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EXHIBIT 99.1
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT (the "AGREEMENT") is made in Champaign,
Illinois, on December 31, 1998, between Cerion Technologies Inc. (the "COMPANY")
and Richard A. Clark and John L. Patenaude (the "TRUSTEES") in order to
establish the Cerion Technologies Liquidating Trust (the "TRUST").
WHEREAS, on December 29, 1998, at a special meeting (the "SPECIAL MEETING")
of the shareholders of the Company's common stock, par value $0.01 per share
(the "COMMON STOCK"), holders of a majority of the outstanding Common Stock
voted to liquidate and dissolve the Company pursuant to a Plan of Complete
Liquidation and Dissolution (the "PLAN");
WHEREAS, the Company has adopted the Plan and has fixed the close of
business on the date hereof as the final record date for determining the record
holders of the Company's Common Stock for the purposes of having the right to an
interest in, and to be a beneficiary of, this Trust (the "SHAREHOLDERS");
WHEREAS, the Company believes it is in the best interest of the
Shareholders to convey and transfer all of the Company's assets, including
without limitation all real property, intellectual property and accounts
receivable, debts and claims owing to the Company (the "Assets"), and further
including the amounts expected to be needed to meet claims and contingent
liabilities, which, in light of the indeterminate nature and amount of certain
liabilities of the Company, the Board of Directors has determined should consist
of all liquid and other assets of the Company as of the time of such conveyance,
subject to reduction from time to time thereafter by the Trustees in their
discretion as such liabilities are determined (the "CONTINGENCY RESERVE"),
subject to all of the Company's liabilities to the extent of the value of the
Assets (the "LIABILITIES") to the Trustees, or to their nominee for the benefit
of this Trust, for the purpose of disposing of the Assets and distributing the
net proceeds therefrom, if any, to the Shareholders.
NOW, THEREFORE, the parties hereto agree as follows:
1. PURPOSE. The primary purpose of this Agreement and of the appointment of
the Trustees hereunder is to facilitate the liquidation of the Company pursuant
to the Plan. Nothing contained herein shall be construed so as to constitute the
Shareholders, or their successors in interest, members of an association,
partnership or joint venture of any kind. Further, this Trust shall have no
objective to continue or engage in the conduct of a trade or business.
2. ASSIGNMENT.
(a) The Company hereby grants, releases, assigns, transfers, conveys and
delivers unto the Trustees all of the Company's right, title and interest in and
to all Assets, subject to all Liabilities, together with the appurtenances and
all the estate and rights of the Company in and to such assets, in trust for the
uses and purposes stated hereinabove, subject to the terms and provisions set
out below, and the Trustees hereby accept such Assets, Liabilities and such
Trust, subject to the same terms
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and conditions. Such conveyance shall be deemed to be a distribution under the
Plan of property and assets by the company to the Shareholders.
(b) Incident to any liquidating distributions to be made by the
Trustees, but not contingent on any such distribution, by virtue of the adoption
of the Plan at the Special Meeting, each of the Shareholders, whether or not
such Shareholder voted in favor of the Plan, shall automatically and
conclusively be deemed to have conveyed and assigned to the Trustees or their
nominee for the benefit of this Trust, such Shareholder's respective PRO RATA
share of all Assets, subject to all Liabilities to the extent of the value of
such Shareholder's respective PRO RATA share of the Assets.
3. TRANSFER OF INTERESTS OF BENEFICIARIES. A Shareholder's Beneficial
Interest may not be transferred either by the Shareholder in person or by a duly
authorized agent or attorney, or by the properly appointed legal representative
of the Shareholder, nor may a Shareholder have authority or power to sell,
assign, transfer, encumber or in any other manner anticipate or dispose of his
Beneficial Interest; PROVIDED, HOWEVER, that a Shareholder's Beneficial Interest
shall be assignable or transferable by will, intestate succession, or operation
of law. The death or incapacity of any Shareholder shall not terminate this
Agreement nor entitle the legal representatives of such Shareholder to claim an
accounting or to take any action or proceedings in court for the distribution of
the trust property or for a partition thereof, nor otherwise affect the rights
and obligations of any of the Shareholders; PROVIDED, that the legal
representatives of any deceased or incapable Shareholder shall succeed to the
interest of such Shareholder. As used in this Agreement, "BENEFICIAL INTEREST"
shall mean the proportionate share of each Shareholder in the Trust, determined
(as of the date hereof) as the ratio of the number of issued and outstanding
shares of Common Stock held by such Shareholder to the number of issued and
outstanding shares of Common Stock held by all Shareholders.
4. TRUSTEES; FORMATION OF TRUST. The Company hereby appoints Richard A.
Clark and John L. Patenaude, and their successors, as Trustees under this
Agreement, and each of the Trustees, on behalf of himself and his successors,
accepts such appointment. The Trust shall be conclusively deemed to have been
created upon execution of this Agreement on behalf of the Company and by either
of the aforesaid Trustees.
5. CONDITIONS OF TRUST. The Trustees hereby accept the Trust created by
this Agreement and agree to execute the Agreement upon the terms and conditions
hereof, including the following:
(a) In lieu of commissions or other compensation fixed by law for
trustees, each Trustee shall receive as compensation for services as Trustee
hereunder and as additional compensation from the cash proceeds of the sale of
any part of the Trust while he is serving as Trustee, such compensation as shall
be first determined by the Board of Directors of the Company at or prior to the
time this Agreement is entered into, or as may subsequently be approved by the
holders of a majority of the Beneficial Interests in the Trust. Trustees shall
receive reimbursement for expenses incurred by them as Trustees hereunder, and
shall serve without bond.
(b) The Trustees shall not be personally liable for any assessments,
charges, or damages, or for any obligations in carrying out or effectuating the
purpose of this Agreement; PROVIDED, HOWEVER, that nothing shall relieve any
Trustee from liabilities arising out of his own willful misconduct or bad faith.
(c) The Trustees shall not be responsible in any manner whatsoever for
the validity or sufficiency of this Agreement.
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(d) Each of the Trustees shall be protected in acting upon any paper or
document believed by him to be genuine.
(e) The Trustees shall not be liable for any acts or omissions of any
agents or attorneys elected or appointed by or acting for them if such agents or
attorneys are selected with reasonable care.
(f) The Trustees may, at the Trust's expense, consult with and engage
legal counsel, accountants, appraisers, engineers, or other experts, and any act
or failure to act done or omitted in good faith in accordance with the opinion
of any such person shall create no liability on the part of the Trustees.
(g) The Trustees represent that they will make continuing efforts to
dispose of the Assets, make timely distributions and not unduly prolong the
duration of the trust.
6. POWERS OF TRUSTEES. The powers, duties and authorities of the Trustees
hereunder, are (i) to hold title to the Assets; (ii) to dispose of, distribute,
preserve, and protect the Assets; (iii) to defend against, to resolve, and to
settle any claims or liabilities asserted against the Company, its officers,
directors, and transferees; (iv) to collect the proceeds, income and revenue
from time to time accruing to or otherwise payable in respect of the Assets; (v)
to distribute to the Shareholders from time to time the shares or portions of
the proceeds, income and revenues from time to time accruing or otherwise
payable in respect of the Assets to which they are each entitled after
reservations for claims and liabilities, fixed or contingent; (vi) to invest any
liquid Assets, or other liquid assets of the Trust, on behalf of the Trust as
applicable, but only in demand or time deposits in banks or savings institutions
or in short-term certificates of deposit, Treasury bills, or similar temporary
investment vehicles; (vii) to obtain and maintain insurance as may be necessary
or appropriate under the Plan; and (viii) generally, to do everything necessary
or advisable in order to carry out the purposes of this Agreement.
7. INDEMNIFICATION.
(a) Each Trustee who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "PROCEEDING"), by reason of
serving or having served as a Trustee of the Trust (an "INDEMNITEE"), whether
the basis of such Proceeding is alleged action or failure to act in an official
capacity as a trustee, shall be indemnified and held harmless by the Trust
against all expense, liability and loss (including attorneys' fees, judgments,
fines or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith and such indemnification
shall continue as to an Indemnitee who has ceased to be a Trustee and shall
inure to the benefit of the Indemnity's heirs, executors and administrators;
PROVIDED, HOWEVER, that such indemnification shall not be required with respect
to any Proceeding in which the Indemnitee is determined by final judicial
decision from which there is no further right to appeal to have engaged in
willful misconduct or acted in bad faith. The right to indemnification conferred
in this Section 7 shall be a contract right and shall include the right to be
paid by the Trust the expenses (including attorneys' fees) incurred in defending
any such Proceeding in advance of its final disposition (an "ADVANCEMENT OF
EXPENSES"); PROVIDED, HOWEVER, that, an Advancement of Expenses incurred by an
Indemnitee shall be made only upon delivery to the Trust of an undertaking (an
"UNDERTAKING"), by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (a "FINAL
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ADJUDICATION") that such Indemnitee is not entitled to be indemnified for such
expenses under this Section 7 or otherwise.
(b) The rights to indemnification and to the Advancement of Expenses
conferred in this Section 7 shall not be exclusive of any other right which any
Trustee may have or hereafter acquire under any statute, agreement or otherwise.
(c) The Trust may maintain insurance, at its expense, to protect itself
and any Trustee of the Trust against any expense, liability or loss, whether or
not the Trust would have the power to indemnify such person against such
expense, liability or loss under this Section 7 or under the Delaware Law.
8. DISTRIBUTIONS.
(a) As a condition to receipt of any distribution, each Shareholder
shall be required to (i) surrender their certificates evidencing the Common
Stock to the Company or its agent for cancellation or (ii) furnish the Company
with evidence satisfactory to the Board of Directors or the Trustees of the
loss, theft or destruction of their certificates evidencing the Common Stock,
together with such surety bond or other security or indemnity as may be required
by and satisfactory to the Trustees (in either case, a "BENEFICIARY").
(b) The Trustees shall make distributions no less often than annually to
the Beneficiaries of the positive balance (if any) of all income or proceeds
received or realized from the Assets held in trust or from their disposition,
over expenses and payments and a reasonable reserve for liabilities (whether
fixed or contingent). All distributions shall be made to the Beneficiaries in
proportion to their Beneficial Interests in the Trust.
(c) If any distribution to a Shareholder cannot be made, whether because
the Shareholder cannot be located, has not surrendered its certificates
evidencing the Common Stock as required hereunder or for any other reason, the
distributions to which such Shareholder is entitled shall be transferred, at
such time as the final liquidating distribution is made by the Trustees, to the
official of such state or other jurisdiction authorized by applicable law to
receive the proceeds of such distribution. The proceeds of such distribution
shall thereafter be held solely for the benefit of and for ultimate distribution
to such Shareholder as the sole equitable owner thereof and shall be treated as
abandoned property and escheat to the applicable state or other jurisdiction in
accordance with applicable law. In no event shall the proceeds of any such
distribution revert to or become the property of the Company.
9. TAX RETURN INFORMATION. The Trustees shall annually compile and
disseminate to each Beneficiary hereunder, at such Beneficiary's address set
forth in the records of the Company or at such other address as such Beneficiary
may provide to the Trustee in writing from time to time, all available tax
return information with respect to such Beneficiary's Beneficial Interest in the
Trust, as well as any information otherwise necessary or useful in reporting
income under the installment method.
10. ACTIONS OF TRUSTEES. All Trustee actions shall be taken, and all
Trustee decisions shall be made, by a majority vote of the Trustees then
serving. Notwithstanding the foregoing, however, any instrument or agreement
executed on behalf of the Trust by any Trustee shall be conclusively presumed to
have been duly authorized and executed on behalf of the Trust.
11. RESIGNATION AND REMOVAL OF A TRUSTEE.
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(a) Any Trustee may resign at any time by delivering to each Shareholder
hereunder, at such Shareholder's address set forth in the records of the Company
or at such other address as such Shareholder may provide to the Trustee in
writing from time to time, a written resignation, in which event the resignation
shall take effect immediately.
(b) Any Trustee may be removed at any time, with or without cause, by
vote of the holders of a majority of the Beneficial Interests in the Trust.
(c) Upon the death, resignation, or removal of any Trustee, the vacancy
thereby occurring shall be filled by the remaining Trustees, or by a vote of the
holders of a majority of the Beneficial Interests in the Trust. Any such
successor Trustee shall execute a written consent to act as Trustee under the
terms of this Agreement.
12. TERMINATION OF TRUST; DISCHARGE OF TRUSTEES. Upon termination of the
Trust and disposition of the Assets, the Trustees shall be fully released and
discharged and their duties as Trustees hereunder shall cease. The Trust shall
terminate, and the Assets and other assets remaining in the Trust after payment
of the Trust's liabilities shall be promptly distributed to the Beneficiaries in
proportion to their Beneficial Interests in the Trust, no later than the third
anniversary of this Agreement.
13. CONSTRUCTION. This Agreement shall be interpreted and construed under
the internal substantive laws of the State of Illinois.
14. BENEFIT. This Agreement shall be binding upon and inure to the benefit
of the respective parties hereto, their heirs, executors, administrators, and
assigns.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original for all purposes.
16. AMENDMENT. This Agreement may be amended in writing by the holders of a
majority of the Beneficial Interests in the Trust; PROVIDED, that no such
amendment shall be materially inconsistent with the provisions of United States
Revenue Procedure 82-58, as modified and amplified by Revenue Procedures 91-15
and 94-45, and any successor revenue procedure.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal as of the date first set forth above.
CERION TECHNOLOGIES INC.
[Corporate Seal] By: /s/ Richard A. Clark
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Name: Richard A. Clark
Title: Vice President -- Finance,
Chief Financial Officer
and Treasurer
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By: /s/ Richard A. Clark
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Richard A. Clark,
as Trustee
By: /s/ John L. Patenaude
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John L. Patenaude,
as Trustee