EXHIBIT 10
TRUST AGREEMENT
BETWEEN
--------------------------------------
ADVO, INC.
AND
FIDELITY MANAGEMENT TRUST COMPANY
--------------------------------------
ADVO, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
TRUST
DATED AS OF JANUARY 2, 2003
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 DEFINITIONS................................................................... 2
2 TRUST......................................................................... 3
(a) Establishment
(b) Grantor Trust
(c) Trust Assets
(d) Non-Assignment
3 PAYMENTS TO SPONSOR........................................................... 4
4 DISBURSEMENT.................................................................. 4
(a) Directions from Administrator
(b) Limitations
5 INVESTMENT OF TRUST........................................................... 4
(a) Selection of Investment Options
(b) Available Investment Options
(c) Investment Directions
(d) Mutual Funds
(e) Sponsor Stock
(f) Trustee Powers
6 RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED..................... 15
(a) General
(b) Accounts
(c) Inspection and Audit
(d) Effect of Plan Amendment
(e) Returns, Reports and Information
7 COMPENSATION AND EXPENSES..................................................... 16
8 DIRECTIONS AND INDEMNIFICATION................................................ 17
(a) Identity of Administrator
(b) Directions from Administrator
(c) Directions from Participants
(d) Indemnification
(e) Survival
9 RESIGNATION OR REMOVAL OF TRUSTEE AND TERMINATION............................. 18
(a) Resignation and Removal
(b) Termination
(c) Notice Period
(d) Transition Assistance
(e) Failure to Appoint Successor
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TABLE OF CONTENTS
(CONTINUED)
SECTION PAGE
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10 SUCCESSOR TRUSTEE............................................................. 19
(a) Appointment
(b) Acceptance
(c) Corporate Action
11 RESIGNATION, REMOVAL, AND TERMINATION NOTICES................................. 19
12 DURATION...................................................................... 20
13 INSOLVENCY OF SPONSOR......................................................... 20
14 AMENDMENT OR MODIFICATION..................................................... 21
15 ELECTRONIC SERVICES........................................................... 21
16 GENERAL....................................................................... 23
(a) Performance by Trustee, its Agent or Affiliates
(b) Entire Agreement
(c) Waiver
(d) Successors and Assigns
(e) Partial Invalidity
(f) Section Headings
17 GOVERNING LAW................................................................. 23
(a) Massachusetts Controls
(b) Trust Agreement Controls
SCHEDULES
A. Recordkeeping and Administrative Services
B. Fee Schedule
C. Administrator's Authorization Letter
D. Operational Guidelines for Non-Fidelity Mutual Funds
E. Exchange Guidelines
F. Available Liquidity Procedures for Unitized Stock Fund
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TRUST AGREEMENT, dated as of the 2nd day of January, 2003, between
ADVO, INC., a Delaware corporation, having an office at Xxx Xxxxxx Xxxx,
Xxxxxxx, XX 00000 (the "Sponsor"), and FIDELITY MANAGEMENT TRUST COMPANY, a
Massachusetts trust company, having an office at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor is the sponsor of the ADVO, Inc. Executive
Deferred Compensation Plan (the "Plan"); and
WHEREAS, the Sponsor wishes to establish an irrevocable trust and to
contribute to the trust assets that shall be held therein, subject to the claims
of Sponsor's creditors in the event of Sponsor's Insolvency, as herein defined,
until paid to Participants and their beneficiaries in such manner and at such
times as specified in the Plan; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974
("ERISA"); and
WHEREAS, it is the intention of the Sponsor to make contributions to
the trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plan; and
WHEREAS, the Trustee is willing to hold and invest the aforesaid Plan
assets in trust among several investment options selected by the Sponsor; and
WHEREAS, the Sponsor wishes to have the Trustee perform certain
ministerial recordkeeping and administrative functions under the Plan; and
WHEREAS, the ADVO, Inc. Compensation Committee (the "Administrator") is
the administrator of the Plan; and
WHEREAS, the Trustee is willing to perform recordkeeping and
administrative services for the Plan if the services are purely ministerial in
nature and are provided within a framework
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of Plan provisions, guidelines and interpretations conveyed in writing to the
Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, the Sponsor and the Trustee
agree as follows:
SECTION 1. DEFINITIONS. The following terms as used in this Trust Agreement
have the meaning indicated unless the context clearly requires otherwise:
(a) "Administrator" shall mean, with respect to the Plan, the person or
entity which is the "administrator" of such Plan.
(b) "Agreement" shall mean this Trust Agreement, as the same may be
amended and in effect from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986, as it has been or
may be amended from time to time.
(d) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it has been or may be amended from time to time.
(e) "Fidelity Mutual Fund" shall mean any investment company advised by
Fidelity Management & Research Company or any of its affiliates.
(f) "Mutual Fund" shall refer both to Fidelity Mutual Funds and
Non-Fidelity Mutual Funds.
(g) "Non-Fidelity Mutual Fund" shall mean certain investment companies not
advised by Fidelity Management & Research Company or any of its
affiliates.
(h) "Participant" shall mean, with respect to the Plan, any employee (or
former employee) with an account under the Plan, which has not yet been
fully distributed and/or forfeited, and shall include the designated
beneficiary(ies) with respect to the account of any deceased employee
(or deceased former employee) until such account has been fully
distributed and/or forfeited.
(i) "Participant Recordkeeping Reconciliation Period" shall mean the period
beginning on the date of the initial transfer of assets to the Trust
and ending on the date of the completion of the reconciliation of
Participant records.
(j) "Plan" shall mean the ADVO, Inc. Executive Deferred Compensation Plan.
(k) "Reporting Date" shall mean the last day of each calendar quarter, the
date as of which the Trustee resigns or is removed pursuant to this
agreement and the date as of which this Agreement terminates pursuant
to Section 11 hereof.
(l) "Sponsor" shall mean ADVO, Inc., a Delaware corporation, or any
successor to all or
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substantially all of its businesses which, by agreement, operation of
law or otherwise, assumes the responsibility of the Sponsor under this
Agreement.
(m) "Sponsor Stock" shall mean the common stock of the Sponsor, or such
other publicly- traded stock of the Sponsor, or such other
publicly-traded stock of the Sponsor's affiliates.
(n) "Trust" shall mean the ADVO, Inc. Executive Deferred Compensation Plan
Trust, being the trust established by the Sponsor and the Trustee
pursuant to the provisions of this Agreement.
(o) "Trustee" shall mean Fidelity Management Trust Company, a Massachusetts
trust company and any successor to all or substantially all of its
trust business as described in Section 10. The term Trustee shall also
include any successor trustee appointed pursuant to Section 10 to the
extent such successor agrees to serve as Trustee under this Agreement.
SECTION 2. TRUST.
(a) Establishment. The Sponsor hereby establishes the ADVO, Inc.
Executive Deferred Compensation Plan Trust with the Trustee. The Trust shall
consist of an initial contribution of money or other property acceptable to the
Trustee in its sole discretion, made by the Sponsor or transferred from a
previous trustee under the Plan, such additional sums of money as shall from
time to time be delivered to the Trustee under the Plan, all investments made
therewith and proceeds thereof, and all earnings and profits thereon, less the
payments that are made by the Trustee as provided herein, without distinction
between principal and income. The Trustee hereby accepts the Trust on the terms
and conditions set forth in this Agreement. In accepting this Trust, the Trustee
shall be accountable for the assets received by it, subject to the terms and
conditions of this Agreement.
(b) Grantor Trust. The Trust is intended to be a grantor trust, of
which the Sponsor is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended, and shall be construed accordingly.
(c) Trust Assets. The principal of the Trust, and any earnings
thereon shall be held separate and apart from other funds of the Sponsor and
shall be used exclusively for the uses and purposes of Participants and general
creditors as herein set forth. Participants and their beneficiaries shall have
no preferred claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan and this Trust Agreement shall be
mere unsecured contractual rights of Participants and their beneficiaries
against the Sponsor. Any
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assets held by the Trust will be subject to the claims of the Sponsor's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 13(a).
(d) Non-Assignment. Benefit payments to Participants and their
beneficiaries funded under this Trust may not be anticipated, assigned (either
at law or in equity), alienated, pledged, encumbered, or subjected to
attachment, garnishment, levy, execution, or other legal or equitable process.
SECTION 3. PAYMENTS TO SPONSOR. Except as provided under Section 13, the Sponsor
shall have no right to retain or divert to others any of the Trust assets before
all payment of benefits have been made to the Participants and their
beneficiaries pursuant to the terms of the Plan.
SECTION 4. DISBURSEMENTS.
(a) Directions from Administrator. The Trustee shall disburse monies
to Participants and their beneficiaries for benefit payments in the amounts that
the Administrator directs from time to time in writing. The Trustee shall have
no responsibility to ascertain whether the Administrator's direction complies
with the terms of the Plan or of any applicable law. The Trustee shall be
responsible for Federal and State income tax reporting or withholding with
respect to such Plan benefits. The Trustee shall not be responsible for FICA
(Social Security and Medicare), any Federal or State unemployment or local tax
with respect to Plan distributions.
(b) Limitations. The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust at
the time of the disbursement. The Trustee shall not be required to make any
disbursement in cash unless the Administrator has provided a written direction
as to the assets to be converted to cash for the purpose of making the
disbursement.
SECTION 5. INVESTMENT OF TRUST.
(a) Selection of Investment Options. The Trustee shall have no
responsibility for the selection of investment options under the Trust and shall
not render investment advice to any person in connection with the selection of
such options.
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(b) Available Investment Options. The Sponsor shall direct the
Trustee as to what investment options the Trust shall be invested in (i) during
the period beginning on the initial transfer of assets to the Trust and ending
on the completion of the reconciliation of Trust records (the "reconciliation
period"), and (ii) following the reconciliation period, subject to the following
limitations. The Sponsor may determine to offer as investment options only (i)
"publicly-traded common stock issued by the Sponsor ("Sponsor Stock")", and (ii)
securities issued by the investment companies advised by Fidelity Management &
Research Company and certain investment companies not advised by Fidelity
Management & Research Company, identified collectively as Mutual Funds on
Schedule "A" attached hereto; provided, however, that the Trustee shall not be
considered a fiduciary with investment discretion. The Sponsor may add or remove
investment options with the consent of the Trustee and upon mutual amendment of
this Trust Agreement and the Schedules thereto to reflect such additions.
(c) Investment Directions. In order to provide for an accumulation of
assets comparable to the contractual liabilities accruing under the Plan, the
Sponsor may direct the Trustee in writing to invest the assets held in the Trust
to correspond to the hypothetical investments made for Participants under the
Plan. Such directions may be made by Participants by use of a Participant
service representative, the Voice Response System (VRS), the internet or such
other electronic means as may be agreed upon from time to time by the Sponsor
and the Trustee, maintained for such purposes by the Trustee or its agents, in
accordance with Schedule "E." In the event that the Trustee fails to receive a
proper direction from the Sponsor or from Participants, the assets in question
shall be invested in the Fidelity Money Market Trust: Retirement Money Market
Portfolio until the Trustee receives a proper direction.
The Sponsor's designation of available investment options under
paragraphs (a) and (b) above, the maintenance of accounts for each Participant
and the crediting of investments to such accounts, the giving of investment
directions by Participants under this paragraph (c), and the exercise by
Participants of any other powers relating to investments under this Section 5
are solely for the purpose of providing a mechanism for measuring the obligation
of the Sponsor to any particular Participant under the applicable Plan. As
provided in Section 2(c) above, no Participant or beneficiary will have any
preferential claim to or beneficial ownership interest in any asset or
investment, and the rights of any Participant and his or her beneficiaries under
the applicable Plan and this Agreement are solely those of an unsecured general
creditor of the Sponsor with respect to the benefits of the Participant under
the Plan.
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(d) Mutual Funds. The Sponsor hereby acknowledges that it has
received from the Trustee a copy of the prospectus for each Mutual Fund selected
by the Sponsor as a Plan investment option. Trust investments in Mutual Funds
shall be subject to the following limitations:
(i) Execution of Purchases and Sales. Purchases and sales of
Mutual Funds (other than for exchanges) shall be made on the date on which the
Trustee receives from the Sponsor in good order all information and
documentation necessary to accurately effect such purchases and sales (or in the
case of a purchase, the subsequent date on which the Trustee has received a wire
transfer of funds necessary to make such purchase). Transactions involving
Mutual Funds not advised by Fidelity Management & Research Company shall be
executed in accordance with the operating procedures set forth in Schedule "D"
attached hereto. Exchanges of Fidelity Mutual Funds shall be made on the same
business day that the Trustee receives a proper direction if received before
market close (generally 4:00 p.m. eastern time); if the direction is received
after market close (generally 4:00 p.m. eastern time), the exchange shall be
made the following day.
(ii) Voting. At the time of mailing of notice of each annual
or special stockholders' meeting of any Mutual Fund, the Trustee shall send a
copy of the notice and all proxy solicitation materials to each Participant who
has hypothetical shares of the Mutual Fund credited to the Participant's
accounts, together with a voting direction form for return to the Trustee or its
designee. The Participant shall have the right to direct the Trustee as to the
manner in which the Trustee is to vote the hypothetical shares credited to the
Participant's accounts. The Trustee shall vote the shares held in the Trust in
the same manner as directed by the Participant under the Plan. The Trustee shall
not vote shares for which it has received no corresponding directions from the
Participant. During the reconciliation period, the Sponsor shall have the right
to direct the Trustee as to the manner in which the Trustee is to vote the
shares of the Mutual Funds in the Trust. With respect to all rights other than
the right to vote, the Trustee shall follow the directions of the Sponsor. The
Trustee shall have no duty to solicit directions from the Sponsor.
(e) Sponsor Stock. Trust investments in Sponsor Stock shall be made
via the ADVO Stock Fund (the "Stock Fund"). Investments in the Stock Fund shall
consist primarily of shares of Sponsor Stock. The Stock Fund shall also include
cash or short-term liquid investments, in accordance with this paragraph, in
amounts designed to satisfy daily exchange or withdrawal
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requests. Such holdings will include Colchester Street Trust: Money Market
Portfolio: Class I or such other Mutual Fund as agreed to in writing by the
Sponsor and Trustee. The Sponsor shall, after consultation with the Trustee,
establish and communicate to the Trustee in writing a target percentage and
drift allowance for such short-term liquid investments. Subject to its ability
to execute open-market trades in Sponsor Stock or to otherwise trade with the
Sponsor, the Trustee shall be responsible for ensuring that the short-term
investments held in the Stock Fund falls within the agreed-upon range over time.
Each Participant's proportional interest in the Stock Fund shall be measured in
units of participation, rather than shares of Sponsor Stock. Such units shall
represent a proportionate interest in all of the assets of the Stock Fund, which
includes shares of Sponsor Stock, short-term investments and at times,
receivables and payables (such as receivables and payables arising out of
unsettled stock trades). The Trustee shall determine a daily net asset value
("NAV") for each unit outstanding of the Stock Fund. Valuation of the Stock Fund
shall be based upon: (a) - the closing price of the stock on the principal
national securities exchange on which the Sponsor Stock is traded or, in the
case of stocks traded over the counter, the last sale price of the day; (b) - if
(a) is unavailable, the latest available price as reported by the principal
national securities exchange on which the Sponsor Stock is traded or, for an
over the counter stock, the last bid price prior to the close of the New York
Stock Exchange (generally 4:00 p.m. Eastern time) (the "Closing Price"); or (c)
- if neither (a) or (b) is available, the price determined in good faith by the
Trustee. The NAV shall be adjusted for gains or losses realized on sales of
Sponsor Stock, appreciation or depreciation in the value of those shares owned,
dividends paid on Sponsor Stock to the extent not used to purchase additional
units of the Stock Fund for affected participants, interest on the short-term
investments held by the Stock Fund, payables and receivables for pending stock
trades, receivables for dividends not yet distributed, payables for other
expenses of the Stock Fund, including principal obligations, if any, and
expenses that, pursuant to Sponsor direction, the Trustee accrues or pays from
the Stock Fund.
(i) Acquisition Limit. Pursuant to the Plan, the Trust may be
invested in Sponsor Stock to the extent necessary to comply with investment
directions in accordance with this Agreement. The Sponsor shall be responsible
for providing specific direction on any acquisition limits required by the Plan
or applicable law.
(ii) Fiduciary Duty. The Sponsor shall continually monitor the
suitability of acquiring and holding Sponsor Stock. The Trustee shall not be
liable for any loss or expense
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which arises from the directions of the Sponsor with respect to the acquisition
and holding of Sponsor Stock, unless it is clear on their face that the actions
to be taken under those directions would be prohibited by any applicable law or
would be contrary to the terms of this Agreement.
(iii)Purchases and Sales of Sponsor Stock. Unless otherwise
directed by the Sponsor in writing pursuant to directions that the Trustee can
administratively implement, the following provisions shall govern purchases and
sales of Sponsor Stock.
(A) Open Market Purchases and Sales. Purchase and sales of
Sponsor Stock shall be made on the open market in accordance with the Trustee's
standard trading guidelines, as they may be amended by the Trustee from time to
time, as necessary to honor exchange and withdrawal activity and to maintain the
target cash percentage and drift allowance for the Stock Fund, provided that:
(1) If the Trustee is unable to purchase or sell the
total number of shares required to be purchased or sold on such day as a result
of market conditions; or
(2) If the Trustee is prohibited by the Securities and
Exchange Commission, the New York Stock Exchange or principal exchange on which
the Sponsor Stock is traded, or any other judicial or regulatory body from
purchasing or selling any or all of the shares required to be purchased or sold
on such day, then the Trustee shall purchase or sell such shares as soon
thereafter as administratively feasible.
(B) Purchases and Sales from or to Sponsor. If directed by
the Sponsor in writing prior to the trading date, the Trustee may purchase or
sell Sponsor Stock from or to the Sponsor if the purchase or sale is for
adequate consideration and no commission is charged. If Sponsor contributions
(employer) or contributions made by the Sponsor on behalf of the Participants
(employee) under the Plan are to be invested in Sponsor Stock, the Sponsor may
transfer Sponsor Stock in lieu of cash to the Trust. In either case, the number
of shares to be transferred will be determined by dividing the total amount of
Sponsor Stock to be purchased or sold by the Closing Price of the Sponsor Stock
on the trading date.
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(C) Use of an Affiliated Broker. The Sponsor hereby directs
the Trustee to use Fidelity Capital Markets, a division of National Financial
Services LLC ("Capital Markets") to provide brokerage services in connection
with any purchase or sale of Sponsor Stock on the open market, except in
circumstances where the Trustee has determined, in accordance with its standard
trading guidelines or pursuant to Sponsor direction, to seek expedited
settlement of the trades. Capital Markets shall execute such directions directly
or through its affiliates. The provision of brokerage services shall be subject
to the following:
(1) As consideration for such brokerage services, the
Sponsor agrees that Capital Markets shall be entitled to remuneration under this
direction provision in an amount of no more than three and one-fifth cents
($.032) commission on each share of Sponsor Stock. Any change in such
remuneration may be made only by written agreement between Sponsor and Trustee.
(2) The Trustee will provide the Sponsor with periodic
reports which summarize all securities transaction-related charges incurred with
respect to trades of Sponsor Stock for such Plan.
(3) Any successor organization of Capital Markets,
through reorganization, consolidation, merger or similar transactions, shall,
upon consummation of such transaction, become the successor broker in accordance
with the terms of this direction provision.
(4) The Trustee and Capital Markets shall continue to
rely on this direction provision until notified to the contrary. The Sponsor
reserves the right to terminate this direction upon written notice to Capital
Markets (or its successor) and the Trustee, in accordance with Section 11 of
this Agreement.
(iv) Execution of Purchases and Sales of Units. Unless
otherwise directed in writing pursuant to directions that the Trustee can
administratively implement, purchases and sales of units shall be made as
follows:
(A) Subject to subparagraphs (B) and (C) below, purchases
and sales of units in the Stock Fund (other than for exchanges) shall be made on
the date on which the
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Trustee receives from the Administrator in good order all information,
documentation, and wire transfers of funds (if applicable), necessary to
accurately effect such transactions. Exchanges of units in the Stock Fund shall
be made in accordance with the Exchange Guidelines attached hereto as Schedule
"E".
(B) Aggregate sales of units in the Stock Fund on any day
shall be limited to the Stock Fund's Available Liquidity for that day. For these
purposes, Available Liquidity shall mean the amount of short-term investments
held in the Stock Fund decreased by any outgoing cash for expenses then due,
payables for loan principal, and obligations for pending stock purchases, and
increased by incoming cash (such as contributions, exchanges ) and to the extent
credit is available and allocable to the Stock Fund, receivables for pending
stock sales. In the event that the requested sales exceed the Available
Liquidity, then transactions shall be processed giving precedence to
distributions and withdrawals, and otherwise on a first-in first- out (FIFO)
basis, as provided in Schedule "F" (the "Specified Hierarchy"). Provided that
the Stock Fund is open for such transactions, sales of units that are requested
but not processed on a given day due to insufficient Available Liquidity shall
be suspended until Available Liquidity is sufficient to honor such transactions
in accordance with the Specified Hierarchy.
(C) The Trustee shall close the Stock Fund to sales or
purchases of units, as applicable, on any date on which trading in the Sponsor
Stock has been suspended or substantial purchase or sale orders are outstanding
and cannot be executed.
(v) Securities Law Reports. The Sponsor shall be responsible
for filing all reports required under Federal or state securities laws with
respect to the Trust's ownership of Sponsor Stock, including, without
limitation, any reports required under section 13 or 16 of the Securities
Exchange Act of 1934, and shall immediately notify the Trustee in writing of any
requirement to stop purchases or sales of Sponsor Stock pending the filing of
any report. The Trustee shall provide to the Sponsor such information on the
Trust's ownership of Sponsor Stock as the Sponsor may reasonably request in
order to comply with Federal or state securities laws.
(vi) Voting and Tender Offers. Notwithstanding any other
provision of this Agreement, the provisions of this Section shall govern the
voting and tendering of Sponsor Stock. The Sponsor shall provide and pay for all
printing, mailing, tabulation and other costs
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associated with the voting and tendering of Sponsor Stock. The Trustee, after
consultation with the Sponsor, shall prepare the necessary documents associated
with the voting and tendering of Sponsor Stock.
(A) Voting
(1) When the issuer of Sponsor Stock prepares for
any annual or special meeting, the Sponsor shall notify the Trustee at least
thirty (30) days in advance of the intended record date and shall cause a copy
of all proxy solicitation materials to be sent to the Trustee. If requested by
the Trustee, the Sponsor shall certify to the Trustee that the aforementioned
materials represent the same information that is distributed to each Participant
whose hypothetical investments in the Plan include Sponsor Stock held in the
Trust. Based on these materials, the Trustee shall prepare a voting instruction
form and shall provide a copy of all proxy solicitation materials to be sent to
each Participant whose hypothetical investments in the Plan include Sponsor
Stock held in the Trust, together with the foregoing voting instruction form, to
be returned to the Trustee or its designee. The voting instruction form shall
show the proportional hypothetical investment in the number of full and
fractional shares of Sponsor Stock credited to the Participant's hypothetical
accounts held in the Stock Fund.
(2) Each Participant whose hypothetical
investments in the Plan include the Stock Fund shall have the right to direct
the Trustee as to the manner in which the Trustee is to vote (including not to
vote) that number of shares of Sponsor Stock reflecting such Participant's
proportional hypothetical investment in the Stock Fund (both vested and
unvested). Directions from a Participant to the Trustee concerning the voting of
Sponsor Stock shall be communicated in writing, or by such other means as is
agreed upon by the Trustee and the Sponsor. These directions shall be held in
confidence by the Trustee and shall not be divulged to the Sponsor, or any
officer or employee thereof, or any other person except to the extent that the
consequences of such directions are reflected in reports regularly communicated
to any such persons in the ordinary course of the performance of the Trustee's
services hereunder. Upon its receipt of the directions, the Trustee shall vote
the shares of Sponsor Stock reflecting the Participant's proportional
hypothetical investment in the Stock Fund as directed by the Participant. Except
as otherwise required by law, the Trustee shall not vote shares of Sponsor Stock
reflecting a Participant's proportional hypothetical investment in the Stock
Fund for which
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it has received no direction from the Participant.
(B) Tender Offers.
(1) Upon commencement of a tender offer for any
securities held in the Trust that are Sponsor Stock, the Sponsor shall timely
notify the Trustee in advance of the intended tender date and shall cause a copy
of all materials to be sent to the Trustee. The Sponsor shall certify to the
Trustee that the aforementioned materials represent the same information
distributed to shareholders of Sponsor Stock. Based on these materials and after
consultation with the Sponsor, the Trustee shall prepare a tender instruction
form and shall provide a copy of all tender materials to be sent to each
Participant whose hypothetical investments in the Plan include the Stock Fund,
together with the foregoing tender instruction form, to be returned to the
Trustee or its designee. The tender instruction form shall show the number of
full and fractional shares of Sponsor Stock that reflect the Participant's
proportional hypothetical investment in the Stock Fund (both vested and
unvested).
(2) Each Participant whose hypothetical
investments in the Plan include the Stock Fund shall have the right to direct
the Trustee to tender or not to tender some or all of the shares of Sponsor
Stock attributable to such Participant's proportional hypothetical investment in
the Stock Fund (both vested and unvested). Directions from a Participant to the
Trustee concerning the tender of Sponsor Stock shall be communicated in writing,
or by such other means as is agreed upon by the Trustee and the Sponsor. These
directions shall be held in confidence by the Trustee and shall not be divulged
to the Sponsor, or any officer or employee thereof, or any other person except
to the extent that the consequences of such directions are reflected in reports
regularly communicated to any such persons in the ordinary course of the
performance of the Trustee's services hereunder. The Trustee shall tender or not
tender shares of Sponsor Stock as directed by the Participant. Except as
otherwise required by law, the Trustee shall not tender shares of Sponsor Stock
reflecting a Participant's proportional hypothetical investment in the Stock
Fund for which it has received no direction from the Participant.
(3) Except as otherwise required by law, the
Trustee shall tender that number of shares not attributable to Participants'
hypothetical investment in Sponsor Stock in the same proportion as the total
number of shares attributable to Participant's hypothetical
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investment in Sponsor Stock for which it has received instructions from
Participants.
(4) A Participant who has directed the Trustee to
tender some or all of the shares of Sponsor Stock reflecting the Participant's
proportional hypothetical investment in the Stock Fund may, at any time prior to
the tender offer withdrawal date, direct the Trustee to withdraw some or all of
the tendered shares reflecting the Participant's proportional hypothetical
investment, and the Trustee shall withdraw the directed number of shares from
the tender offer prior to the tender offer withdrawal deadline. Prior to the
withdrawal deadline, if any shares of Sponsor Stock not credited to
Participants' accounts have been tendered, the Trustee shall redetermine the
number of shares of Sponsor Stock that would be tendered under Section
5(e)(vi)(B)(3) if the date of the foregoing withdrawal were the date of
determination, and withdraw from the tender offer the number of shares not
attributable to hypothetical investments in Sponsor Stock as necessary to reduce
the amount of tendered Sponsor Stock not attributable to hypothetical
investments in Sponsor Stock to the amount so redetermined. A Participant shall
not be limited as to the number of directions to tender or withdraw that the
Participant may give to the Trustee.
(5) A direction by a Participant to the Trustee
to tender shares of Sponsor Stock reflecting the Participant's proportional
hypothetical investment in the Stock Fund shall not be considered a written
election under the Plan by the Participant to withdraw, or have distributed, any
or all of his withdrawable shares. The Trustee shall credit to each proportional
interest of the Participant from which the tendered shares were taken the
proceeds received by the Trustee in exchange for the shares of Sponsor Stock
tendered from that interest. Pending receipt of directions (through the
Administrator) from the Participant or the Sponsor, as provided in the Plan, as
to which of the remaining investment options the proceeds should be invested in,
the Trustee shall invest the proceeds in the Fidelity Money Market Trust:
Retirement Money Market Portfolio.
(vii) General. With respect to all rights other than the right
to vote, the right to tender, and the right to withdraw shares previously
tendered, in the case of Sponsor Stock attributable to a Participant's
hypothetical investment in the Stock Fund, the Trustee shall follow the
directions of the Participant and if no such directions are received, the
directions of the Sponsor. The Trustee shall have no duty to solicit directions
from Participants. With respect to
13
all rights other than the right to vote and the right to tender, in the case of
Sponsor Stock that is not attributable to a Participant's hypothetical
investment in Sponsor Stock, the Trustee shall follow the directions of the
Sponsor.
(viii) Conversion. All provisions in this Section 5(e) shall
also apply to any securities received as a result of a conversion of Sponsor
Stock.
(f) Trustee Powers. The Trustee shall have the following powers and
authority:
(i) Subject to paragraphs (b), (c) and (d) of this Section 5,
to sell, exchange, convey, transfer, or otherwise dispose of any property held
in the Trust, by private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the purchase money or
other property delivered to the Trustee or to inquire into the validity,
expediency, or propriety of any such sale or other disposition.
(ii) To cause any securities or other property held as part of
the Trust to be registered in the Trustee's own name, in the name of one or more
of its nominees, or in the Trustee's account with the Depository Trust Company
of New York and to hold any investments in bearer form, but the books and
records of the Trustee shall at all times show that all such investments are
part of the Trust.
(iii) To keep that portion of the Trust in cash or cash
balances as the Sponsor or Administrator may, from time to time, deem to be in
the best interest of the Trust.
(iv) To make, execute, acknowledge, and deliver any and all
documents of transfer or conveyance and to carry out the powers herein granted.
(v) To borrow funds from a bank not affiliated with the
Trustee in order to provide sufficient liquidity to process Plan transactions in
a timely fashion, provided that the cost of borrowing shall be allocated in a
reasonable fashion to the investment fund(s) in need of liquidity.
(vi) To settle, compromise, or submit to arbitration any
claims, debts, or damages due to or arising from the Trust; to commence or
defend suits or legal or administrative
14
proceedings; to represent the Trust in all suits and legal and administrative
hearings; and to pay all reasonable expenses arising from any such action, from
the Trust if not paid by the Sponsor.
(vii) To employ legal, accounting, clerical, and other
assistance as may be required in carrying out the provisions of this Agreement
and to pay their reasonable expenses and compensation from the Trust if not paid
by the Sponsor.
(viii) To do all other acts although not specifically
mentioned herein, as the Trustee may deem necessary to carry out any of the
foregoing powers and the purposes of the Trust.
Trustee will file an annual fiduciary return to the extent required by law.
SECTION 6. RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED.
(a) General. The Trustee shall perform those recordkeeping and
administrative functions described in Schedule "A" attached hereto. These
recordkeeping and administrative functions shall be performed within the
framework of the Administrator's written directions regarding the Plan's
provisions, guidelines and interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of the last day of
each fiscal quarter of the Plan and, if not on the last day of a fiscal quarter,
the date on which the Trustee resigns or is removed as provided in Section 9 of
this Agreement or is terminated as provided in Section 11. Within thirty (30)
days following each Reporting Date or within sixty (60) days in the case of a
Reporting Date caused by the resignation or removal of the Trustee, or the
termination of this Agreement, the Trustee shall file with the Administrator a
written account setting forth all investments, receipts, disbursements, and
other transactions effected by the Trustee between the Reporting Date and the
prior Reporting Date, and setting forth the value of the Trust as of the
Reporting Date. Except as otherwise required under applicable law, upon the
expiration of twelve (12) months from the date of filing such account with the
Administrator, the Trustee shall have no liability or further accountability to
anyone with respect to the propriety of its acts or transactions shown in such
account, except with respect to such acts or transactions as to which the
Sponsor shall within such twelve (12) month period file with the Trustee written
objections.
15
(c) Inspection and Audit. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by the Administrator or any person designated by the Administrator.
Upon the resignation or removal of the Trustee or the termination of this
Agreement, the Trustee shall provide to the Administrator, at no expense to the
Sponsor, in the format regularly provided to the Administrator, a statement of
each Participant's accounts as of the resignation, removal, or termination, and
the Trustee shall provide to the Administrator or the Plan's new recordkeeper
such further records as are reasonable, at the Sponsor's expense.
(d) Effect of Plan Amendment. The Trustee's provision of the
recordkeeping and administrative services set forth in this Section 6 shall be
conditioned on the Sponsor delivering to the Trustee a copy of any amendment to
the Plan as soon as administratively feasible following the amendment's
adoption, and on the Administrator providing the Trustee on a timely basis with
all the information the Administrator deems necessary for the Trustee to perform
the recordkeeping and administrative services and such other information as the
Trustee may reasonably request.
(e) Returns, Reports and Information. The Administrator shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust or Plan by law. The Trustee shall provide the
Administrator with such information as the Administrator may reasonably request
to make these filings. The Administrator shall also be responsible for making
any disclosures to Participants required by law.
SECTION 7. COMPENSATION AND EXPENSES. Sponsor shall pay to Trustee, within
thirty (30) days of receipt of the Trustee's xxxx, the fees for services in
accordance with Schedule "B". All fees for services are specifically outlined in
Schedule "B" and are based on any assumptions identified therein. The Trustee
shall maintain its fees for two years; provided, however, in the event that the
Plan characteristics referenced in the assumptions outlined in Schedule "B"
change significantly by either falling below or exceeding current or projected
levels, such fees shall be subject to revision. To reflect increased operating
costs, Trustee may once each calendar year, but not prior to January 2, 2005,
amend Schedule B without the Sponsor's consent upon ninety (90) days prior
notice to the Sponsor.
All reasonable expenses of Plan administration as shown on Schedule "B"
attached
16
hereto, as amended from time to time, shall be a charge against and paid from
the appropriate Participants' accounts, except to the extent such amounts are
paid by the Sponsor in a timely manner.
All expenses of the Trustee relating directly to the acquisition and
disposition of investments constituting part of the Trust, and all taxes of any
kind whatsoever that may be levied or assessed under existing or future laws
upon or in respect of the Trust or the income thereof, shall be a charge against
and paid from the appropriate Participants' accounts.
SECTION 8. DIRECTIONS AND INDEMNIFICATION.
(a) Identity of Administrator. The Trustee shall be fully protected
in relying on the fact that the Administrator under the Plan is the individual
or persons named as such above or such other individuals or persons as the
Sponsor may notify the Trustee in writing.
(b) Directions from Administrator. Whenever the Administrator
provides a direction to the Trustee, the Trustee shall not be liable for any
loss arising from the direction if the direction is contained in a writing (or
is oral and immediately confirmed in a writing) signed by any individual whose
name and signature have been submitted (and not withdrawn) in writing to the
Trustee by the Administrator in the form attached hereto as Schedule "C",
provided the Trustee reasonably believes the signature of the individual to be
genuine. Such direction may be made via electronic data transfer ("EDT") in
accordance with procedures agreed to by the Administrator and the Trustee;
provided, however, that the Trustee shall be fully protected in relying on such
direction as if it were a direction made in writing by the Administrator. The
Trustee shall have no responsibility to ascertain any direction's (i) accuracy,
(ii) compliance with the terms of the Plan or any applicable law, or (iii)
effect for tax purposes or otherwise.
(c) Directions from Participants. The Trustee shall not be liable
for any loss which arises from any Participant's exercise or non-exercise of
rights under Section 5 over the assets in the Participant's accounts.
(d) Indemnification. The Sponsor shall indemnify the Trustee
against, and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
17
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or Trust, excepting only any and all loss, etc.,
arising from the Trustee's negligence or bad faith.
The Trustee shall indemnify the Sponsor against and hold the Sponsor harmless
from any and all such loss, damage, penalty, liability, cost, and expense,
including without limitation, reasonable attorney's fees and disbursements, that
may be incurred by, imposed upon, or asserted against the Sponsor solely as a
result of a) any defects in the investment methodology embodied in the target
asset allocation or model portfolio provided through Fidelity
PortfolioPlanner(SM) , except to the extent that any such loss, damage, penalty,
liability, cost or expense arises from information provided by the Participant,
the Sponsor or third parties; or b) any prohibited transactions resulting from
the provision of Fidelity PortfolioPlanner(SM) by the Trustee.
(e) Survival. The provisions of this Section 8 shall survive the
termination of this Agreement.
SECTION 9. RESIGNATION OR REMOVAL OF TRUSTEE AND TERMINATION.
(a) Resignation and Removal. The Trustee may resign at any time in
accordance with the notice provisions set forth below. The Sponsor may remove
the Trustee at any time in accordance with the notice provisions set forth
below.
(b) Termination. This Agreement may be terminated in full, or with
respect to only a portion of the Plan (i.e., a "partial deconversion") at any
time by the Sponsor upon prior written notice to the Trustee in accordance with
the notice provisions set forth below.
(c) Notice Period. In the event either party desires to terminate
this Agreement or any services hereunder, the party shall provide at least
sixty-(60) days prior written notice of the termination date to the other party;
provided, however, that the receiving party may agree, in writing, to a shorter
notice period.
(d) Transition Assistance. In the event of termination of this
Agreement, if requested by Sponsor, Fidelity shall assist Sponsor in developing
a plan for the orderly transition of the Plan data, cash and assets then
constituting the Trust and Services provided by Fidelity hereunder to Sponsor or
its designee. Fidelity shall provide such assistance for a period not extending
beyond sixty (60) days from the termination date of this Agreement. Fidelity
shall
18
provide to Sponsor, or to any person designated by Sponsor, at a mutually
agreeable time, one file of the Plan Data prepared and maintained by Fidelity in
the ordinary course of business, in Fidelity's format. Fidelity may provide
other or additional transition assistance as mutually determined for additional
fees, which shall be due and payable by the Sponsor prior to any termination of
this Agreement.
(e) Failure to Appoint Successor. If, by the termination date, the
Sponsor has not notified the Trustee in writing as to the individual or entity
to which the assets and cash are to be transferred and delivered, the Trustee
may bring an appropriate action or proceeding for leave to deposit the assets
and cash in a court of competent jurisdiction. The Trustee shall be reimbursed
by the Sponsor for all costs and expenses of the action or proceeding including,
without limitation, reasonable attorneys' fees and disbursements.
SECTION 10. SUCCESSOR TRUSTEE.
(a) Appointment. If the office of Trustee becomes vacant for any
reason, the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights, powers,
privileges, obligations, duties, liabilities, and immunities granted to the
Trustee under this Agreement. The successor trustee and predecessor trustee
shall not be liable for the acts or omissions of the other with respect to the
Trust.
(b) Acceptance. When the successor trustee accepts its appointment
under this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further action on the part
of the predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably may
be requested in writing by the Sponsor or the successor trustee to vest title to
all Trust assets in the successor trustee or to deliver all Trust assets to the
successor trustee.
(c) Corporate Action. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department of the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the transaction,
become the successor trustee under this Agreement.
SECTION 11. RESIGNATION, REMOVAL, AND TERMINATION NOTICES. All notices of
resignation, removal, or termination under this Agreement must be in writing and
mailed to the party to
19
which the notice is being given by certified or registered mail, return receipt
requested, to the Sponsor c/o General Counsel, ADVO, Inc., Xxx Xxxxxx Xxxx, X.X.
Xxx 000, Xxxxxxx, XX 00000, and to the Trustee c/o Xxxx X. Xxxxxx, Fidelity
Investments, 00 Xxxxxxxxxx Xxxxxx, X0X, Xxxxxx, Xxxxxxxxxxxxx 00000, or to such
other addresses as the parties have notified each other of in the foregoing
manner.
SECTION 12. DURATION. This Trust shall continue in effect without limit as to
time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
SECTION 13. INSOLVENCY OF SPONSOR.
(a) Trustee shall cease disbursement of funds for payment of
benefits to Participants and their beneficiaries if the Sponsor is Insolvent.
Sponsor shall be considered "Insolvent" for purposes of this Trust Agreement if
(i) Sponsor is unable to pay its debts as they become due, or (ii) Sponsor is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, the principal
and income of the Trust shall be subject to claims of general creditors of the
Sponsor under federal and state law as set forth below.
(i) The Board of Directors and the Chief Executive Officer of
the Sponsor shall have the duty to inform Trustee in writing of Sponsor's
Insolvency. If a person claiming to be a creditor of the Sponsor alleges in
writing to Trustee that Sponsor has become Insolvent, Trustee shall determine
whether Sponsor is Insolvent and, pending such determination, Trustee shall
discontinue disbursements for payment of benefits to Participants or their
beneficiaries.
(ii) Unless Trustee has actual knowledge of Sponsor's
Insolvency, or has received notice from Sponsor or a person claiming to be a
creditor alleging that Sponsor is Insolvent, Trustee shall have no duty to
inquire whether Sponsor is Insolvent. Trustee may in all events rely on such
evidence concerning Sponsor's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Sponsor's solvency.
20
(iii) If at any time Trustee has determined that Sponsor is
Insolvent, Trustee shall discontinue disbursements for payments to Participants
or their beneficiaries and shall hold the assets of the Trust for the benefit of
Sponsor's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of Participants or their beneficiaries to pursue their
rights as general creditors of Sponsor with respect to benefits due under the
Plan or otherwise.
(iv) Trustee shall resume disbursement for the payment of
benefits to Participants or their beneficiaries in accordance with Section 4 of
this Trust Agreement only after Trustee has determined that Sponsor is not
Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to (a) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to
Participants or their beneficiaries by Sponsor in lieu of the payments provided
for hereunder during any such period of discontinuance.
SECTION 14. AMENDMENT OR MODIFICATION. This Agreement may be amended or
modified at any time and from time to time only by an instrument executed by
both the Sponsor and the Trustee.
SECTION 15. ELECTRONIC SERVICES.
(a) The Trustee may provide communications and services ("Electronic
Services") and/or software products ("Electronic Products") via electronic
media, including, but not limited to Fidelity Plan Sponsor WebStation. The
Sponsor and its agents agree to use such Electronic Services and Electronic
Products only in the course of reasonable administration of or participation in
the Plan and to keep confidential and not publish, copy, broadcast, retransmit,
reproduce, commercially exploit or otherwise redisseminate the Electronic
Products or Electronic Services or any portion thereof without the Trustee's
written consent, except, in cases where Trustee has specifically notified the
Sponsor that the Electronic Products or Services are suitable for delivery to
Sponsor's Participants, for non-commercial personal use by Participants or
21
beneficiaries with respect to their participation in the Plan or for their other
retirement planning purposes.
(b) The Sponsor shall be responsible for installing and maintaining
all Electronic Products, (including any programming required to accomplish the
installation) and for displaying any and all content associated with Electronic
Services on its computer network and/or Intranet so that such content will
appear exactly as it appears when delivered to Sponsor. All Electronic Products
and Services shall be clearly identified as originating from the Trustee or its
affiliate. The Sponsor shall promptly remove Electronic Products or Services
from its computer network and/or Intranet, or replace the Electronic Products or
Services with updated products or services provided by the Trustee, upon written
notification (including written notification via facsimile) by the Trustee.
(c) All Electronic Products shall be provided to the Sponsor without
any express or implied legal warranties or acceptance of legal liability by the
Trustee, and all Electronic Services shall be provided to the Sponsor without
acceptance of legal liability related to or arising out of the electronic nature
of the delivery or provision of such Services. Except as otherwise stated in
this Agreement, no rights are conveyed to any property, intellectual or
tangible, associated with the contents of the Electronic Products or Services
and related material. The Trustee hereby grants to the Sponsor a non-exclusive,
non-transferable revocable right and license to use the Electronic Products and
Services in accordance with the terms and conditions of this Agreement.
(d) To the extent that any Electronic Products or Services utilize
Internet services to transport data or communications, the Trustee will take,
and Sponsor agrees to follow, reasonable security precautions, however, the
Trustee disclaims any liability for interception of any such data or
communications. The Trustee reserves the right not to accept data or
communications transmitted via electronic media by the Sponsor or a third party
if it determines that the media does not provide adequate data security, or if
it is not administratively feasible for the Trustee to use the data security
provided. The Trustee shall not be responsible for, and makes no warranties
regarding access, speed or availability of Internet or network services, or any
other service required for electronic communication. The Trustee shall not be
responsible for any loss or damage related to or resulting from any changes or
modifications to the Electronic Products or
22
Services after delivering it to the Sponsor.
SECTION 16. GENERAL.
(a) Performance by Trustee, its Agents or Affiliates. The Sponsor
acknowledges and authorizes that the services to be provided under this
Agreement shall be provided by the Trustee, its agents or affiliates, including
Fidelity Investments Institutional Operations Company, Inc. ("FIIOC") or its
successor, and that certain of such services may be provided pursuant to one or
more other contractual agreements or relationships.
(b) Entire Agreement. This Agreement contains all of the terms
agreed upon between the parties with respect to the subject matter hereof.
(c) Waiver. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(d) Successors and Assigns. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.
(e) Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(f) Section Headings. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
SECTION 17. GOVERNING LAW.
(a) Massachusetts Law Controls. This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust.
23
The validity, construction, effect, and administration of this Agreement shall
be governed by and interpreted in accordance with the laws of the Commonwealth
of Massachusetts, except to the extent those laws are superseded under section
514 of ERISA.
(b) Trust Agreement Controls. The Trustee is not a party to the
Plan, and in the event of any conflict between the provisions of the Plan and
the provisions of this Agreement, the provisions of this Agreement shall
control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ADVO, INC. FIDELITY MANAGEMENT TRUST
COMPANY
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxx
-------------------------------- ---------------------------
FMTC Authorized Signatory
Name: Xxxxx X. Xxxxxxx Name: Xxxx Xxxxxx
Date: 12/22/02 Date: 2/4/03
24
SCHEDULE "A"
RECORDKEEPING AND ADMINISTRATIVE SERVICES
* The Trustee will provide only the recordkeeping and administrative services
set forth on this Schedule "A" and no others.
Administration
* Establishment and maintenance of Participant account and election
percentages.
* Maintenance of the following Plan investment options:
- ADVO Stock Fund
- Calamos Growth Fund - Class A
- Fidelity Balanced Fund
- Fidelity Diversified International Fund
- Fidelity Dividend Growth Fund
- Fidelity Equity-Income Fund
- Fidelity Freedom 2010 Fund
- Fidelity Freedom 2020 Fund
- Fidelity Freedom 2030 Fund
- Fidelity Freedom 2040 Fund
- Fidelity Freedom Income Fund
- Fidelity Money Market Trust: Retirement Money Market Portfolio
- Fidelity Small Cap Stock Fund
- PIMCO Total Return Fund - Administrative Class
- Spartan(R) U.S. Equity Index Fund
- Strong Advisor Small Cap Value Fund - Class Z
* Maintenance of the following money classifications:
- Salary (class year accounting)
- Bonus (class year accounting)
- Match (class year accounting)
Processing
* Process mutual fund trades and employer stock.
* Maintain and process changes to Participants' prospective investment mix
elections.
* Process exchanges between investment options on a daily basis.
* Process consolidated payroll contribution data via a consolidated magnetic
tape.
* Reconcile and process Participant withdrawal requests as approved and
directed by the Sponsor. All withdrawal requests will be based on the
current market values of the
25
Participants' accounts, not advances or estimated values. The "current
market value" of a Participant's account shall be the account value on the
business day that direction is received from the Sponsor in good order by
the Trustee, if such direction is confirmed before 4:00 p.m. (E.T.). If
direction from the Sponsor is confirmed by the Trustee after 4:00 p.m.
(E.T.) on a business day, then the current market value of a Participant's
account shall be the account value on the next business day.
Other
* Prepare, reconcile and deliver a monthly Trial Balance Report presenting
all money classes and investments. This report is based on the market value
as of the last business day of the month. The report will be delivered not
later than thirty (30) days after the end of each month in the absence of
unusual circumstances.
* Prepare, reconcile and deliver a Quarterly Administrative Report presenting
both on a Participant and a total Plan basis all money classes, investment
positions and a summary of all activity of the Participant and Plan as of
the last business day of the quarter. The report will be delivered not
later than thirty (30) days after the end of each quarter in the absence of
unusual circumstances.
* Prepare and distribute, either to the Sponsor or to each Participant
directly, a quarterly detailed Participant statement reflecting all
activity for the period. Statements will be delivered not later than thirty
(30) days after each quarter in the absence of unusual circumstances.
* Provide monthly trial balance.
* Prepare and mail to the Participant, a confirmation of the transactions,
exchanges and changes to investment mix elections within five (5) business
days of the Participant's instructions.
* Provide access to Plan Sponsor Webstation (PSW). PSW is a graphical,
Windows-based application that provides current Plan and Participant-level
information, including indicative data, account balances, activity and
history.
* Provide Mutual Fund tax reporting (Forms 1099 Div. and 1099-B) to the
Sponsor.
* Provide federal and state tax reporting and withholding on benefit payments
made to Participants and beneficiaries in accordance with Section 4 of this
Agreement.
* Prepare employee communications describing available investment options,
including multimedia informational materials and group presentations.
Communication Services.
* Provide employee communications describing available investment options,
including multimedia informational materials and group presentations.
* Fidelity PortfolioPlanner(SM), an internet-based educational service for
Participants that generates target asset allocations and model portfolios
customized to investment options in
26
the Plan, based upon methodology provided by Strategic Advisers, Inc., an
affiliate of the Trustee. The Sponsor acknowledges that it has received the
ADV Part II for Strategic Advisers, Inc. more than 48 hours prior to
executing the Trust.
ADVO, INC. FIDELITY MANAGEMENT TRUST
COMPANY
By: /s/ Xxxxx X. Xxxxxxx 12/22/02 By: /s/ Xxxx Xxxxxx 2/4/03
-------------------------------- ------------------------------------
Date FMTC Authorized Signatory Date
27
SCHEDULE "B"
FEE SCHEDULE
Annual Recordkeeping Fee $6,000 per year, billed and payable on a
quarterly basis.
Non-Fidelity Mutual Funds: Non-Fidelity Mutual Fund vendors shall pay
fees directly to Fidelity Investments
Institutional Operations Company, Inc.
(FIIOC) or its affiliates equal to such
percentage (generally 25 to 50 basis points)
of Plan assets invested in such Non-Fidelity
Mutual Funds as may be disclosed
periodically, or, in the case of the
following investment options, in the amounts
listed below:
Calamos Growth Fund - Class A: 35 basis
points.
Unless otherwise noted, disclosure shall be
posted and updated quarterly on Plan Sponsor
Webstation at xxxxx://xxx.xxxxxxxx.xxx or a
successor site.
Plan Sponsor Webstation (PSW): Four User I.D.'s provided free of charge.
Additional I.D.'s available upon request.
Stock Administration Fee: To the extent that assets are invested in Sponsor
Stock, .10% of such assets in the Trust payable pro rata quarterly on the basis
of such assets as of the calendar quarter's last valuation date, but no less
than $20,000 per year nor more than $70,000 per year.
Note: These fees have been negotiated and accepted based on current
participation of 117 Participants. Fees will be subject to revision if these
Plan characteristics change significantly by either falling below or exceeding
current or projected levels. Fees also have been based on the use of up to 17
investment options, and such fees will be subject to revision if additional
investment options are added.
Other Fees: Separate charges for extraordinary expenses resulting from large
numbers of simultaneous manual transactions, from errors not caused by Fidelity,
reports not contemplated in this Agreement, corporate actions, or the provision
of communications materials in hard copy which are also accessible to
Participants via electronic services in the event that the provision of such
material in hard copy would result in an additional expense deemed to be
material.
Fees for corporate actions will be negotiated separately based on the
characteristics of the project as well as the overall relationship at the time
of the project.
ADVO, INC. FIDELITY MANAGEMENT TRUST
COMPANY
By: /s/ Xxxxx X. Xxxxxxx 12/22/02 By: /s/ Xxxx Xxxxxx 2/4/03
----------------------------- ----------------------------------
Date FMTC Authorized Signatory Date
28
SCHEDULE "C"
[Administrator's Letterhead]
Xx. Xxxxxxx X. Xxxxx
Fidelity Investments
82 Devonshire Street, MM3H
Xxxxxx, Xxxxxxxxxxxxx 00000
ADVO, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
*** NOTE: This schedule should contain names and signatures for ALL
individuals who will be providing directions to Fidelity
representatives in connection with the Plan.
Fidelity representatives will be unable to accept directions from any
individual whose name does not appear on this schedule.***
Dear Xx. Xxxxx:
This letter is sent to you in accordance with Section 8(b) of the Trust
Agreement, dated as of [DATE], between [NAME OF SPONSOR] and Fidelity Management
Trust Company. [I OR WE] hereby designate [MYSELF - IF SO DESIRED], [NAME OF
INDIVIDUAL], [NAME OF INDIVIDUAL], AND [NAME OF INDIVIDUAL], as the individuals
who may provide directions upon which Fidelity Management Trust Company shall be
fully protected in relying. Only one such individual need provide any direction.
The signature of each designated individual is set forth below and certified to
be such.
You may rely upon each designation and certification set forth in this
letter until [I or we] deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
[ADMINISTRATOR]
By
[signature of designated individual]
------------------------------------
[name of designated individual]
[signature of designated individual]
------------------------------------
[name of designated individual]
[signature of designated individual]
------------------------------------
[name of designated individual]
29
SCHEDULE "D"
OPERATIONAL GUIDELINES FOR NON-FIDELITY MUTUAL FUNDS
Pricing
By 7:00 p.m. Eastern Time ("ET) each Business Day, the Non-Fidelity Mutual Fund
Vendor (Fund Vendor) will input the following information ("Price Information")
into the Fidelity Participant Recordkeeping System ("FPRS") via the remote
access price screen that Fidelity Investments Institutional Operations Company,
Inc. ("FIIOC"), an affiliate of the Trustee, has provided to the Fund Vendor:
(1) the net asset value for each Fund at the Close of Trading, (2) the change in
each Fund's net asset value from the Close of Trading on the prior Business Day,
and (3) in the case of an income fund or funds, the daily accrual for interest
rate factor ("mil rate"). FIIOC must receive Price Information each Business Day
(a "Business Day" is any day the New York Stock Exchange is open). If on any
Business Day the Fund Vendor does not provide such Price Information to FIIOC,
FIIOC shall pend all associated transaction activity in the Fidelity Participant
Recordkeeping System ("FPRS") until the relevant Price Information is made
available by Fund Vendor.
Trade Activity and Wire Transfers
By 7:00 a.m. ET each Business Day following Trade Date ("Trade Date Plus One"),
FIIOC will provide, via facsimile, to the Fund Vendor a consolidated report of
net purchase or net redemption activity that occurred in each of the Funds up to
4:00 p.m. ET on the prior Business Day. The report will reflect the dollar
amount of assets and shares to be invested or withdrawn for each Fund. FIIOC
will transmit this report to the Fund Vendor each Business Day, regardless of
processing activity. In the event that data contained in the 7:00 a.m. ET
facsimile transmission represents estimated trade activity, FIIOC shall provide
a final facsimile to the Fund Vendor by no later than 9:00 a.m. ET. Any
resulting adjustments shall be processed by the Fund Vendor at the net asset
value for the prior Business Day.
The Fund Vendor shall send via regular mail to FIIOC transaction confirms for
all daily activity in each of the Funds. The Fund Vendor shall also send via
regular mail to FIIOC, but no later than the fifth Business Day following
calendar month close, a monthly statement for each Fund. FIIOC agrees to notify
the Fund Vendor of any balance discrepancies within twenty (20) Business Days of
receipt of the monthly statement.
For purposes of wire transfers, FIIOC shall transmit a daily wire for aggregate
purchase activity and the Fund Vendor shall transmit a daily wire for aggregate
redemption activity, in each case including all activity across all Funds
occurring on the same day.
Prospectus Delivery
FIIOC shall be responsible for the timely delivery of Fund prospectuses and
periodic Fund reports ("Required Materials") to Participants, and shall retain
the services of a third-party vendor to handle such mailings. The Fund Vendor
shall be responsible for all materials and production costs, and hereby agrees
to provide the Required Materials to the third-party vendor selected by FIIOC.
The Fund Vendor shall bear the costs of mailing annual Fund reports to
Participants. FIIOC shall bear the costs of mailing prospectuses to
Participants.
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SCHEDULE "D"(CONTINUED)
Proxies
The Fund Vendor shall be responsible for all costs associated with the
production of proxy materials. FIIOC shall retain the services of a third-party
vendor to handle proxy solicitation mailings and vote tabulation. Expenses
associated with such services shall be billed directly the Fund Vendor by the
third-party vendor.
Participant Communications
The Fund Vendor shall provide internally prepared fund descriptive information
approved by the Funds' legal counsel for use by FIIOC in its written Participant
communication materials. FIIOC shall utilize historical performance data
obtained from third-party vendors (currently Morningstar, Inc., FACTSET Research
Systems and Lipper Analytical Services) in telephone conversations with
Participants and in quarterly Participant statements. The Sponsor hereby
consents to FIIOC's use of such materials and acknowledges that FIIOC is not
responsible for the accuracy of third-party information. FIIOC shall seek the
approval of the Fund Vendor prior to retaining any other third-party vendor to
render such data or materials under this Agreement.
Compensation
FIIOC shall be entitled to fees as set forth in a separate agreement with the
Fund Vendor.
31
SCHEDULE "E"
EXCHANGE GUIDELINES
The following exchange guidelines are currently employed by Fidelity Investments
Institutional Operations Company, Inc. (FIIOC).
Exchange hours, via a Fidelity Participant service representative, are 8:30 a.m.
(ET) to 8:00 p.m. (ET) on each business day, subject to any restrictions
otherwise referenced herein. A "business day" is any day on which the New York
Stock Exchange (NYSE) is open.
Exchanges via the internet (Netbenefits) may be made virtually 24 hours a day,
subject to any restrictions otherwise referenced herein.
Exchanges via Voice Response System ("VRS") may be made virtually 24 hours a
day, subject to any restrictions otherwise referenced herein.
FIIOC reserves the right to change these exchange guidelines at its discretion.
Note: The NYSE's normal closing time is 4:00 p.m. (ET); in the event the NYSE
alters its closing time, all references below to 4:00 p.m. (ET) shall mean the
NYSE closing time as altered.
MUTUAL FUNDS
EXCHANGES BETWEEN MUTUAL FUNDS
In accordance with this Agreement, the Sponsor may direct that Participants
contact Fidelity on any day to exchange between Mutual Funds. If the request is
confirmed before the close of the market (generally, 4:00 p.m. ET) on a business
day, it will receive that day's trade date. Requests confirmed after the close
of the market on a business day (or on any day other than a business day) will
be processed on a next day basis.
STOCK FUND
Provided that the Stock Fund is open for purchases and sales of units, the
following rules will govern exchanges:
I. EXCHANGES FROM MUTUAL FUNDS TO STOCK FUND
Participants may contact Fidelity on any day to exchange from Mutual
Funds into the Stock Fund. If the request is confirmed before the close
of the market (generally, 4:00 p.m. ET) on a business day, it will
receive that day's trade date. Requests confirmed after the close of
the market on a business day (or on any day other than a business day)
will be processed on a next business day basis.
32
II. EXCHANGES FROM STOCK FUND TO MUTUAL FUNDS
Participants may contact Fidelity on any day to exchange from the Stock
Fund to Mutual Funds. If Fidelity receives the request before the close
of the market (generally 4:00 p.m. ET) on any business day and
Available Liquidity is sufficient to honor the trade after Specified
Hierarchy rules are applied, it will receive that day's trade date.
Requests received by Fidelity after the close of the market on any
business day (or on any day other than a business day) will be
processed on a next business day basis, subject to Available Liquidity
for such day after application of Specified Hierarchy rules. If
Available Liquidity on any day is insufficient to honor the trade after
application of Specified Hierarchy rules, it will be suspended until
Available Liquidity is sufficient, after application of Specified
Hierarchy rules, to honor such trade, and it will receive the trade
date and Closing Price of the date on which it was processed.
SECTION 16b RESTRICTIONS
EXCHANGE RESTRICTIONS FOR SECTION 16 OFFICERS:
- Exchanges into or out of the Stock Fund are not permitted by
Section 16 Officers without the approval of the Sponsor. The
Sponsor shall approve/disapprove such request, and if approved,
shall direct Fidelity to process the exchange. Section 16 Officers
will be identified by the Sponsor and the Sponsor will transmit
this information to Fidelity.
ADVO, INC. FIDELITY MANAGEMENT TRUST
COMPANY
By: /s/ Xxxxx X. Xxxxxxx 12/22/02 By: /s/ Xxxx Xxxxxx 2/4/03
------------------------------ ---------------------------------
Date FMTC Authorized Signatory Date
33
SCHEDULE "F"
AVAILABLE LIQUIDITY PROCEDURES FOR UNITIZED STOCK FUND
The following procedures shall govern sales of the Stock Fund requested for a
day on which Available Liquidity is insufficient:
1. Withdrawals and distributions will be aggregated and placed first in
the hierarchy. If Available Liquidity is sufficient for the aggregate
of such transactions, all such withdrawals and distributions will be
honored. If Available Liquidity is not sufficient for the aggregate of
such transactions, then such transactions will be suspended, and no
transactions requiring a sale of Stock Fund units shall be honored for
that day.
2. If Available Liquidity has not been exhausted by the aggregate of
withdrawals and distributions, then all remaining transactions
involving a sale of units in the Stock Fund (exchanges out) shall be
grouped on the basis of when such requests were received, in accordance
with standard procedures maintained by the Trustee for such grouping as
they may be amended from time to time. To the extent of Available
Liquidity, groups of exchanges out of the Stock Fund shall be honored,
by group, on a "first in, first out" basis. If Available Liquidity is
insufficient to honor all exchanges out within a group, then none of
the exchanges out in such group shall be honored, and no exchanges out
in a later group shall be honored.
3. Transactions not honored on a particular day due to insufficient
Available Liquidity shall be honored, using the hierarchy specified
above, on the next business day on which there is Available Liquidity.
34
SAMPLE DIRECTION LETTER
[Employer's Letterhead]
Xxxx X. Xxxxxx, Esq.
Vice President and Pension Counsel
Fidelity Investments
00 Xxxxxxxxxx Xxxxxx, X0X
Xxxxxx, XX 00000
RE: INVESTMENT INSTRUCTIONS FOR RABBI TRUST ASSETS
Dear Xx. Xxxxxx:
The Participants under the ADVO, Inc. Executive Deferred Compensation
Plan ("Plan") have the right to direct the investment of their Plan account in
hypothetical investment options, which are currently based on a number of
registered investment companies advised by Fidelity Management & Research
Company ("Fidelity Mutual Funds") and certain investment companies not advised
by Fidelity Management & Research Company ("Non-Fidelity Mutual Funds").
Fidelity Management Trust Company has agreed pursuant to a Trust Agreement with
ADVO, Inc., dated January 2, 2002, to receive such Participant directions.
The Sponsor hereby directs the Trustee to invest funds contributed to
the rabbi trust in a manner which corresponds directly to elections made by
Participants under the Plan.
This procedure will remain in effect until a revised instruction letter
is provided by the Sponsor and accepted by the Trustee.
Sincerely,
/s/ Xxxxx X. Xxxxxxx
-----------------------------
35
