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Deficient management leads INDITEX on the verge of fail BUCHAREST, ROMANIA - Zara wants to cover losses from theft with employees’ money. The management, theft and losses give headaches to the Spanish group INDITEX, the owner of the ZARA chain. Only 10 months before, on July 25th, 2011, the publication Ziarul Financiar announced the fact that “INDITEX takes the manager from the Douglas perfumeries” pointing at Paul Cuza, who previously had the function of General Manager for Parfumerie Douglas SRL. Currently, the Romanian INDITEX group performs salary and structural changes without precedent, which the management team from Bucharest doesn’t want to explain. The problem of the clothes theft is a known phenomenon, especially when it comes to expensive brands such as ZARA or Massimo Dutti. The phenomenon was publicly recognized even by the management of the INDITEX Group Romania, two years before. Probably worried by this fact, Mihai Cioltea, the development manager of the INDITEX Group from Romania, also named by the press as “the Zara man”, stated in 2010 for the economic website InCont the following: “They steal a lot. Only for the stores in Bucharest we have 10 cases of stealing per day, which we discover and, depending on the severity, we call the police”.[...] Read the rest of the article... |
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SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
For the period ended March 31, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d)
For the transition period from to Commission file number 1-7092 ILLINOIS CENTRAL RAILROAD COMPANY (Exact name of registrant as specified in its charter)
Registrant's telephone number, including area code: (312) 755-7500 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of March 31, 1996, 100 common shares were outstanding. THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF ILLINOIS CENTRAL CORPORATION AND MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF THE FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
ILLINOIS CENTRAL RAILROAD COMPANY
Three Months Ended March 31, 1996 CONTENTS Part I - Financial Information:
Part II - Other Information: Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12
ILLINOIS CENTRAL RAILROAD COMPANY
The following notes are an integral part of the consolidated
ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
The following notes are an integral part of the consolidated financial statements.
ILLINOIS CENTRAL RAILROAD COMPANY AND SUBSIDIARIES
Supplemental disclosure of cash flow information :
The following notes are an integral part of the consolidated financial statements.
ILLINOIS CENTRAL RAILROAD COMPANY
Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation Except as described below, the accompanying unaudited consolidated financial statements have been prepared in accordance with accounting policies described in the 1995 Annual Report on Form 10-K and should be read in conjunction with the disclosures therein. In the opinion of management, these interim financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Interim results are not necessarily indicative of results for the full year. Certain 1995 amounts have been reclassified to conform with the presentation used in the 1996 financial statements. Income Per Share Income per common share has been omitted as the Railroad is a wholly-owned subsidiary of Illinois Central Corporation ("IC"). 2. Equity and Restrictions on Dividends To date, the Railroad has paid dividends of $24.2 million in 1996. The Railroad is no longer subject to specific dividend restrictions. Covenants of the Railroad's Revolver require specified levels of tangible net worth. At March 31, 1996, the Railroad exceeded its tangible net worth covenant by $73.9 million. 3. CCP Holdings, Inc. Acquisition On January 17, 1996, IC announced that it had entered into a definitive agreement to purchase all the stock of CCP Holdings, Inc., for approximately $125 million in cash, the assumption of approximately $14 million in net debt and approximately $18 million of capitalized lease obligations. IC expects to fund the acquisition using its credit lines and debt issued by the Railroad. The Railroad will transfer the funds to IC via a combination of dividends and intercompany loan. On April 30, 1996, the STB announced they had voted in favor of the acquisition. On April 30, 1996, the STB announced they had voted in favor of the acquisition. Formal written approval, including an effective date of the order, is required before the transaction can be closed. IC expects the closing to occur in late June or early July. CCP Holdings, Inc. has two principal subsidiaries, the Chicago, Central and Pacific Railroad (CCP) and the Cedar River Railroad (CRR). These two railroads comprise a Class II freight system which operates 850 miles of road. CCP operates from Chicago west to Omaha, Nebraska, with connecting lines to Cedar Rapids and Sioux City, Iowa. CRR runs north from Waterloo, Iowa to Albert Lea, Minnesota. CCP Holdings, Inc.'s 1995 revenues were approximately $76 million, its operating ratio was approximately 70%, and its shareholders' equity was approximately $54 million at December 31, 1995. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion below takes into account the financial condition and results of operations of the Railroad for the periods presented in the consolidated financial statements. Results of Operations Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995 Revenues for 1996 decreased from the prior year quarter by $5.2 million or 3.1% to $162.3 million. The decrease was a result of a 8.2% decrease in the number of carloadings partially offset by a .5% increase in the average freight revenue per carload. In 1996, the Railroad experienced decreased carloadings in coal (26.0%), chemicals (7.9%), paper (4.1%) and grain and grain mill products (12.5%), partially offset by increased intermodal loads (8.0%). Operating expenses overall declined in the first quarter of 1996 $1.9 million or 1.8%. On a component basis: labor and fringe costs rose reflecting the wage increases negotiated with eight of the eleven unions; leases and car hire declined as a result of decreased traffic volume and continued conversion to ownership and better car management stressing better car turnover; the decline in material and supplies reflects the winding down of the 1995 wheel replacement program; depreciation reflects the shift to ownership; casualty, insurance and losses declined despite a significant derailment primarily on the strength of savings which are a direct result of improved safety and lower settlement costs; and the increase in Other over 1995 is the direct result of losses of joint facility income when another carrier stopped using our track in southern Illinois and an increase in various equipment related costs. Operating income for 1996 decreased by $3.3 or 5.4% to $57.8 million for the reasons cited above. Net interest expense of $6.8 million for 1996 increased 1.5% compared to $6.7 million in 1995. Increased debt burden primarily associated with equipment additions account for the increase in interest expense.
Operating activities in 1996 provided $36.1 million in cash, primarily from net income before depreciation and deferred taxes.
Property retirements and removals generated proceeds of $1.4 million and $1.9 million in 1996 and 1995, respectively. The Railroad anticipates that capital expenditures for 1996 will be approximately $114 million of which $83 million of base expenditures will concentrate on track maintenance (i.e., renewal of track structures such as bridges) and freight car upgrades. Approximately $20 million will be incurred to expand the Railroad's intermodal facility in Chicago to service Canadian National Railway. These expenditures are expected to be met from current operations or other available sources. The Railroad has a commercial paper program whereby a total of $150 million can be issued and outstanding at any one time. The program is supported by a $250 million Revolver with the Railroad's lending group (see below). At March 31, 1996, the commercial paper has been rated A2, P2 and F2 and $62.0 million was outstanding. The Railroad views this program as a significant long-term funding source and intends to issue replacement notes as each existing issue matures. Therefore, commercial paper borrowings are classified as long-term. The Railroad's public debt is rated Baa2 by Moody's and BBB by S&P. In 1994, the Railroad entered into a revolving agreement to sell undivided percentage interests in certain of its accounts receivable, with recourse, to a financial institution. The agreement, which expires in June 1998, allows for sales of accounts receivable up to a maximum of $50 million at any one time. The Railroad services the accounts receivable sold under the agreement and retains the same exposure to credit loss as existed prior to the sale. At March 31, 1996, $48 million had been sold pursuant to the agreement. Costs related to the agreement fluctuate with changes in prevailing interest rates. These costs, which are included in Other Income (Expense), Net, were $.8 million for each of the three month periods ended March 31, 1996 and 1995. In April 1996, the Railroad concluded negotiations with its bank lending group whereby the Railroad's $250 million Revolver was amended and restated, for the fourth time since becoming unsecured in September 1993. The amendment reduced various facility fees and borrowing spreads, lowered the tangible net worth requirement beginning in the second quarter and changed the expiration date to 2001. Fees and borrowing spreads are predicated on the Railroad's long-term credit ratings. Currently, the annual facility fee is 15 basis points and borrowings under this agreement are at Eurodollar offered rate plus 22.5 basis points. The Revolver will be used primarily for backup for the Railroad's commercial paper program but can be used for general corporate purposes. The available amount is reduced by the outstanding amount of commercial paper borrowings and any letters of credit issued on behalf of the Railroad under the facility. No amounts have been drawn under the Revolver. At March 31, 1996, the $250 million was limited to $188.0 million because $62.0 million in commercial paper was outstanding. The Railroad believes that its available cash, cash generated by its operations and cash available from the facilities described above will be sufficient to meet foreseeable liquidity requirements. Additionally, the Railroad believes it has access to the public debt market if needed. Various borrowings of the Railroad are governed by agreements which contain financial and operating covenants. All entities were in compliance with these covenant requirements at March 31, 1996, and management does not anticipate any difficulty in maintaining such compliance. Certain covenants of the Railroad's debt agreements require specific levels of tangible net worth but not a specific dividend restriction. The Railroad paid dividends to IC of $107.7 million in 1995, $42.5 million in 1994 and $27.4 million in 1993. At March 31, 1996, the Railroad's tangible net worth exceeded the former level by approximately $73.9 million. The calculation under the new levels will be done at June 30, 1996. To date in 1996, the Railroad has declared and paid dividends of $24.2 million to IC. The Railroad has entered into various diesel fuel collar agreements designed to mitigate significant changes in fuel prices. As a result, approximately 65% of the Railroad's short-term diesel fuel requirements through June 1996 and 17% for the period July 1996 through June 1997 are protected against significant price changes.
The Railroad continues to negotiate with its three remaining
operating unions on a local level, while no agreements are pending
agreements may be reached that require significant lump sum payments.
It is too early to determine if separate agreements will be reached but
management believes available funding sources will be sufficient to
meet any required payments.
The Railroad's operations are subject to comprehensive environmental regulation by federal, state and local authorities. Compliance with such regulation requires the Railroad to modify its operations and expend substantial manpower and financial resources. Under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("Superfund"), and similar state and federal laws, the Railroad is potentially liable for the cost of clean-up of various contaminated sites. The Railroad has been notified that it is a Potentially Responsible Party at sites ranging from those with hundreds of potentially responsible parties to sites at which the Railroad is primarily responsible. The Railroad generally participates in the clean-up at sites where other substantial parties share responsibility through cost-sharing arrangements, but under Superfund and other similar laws the Railroad can be held jointly and severally liable for all environmental costs associated with such sites. The Railroad is aware of approximately 30 contaminated sites and various fueling facilities at which it is probably liable for some portion of the clean-up. The Railroad paid approximately $6.3 million in 1995 toward the investigation and remediation of those sites, and anticipates future expenditures of between $1 million and $2 million annually. Furthermore, recent amendments to the Clean Air Act require the Environmental Protection Agency to promulgate regulations restricting the level of pollutants in locomotive emissions which could impose significant retrofitting requirements, operational inefficiencies or capital expenditures in the future. For all known sites of environmental contamination where Railroad loss or liability is probable, the Railroad has recorded an estimated liability at the time when a reasonable estimate of remediation cost and Railroad liability can first be determined. Adjustments to initial estimates are recorded as necessary based upon additional information developed in subsequent periods. Estimates of the Railroad`s potential financial exposure for environmental claims or incidents are necessarily imprecise because of the difficulty of determining in advance the nature and extent of contamination, the varying costs of alternative methods of remediation, the regulatory clean-up standards which will be applied, and the appropriate allocation of liability among multiple responsible parties. At March 31, 1996, the Railroad estimated the probable range of its estimated liability to be $12.6 million to $48.5 million, and in accordance with the provisions of SFAS No. 5 had a reserve of $12.6 million for environmental contingencies. This amount is not reduced for potential insurance recoveries or third-party contribution where the Railroad is primarily liable. The risk of incurring environmental liability in connection with both past and current activities is inherent in railroad operations. Decades-old railroad housekeeping practices were not always consistent with contemporary standards, historically the Railroad leased substantial amounts of property to industrial tenants, and the Railroad continues to haul hazardous materials which are subject to occasional accidental release. Because the ultimate cost of known contaminated sites cannot be definitively established and because additional contaminated sites yet unknown may be discovered or future operations may result in accidental releases, no assurance can be given that the Railroad will not incur material environmental liabilities in the future. However, based on its assessments of the facts and circumstances now known, management believes that it has recorded adequate reserves for known liabilities and does not expect future environmental charges or expenditures to have a material adverse effect on the Railroad's financial position, results of operations, cash flow or liquidity. CCP Holdings, Inc. Acquisition On January 17, 1996, IC announced that it had entered into a definitive agreement to purchase all the stock of CCP Holdings, Inc., for approximately $125 million in cash, and the assumption of approximately $14 million in net debt and approximately $18 million of capitalized lease obligations. IC expects to fund the acquisition using funds from its existing line of credit and the proceeds of public debt issued by the Railroad. The Railroad will transfer the funds to IC via a combination of dividends and intercompany loans. On April 30, 1996, the STB announced they had voted in favor of the acquisition. Formal written approval, including an effective date of the order, is required before the transaction can be closed. IC expects the closing to occur in late June or early July. Recent Accounting Pronouncements In March 1995, the Financial Accounting Standards Board issued "Statement of Financial Accounting Standards No. 121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS No. 121"). SFAS No. 121 requires that long-lived assets and certain identifiable intangibles to be held or used by an entity be reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Adoption of this standard on January 1, 1996 did not require adjustment to the carrying amount of any long-lived assets or intangibles. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 establishes a fair value based method of accounting for stock-based compensation plans. The Railroad has elected to measure compensation cost using the intrinsic value based method as permitted under SFAS 123. Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(b) Reports on Form 8-K:
ILLINOIS CENTRAL RAILROAD COMPANY Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Railroad has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. ILLINOIS CENTRAL RAILROAD COMPANY
(A) Included herein as filed but not reproduced
ILLINOIS CENTRAL RAILROAD COMPANY
Article 1
1.1 Establishment of Plan. Illinois Central Railroad Company (the "Company") hereby establishes an incentive compensation plan to be known as the Illinois Central Railroad Company Incentive 2000 Plan (the "Plan") for certain management employees of Illinois Central Railroad Company and its Affiliated Companies (as defined in Section 2.1). The Plan permits the payment of cash awards, subject to the terms and provisions set forth herein. 1.2 Purpose of Plan. The purpose of the Plan is to focus sharply the attention of management on the goals of the Illinois Central Corporation Plan2000 and to provide incentive compensation based upon attainment of those goals. This incentive will promote creation of stockholder value, reward high performance and assist in the further development and retention of high performing management team. 1.3 Effective Date and Duration of the Plan. The Plan has been adopted and authorized by the Board of Directors for submission to the stockholders of IC. If the Plan is approved by the affirmative vote of a majority of the shares of the voting stock of IC entitled to be voted by the holders of stock represented at a duly held stockholders' meeting, it shall be deemed to be effective as of the date of approval by the stockholders of IC. The Plan shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at anytime pursuant to Article 6 hereof, until all Awards (as defined in Section 2.2), if any, have been paid in accordance with this Plan. Article 2 Definitions Wherever used herein the following terms shall have the meanings hereinafter set forth: 2.1 Affiliated Company. "Affiliated Company" shall mean a business entity, or predecessor of such entity, if any, which is a member of a controlled group of corporations which includes the Company. 2.2 Award. "Award" shall mean the cash remuneration payable to an Eligible Employee pursuant to the Plan. 2.3 Beneficial Owner. "Beneficial Owner" shall have the meaning given such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. 2.4 Board or Board of Directors. "Board" or "Board of Directors" shall mean the Board of Directors of Illinois Central Corporation. 2.5 Change in Control. A "Change in Control" of IC shall be deemed to have occurred if: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (except that a person shall be deemed to be the "beneficial owner" of all shares that any such person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants, options or otherwise, without regard to the sixty day period referred to in such Rule), directly or indirectly, of securities representing 25% or more of the combined voting power of IC's then outstanding securities; provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from IC,(ii) any acquisition by IC or (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by IC; or (b) at any time during any period of two consecutive years (not including any period prior to January 1, 1996) individuals who at the beginning of such period constituted the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the IC's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 or Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board. 2.6 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 2.7 Committee. "Committee" shall mean the Compensation Committee of the Board of Directors of IC. The Committee shall be comprised of two or more members of the Board of Directors. All members of the Committee shall satisfy the "outside" director requirements of Section 162(m). 2.8 Common Stock. "Common Stock" shall mean shares of common stock of IC, par value $.001 per share. 2.9 Company. "Company" shall mean Illinois Central Railroad Company, a Delaware corporation, or any successor corporation or other entity resulting from a merger or consolidation into or with the Company or a transfer or sale of substantially all of the assets of the Company. 2.10 Disability. "Disability" shall mean "disabled" within the meaning of the Illinois Central Railroad Company Supplemental Executive Retirement Plan. 2.11 Effective Date. "Effective Date" shall have the meaning set forth in Section 1.3 hereof. 2.12 Eligible Employee. "Eligible Employee" shall mean any employee of the Company in Salary Grades A, B, C, D, E, F, G, 1, 2 and 3. 2.13 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. 2.14 IC. "IC" shall mean Illinois Central Corporation, a Delaware corporation, or any successor corporation or other entity resulting from a merger or consolidation into or with IC or a transfer or sale of substantially all of the assets of IC. 2.15 Incentive Period. "Incentive Period" shall mean the period commencing on the Effective Date and ending on April 30, 2001. 2.16 Measurement Area. "Measurement Areas" shall mean the areas of IC's performance that are measured for purposes of determining whether Awards may be earned and paid under the Plan, as follows: (a) IC's return on total capital, for the year ended December 31, 2000, calculated as follows: (i) IC's net income after giving effect to both Awards earned under the Plan and the financial impact, if any, of the options granted under the Illinois Central Corporation Directors Incentive 2000 Option Plan but before giving effect to special or extraordinary items or changes in accounting rules, plus after-tax interest expense; divided by (ii) the average of IC's total assets less non-interest bearing current liabilities at the beginning and end of such year ("ROTC"); (b) IC's primary earnings per share for the year ended December 31, 2000, as reported in IC's audited financial statements, after giving effect to both Awards earned under the Plan and the financial impact, if any, of the options granted under the Illinois Central Corporation Directors Incentive 2000 Option Plan but before giving effect to special or extraordinary items or changes in accounting rules ("EPS"); and (c) The highest consecutive average twenty- day closing price of the Common Stock for the sixteen-month period ending April 30, 2001, determined concurrently with or after the period when such closing price has been not less than $43 for twenty consecutive days, as such closing prices are reported on the consolidated tape of the New York Stock Exchange ("Stock Price"). 2.17 Retirement. "Retirement" shall mean either Normal Retirement or Early Retirement within the meaning of the Illinois Central Railroad Company Supplemental Executive Retirement Plan. 2.18 Plan. "Plan" shall mean the Illinois Central Railroad Company Incentive 2000 Plan, as set forth herein and as hereinafter amended from time to time. 2.19 Section 162(m). "Section 162(m)" shall mean the provisions of Code Section 162(m) and the regulations implementing such provisions issued by the Internal Revenue Service. Article 3 Administration of the Plan 3.1 Appointment of the Committee. The Plan shall be administered by the Committee, subject to the restrictions set forth herein. 3.2 Authority of the Committee. The Committee shall have all power, discretion and authority necessary to interpret and administer the Plan in a manner which is consistent with the Plan's provisions. The Committee shall determine all questions arising in the administration, interpretation, and application of the Plan, including but not limited to, questions of eligibility and the status and rights of Eligible Employees. The Committee may, subject to the provisions of the Plan, establish such rules and regulations as it deems necessary or advisable for the proper administration of the Plan, and may make determinations and may take such other action in connection with or in relation to the Plan as it deems necessary or advisable. Each determination and decision made by the Committee shall presumptively be final, conclusive and binding for all purposes and upon all persons. 3.3 Committee Certification. The Committee shall certify in writing, prior to payment of any Award hereunder to an Eligible Employee, the extent to which the goals for each of the Stock Price, ROTC and EPS Measurement Areas were satisfied. Article 4 Eligibility 4.1 Eligibility. Persons eligible to participate in Plan are Eligible Employees as of the Effective Date and persons who become Eligible Employees after the Effective Date but before January 1, 2000. Article 5 Awards Under the Plan
5.1 Performance Goals for Awards. Awards earned
by and paid to Eligible Employees shall be determined solely
by reference to the extent IC attains the goals relating to
each of the Measurement Areas. Subject to the provisions of
5.2 Calculation of Awards. ROTC, EPS and Stock Price shall be certified by the Committee. If the Stock Price is less than $43 (as adjusted from time to time in accordance with Section 5.7 hereof), no Awards will be made under the Plan. If the Stock Price is equal to or greater than the minimum goal (as may be adjusted), Awards earned and paid under the Plan shall be calculated as follows: (a) If only the Stock Price minimum, target or maximum goal is attained, Eligible Employees shall be entitled to receive 70% of the minimum target or maximum Award set forth in the following table, respectively, for their employment Salary Grade, determined in accordance with Section 5.6. If the Stock Price is between the Stock Price minimum, target and maximum goals, the amount of an Award shall be interpolated between the minimum and target or target and maximum Awards, as the case may be.
Salary
(b) If the ROTC goal is attained, an additional 15% of the applicable Award (based upon attainment of the Stock Price goal) as set forth in the table above or interpolated, shall be earned and paid. (c) If the EPS goal is attained, an additional 15% of the applicable Award (based upon attainment of the Stock Price goal) as set forth in the table above or interpolated, shall be earned and paid. In no event shall total Awards under this Plan exceed $30 million at Target or $60 million at Maximum Awards. In the event that total Awards under this Plan exceed such Target or Maximum Awards, actual Awards shall be prorated among Eligible Employees. 5.3 Payment of Awards. Awards will be paid to Eligible Employees within 90 days following the earliest to occur of a Change in Control or the end of the Incentive Period. Except as otherwise provided in Sections 5.4 and 5.5, Awards will be paid only to Eligible Employees who are employed by the Company or an Affiliated Company on the last day of the Incentive Period. 5.4 Calculation of Awards in the Event of Death, Disability or Retirement. Awards will be paid to an Eligible Employee whose termination of employment occurs on account of death, Disability or Retirement, in an amount equal to the amount that such Eligible Employee would have received under the terms of the Plan if he had remained employed until the last day of the Incentive Period, but prorated according to the number of full months the Eligible Employee actually worked during the Incentive Period. Such Award will be paid at the same time and in the same manner as other Awards. 5.5 Calculation of Awards in the Event of a Change in Control. In the event of a Change in Control, Awards will be payable to Eligible Employees who are employed by the Company or an Affiliated Company on the date of the Change in Control at the greater of Target Award or actual Award earned, determined by performance during the prior 12 months, prorated for the number of completed months in the Incentive Period prior to the Change in Control. Awards will be paid to Eligible Employees within 90 days following a Change in Control. 5.6 Change in Salary Grade; New Hires. An employee who first becomes a Eligible Employee after the Effective Date, shall be entitled to an Award equal to the amount of Award he or she would have received under the terms of the Plan, but pro rated according to the number of full months in which such employee actually was an Eligible Employee during the Incentive Period. The Award of an Eligible Employee whose Salary Grade changes during the Incentive Period shall be calculated according to the number of months worked in each Salary Grade. 5.7 Adjustment of Performance Goals. In the event that the number of outstanding shares of Common Stock is changed by any stock dividend, stock split or combination of the shares of Common Stock, the EPS goal and the Stock Price minimum, target and maximum goals shall be proportionately adjusted, and in the event of any other change in the capitalization of IC, the Committee shall provide for a proportionate adjustment to such EPS and Stock Price goals. Article 6 Amendment or Termination of the Plan 6.1 Amendment or Termination. The Board or Committee may terminate, suspend, or amend the Plan, in whole or in part, from time to time, without the approval of the stockholders of IC to the extent allowed by law; provided, however, that no Plan amendment shall be effective until approved by the stockholders of IC insofar as stockholder approval thereof is required in order for the Plan to continue to satisfy the requirements of Section 162(m). The Committee may correct any defect or supply an omission or reconcile any inconsistency in the Plan or in any Award granted hereunder in the manner and to the extent it shall deem desirable, in its sole discretion, to effectuate the Plan. Article 7 Miscellaneous 7.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 7.2 No Right of Employment. Establishment of the Plan shall not be construed to give any Eligible Employee the right to be retained in the service of the Company for any particular period or to limit the Company's right to discharge an employee for any reason at any time. 7.3 Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings. 7.4 Withholding. The Company may withhold from any Award paid an amount necessary to pay any taxes or other deductions required by law to be withheld. 7.5 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not effect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision had not been included. This Plan is intended to comply with all applicable requirements of Section 162(m) insofar as participants covered by such section are concerned. To the extent any provision of the Plan does not so comply, the provisions shall, to the extent permitted by law and deemed advisable by the Committee, be deemed null and void with respect to such participants. 7.6 Governing Law. To the extent not preempted by Federal law, the Plan and all agreements hereunder shall be construed in accordance with and governed by the laws of the State of Illinois.
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