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                                                                    Exhibit 10.4

               MORNINGSTAR, INC. 1999 INCENTIVE STOCK OPTION PLAN

      Morningstar, Inc., an Illinois corporation (the "Company"), has adopted
the Morningstar, Inc. 1999 Incentive Stock Option Plan ("Plan").

      1.    PURPOSE. The purpose of the Plan is to enable the Company and its
Affiliates (as defined below) to attract, retain, and reward eligible persons by
offering them an opportunity to have a greater proprietary interest in, and
closer identity with, the Company and its Affiliates. An option ("Option")
granted under the Plan to purchase shares of the Company's common stock ("Common
Stock"), will be specified as either a nonqualified stock option ("NSO") or an
incentive stock option ("ISO") intended to meet the qualification requirements
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The Company will use the proceeds from the sale of Common Stock pursuant to
Options for general corporate purposes. An Affiliate of the Company is any
corporation that is a parent or subsidiary corporation (as those terms are
defined in Code Sections 424(e) and (f)) with respect to the Company.

      2.    ADMINISTRATION. The Plan will be administered by the Company's Board
of Directors ("Board") or any committee of the Board that the Board designates
for such purpose. Subject to the express provisions of the Plan, the Board may
interpret the Plan, prescribe, amend and rescind rules and regulations relating
to it, determine Options grants and the terms and provisions of Participants'
Option Agreements, and make such other determinations as the Board deems
necessary or advisable for the administration of the Plan. The Board may
delegate decisions with respect to Options to such Company officer or officers
as the Board determines. The decisions of the Board and its delegate(s) under
the Plan will be conclusive and binding. No member of the Board or any of its
delegate(s) will be liable for any action taken or determination made in good
faith.

      3.    ELIGIBILITY. The Board will determine, within the limits set forth
below, those eligible person to whom, and the time or times at which, Options
will be granted. Any person employed by the Company or an Affiliate in a common
law employee-employer relationship ("Employee") is eligible to receive Options
under this Plan. Each eligible person whom the Board has selected to receive
Options will become a "Participant" in the Plan. The Board also will determine
the number of shares of Common Stock to be subject to each such Option, the
duration of each Option, the exercise price under each Option, the time or times
within which (during the term of the Option) the Participant may exercise all or
portions of each Option, whether the Company may accept cash, Common Stock or
Options in full or partial payment upon exercise of an Option, and any other
terms and conditions of such Options. In making such determinations, the Board
may take into account the nature of the services rendered by the eligible
person, his or her present and potential contributions to the success of the
Company and its Affiliates, and such other factors as the Board, in its
discretion, deems relevant.

      4.    COMMON STOCK. No more than 500,000 shares of Common Stock may be
subject to Options under the Plan. The Board will adjust the total number of
shares of Common Stock authorized under this Section in accordance with the
provisions of Section 11 hereof. Shares of Common Stock may be either authorized
but unissued shares or reacquired shares. If any Option granted under the Plan
expires unexercised, is repurchased by the Company pursuant to Section

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6(d), or is terminated, surrendered or canceled without being exercised, in
whole or in part, for any reason, then the number of shares of Common Stock
theretofore subject to such Option, or the unexercised, terminated, surrendered,
forfeited, canceled or reacquired portion thereof, will be added to the
remaining number of shares of Common Stock that may be made subject to Options
under the Plan. If the Company repurchases any unvested Common Stock pursuant to
Section 6(d), the Company may again grants Options with respect to such shares.
Options subject to the foregoing provision include Option awards to former
holders of Options, upon such terms and conditions as the Board determines,
which terms may be more or less favorable than those applicable to the former
holders of Options. The Board will not issue an Option under this Plan as an ISO
if it would cause the aggregate fair market value of stock with respect to which
ISOs are exercisable by the Participant for the first time during a calendar
year (under all plans of the Company and its Affiliates) to exceed $100,000.

      5.    OPTIONS. The provisions described below will apply to each Option
granted under the Plan.

            (a)   OPTION AGREEMENT. Each Option will be evidenced by a written
      agreement (the "Option Agreement"). The Option Agreement will specify the
      Option exercise price, the terms for payment of the exercise price, the
      duration of the Option, and the number of shares of Common Stock to which
      the Option pertains. An Option Agreement also may contain an installment
      exercise schedule, a noncompetition agreement, a confidentiality
      provision, provisions for forfeiture in the event of the Participant's
      termination of Service (as defined below), and such other restrictions,
      conditions and terms, as the Board determines. Option Agreements need not
      be identical.

            (b)   EXERCISE PRICE. The applicable Option Agreement will specify
      the per share exercise price of each Option, which may be less than, equal
      to or greater than the Common Stock's Fair Market Value (as defined below)
      on the date of grant. If the Option is an ISO, the exercise price must be
      equal to or greater than the Common Stock's Fair Market Value on the date
      of grant. If the Option is an ISO and the Participant to whom it is
      granted is a 10% Owner, the Option Agreement will provide that the per
      share exercise price of the Option will equal at least 110% of the Common
      Stock's Fair Market Value on the date of grant. A "10% Owner" is an
      individual who, at the time an Option is granted under this Plan, owns
      stock possessing more than 10 percent of the total combined voting power
      of all classes of stock of the Company or any of its Affiliates.

            (c)   MAXIMUM TERM. Subject to earlier termination as provided in
      Section 6, each Option will expire no later than ten years after the date
      it is granted. If the Option is an ISO and the Participant is a 10% Owner,
      the Option Agreement will provide that the Option will expire no later
      than five years after the date it is granted.

            (d)   STATUS OF OPTIONS. Each Option Agreement entered into under
      the Plan will specify whether the Options granted under it are NSOs or
      ISOs.

            (e)   ACCELERATION OF VESTING. The Board, in its discretion, will
      have the power to accelerate the dates for exercise of any or all Options,
      or any part thereof.

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            (f)   FAIR MARKET VALUE. "Fair Market Value" means, as it relates to
      Common Stock: (i) the average of the high and low prices of such Common
      Stock as reported on the principal national securities exchange on which
      the shares of Common Stock are then listed on the date specified herein,
      or if there were no sales on such date, on the next preceding day on which
      there were sales, or if such Common Stock is not listed on a national
      securities exchange, the last reported bid price in the over-the-counter
      market; or (ii) if the Common Stock is at the time not listed on any
      national securities exchange or traded in the over-the-counter market,
      then the Fair Market Value shall be determined by the Board, in its sole
      discretion, after taking into account such factors as the Board deems
      appropriate. Except as may be otherwise expressly provided in a particular
      Option, Fair Market Value shall be determined in good faith by the Board.

      6.    VESTING OF OPTION RIGHTS.

            (a)   IN GENERAL. The right to exercise the Option will vest
      according to the terms of the applicable Option Agreement. The term
      "Vested Option Rights" means a Participant's rights to exercise the
      Options that have vested pursuant to this Section 6. "Owned Shares" means
      shares of Common Stock that have vested according to the Option Agreement
      and are owned by the Participant as a result of his or her exercise of the
      Option.

            (b)   TERMINATION OF SERVICE. Unless otherwise approved by the
      Board, a Participant's Vested Option Rights will terminate and expire
      three (3) months from the date the Participant's Service terminates for
      any reason, other than Involuntary Termination, Permanent Disability or
      death. If a Participant's Service terminates due to Permanent Disability
      or death, the Participant's Vested Option Rights will terminate and expire
      twelve (12) months from the date the Participant's Service terminates due
      to Involuntary Termination, Permanent Disability or death, unless the
      Board provides otherwise. For purposes of this Plan, "Service" means the
      provision of services in the capacity of an Employee of the Company or an
      Affiliate. For purposes of this Plan, "Permanent Disability" means the
      Participant is unable to engage in any substantial gainful activity by
      reason of any medically determinable physical or mental impairment that is
      expected to result in death or to last for a continuous period of not less
      than twelve (12) months.

      7.    METHOD OF EXERCISE OF OPTIONS. Any Vested Option Rights under the
Plan may be exercised by a Participant, by a legatee or legatees of the Vested
Option Rights under the Participant's last will or by his or her executors,
personal representatives or distributees, by delivering to the Secretary of the
Company written notice of the number of shares of Common Stock with respect to
which the Option is being exercised, accompanied by full payment to the Company
of the exercise price of the shares being purchased under the Option, and by
satisfying all other conditions provided for in the Plan. The price per share of
Common Stock with respect to each Option exercise shall be payable in cash or
check made payable to the Company. If the Common Stock is registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934 (the "1934 Act"),
the Participant also may pay the exercise price in one of the following forms:

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            (a)   in shares of Common Stock the Participant has held for a
      period sufficient to avoid a charge to the Company's earnings for
      financial reporting purposes, with such shares to be valued at the Fair
      Market Value on the date of exercise;

            (b)   to the extent the Option is exercised for Vested Option
      Rights, through a special sale and remittance procedure pursuant to which
      the Participant concurrently provides irrevocable written instructions to
      (i) a Company-designated brokerage firm to effect the immediate sale of
      the purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Company by reason of such exercise, and (ii) the Company
      to deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale.

The Company will issue, in the name of the Participant (or, if applicable, the
legatee(s), executor(s), personal representative(s), or distributee(s) of a
deceased Participant), stock certificates representing the total number of
shares of Common Stock issuable pursuant to the exercise of any Option as soon
as reasonably practicable after such exercise.

      8.    TERMS AND CONDITIONS OF OPTIONS.

            (a)   Each Participant, and each other person described in Section
      7, will agree to such restrictions and conditions and other terms in
      connection with the exercise of an Option, including restrictions and
      conditions on the disposition of the Common Stock acquired upon the
      exercise thereof, as the Board may deem appropriate and as are set forth
      in the Plan or the applicable Option Agreement. The certificates delivered
      to a Participant, or any other person described in Section 7, evidencing
      the shares of Common Stock acquired upon exercise of an Option will bear a
      legend referring to any restrictions, conditions or other terms contained
      in the Plan, the applicable Option Agreement, and the Company may place a
      stop transfer order with its transfer agent against the transfer of those
      shares.

            (b)   The obligation of the Company to sell and deliver Common Stock
      under the Plan will be subject to all applicable laws, regulations, rules
      and approvals, including, but not by way of limitation, the effectiveness
      of a registration statement under the Securities Act of 1933, as amended
      (the "1933 Act"), if deemed necessary or appropriate by the Board, with
      respect to the Common Stock or Options reserved for issuance or that the
      Plan may grant. Neither a Participant, nor any other person described in
      Section 7, will have any rights as a stockholder with respect to any
      shares of Common Stock covered by an Option granted to, or exercised by,
      him or her until the date of delivery of a stock certificate to him or her
      for such shares. No adjustment, other than pursuant to Section 11 hereof,
      will be made for dividends or other rights for which the record date is
      prior to the date a stock certificate is delivered.

      9.    CORPORATE TRANSACTION. In the event of any Corporate Transaction (as
defined below), the Board shall have the discretion to provide that each
outstanding option shall either (i) become a fully exercisable Vested Option
Right, (ii) be assumed by the successor corporation (or

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parent thereof), (iii) be replaced with a comparable option to purchase shares
of the capital stock of the successor corporation (or parent thereof), or (iv)
be replaced with a cash incentive program of the successor corporation which
preserves the spread existing on the unvested shares of Common Stock at the time
of the Corporate Transaction and provides for subsequent payout in accordance
with the same vesting schedule applicable to such Option. The Board shall make
all determinations of comparability under this Section 9, and its determination
shall be final, binding and conclusive. Immediately following the consummation
of the Corporate Transaction, all outstanding Options shall terminate and cease
to be outstanding, except to the extent assumed or replaced by the successor
corporation (or parent thereof).

            (a)   Each Option that is assumed in connection with a Corporate
      Transaction will be appropriately adjusted, immediately after such
      Corporate Transaction, to apply to the number and class of securities that
      would have been issuable to the Participant in consummation of such
      Corporate Transaction had the Option been exercised immediately prior to
      such Corporate Transaction. Appropriate adjustments shall also be made to
      (i) the number and class of securities available for issuance under the
      Plan following the consummation of such Corporate Transaction and (ii) the
      exercise price payable per share under each outstanding Option, PROVIDED
      the aggregate exercise price payable for such securities shall remain the
      same.

            (b)   Any Options that are assumed or replaced in the Corporate
      Transaction and that did not otherwise accelerate at that time will
      automatically accelerate and become Vested Option Rights in the event the
      Participant's Service is subsequently terminated in an Involuntary
      Termination (as defined below) within eighteen (18) months following the
      effective date of such Corporate Transaction. Any Options so accelerated
      will remain exercisable as Vested Option Rights until the earlier of (i)
      the expiration of the Option term or (ii) one year from the termination of
      Service.

            (c)   For purposes of this Plan, "Corporate Transaction" shall mean
      either of the following stockholder-approved transactions to which the
      Company is a party: (i) a merger or consolidation in which securities
      possessing more than fifty percent (50%) of the total combined voting
      power of the Company's outstanding securities are transferred to a person
      or persons different from the person or persons holding those securities
      immediately prior to the transaction; or (ii) the sale, transfer or other
      disposition of all or substantially all of the Company's assets.

            (d)   For purposes of this Plan, "Involuntary Termination" shall
      mean the termination of the Participant's Service by (i) the Company (or
      an Affiliate), or (ii) the Participant following (A) a material reduction
      in the nature, scope, level or extent of Participant's responsibilities,
      (B) a reduction in the Participant's aggregate compensation (including
      base salary, performance bonus or incentive, and retirement and other
      fringe benefits), or (C) relocation, or assignment of duties that would
      reasonably require relocation, of Participant's place of Service by more
      than fifty (50) miles, without the Participant's consent.

      10.   RIGHT OF FIRST REFUSAL. Until such time as the Common Stock is first
registered under Section 12(b) or 12(g) of the 1934 Act, the Company shall have
the right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interests to the

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Participant) of any shares of Common Stock issued under the Plan. The Company
may exercise such right of first refusal in accordance with the terms
established by the Board and set forth in the applicable Option Agreement.

      11.   ADJUSTMENTS. The Board will appropriately adjust the maximum number
of shares of Common Stock subject to Options under the Plan and the exercise
price with respect to Options to give effect to any increase or decrease in the
number of shares of issued Common Stock resulting from a subdivision or
consolidation of Shares, whether through reorganization, recapitalization, stock
split, reverse stock split, spin-off, split-off, spin-out, or other distribution
of assets to stockholders, stock distributions or combination of shares,
assumption and conversion of outstanding Options due to an acquisition by the
Company of the stock or assets of any other corporation, payment of stock
dividends, other increase or decrease in the number of shares of Common Stock
outstanding effected without receipt of consideration by the Company, or any
other occurrence for which the Board determines an adjustment is appropriate,
but not including an initial public offering or other capital infusion from any
source. Except as described above, the existence of Options will not affect in
any way the right or power of the Company or its stockholders to make or
authorize: (i) any reorganization, recapitalization, or other adjustments in the
Company's capital structure, its ownership, or its business, (ii) any merger or
consolidation of the Company, (iii) any issue or issuance of bonds, debentures,
preferred, or prior preference stock ahead of or affecting any Common Stock of
the Company, including the Common Stock, or the rights thereof, (iv) the
dissolution or liquidation of the Company, (v) any sale or transfer of all or
any part of the assets or business of the Company, or (vi) any other corporate
act or proceeding whether of a similar or dissimilar character. On the basis of
information known to the Company, the Board will make all determinations
relating to the applicability and interpretation of this Section 11, and all
such determinations will be conclusive and binding.

      12.   NONTRANSFERABILITY. Options granted under the Plan, and any rights
and privileges pertaining thereto, may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, other than by will
or by the laws of descent and distribution, and will not be subject to
execution, attachment or similar process. Except as provided below, Options
granted under the Plan shall not be transferable by the Participant other than
by will or the laws of descent and distribution and shall be exercisable, during
the Participant's lifetime, only by the Participant.

            (a)   In the event of the Participant's death during a period of
      Service and prior to the termination, expiration, cancellation or
      forfeiture of any Option held by the Participant hereunder, each Option
      theretofore granted to the Participant shall be exercisable or payable to
      the extent provided in Section 6 but only: (i) by or to the executor or
      administrator of the estate of the deceased Participant or the person or
      persons to whom the deceased Participant's rights under the Option shall
      pass by will or the laws of descent and distribution; and (ii) to the
      extent set forth in the Agreement.

            (b)   Notwithstanding the foregoing, an Option Agreement for a grant
      of NSOs, may permit the Participant who received the Option at any time
      prior to the Participant's death, to assign all or any portion of the
      Option granted to him or her to: (i) the Participant's spouse or lineal
      descendants; (ii) the trustee of a trust for the primary benefit

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      of the Participant's spouse or lineal descendants; or (iii) a partnership
      of which the Participant's spouse and lineal descendants are the only
      partners. In such event, the spouse, lineal descendant, trustee or
      partnership will be entitled to all of the rights of the Participant with
      respect to the assigned portion of such Option, and such portion of the
      Option will continue to be subject to all of the terms, conditions and
      restrictions applicable to the Option, as set forth herein and in the
      related Option Agreement immediately prior to the effective date of the
      assignment. Any such assignment will be permitted only if: (x) the
      Participant does not receive any consideration therefor; and (y) the
      assignment is expressly permitted by the applicable Option Agreement as
      approved by the Board. Any such assignment shall be evidenced by an
      appropriate written document executed by the Participant, and a copy
      thereof shall be delivered to the Board on or prior to the effective date
      of the assignment.

            (c)   An NSO may be assigned in whole or in part during the
      Participant's lifetime in accordance with the terms of a domestic
      relations order that substantially qualifies with the requirements of Code
      Section 414(p), as determined by the Board in its sole discretion (a
      "qualified domestic relations order"). The assigned portion may be
      exercised only by the person or persons who acquire a proprietary interest
      in the Option pursuant to such qualified domestic relations order. The
      terms applicable to the assigned portion shall be the same as those in
      effect for the Option immediately prior to such assignment.

            (d)   An assignee or transferee of an Option must sign an agreement
      with the Company to be bound by the terms of the applicable Option
      Agreement.

      13.   INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board, or as its delegates, the Company will
indemnify members of the Board and its delegates against (a) the reasonable
expenses (as they incur them), including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding (or in connection with any appeal therein), to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted hereunder; and (b) against all
amounts paid by them in settlement of any such action suit, proceeding or appeal
(if independent legal counsel selected by the Company approves the settlement)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it is adjudged in the
action, suit or proceeding that the Board member or delegate is liable for gross
negligence or willful misconduct in the performance of his or her duties. The
Company may elect, at its own expense, to handle and defend any action, suit or
proceeding described in this Section 13.

      14.   NO EMPLOYMENT OR SERVICE RIGHTS. Neither the adoption of the Plan
nor the grant of any Option will be deemed to obligate the Company or any
Affiliate to continue the Service of any Participant for any particular period
or interfere with the rights of the Company or an Affiliate to terminate the
Participant's Service at any time. The granting of an Option will not constitute
a request or consent to postpone any Participant's retirement.

      15.   TERMINATION AND AMENDMENT OF PLAN.

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            (a)   The Board may at any time amend, terminate, suspend or modify
      the Plan; provided, that no amendment shall be made that increases the
      total number of shares of the Common Stock that may be issued and sold
      pursuant to Options granted under the Plan or modify the provisions of the
      Plan relating to eligibility with respect to ISOs unless such amendment is
      made by or with the approval of the stockholders.

            (b)   No termination, suspension or modification of the Plan will
      adversely affect any right acquired by any Participant, or a Participant's
      legatees, executors, personal representatives or distributees, under an
      Option granted before the effective date of the Plan's termination,
      suspension or modification, unless the Participant or other person
      consents. It will be conclusively presumed that any adjustment for changes
      in capitalization as provided for under this Plan do not adversely affect
      any right described in this paragraph (b).

      16.   EFFECTIVE DATE AND TERM OF THE PLAN.

            (a)   The Plan shall become effective when adopted by the Board, but
      no option granted under the Plan may be exercised, and no shares shall be
      issued under the Plan, until the Plan is approved by the Company's
      stockholders. If such stockholder approval is not obtained within twelve
      (12) months after the date of the Board's adoption of the Plan, then all
      options previously granted under the Plan shall terminate and cease to be
      outstanding, and no further options shall be granted and no shares shall
      be issued under the Plan. Subject to such limitation, the Board may grant
      options and issue shares under the Plan at any time after the effective
      date of the Plan and before the date fixed herein for termination of the
      Plan.

            (b)   The Plan will terminate upon the earliest of (i) the
      expiration of the ten (10)-year period measured from the date the Plan is
      adopted by the Board, (ii) the date on which all shares available for
      issuance under the Plan shall have been issued pursuant to the exercise of
      options or the issuance of shares (whether vested or unvested) under the
      Plan or (iii) the termination of all outstanding options in connection
      with a Corporate Transaction. Upon such Plan termination, all options and
      unvested stock issuances outstanding under the Plan shall continue to have
      full force and effect in accordance with the provisions of the documents
      evidencing such options or issuances.

      17.   WITHHOLDING TAXES. By acceptance of the Option, the Participant will
be deemed to (i) agree to reimburse the Company or Affiliate that employs the
Participant for any federal, state, or local taxes required by any government to
be withheld or otherwise deducted by such corporation in respect of the
Participant's exercise of all or a portion of the Option; (ii) authorize the
Company or any Affiliate that employs the Participant to withhold from any cash
compensation paid to the Participant or on the Participant's behalf, an amount
sufficient to discharge any federal, state, and local taxes imposed on the
Company or the Affiliate, and which the Participant has not otherwise
reimbursed, in respect of the Participant's exercise of all or a portion of the
Option; and (iii) agree that the Company may, in its discretion, hold the stock
certificate to which the Participant is entitled upon exercise of the Option as
security for the payment of the aforementioned withholding tax liability, until
cash sufficient to pay that liability has been accumulated, and may, in its
discretion, effect such withholding by retaining shares

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issuable upon the exercise of the Option having a Fair Market Value on the date
of exercise which is equal to the amount to be withheld.

      18.   GOVERNING LAW. The Plan, and all Option Agreements hereunder, will
be construed in accordance with and governed by the laws of the State of
Illinois.

      19.   SUCCESSORS. In the event of a sale of substantially all of the
assets of the Company, or a merger, consolidation or share exchange involving
the Company, all obligations of the Company under the Plan as to Options granted
hereunder will be binding on the successor to the transaction. A Participant's
Service with the successor will be considered Service with the Company for
purposes of the Plan.

      20.   NOTICES. Notices given pursuant to the Plan must be in writing and
will be deemed received when personally delivered, or three days after mailed by
United States registered or certified mail, return receipt requested, addressee
only, postage prepaid. Notice to the Company should be directed to:

                    Morningstar, Inc.
                    225 West Wacker Drive, Suite 400
                    Chicago, Illinois  60606
                    Telephone: (312)
                    Facsimile: (312)
                    Attention: Corporate Secretary

      Notices to or regarding a Participant should be directed to the
Participant, or the executors, personal representatives or distributees of a
deceased Participant, at the Participant's home address on the records of the
Company.

      21.   FRACTIONAL SHARES. If at any time the exercise of the Option would,
except for this provision, require the issue or transfer of fractional shares,
the number of shares of Common Stock will be rounded down to the next whole
number.

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                                                                    Exhibit 10.6

                         DEFERRED COMPENSATION AGREEMENT

      This DEFERRED COMPENSATION AGREEMENT (the "Agreement") is dated as of the
15th day of February 1999, between Morningstar, Inc. (the "Company"), and Don
Phillips (the "Employee"), a key employee of the Company. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Option Agreements (as defined below).

SECTION 1. DEFERRED COMPENSATION AWARD.

      Pursuant to the terms of two option agreements, each dated April 30, 1999
(collectively, the "Option Agreements"), the Company has granted to the Employee
stock option awards (the "Options") to purchase all or any part of an aggregate
of 500,000 shares of the Company's Common Stock (the "Shares").

      Subject to the adjustment provided for in Section 2 below, on any date the
Employee (or any permitted assignee of Employee) exercises the right to purchase
one or more Shares pursuant to the Options, the Company, within three (3)
business days of such exercise, shall pay to the Employee an amount equal to the
Per Share Amount for each Share so acquired (the "Deferred Compensation"). Such
payment shall be in the form of cash or, at the election of the Company, shares
of the Company's Common Stock having an aggregate Fair Market Value equal to the
amount of Deferred Compensation payable in respect of each Option exercise. For
purposes of this Agreement, an exercise of an Option shall include any
cancellation, exchange or surrender of such Option for value in connection with
any merger, consolidation or sale of the Company's Common Stock.

      For purposes of this Agreement, Per Share Amount shall mean $8.075 times a
fraction, the numerator of which is Fair Market Value and the denominator of
which is $8.30; provided; however, that in no event shall the Per Share Amount
exceed $8.075.

      This Agreement shall not permit the Employee to defer the receipt of any
regular compensation, fees, or bonus payable to him by the Company during any
year.

SECTION 2. ADJUSTMENT OF DEFERRED COMPENSATION AMOUNT.

      The Company's obligation to pay Deferred Compensation shall not be
increased by any imputed interest or earnings amount. If the number of Shares
subject to Option under an Option Agreement is adjusted for any reason, the
Deferred Compensation amount payable under this Agreement shall be adjusted at
the same time and in the same manner so as to provide an economically equivalent
value to the Employee.

SECTION 3. FORFEITURE OF DEFERRED COMPENSATION.

      The Employee shall only be entitled to payment of all or any part of the
Deferred Compensation at the time he exercises a like portion of the Options. If
all or any portion of the

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Options expires unexercised, the Employee shall not be entitled to that portion
of the Deferred Compensation.

SECTION 4. PAYMENTS IN THE EVENT OF THE EMPLOYEE'S DEATH.

      If the Employee terminates employment due to death, and the Employee's
estate exercises the Option, in accordance with an Option Agreement, the Company
will pay any Deferred Compensation amounts due under this Agreement to the
Employee's estate or such other beneficiary as the Employee has designated in
writing to the Company.

SECTION 5. TRANSFERABILITY OF DEFERRED COMPENSATION RIGHTS.

      The Employee may not sell, transfer, pledge, assign or otherwise alienate
or hypothecate his rights under this Agreement, in any manner, by operation of
law, or otherwise, other than by will or by the laws of descent and
distribution, and the Employee's rights under this Agreement will not be subject
to execution, attachment, or similar process. Other than as provided in Section
4 above, the Deferred Compensation will be paid only to the Employee.

SECTION 6. TAX WITHHOLDING.

      The Company will withhold from its Deferred Compensation payments the
amount of tax it deems necessary to satisfy all applicable tax withholding
obligations.

SECTION 7. NO LIMITATION ON RIGHTS OF THE COMPANY.

      Nothing in this Agreement shall in any way affect the right or power of
the Company to make adjustments, reclassifications or changes in its capital or
business structure, or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any part of its business or assets.

SECTION 8. AGREEMENT NOT A CONTRACT OF EMPLOYMENT.

      This Agreement is not a contract of employment, and no terms of the
Employee's employment will be affected in any way by this Agreement, except to
the extent specifically expressed herein. This Agreement will not be construed
as conferring any legal rights on the Employee to continue to be employed, nor
will it interfere with the Company's right to discharge the Employee or to deal
with him regardless of the existence of this Agreement.

SECTION 9. SUCCESSORS.

      All obligations of the Company under this Agreement will be binding on any
successor to the Company, whether the existence of the successor results from a
direct or indirect purchase of all or substantially all of the business and/or
assets of the Company, or a merger, consolidation, or otherwise.

                                       -2-
<Page>

SECTION 10. GOVERNING LAW.

      This Agreement will be construed and enforced in accordance with, and
governed by, the laws of the State of Illinois, determined without regard to its
conflict of law rules.

SECTION 11. EFFECT ON OPTION AGREEMENTS.

      This Agreement shall have no effect on the Employee's rights under the
Option Agreements.

SECTION 12. EMPLOYEE'S RIGHTS UNSECURED.

      This right of the Employee or his designated beneficiary to receive a
distribution hereunder shall be an unsecured claim against the general assets of
the Company, and neither the Employee nor his designated beneficiary shall have
any rights in or against any specific assets of the Company.

SECTION 13. AMENDMENTS TO AGREEMENT.

      This Agreement may be amended at any time by written agreement between the
Company and the Employee.

SECTION 14. EXPENSES.

      The Company shall pay any costs of administering this Agreement.

      IN WITNESS WHEREOF, the Company and the Employee have duly executed this
Agreement as of the date first written above.

                                           MORNINGSTAR, INC.

      /s/  Don Phillips                    By:    /s/  Joe Mansueto
-------------------------------                --------------------------
      DON PHILLIPS
                                           Its:   Chairman
                                               -----------------------------

                                       -3-

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