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EXHIBIT 10.4
TRUE NORTH COMMUNICATIONS INC.
SENIOR MANAGEMENT INCOME PROTECTION PLAN
ESTABLISHED EFFECTIVE JUNE 1, 2000
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TRUE NORTH COMMUNICATIONS INC.
SENIOR MANAGEMENT INCOME PROTECTION PLAN
True North Communications Inc. ("True North") hereby establishes
the True North Communications Inc. Senior Management Income Protection Plan (the
"Plan") effective June 1, 2000.
SECTION 1: PURPOSE OF THE PLAN.
The purpose of the Plan is to advance the interests of True North and its
subsidiaries (hereinafter individually or collectively, as the case may be,
referred to as the "Company") and its shareholders by providing financial
protection to selected key senior management employees of the Company.
SECTION 2: ELIGIBILITY.
Persons eligible to participate in this Plan are key employees of the Company
who shall be selected by the Compensation Committee of the Board of Directors of
the Company (the "Committee") (or any officer of True North who has been
delegated such authority by the Committee, as provided in Section 3 below);
provided that in no event shall a key employee be eligible for participation
under the Plan if such employee is or becomes covered under another plan or
negotiated arrangement providing for severance benefits (other than the
Company's regular severance guidelines generally covering employees, which,
subject to Section 8(b), shall be superseded by the Plan with respect to
eligible Plan participants). In selecting the eligible Plan participants, the
Committee shall take into consideration such factors as it deems relevant in
connection with accomplishing the purposes of the Plan.
Each key employee selected by the Committee shall be required to execute a
separate Senior Management Income Protection Letter Agreement with the Company
(the "Agreement") which will provide for (i) the payment of benefits in
accordance with the provisions of this Plan, and (ii) the terms and conditions
by which the key employee agrees to be bound in order to participate in the
Plan. A key employee selected by the Committee who has executed an Agreement is
hereinafter referred to as a "Participant."
SECTION 3: PLAN ADMINISTRATION.
The Committee or its delegates may establish such rules and regulations, not
inconsistent with the provisions of the Plan, as it deems necessary for the
proper administration of the Plan, and may amend or revoke any rule or
regulation so established. The Committee may make such determinations and
interpretations under or in connection with the Plan as it deems necessary or
advisable. All such rules, regulations, determinations and interpretations shall
be binding and conclusive upon the Company, its officers, employees,
shareholders, Participants, their respective
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legal representatives, beneficiaries, successors and assigns, and upon all other
persons claiming under or through any of them.
Notwithstanding the foregoing provisions of Section 2 or this Section 3, the
Committee may delegate all or a portion of its authority for administering the
Plan to an officer or officers of True North. To the extent so delegated, the
term "Committee" hereunder shall be deemed to refer to such officer or officers.
The Committee shall take such actions it deems necessary or desirable to ensure
that such officer or officers have sufficient and appropriate authority for
carrying out the intent and purpose of the Plan.
SECTION 4: REQUIREMENTS FOR BENEFITS.
(a) INVOLUNTARY TERMINATION OF EMPLOYMENT BY COMPANY AS CONDITION FOR
ELIGIBILITY. No benefits shall be payable under the Plan or any
Agreement unless the Participant's employment is involuntarily
terminated by the Company without Cause (a "Qualifying
Termination").
(b) DEFINITION OF CAUSE. The Company may terminate the Participant's
employment for "Cause" if, in the reasonable determination of the
Company, as set forth in a writing explaining in reasonable
detail the reasons for such termination, (i) the Participant
engages in conduct that violates significant policies of the
Company, (ii) the Participant fails to perform the essential
functions of his or her job (except for a failure resulting from
a bona fide illness or incapacity) or fails to carry out the
Company's reasonable directions, issued through its Chief
Executive Officer, Board of Directors or other appropriate senior
officer responsible for the Participant's business unit or area,
with respect to material duties, (iii) the Participant engages in
embezzlement or misappropriation of corporate funds or other acts
of fraud, dishonesty or self-dealing, or commits a felony or any
significant violation or any material statutory or common law
duty of loyalty to the Company, or (iv) the Participant breaches
a material provision of the Plan or the Agreement.
SECTION 5: SEVERANCE BENEFITS.
In the event of a Participant's Qualifying Termination, the Company shall pay
the Participant the following:
(a) SALARY. Continued base salary, at the Participant's rate of
salary in effect on the date of his or her Qualifying
Termination, through the end of the Severance Period specified in
the Participant's Agreement (the "Severance Period"). Such
continued base salary shall be payable in accordance with the
Company's regular payroll practices;
(b) BONUS. The Participant shall receive a pro-rated bonus for the
year in which his or her termination of employment occurs equal
to 80% of (A x B), where:
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A equals the Participant's average annual bonus paid or
payable to him or her by the Company during the immediately
three previous fiscal years (or such other relevant average
if the Participant has been employed by the Company for less
than three years at the time of his or her termination of
employment); and
B equals a fraction, the numerator of which is the number of
days in the current fiscal year through the date of the
Participant's termination of employment and the denominator
of which is 365 or 366, as the case may be.
(c) MEDICAL, DENTAL AND LIFE INSURANCE BENEFITS. The Participant
shall continue to be entitled to medical, dental and life
insurance benefits on the same basis and at the same cost as if
he or she were still employed during the Severance Period, but,
except as otherwise required by law, in no event shall such
benefits continue beyond the date on which the Participant
accepts subsequent employment. Notwithstanding anything to the
contrary, any welfare benefit plan continuation coverage required
to be provided to a Participant under Part 6 of Title I, Subtitle
B of the Employee Retirement Income Security Act of 1974, as
amended, and Section 4980B of the Internal Revenue Code of 1986,
as amended, as a result of such Participant's Qualifying
Termination, shall be offered and shall run concurrently with any
welfare plan benefits provided under this paragraph (c).
(d) STOCK OPTIONS. Any stock options granted to a Participant after
the date he or she becomes eligible for participation in the
Plan, which are unvested on the date of his or her Qualifying
Termination but would have vested within the Severance Period,
shall become fully vested as of such date and may be exercised in
accordance with the terms and conditions set forth in the
relevant grant agreement for such stock options.
(e) PLACEMENT ASSISTANCE. The Participant shall be entitled to
receive reimbursement for expenses incurred in connection with
locating comparable employment with another employer solely as a
result of such Participant's Qualifying Termination. Only
placement expenses which are approved in advance by the Committee
or its designee shall be covered under the Plan. Any submission
for reimbursement must be substantiated in writing in accordance
with procedures set by the Committee. In no event shall the total
aggregate reimbursed expenses for any Participant exceed the
maximum amount set forth in his or her Agreement.
All severance benefits payable under this Section 5 shall be reduced by any and
all withholdings and deductions required or allowed under all applicable
federal, state and local or other laws or regulations.
Notwithstanding anything to the contrary under the Plan:
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(i) The Participant shall be required to execute a "Release of Claims
and Liability" as approved by the Committee as a condition of
receiving any payment under this Section 5;
(ii) If the Participant's Severance Period is longer than six months,
then after the first six months following a Participant's
Qualifying Termination the Company reserves the right to reduce
(or recover) in any manner the severance benefits described in
paragraph (a) above to be paid for the remainder of the Severance
Period, if any, by any other employment income earned by the
Participant during the remainder of such Severance Period; and
(iii) All payments under this Section 5 are conditioned on the
Participant's full compliance with all of the terms and
conditions set forth in this Plan and his or her Agreement
SECTION 6: NONSOLICITATION, CONFIDENTIALITY AND NONDISPARAGEMENT.
The Plan is intended to benefit mutually both the Participant, through financial
security, and the Company, through the Participant's continuity in service. It
is imperative that in order for both parties to benefit under the Plan, the
Company's continued competitive position be maintained. To effectuate this,
certain promises and covenants must be made regarding solicitation,
confidentiality and disparagement. Therefore, any entitlement to benefits under
the Plan shall be conditioned upon acceptance of and compliance with all of the
following rules and provisions:
(a) NONSOLICITATION. During the course of a Participant's employment
with the Company and during the time period designated as the
Severance Period (regardless of whether the Participant actually
receives severance benefits during that period), a Participant is
prohibited from, directly or indirectly, either on his or her own
behalf or on behalf of any other person, firm or corporation,
soliciting any account that is a client of the business unit or
units of the Company that employs such Participant (the "Business
Unit") at the time of, or at any time within six months prior to,
such Participant's termination of employment for any reason or
that was a client of the Business Unit at any time within six
months prior to the date of such Participant's termination of
employment for any reason. A Participant is also prohibited from
performing any services relating to advertising, marketing,
research, public relations or related services for any such
account.
During the course of a Participant's employment with the Company
and during the time period designated as the Severance Period
(regardless of whether the Participant actually receives
severance benefits during that period), the Participant is
prohibited from, directly or indirectly, employing or attempting
to employ or assisting anyone else in attempting to employ any
person who is at such time or
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who was within the six-month period immediately prior to such
time in the employ of the Business Unit.
(b) CONFIDENTIALITY.
(i) All intellectual property created or conceived by a
Participant during the course of his or her employment with
the Company constitutes "work for hire" and is property of
the Company, including all ideas, inventions, literary
property, music, lyrics, scripts, themes, stories,
characters, slogan, plots, story lines, titles, copy, art,
photography and footage and any other idea (collectively the
"Materials") that such Participant creates during the course
of his or her employment with the Company or in connection
with any of its clients or prospective clients. If for any
reason the Materials cannot legally constitute a "work for
hire," then a Participant is required to assign all rights,
title and interest in said Materials to the Company and to
agree to execute such documents as may be necessary to
evidence such assignment(s).
(ii) A Participant retains ownership of any and all intellectual
property created by him or her prior to his or her
employment with the Company and that is not used with such
Participant's permission by the Company or any of its
clients. A Participant also retains ownership of any
intellectual property created by him or her while employed
by the Company if such intellectual property is created
outside the scope of such Participant's employment and is
not created during Company time, on Company property or with
Company resources.
(iii) A Participant must maintain all of his or her ideas and all
other information concerning the business of the
Company, its clients and prospective clients
(collectively the "Confidential Information") in
strictest confidence both during and at all times
following such Participant's employment with the
Company. A Participant is prohibited from, at any time
during his or her employment or after his or her
employment with the Company ends for any or no reason,
except as directed or permitted by the Company in
writing, disclosing or taking any action or inaction
which could result in disclosure to any person, firm,
corporation or other entity of any Confidential
Information, or in any way directly or indirectly
utilizing Confidential Information for any purpose,
including without limitation for his or her own benefit
or the benefit of others. Confidential Information
includes, without limitation, business prospects,
computer software, research techniques, research
results, media plans, layouts, storyboards, scripts,
reports and information regarding the Company's or its
actual or prospective clients' advertising, marketing
and sales promotion products, services and strategies,
and any other information deemed confidential in the
Non-Public and Confidential Information provision of the
Company's
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Code of Conduct, which such Participant has received,
whether imparted to him or her by the Company or its clients
or prospective clients or obtained by him or her as part of
his or her employment relationship, and whether or not
marked confidential or proprietary. Notwithstanding the
foregoing, information shall not be deemed Confidential
Information if it has lawfully become publicly known outside
of the Company through appropriate means, and other than
through the act or omission of any person that has or had an
obligation of non-disclosure or non-use with respect to such
information.
(c) NONDISPARAGEMENT. A Participant is prohibited from, at any time
during his or her employment with the Company or thereafter,
making any public or private statement to the news media, to any
competitor or client of the Company, or to any other individual
or entity, if such statement would disparage the Company, the
Company's respective business or any director or officer of the
Company or would have a deleterious effect upon the interests of
the Company or the stockholders or other owners of the Company.
This paragraph (c) will not be breached if the relevant
statement(s) consist solely of:
(i) private statements made to any officers, directors or
employees of the Company by a Participant in the course of
carrying out his or her duties,
(ii) private statements made to persons other than clients or
competitors of the Company (or its representatives) or
members of the press or the financial community that do not
have a material adverse effect upon the Company, or
(iii) statements made in good faith that are required by law,
regulation or order of any court or regulatory commission,
department or agency.
(d) ENFORCEMENT. By execution of an Agreement under the Plan, the
Participant acknowledges and agrees that the Company would be
damaged irreparably if any provision under this Section 6 were
breached by him or her and money damages would be an inadequate
remedy for any such nonperformance or breach. Accordingly, the
Company and its successors or permitted assigns in order to
protect its interests, shall pursue, in addition to other rights
and remedies existing in its favor, an injunction or injunctions
to prevent any breach or threatened breach of any of such
provisions and to enforce such provisions specifically (without
posting a bond or other security). With respect to such
enforcement, the Company shall be entitled to recover from a
Participant any and all attorneys' fees, costs and expenses
incurred by or on behalf of the Company in enforcing or
attempting to enforce any provision under this Section 6 or any
of the Company's rights under this Plan.
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SECTION 7: AMENDMENT OR TERMINATION.
The Company reserves the right to have the Committee amend, modify, suspend, or
terminate the Plan at any time; provided that without the consent of the
Participant, no such amendment, modification, suspension or termination shall
materially affect the terms of a Participant's existing Agreement without the
Participant's written consent.
SECTION 8: MISCELLANEOUS.
(a) ARBITRATION. Any controversy or claim arising out of or relating
to this Plan, or breach hereof, shall be settled by
arbitration with an arbitrator appointed by the Company. The
arbitration shall be conducted in accordance with the rules of
the American Arbitration Association, except with respect to
the selection of an arbitrator. The arbitrator's determination
shall be final and binding upon all parties and judgment upon
the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. Notwithstanding the
foregoing, claims which the Company has or may have against
the Participant based on violation or threatened violation of
his or her obligations pursuant to Section 6 of the Plan are
excluded from this arbitration provision.
(b) COORDINATION WITH OTHER PLANS AND ARRANGEMENTS. No key employee
shall be eligible for participation under the Plan if such
employee is or becomes covered under an individually-negotiated
arrangement providing for severance benefits. Notwithstanding the
foregoing, if, upon ultimate termination of employment, the
severance period that would apply to a Participant under the
Company's regular severance policy applicable to employees
generally would be greater than the Severance Period applicable
pursuant to such Participant's Agreement, then such Participant's
Severance Period shall be increased to correspond to the
severance period that would have applied under such severance
policy.
(c) NO FUNDING OF SEVERANCE BENEFITS. Nothing herein contained shall
require or be deemed to require the Company to segregate, earmark
or otherwise set aside any funds or other assets to provide for
any payments made hereunder. The rights of any Participant under
this Plan shall be solely those of a general creditor of the
Company. However, in the event the Company foresees payment under
the Plan, the Company may deposit cash or property, or both,
equal in value to all or a portion of the benefits anticipated to
be payable hereunder for any or all Participants into a trust,
the assets of which are to be distributed at such times as are
otherwise provided for in this Plan and are subject to the rights
of the general creditors of the Company.
(d) EFFECT OF DEATH. In the event of the Participant's death after
termination of employment, all benefits under this Plan shall
cease (except for any life insurance benefits).
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(e) AFFIRMATIVE DUTY TO SEEK EMPLOYMENT. The Participant shall be
under a good faith duty and obligation to reasonably seek other
employment after a Qualifying Termination during the
Participant's applicable Severance Period.
(f) NO ALIENATION OF BENEFITS. The Participant shall not have any
right to pledge, hypothecate, anticipate or in any way create a
lien upon any amounts provided under this Plan and no benefits
payable hereunder shall be assignable in anticipation of payment
either by voluntary or involuntary acts, or by operation of law.
(g) INCAPACITY. If, in the opinion of the Committee, a Participant or
other person entitled to benefits hereunder is physically or
mentally incapable of personally receiving any payment due
hereunder, the Committee may determine that payments be made to a
person, persons or institution who, in the opinion of the
Committee, maintains or has custody of the Participant, until
claim is made by a conservator or guardian legally charged with
the care of his or her person or his or her estate. Any payments
hereunder shall constitute a full discharge of the liability of
the Company to the extent thereof.
(h) SUCCESSORS TO THE COMPANY. This Plan shall be binding upon the
Company and any successor of the Company, including without
limitation any corporation or other entity acquiring directly or
indirectly all or substantially all of the assets of the Company
whether by merger, consolidation, sale or otherwise. Such
successor shall thereafter be deemed the "Company" for the
purposes of this Plan.
(i) EMPLOYMENT RIGHTS. Establishment of this Plan shall not be
construed to give any Participant the right to be retained by the
Company or to any benefits not specifically provided by the Plan.
(j) VALIDITY. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any
other provision of this Plan, which shall continue in full force
and effect.
(k) EFFECTIVE DATE AND GOVERNING LAW. This Plan shall be effective as
of June 1, 2000 and shall be governed and construed in accordance
with the laws of the State of Illinois.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Terry D. Peigh
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Its: Executive Vice President
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Dated: June 23, 2000
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