Exhibit 10.1
FORM OF
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT, dated as of [___________] (this
"AGREEMENT"), is by and between Morningstar, Inc., an Illinois corporation (the
"COMPANY"), and the undersigned director or executive officer of the Company
("INDEMNITEE").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company (the "BOARD OF DIRECTORS")
has determined that highly competent persons may be reluctant to serve as a
member of the Board of Directors (each, a "BOARD MEMBER") or as an executive
officer of the Company (each, an "OFFICER") unless they are provided with
adequate protection through insurance and indemnification against inordinate
risks of claims and actions against them arising out of their service to the
Company; and
WHEREAS, the Board of Directors has determined that attracting and
retaining such persons is in the best interests of the Company's shareholders
and that the Company should act to assure such persons that there will be
increased certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is being entered into as part of Indemnitee's
total compensation for serving as a Board Member or Officer, as applicable;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
SECTION 1. SERVICE BY INDEMNITEE.
Indemnitee agrees to serve as a Board Member or Officer, as applicable,
if so designated by the Company and appointed by the Board of Directors, and
agrees to the indemnification provisions provided for herein. Indemnitee may at
any time and for any reason resign from such position (subject to any other
contractual obligation or other obligation imposed by operation of law), in
which event the Company shall have no obligation under this Agreement to
continue Indemnitee in such position.
SECTION 2. INDEMNIFICATION.
The Company shall indemnify Indemnitee to the fullest extent permitted by
applicable law in effect on the date hereof, notwithstanding that such
indemnification is not
specifically authorized by this Agreement, the Articles of Incorporation of the
Company (as amended, the "CHARTER"), the By-laws of the Company (as amended, the
"BY-LAWS"), the Illinois Business Corporation Act of 1983, as amended (the
"ILLINOIS BUSINESS CORPORATION ACT"), or otherwise. In the event of any change,
after the date of this Agreement, in any applicable law, statute or rule
regarding the right of an Illinois corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent that they would
expand Indemnitee's rights hereunder, shall be within the scope of Indemnitee's
rights and the Company's obligations hereunder, and, to the extent that they
would narrow Indemnitee's rights hereunder, shall be excluded from this
Agreement; PROVIDED that any change that is required by any applicable law,
statute or rule to be applied to this Agreement shall be so applied regardless
of whether the effect of such change is to narrow Indemnitee's rights hereunder.
SECTION 3. ACTION OR PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT
OF THE COMPANY.
Indemnitee shall be entitled to the indemnification rights provided in
this SECTION 3 if he or she was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company), by reason of the fact that he or she is or
was a Board Member or Officer, as applicable, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement (collectively,
"DAMAGES") actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable for (a) gross
negligence or intentional misconduct in the performance of his or her duty to
the Company in such capacity unless and only to the extent that the court in
which such action, suit or proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Damages as
such court shall deem proper, or (b) a violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any of the
rules or regulations promulgated thereunder. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon a plea of
NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal action or proceeding, that Indemnitee had
reasonable cause to believe that his or her conduct was unlawful.
Notwithstanding the foregoing, the Company shall be required to indemnify
Indemnitee in connection with an action, suit or proceeding initiated by him or
her only if such action, suit or proceeding was authorized or contemplated by
the Board of Directors or a committee thereof. No indemnity pursuant to this
Agreement shall be provided by the Company for Damages that have been paid
directly to Indemnitee by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company.
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SECTION 4. ACTIONS BY OR IN THE RIGHT OF THE COMPANY.
Indemnitee shall be entitled to the indemnification rights provided in
this Section 4 if he or she was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action or suit by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
or she is or was a Board Member or Officer, as applicable, against Damages
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company; PROVIDED that no indemnification shall be made with
respect to any claim, issue or matter as to which Indemnitee has been finally
adjudged to have been liable for (a) gross negligence or intentional misconduct
in the performance of his or her duty to the Company in such capacity unless and
only to the extent that the court in which such action, suit or proceeding was
brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for such Damages as such court shall deem proper, or (b) a violation
of Section 16(b) of the Exchange Act or any of the rules or regulations
promulgated thereunder. Notwithstanding the foregoing, the Company shall be
required to indemnify Indemnitee in connection with an action, suit or
proceeding initiated by him or her only if such action, suit or proceeding was
authorized by the Board of Directors or a committee thereof. No indemnity
pursuant to this Agreement shall be provided by the Company for Damages that
have been paid directly to Indemnitee by an insurance carrier under a policy of
directors' and officers' liability insurance maintained by the Company.
SECTION 5. ACTIONS WHERE INDEMNITEE IS DECEASED.
If Indemnitee was or is a party, or is threatened to be made a party, to
any proceeding by reason of the fact that he or she is or was a Board Member or
Officer, as applicable, or by reason of anything done or not done by Indemnitee
in any such capacity, and prior to, during the pendency of, or after completion
of, such proceeding, Indemnitee shall die, then the Company shall indemnify,
defend and hold harmless the estate, heirs and legatees of Indemnitee against
any and all Damages incurred by such estate, heirs or legatees in connection
with the investigation, defense, settlement or appeal of such proceeding on the
same basis as provided for the Indemnitee in SECTIONS 3 and 4.
SECTION 6. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY.
Notwithstanding the other provisions of this Agreement, to the extent
that Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in the defense of any action, suit or
proceeding referred to in SECTION 3 or 4, or in defense of any claim, issue or
matter therein, Indemnitee shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
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SECTION 7. PARTIAL INDEMNIFICATION.
If Indemnitee is only partially successful in the defense, settlement or
appeal of any action, suit or proceeding described in SECTION 3 or 4, and as a
result is not entitled under SECTION 6 to indemnification by the Company for the
total amount of reasonable Damages actually and reasonably incurred by him or
her, the Company shall nevertheless indemnify Indemnitee, as a matter of right
pursuant to SECTION 6, to the extent Indemnitee has been partially successful.
SECTION 8. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
Upon written request by Indemnitee for indemnification pursuant to
SECTION 3 or 4, the entitlement of Indemnitee to indemnification pursuant to the
terms of this Agreement shall be determined by the following person or persons
who shall be empowered to make such determination: (a) the Board of Directors by
a majority vote of a quorum consisting of disinterested directors; (b) if such a
quorum is not obtainable or, even if obtainable, if the Board of Directors by a
majority vote of disinterested directors so directs, by independent counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; or (c) by the shareholders, but shares owned by or voted under the
control of Board Members, including the Indemnitee, who are at the time parties
to the proceeding may not be voted in the determination. Such independent
counsel shall be selected by the Board of Directors and approved by Indemnitee.
Upon failure of the Board of Directors to so select such independent counsel or
upon failure of Indemnitee to so approve, such independent counsel shall be
selected by an Illinois state court judge of the Circuit Court of Xxxx County,
Chancery Division, or such other person as such judge shall designate to make
such selection. Such determination of entitlement to indemnification shall be
made not later than sixty (60) days after receipt by the Company of a written
request for indemnification. Such request shall include documentation or
information which is necessary for such determination and which is reasonably
available to Indemnitee. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel or its
shareholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel or its shareholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
For purposes of this SECTION 8, (a) a disinterested director shall mean a
Board Member who is not or was not a party to the action, suit or proceeding in
respect of which indemnification is being sought by Indemnitee, and (b)
independent counsel shall mean a law firm or a member of a law firm that neither
is presently nor in the past five years has been retained to represent (i) the
Company or Indemnitee in any matter material to either such party or (ii) any
other party to the action, suit or proceeding giving rise to a claim for
indemnification hereunder; PROVIDED that such independent counsel shall not have
a conflict of interest in
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representing either the Company or Indemnitee in an action to determine
Indemnitee's right to indemnification under this Agreement.
SECTION 9. ADVANCEMENT OF EXPENSES AND COSTS.
All reasonable expenses and costs incurred by Indemnitee as a party to a
proceeding or investigation (including attorneys' fees, retainers and advances
of disbursements required of Indemnitee) (collectively, the "EXPENSE ADVANCE")
shall be paid by the Company in advance of the final disposition of such action,
suit, proceeding or investigation at the request of Indemnitee within ten (10)
days after the receipt by the Company of a statement or statements from
Indemnitee requesting such advance or advances from time to time. Such statement
or statements shall reasonably evidence the expenses and costs incurred by
Indemnitee in connection therewith. The Company's obligation to provide an
Expense Advance is subject to the following conditions: (a) if the proceeding
arose in connection with Indemnitee's service as a Board Member or Officer, as
applicable, then the Indemnitee or his or her representative shall have executed
and delivered to the Company an undertaking, which need not be secured and shall
be accepted without reference to Indemnitee's financial ability to make
repayment, by or on behalf of Indemnitee to repay all Expense Advance if and to
the extent that it shall ultimately be determined by a final, unappealable
decision rendered by a court having jurisdiction over the parties and the
question, that Indemnitee is not entitled to be indemnified for such Expense
Advance under this Agreement or otherwise; (b) Indemnitee shall give the Company
such information and cooperation as it may reasonably request and as shall be
within Indemnitee's power; and (c) Indemnitee shall furnish, upon request by the
Company and if required under applicable law, a written affirmation of
Indemnitee's good faith belief that any applicable standards of conduct have
been met by Indemnitee. Indemnitee's entitlement to such Expense Advance shall
include those incurred in connection with any proceeding by Indemnitee seeking
an adjudication pursuant to this Agreement. In the event that a claim for an
Expense Advance is made hereunder and is not paid in full within ten (10) days
after written notice of such claim is delivered to the Company, Indemnitee may,
but need not, at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim.
SECTION 10. OTHER RIGHTS TO INDEMNIFICATION.
The indemnification and advancement of expenses (including attorneys'
fees) and costs provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may now or in the future be entitled under any
provision of the By-laws or the Charter, any vote of shareholders, any provision
of law or otherwise.
SECTION 11. REMEDIES OF INDEMNITEE IN CASES OF DETERMINATION NOT TO
INDEMNIFY OR TO ADVANCE EXPENSES.
In the event that a determination is made that Indemnitee is not entitled
to indemnification hereunder, or if payment has not been timely made following a
determination of entitlement to indemnification pursuant to SECTION 8, or if
expenses are not advanced pursuant to SECTION 9, Indemnitee shall be entitled to
a final adjudication in an appropriate court of the State
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of Illinois of his or her entitlement to such indemnification or advance. The
Company shall not oppose Indemnitee's right to seek any such adjudication or any
other claim. Such judicial proceeding shall be made de novo, and Indemnitee
shall not be prejudiced by reason of a determination (if so made) that he or she
is not entitled to indemnification. If a determination is made or deemed to have
been made, pursuant to the terms of SECTION 8, that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination and is
precluded from asserting that such determination has not been made or that the
procedure by which such determination was made is not valid, binding and
enforceable. The Company further agrees to stipulate in any such court that the
Company is bound by all the provisions of this Agreement and is precluded from
making any assertion to the contrary. If the court shall determine that
Indemnitee is entitled to any indemnification hereunder, the Company shall pay
all reasonable Damages actually incurred by Indemnitee in connection with such
adjudication (including, but not limited to, any appellate proceedings).
SECTION 12. SELECTION OF COUNSEL.
In the event the Company shall be obligated hereunder to pay the expenses
of any claim, the Company shall be entitled to assume the defense of such claim
with counsel approved by Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same claim; PROVIDED that (i) Indemnitee shall
have the right to employ Indemnitee's counsel in any such claim at Indemnitee's
expense and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there is a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such claim, then the fees and expenses
of Indemnitee's counsel shall be at the expense of the Company.
SECTION 13. COUNSEL FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT.
In the event that Indemnitee is subject to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication or award in arbitration to enforce his or her rights
under, or to recover damages for breach of, this Agreement, Indemnitee, if he or
she prevails in whole or in part in such action, shall be entitled to recover
from the Company, and shall be indemnified by the Company against, any
reasonable expenses for attorneys' fees and disbursements actually and
reasonably incurred by him or her. Indemnitee shall be entitled to select his or
her own counsel; PROVIDED that the Company may elect to hire counsel to
represent Indemnitee together with other similarly situated individuals, but
only if such joint representation does not, in the reasonable discretion of
Indemnitee, create any conflict of interest.
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SECTION 14. LIABILITY INSURANCE.
The Company shall, from time to time, make a good faith determination
whether or not it is practicable for the Company to obtain and maintain a policy
or policies of insurance with reputable insurance companies providing the
directors, officers and employees of the Company or any subsidiary of the
Company with coverage for losses from wrongful acts or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
directors' and officers' liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or the most favorably insured of the Company's
officers, if Indemnitee is not a director of the Company but is an officer of
the Company or any subsidiary of the Company. Notwithstanding the foregoing, the
Company shall have no obligation to obtain or maintain such insurance if the
Company determines in good faith that such insurance is not reasonably
available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is
limited by exclusions so as to provide an insufficient benefit or if Indemnitee
is covered by similar insurance maintained by a subsidiary or parent of the
Company.
If, at the time of the receipt of a notice of a claim pursuant to SECTION
24, the Company maintains liability insurance applicable to Board Members or
Officers, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
SECTION 15. DISCLOSURE OF PAYMENTS.
In the event that the Company makes any payment, advance or reimbursement
for Damages to Indemnitee under this Agreement, the Company shall make such
disclosures as are required by the Illinois Business Corporation Act.
SECTION 16. DURATION OF AGREEMENT.
This Agreement shall continue until and terminate upon the later of (a)
10 years after Indemnitee has ceased to serve as a Board Member or Officer, as
applicable or (b) the final termination of all pending or threatened actions,
suits, proceedings or investigations with respect to Indemnitee.
SECTION 17. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and Indemnitee's estate,
heirs, legal representatives and assigns. The Company shall require and cause
any successor (whether direct
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or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all or a substantial part of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place.
SECTION 18. SEVERABILITY.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION 19. IDENTICAL COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original, but all of which together
shall constitute one and the same Agreement. Only one such counterpart signed by
the party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.
SECTION 20. HEADINGS; SECTION REFERENCES.
The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof. Unless otherwise specified herein, each
reference herein to a Section shall be deemed a reference to a Section of this
Agreement.
SECTION 21. MODIFICATION AND WAIVER.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
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SECTION 22. MUTUAL ACKNOWLEDGMENT.
The Company and Indemnitee acknowledge that, in certain instances,
federal law or public policy may override applicable state law and prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the Securities and Exchange
Commission ("SEC") has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws, and
federal legislation prohibits indemnification for certain ERISA violations.
Furthermore, Indemnitee understands and acknowledges that the Company has
undertaken, or may be required in the future to undertake, with the SEC to
submit the question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
SECTION 23. NOTICE/COOPERATION BY INDEMNITEE.
Indemnitee agrees promptly to notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any matter which may be subject to indemnification
covered hereunder, either civil, criminal or investigative. In addition,
Indemnitee shall give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee's power.
SECTION 24. NOTICES.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if (a) delivered by
hand and receipted for by the party to whom said notice or other communication
shall have been directed or (b) mailed by certified or registered mail with
postage prepaid on the third business day after the date on which it is so
mailed, to the following addresses:
(i) to Indemnitee:
[--------------------]
(ii) to the Company:
Morningstar, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
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SECTION 25. OTHER AGREEMENTS.
This Agreement restates and supersedes, but does not limit or negate, any
indemnification, rights or interests of Indemnitee under any prior agreements
between the Company and Indemnitee.
SECTION 26. CONSENT TO JURISDICTION.
The Company and Indemnitee hereby irrevocably consent to the jurisdiction
of the state and federal courts of the State of Illinois for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement and agree that any action instituted under this Agreement shall be
commenced, prosecuted and continued only in a state or federal court in the
State of Illinois, which shall be the exclusive and only proper forum for
adjudicating such a claim.
SECTION 27. GOVERNING LAW.
The parties agree that this Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois.
SECTION 28. EFFECTIVE DATE.
The provisions of this Agreement shall cover claims, actions suits and
proceedings whether now pending or hereafter commenced and shall be retroactive
to cover acts or omissions or alleged acts or omissions which heretofore have
taken place. By way of example but not of limitation, this Agreement shall apply
to all liabilities, known or unknown, contingent or otherwise, that presently
exist or arise in the future, regardless of whether the liabilities relate to
activities of Indemnitee and/or the Company preceding or subsequent to the date
of this Agreement.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
MORNINGSTAR, INC.
By:
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Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
INDEMNITEE:
By:
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Name: [__________________]
[Signature Page to Indemnification Agreement]
