Exhibit 10.7
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement") is dated as of
February 1, 1999 by and among Morningstar, Inc., an Illinois corporation (the
"Company"), each of the shareholders and option holders of the Company listed on
SCHEDULE I hereto and such other shareholders of the Company as may, from time
to time, become parties to this Agreement in accordance with the provisions
hereof (individually, a "Shareholder" and, collectively, the "Shareholders").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
1. BOARD OF DIRECTORS; PROXY.
(a) From and after the date hereof and until this Agreement ceases
to be effective, each Shareholder shall vote all of his, her or its Shares (as
hereafter defined) and take all other necessary or desirable actions within such
Shareholder's control (whether in its capacity as a shareholder, director,
member of a board committee or officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary or desirable actions within
its control (including, without limitation, calling special board and
shareholder meetings), in order to cause:
(i) the election to the Company's Board of Directors (the "Board")
of the individuals nominated by the holders of a majority of the
issued and outstanding shares of voting capital stock of the Company
(whether at a meeting of shareholders or by an action by written
consent of shareholders in lieu of a meeting);
(ii) at the written request of holders of a majority of the issued
and outstanding shares of voting capital stock of the Company given at
any time (including during any meeting of the Board, in which case
such meeting may, at the option of any remaining director(s)
designated by such holders, be adjourned pending filling the vacancy
caused by such removal in accordance with clause (iii) below), the
immediate removal from the Board (with or without cause) of any
directors; and
(iii) in the event that any designee shall for any reason cease to
serve as a member of the Board during his term of office, the
resulting vacancy on the Board to be filled by a representative
designated by holders of a majority of the issued and outstanding
shares of voting capital stock of the Company immediately upon request
of the holders of a majority of the issued and outstanding shares of
voting capital stock of the Company, whether at a meeting of
shareholders or by an action by written consent of shareholders in
lieu of a meeting.
2. REPRESENTATIONS AND WARRANTIES. Each Shareholder represents
and warrants that (i) such Shareholder is the record owner of the number of
Shares or options to purchase Shares set forth opposite its name on SCHEDULE I
hereto, (ii) this Agreement has been duly authorized, executed and delivered by
such Shareholder and constitutes the valid and binding obligation of such
Shareholder, enforceable in accordance with its terms, and (iii) such
Shareholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement.
3. LEGEND. Each certificate evidencing Shares and each
certificate issued in exchange for or upon any Transfer (as hereafter defined)
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SHAREHOLDERS AGREEMENT DATED AS OF February 1, 1999, AMONG
MORNINGSTAR, INC. (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
SHAREHOLDERS, AS AMENDED AND MODIFIED FROM TIME TO TIME. A COPY OF
SUCH SHAREHOLDERS AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR AN EXEMPTION FROM REGISTRATION UNDER THE
ACT."
The Company shall imprint such legend on certificates evidencing Shares
outstanding as of the date hereof.
4. CERTAIN DEFINITIONS.
"AFFILIATE" shall have the meaning given such term in Rule 12b-2
promulgated under the Securities Exchange Act of 1934.
"COMMISSION" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"COMMON STOCK" means the Company's Common Stock, no par value.
"FAIR MARKET VALUE" means (i) the fully diluted per Share valuation
completed by Duff & ▇▇▇▇▇▇ LLC (or such other nationally recognized investment
banking or appraisal firm selected by the Board) or (ii) such other amount
determined by the Board to evidence the fair market value of a Share on a fully
diluted basis in each case determined as of the date of the event giving rise to
such calculation; provided, however, that in all events Fair Market Value shall
be calculated on a control basis without giving effect to any minority discount;
and further
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provided that in the event Fair Market Value is established pursuant to the
foregoing clause (ii) such calculation shall be subject to final determination
in the manner contemplated by Section 24.
"FAMILY GROUP" means, with respect to any Person, (i) such Person's
spouse and descendants (whether natural or adopted), (ii) any trust solely for
the benefit of such Person and/or any of such Person's spouse and/or descendants
(whether natural or adopted), and (iii) any Person not an individual that is
wholly-owned by such Person and/or any of the Person's described in the
foregoing clauses (i) and (ii).
"GOOD REASON" means, with respect to any Employee Shareholder (as
defined in SECTION 6), the basis for the termination of such Employee
Shareholder's employment with the Company if such Employee Shareholder
terminates such employment within six (6) months of (i) the assignment to such
Employee Shareholder by the Company of duties representing a substantial
diminution in the nature or status of such Employee Shareholder's
responsibilities, duties or job title, (ii) the relocation of such Employee
Shareholder, except for travel required by such Employee Shareholder in the
ordinary course of business and to an extent substantially consistent with such
Employee Shareholder's past practices or (iii) a material reduction in the
salary or level of benefits received by the Employee Shareholder from the
Company to an extent substantially inconsistent with the past practices of the
Company.
"MANSUETO ENTITIES" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and each of his Permitted
Transferees.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PROMISSORY NOTE" means a promissory note of the Company in the form
attached hereto as Exhibit A.
"PUBLIC OFFERING" means an initial public offering and sale of equity
securities of the Company pursuant to a registration statement (other than a
registration statement on Form S-8) that is declared effective by the
Commission.
"REASONABLE CAUSE" means, with respect to any Employee Shareholder,
(i) the Board determines that the Employee Shareholder willfully
breached or habitually neglected significant and material duties he is
required to perform;
(ii) the Employee Shareholder commits a material act of dishonesty,
fraud, misrepresentation, or is convicted by a court of competent
jurisdiction of, or pleaded guilty or NOLO CONTENDERE to, any felony;
(iii) the Employee Shareholder exhibits gross negligence in the
course of his/her employment with the Company; or
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(iv) the Board determines that the Employee Shareholder has failed
to obey a lawful direction of the Board.
"S CORPORATION ELECTION" means the election by the Company and its
shareholders to be an "S Corporation" within the meaning of SECTION 1361 of the
Internal Revenue Code.
"SALE OF THE COMPANY" means the sale of the Company to a
non-affiliated third party pursuant to which such party acquires (i) capital
stock of the Company possessing the voting power under normal circumstances to
elect a majority of the Board (whether by merger, consolidation or sale or
transfer of the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.
"SECURITIES ACT" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"SHARES" means shares of (i) any Common Stock purchased or otherwise
acquired by any Shareholder, (ii) any Common Stock or other equity securities
issued or issuable directly or indirectly with respect to the Common Stock by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization, and
(iii) any other class or series of common stock of the Company held by a
Shareholder.
5. RESTRICTIONS ON TRANSFER.
5.1 GENERAL RESTRICTIONS ON TRANSFER. (a) In no event will any
Shareholder sell, transfer, assign, pledge, hypothecate or otherwise dispose of
("TRANSFER") all or any portion of its Shares unless and until (i) such
Shareholder shall have furnished the Company with an opinion of counsel
satisfactory to the Company to the effect that (a) such Transfer will not
require registration of such Shares under the Securities Act, (b) such Transfer
is in accordance with an exemption under the Securities Act, and (c) appropriate
action necessary for compliance with the Securities Act has been taken, and (ii)
the Company shall have waived, expressly and in writing, its rights, if any,
under SECTION 5.3 of this Agreement.
(b) The Company shall not be required (i) to reflect on its books
any purported Transfer in violation of any of the provisions set forth in this
Agreement, (ii) to treat any purported transferee of such Shares as a record
owner of such Shares or (iii) to afford such purported transferee any right to
vote, or to receive dividends in respect of, such Shares.
5.2 S CORPORATION ELECTION; NON-RECOURSE LOANS. (a) Neither the
Company nor any Shareholder by any act or failure to act, shall terminate or
have the effect of terminating, the S Corporation Election, unless the Company
by written resolution of the Board first directs or authorizes such act or
failure to act. Each Shareholder shall promptly act or fail to act as may be
necessary to terminate the S Corporation Election as and when the Company so
directs or authorizes. This SECTION 5.2 shall terminate upon any such
termination of the S Corporation Election.
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(b) Except to the extent authorized pursuant to SECTION 5.2(a),
and subject to the provisions of SECTIONS 5.3 and 10(a), no Shareholder shall
Transfer any Shares unless prior thereto (i) the Company's tax counsel shall
have given a written opinion that such Transfer will not have the effect of
terminating the S Corporation Election and (ii) the proposed transferee shall
have agreed in writing to consent affirmatively to such election at any time the
Company's tax counsel deems such consent to be necessary to the continuation of
such election; PROVIDED, however, that a Shareholder may Transfer Shares to
another then-current Shareholder without complying with the provisions of this
SECTION 5.2(b). Any attempted Transfer of Shares in violation of this SECTION
5.2(b) shall be void. The Company shall not permit any Transfers of Shares to be
made on the books of the Company unless such Transfers are in compliance with
the provisions of this SECTION 5.2(b).
(c) Nothing in this SECTION 5.2 affects the obligations of
Shareholders to comply with the other provisions of this Agreement governing the
proposed Transfer of Shares.
(d) The Shareholder proposing to make any transfer pursuant to
SECTION 5.2(c) shall pay all costs incurred by the Company in enforcing the
provisions of this SECTION 5.2.
(e) The Company hereby agrees that at any time and from time to
time it will make non-recourse loans to each Shareholder, on the terms and
conditions set forth on Exhibit B hereto, in an aggregate amount, with respect
to each taxable year or period of the Company, equal to (x) the aggregate
federal and state income tax liabilities of such Shareholder that arise solely
as a result of such Shareholder's ownership of Shares and the Company being a
pass through entity for federal income tax purposes minus (y) the total cash
dividends or distributions declared and paid to such Shareholder in respect of
such year or period. In order to request that a loan be made pursuant to this
Section 5.2(e), a Shareholder shall provide the Company with written notice
setting forth in reasonable detail the amount of the proposed loan and a
calculation thereof. Notwithstanding anything set forth in this Section 5.2(e)
to the Company, in no event shall the Company be obligated to loan or advance
any funds to a Shareholder if and to the extent that such loan or advance would
result in a breach or default of any debt instrument or credit agreement of the
Company or its subsidiaries.
5.3 FIRST REFUSAL RIGHTS. At least sixty (60) days prior to making
any Transfer (other than a Permitted Transfer (as hereafter defined)), the
transferring Shareholder (the "TRANSFERRING SHAREHOLDER") shall deliver a
written notice (the "SALE NOTICE") to the Company and each other Shareholder
signatory hereto (each, a "NON-TRANSFERRING SHAREHOLDER"). The Sale Notice will
state the aggregate amount of Shares to be Transferred, the identity of the
proposed transferee, the terms and conditions of the proposed Transfer, and that
such proposed transferee is committed to acquire the Shares on the stated price,
terms and conditions. The Company shall have the right, but not the obligation,
to elect to purchase all or a portion of the Shares to be Transferred upon the
same terms and conditions as those set forth in the Sale Notice by delivering a
written notice (the "PURCHASE NOTICE") of such election to the Transferring
Shareholder within forty-five (45) days after its receipt of the Sale Notice
(the "REFUSAL PERIOD"), which Purchase Notice shall specify the time, place and
date of settlement of such purchase. If the Company does not elect to purchase
all of the Shares specified in the Sale Notice, then each Non-Transferring
Shareholder shall have the right, but not the obligation, to elect to purchase
all or a portion of the Shares to be Transferred (and not purchased by the
Company) upon the same
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terms and conditions as those set forth in the Sale Notice. The right to
purchase shall be exercised by delivering a Purchase Notice to the Transferring
Shareholder no later than ten (10) days following expiration of the Refusal
Period (the "EXTENSION PERIOD"), which Purchase Notice shall specify the time,
place and date for settlement of such purchase; PROVIDED, in the event the
Company has elected to purchase a portion of the Shares, the time, place and
date of settlement of such purchase by the Non-Transferring Shareholders shall
be the same as that chosen by the Company. If purchased by the Company, the
purchase price of such Shares may be paid, at the option of the Company, in
cash, by Promissory Note or any combination thereof. If purchased by a
Shareholder, the purchase price shall be paid in cash. In the event the
Non-Transferring Shareholders elect to purchase, in the aggregate, an amount of
Shares greater than the actual amount of Shares being Transferred by the
Transferring Shareholder (and not purchased by the Company), such
Non-Transferring Shareholders shall be entitled to purchase such Shares on a pro
rata basis according to the amount of Shares owned by such Non-Transferring
Shareholders at the time of delivery of the Sale Notice. If some or all of the
Shares specified in the Sale Notice are not purchased by the Company or
Non-Transferring Shareholders, the Transferring Shareholder may consummate such
Transfer at a price and on terms and conditions no more favorable to the
transferee(s) thereof than are specified in the Sale Notice during the thirty
(30) day period immediately following the Extension Period. If the Shareholder
does not consummate the Transfer within such period, the right of first refusal
provided hereby shall be deemed to be revived and no Transfer may be effected
without first offering the Shares in accordance with the terms hereof.
5.4 CERTAIN PERMITTED TRANSFERS. The restrictions contained in
SECTION 5.3 hereof shall not apply with respect to Transfers of Shares made (i)
in the case of any Person who is an individual, pursuant to applicable laws of
descent and distribution or to such Persons's legal guardian in the case of any
mental incapacity or among such Person's Family Group, (ii) in the case of any
Person that is not an individual, among such Person's Affiliates, (iii) in the
case of the Mansueto Entities, any Transfer so long as immediately following the
consummation of such Transfer, the Mansueto Entities own a majority of the
issued and outstanding Shares, or (iv) pursuant to SECTIONS 6 and 10(b) hereof.
Any transferee of Shares pursuant to a Transfer in accordance with the
provisions of this SECTION 5.4 is herein referred to as a "PERMITTED
TRANSFEREE." Any Transfer effected pursuant to clauses (i) - (iv) of this
SECTION 5.4 is herein referred to as a "PERMITTED TRANSFER."
5.5 CONTINUING OBLIGATIONS. As a condition to any Transfer, each
transferee of Shares (including, without limitation, a Permitted Transferee)
shall execute and deliver to the Company a valid and binding agreement
satisfactory to the Company and its legal counsel to the effect that any Shares
so Transferred shall continue to be subject to all of the provisions and
conditions of this Agreement and that such transferee (including, without
limitation, a Permitted Transferee) agrees to be jointly and severally bound
with the Transferring Shareholder hereby as if an original party hereto and
thereto; and further provided that no Transfer to any transferee (including,
without limitation, a Permitted Transferee) shall relieve the Transferring
Shareholder of any obligation or liability under this Agreement.
6. REPURCHASE AND PUT RIGHTS.
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(a) In the event of the termination (a "TERMINATION") of the
employment relationship between the Company and any Shareholder who is an
employee of the Company (an "EMPLOYEE SHAREHOLDER") for any or no reason, the
Company shall have the right, but not the obligation, to purchase all or part,
and such Employee Shareholder shall sell all or part, of the Shares then owned
by the Employee Shareholder (or any Permitted Transferee thereof) by delivering
a written notice of such election (the "PUT STATEMENT") to such Employee
Shareholder within forty-five (45) days of such Termination.
(b) If the Termination of an Employee Shareholder is due to (i)
the death of the Employee, (ii) dismissal by the Company without Reasonable
Cause, or (iii) resignation by the Employee Shareholder for Good Reason, such
Employee Shareholder (or his or her estate) shall have the right, but not the
obligation, to sell to the Company, and the Company shall purchase from the
Employee Shareholder, all, but not less than all, of the Shares then owned by
the Employee Shareholder (or any Permitted Transferee thereof) by delivery of
written notice of such election (the "Put Statement") to the Company within
forty-five days of such Termination.
(c) The purchase price to be paid for each Share which is
purchased pursuant to this SECTION 6 shall be the Fair Market Value. Such
purchase price shall be payable, at the option of the Company, in cash, by
Promissory Note or any combination thereof, provided, however, that in the event
such purchase is made pursuant to any Put Statement delivered pursuant to
SECTION 6(b) hereof, not less than fifty percent (50%) of such purchase price
shall be paid in cash. The cash portion of any purchase price in respect of
Shares shall be applied by the Company to repay any loans made pursuant to
Section 5.2(e) that are secured by such Shares.
(d) The Closing of any purchase consummated pursuant to this
SECTION 6 shall be no later than fifteen (15) days after the delivery of the
Repurchase Statement or Put Statement, as applicable, at such place and in such
manner as designated by the Company. If, in respect of any Termination, (i) the
purchase of Shares by the Company would result in a breach or default of any
debt instrument or credit agreement of the Company or its subsidiaries or (ii)
the Board otherwise determines in good faith that purchasing such Shares would
be inadvisable given the then existing financial condition of the Company and
its subsidiaries, the Company may defer the Closing until the earliest date on
which neither of the conditions described in the foregoing clauses (i) and (ii)
shall exist; provided, however, that no such deferral may exceed sixty (60)
days.
7. INITIAL PUBLIC OFFERING. In the event that the Board approves
a Public Offering pursuant to an effective registration statement under the
Securities Act, each Shareholder shall take all necessary or desirable actions
in connection with the consummation of the Public Offering. In the event that
such Public Offering is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the Common Stock structure
would adversely affect the marketability of the offering, each Shareholder shall
consent to and vote for a recapitalization, reorganization and/or exchange of
the Common Stock, as the case may be, into securities that the managing
underwriters and the Board find acceptable and shall take all necessary or
desirable actions in connection with the consummation of the recapitalization,
reorganization and/or exchange; provided that the resulting securities reflect
and are consistent with the rights and preferences set forth in the Company's
articles of incorporation as in effect immediately prior to such Public
Offering.
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8. HOLDBACK AGREEMENT. During the period beginning ten (10) days
prior and ending 180 days after the effective date of a registration statement
of the Company filed under the Securities Act, each Shareholder shall not, to
the extent requested by the Company and such underwriter, directly or
indirectly, sell, offer or contract to sell (including, without limitation, any
short sale), grant any option to purchase or otherwise transfer or dispose of
(other than to Permitted Transferees or pursuant to gifts to donees who agree to
be similarly bound) any Shares at any time during such period except Shares
covered by such registration statement.
9. PURCHASER'S REPRESENTATIVE. In the event that in the future
the Company engages in any negotiation or transaction (including a merger or
consolidation or other reorganization by or of the Company) in which Regulation
D promulgated by the Commission may or will be available to the Company, each
Shareholder not an "accredited investor" within the meaning of Regulation D
will, within five (5) days of written notice from the Company, which may be
given in the sole discretion of the Company, appoint a purchaser's
representative or representatives who shall be qualified and acceptable to the
Company and any other person(s) who is (are) involved in the proposed
transaction so that the maximum benefits of Regulation D shall be available to
the Company and all Shareholders. Each Shareholder shall bear the costs and
expenses of such purchaser's representative pro rata and shall be liable to the
Company and all of the Company's other Shareholders for any damage or loss that
may or might be incurred by such parties if such Shareholder fails to perform
this covenant.
10. CO-SALE RIGHTS.
(a) In the event of any proposed Transfer (other than a Permitted
Transfer) by a Shareholder or group of Shareholders (individually or
collectively, the "MAJORITY SHAREHOLDER") of Shares representing a majority of
the issued and outstanding shares of voting capital stock of the Company, the
Majority Shareholder will deliver written notice of such proposed sale (a
"SHAREHOLDER NOTICE") to the remaining Shareholders (the "REMAINING
SHAREHOLDERS") and the Remaining Shareholders shall have the right, but not the
obligation, to participate in the contemplated sale by delivering written notice
to the Majority Shareholder no later than fifteen (15) days after the date of
receipt of such Shareholder Notice; PROVIDED, HOWEVER, that in no event shall a
pledge of or lien or encumbrance on the Majority Shareholder's Shares to any
bank or financial institution (or any resulting foreclosure or seizure of such
Shares) constitute a sale of Shares by the Majority Shareholder. If any
Remaining Shareholder elects to participate in such proposed sale, such
Remaining Shareholder will be entitled and required to sell in the contemplated
sale, at the same price and on the same terms as the Majority Shareholder
proposes to sell, the number of Shares equal to the product of: (i) the quotient
determined by dividing (x) the number of Shares on a fully diluted basis
outstanding and owned by such Remaining Shareholder by (y) the aggregate number
of Shares on a fully diluted basis outstanding and owned by the Shareholders;
and (ii) the number of Shares to be sold in the contemplated sale. The Majority
Shareholder will use commercially reasonable efforts to obtain the agreement of
each prospective buyer to the participation of such Remaining Shareholder in the
contemplated sale and will not sell any Shares to any prospective buyer if such
buyer refuses to allow the participation of such Remaining Shareholder.
(b) If the Majority Shareholder determines to Transfer a majority
of the issued and outstanding shares of voting capital stock of the Company
pursuant to a proposed bona fide
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sale to a non-affiliated third party in an arms-length transaction, the Majority
Shareholder may by written notice (the "DRAG-ALONG NOTICE") to the Remaining
Shareholders given at any time concurrent with or during the forty-five (45) day
period immediately following the date of the giving of the Drag-Along Notice,
require and compel the Remaining Shareholders to sell, on a pro rata basis,
their Shares along with the Majority Shareholder at the same price and otherwise
upon the same terms and conditions as are applicable to the Shares sold by the
Majority Shareholder. If the Majority Shareholder exercises its right to require
and compel a drag-along sale as provided herein, the Remaining Shareholders
shall take all lawful and customary actions reasonably requested by the Majority
Shareholder to effectuate the purposes of this SECTION 10(b), including, without
limitation, (i) voting all of their respective Shares in favor of the proposed
sale, (ii) executing any purchase or sale agreement and any related agreements
likewise executed by the Majority Shareholder, and (iii) surrendering their
certificates evidencing all of their Shares properly endorsed for transfer,
against payment of the consideration for such Shares at the closing of any such
transaction. If such sale of Shares is by merger or consolidation, each
Remaining Shareholder shall waive any dissenters rights, appraisal rights or
similar rights in connection with such merger or consolidation.
11. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Shareholders unless such modification,
amendment or waiver is approved in writing by the Company and the Shareholders
holding a majority of the Shares. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
14. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Shareholders and any subsequent
holders of Shares and the respective successors and assigns of each of them.
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15. COUNTERPART. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
16. SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
parties would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement in any action instituted in the United States
District Court for any District located in the State of Illinois, or, in the
event such court would not have jurisdiction of such action, in any court of the
United States or any state thereof having subject matter jurisdiction of such
action.
17. NOTICES. All notices and other communications provided for
hereunder shall be dated and in writing and shall be deemed to have been given
(i) when delivered, if delivered personally, sent by confirmed telecopy or sent
by registered or certified mail, return receipt requested, postage prepaid, (ii)
on the next business day if sent by overnight courier and (iii) when received if
delivered otherwise. Such notices shall be addressed to the appropriate party to
the attention of the person who executed this Agreement at the address set forth
under such party's signature below (or to the attention of such other person or
to such other address as such party shall have furnished to each other party in
accordance with this SECTION 17). A copy of any notice sent to the Company shall
be sent by the party sending such notice to the Company to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Morningstar, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule thereof.
19. JURY TRIAL WAIVER. THE COMPANY AND EACH OF THE SHAREHOLDERS
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED IN CONNECTION HEREWITH OR HEREAFTER AND AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
20. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and no other party shall be deemed to be a third
party beneficiary of this Agreement.
21. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
22. OTHER AGREEMENTS. Except as specifically contemplated hereby,
no Shareholder shall grant any proxy or enter into or agree to be bound by any
voting trust with
- 10 -
respect to any shares of voting capital stock nor shall any Shareholder enter
into any shareholder agreements or arrangements of any kind with any Person with
respect to any Shares inconsistent with the provisions of this Agreement,
including but not limited to, agreements or arrangements with respect to the
acquisition, disposition or voting of the Shares, nor shall any Shareholder act,
for any reason, as a member of a group or in concert with any other Persons
(other than Permitted Transferees) in connection with the acquisition,
disposition or voting of the Shares in any manner which is inconsistent with the
provisions of this Agreement.
23. TERMINATION. SECTIONS 5.2, 5.3, and 6 of this Agreement shall
automatically terminate and no longer be in force and effect upon the
consummation of a Public Offering or a Sale of the Company.
24. FINAL DETERMINATION OF FAIR MARKET VALUE. In the event of any
determination of Fair Market Value, the Company shall provide each Shareholder
with respect to whose Shares such determination is being made with prompt
written notice thereof. Any determination pursuant to clause (i) of the
definition of Fair Market Value shall be final and binding on the parties. Any
determination pursuant to clause (ii) of such definition shall be final and
binding on the parties unless, within ten (10) days of receipt of such notice,
the Shareholder shall have provided the Company with written objection to such
determination, which notice shall include the basis for such objection. If the
Company and the Shareholder fail to reach agreement or Fair Market Value within
ten (10) days after delivery of such objection, Fair Market Value will be
determined in the manner contemplated by clause (i) of definition of Fair Market
Value. If, with respect to any such determination, the value initially proposed
by the Company is 90% or more of the Fair Market Value so determined, the
Shareholder shall pay all of the expenses of the investment banking or appraisal
firm retained for such determination. If the value so proposed by the Company is
less than 90% of the Fair Market Value so determined, the Company shall pay all
of the expenses of such investment banking or appraisal firm.
[signature page follows]
- 11 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
MORNINGSTAR, INC.,
an Illinois corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary and Chief Financial
Officer
SHAREHOLDERS:
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o Morningstar, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o Morningstar, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
- 12 -
Schedule I to
SHAREHOLDER AGREEMENT
NUMBER OF SHARES/
SHAREHOLDER OPTIONS TO ACQUIRE SHARES
----------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 10,000,000 Shares/No Options
to acquire Shares
▇▇▇▇ ▇▇▇▇▇ 100,000 Shares/24,000 Options
to acquire Shares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000 Shares/89,540 Options
to acquire Shares
- 13 -
EXHIBIT A
TO SHAREHOLDERS
AGREEMENT
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS AND ACCORDINGLY MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR LAWS OR PURSUANT TO AN EXEMPTION THEREFROM. THE
PRINCIPAL AMOUNT OF THIS NOTE, AND INTEREST IN RESPECT THEREOF, IS SUBORDINATED
TO THE PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS AND IS SUBJECT TO SET-OFF, AS
DESCRIBED IN THIS NOTE.
MORNINGSTAR, INC.
NON-NEGOTIABLE THREE YEAR JUNIOR SUBORDINATED NOTE
DUE _________, ____
_________,
Illinois
__________ __, 19__
FOR VALUE RECEIVED, the undersigned,
MORNINGSTAR, INC. an
Illinois
corporation (together with its successors, the "Company"), hereby promises to
pay to ___________________ (together with [his][her] successors and permitted
assigns, the "Holder"), at the Holder's residence at ______________________, the
principal amount of _________________ ($_________) on the Maturity Date. Certain
capitalized terms are used in this Note as defined in Section 6.
Section 1. PAYMENT; INTEREST.
1.1 The outstanding principal amount of this Note shall bear interest
(computed on the basis of a 365 day year, as the case may be) accruing daily at
a rate per annum equal to the rate of interest publicly announced from time to
time by The First National Bank of Chicago as its "corporate base rate" plus 1%
from the date hereof to (and including) the date on which the principal amount
of this Note is paid in full, regardless of the commencement of any bankruptcy
or insolvency proceedings against the Company. Subject to Section 5 of this
Note, such interest shall be payable annually in arrears on each anniversary of
the issuance of this Note and on the Maturity Date.
1.2 Subject to Section 5 of this Note, the Company shall pay one-third
of the original principal amount of this Note to the Holder on each of the first
and second anniversaries of the date of this Note, and all remaining outstanding
principal, accrued and unpaid interest, and other amounts due hereunder to the
Holder on the Maturity Date.
- 14 -
1.3 Whenever payment of principal of, or interest on, this Note shall be
due on a date that is not a Business Day, the date for payment thereof shall be
the next succeeding Business Day and interest due on the unpaid principal and
any other amounts payable hereunder shall accrue during such extension and shall
be payable on such succeeding Business Day.
Section 2. OPTIONAL PREPAYMENT. The Company shall have the right to
prepay the principal amount of this Note in whole or in part at any time, or
from time to time, without payment of any premium or penalty whatsoever,
together with interest thereon accrued to the date of prepayment; PROVIDED,
HOWEVER, that so long as (a) any Senior Indebtedness remains outstanding and
unpaid, (b) any commitment to provide Senior Indebtedness is outstanding, or (c)
any other amount is owing to the holders of Senior Indebtedness, this Note may
not be prepaid, in whole or in part, without the written consent of the holders
of Senior Indebtedness.
Section 3. SET-OFF. The Company shall be entitled to set-off and reduce
any amounts payable hereunder for any obligations or liabilities of the Holder
to the Company or its Subsidiaries. The Holder, by accepting this Note, hereby
acknowledges and agrees to the foregoing provisions, and any subsequent
transferee or successor shall be bound by the foregoing.
Section 4. DEFAULTS.
4.1 EVENTS OF DEFAULT. If one or more of the following events ("Events
of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay within five Business Days of the
due date thereof any principal of this Note or shall fail to pay within
five Business Days of the due date thereof any interest or any other amount
payable hereunder;
(b) the Company shall fail to observe or perform any covenant or
agreement contained in this Note (other than those covered by clause (a)
above) and the same shall not have been cured within 30 days after written
notice thereof has been given by the Holder to the Company;
(c) the Company shall (i) adopt a plan relating to the liquidation
or dissolution of the Company or (ii) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official, or shall consent
to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors; or
(d) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official, and
such involuntary case or other proceeding shall remain undismissed and
- 15 -
unstayed for a period of 60 days; or an order for relief shall be entered
against the Company under the Federal bankruptcy laws as now or hereafter
in effect;
then, and in every such event, subject to the provisions of Section 5, the
Holder may, by notice to the Company, declare the unpaid principal amount of
this Note together with accrued interest thereon, to be, and such portions of
this Note (and accrued interest thereon) shall thereupon become due and payable
immediately following delivery of such notice to the Company without
presentment, demand, protest or further notice of any kind, all of which are
hereby waived by the Company; PROVIDED, HOWEVER, that in the case of any of the
Events of Default specified in clause (c) or (d), such portions of this Note
(together with accrued interest thereon) shall, subject to the provisions of
Section 5, immediately (and without notice) become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company. The Company shall provide the Holder with written notice
of the occurrence of any Event of Default promptly upon obtaining actual
knowledge thereof.
Section 5. SUBORDINATION.
5.1 AMOUNTS PAYABLE SUBORDINATED TO SENIOR INDEBTEDNESS. Notwithstanding
any provision of this Note to the contrary, the Company covenants and agrees,
and the Holder by acceptance of this Note likewise covenants and agrees, that
all Amounts Payable shall be subordinated to the extent set forth in this
Section 5 to the prior payment in full in cash of all Senior Indebtedness. This
Section 5 shall constitute a continuing offer to and covenant with all persons
who become holders of, or continue to hold, Senior Indebtedness (irrespective of
whether such Senior Indebtedness was created or acquired before or after the
issuance of this Note). The provisions of this Section 5 are made for the
benefit of all present and future holders of Senior Indebtedness (and their
successors and assigns), and shall be enforceable by them directly against the
Holder.
5.2 PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN EVENTS.
(a) Upon any payment by or on behalf of the Company or
distribution of assets of the Company, whether in cash, property,
securities or otherwise, in the event of any dissolution, winding up or
total or partial liquidation, reorganization, arrangements, adjustment,
protection, relief or composition, or assignment for the benefit of
creditors of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership, reorganization, relief or other
proceedings or upon an assignment for the benefit of creditors or any other
marshaling of all or part of the assets and liabilities of the Company (the
foregoing events herein collectively referred to as an "Insolvency Event"),
all Senior Indebtedness shall first be paid in full in cash before the
Holder shall be entitled to receive any payment by or on behalf of the
Company or distribution of assets of the Company relating to any Amounts
Payable. Upon any Insolvency Event, any payment by or on behalf of the
Company or distribution of assets of the Company, whether in cash,
property, securities or otherwise, to which the Holder would be entitled
relating to any Amounts Payable, except for the provisions of this Section
5, shall, until payment in full in cash of all Senior Indebtedness
(including from any concurrent payment or distribution to the holders of
such Senior Indebtedness), be made by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other
- 16 -
person making such payment or distribution, directly to the holders of the
Senior Indebtedness or their representatives for application to the payment
or prepayment of all such Senior Indebtedness.
If the Senior Indebtedness has not been paid in full in cash at a
time in which the Company is subject to an Insolvency Event, (a) the
holders of the Senior Indebtedness are hereby irrevocably authorized, but
shall have no obligation, to demand, ▇▇▇ for, collect and receive every
payment or distribution received on or after the Insolvency Event or to be
received in respect of this Note (regardless of when originally due) in any
such Insolvency Proceeding and give acquittance therefor and to file claims
and proofs of claim, as their interests may appear, and (b) the Holder
shall duly and promptly take, for the account of the holders of the Senior
Indebtedness, as their interests may appear, such actions as the holders of
the Senior Indebtedness may request to collect and receive all amounts
payable by the Company in respect of this Note and to file appropriate
claims or proofs of claim in respect of this Note.
(b) No payment shall be made by or on behalf of the Company with
respect to any Amounts Payable or to acquire this Note (or any portion
hereof) for cash, property, securities or otherwise, and, by virtue of
accepting this Note and the benefits hereof, the Holder shall not be
entitled, and will not take any action, including any judicial process, to
accelerate, demand payment or enforce any Indebtedness in respect of this
Note or any other claim with regard to any Amounts Payable if (i) such
payment is prohibited by the terms of any Senior Indebtedness, or (ii)
there has occurred and is continuing a default in the payment of all or any
portion of any Senior Indebtedness, or (iii) any other default (not
involving the non-payment of any Senior Indebtedness) shall have occurred
which, including after giving any notice or the passage of time, or both,
would allow holders of any Senior Indebtedness to accelerate or otherwise
demand the payment thereof, and in the case of a default described in
clause (iii), the holders of the Senior Indebtedness have given notice of
such default to the Company (the date that such notice is received by the
Company is the "Notice Date"); provided that such restrictions on actions,
including judicial process, to accelerate, demand payment or enforce any
such Indebtedness on claim will cease to be applicable six months after the
occurrence and continuation of an Event of Default of the types referred to
in Section 4(a) or (b). The Company shall promptly give written notice to
the Holder of any written notice of default under the Senior Indebtedness.
(c) In the event of all or any portion of the principal amount of
this Note becoming due before the Maturity Date (whether by declaration or
otherwise), no payment shall be made by or on behalf of the Company on or
with respect to any Amounts Payable or to acquire this Note (or any portion
thereof) for cash, property, securities or otherwise until all Senior
Indebtedness shall first have been paid in full in cash.
(d) If, notwithstanding the foregoing provisions of clauses (a)
through (c) prohibiting payments or distributions, the Holder shall, on or
after the Notice Date or the occurrence of any Insolvency Event, have
received, directly or indirectly, by setoff, redemption, purchase or in any
other manner, any payment of, or on account of, any
- 17 -
Amounts Payable that was prohibited by this Section 5, before all Senior
Indebtedness shall have been paid in full in cash, then and in such event
such payments or distributions shall be received and held in trust for the
holders of the Senior Indebtedness and promptly paid over or delivered to
the holders of the Senior Indebtedness remaining unpaid to the extent
necessary to pay in full in cash such Senior Indebtedness in accordance
with its terms after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness, PROVIDED that any
such payment which is, for any reason, not so paid over or delivered shall
be held in trust by the Holder for the holders of Senior Indebtedness.
(e) So long as any Senior Indebtedness remains outstanding, or the
commitment to make credit extensions of any Senior Indebtedness shall not
have been terminated, the Holder will not be entitled to take, demand or
receive, directly or indirectly, by setoff, redemption, purchase or in any
other manner, any voluntary prepayment or other payment of any Amounts
Payable in amounts or in a manner which are in violation of the provisions
of this Section 5.
(f) Upon any payment or distribution of assets referred in clause
(a), the Holder shall be entitled to rely upon any order or decree of a
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making any such payment or distribution of assets,
delivered to the Holder for the purpose of ascertaining the persons
entitled to participate in such distribution of assets, the holders of
Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Section 5.
5.3 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE IMPAIRED, ETC.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce the subordination and other terms and conditions
provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act by any such holder, or by any noncompliance by
the Company with the terms and provisions and covenants herein regardless
of any knowledge thereof any such holder may have or otherwise be charged
with.
(b) This Section 5 may not be amended without the written consent
of each holder of the Senior Indebtedness and of the Holder, and any
purported amendment without such consent shall be void. No holder of Senior
Indebtedness shall be prejudiced in such holder's right to enforce the
subordination and other terms and conditions of this Note by any act or
failure to act by the Company or anyone in custody of its assets or
property.
5.4 SUBROGATION. Subject to and upon the payment in full in cash of all
Senior Indebtedness, the Holder shall be subrogated, to the extent of payments
or distributions made to
- 18 -
the holders of Senior Indebtedness pursuant to or by reason of this Section 5,
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company made on such Senior Indebtedness until
all amounts due under this Note shall be paid in full; and for the purposes of
such subrogation, no payments or distributions to holders of such Senior
Indebtedness of any cash, property or securities to which the Holder would be
entitled except for the provisions of this Section 5, and no payment over
pursuant to the provisions of this Section 5 to holders of such Senior
Indebtedness by the Holder, shall, as among the Company, its creditors (other
than holders of such Senior Indebtedness) and the Holder be deemed to be a
payment by the Company to or on account of such Senior Indebtedness, it being
understood that the provisions of this Section 5 are solely for the purpose of
defining the relative rights of the holders of such Senior Indebtedness, on the
one hand, and the Holder, on the other hand.
5.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing contained in this
Note is intended to or shall impair, as between the Company and the Holder, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holder all Amounts Payable, as and when the same shall become due and payable in
accordance with their terms, or to affect the relative rights of the Holder and
other creditors of the Company (other than the holders of Senior Indebtedness),
except as provided in Section 5.2(b).
5.6 SECTION 5 NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a
payment of any Amounts Payable by reason of any provision of this Section 5
shall not be construed as preventing the occurrence or consequences of an Event
of Default under Section 4.1 hereof, except as provided in Section 5.2(b).
5.7 ACCELERATION. If any Senior Indebtedness shall have become or be
declared to be immediately due and payable, this Note shall become immediately
due and payable upon notice by the holders of Senior Indebtedness to the
Corporation and the Holder, notwithstanding any inconsistent terms hereof;
provided, however, that without the prior consent of the holders of the Senior
Indebtedness, the Holder will not take any further steps to enforce payment
hereof. Upon notice by the holders of Senior Indebtedness to both the Company
and the Holder, any acceleration pursuant to the preceding sentence may be
withdrawn and voided, and upon such notice, all terms and conditions of this
Note shall be reinstated to those existing prior to the acceleration (but taking
into account any payments that have been made). No Holder of this Note shall,
without the prior written consent of all of the holders of Senior Indebtedness,
have any right to accelerate the maturity of, or institute any proceedings to
enforce, any indebtedness evidenced by this Note.
Section 6. DEFINITIONS. For purposes of this Note, the following terms
have the meanings set forth below:
"AFFILIATE" shall have the meaning given such term in Rule 12b-2
promulgated under the Securities Exchange Act of 1934.
"AMOUNTS PAYABLE" means all principal of, interest on, premium, if any,
fees, costs, expenses, indemnities or any other amounts due from the Company
under this Note, and all claims against or liabilities of the Company in respect
of this Note.
- 19 -
"BUSINESS DAY" means any day except a Saturday, Sunday or other days on
which commercial banks in New York City or Chicago,
Illinois are required or
authorized by law to close.
"DEFAULT" mans any condition or event that constitutes an Event of Default
or that with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"INDEBTEDNESS" means any indebtedness (including, without limitation,
Senior Indebtedness), whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
deferred and unpaid balance of the purchase price of any property (including
pursuant to capital leases), and any financial hedging obligations, if and to
the extent such indebtedness (other than a financial hedging obligation) would
appear as a liability upon a balance sheet of such person prepared on a
consolidated basis in accordance with generally accepted accounting principles,
other than a trade payable accrued expense, and also includes, the guarantee of
items that would be included within this definition.
"MATURITY DATE" means the third anniversary of the issuance of this Note.
"NOTE" means this Non-Negotiable Subordinated Note.
"SENIOR INDEBTEDNESS" means the principal, interest (including interest
accruing subsequent to the commencement of a proceeding specified in Sections
4.1(c) and 4.1(d), whether or not enforceable in such proceeding) on, premium,
if any, fees (including, without limitation, any attorneys', commitment, agency,
facility, structuring, restructuring or other fee), costs, expenses,
indemnities, and other amounts due on or in connection with any Indebtedness of
the Company, including, without limitation, any Indebtedness, now or hereafter
incurred, any documents executed under or in connection therewith, and any
amendments, modifications, deferrals, renewals or extensions of such
Indebtedness, and any amounts owed in respect of any Indebtedness incurred in
refinancing, replacing or refunding the foregoing (including any refinancing,
replacing or refunding the foregoing (including any refinancing, replacing or
refunding with new lenders), unless the terms of such Indebtedness expressly
provide that such Indebtedness is not Senior Indebtedness with respect to this
Note. Nothing in this Note shall restrict an Affiliate of the Company from being
a holder of Senior Indebtedness.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as of
__________, ____ by and among the Company and the other signatories thereto.
"SUBSIDIARY" of a person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the Board of Directors or other persons performing similar functions
are at the time directly or indirectly owned by such person.
Section 7. MERGERS; CONSOLIDATIONS. The Company will not consolidate or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another Person unless the Company is the surviving
corporation or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person that acquires by
conveyance,
- 20 -
transfer or lease substantially all of the properties and assets of
the Company assumes all the obligations of the Company under this Note.
Section 8. MISCELLANEOUS.
8.1 NOTICES. Any notice, request, demand or other communication required
or permitted to be given under this Note shall be given in writing and if
delivered personally, sent by certified or registered mail, return receipt
requested, or delivered by reputable next day delivery service as follows (or to
such other addressee or address as shall be set forth in a notice given in the
same manner):
If to Holder: ______________________________
______________________________
______________________________
If to Company:
Morningstar, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Any such notices shall be deemed to be given on the date personally delivered,
such return receipt is issued or the business day after deposit with the
next-day delivery service.
8.2 NO WAIVERS. No failure or delay by the Holder in exercising any
right, power or privilege hereunder or under this Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law. No notice to or demand on the Company in
any case shall entitle the Company to any other or further notice or demand in
related or similar circumstances requiring such notice.
8.3 AMENDMENTS AND WAIVERS. Except as expressly set forth in this Note
(including Section 5.3(b)), any provision of this Note may be amended or waived
if, but only if, such amendment or waiver is in writing, signed by the Company
and the Holder.
8.4 RIGHTS OF PARTIES. This Note is delivered pursuant to the terms
and conditions of the Shareholders Agreement and is subject to the terms
thereof.
8.5 RESTRICTIONS ON TRANSFER. This Note may not be sold, pledged,
distributed, offered for sale, or otherwise transferred by the Holder to any
transferee unless such transferee executes a written instrument, in form and
substance satisfactory to the Company, agreeing to be bound by the provisions of
this Note.
8.6 BINDING EFFECT. The provisions of this Note shall be binding upon
and inure to the benefit of the Holder and its respective successors and
permitted assigns. This Note shall be binding upon, and inure to the benefit of,
the Company and its successors and assigns and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the Company's assets and business.
- 21 -
8.7 REPLACEMENT NOTE. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory top the Company from the Holder
and upon reimbursement to the Company of all reasonable expenses incident
thereto, and upon surrender or cancellation of this Note, if mutilated, the
Company will make and deliver a new Note of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note.
8.8 COMPANY OBLIGATIONS. The Holder agrees and acknowledges that this
Note and the Company's obligations hereunder and for all Amounts Payable are
solely obligations and liabilities of the Company. None of the Company's
directors, officers, employees, stockholders, advisors, consultants and
affiliates or any other persons shall be obligated or liable in respect of this
Note or any Amounts Payable, and the Holder hereby releases them from any such
obligation or liability.
8.9 CROSS-REFERENCES; HEADINGS. Unless otherwise specified, references
in this Note to any Section are references to such Section of this Note, and
unless otherwise specified, references in any Section to any clause are
references to such clause of such Section. The various headings of this Note are
inserted for convenience only and shall not affect the meaning or interpretation
of this Note or any provisions hereof.
8.10 LITIGATION. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS, EXCEPT THAT NO
DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF
ILLINOIS, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY
THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT,
MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY
FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION
7.11, THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT
OF THIS AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES
DISTRICT COURTS IN CHICAGO,
ILLINOIS. THE PARTIES CONSENT TO SUCH JURISDICTION,
AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTION BASED
UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 8.10
SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH
FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY
OTHER JURISDICTION.
8.11 WAIVER OF JURY TRIAL. THE HOLDER HEREBY WAIVES AND SHALL NOT
SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR
OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS NOTE.
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MORNINGSTAR INC.
By:
---------------------------
Name:
----------------------------
Title:
-----------------------------
Accepted and Agreed to this
____ day of ________, _____
---------------------------
[Holder]
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EXHIBIT B
SUMMARY OF LOAN TERMS
Security: A perfected first property security interest in 100%
of the Shares owned by the Shareholder
Recourse: Nonrecourse to Shareholder
Term: [10] years
Mandatory Prepayment: Dividends and distributions in excess of income tax
liability attributable to Shares and cash proceeds
from any sale or disbursement of Shares shall be
applied first to interest then to principal
Optional Prepayment: The loan may be prepaid at any time without penalty
Interest Rate: The lowest applicable rate permitted under Section
1274(d) of the Internal Revenue Code of 1986, as
amended
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