Exhibit 1.1
7,612,500 SHARES
MORNINGSTAR, INC.
COMMON STOCK, NO PAR VALUE
UNDERWRITING AGREEMENT
May __, 2005
May __, 2005
▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC
as Representative of the several
Underwriters named in Schedule II hereto
▇/▇ ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Subject to the terms and conditions contained herein, certain shareholders
of Morningstar, Inc., an Illinois corporation (the "COMPANY"), named in Schedule
I hereto (the "SELLING SHAREHOLDERS") severally propose to sell to you and the
other underwriters named in Schedule II hereto (the "UNDERWRITERS"), an
aggregate of 7,612,500 shares (the "FIRM SHARES") of the Common Stock, no par
value, of the Company (the "COMMON STOCK"), with each Selling Shareholder
selling the amount set forth opposite such Selling Shareholder's name in
Schedule I hereto.
The Company proposes to issue and sell to the several Underwriters not more
than an additional 1,141,875 shares of Common Stock (the "ADDITIONAL SHARES") if
and to the extent that you, as Representative of the Underwriters (the
"REPRESENTATIVE"), shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of Common Stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The Company and the
Selling Shareholders are hereinafter sometimes collectively referred to as the
"SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form included
in the Registration Statement at the time of effectiveness or, if Rule 430A
under the Securities Act is relied on, the final prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act, is hereinafter
referred to as the "PROSPECTUS." If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"),
then any reference herein to the term "REGISTRATION STATEMENT" shall be deemed
to include such Rule 462 Registration Statement.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the Company's
knowledge, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements in or
omissions from the Registration Statement or the Prospectus based upon
information relating to (i) any Underwriter furnished to the Company in
writing by or on behalf of such Underwriter through you expressly for use
therein or (ii) any Selling Shareholder furnished to the Company in writing
by or on behalf of such Selling Shareholder expressly for use therein.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Illinois, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(d) (i) Each majority-owned subsidiary (as defined in the Securities
Act) of the Company (each, a "SUBSIDIARY," and, collectively, the
"SUBSIDIARIES"), except for those referred to in Section 1(d)(ii) below,
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; except as described in the
Prospectus or set forth in the Registration Statement, all of the issued
shares of capital stock of each such Subsidiary have been duly authorized
and are validly issued, fully paid and non-assessable and are owned,
directly or indirectly, by the Company, free and clear of all
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liens, encumbrances, equities or claims; and (ii) each Subsidiary which has
been organized as a limited liability company has been duly formed, is
validly existing as a limited liability company in good standing under the
laws of the jurisdiction of its formation, has the limited liability
company power and authority to own its property and to conduct its business
as described in the Prospectus and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; except as described in the
Prospectus or set forth in the Registration Statement, all of the issued
membership or other equity interests of each such Subsidiary have been duly
authorized and are validly issued, fully paid and non-assessable and are
owned, directly or indirectly, by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Firm Shares to be sold
by the Selling Shareholders) outstanding prior to the issuance of any
Additional Shares to be sold by the Company have been duly authorized and
are validly issued, fully paid and non-assessable.
(h) Any Additional Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of any such Additional Shares will not be subject to any
preemptive or similar rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the articles of incorporation or by-laws
of the Company or any agreement or other instrument binding upon the
Company or any of its Subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any of its Subsidiaries, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this Agreement,
except (i) such as may be required by the securities or Blue Sky laws of
the various jurisdictions in connection with the offer and sale of the
Shares, (ii) those consents, approvals, authorizations, orders and
qualifications that have been obtained and (iii) for any thereof (exclusive
of any thereof which, if not obtained, would preclude the Company from
executing and delivering this Agreement or from performing its obligations
hereunder) the failure of which to have been obtained would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
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(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company or
any of its Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(m) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended (the "INVESTMENT COMPANY ACT").
(n) The Company and its Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(p) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect
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to any securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its Subsidiaries have not incurred any liability or obligation, direct or
contingent, that is material to the Company and its subsidiaries, taken as
a whole, nor entered into any transaction not in the ordinary course of
business that is material to the Company and its subsidiaries, taken as a
whole; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its Subsidiaries, except in each case as described in the
Prospectus (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement).
(r) The Company and its Subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of
the Company and its subsidiaries, taken as a whole, in each case free and
clear of all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries; the Company does not own
any real property; and any real property and buildings held under lease by
the Company and its Subsidiaries that are material to the business of the
Company and its subsidiaries, taken as a whole, are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its Subsidiaries, in each
case except as described in the Prospectus.
(s) The Company and its Subsidiaries own or possess, or can acquire
on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed
by them in connection with the business now operated by them, except for
those the loss of which or the failure of which to have been obtained would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole, and neither the Company nor any of its Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(t) No material labor dispute with the employees of the Company or
any of its Subsidiaries exists, except as described in the Prospectus, or,
to the knowledge of the Company, is imminent; and the Company is not aware
of any existing, threatened or imminent labor disturbance by the employees
of any of its principal suppliers or contractors that would have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
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(u) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts which, to the Company's knowledge, are prudent in the
businesses in which they are engaged; except to the extent previously
disclosed to you, neither the Company nor any of its Subsidiaries, within
the last three (3) years, has been refused any material insurance coverage
sought or applied for; and neither the Company nor any of its Subsidiaries
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole, in each case except as described in the
Prospectus.
(v) Except as described in the Prospectus, (i) the Company and its
Subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company
nor any of its Subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
Company and its subsidiaries, taken as a whole; (ii) the Company neither is
or has been registered nor is or has been required to be registered as an
investment advisor or broker-dealer under the Investment Advisers Act of
1940, as amended (the "IAA"), the Exchange Act (as hereinafter defined) or
any state blue sky or securities law or the rules and regulations
thereunder, except for such registration under any state blue sky or
securities law or the rules and regulations thereunder the failure of which
to have been complied with would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; (iii) each of Morningstar
Investment Services, Inc., Morningstar Associates, LLC and mPower Advisors,
LLC is duly registered as an investment adviser under the IAA and the rules
and regulations thereunder and is duly qualified as an investment adviser
under the state blue sky or securities laws and the rules and regulations
thereunder of each jurisdiction in which the conduct of its business
requires such qualification, except to the extent that the failure to be so
qualified would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, (iv) each of Morningstar Investment
Services, Inc., Morningstar Associates, LLC and mPower Advisors, LLC has
filed a Form ADV with the SEC in accordance with the IAA, which Form at the
time of filing was, as amended and supplemented as of the date hereof
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is, and upon any required filing of a further amendment to reflect the sale
of the Shares contemplated hereby shall be, in effect pursuant to the
requirements of the IAA and accurate and complete in all material respects;
(v) Morningstar Investment Services, Inc. is duly registered as a
broker-dealer under the Exchange Act and the rules and regulations
thereunder and is duly registered or qualified as a broker-dealer under the
state blue sky or securities laws and the rules and regulations thereunder
of each jurisdiction in which the conduct of its business requires such
registration or qualification, except to the extent that the failure to be
so registered or qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; (vi) Morningstar Investment
Services, Inc. has filed a Form BD with the SEC in accordance with the
Exchange Act, which Form at the time of filing was, as amended and
supplemented as of the date hereof is, and upon any required filing of a
further amendment to reflect the sale of the Shares contemplated hereby
shall be, in effect pursuant to the requirements of the Exchange Act and
accurate and complete in all material respects; and (vii) each of
Morningstar Investment Services, Inc., Morningstar Associates, LLC and
mPower Advisors, LLC (A) has made all filings, including reports and other
documents, required by the IAA and the Exchange Act and any applicable
state blue sky or securities laws and the respective rules and regulations
thereunder, (B) has made all disclosures and delivered all documents
required by the IAA and the Exchange Act to be delivered to its clients and
(C) has maintained in all material respects all books and other records
required by the IAA and the Exchange Act; and each of such reports and
other documents at the time of filing was, as amended and supplemented as
of the date hereof is, and after consummation of the transactions
contemplated hereby shall be, accurate and complete in all material
respects.
(w) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Prospectus and any preliminary prospectus, together for this
purpose with the applicable supplement thereto intended to be distributed
therewith in, respectively, the United Kingdom and Canada, comply in all
material respects, and any further amendments or supplements thereto will
comply in all material respects, with any applicable laws or regulations of
the United Kingdom and Canada, which are the only foreign jurisdictions, to
the Company's knowledge, in which the Prospectus or any preliminary
prospectus, as amended or supplemented, if applicable, are contemplated to
be distributed.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement signed by such Selling Shareholder and
Computershare Trust Company, Inc., as Custodian, relating to the deposit of
the Shares to be sold by such Selling Shareholder (the "CUSTODY AGREEMENT")
and the Power of Attorney appointing certain individuals as such Selling
Shareholder's attorneys-in-fact to the extent set forth therein, relating
to the transactions contemplated hereby and by the Registration Statement
(the "POWER OF ATTORNEY") will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such Selling
Shareholder (if such
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Selling Shareholder is a corporation), or any agreement or other instrument
binding upon such Selling Shareholder or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this
Agreement or the Custody Agreement or Power of Attorney of such Selling
Shareholder, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(c) Such Selling Shareholder owns, and on the Closing Date will own,
the Shares to be sold by such Selling Shareholder free and clear of all
security interests, claims, liens, equities or other encumbrances and has,
and on the Closing Date will have, the legal right and power, and all
authorization and approval required by law, to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, transfer and
deliver the Shares to be sold by such Selling Shareholder.
(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder.
(e) Delivery of the Shares to be sold by such Selling Shareholder and
payment therefor pursuant to this Agreement will pass valid title to such
Shares, free and clear of any adverse claim within the meaning of Section
8-102 of the New York Uniform Commercial Code, to each Underwriter who has
purchased such Shares without notice of an adverse claim.
(f) Such Selling Shareholder is not prompted by any information
concerning the Company or its subsidiaries which is not set forth in the
Prospectus to sell its Shares pursuant to this Agreement.
(g) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this Section 2(g) are limited to statements or omissions made in
reliance upon information relating to such Selling Shareholder furnished to
the Company in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
3. AGREEMENTS TO SELL AND PURCHASE. Each Selling Shareholder, severally
and not jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Selling Shareholder at $______ a
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share (the "PURCHASE PRICE") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the number of Firm Shares to be sold by such Selling
Shareholder as the number of Firm Shares set forth in Schedule II hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 1,141,875 Additional Shares
at the Purchase Price. You may exercise this right on behalf of the Underwriters
in whole or from time to time in part by giving written notice of each election
to exercise the option not later than 30 days after the date of this Agreement.
Any exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Each purchase date must be at least one business day after the
written notice is given and may not be earlier than the closing date for the
Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. On each day, if any, that Additional Shares are to be purchased
(an "OPTION CLOSING DATE"), each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule II hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of ▇▇
▇▇▇▇▇▇▇▇▇ + Co, LLC, it will not, during the period ending 180 days after the
effective date of the Registration Statement, (i) directly or indirectly, sell,
offer, contract to sell, transfer the economic risk of ownership in, make any
short sale, pledge or otherwise dispose of any shares of capital stock or other
ownership interests of the Company or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire the
Company's capital stock or other ownership interests of the Company that the
undersigned beneficially owns, or (ii) file any registration statement with the
Commission relating to the offering of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(other than any registration statement on Form S-8 relating to the Company's
equity-based incentive compensation plans), whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
The restrictions contained in the preceding paragraph shall not apply to
(A) the Shares to be sold hereunder, (B) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof, (C) grants by the Company of awards
pursuant to the Morningstar 2004 Stock Incentive Plan, (D) transactions by any
person other than the Company relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of the Shares, (E) distributions of shares of Common Stock or any
security convertible into or exchangeable or exercisable for the Company's
capital stock or any other rights to purchase or acquire the Company's capital
stock to partners, stockholders or affiliates of any Seller or (F) in
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the case of the Selling Shareholders, transfers of shares of Common Stock or any
security convertible into or exchangeable for the Company's capital stock or any
other rights to purchase or acquire the Company's capital stock to affiliates of
any Selling Shareholder. In addition, each Selling Shareholder agrees that,
without the prior written consent of ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC, it will not, during
the period ending 180 days after the effective date of the Registration
Statement, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. Each Selling Shareholder also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of such Selling
Shareholder's shares of Common Stock except in compliance with the foregoing
restrictions.
Notwithstanding the foregoing, if (1) during the last 17 days of the
180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, the restrictions imposed by the second preceding paragraph
shall continue to apply until the expiration of the 18-day period beginning on
the issuance of the earnings release or the occurrence of the material news or
material event.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $___
a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at
a price that represents a concession not in excess of $____ a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $___ a share, to any Underwriter or to
certain other dealers. The Sellers hereby confirm that the Underwriters and
dealers have been authorized to distribute or cause to be distributed each
preliminary prospectus included at any time as a part of the Registration
Statement and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by each
Selling Shareholder shall be made to such Selling Shareholder by wire transfer
of immediately available funds or by one or more certified or official bank
check or checks in same day funds drawn to the order of such Seller against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at the offices of ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ at 7:00 a.m., San Francisco time, on the third
business day following the date of this Agreement or at such other time or on
such other date, not later than ten (10) business days after the date of this
Agreement, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Company at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Representative and the Company, on each purchase date as specified in the notice
from the Representative to the Company, against delivery of such Additional
Shares for the respective accounts of the several Underwriters.
- 10 -
The Firm Shares and Additional Shares shall be registered in such names and
shall be in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Selling Shareholders to sell the Firm Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Firm Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 5:00 p.m. (New York City time) on the date
hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating, if any, accorded any
of the Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
reasonable judgment, is material and adverse and that makes it, in
your reasonable judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) (i) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 6(a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct in all material respects as of the
Closing Date and that the Company has complied in all material respects
with all of the agreements and satisfied in all material respects all of
the conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon his or
her knowledge as to proceedings threatened.
- 11 -
(ii) The Underwriters shall have received on the Closing Date
a certificate, dated the Closing Date and signed by an authorized
representative of each of the respective Selling Shareholders, to the
effect that the representations and warranties of such Selling Shareholder
contained in this Agreement are true and correct in all material respects
as of the Closing Date and that such Selling Shareholder has complied in
all material respects with all of the agreements and satisfied in all
material respects all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing Date an
opinion of Winston & ▇▇▇▇▇▇ LLP, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Illinois and has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(ii) (A) each of Morningstar Investment Services, Inc. and
▇▇▇▇▇▇.▇▇▇, Inc. is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power
and authority to own its property and to conduct its business as
described in the Prospectus; and (B) each of Morningstar Associates,
LLC and mPower Advisors, LLC (collectively, together with Morningstar
Investment Services, Inc. and ▇▇▇▇▇▇.▇▇▇, Inc., the "US SUBSIDIARIES")
is validly existing as a limited liability company in good standing
under the laws of the State of Delaware and has the limited liability
company power and authority to own its property and to conduct its
business as described in the Prospectus;
(iii) the Company's capital stock, including the Shares,
conforms as to legal matters in all material respects to the
description thereof contained in the Prospectus under the caption
"Description of Capital Stock";
(iv) the shares of Common Stock (including the Firm Shares to
be sold by the Selling Shareholders) outstanding prior to the issuance
of any Additional Shares to be sold by the Company have been duly
authorized and are validly issued, fully paid and non-assessable;
(v) all of the issued and outstanding shares of capital stock
or membership interests, as applicable, of each of Morningstar
Investment Services, Inc., ▇▇▇▇▇▇.▇▇▇, Inc. and Morningstar
Associates, LLC have been duly authorized and validly issued and are
fully paid and non-assessable and are owned, directly or indirectly,
by the Company, free and clear of all liens, charges or encumbrances
known to such counsel;
(vi) any Additional Shares to be sold by the Company have been
duly authorized and, when issued and delivered in accordance with the
terms of this
- 12 -
Agreement, will be validly issued, fully paid and non-assessable, and
the issuance of any such Additional Shares will not be subject to any
preemptive or similar rights under the laws of the State of Illinois,
the articles of incorporation or by-laws of the Company or, to such
counsel's knowledge, any agreement or other instrument binding upon
the Company that has been filed as an exhibit to the Registration
Statement;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement do
not contravene any provision of federal or New York or Illinois law
applicable to the Company and do not conflict with or violate the
articles of incorporation or by-laws of the Company or, to such
counsel's knowledge, result in a breach or violation of, or constitute
a default under, any agreement or other instrument binding upon the
Company or any of its US Subsidiaries that has been filed as an
exhibit to the Registration Statement or violate any judgment, order
or decree of any governmental body, agency or court known to such
counsel to be applicable to the Company or any of its US Subsidiaries,
and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by the Company of its obligations under this Agreement, except (i)
such as may be required by the securities or Blue Sky laws and
regulations of the various jurisdictions in connection with the offer
and sale of the Shares, or (ii) those consents, approvals,
authorizations, orders and qualifications that have been obtained;
(ix) the statements relating to legal matters, documents or
proceedings included in (A) the Prospectus under the captions
"Description of Capital Stock" and "Shares Eligible for Future Sale,"
and (B) the Registration Statement in Items 14 and 15 of Part II, in
each case accurately summarize in all material respects such matters,
documents or proceedings; and
(x) nothing has come to the attention of such counsel that
causes such counsel to believe that (A) the Registration Statement or
the Prospectus (except for the financial statements and related
schedules and other financial, statistical and accounting data
included therein, as to which such counsel need not express any
belief) do not comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder, (B) the Registration
Statement or the prospectus included therein (except for the financial
statements and related schedules and other financial, statistical and
accounting data included therein, as to which such counsel need not
express any belief) at the time the Registration Statement became
effective contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (C) the Prospectus
(except for the financial statements and related schedules and other
financial, statistical and accounting data included therein, as
- 13 -
to which such counsel need not express any belief) as of its date or
as of the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, special outside counsel for the Company,
dated the Closing Date, to the effect that the Company is not, and after
giving effect to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus will not be, required
to register as an "investment company" as such term is defined in the
Investment Company Act.
(e) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement and the Custody Agreement and Power of Attorney
of such Selling Shareholder will not contravene any provision of
applicable law, or the certificate of incorporation or by-laws of such
Selling Shareholder (if such Selling Shareholder is a corporation) or
partnership agreement of such Selling Shareholder (if such Selling
Shareholder is a partnership), and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Shareholder, except such as may be required
by the securities or Blue Sky laws of the various states in connection
with offers and sales of the Shares;
(iii) each of the Selling Shareholders owns the Shares to be
sold by such Selling Shareholder free and clear of all security
interests, claims, liens, equities and other encumbrances, and each of
the Selling Shareholders has the legal right and power, and all
authorization and approval required by law, to enter into this
Agreement and the Custody Agreement and Power of Attorney of such
Selling Shareholder and to sell, transfer and deliver the Shares to be
sold by such Selling Shareholder;
(iv) the Custody Agreement and Power of Attorney of each
Selling Shareholder has been duly authorized, executed and delivered
by such Selling Shareholder and is the valid and binding agreement of
such Selling Shareholder;
(v) when stock certificates representing the Shares to be sold
by the Selling Shareholders, endorsed to the Underwriters, have been
delivered against
- 14 -
payment therefor pursuant to this Agreement, each Underwriter who has
purchased such Shares without notice of an adverse claim will own such
Shares free and clear of any adverse claim within the meaning of
Section 8-102 of the New York Uniform Commercial Code; and
(vi) nothing has come to the attention of such counsel that
causes such counsel to believe that (A) the Registration Statement or
the prospectus included therein (except for the financial statements
and financial schedules and other financial, statistical and
accounting data included therein, as to which such counsel need not
express any belief) at the time the Registration Statement became
effective contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (B) the Prospectus
(except for the financial statements and financial schedules and other
financial, statistical and accounting data included therein, as to
which such counsel need not express any belief) as of its date or as
of the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the opinions of such counsel with respect to such matters shall be
limited to statements or omissions made in reliance upon information
relating to the Selling Shareholders furnished in writing by or on
behalf of the Selling Shareholders expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendments or supplements thereto.
(f) The Underwriters shall have received on the Closing Date an
opinion of T.M.I. Associates of Tokyo, Japan, Japanese counsel for the
Selling Shareholders, dated the Closing Date, to the effect that the
execution and delivery by each Selling Shareholder of, and the performance
by such Selling Shareholder of its obligations under, this Agreement and
the Custody Agreement and Power of Attorney of such Selling Shareholder
will not contravene, to such counsel's knowledge, any agreement or other
instrument binding upon such Selling Shareholder or, to such counsel's
knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over such Selling Shareholder.
(g) The Underwriters shall have received on the Closing Date an
opinion of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Sections
6(c)(vi), 6(c)(vii) and 6(c)(x) above.
With respect to Section 6(c)(x) above, Winston & ▇▇▇▇▇▇ LLP and
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, and with respect to Section 6(e)(vi)
above, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., may state that their beliefs are based
upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without
independent check or verification, except as specified. With respect
to Section 6(e) above, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. may rely upon an opinion
of T.M.I. Associates of Tokyo, Japan as to all matters of Japanese law
and any other
- 15 -
opinion or opinions of counsel for any Selling Shareholders and, with
respect to factual matters and to the extent such counsel deems
appropriate, upon the representations of each Selling Shareholder
contained herein and in the Custody Agreement and Power of Attorney of
such Selling Shareholder and in other documents and instruments;
PROVIDED that (A) each such counsel for the Selling Shareholders is
satisfactory to your counsel (it being understood that T.M.I.
Associates is satisfactory to your counsel), (B) a copy of each
opinion so relied upon is delivered to you and is in form and
substance satisfactory to your counsel and (C) copies of such Custody
Agreements and Powers of Attorney and of any such other documents and
instruments shall be delivered to you and shall be in form and
substance satisfactory to your counsel.
The opinions of Winston & ▇▇▇▇▇▇ LLP, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and T.M.I. Associates described in Sections
6(c), 6(d), 6(e) and 6(f) above (and any opinions of counsel for any
Selling Shareholder referred to in the immediately preceding
paragraph) shall be rendered to the Underwriters at the request of the
Company or one or more of the Selling Shareholders, as the case may
be, and shall so state therein.
(h) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Deloitte & Touche LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
- 16 -
7. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you and each other Underwriter, without charge, one
signed copy of the Registration Statement (including exhibits thereto) and
to furnish to you in New York City, without charge, prior to 10:00 a.m. New
York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 7(c) below, as many
copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission, subject to Section 7(a), and furnish, at
its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending June 30, 2006 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
8. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company, the
Selling Shareholders and the Underwriters agree that (a) the Company shall pay
or cause to be paid all expenses incident to the performance of its obligations
under this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the
- 17 -
Prospectus and amendments and supplements to any of the foregoing, including all
printing costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery of
the Shares by the Company to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the Shares
under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum; PROVIDED, HOWEVER, that such fees and disbursements of such counsel
(excluding filing fees) in clauses (iii) and (iv) shall not exceed $20,000 in
the aggregate, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc.; PROVIDED, HOWEVER, that such fees and disbursements of
such counsel (excluding filing fees) in clauses (iii) and (iv) shall not exceed
$20,000 in the aggregate, (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to inclusion of the Shares on
the Nasdaq National Market, (vi) the cost of printing certificates representing
the Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, and travel and lodging expenses of the
representatives and officers of the Company and any such consultants, (ix) the
document production charges and expenses associated with printing this
Agreement, (x) all expenses in connection with any offer and sale of the Shares
outside of the United States, excluding, however, any filing fees and any fees
and disbursements of counsel for the Underwriters in connection with offers and
sales outside of the United States, and (xi) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section and (b) the Selling
Shareholders shall bear their own costs and expenses (other than those required
to be paid by the Company), including (i) all fees and expenses of counsel for
the Selling Shareholders and (ii) all costs and expenses related to the transfer
and delivery of Shares by the Selling Shareholders to the Underwriters,
including any transfer or other taxes payable thereon. It is understood,
however, that except as provided in this Section, Section 9 entitled "Indemnity
and Contribution", and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them, any advertising expenses connected with any offers they may make and the
costs and expenses of the Underwriters, excluding the cost of travel on aircraft
to be chartered by the Company, relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, travel and lodging expenses of the
Representative.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
- 18 -
9. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and each affiliate of any Underwriter within the meaning of Rule 405
under the Securities Act, and each Selling Shareholder, each person who controls
any Selling Shareholder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each affiliate of any
Selling Shareholder within the meaning of Rule 405 under the Securities Act,
from and against any and all losses, claims, damages and liabilities, joint or
several (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim), caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except (i) insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished to the Company in
writing by or on behalf of such Underwriter through you expressly for use
therein and (ii) insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Selling Shareholder furnished in
writing by or on behalf of such Selling Shareholder expressly for use therein;
PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 7(a)
hereof.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and the Company, each person,
if any, who controls any Underwriter or the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and each affiliate of any Underwriter or the Company within the meaning of
Rule 405 under the Securities Act, the directors of the Company and each
officer of the Company who signs the Registration Statement, from and
against any and all losses, claims, damages and liabilities, joint or
several (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim), caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only with reference to
information relating to such
- 19 -
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto; PROVIDED, HOWEVER, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 7(a)
hereof. The aggregate liability of each Selling Shareholder under the
indemnity agreement contained in this paragraph and the contribution
agreement contained in paragraphs (e) and (f) below shall be limited to an
amount equal to the aggregate Public Offering Price of the Shares sold by
such Selling Shareholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Shareholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities, joint or several (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim), caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by or on behalf of such
Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 9(a), 9(b) or 9(c), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually
- 20 -
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (i) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or who are affiliates of any Underwriter within the meaning of
Rule 405 under the Securities Act, (ii) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section and (iii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Selling Shareholders and all
persons, if any, who control any Selling Shareholder within the meaning of
either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Underwriters and such control persons and affiliates of any
Underwriters, such firm shall be designated in writing by the
Representative. In the case of any such separate firm for the Company, and
such directors, officers and control persons of the Company, such firm
shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Shareholders and such control persons of any
Selling Shareholders, such firm shall be designated in writing by the
Selling Shareholders. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause 9(e)(i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
9(e)(i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well
- 21 -
as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in
the same respective proportions as the net proceeds from the offering of
the Shares (before deducting expenses) received by each Seller and the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover of the Prospectus, bear
to the aggregate Public Offering Price of the Shares. The relative fault of
the Sellers on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Selling Shareholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 9 are several in
proportion to the respective number of Shares they have purchased
hereunder, and not joint. The aggregate liability of each Selling
Shareholder under the contribution agreement contained in this paragraph
and paragraph 9(f) below and under the indemnification agreement contained
in paragraph 9(b) above shall be limited to an amount equal to the
aggregate Public Offering Price of the Shares sold by such Selling
Shareholder under this Agreement.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 9(e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 9 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter, any person controlling any Underwriter or any affiliate
of any Underwriter, any Selling Shareholder or any person controlling any
Selling Shareholder, or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any
of the Shares.
- 22 -
10. TERMINATION. (a) This Agreement may be terminated with respect to the
Shares to be purchased on the Closing Date or an Option Closing Date by the
Representative by notifying the Company and the Selling Shareholders in writing
at any time at or before such Closing Date in the absolute discretion of the
Representative if: (i) there has occurred any material adverse change in the
securities markets or any event, act or occurrence that has materially disrupted
the securities markets or there shall be such a material adverse change in
general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States is such
as to make it, in the judgment of the Representative, inadvisable or
impracticable to market the Shares or enforce contracts for the sale of the
Shares; (ii) there has occurred any new outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Shares or enforce
contracts for the sale of the Shares; (iii) trading in the Shares or any
securities of the Company has been suspended or materially limited by the
Commission or trading generally on the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities have been
required, by any of such exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc., or any other
governmental or regulatory authority; or (iv) a banking moratorium has been
declared by any state or Federal authority; or (v) in the reasonable judgment of
the Representative, there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material and adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which makes it, in your reasonable judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling
- 23 -
Shareholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Shareholders. In
any such case, each of you, the Company and the Selling Shareholders shall have
the right to postpone the Closing Date, but in no event for longer than seven
business days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Additional Shares to be purchased on such
Option Closing Date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase the Additional Shares to be
sold on such Option Closing Date or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement is terminated by the Underwriters, or any of them
(including the Representative), because of any failure or refusal on the part of
the Company or the Selling Shareholders to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Company shall
be unable to perform its obligations or the Selling Shareholders shall be unable
to perform their obligations under this Agreement, the Company or the Selling
Shareholders, as the case may be, will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
12. NOTICES. All notices and communications hereunder shall be in writing
and mailed or delivered by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representative, ▇/▇ ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇, Esq., with a copy to
▇▇▇▇ ▇. ▇▇▇▇, Esq., Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, Bank One Plaza, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) if to the Company, to
its agent for service as such agent's address appears on the cover page of the
Registration Statement, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Winston & ▇▇▇▇▇▇
LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and (c) if to
the Selling Shareholders, c/o SOFTBANK Corp., 20F Izumi ▇▇▇▇▇▇ ▇▇▇▇▇, ▇-▇-▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇, Attention: Yoshitaka Kitao and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
13. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES THEREOF. THE SELLERS AND THE UNDERWRITERS AGREE TO
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR ON
BEHALF OF ANY PARTY WITH RESPECT TO
- 24 -
ANY MATTER WHATSOEVER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE
PURCHASE OF THE SHARES HEREUNDER. THE SELLERS ALSO HEREBY SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY AND
COUNTY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND EACH OF THE PARTIES HERETO SUBMITS TO THE JURISDICTION
OF SUCH COURTS IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND AGREES NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO
EXCEPT IN SUCH COURTS, AND WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO MOVE TO DISMISS OR TRANSFER ANY ACTION BROUGHT IN SUCH COURT ON THE
BASIS OF ANY OBJECTION TO PERSONAL JURISDICTION, VENUE OR INCONVENIENT FORUM.
15. REPRESENTATION OF SEVERAL UNDERWRITERS. Each Underwriter represents,
warrants and undertakes, severally as to itself only, that: (i) it has not
offered or sold and, prior to the expiry of a period of six months from the
Closing Date, will not offer or sell, any Shares to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, as
amended; (ii) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000 (the "FSMA")) received by it in connection with
the issue or sale of any Shares in circumstances in which section 21(1) of the
FSMA does not apply to the issuer; and (iii) it has complied and will comply
with all applicable provisions of the FSMA with respect to anything done by it
in relation to the Shares in, from or otherwise involving the United Kingdom.
- 25 -
16. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
Morningstar, Inc.
By:
---------------------------------
Name:
Title:
SOFTBANK Investment Corporation
By:
---------------------------------
Name:
Title:
SOFTBANK Contents Fund
By:
---------------------------------
Name:
Title:
Confirmed:
▇▇ ▇▇▇▇▇▇▇▇▇ + CO, LLC
On behalf of itself
and as Representative of the several
Underwriters in Schedule II annexed hereto.
By: ▇▇ ▇▇▇▇▇▇▇▇▇ + CO, LLC
By:
---------------------------------
Name:
Title:
- 26 -
SCHEDULE I
NUMBER OF FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
------------------- ----------
SOFTBANK Investment Corporation............................... 6,984,821
SOFTBANK Contents Fund........................................ 627,679
----------
Total:................................................... 7,612,500
==========
I
SCHEDULE II
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC........................................
HARRISdirect, LLC.............................................
----------
Total:................................................... 7,612,500
==========
II
EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 2005
▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC
As Representative of the
Several Underwriters
▇/▇ ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that ▇▇ ▇▇▇▇▇▇▇▇▇ + Co, LLC ("▇▇
▇▇▇▇▇▇▇▇▇") proposes to enter into an
underwriting agreement ("
Underwriting
Agreement") with
Morningstar, Inc., an Illinois corporation (the "Company"), and
wishes to facilitate the proposed initial public offering (the "Offering") of
the Company's Common Stock ("Common Stock") pursuant to a Registration Statement
on Form S-1 (the "Registration Statement").
In consideration of the foregoing, and in order to induce you to act
as the sole book-running manager in the Offering, the undersigned hereby
irrevocably agrees not to, directly or indirectly, sell, offer, contract to
sell, transfer the economic risk of ownership in, make any short sale, pledge or
otherwise dispose of any shares of Common Stock of the Company or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire the Company's Common Stock that the undersigned beneficially
owns, without the prior written consent of ▇▇ ▇▇▇▇▇▇▇▇▇, for a period commencing
on the date hereof and ending 180 days after the effective date of the
Registration Statement.
Notwithstanding the foregoing: (a) if the undersigned is an
individual, he or she may, directly or indirectly, sell, offer, contract to
sell, transfer, pledge or otherwise dispose of any shares of the Company's
Common Stock or securities convertible into or exchangeable or exercisable for
the Company's Common Stock either during his or her lifetime or on death (i) by
gift, will or intestacy, (ii) to a member or members of his or her immediate
family or to a partnership or trust, the partners or beneficiaries of which are
exclusively the undersigned and/or a member or members of his or her immediate
family or (iii) by the exercise of options to purchase shares of Common Stock,
(b) if the undersigned is a partnership, trust, corporation or similar entity,
it may distribute any such shares or securities to its partners, stockholders or
affiliates and (c) if the undersigned is a selling shareholder (as such term is
used in the Registration Statement), it may transfer any such shares to its
affiliates; provided, however, that in each such case, prior to any such
transfer, each transferee shall execute an agreement, reasonably satisfactory to
▇▇ ▇▇▇▇▇▇▇▇▇, pursuant to which each transferee shall agree to receive and hold
such shares of Common Stock, such securities convertible into or exchangeable
A-1
or exercisable for such Common Stock, or such securities acquired upon
conversion or exchange of securities convertible into or exchangeable or
exercisable for such Common Stock, subject to the provisions hereof, and there
shall be no further transfer except in accordance with the provisions hereof.
The provisions of this paragraph shall not apply with respect to sales of Common
Stock acquired after the commencement of the Offering on the open market or to
the sale of any Common Stock to the underwriters pursuant to the
Underwriting
Agreement. For the purposes of this paragraph, "immediate family" shall mean
spouse, domestic partner, lineal descendant, father, mother, brother or sister
of the transferor.
Further notwithstanding the foregoing, if (1) during the last 17 days
of the 180-day restricted period the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (2) prior
to the expiration of the 180-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last
day of the 180-day period, the restrictions imposed by this letter shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event.
This agreement shall be terminated if, for any reason, (a) the
Underwriting Agreement is not executed on or prior to June 1, 2005, (b) the
Underwriting Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for and delivery
of the shares of Common Stock or (c) either ▇▇ ▇▇▇▇▇▇▇▇▇, on the one hand, or
the Company, on the other hand, advises the other in writing, prior to the
execution of the
Underwriting Agreement, that it has determined not to proceed
with the Offering.
The undersigned hereby waives any rights of the undersigned under any
agreement, instrument or understanding to sell shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock issued
by the Company pursuant to the Registration Statement, and acknowledges and
agrees that for a period commencing on the date hereof and ending 180 days after
the effective date of the Registration Statement, the undersigned will not make
any demand for, or exercise any right with respect to, the registration of any
shares of Common Stock issued by the Company or any security convertible into or
exercisable or exchangeable for Common Stock issued by the Company.
The undersigned understands that the agreements of the undersigned are
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns. The agreements herein shall remain
enforceable by ▇▇ ▇▇▇▇▇▇▇▇▇ notwithstanding the addition of any new underwriters
to the Offering or the replacement or substitution of any underwriters in the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of Common
Stock held by the undersigned except in compliance with this agreement.
A-2
Very truly yours,
Dated:
----------------------- --------------------------------------------
Signature
--------------------------------------------
Name (Please print or type your name)
--------------------------------------------
Title (Please print or type your title)
A-3