduction for Federal income tax
purposes at the same time and in the same amount as an optionee is required to
recognize ordinary compensation income as described above. However, Section
162(m) of the Code provides that no deduction will be allowed for certain
compensation paid to "covered employees", as defined in Section 162(m)(3), to
the extent such compensation exceeds $1,000,000 in a taxable year. It is
intended that this limitation will not apply with respect to options granted
pursuant to the 1993 Subplan by reason of the options constituting
"performance based compensation" as described in Section 162(m)(4)(c) of the
Code. However, due to the enactment of Section 162(m) of the Code, and in the
absence of the issuance of any guidance by the Treasury Department under
Section 162(m) of the Code to date, this cannot be assured. As part of
satisfying the Code, individual grant limitations over a period of time must
be specified to accommodate reloads under the Subplan. The Company set this
limit at 750,000 options per year.

To the extent that an employee recognizes a capital gain as described above,
the Company will not be entitled to a deduction for Federal income tax
purposes.

Market Price: The last sales price on the Record Date of the Company's
Common Stock on the New York Stock Exchange as reported in The Wall Street
Journal was $21 3/4 per share.

Vote Required: The affirmative vote of the holders of a majority of the
voting power of the outstanding shares of Common Stock represented at the
Annual Meeting in person or by proxy is required for approval of the proposed
amendment to the 1988 Plan. Abstaining votes and broker non-votes are counted
as votes cast in tabulating the majority requirement and have the same effect
as a vote cast against this Proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3.

22
<PAGE>

4. APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors recommends that proxies be voted in favor of the
ratification of the appointment of Ernst & Young LLP, certified public
accountants, as independent auditors for the fiscal year ending September 26,
1998.

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting where they will have an opportunity to make a statement if they
desire to do so and are expected to be available to answer appropriate
questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4.

OTHER BUSINESS

The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before such meeting,
the persons named in the enclosed form of proxy will have discretionary
authority to vote all proxies on such matters in accordance with their
judgment.

STOCKHOLDER PROPOSALS

Stockholder proposals intended to be presented at the Annual Meeting of
Stockholders in 1999 must be received by the Company no later than August 19,
1998 in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to the Annual Meeting of Stockholders in 1999. Any
such proposal must comply with Rule 14a-8 promulgated by the Securities and
Exchange Commission pursuant to the Act.

/s/ David M. Stigler

David M. Stigler
Secretary

December 18, 1997

23
<PAGE>

EXHIBIT A

The portion of the Plan that is proposed to be amended pursuant to Proposal
2 is indicated by brackets and the text of the proposed amendment is
underlined.

ADVO, INC

1986 EMPLOYEE RESTRICTED STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 22, 1998

1. PURPOSE

The purpose of this Employee Restricted Stock Plan is to advance the
interests of the Company and its Subsidiaries by encouraging and enabling the
acquisition of a larger personal proprietary interest in the Company by
officers and employees of the Company and its Subsidiaries upon whose judgment
and keen interest the Company and its Subsidiaries are largely dependent for
the successful conduct of their operations. It is anticipated that the
acquisition of such proprietary interest in the Company will stimulate the
efforts of such officers and employees on behalf of the Company and its
Subsidiaries and strengthen their desire to remain with the Company and its
Subsidiaries. It is also expected that the opportunity to acquire such a
proprietary interest will enable the Company and its Subsidiaries to attract
desirable personnel.

2. DEFINITIONS

When used in this Plan, unless the context otherwise requires:

(a) "Anniversary Date" shall mean the anniversary of the date Restricted
Shares are granted to a Participant.

(b) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted at any time.

(d) "Company" shall mean ADVO, Inc., a Delaware corporation.

(e) "Participant" shall mean any one who is eligible to receive Shares
and who has been issued Shares pursuant to the Plan, as specified in
Section 4 hereof.

(f) "Plan" shall mean this 1986 Employee Restricted Stock Plan of ADVO,
Inc., as adopted by the Board of Directors at its meeting held on September
23, 1986, as such Plan from time to time may be amended.

(g) "President" shall mean the person who at the time shall be the
President of the Company.

(h) "Restricted Period" shall mean the period of time during which
Restrictions shall apply to a Restricted Share, as determined by the Board
of Directors or Committee pursuant to Section 8 hereof.

(i) "Restricted Shares" shall mean the Shares issued pursuant to Section
7 hereof.

(j) "Restrictions" shall mean the restrictions upon the sale, assignment,
transfer, pledge or other disposal or encumbrance of a Share as set forth
in Section 7 hereof.

A-1
<PAGE>

(k) "Share" shall mean a share of common stock of the Company, par value
$.01 per share.

(l) "Subsidiary" shall mean any corporation, in an unbroken chain of
corporations, fifty percent (50%) or more of which common stock is owned by
the Company, as such terms is defined herein.

3. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Board of Directors or in the
alternative, the Board of Directors may appoint a committee consisting of at
least two (2) members of the Board of Directors, each of whom is a "Non-
Employee Director" within the meaning of Rule 16b-3(d)(3) under the Securities
Exchange Act of 1934. The Board of Directors or Committee, if any, shall have
the authority to exercise all of the responsibilities and duties under this
plan. Each member of the Committee shall hold office until the next regular
annual meeting of the Board of Directors following his designation and until
his successor is designated as a member of the Committee. Any vacancy in the
Committee may be filled by a resolution adopted by a majority of the full
Board of Directors. Any member of the Committee may be removed at any time,
with or without cause, by resolution adopted by a majority of the full Board
of Directors. A member of the Committee may resign from the Committee at any
time by giving such written notice to the President or Secretary of the
Company and, unless otherwise specified therein, such resignation shall take
effect upon receipt thereof. The acceptance of such resignation shall not be
necessary to make it effective. The Board of Directors or Committee, if any,
shall establish such rules and procedures as are necessary or advisable to
administer the Plan.

4. PARTICIPANTS

Except as hereinafter provided, all employees of the Company or of any
Subsidiary shall be eligible to receive Shares pursuant to the Plan. The
Participants to whom Shares are issued under this Plan and the number of
Shares issued to each Participant shall be determined by the Board of
Directors or Committee, if any, in its sole discretion, subject, however to
the terms and conditions of this Plan.

Shares may be issued pursuant to the Plan to employees who are also
directors of the Company, but not to directors who are not also employees.

Nothing contained in this Plan shall be construed to prohibit the issue of
Shares at different times to the same employee.

5. SHARES

The Board of Directors or Committee, if any, may, but shall not be required
to, issue, in accordance with this Plan, an aggregate of up to 2,567,500
---------
[2,467,500] Shares, which may be either treasury Shares or authorized but
unissued Shares. If any Restricted Shares shall revert to the Company pursuant
to Section 8 hereof, the Board of Directors or Committee, if any, may again
issue such Shares pursuant to the Plan.

6. ISSUE OF SHARES

From time to time the Board of Directors or Committee, if any, may, in its
sole discretion, issue to a Participant the right to receive the number of
shares specified by the Board of Directors or Committee, in its sole
discretion. The Participant shall have thirty (30) business days from the date
of such issue to pay to the Company, in cash or by check, an amount equal to
the par value of a Share

A-2
<PAGE>

multiplied by the number of Shares which have been issued to him by the Board
of Directors or Committee. Subject to the provisions of Section 7 and Section
12, upon receipt of such payment the Company shall issue to such Participant a
certificate representing such Shares. In the event such a Participant fails to
make payment to the Company for such Shares within thirty (30) business days
after the issue thereof, the issue of the Shares may lapse and the Board of
Directors or Committee may again issue such Shares to Participants pursuant to
the Plan.

7. RESTRICTED SHARES

If the Board of Directors or Committee so provides at the time that Shares
are issued to a Participant, such Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered until the
expiration of the period of time or the satisfaction of the conditions
specified by the Board of Directors or Committee at the time the Shares are
issued (such Shares being hereinafter referred to as "Restricted Shares"). The
terms and conditions of the issue of such Restricted Shares and the
Restrictions applicable to such Shares shall be set forth, in writing, in an
agreement signed by the Participant and, on behalf of the Company, by the
President or a Vice President of the Company (the "Restricted Shares
Agreement"). If the Board of Directors or Committee does not provide for any
Restrictions with respect to a Participant's Shares at the time the Shares are
issued, such Shares shall not be subject to forfeiture to the Company and
shall be freely transferable by the Participant.

8. FORFEITURE OF RESTRICTED SHARES

If a Participant who has been issued Restricted Shares thereafter during the
Restricted Period ceases to be eligible to receive Shares under the Plan or if
any of the conditions imposed upon the issue of such Shares by the Board of
Directors or Committee pursuant to Section 7 are not satisfied during the time
prescribed by the Board of Directors or Committee, the Restricted Shares held
by such Participant which are subject to such Restrictions shall automatically
revert to and become the property of the Company. However, in the event of a
Participant's death or the termination of his eligibility to receive Shares
under the Plan is due to his disability (the existence of which disability
shall be determined by the Board of Directors or Committee, in its sole
discretion), all restrictions on the Restricted Shares held by such
Participant shall immediately cease. In the sole discretion of the Board of
Directors or Committee, the Restrictions upon the Shares shall cease in whole
or in part and upon such conditions as the Board of Directors or Committee may
impose and such Restricted Shares may be retained by the Participant
irrespective of his continued eligibility to receive Shares under the Plan. In
addition, except in the case of an Exempt Reorganization, in the event of:

(a) a reorganization, merger or consolidation of the Company in which the
Company is not the surviving or resulting corporation or pursuant to which
the Common Stock would be converted into cash, securities or other property
(other than a merger or other business combination involving the Company in
which the holders of the Common Stock of the Company immediately prior to
the merger have the same proportionate ownership of the Common Stock of the
surviving corporation immediately after the merger),

(b) the approval by the stockholders of the Company of any plan or
proposal for the dissolution or liquidation of the Company, or

(c) a sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all of the
Company's consolidated assets, then the Restrictions upon the Shares shall
cease in whole and such Restricted Shares may be retained by the
Participant

A-3
<PAGE>

irrespective of his continued eligibility to receive Shares under the Plan
or on a date fixed by the Board of Directors prior to the effective time of
such reorganization, merger, consolidation, dissolution, liquidation, sale,
lease, exchange or transfer. For purposes of the preceding sentence:

(1) "Exempt Reorganization" means a Reorganization in which either
(x) the election or appointment of the individuals who immediately
after the effective time of the Reorganization constitute the directors
of the Continuing Corporation was approved by a vote of at least two-
thirds of the individuals constituting the directors of the Company
immediately prior to such effective time (each such individual in
office immediately prior to the effective time, a "Prior Director") or
(y) a majority of the directors of the Continuing Corporation
immediately after such effective time were Prior Directors.

(2) "Reorganization" means:

(A) a reorganization, merger or consolidation of the Company in
which the Company is not the surviving or resulting corporation
pursuant to which the Common Stock would be converted into
securities or other property or

(B) a reorganization of the Company into a holding company
structure, including such a reorganization involving a business
combination with another corporation or entity, or

(C) a sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of
the Company's consolidated assets or a dissolution or liquidation of
the Company, in each case pursuant to which the holders of the
Common Stock receive securities of another entity.

(3) "Continuing Corporation" means the entity surviving a
Reorganization.

(4) "Prior Director" shall be deemed to include any individual
proposed by Warburg, Pincus Capital Partners, L.P. ("Warburg") as a
substitute for a Prior Director and elected a director of the
Continuing Corporation.

In addition, subject to the foregoing, the Restrictions upon the Shares
shall cease in whole and such Restricted Shares may be retained by the
Participant irrespective of his continued eligibility to receive Shares under
the Plan, if (A) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than
Warburg and its affiliates, shall become the beneficial owner (within the
meaning of Rule 13d-3 under such Act) of 30% or more of the Company's Common
Stock or (B) at any time Eligible Director shall cease for any reason to
constitute a majority of the entire Board of Directors of the Company. An
"Eligible Director" shall mean (i) any individual who was a director at
September 27, 1990 (a "1990 Director"), (ii) any individual proposed by
Warburg and elected as a director in place of a 1990 director, (iii) any
director elected by, or nominated for election by the Company's stockholders
by, the vote of at least two-thirds of the directors who at the time of such
vote were Eligible Directors.

In the event that any Restricted Shares shall revert to and become the
property of the Company pursuant to this Section 8, any stock certificate or
certificates representing such Restricted Shares shall be returned to the
Company. Upon the reversion of such Shares, the Company shall repay to such
Participant or (in the case of his death) the representative of such
Participant's estate the full amount paid to the Company for such Shares.

A-4
<PAGE>

9. RIGHT TO VOTE AND TO RECEIVE DIVIDENDS ON RESTRICTED SHARES

Each holder of Restricted Shares shall be the beneficial and record owner of
such Restricted Shares and shall have full voting rights with respect thereto.
During the Restricted Period, all dividends and distributions paid upon any
Restricted Share shall be paid to the Company for the account of the holder of
such Restricted Share. The Board of Directors may in its sole discretion
permit reinvestment of cash dividends paid on any Restricted Shares in Shares
on behalf of the participant. Such Shares shall be treated as subject to the
same term and restrictions as the Restricted Shares upon which the reinvested
cash dividend was paid, including cash dividend reinvestment. Such dividends
and Shares purchased through the reinvestment of cash dividends and
distributions shall be retained by the Company if for any reason the
Restricted Shares upon which such dividends and distributions were paid and
Shares purchased through the reinvestment of cash dividends reverts to the
Company. Upon the expiration of the Restricted Period, all dividends and
distributions made on such Restricted Share and Shares purchased through the
reinvestment of cash dividends and retained by the Company shall be paid to
the holder.

10. ADJUSTMENT OF SHARES

If, during the Restricted Period, there shall be declared and paid a stock
dividend upon the Shares or if the Shares shall be split up, converted,
exchanged, reclassified, or in any way substituted for, the holder of a
Restricted Share shall receive, subject to the provisions of Section 9, the
same securities or other property as are received by the other holders of the
Company's Shares pursuant to such stock dividend, split-up, conversion,
exchange, reclassification or substitution. If any such event should occur,
the number of shares which remain to be issued, or which may be reissued,
under the Plan shall be adjusted by the Committee in a similar manner.

11. NO RIGHT TO CONTINUED EMPLOYMENT

Nothing contained herein or in the Restricted Shares Agreement shall be
construed to confer on any employee any right to continue in the employ of the
Company or any Subsidiary or confer on any officer of the Company or
Subsidiary any right to remain as such, or derogate from any right of the
Company and any Subsidiary to retire, request the resignation or discharge
such individual at any time, with or without cause.

12. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES LAWS

Each stock certificate representing Restricted Shares shall contain an
appropriate legend referring to the Plan and the Restrictions upon such
Restricted Shares. Simultaneously with delivery of each stock certificate for
Restricted Shares, the Company may cause a stop transfer order with respect to
such certificate to be placed with the transfer agent of the Shares. Before
issuing a certificate with respect to any Shares, the Company may: (i) require
the holder to give satisfactory assurances that the Shares are being purchased
for investment and not with a view to resale or distribution, and will not be
transferred in violation of applicable securities laws; (ii) restrict the
transferability of such Shares and require a legend to be endorsed on the
certificates representing the Shares; and (iii) condition the issuance and
delivery of Shares upon the listing, registration or qualification of such
Shares upon a securities exchange or under applicable securities laws.

A-5
<PAGE>

13. INCOME TAX WITHHOLDING

If the Company or a Subsidiary shall be required to withhold any amounts by
reason of any federal, state or local tax rules or regulations in respect to
the issue of Shares pursuant to the Plan, or when the Restrictions on such
Shares cease, the Company or the Subsidiary shall be entitled to deduct and
withhold such amounts from any cash payments to be made to the Participant. In
any event, the Participant shall make available to the Company or Subsidiary,
promptly when requested by the Company or such Subsidiary, sufficient funds to
meet the requirements of such withholding and the Company or Subsidiary shall
be entitled to take and authorize such steps as it may deem advisable in order
to have such funds made available to the Company or Subsidiary out of any
funds or property due or to become due to the Participant.

The Participant may satisfy the obligation to pay such withholding tax
amounts, in whole or in part, in connection with the lapse of Restrictions on
Shares, by electing to have the Company withhold Shares of Common Stock on
which Restrictions have lapsed or by delivering Shares then owned by the
Participant. The value of such Shares shall be the fair market value of the
Shares on the date the amount of such withholding tax is to be determined.

The fair market value of a share on a specified date shall mean the closing
price for a Share on the stock exchange, if any, on which the Shares are
primarily traded, but if no Shares were traded on such date, then on the last
previous date on which a Share was so traded, or if Shares are not primarily
traded on a stock exchange, the average of the high and low sales prices at
which one share is traded on the over the counter market, as reported on the
National Association of Securities Dealers Automated Quotation System, or, if
none of the above is applicable, the value of a Share as established by the
Board of Directors for such date using any reasonable method of valuation.

14. ADMINISTRATION AND AMENDMENT OF THE PLAN

Except as hereinafter provided, the Board of Directors or the Committee, if
any, may at any time withdraw or from time to time amend the Plan as it
relates to, and the terms and conditions of, any Shares not theretofore
issued, and the Board of Directors or Committee, with the consent of each
adversely affected holder of any Restricted Shares, may at any time withdraw
or from time to time amend the Plan as it relates to and the terms and
conditions of, any Restricted Shares issued pursuant to the Plan.

Determinations of the Board of Directors or Committee as to any questions
which may arise with respect to the interpretation of the provisions of the
Plan or any issue of Shares shall be final. The Board of Directors or
Committee may authorize and establish such rules, regulations and revisions
thereof, not inconsistent with the provisions of the Plan, as it may deem
advisable to make the Plan and any Shares issued thereunder effective or
provide for their administration, and may take such other action with regard
to the Plan and any Shares issued thereunder, as it shall deem desirable to
effectuate their purpose.

15. FINAL ISSUANCE DATE

No Shares shall be issued under the Plan after September 22, 2006.

A-6
<PAGE>

EXHIBIT B

The portions of the 1988 Plan as proposed to be amended pursuant to Proposal
3 is indicated by brackets and the text of the proposed amendment is
underlined.

ADVO, INC.

1988 NON-QUALIFIED STOCK OPTION PLAN AND 1993 STOCK OPTION SUBPLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 22, 1998

1. PURPOSES

The purposes of this Stock Option Plan (the "Plan") are (a) to secure for
ADVO, Inc. (the "Company") and its stockholders the benefits arising from
officers and other key employees of the Company, and any parent or subsidiary
of the Company, who will be responsible for its future growth and continued
success, having an ownership interest in the Company and (b) to enable the
Company to attract, retain and motivate top caliber officers and key employees
by providing them with competitive long term equity opportunities under the
terms and conditions and in the manner contemplated by this Plan.

2. ADMINISTRATION

The Plan shall be administered by the Board of Directors. In the
alternative, the Board may appoint a Stock Option Committee (the "Committee"),
consisting of not less than two members of the Board of Directors appointed by
the Board of Directors, who may but are not required to be members of the
Board of Directors. Any Committee so appointed shall have the sole authority
to exercise all of the responsibilities and duties of the Board of Directors
under this Plan, except for the appointment, removal or replacement of members
of the Committee and except as otherwise provided herein. A member of the
Committee may only serve on the Committee if he or she is, at the time of
taking any discretionary action relating to an optionee who is then subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Exchange Act (as then applicable to the Plan). Each member of the Committee
shall hold office until his or her successor is designated as a member of the
Committee by the Board of Directors. Any vacancy in the Committee may be
filled by a resolution adopted by a majority of the Board of Directors. Any
member of the Committee may be removed at any time, with or without cause, by
a resolution adopted by a majority of the Board of Directors. Any action of
the Committee with respect to the administration of the Plan shall be taken by
majority vote. In the event the Board of Directors appoints a Committee to
administer the Plan pursuant to this Section 2, then, except to the extent
specified in this paragraph and in Sections 7 and 16 hereof, for purposes of
administering the Plan, the term "Committee" shall be substituted for the term
"Board of Directors" wherever it appears hereinafter. Whether or not the Board
of Directors has appointed a Committee to administer the Plan, the Board of
Directors or the Committee may establish such subplans under the Plan as it
may deem desirable in order to qualify options thereunder as "performance-
based compensation" as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), or for any other purpose, provided that
stockholder approval of any such subplan shall be obtained if and to the
extent deemed necessary or advisable by the Board of Directors.

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Subject to the express provisions of the Plan, the Board of Directors shall
have authority to (i) construe and interpret the Plan, (ii) prescribe, amend
and rescind rules and regulations relating to the Plan, (iii) determine the
individuals to whom, and the time or times at which options shall be granted,
the number of shares to be subject to each option, the option price, and the
duration of each option, and (iv) make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Board of Directors shall be binding and conclusive
on all participants in the Plan and on their legal representatives and
beneficiaries.

3. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN

Subject to adjustment as provided in Section 14 hereof, the shares of stock
to be offered under the Plan may be authorized but unissued shares of the
Company's Common Stock, $.01 par value, or issued shares which have been
reacquired. The aggregate amount of Common Stock to be delivered upon exercise
of all options granted under the Plan shall not exceed 5,200,000 [4,800,000]
---------
shares. If any option granted hereunder shall expire or terminate for any
reason without having been exercised in full, or if any option exercise is
settled in cash under Section 9, the unpurchased shares subject thereto shall
again be available for the purposes of this Plan. If, in connection with any
option granted hereunder, any shares of Common Stock are tendered to the
Company in payment of the option price under Section 9 or are surrendered to
or withheld by the Company in satisfaction of tax withholding obligations
under Section 17 hereof, a number of shares equal to the number of shares
tendered, surrendered, or withheld shall again be available for option grants
under this Plan.

4. NON-QUALIFIED OPTIONS

Options granted under the Plan shall not be incentive stock options for
purposes of Section 422 of the Code.

5. ELIGIBILITY AND PARTICIPATION

Officers and other key employees of the Company or of any parent or
subsidiary of the Company, whether or not directors of the Company, shall be
eligible to participate in the Plan. Directors who are not also employees are
not eligible to participate in the Plan. An individual who has been granted an
option may, if he is otherwise eligible, be granted additional options.
Nothing in the Plan shall be deemed to give any employee any right to
participate in this Plan or to receive an option hereunder.

6. OPTION PRICE

The purchase price per share of Common Stock (the "option price") covered by
each option shall be determined by the Committee, but shall not be less than
the greater of the par value of the Common Stock or the fair market value of
the Common Stock at the time such option is granted (except as provided in
Section 8 with respect to options substituted for options to purchase stock of
other issuers). The fair market value of the Common Stock on a specified date
shall mean the closing price for a share of the Common Stock on the stock
exchange, if any, on which the Common Stock is primarily traded, but if no
shares of Common Stock were traded on such date, then on the last previous
date on which a share was so traded, or, if shares of Common Stock are not
primarily traded on a stock exchange, the average of the high and low sales
prices at which one share of Common Stock is traded on the over-the-counter
market, as reported on the National Association of Securities Dealers
Automated Quotation System, or, if none of the above is applicable, the value
of a share of Common Stock as established by the Board of Directors for such
date using any reasonable method of valuation.

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7. DURATION AND TIME OF EXERCISE OF OPTIONS

Each option and all rights thereunder shall expire on such date as the Board
of Directors may determine, but in no event later than ten (10) years from the
date on which the option is granted, and shall be subject to earlier
termination as provided herein.

Each option shall be exercisable in such installments during the period
prior to its expiration date as the Board of Directors shall determine, or
may, if so determined by the Board of Directors, be exercisable either in
whole or in part at any time prior to its expiration date. If the option is
made exercisable in installments and the optionee shall not in any given
installment period purchase all of the shares which the optionee is entitled
to purchase in such installment period, then the optionee shall have the right
cumulatively thereafter to purchase any shares not so purchased and such right
shall continue until the expiration date or sooner termination of such option.
In addition to vesting based upon future service, the Board of Directors may
condition the right to exercise options upon the achievement of performance
objectives or other events.

Except in the case of an Exempt Reorganization, in the event of:

(b) the approval by the stockholders of the Company of any plan or
proposal for the dissolution or liquidation of the Company, or

(c) a sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all of the
Company's consolidated assets, then all or any part of the remaining
unexercised options granted to any person shall be exercisable in full,
whether or not then exercisable, during a period commencing on a date fixed
by the Board of Directors prior to the effective time of such
reorganization, merger, consolidation, dissolution, liquidation, sale,
lease, exchange or transfer and continuing to the time which is immediately
prior to such effective time (and upon such effective time any unexercised
options shall expire). For purposes of the preceding sentence:

(2) "Reorganization" means:

(A) a reorganization, merger or consolidation of the Company in
which the Company is not the surviving or resulting corporation or
pursuant to which the Common Stock would be converted into
securities or other property or

(B) a reorganization of the Company into a holding company
structure, including such a reorganization involving a business
combination with another corporation or entity, or

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<PAGE>

(3) "Continuing Corporation" means the entity surviving a
Reorganization.

In addition, subject to the foregoing, all or any part of any remaining
unexercised options may be exercised in full whether or not then exercisable,
if (A) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act), other than Warburg and its affiliates, shall become the
beneficial owner (within the meaning of Rule 13d-3 under such Act) of 30% or
more of the Company's Common Stock or (B) at any time Eligible Directors shall
cease for any reason to constitute a majority of the entire Board of Directors
of the Company. An "Eligible Director" shall mean (i) any individual who was a
director at September 27, 1990 (a "1990 Director"), (ii) any individual
proposed by Warburg and elected as a director in place of a 1990 Director, or
(iii) any director elected by, or nominated for election by the Company's
stockholders by, the vote of at least two-thirds of the directors who at the
time of such vote were Eligible Directors. For purposes of clause (B) of this
paragraph the term "Committee" may not be substituted for the term "Board of
Directors".

The Board of Directors may, at any time, in its absolute discretion,
accelerate the time at which an outstanding option can be exercised, in whole
or in part.

8. REPLACEMENT AND SUBSTITUTE OPTIONS: RELOAD OPTIONS

The Board of Directors may, in its absolute discretion, grant to optionees,
in exchange for the surrender and cancellation of their outstanding options to
purchase the Company's Common Stock, new options having option prices lower
than the option price of the options so surrendered and cancelled and
containing such other terms and conditions as the Board of Directors may deem
appropriate, provided that such new options shall comply with all terms and
conditions of the Plan. Options may be granted under the Plan in substitution
for options to purchase stock of other issuers held by persons who become
employees of the Company or any parent or subsidiary of the Company, in which
case the option price per share may be adjusted downward from the minimum
option price specified in Section 6 hereof to reflect the value, as determined
by the Board of Directors, of any options surrendered or forfeited by such
persons.

The Board of Directors may grant "reload" options with respect to options
granted hereunder (the "original options"). A "reload" option shall be an
option, granted on the date of exercise of an original option, to purchase a
number of shares which may be equal to the number of shares surrendered to pay
the exercise price of the original option, the number of shares surrendered or
withheld to pay tax withholding relating to the exercise of the original
option, or such other number of shares not to exceed the total number of
shares with respect to which the original option is exercised. The expiration
date of a "reload" option shall be the same as that of the original option,
unless otherwise determined by the Board of Directors. "Reload" options may be
authorized with respect to options that are themselves granted as "reload"
options. The terms of "reload" options shall meet all requirements applicable
to options granted under the Plan, including the requirements of Section 6. In
connection with the grant of

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<PAGE>

a reload option, the Board of Directors may require that a specified number of
shares acquired upon exercise of the original option or prior "reload" option
shall be non-transferable for a period of time that the Board of Directors may
specify.

9. EXERCISE OF OPTIONS

Options shall be exercised by the delivery of written notice to the officer
of the Company designated by the Board of Directors setting forth the number
of shares with respect to which the option is to be exercised, and specifying
the address to which the certificates for such shares are to be mailed.

The option price of an option granted hereunder shall be paid in full at the
time of exercise (i) in cash by United States currency, certified check or
money order, (ii) by tendering to the Company shares of Stock having a fair
market value on the date of exercise equal to the option price, (iii) by a
full recourse promissory note for a term of up to two years for the lesser of
up to 90% of the option price or that portion of the option price which
exceeds par value of the shares at an interest rate equal to or greater than
the applicable Federal rate determined under Section 1274(d) of the Code, or
(iv) a combination of cash, Stock valued at fair market value and such
promissory note. As promptly as practicable after receipt of such written
notification of the exercise of an option and payment, the Company shall make
delivery to the optionee or as instructed by the optionee of certificates for
the number of transferable shares with respect to which such option has been
so exercised, issued in the optionee's name or as otherwise instructed by the
optionee.

The Board of Directors may, in its discretion, in lieu of delivery of any
shares upon option exercise, make a cash payment in an amount equal to the
difference between the fair market value of the Common Stock on the date of
exercise and the option price per share multiplied by the number of shares for
which the option is being exercised for which the Board of Directors has
determined to pay cash.

10. NON-TRANSFERABILITY OF OPTIONS

The Board may determine in connection with any grant of an option or other
right which may constitute a derivative security granted under the Plan
whether such option or right shall, by its terms, be nontransferable by the
optionee, either voluntarily or by operation of law, otherwise than by will or
the laws of descent and distribution, and whether such option or right shall
be exercisable during the optionee's lifetime only by the optionee, regardless
of any community property interest therein of the spouse of the optionee, or
such spouse's successors in interest.

11. NON-COMPETITION AGREEMENT; CONTINUANCE OF EMPLOYMENT

Each person to whom an option is granted under the Plan, who has not already
done so at the time of such grant, must agree in writing as a condition to the
granting of the option not to enter into a business in direct competition with
the Company for one year after the termination of his employment with the
Company. Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any optionee any right with respect to the continuation of
employment by the Company or any parent or subsidiary of the Company, or
interfere in any way with the right of the Company or of any parent or
subsidiary of the Company (subject to the terms of any separate employment
agreement to the contrary) at any time to terminate such employment or to
increase or decrease the compensation of the optionee from the rate in
existence at the time of the granting of an option.

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<PAGE>

12. TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH OF OPTIONEE

Except as may be otherwise expressly provided herein, options shall
terminate, unless exercised, three (3) months after the date of the severance
of the employment relationship between the optionee and the Company, or a
parent or subsidiary of the Company; provided however, that all options held
by an optionee shall terminate immediately upon receipt by an optionee of the
notice of termination if the optionee is terminated for deliberate, willful or
gross misconduct as determined by the Company. Absence on leave approved by
the Board of Directors shall not be considered the severance of employment.

If, before the date of expiration of the option, the optionee shall retire
from the employ of the Company, or a parent or subsidiary of the Company, for
reasons of age pursuant to a defined benefit or defined contribution plan of
the Company, or a parent or subsidiary of the Company, or for reasons of
disability as defined in Section 105(d)(4) of the Code, the option shall
terminate on the earlier of such date of expiration or one year after the date
of such retirement. In the event of such retirement, the optionee shall have
the right prior to the termination of such option to exercise the option to
the extent to which the optionee was entitled to exercise such option
immediately prior to such retirement provided that in the event of retirement
due to disability all options then held by the optionee shall become
immediately exercisable. If the retired optionee shall die before the
termination of the option, the optionee's executors, administrators or any
person or persons to whom the option may be transferred by will or by the laws
of descent and distribution shall have the right, at any time within the
earlier of the date of expiration of the option or the one-year period
beginning on the date of the optionee's death, to exercise the option to the
same extent as said retired optionee.

13. PRIVILEGE OF STOCK OWNERSHIP

No person entitled to exercise any option granted under the Plan shall have
any of the rights or privileges of a stockholder of the Company in respect of
any shares of stock issuable upon exercise of such option until such option
shall have been validly exercised and the option price paid. The Company shall
have no obligation to issue or deliver shares upon exercise of any option
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act of 1933, any applicable
listing requirements of any national securities exchange on which stock of the
same class is then listed, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery, shall
have been fully complied with.

14. ADJUSTMENTS

If the outstanding shares of Common Stock of the Company are increased,
decreased, changed into, or exchanged for a different number or kind of shares
or securities of the Company as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse
stock split, an appropriate and proportionate adjustment shall be made in the
maximum number and kind of shares as

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<PAGE>

to which options may be granted under this Plan. A corresponding adjustment
changing the number or kind of shares allocated to unexercised options or
portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment in the outstanding options shall
be made without change in the aggregate purchase price applicable to the
unexercised portion of the option but with a corresponding adjustment in the
price for each share covered by the option.

In addition, in the event the Company declares and pays an extraordinary
cash dividend or distribution, repurchases a significant portion of its stock
or engages in any other action having an effect similar to a recapitalization,
the Board of Directors or Committee may make such substitutions or adjustments
as it may determine to be appropriate in its sole discretion to preserve the
economic value of the options granted under the Plan.

Adjustments under this Section shall be made by the Board of Directors or
Committee, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares
of stock shall be issued under the Plan for any such adjustment.

15. WRITTEN AGREEMENT

Each option granted hereunder shall be embodied in a written Option
Agreement which shall be subject to the terms and conditions prescribed
herein, and shall be signed by the optionee and by an officer of the Company
for and on behalf of the Company. An Option Agreement shall contain such other
provisions as the Board of Directors in its discretion shall deem advisable so
long as the same are not contrary or inconsistent with the terms and
provisions of the Plan.

16. AMENDMENT AND TERMINATION OF PLAN

The Board of Directors of the Company may at any time amend, suspend or
terminate the Plan, subject to applicable law. For the purposes of this
Section, the term "Committee" may not be substituted for the term "Board of
Directors."

No amendment, suspension or termination of the Plan shall, without the
consent of the optionee, materially impair any rights of such optionee under
any outstanding Option Agreement.

17. WITHHOLDING

Any person exercising an option shall be required to pay in cash to the
Company the amount of any taxes the Company is required by law to withhold
with respect to the exercise of such option. Such payment shall be due on the
date the Company is required by law to withhold such taxes. Such payment may
also be made at the election of the optionee by the surrender of shares of
Common Stock then owned by the optionee, or the withholding of shares of
Common Stock otherwise to be issued to the optionee on exercise, in an amount
that would satisfy the withholding amount due. The value of such shares
withheld or delivered shall be equal to the fair market value of such shares
on the date of exercise. In the event that such payment is not made when due,
the Company shall have the right to deduct, to the extent permitted by law,
from any payment of any kind otherwise due to such person from the Company,
all or part of the amount required to be withheld.

18. EFFECTIVE DATE OF PLAN

This Plan shall become effective on January 14, 1988, subject to its
approval by the holders of a majority of the voting power of the outstanding
shares of Common Stock of the Company and the

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<PAGE>

Company's Series A Convertible Preferred Stock, voting together and without
regard to classes, present in person or by proxy and entitled to vote at the
1988 Annual Meeting of Shareholders. No option shall be granted pursuant to
the Plan after January 31, 2008 [1998].
----

19. CONSTRUCTION

The Plan and options granted hereunder shall be governed by and construed in
accordance with the laws of the State of Delaware and in accordance with such
Federal laws as may be applicable.

It is the intent of the Company that the Plan shall comply in all respects
with applicable provisions of Rule 16b-3 under the Exchange Act, so that any
grant of options to or other transaction by an optionee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act shall not result
in short-swing profits liability under Section 16(b) (except for any
transaction exempted under alternative Exchange Act rules or intended by such
optionee to be a non-exempt transaction). Accordingly, if any provision of
this Plan or any agreement relating to an option does not comply with such
requirements of Rule 16b-3 as then applicable to any such transaction so that
such an optionee would be subject to Section 16(b) liability, such provision
shall be construed or deemed amended to the extent necessary to conform to
such requirements, and the optionee shall be deemed to have consented to such
construction or amendment.

1993 STOCK OPTION SUBPLAN

1. PURPOSE OF SUBPLAN

This 1993 Stock Option Subplan (the "Subplan") is implemented under the 1988
Non-Qualified Stock Option Plan (the "Plan") of ADVO, Inc. (the "Company") in
order to promote the purposes of the Plan while ensuring that, with respect to
options granted hereunder to persons who constitute "covered employees" within
the meaning of Section 162(m)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company will be entitled to fully deduct for tax
purposes any remuneration to such covered employees arising under the Plan.
Capitalized terms used in the Subplan but not defined herein shall have the
same meanings as defined in the Plan.

2. ADMINISTRATION

The Subplan shall be administered by the Committee or, if the Committee
should at any time not consist solely of "outside directors" within the
meaning of Section 162(m)(4)(C)(i) of the Code, by a subcommittee of the
Committee consisting of all members of the Committee who are such "outside
directors;" provided, however, that, if such subcommittee would not have at
least two members, the Board of Directors shall designate additional directors
who are both such "outside directors" and Non-Employee Director within the
meaning of Rule 16b-3 under the Exchange Act (as then applicable to the
Subplan) to serve on such subcommittee, so that the subcommittee has at least
two members. References in the Plan and the Subplan to the "Committee" shall
be deemed to mean such subcommittee, operating pursuant to delegated
authority, at any time it is administering the Subplan. The Committee shall
have all authority under the Subplan as it has under the Plan, except that
terms of options granted hereunder may not be inconsistent, with the express
terms set forth in the Subplan. Any reference to the Board of Directors in a
Plan provision applicable to the Subplan shall mean the Committee.

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3. STOCK SUBJECT TO SUBPLAN; LIMITATIONS ON INDIVIDUAL GRANTS

Subject to adjustment as provided in Section 14 of the Plan, the total
number of shares of the Company's common stock, $.01 par value (the "Stock"),
that may be delivered upon exercise of all options granted under the Subplan
shall be 5,200,000 [4,800,000]. The shares of Stock reserved and available for
---------
issuance hereunder represent an allocation of the shares reserved and
available for issuance under the Plan. Accordingly, no option may be granted
hereunder if sufficient shares for such grants are not then available under
both the Subplan and the Plan, and grants of options may be made under the
Plan even though the effecting of such grants will be to reduce the number of
shares remaining available for issuance hereunder. Likewise, shares issued
hereunder shall be counted against the number of shares reserved and available
under the Plan. Shares subject to an option that is forfeited or otherwise
terminated without a distribution of shares will again be available for grants
of options under the Subplan and the Plan (to the extent specified in the
Plan). Except as modified by this Section 3, the provisions of Section 3 of
the Plan shall apply equally to the Subplan.

Subject to adjustment as described below, the total number of shares of
Stock that may be subject to options that any one person may receive under the
Subplan shall not exceed 750,000 during any calendar year under the Subplan.
The number of shares set forth in the preceding sentence shall be adjusted
proportionately with any adjustment (made in accordance with Section 14 of the
Plan) to the number of shares reserved and available for issuance under the
Plan.

4. ELIGIBILITY

Any person eligible to be granted an option under the Plan will likewise be
eligible for option grants under the Subplan.

5. SPECIFIC TERMS OF OPTION GRANTS

(a) Option Grants. The Committee is authorized to grant non-qualified stock
options to persons eligible to participate hereunder ("Optionees"), including
grants of "reload" options to the extent specified in Section 8 of the Plan,
on the terms and conditions set forth in this Section 5.

(b) Option Price. The option price per share of Stock purchasable under an
option granted hereunder shall be the greatest of (i) 100% of the fair market
value of a share on the date of grant of such option, determined by the
Committee in accordance with Section 6 of the Plan, (ii) 100% of the "fair
market value" of Stock determined in such manner as is necessary to qualify
the option as "performance-based compensation" under Section 162(m)(4)(C) of
the Code, or (iii) par value of the Stock.

(c) Term. Options granted hereunder shall expire no later than ten years
-------------
after the date of grant by the Committee, unless earlier terminated under
Section 5(e) below; provided, however, that, unless otherwise determined by
the Committee, any option granted as a "reload" option hereunder shall expire
not later than the expiration date of the original option, the exercise of
which results in the grant of such "reload" option or options.

(d) Payment of the Option Price; Exercise Procedures. The option price of an
option granted hereunder shall be paid in full at the time of exercise (i) in
cash by United States currency, certified check or money order, (ii) by
tendering to the Company shares of Stock having a fair market value on the
date of exercise equal to the option price, (iii) by a full recourse
promissory note for a term of up to

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<PAGE>

two years for the lesser of up to 90% of the option price or that portion of
the option price which exceeds par value of the shares at an interest rate
equal to or greater than the applicable Federal rate under Section 1274(d) of
the Code, or (iv) a combination of cash, Stock valued at fair market value,
and such promissory note. Options granted hereunder shall be exercised by the
delivery of written notice to the officer of the Company designated under
Section 9 of the Plan, setting forth the number of shares with respect to
which the option is to be exercised, and specifying the address to which the
certificates for such shares are to be mailed. As promptly as practicable
after receipt of such written notification of the exercise of an option and
payment, the Company shall make delivery to the Optionee or as instructed by
the Optionee of certificates for the number of transferable shares with
respect to which such option has been so exercised, issued in the Optionee's
name or as otherwise instructed by the Optionee.

(e) Vesting and Termination of Employment. Any option (except options
--------------
granted pursuant to Section 8 of the Plan) granted hereunder shall be
- -----------------------------------------
exercisable only as follows (in addition to any condition on exercisability
imposed under Section 5(f) hereof):

(i) on or after the first anniversary of the date of grant, the option
may be exercised for up to one-fourth ( 1/4) of the shares subject thereto;

(ii) on or after the second anniversary of the date of grant, the option
may be exercised for up to one-half ( 1/2) of the shares subject thereto,
reduced by the amount of any shares with respect to which the option has
previously been exercised;

(iii) on or after the third anniversary of the date of grant, the option
may be exercised for up to three-fourths ( 3/4) of the shares subject
thereto, reduced by the amount of any shares with respect to which the
option has previously been exercised; and

(iv) on or after the fourth anniversary of the date of grant, the option
may be exercised for all shares subject thereto with respect to which the
option has not previously been exercised; provided, however, that options
shall be subject to all other terms and conditions, including without
limitation terms providing for accelerated exercisability, set forth in the
third and fourth Paragraphs of Section 7 of the Plan, but shall not be
subject to the discretionary acceleration of exercisability under the fifth
paragraph of Section 7 of the Plan; and provided further, that options may
be exercised only for whole shares. In the event the employment
relationship between the Optionee and the company, or a parent or
subsidiary of the Company, is severed, options granted hereunder shall be
exercisable only for such periods, and only to the extent, provided under
Section 12 of the Plan. At any time options granted hereunder cease to be
exercisable by operation of the provisions of Section 12 of the Plan, such
options shall terminate.

(f) Performance Conditions on Vesting. One-half of the options granted to
any Optionee during the 1994 calendar year shall, in addition to any vesting
requirements imposed under Section 5(e) hereof, not become exercisable until
the following performance condition has been satisfied: During any period of
180 consecutive trading days on which actual trades in the Stock are reported
on the composite tape for the New York Stock Exchange-listed securities, the
closing price of Stock on any 90 of such trading days equals or exceeds an
amount determined by the Committee with respect to such grant. Options subject
to the foregoing performance condition shall be subject to accelerated
exercisability in accordance with the terms of the third or fourth paragraph
of Section 7 of the Plan. The performance conditions contained herein may be
revised periodically by the Committee.

(g) Non-Transferability. The Committee may determine in connection with any
grant of an option or other right which may constitute a derivative security
granted under the Subplan whether

B-10
<PAGE>

such option or right shall, by its terms, be non-transferable by the Optionee,
either voluntarily or by operation of law, otherwise than by will or the laws
of descent and distribution, and whether such option or right shall be
exercisable during the Optionee's lifetime only by the Optionee, regardless of
any community property interest therein of the spouse of the Optionee, or such
spouse's successors in interest.

6. APPLICABLE PLAN PROVISIONS

The provisions of Sections 11 (including the requirement that the agreement
evidencing options contain a non-competition covenant), 13, 14, 15, 17, and 19
of the Plan shall apply equally to the Subplan.

7. EFFECTIVE DATE, TERMINATION, AND AMENDMENT OF SUBPLAN

This Subplan shall become effective on January 20, 1994; provided, however,
that the Subplan shall be approved by the vote of stockholders of the Company
sufficient to meet the applicable requirements of Section 162(m)(4)(C)(ii) of
the Code, the rules of the New York Stock Exchange, and any other applicable
law, regulation, or contractual provision imposing a stockholder approval
requirement; and provided further that such approval shall be obtained in such
manner as will satisfy such requirements (including a separate vote if
required to meet the requirements of Section 162(m)(4)(C)(ii)). The Subplan
shall terminate at such time as no shares remain available for issuance
pursuant to Section 3 and the Company has no further obligation with respect
to any previously granted option; provided, however, that no options may be
granted hereunder at any time after the Plan has been terminated. The Board of
Directors of the Company may at any time amend, suspend, or terminate the
Subplan; provided, however, that any such amendment shall be approved by vote
of stockholders of the Company if and to the extent required to meet the
requirements of any applicable law, regulation, or contractual provision,
including without limitation those specified in the first sentence of this
Section 7.

8. STATUS OF OPTIONS AS "PERFORMANCE-BASED COMPENSATION"; SAVINGS PROVISION

It is the intention of the Company that options granted under the Subplan
constitute "performance-based compensation" under Section 162(m)(4)(C) of the
Code, so that the Company will be allowed a full deduction for any
remuneration relating to such option without restriction under Section 162(m)
of the Code. Accordingly, any term, condition, or provision of the Subplan,
the Plan, or any agreement relating to an option granted hereunder that would
cause the Company, by operation of Section 162(m) of the Code, to not be able
to fully deduct remuneration relating to an option granted hereunder shall be
inapplicable to such option or shall be deemed modified and amended to the
extent necessary to preserve such full deductibility under Section 162(m). To
the extent that any provision of the Subplan, whether or not rendered
inapplicable or modified by operation of this Section 8, is inconsistent with
the express grant of rights or other provisions of the Plan, the Plan shall be
deemed amended insofar as such provisions would otherwise apply to the Subplan
and options awarded hereunder. As a condition to his or her receipt of options
hereunder, each Optionee shall be deemed to have consented to any modification
or amendment resulting from this Section 8 and shall be deemed to have waived
any rights under the Plan that may be inconsistent with the provisions of
Subplan.

B-11
<PAGE>

PROXY ADVO, INC. PROXY

ONE UNIVAC LANE, P.O. BOX 755, WINDSOR, CONNECTICUT 06095-0755

PROXY SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints David M. Stigler and Robert S. Hirst, and
each of them, with full power of substitution, the proxies of the undersigned to
vote all the shares of the Common Stock of ADVO, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on January 22,
1998 at the Sheraton Hotel at Bradley International Airport, Windsor Locks, CT,
commencing at 10.30 a.m. (EST) or any adjournment thereof.

In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED "FOR" PROPOSALS 2, 3
AND 4.

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the related Proxy Statement.

(PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE)

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<PAGE>

<TABLE>
<S> <C> <C>
The Board of Directors recommends that you vote PLEASE MARK YOUR CHOICE LIKE I Plan to ------
"FOR" Items 1, 2, 3 and 4. THIS X IN BLUE OR BLACK INK attend the
meeting ------

1. Election of Directors:
Nominees for election by holders of Common Stock: 2. Approval of an Amendment to the
FOR all nominees WITHHOLD Bruce Crawford, David Dyer, Jack W. Fritz, Robert 1986 Employee Restricted Stock Plan,
listed to the right AUTHORITY Kamerschen, Gary M. Mulloy, Howard H. Newman, as Amended, as described in the
(except as marked to vote for John R. Rockwell, John L. Vogelstein. Proxy Statement.
to the contrary) all nominees
listed to the INSTRUCTION: To withhold your vote for any
right nominee(s), write that nominee's name on the line
below.
FOR AGAINST ABSTAIN
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------ ------ ____________________________________________________ ------ ------ ------

3. Approval of an Amendment of the 4. Ratification of the appointment of Ernst & Young PLEASE MARK, SIGN, DATE AND RETURN
1988 Non-Qualified Stock Option LLP as the Company's Independent Auditors THE PROXY CARD PROMPTLY USING THE
Plan and 1993 Stock Option Subplan for fiscal 1998. ENCLOSED ENVELOPE.
as Amended, as described in the
Proxy Statement.

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
------ ------ ------ ------ ------ ------

------ ------ ------ ------ ------ ------

Signature__________________________________________Signature__________________________________________________Date_________________

Please sign exactly as name appears at left. When shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
</TABLE>

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