Exhibit 10.1


 


SEPARATION
AGREEMENT


 


This Separation Agreement (the “Agreement”)
is entered into on this 10th day of November, 2010, by and among
Morningstar Associates, LLC, a Delaware limited liability company (the “Company”),
Morningstar, Inc., an Illinois corporation and the sole member of the
Company (the “Parent”), and Patrick Reinkemeyer (the “Executive”).


 


WHEREAS, the Executive is
currently employed as the President of the Company and an executive officer of
the Parent; and


 


WHEREAS, the Company, Parent and
the Executive desire to set forth herein their mutual agreement with respect to
the matters addressed herein, including matters pertaining to the Executive’s
cessation of his employment and positions with the Company and Parent, certain
other matters pertaining to the Executive’s consulting relationship with the
Company and Parent  following the
Executive’s cessation of employment and the Executive’s release of claims, all
upon the terms set forth herein.


 


NOW, THEREFORE, in consideration
of the mutual promises and agreements contained herein, the adequacy and
sufficiency of which are hereby acknowledged, the Company, Parent and the
Executive hereby agree as follows:


 


1.  Termination of Employment and Service.  As of December 15, 2010 (the “Date of
Termination”), the Executive shall cease to be an employee and officer of
the Parent and Company.


 


2.  Payment of Accrued Amounts; Accrued
Benefits; Stock Options.  Not later
than 30 days after the Date of Termination, the Company shall pay to the
Executive all amounts, if any, due to the Executive for earned salary through
the Date of Termination. Executive’s rights to receive benefits accrued or
payable under the Company’s employee benefit plans shall be governed by the
terms of such plans. Stock options held by Executive and which have vested as
of the Date of Termination shall remain exercisable in accordance with the
terms of the Parent’s 2004 Stock Incentive Plan.  In addition, not later than 30 days after the
Date of Termination, the Company shall reimburse the Executive in accordance
with the Company’s policies and procedures for all proper expenses incurred by
the Executive in the performance of his duties through the Date of Termination.


 


3.  Post-Termination Benefits.


 


(a) 
Severance Payments.  The Company
shall pay to the Executive a cash payment in an aggregate gross amount equal to
$2.2 million, consisting of an incentive bonus equal to $250,000 and a
severance payment equal to $1,950,000 (collectively, the “Severance Benefit”).  The Severance Benefit shall be payable as
follows: (i) $1.1 million of the Severance Benefit shall be paid in a lump
sum cash payment no later than December 31, 2010; and (ii) the
remaining $1.1 million of the Severance Benefit shall be payable over the
period commencing on the first payroll date following January 1, 2011 and
ending on the last payroll date immediately preceding December 31, 2011,
with such amounts payable in substantially equal installments and in accordance
with the Company’s normal payroll practices.


 

















 


(b) 
Employee Benefits.  Provided that
the Executive timely elects to receive continued coverage under the Company’s
group medical and dental plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (“COBRA”), the Company shall pay to the Executive, as an additional severance
benefit, a cash payment equal to the difference between the cost of COBRA
premiums and the cost of active employee premiums for 12 months of COBRA
coverage, as calculated by the Company as of the Date of Termination.  Such payment shall constitute taxable income
to the Executive and shall be paid in a lump sum prior to December 31,
2010. If the Executive is entitled to any benefit under the current
terms and conditions of any employee benefit plan of the Parent or Company that
is accrued and vested on the Date of Termination and that is not expressly
referred to in this Agreement, such benefit shall be provided to the Executive
in accordance with the terms and conditions of such employee benefit plan.


 


(c) 
Compliance with Agreement. 
Notwithstanding anything herein to the contrary, if the Executive
breaches the terms of this Agreement and the Executive does not cure such
breach (if curable) within 30 days after receipt of written notice from the
Company describing such breach, the Executive shall forfeit any and all rights
to the post-termination payments made or to be made pursuant to this Section 3.


 


4.  Consulting Arrangement.


 


(a) 
Consulting Services. The Parent and Company hereby agree to retain the
Executive as a consultant, and the Executive hereby agrees to be retained by
the Parent and Company, upon the terms and subject to the conditions hereof for
the period commencing on the Date of Termination and ending on the date that is
twelve (12) months following the Date of Termination, unless earlier terminated
pursuant to this Section 4 (such period, the “Consulting Period”).  During the Consulting Period, the Executive
shall make himself available at mutually acceptable times to perform consulting
services with respect to the businesses conducted by the Parent and Company; provided,
however, that  such consulting
services shall not exceed 10  hours per
month.  Subject to the prior approval of
the Parent and in accordance with Section 19 of the Agreement, the Parent
shall reimburse the Executive in accordance with the Parent’s policies and
procedures for all proper expenses incurred by the Executive in the performance
of his consulting duties during the Consulting Period. In accordance with the
terms of this Agreement, the Executive shall comply with reasonable requests
for the Executive’s consulting services and shall devote his reasonable best
efforts, skill and attention to the performance of such consulting services; provided,
however, that nothing in this Section 4 shall preclude Executive
from accepting employment with or providing services to any other person or
entity (provided such employment or services are not prohibited by Section 10
hereof) and Parent and Company agree that any consulting services requested
hereunder shall not interfere with Executive’s employment or services.  The Executive shall take his direction as a
consultant solely from the Parent’s Chief Executive Officer or the President of
Parent’s Global Investment Management Division and shall not interact with any
of the Parent’s or Company’s other employees or directors in his capacity as a
consultant, except to the extent he is directed to do so by the Chief Executive
Officer.


 


2

















 


(b) 
Termination.  This Section 4
may be terminated at any time (i) by the Executive on 30  days prior written notice to the Parent and (ii) by
the Parent upon written notice to the Executive.


 


5.  Federal and State Withholding.  The Company shall deduct from any
compensation payable by the Company to the Executive the amount of all taxes
required to be withheld under applicable law with respect to such
payments.  For purposes of determining
all applicable tax withholdings, any compensation recognized by the Executive
upon the exercise of the Executive’s stock options in accordance with the terms
of the Parent’s 2004 Stock Incentive Plan and the amounts to be paid to
Executive pursuant to Section 3 
hereof shall be treated as wages subject to all applicable withholding
requirements.


 


6.  Return of Parent and Company Property.  Promptly following the Termination Date (but
in no event later than three business days following such date), the Executive
shall return to the Parent all property of the Parent and Company in the
Executive’s possession or under the Executive’s control, including but not
limited to any office, computing or communications equipment; provided, however,
Parent or the Company shall take reasonable efforts to transfer to Executive
the right to continue to use the phone number for his Company-provided cellular
phone.


 


7.  Release of Claims.


 


The Executive, on behalf of
himself and anyone claiming through him, including, but not limited to, his
past, present and future spouses, family members, relatives, agents, attorneys,
representatives, heirs, executors and administrators, and the predecessors,
successors and assigns of each of them, hereby releases and agrees not to sue
the Company, Parent or any of their divisions, subsidiaries, affiliates, other
related entities (whether or not such entities are wholly owned) or the owners,
officers, directors, agents, attorneys or representatives thereof, or the
predecessors, successors or assigns of each of them (hereinafter jointly
referred to as the “Company Released Parties”), with respect to any and
all known or unknown claims which the Executive now has, has ever had, or may
in the future have, against any of the Company Released Parties for or related
in any way to anything occurring from the beginning of time up to and including
the date on which he signs this Agreement, including, without limiting the
generality of the foregoing, any and all claims which in any way result from,
arise out of, or relate to, the Executive’s employment by any of the Company
Released Parties or the termination of such employment, including, but not
limited to, any and all claims for severance or termination payments under any
agreement between the Executive and any of the Company Released Parties or any
program or arrangement of any of the Company Released Parties or any claims
that could have been asserted by the Executive or on his behalf against any of
the Company Released Parties in any federal, state or local court, commission,
department or agency under any fair employment, contract or tort law, or any
other federal, state or local law, regulation or ordinance (as in effect or
amended from time to time), including, without limitation, the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
the Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act, the Family and Medical Leave Act, or under any compensation,
bonus, severance, retirement or other benefit plan; provided, however,
that nothing contained in this Section 7 shall apply to, or release the
Company or Parent from (i) any obligation contained in this Agreement, (ii) any


 


3

















 


obligation which the Company or Parent may have to provide
benefits to the Executive under any plans or programs of the Company or Parent
which continue to be applicable to the Executive, except as otherwise expressly
provided in this Agreement, (iii) any obligation which the Parent or the
Company may have to indemnify the Executive pursuant to their articles of
incorporation, by-laws, operating agreement or other governing documents or the
2005  indemnification agreement entered
into with Executive;  or (iv) any
obligation which the Company or Parent may have to provide coverage to the Executive
pursuant to their director and officer insurance policy with respect to actions
or omissions of the Executive during his service as an officer or director of
the Company or Parent.  The Executive
expressly represents and warrants that he has not filed or had filed on his
behalf any claim against any of the Company Released Parties, and has not
transferred or assigned any rights or causes of action that he might have
against any of the Company Released Parties.


 


Executive represents that he has
had the opportunity and time to consult with his own legal counsel concerning
the provisions of this Agreement and that he has been given up to twenty-one
(21) days from the date of the Company’s signature as set forth below to
consider this Agreement and determine whether to accept and sign this
Agreement.  Following his acceptance and
signing of this Agreement, Executive has seven (7) calendar days to revoke
the Agreement by delivering notice of revocation to the Company in accordance
with Section 13.


 


8.  Authority.  The Executive expressly represents and
warrants that the Executive is the sole owner of the actual and alleged claims,
demands, rights, causes of action and other matters that are released herein;
that the same have not been transferred or assigned or caused to be transferred
or assigned to any other person, firm, corporation or other legal entity; and
that the Executive has the full right and power to grant, execute and deliver
the general release, undertakings and agreements contained herein.


 


9.
 Non-Admissions.  Nothing in this Agreement is intended to or
shall be construed as an admission by the Parent or Company or any of the other
Company Released Parties that any of them violated any law, interfered with any
right, breached any obligation or otherwise engaged in any improper or illegal
conduct.  The Company, Parent, and the
other Company Released Parties expressly deny any such illegal or wrongful
conduct.


 


10.  Noncompetition and Nonsolicitation.


 


(a) 
The Executive agrees, on behalf of himself and his affiliates, that for a
period of twelve (12) months following the Date of Termination, neither the
Executive nor any of his affiliates will directly or indirectly (whether as
principal, agent, independent contractor, partner, employee, consultant or
otherwise) perform for any of the organizations set forth in Exhibit A
attached hereto or any affiliates of such organizations, the same or
substantially the same functions or job duties, with respect to competitive
products or services, that the Executive performed for the Parent or Company; provided,
however, that nothing set forth in this Section 10(a) shall
prohibit the Executive or any of his affiliates from owning not in excess of 2%
in the aggregate of any class of capital stock of any corporation if such stock
is publicly traded and listed on any national or regional stock exchange. For
purposes of this Section 10(a), a competing product or service is a
product or service which replaces a product or service which is being provided
by the Parent or Company as of the Date of Termination.


 


4

















 


(b) 
The Executive agrees, on behalf of himself and his affiliates, that for a
period of twelve (12) months following the Date of Termination, neither the
Executive nor any of his affiliates will directly or indirectly solicit,
attempt to solicit, induce or encourage any person who is in the employ or
service of the Parent, Company or any of their affiliates, or any of their
respective consultants or independent contractors, to terminate his or her
relationship with the Parent, Company or any of their affiliates (as the case
may be) or become employed by the Executive, any of his affiliates, or any
other person.


 


(c) 
It is expressly understood and agreed that the restrictions contained in this Section 10
are reasonable and necessary to protect the business of the Parent, Company and
their affiliates.  Accordingly, if a
final judicial determination is made that the time, territory, scope or any
other restriction contained in this Section 10 is unreasonable or
otherwise unenforceable, neither this Agreement nor the provisions of this Section 10
shall be rendered void, but shall be deemed amended to apply as to such maximum
scope, time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable, or if the court or other governmental
authority does not so determine or indicate, to the maximum extent which any
pertinent statute or judicial decision may indicate to be a reasonable
restriction under the circumstances involved, and as so modified, the
restrictions contained in this Section shall be binding and enforceable.


 


(d) 
The Executive agrees and acknowledges that remedies at law for any breach of
his obligations under this Section 10 are inadequate and that in addition
thereto the Parent, Company and their affiliates shall be entitled to seek
equitable relief, including injunction and specific performance, in the event
of any such actual or threatened breach. 
The Executive acknowledges that the covenants set forth in this Section 10
are an essential element of this Agreement and that, but for the agreement of
the Executive to comply with these covenants, the Parent and Company would not
have entered into this Agreement.  The
Executive acknowledges that this Section 10 constitutes an independent
covenant and shall not be affected by performance or nonperformance of any
other provision of this Agreement by the Parent or Company.


 


11.  Confidentiality; Assignment of Rights.


 


(a) 
The Executive shall not disclose to anyone or make use of any trade secret or
proprietary or confidential information of the Parent, Company and their
affiliates, including such trade secret or proprietary or confidential
information of any customer or other entity to which the Parent, the Company or
one of their affiliates owes an obligation not to disclose such information,
which the Executive acquired during the term of his employment by the Company,
including but not limited to records kept in the ordinary course of business,
except (i) when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information, or (ii) as to such confidential information that becomes
generally known to the public or trade without violation of this Section 11.


 


(b) 
The Executive hereby sells, assigns and transfers to the Company all of his
right, title and interest in and to all inventions, discoveries, improvements
and copyrightable subject matter (the “rights”) which during the term of his
employment by the Company were 


 


5

















 


made or
conceived by him, alone or with others, and which are within or arise out of
any general field of the Company’s business or arise out of any work he
performs or information he received regarding the business of the Company while
employed by the Company.  The Executive
shall fully disclose to the Company as promptly as available all information
known or possessed by him concerning the rights referred to in the preceding
sentence, and upon request by the Company and without any further remuneration
in any form to him by the Company, but at the expense of the Company, execute
all applications for patents and for copyright registration, assignments
thereof and other instruments and do all things which the Company may deem necessary
to vest and maintain in it the entire right, title and interest in and to all
such rights.


 


12.  Nondisparagement.


 


(a) 
The Executive will not, nor will he cause or assist any other person to, make
any statement to a third party or take any action which is intended to or would
reasonably have the effect of disparaging or harming the Parent or Company or
the business reputation of the Parent or Company; provided, however,
that this provision shall not preclude such truthful disclosure or testimony as
may be required by a court of law, by any governmental agency having
supervisory authority over the business of the Parent or Company or by any
administrative or legislative body (including a committee thereof) with
apparent jurisdiction to order him to make such disclosure or provide such
testimony.


 


(b)  The
Parent and Company will not, nor will they cause or assist any other person to,
make any statement to a third party or take any action which is intended to or
would reasonably have the effect of disparaging or harming the Executive or his
business reputation; provided, however, that this provision shall
not preclude such truthful disclosure or testimony as may be required by a
court of law, by any governmental agency having supervisory authority over the
business of the Parent or Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order the Parent
or Company to make such disclosure or provide such testimony.


 


13.  Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following address of the other
parties hereto (or such other address for such parties as shall be specified by
notice given pursuant to this Section) or (b) sent by facsimile to the
following facsimile number of the other parties hereto (or such other facsimile
number for such parties as shall be specified by notice given pursuant to this
Section), with the confirmatory copy delivered by overnight courier to the
address of such parties pursuant to this Section 13:


 


If to the Parent or Company, to:


 


Morningstar, Inc.


22 West Washington Street


Chicago, IL 60602


Attn:  General Counsel


Facsimile:  (312)
244-8032


 


If to Executive, to:


 


6

















 


Patrick Reinkemeyer


At the most recent address on
file with the Company


 


14.  Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.


 


15.  Entire Agreement.  This Agreement shall constitute the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes and preempts any prior understandings, agreements
(including, without limitation, all equity award agreements between the Parent
or Company and the Executive) or representations by or between the parties,
written or oral, which may have related in any manner to the subject matter
hereof.  The Executive acknowledges that
neither the Parent nor Company has made any representations regarding the tax
consequences of payments under this Agreement and that Executive has had the
opportunity to consult Executive’s tax advisor, if any.


 


16.  Successors and Assigns.  This Agreement shall be enforceable by
Executive and Executive’s heirs, executors, administrators and legal
representatives, and by the Company and Parent and their successors and assigns.  Executive may not assign this Agreement and
any such assignment shall be null and void.


 


17.  Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois without regard to principles of conflict of laws.


 


18.  Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only by the written agreement of the Company, Parent and
Executive, and no course of conduct or failure or delay in enforcing the provisions
of this Agreement shall affect the validity, binding effect or enforceability
of this Agreement.


 


19.  Section 409A.  This Agreement is intended to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and shall be interpreted and construed consistently with
such intent.  The payments to the
Executive pursuant to this Agreement are also intended to be exempt from Section 409A
of the Code to the maximum extent possible, under either the separation pay
exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as
short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for purposes of the separation pay
exemption, each installment paid to the Executive under this Agreement shall be
considered a separate payment.    In the event the terms of this Agreement
would subject the Executive to taxes or penalties under Section 409A of
the Code (“409A Penalties”), the Parent, Company and Executive shall cooperate
diligently to amend the terms of the Agreement to avoid such 409A Penalties, to
the extent possible; provided that in no event shall the Parent or Company be
responsible for any 409A Penalties that arise in 


 


7

















 


connection
with any amounts payable under this Agreement. 
To the extent any amounts under this Agreement are payable by reference
to Executive’s “Date of Termination,” such term shall be deemed to refer to the
Executive’s “separation from service,” within the meaning of Section 409A
of the Code.  Notwithstanding any other
provision in this Agreement, in no event shall the level of consulting services
to be provided by the Executive pursuant to Section 4 of this Agreement
exceed more than 20% of the average of services performed by the Executive for
the Parent, Company and their affiliated “service recipients” (within the
meaning of Treasury regulation §1.409A-1(h)(3)) over the immediately preceding
36-month period.  Notwithstanding any
other provision in this Agreement, if the Executive is a “specified employee,”
as defined in Section 409A of the Code, as of the date of the Executive’s
separation from service, then to the extent any amount payable under this
Agreement (i) constitutes the payment of nonqualified deferred compensation,
within the meaning of Section 409A of the Code, (ii) is payable upon
the Executive’s separation from service and (iii) under the terms of this
Agreement would be payable prior to the six-month anniversary of the Executive’s
separation from service, such payment shall be delayed until the earlier to
occur of (a) the six-month anniversary of the separation from service or (b) the
date of the Executive’s death.  Any
reimbursement payable to the Executive pursuant to this Agreement shall be
conditioned on the submission by the Executive of all expense reports
reasonably required by the Parent or Company under any applicable expense
reimbursement policy, and shall be paid to the Executive within 30 days
following receipt of such expense reports, but in no event later than the last
day of the calendar year following the calendar year in which the Executive
incurred the reimbursable expense.  Any
amount of expenses eligible for reimbursement, or in-kind benefit provided,
during a calendar year shall not affect the amount of expenses eligible for
reimbursement, or in-kind benefit to be provided, during any other calendar
year.  The right to any reimbursement or
in-kind benefit pursuant to this Agreement shall not be subject to liquidation
or exchange for any other benefit.


 


20.  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.


 


[SIGNATURE PAGE
FOLLOWS]


 


8

















 


IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first written above.


 


 


	
   

  	
  MORNINGSTAR, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joe Mansueto

  
	
   

  	
  Name: Joe Mansueto

  
	
   

  	
  Its: Chairman and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORNINGSTAR ASSOCIATES, LLC

  
	
   

  	
   

  
	
   

  	
  By: Morningstar, Inc. (as sole
  member of Morningstar Associates, LLC)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joe Mansueto

  
	
   

  	
  Name: Joe Mansueto

  
	
   

  	
  Its: Chairman and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Patrick Reinkemeyer

  
	
   

  	
  Patrick Reinkemeyer

  



 


 


[SIGNATURE PAGE TO
PATRICK REINKEMEYER SEPARATION AGREEMENT]


 


9

















 


EXHIBIT A


 


AEGON


 


Ameriprise Financial, Inc.


 


Financial Engines, Inc.


 


GuidedChoice


 


ING Groep N.V.


 


Mercer LLC


 


Mesirow Financial Holdings, Inc.


 


Metropolitan Life Insurance Company


 


New York Life Insurance Company


 


TD Ameritrade, Inc.


 


The Hartford Financial Services Group


 


The Northwestern Mutual Life Insurance Company


 


Wachovia Bank, a division of Wells Fargo Bank, N.A.


 


Wilshire Associates Incorporated


 


10