Description of Morningstar's Securities

Our authorized capital stock consists of 200 million shares of common stock, no par value per share, and 5 million shares of preferred stock, no par value per share.

Subject to the rights of the holders of any preferred stock the Company may designate and issue at any time in the future, the holders of our common stock are entitled to receive dividends if the Company’s Board of Directors (the “Board”) decides to declare any dividends. Upon liquidation, dissolution, or winding up of the Company, the holders of our common stock are entitled to receive, pro rata, our assets that are legally available for distribution, after payment of all debts and other liabilities. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of shareholders. The affirmative vote of the majority of the shares represented in person or by proxy at a shareholders meeting and entitled to vote on a matter is required for all actions to be taken by shareholders. Holders of our common stock do not have cumulative voting rights in the election of directors and have no preemptive, subscription, redemption, sinking fund or conversion rights. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.

Our Articles of Incorporation authorize the issuance of 5 million shares of preferred stock, no par value per share. The Board is authorized to provide for the issuance of shares of preferred stock in one or more series, and to fix for each series voting rights, if any, designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations and restrictions as provided in a resolution adopted by the Board.

Illinois law and our Articles of Incorporation and By-Laws contain several provisions that may make it more difficult for another person to acquire control of us by means of tender offer, open market purchases, proxy contest, or otherwise. Set forth below is a description of those provisions.

The authorized but unissued shares of common stock and preferred stock are generally available for future issuance without shareholder approval. These additional shares may be utilized for a variety of corporate purposes, including future financings to raise additional capital, corporate acquisitions, and employee benefit plans. The shares could be issued to purchasers sympathetic with our management or others in such a way as to render more difficult or to discourage a merger, tender offer, proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent officers or directors.

Our By-Laws provide that we will have no fewer than 7 and no more than 12 directors, as may be determined by resolution of the Board. Vacancies on the Board, or any directorship to be filled by reason of an increase in the number of directors, may be filled by the Board. Under Illinois law, one or more directors may be removed, with or without cause, at meetings of shareholders by the affirmative vote of the holders of a majority of the outstanding shares that are entitled to vote at an election of directors.

Our By-Laws provide that special meetings of our shareholders may be called only by our chairman of the Board, our chief executive officer, our Board, or the holders of not less than one-fifth of all the outstanding shares entitled to vote on the matter for which the meeting is being called or the purpose or purposes stated in the meeting notice.

Under our By-Laws, to be properly brought before an annual meeting of shareholders, any shareholder proposal or nomination for election to our Board must be delivered to the Company’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the prior year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the anniversary date of the preceding year’s annual meeting date, written notice by a shareholder must be delivered not later than the close of business on the 10th day following the day on which first public disclosure of the date of the annual meeting was made. Such notice must contain information specified in our By-Laws, including the director nominee or proposal of other business, information about the shareholder making the nomination or proposal and the beneficial owner, if any, on behalf of whom the nomination or proposal is made. Our By-Laws also allow for proxy access, which requires the Company to include in its annual proxy statement nominees constituting up to the greater of (i) two directors or (ii) 20% of the number of directors that the holders of our common stock are entitled to elect. To be eligible to nominate directors for election, a shareholder or limited group of shareholders must have owned 3% or more of the Company’s common stock for at least three years as of the applicable nomination deadline, among other requirements.

We are subject to Section 7.85 of the IBCA. Section 7.85 prohibits a publicly held Illinois corporation from engaging in a business combination unless, in addition to any affirmative vote required by law or the articles of incorporation of the company, the proposed business combination:

Such fair price standards require that the fair market value per share of the consideration offered be equal to or greater than the higher of:

For purposes of Section 7.85, disinterested director means any member of the board of directors of the corporation who:

For purposes of Section 7.85 and Section 11.75 described below, a business combination generally includes a merger, asset sale, or other transaction resulting in a financial benefit to an interested shareholder, and an interested shareholder is generally a person who, together with affiliates and associates, owns (or within the prior three years, did own) 15% of the voting shares.

We are also subject to Section 11.75 of the IBCA, which prohibits business combinations with interested shareholders for a period of three years following the date that such shareholder became an interested shareholder, unless:

 

Illinois law requires the affirmative votes of at least two-thirds of the shares entitled to vote to approve or authorize any:

The two-thirds voting requirement may delay, deter, or prevent a change of control of us if the proposed change is not favored by a shareholder or group of shareholders holding more than one-third of our outstanding voting stock.