Document:

Tax Indeminity Agreement by and between Bitstream Inc. and Monotype

 Exhibit 10.5 

 
  

 
 TAX INDEMNITY AGREEMENT

 dated as of November 10, 2011 
 between 
 BITSTREAM INC. 

and 
 MARLBOROUGH
SOFTWARE DEVELOPMENT HOLDINGS INC. 
  
  

 

 TABLE OF CONTENTS 

 

							
	  	 	 	  	Page	 
	 Section 1.
	 	Definitions	  	 	1	  
			
	 Section 2.
	 	Reporting	  	 	4	  
			
	 Section 3.
	 	Tax Losses	  	 	5	  
			
	 Section 4.
	 	Excluded Events	  	 	6	  
			
	 Section 5.
	 	Contest Provisions	  	 	7	  
			
	 Section 6.
	 	Verification	  	 	10	  
			
	 Section 7.
	 	Payments	  	 	11	  
			
	 Section 8.
	 	Survival of Agreement	  	 	11	  
			
	 Section 9.
	 	Interest on Late Payments	  	 	11	  
			
	 Section 10.
	 	Notices	  	 	11	  
			
	 Section 11.
	 	Governing Law	  	 	13	  
			
	 Section 12.
	 	Miscellaneous	  	 	13	  

  
 i 

 TAX INDEMNITY AGREEMENT 

This TAX INDEMNITY AGREEMENT dated as of November 10, 2011 is between BITSTREAM INC., a Delaware corporation
(“Bitstream”), and MARLBOROUGH SOFTWARE DEVELOPMENT HOLDINGS INC., a Delaware corporation (“Marlborough”). 

W I T N E S S E T H: 

WHEREAS, Bitstream is entering into that certain Agreement and Plan of Merger dated as of November 10, 2011 with Monotype Imaging
Holdings Inc. and Birch Acquisition Corporation (the “Merger Agreement”); 
 WHEREAS, pursuant to the Merger Agreement
Birch Acquisition Corporation is to merge with and into Bitstream (the “Merger”); 
 WHEREAS, pursuant to the Merger
Agreement the Merger will be preceded by the distribution by Bitstream to its shareholders of the stock of Marlborough (the “Spin Off”); and 
 WHEREAS, pursuant to the Merger Agreement it is a condition precedent to the Merger that Marlborough shall have entered into this Agreement to indemnify Bitstream and the Common Parent against certain
potential adverse tax consequences of the Spin Off as more fully set forth herein, 
 NOW, THEREFORE, in consideration of the
mutual agreements herein contained, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 
 Section 1. Definitions. The following terms shall have the meanings set forth below for purposes of this Tax Indemnity Agreement: 

“After Tax Basis” means, with respect to an indemnity payment received by Bitstream under this Tax Indemnity Agreement,
the amount of such payment supplemented by a further 

  
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payment to Bitstream so that the sum of the indemnity payment plus the further payment shall, after deduction of all federal, state and/or local income and/or franchise taxes actually required to
be paid by Bitstream in respect of the receipt or accrual of the indemnity payment and the further payment (taking into account any actual reduction in the tax liability of Bitstream as a result of any tax credits or deductions arising therefrom in
the taxable period in which the loss that gives rise to the indemnity payment is incurred), be equal to the indemnity payment. 

“Appraisal” means a valuation report in respect of Marlborough to be prepared by D&P for Bitstream. 

“Bitstream” means Bitstream and the Common Parent, except for in the Recitals and unless context indicates that the
reference should not include the Common Parent. 
 “Business Day” has the meaning set forth in
Section 1.01(a) of the Merger Agreement. 
 “Claim” has the meaning set forth in Section 5.

 “Closing” has the Meaning set forth in Section 2.01 of the Merger Agreement. 

“Closing Date” has the meaning set forth in Section 1.01(a) of the Merger Agreement. 

“Code” means the Internal Revenue Code of 1986, as amended. 

“Common Parent” means the common parent of the affiliated or other group of corporations filing a consolidated,
combined, unitary or similar federal, state or local income or franchise tax return, if any, of which Bitstream is a member after the Closing Date. 
 “D&P” means Duff and Phelps, LLC. 
 “Final
Determination” means (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all appeals allowable by law (other than appeals to a
court with discretionary jurisdiction) by either party to the action have been exhausted or the time for filing such appeals has expired (or 

  
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if Marlborough shall not require judicial proceedings hereunder or if judicial proceedings shall be unavailable as a matter of law) or a decision, judgment, decree or other order of an
administrative official or agency of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable administrative appeals have been exhausted by either party, (b) a closing agreement entered into
under section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding, or (c) expiration of the time for instituting a claim for refund, or if such a claim was filed,
expiration of the time for instituting a suit with respect thereto. 
 “Gross Up Amount” means the amount
required to make an indemnity payment hereunder be on an After Tax Basis. 
 “Net Asset Value” has the meaning
set forth in Section 1.01(a) of the Merger Agreement. 
 “Opinion of Marlborough’s Tax Counsel” means
a written opinion of Seyfarth Shaw LLP, or other independent tax counsel selected by Marlborough and reasonably acceptable to Bitstream. 
 “Overdue Rate” means the prime rate as set forth in the Wall Street Journal plus 4%. 
 “PwC” means PricewaterhouseCoopers, LLP. 
 “PwC Basis
Report” means a report to be prepared by PwC for Bitstream with respect to Bitstream’s tax basis in the assets contributed to Marlborough prior to the Spin Off. 
 “Rev. Proc. 2011-29 Deductions” has the meaning set forth in Section 2. 
 “Section 382 Study” means a Code section 382 study to be prepared by PwC for Bitstream. 
 “Short 2012 Taxable Year” means the short taxable year of Bitstream commencing on January 1, 2012 and ending at the end of the Closing Date. 

  
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 “Spin Off Taxes” has the meaning set forth in Section 1.01(a) of the
Merger Agreement. 
 “Substantial Authority” has the meaning set forth in Treasury Regulation
Section 1.6662-4(d). 
 “Tax Loss” means the incurrence by Bitstream of (i) any tax, governmental
fee, like assessment or charge (including withholding on amounts paid to or by any person together with any interest, penalty, addition to tax or additional amount paid with respect thereto), and (ii) any obligation to indemnify or otherwise
assume or succeed to the tax liability of any person, in each case, by reason of the distribution of the stock of Marlborough to the shareholders of Bitstream pursuant to the Spin Off, determined by computing the tax liability of Bitstream for its
Short 2012 Taxable Year with and without the occurrence of the Spin Off. 
 “Verifying Firm” has the meaning
set forth in Section 6. 
 Section 2. Reporting. Any federal, state or local income or franchise tax return of
Bitstream for 2011 and for its Short 2012 Taxable Year, which return is filed after the Closing, shall be prepared by Bitstream; provided that the fair market value and tax basis as of the date of the Spin Off of the Marlborough stock
distributed to the shareholders of Bitstream in the Spin Off and the availability of net operating loss and business credit carryforwards shall be such amounts as Bitstream shall in good faith determine taking the Appraisal, any available data with
respect to the trading price of the stock of Marlborough after the Spin Off and of Bitstream prior to the Closing, the PwC Basis Report and the Section 382 Study into account; and provided further that Bitstream’s
taxable income or loss for the Short 2012 Taxable Year shall be determined on the basis of an interim closing of the books of Bitstream at the end of the Closing Date, taking into account, inter alia, the availability of net operating loss
and business credit carryforwards, foreign tax credits, and the Rev. Proc. 2011-29 Deductions (as defined below), in 

  
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each case to the extent available for use in the Short 2012 Taxable Year under applicable law. Bitstream shall, within twenty (20) Business Days prior to the due date for filing such
returns, if such tax returns would result in an indemnification obligation from Marlborough, deliver, or caused to be delivered, to Marlborough such income tax returns for Marlborough’s review and comment solely with respect to items that would
result in or increase the amount of an indemnity payment under this Agreement and shall make such changes to such income tax returns solely with respect to items that would result in or increase the amount of an indemnity payment under this
Agreement, as are reasonably requested by Marlborough, unless otherwise required by applicable law. No election under section 1.1502-76(b)(2)(ii)(D) of the Income Tax Regulations promulgated under the Code shall be made with respect to Bitstream for
2012. No election shall be made under Section 336(e) of the Code with respect to the Spin Off. Bitstream shall make the election provided by Revenue Procedure 2011-29, 2011-18 I.R.B. 746, with respect to all eligible success-based fees that
would not be payable absent a closing of the Merger and shall, to the extent permitted by applicable law, deduct the amount allowable thereunder in its Short 2012 Taxable Year (the “Rev. Proc. 2011-29 Deductions”). Bitstream shall
maintain or cause to be maintained such written information and records with respect to periods prior to the Closing Date as were maintained by Bitstream as of the Closing or as are prepared by Bitstream or an affiliate thereafter in the ordinary
course of business, and shall make such information and records available to Marlborough within a reasonable time after Marlborough’s written request for purposes of exercising its rights under Section 5 hereof and this Section 2.

 Section 3. Tax Losses. 
 (a) Marlborough hereby covenants and agrees to indemnify and hold Bitstream harmless on an After Tax Basis from and against any Tax Loss to the extent such Tax

  
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Loss exceeds any reduction in Net Asset Value attributable to Spin Off Taxes under the Merger Agreement. 
 (b) Section 3(a) above to the contrary notwithstanding, any indemnity payment hereunder shall not include a Gross Up Amount if Marlborough furnishes to Bitstream an Opinion of Marlborough’s Tax
Counsel to the effect that there is Substantial Authority for the proposition that the indemnity amount payable hereunder (not determined on an After Tax Basis) does not constitute taxable income to Bitstream for federal income tax purposes. In such
event, Marlborough shall indemnify Bitstream on an After Tax Basis under Section 3(a) against any adverse tax consequences resulting from the subsequent treatment of the indemnity payment in question as taxable income to Bitstream, including
without limitation any reasonable expenses such as attorneys’ or accountants’ fees incurred by Bitstream in contesting such treatment. 
 (c) Following a Tax Loss, or if contested in accordance with Section 5, following a Final Determination (to the extent such Final Determination gives rise to an indemnity obligation hereunder) with
respect to such Tax Loss, Bitstream shall give Marlborough written notice requesting payment of the indemnity and its calculation of the indemnity amount due after taking into account amounts previously advanced under Section 5. Any indemnity
shall be paid within 30 days after the later of 30 days after receipt of such notice or 10 days after conclusion of any verification process pursuant to Section 6. 
 Section 4. Excluded Events. Notwithstanding anything to the contrary in this Tax Indemnity Agreement, Marlborough shall not be required to make any payment to Bitstream with respect to a Tax
Loss (a) if such Tax Loss is a result of (i) Bitstream’s breach of Sections 2 or 5 after the Closing in such manner as materially to impair Marlborough’s rights under those Sections, (ii) Bitstream’s filing of an
amended federal, state or local income or franchise tax 

  
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return after the Closing with respect to taxable years of Bitstream through and including the Short 2012 Taxable Year except as required by applicable law or with consent from Marlborough, such
consent not to be unreasonably withheld or delayed, or (iii) Bitstream’s making any tax election on any tax return for any taxable year after the Short 2012 Taxable Year, except as required by applicable law or with consent from
Marlborough, such consent not to be unreasonably withheld or delayed, or (b) if such Tax Loss would not have occurred but for an extension of a statute of limitations made by Bitstream after the Closing without the prior written consent of
Marlborough not unreasonably to be withheld or delayed. 
 Section 5. Contest Provisions. If Bitstream receives a
written notice of any claim by the Internal Revenue Service or a state or local taxing authority that, if sustained, would require Marlborough to pay an indemnity under this Tax Indemnity Agreement (a “Claim”), Bitstream will
(a) so notify Marlborough in writing within 30 days of such receipt, (b) if permitted by law, not make payment of the tax claimed for at least 30 days after giving such notice, and (c) if requested by Marlborough in writing within 30
days after receipt of such notice by Marlborough (or, if less, within the period ending five days prior to the date, including extensions, on which Bitstream is required to respond to the Internal Revenue Service or such state or local taxing
authority with respect to such Claim, but in no event less than five Business Days after receipt by Marlborough of such written notice from Bitstream), contest in good faith the validity, applicability and/or amount of such adjustment or such action
or proposed action by the Internal Revenue Service or such other taxing authority in any and all administrative and judicial forums as may be legally available (including appellate forums in which the administrative or judicial body is required to
hear the appeal); provided that Bitstream shall not be required to initiate or continue any such contest unless (x) Bitstream shall have received, at 

  
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the expense of Marlborough, an Opinion of Marlborough’s Tax Counsel to the effect that there is Substantial Authority for contesting such Claim, (y) Marlborough shall have agreed to pay
and shall advance upon demand all reasonable expenses to be incurred by Bitstream to contest such action or proposed action by the Internal Revenue Service or other taxing authority (including, without limitation, reasonable attorneys’ and
accountants’ fees and disbursements), and (z) in the event that Bitstream elects in its sole discretion to pay the tax claimed and seek a refund thereof, Marlborough shall make an interest free advance to Bitstream in the amount of such
tax and interest, additions to tax and penalties thereon, if any, and shall agree to indemnify Bitstream on an After Tax Basis against any adverse tax consequences resulting from such interest free advance. 

Provided that Marlborough has complied with clauses (x), (y) and (z) of the preceding paragraph, Bitstream shall consult with
Marlborough and its counsel in good faith prior to taking any action to contest such Claim. Bitstream, at its sole option, may determine (a) the forum of any judicial contest, and (b) whether to pay the tax claimed and then seek a refund
thereof, or not to pay the tax claimed and contest the Claim in the United States Tax Court or other appropriate forum. Upon a Final Determination with respect to the liabilities of Bitstream, or the receipt of a refund by Bitstream (or the
application of such refund against other tax liability of Bitstream) with respect to a Claim contested hereunder, Bitstream shall offset against the amount due (including for this purpose any reasonable expenses not otherwise advanced or reimbursed)
any amount advanced by Marlborough to Bitstream on an interest free basis pursuant to this Section 5, and either (q) Marlborough shall pay to Bitstream any excess of such amount due over the amount of such interest free advance, or
(r) Bitstream shall repay to Marlborough any excess of such interest free advance over such amount due, in either case 

  
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within 30 days thereafter and, if Marlborough shall have paid an indemnity to Bitstream with respect to the adverse tax consequences of any interest free advance, the amount of any tax savings
resulting from any payment by Bitstream to Marlborough pursuant to this sentence that are actually realized in the year of such payment. Any interest received by Bitstream (or which would have been received but for offset by unrelated matters) in
connection with any refund that is allocable to indemnified taxes in respect of which Marlborough has made an interest free advance shall be for the account of Marlborough and shall be paid to Marlborough promptly after receipt thereof by Bitstream,
including application of such refund against other tax liability of Bitstream. 
 Notwithstanding the foregoing, Bitstream,
after consulting in good faith with Marlborough and its counsel and with the prior written consent of Marlborough, may refrain from contesting, or enter into a settlement with respect to, any Claim; provided that Bitstream may refrain from
contesting, or may enter into a settlement with respect to, a Claim without consulting with Marlborough and its counsel and receiving Marlborough’s consent if Bitstream expressly and unconditionally waives Bitstream’s rights to the
indemnities set forth in Section 3 with respect to such Claim. In the event that Bitstream so expressly and unconditionally waives its rights, Marlborough shall have no liability to Bitstream under this Tax Indemnity Agreement with respect to
such Claim, and Bitstream shall promptly pay to Marlborough the amount of any interest free advance made to Bitstream pursuant to this Section 5. 
 Bitstream shall provide Marlborough with copies of or reasonable access to all documents and information to the extent relating to the contest reasonably requested by Marlborough (other than tax returns
related to periods commencing on or after the Closing Date and other confidential information) and will in good faith keep Marlborough fully informed 

  
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regarding all relevant aspects of any contest. Bitstream shall allow Marlborough and its counsel a reasonable opportunity to comment on all written submissions to the extent relating to a Claim,
shall consider in good faith its requests concerning the most appropriate forum in which to proceed and other related matters and shall, if requested by Marlborough, consult in good faith with Marlborough’s counsel regarding the conduct of such
contest. 
 Section 6. Verification. The determination of the amount payable to Bitstream under this Agreement shall
be made in the first instance by Bitstream, which shall furnish Marlborough with a notice setting forth in reasonable detail the computations and methods used in computing such amount. Any such notice furnished to Marlborough shall state in
reasonable detail the basis upon which such amount has been determined. If requested by Marlborough within 30 days of receipt of such notice, such determination shall be verified in writing by an accounting firm mutually acceptable to and agreed by
both Marlborough and Bitstream (the “Verifying Firm”). If such verification is requested, Bitstream will provide all information (other than tax returns or books) necessary to permit confirmation of the accuracy of Bitstream’s
proposed adjustment to the Verifying Firm and allow such Firm reasonable access to such information on a confidential basis and subject to a confidentiality agreement reasonably satisfactory to Bitstream. Marlborough agrees that neither it nor any
affiliate will have the right to inspect the tax returns, books, records or any other documents of Bitstream in order to verify the basis or accuracy of the calculations so made or of the amounts set forth in any such notice. The determinations made
by the Verifying Firm in accordance with this Section 6 shall be conclusive and binding on Bitstream and Marlborough absent manifest error. The reasonable fees and expenses payable of Verifying Firm shall be paid by Marlborough, except that
such fees and expenses shall be paid by Bitstream if such verification shall result in an adjustment in 

  
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Marlborough’s favor of more 20 percent of the indemnity payment or payments as calculated by Bitstream. Notwithstanding anything herein to the contrary, the sole responsibility of the
Verifying Firm shall be to verify the computation of the indemnity payment hereunder and matters of interpretation of this Agreement or tax law of any jurisdiction shall not be within the scope of the Verifying Firm’s responsibilities.

 Section 7. Payments. All payments made pursuant to this Tax Indemnity Agreement shall be made in United States
dollars to Bitstream by wire transfer of immediately available funds to such bank account of Bitstream as specified by Bitstream in written directions to Marlborough or, if no such direction shall have been given, by check of Marlborough payable to
the order of Bitstream and mailed to Bitstream by certified mail, postage prepaid, at its address for notices hereunder. 

Section 8. Survival of Agreement. The respective obligations of Marlborough and Bitstream under this Tax Indemnity Agreement
shall survive the Merger. The respective obligations of Marlborough and Bitstream arising under this Agreement are expressly made for the benefit of, and shall be enforceable by, Bitstream, Marlborough and their respective successors and assigns.

 Section 9. Interest on Late Payments. To the extent permitted by applicable law, interest at the Overdue Rate
shall be paid, on demand, on any amount not paid when due pursuant to this Tax Indemnity Agreement until the same shall be paid. 
 Section 10. Notices. Any notices or other communications required or permitted under, or otherwise given in connection with, this Agreement shall be in writing and shall be deemed to have been
duly given (a) when delivered or sent if delivered in person or sent by facsimile transmission (provided confirmation of facsimile transmission is obtained), (b) on 

  
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the fifth Business Day after dispatch by registered or certified mail, (c) on the next Business Day if transmitted by national overnight courier, or (d) on the date delivered if sent by
email (provided confirmation of email receipt is obtained), in each case as follows: 
 if to Bitstream, to: 

(if prior to Effective Time (as defined in the Merger Agreement)): 

Bitstream Inc. 

500 Nickerson Road 
 Marlborough, Massachusetts 01752 
 Attention: Chief Executive Officer 

Facsimile No.: (617) 868-0784 
 with a copy to 
 Seyfarth Shaw LLP 

World Trade Center East 
 Two Seaport Lane 
 Boston, MA 02210-2028 

Attention:         Gregory L. White 

      Blake Hornick 

Facsimile No.: (617) 790-6730 
 (if subsequent to the Effective Time (as defined in the Merger Agreement)): 

Bitstream Inc. 

c/o Monotype Imaging Holdings Inc. 
 500 Unicorn Park Drive 
 Woburn, Massachusetts 

Attention: Chief Executive Officer 
 Facsimile No.: (781) 970-6001 
 with a copy to: 

Goodwin Procter LLP 
 Exchange Place 
 53 State Street 

Boston, MA 02109 

Attention:         John Mutkoski 

      James Matarese 

Facsimile No.: (617) 523-1231 

  
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 if to Marlborough to: 

Marlborough Software Development Holdings Inc. 
 500 Nickerson Road 
 Marlborough, Massachusetts 01752 

Attention: Chief Executive Officer 
 Facsimile No.: (617) 868-0784 
 with a copy to: 

Seyfarth Shaw LLP 

World Trade Center East 
 Two Seaport Lane 
 Boston, MA 02210-2028 

Attention:         Gregory L. White 

      Blake Hornick 

Facsimile No.: (617) 790-6730 
 Section 11. Governing Law. This Tax Indemnity Agreement shall in all respects be governed by and construed in accordance with the laws of the State of New York, including all matters of
construction, validity and performance. 
 Section 12. Miscellaneous. Any provision of this Tax Indemnity Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Tax Indemnity Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Neither this Tax Indemnity Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought. The headings of the 

  
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various Sections of this Tax Indemnity Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. 

  
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 IN WITNESS WHEREOF, Bitstream and Marlborough have caused this Tax Indemnity Agreement to be
duly executed as of the day and year first above written. 
  

			
	BITSTREAM INC.
		
	By:	 	/s/ James Dore
		 	James Dore
	
	MARLBOROUGH SOFTWARE
	DEVELOPMENT HOLDINGS INC.
		
	By:	 	/s/ James Dore
		 	James Dore

  

			
	Acknowledged and Agreed to as of the date set forth above:
	
	MONOTYPE IMAGING HOLDINGS INC.
		
	By:	 	/s/ Douglas J. Shaw
		 	Douglas J. Shaw

 [Signature page to Tax Indemnity Agreement] 

  
 15Transition Services Agreement

 Exhibit 10.6 
 TRANSITION SERVICES AGREEMENT 
 This Transition Services Agreement
(this “Agreement”) is entered into as of November 10, 2011, by and between Marlborough Software Development Holdings Inc., a Delaware corporation (the “Spin-Off Entity”), and Monotype Imaging Holdings Inc., a
Delaware corporation (“Buyer”, together with the Spin-Off Entity, the “Parties”, each a “Party”). Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in
the Merger Agreement (as hereinafter defined). 
 WHEREAS, reference is made to that certain Agreement and Plan of Merger (the
“Merger Agreement”), dated as of the date hereof, among Bitstream Inc., a Delaware corporation (the “Company”), Buyer and Birch Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Buyer
(“Merger Subsidiary”); 
 WHEREAS, subject to the terms and conditions set forth in the Merger Agreement,
Merger Subsidiary will merge with and into the Company, with the Company resulting as the surviving entity (the “Merger”); 
 WHEREAS, it is a condition to the Merger that the Company, at or prior to the Effective Time, distribute to its stockholders all of the shares of common stock of the Spin-Off Entity (together with the
related transactions, actions, agreements and undertakings in connection therewith, in each case required pursuant to the Spin-Off Agreements, the “Spin-Off”); 

WHEREAS, the Parties seek an orderly transition of the operations of the Company and the Spin-Off Entity following the consummation of
the transactions contemplated by the Merger Agreement, including the Merger and the Spin-Off; and 
 WHEREAS, in connection with
and as a condition precedent to the closing of the transactions contemplated by the Merger Agreement, the Parties have agreed to provide certain transitional services following the Closing as further described herein. 

NOW THEREFORE, in consideration of the mutual agreements and covenants herein contained and intending to be legally bound hereby, the
Parties hereto hereby agree as follows: 
 1. Services to be Performed. 

(a) During the applicable services period set forth on Exhibit A (the “Spin-Off Service Periods”),
the Spin-Off Entity agrees to perform all of the transitional services set forth on Exhibit A (the “Spin-Off Services”) on the terms and conditions hereof. Notwithstanding anything in this Agreement or Exhibit A to the
contrary, Buyer shall not be obligated to receive or continue to receive the Spin-Off Services in whole or in part and may terminate the Spin-Off Services at its sole and exclusive option at any time by providing written notice of such termination
to the Spin-Off Entity. 

 (b) During the applicable services period set forth on Exhibit B (the
“Buyer Service Periods”), Buyer agrees to perform all of the transitional services set forth on Exhibit B (the “Buyer Services”, together with the Spin-Off Services, the “Services”) on the
terms and conditions hereof. Notwithstanding anything in this Agreement or Exhibit B to the contrary, the Spin-Off Entity shall not be obligated to receive or continue to receive the Buyer Services in whole or in part and may terminate the
Buyer Services at its sole and exclusive option at any time by providing written notice of such termination to Buyer. 
 When a Party to this
Agreement is providing Services to the other Party, it shall hereinafter be the “Servicing Party”, and when a Party to this Agreement is receiving Services from the other Party, it shall hereinafter be the “Receiving
Party”. 
 (c) For a period of Twelve (12) months after the Closing Date (together with the
Services Periods, the “Transition Periods”), (i) the Spin-Off Entity agrees to redirect to Buyer as promptly as practicable any Communications (as hereinafter defined) it receives that relate to the business of the Company and
the Limited Company Subsidiaries, excluding the Bolt Products and the Pageflex Business (the “Company Business”), and (ii) Buyer agrees to redirect to the Spin-Off Entity as promptly as practicable any Communications it
receives that relate to the business of the Spin-Off Entity, including, without limitation, the Bolt Products and the Pageflex Business (collectively, the “Communication Obligations”). “Communications” means any
notice, correspondence, mail, electronic mail, internet inquiry, or other communication, including customer, supplier and vendor correspondence or other similar communications. For the avoidance of doubt and notwithstanding anything herein to the
contrary, neither Party hereto is entitled to any compensation, reimbursement or other payment in connection with, or arising out of, the Communication Obligations. 

(d) For the avoidance of doubt, neither party shall be obligated to provide any Services to the other party hereunder
until after the Effective Time. 
 2. Standard of Care; Liability. 

(a) The Spin-Off Entity shall provide the Spin-Off Services to be rendered hereunder on a timely basis and shall cooperate
with Buyer in connection with the provision of such Spin-Off Services. The Spin-Off Entity shall provide the Spin-Off Services, or cause the Spin-Off Services to be provided, to Buyer in a manner and quality consistent with the manner and quality
they were heretofore provided to the Company Business during the twelve (12) month period immediately preceding the Closing Date, unless a different manner or quality is mutually agreed upon by Buyer and the Spin-Off Entity in writing. Buyer
and the Spin-Off Entity shall cooperate with each other to ensure appropriate coordination of the performance of all Spin-Off Services and planning of the disengagement therefrom. 

(b) Buyer shall provide the Buyer Services to be rendered hereunder on a timely basis and shall cooperate with the
Spin-Off Entity in connection with the provision of such Buyer Services. Buyer shall provide the Buyer Services, or cause the Buyer Services to be provided, to the Spin-Off Entity in good faith in a workmanlike manner, unless a different manner or
quality is mutually agreed upon by Buyer and the Spin-Off Entity in writing. Buyer 

 
and the Spin-Off Entity shall cooperate with each other to ensure appropriate coordination of the performance of all Buyer Services and planning of the disengagement therefrom. 

3. Payment for Services. 
 (a) Subject to this Section 3, each Spin-Off Service rendered pursuant to this Agreement shall be charged to and payable by Buyer as set forth on Exhibit A. Subject to this Section 3,
each Buyer Service rendered pursuant to this Agreement shall be charged to and payable by Spin-Off Entity as set forth on Exhibit B. 
 (b) Payments for Services will be due sixty (60) days from the date an invoice from the Servicing Party relating thereto is received by the Receiving Party (“Payment Due Date”). In
the case of a disputed amount on an invoice, the Receiving Party shall provide the Servicing Party with a written explanation of the dispute (“Invoice Dispute Notice”) prior to the Payment Due Date and the Parties shall work in good
faith to resolve any such dispute. In the event that the Receiving Party has delivered the foregoing Invoice Dispute Notice, the Receiving Party shall not be obligated to pay that portion of the subject invoice that is in dispute until the dispute
is resolved; provided however, the Receiving Party shall pay the undisputed amounts of the subject invoice on the Payment Due Date. The Parties shall have the right of set-off for any portion of the subject invoice that is in dispute. 

4. Consents. The Servicing Party shall use reasonable best efforts to obtain all consents, approvals, licenses or sublicenses
required from third parties, including Governmental Authorities, in connection with the provision of the Services and the other transactions contemplated hereby. 
 5. Relationship of Parties. The Parties hereto and, if applicable, their Affiliates, are independent contractors, and neither Party nor its Affiliates, employees or representatives will be deemed
to be employees or representatives of the other for any purpose or under any circumstances. No partnership, joint venture, alliance, fiduciary, agency or other relationship, except that of independent contractors, is created hereby, either expressly
or by implication. 
 6. Relationship to Merger Agreement. Nothing in this Agreement shall affect the respective rights
and obligations under the Merger Agreement of any Party thereto. 
 7. Termination; Survival. 

(a) This Agreement is a master agreement and shall be construed as a separate and independent agreement for each and every
Service and the Communications Obligations provided under this Agreement. Any termination or expiration of this Agreement with respect to any Service or the Communications Obligations shall not terminate this Agreement with respect

 
to any other Service or the Communications Obligations then being provided under this Agreement. 
 (b) This Agreement shall terminate with regard to any Services or the Communications Obligations at the conclusion of the applicable Transition Period; unless terminated earlier (i) by the Receiving
Party with respect to any Service upon prior written notice to the Servicing Party, or (ii) by the mutual written consent of both Parties. Any Transition Period may be extended by the mutual written agreement of both Parties. 

(c) Neither the termination of this Agreement nor the expiration of this Agreement, in each case, either in full or with
respect to any particular Service or the Communications Obligations, shall affect (i) the liability of either Buyer or the Spin-Off Entity for breach of this Agreement, or (ii) the provisions of this Agreement which are expressly or by
implication to come into or continue in force after such termination or expiration. 
 8. Compliance with Laws. Each
Party will, and will cause their respective Affiliates to, with respect to its or their obligations and performance hereunder, comply with all applicable requirements of federal, state, local and foreign Laws, rules and regulations. 

9. Confidentiality. 
 (a) Spin-Off Entity’s Obligation. The Spin-Off Entity and its Affiliates will treat and hold any proprietary and confidential information of or relating primarily to the operations or affairs
of the Company or the Limited Company Subsidiaries, including the Company Business, disclosed or made available to the Spin-Off Entity during any Transition Period in connection with the Services or the Communications Obligations under this
Agreement (the “Buyer Business Confidential Information”) in the same manner as the Spin-Off Entity treats and holds its own confidential information of a similar nature; for avoidance of doubt, the Spin-Off Entity and its
Affiliates shall not access, use or disclose Buyer Business Confidential Information for any purpose other than the performance of its obligations under this Agreement and except for permitted disclosures set forth in Section 10(d). 

(b) Buyer’s Obligation. Buyer and its Affiliates will treat and hold any proprietary and confidential
information of or relating primarily to the operations or affairs of the Spin-Off Entity, including, without limitation, the operations or affairs related to the Bolt Product and the Pageflex Business and disclosed or made available to Buyer during
any Transition Period in connection with the Services or the Communications Obligations under this Agreement (the “Spin-Off Entity Business Confidential Information” and together with the Buyer Business Confidential Information, the
“Business Confidential Information”) in the same manner as Buyer treats and holds its own confidential information of a similar nature; for avoidance of doubt, Buyer and its Affiliates shall not access, use or disclose Spin-Off
Entity Business Confidential Information for any purpose other than the performance of its obligations under this Agreement and except for permitted disclosures set forth in Section 10(d). 

(c) The obligations of confidentiality contained in Section 10(a) and Section 10(b) will not apply to any
information to the extent that (i) it becomes generally available to the 

 
public or otherwise part of the public domain after the Closing Date and other than through any act or omission of the Party in breach of this Agreement, (ii) it is disclosed to the Party
hereto after the Closing Date, other than under an obligation of confidentiality, by a third party who has no obligation to the receiving Party not to disclose such information to others, or (iii) it is independently developed by the disclosing
Party after the Closing Date without access to the Business Confidential Information. 
 (d) Notwithstanding
Section 10(a) and Section 10(b), a Party hereto may disclose Business Confidential Information to (i) the extent required by a court of competent jurisdiction or other Governmental Authority or otherwise as required by any Law or
(ii) on a “need-to-know” basis, and subject to the obligation to maintain confidentiality, to its officers, employees, legal counsel, accountants, banks and other financing sources or their advisors (clauses (i) and
(ii) collectively referred to herein as “Permitted Disclosures”). Before disclosing Business Confidential Information to a court or other Government Authority pursuant to this Section 10(d), a Party hereto shall provide at
least five (5) Business Days’ notice to the other Party of the court order, subpoena, interrogatories or government order that requires disclosure of the Business Confidential Information so that the other Party hereto may seek a
protective order or other appropriate remedy or waive compliance with this Agreement; provided, however, that if the disclosing Party is obligated to make such disclosure within a shorter disclosure period, then such five (5) Business Day
notice period shall be appropriately shortened. The Party hereto seeking to disclose the Business Confidential Information shall consult with the other Party hereto on the advisability of taking steps to resist or narrow such request or requirement
and shall otherwise cooperate with the efforts of the other Party to protect the Business Confidential Information. Further, in the event such disclosure is required under the laws, rules or regulations of the Securities and Exchange Commission or
any other applicable Governmental Authority, the disclosing Party shall (i) redact mutually agreed upon portions of the Business Confidential Information to the fullest extent permitted under applicable laws, rules and regulations and
(ii) submit a request to the Securities and Exchange Commission or such Governmental Authority that such portions of the Business Confidential Information receive confidential treatment under the laws, rules and regulations of the Securities
and Exchange Commission or otherwise be held in the strictest confidence to the fullest extent permitted under the laws, rules or regulations of any other applicable Governmental Authority. 

(e) Each Party hereto agrees that in the event of any breach or threatened breach of this Section 10, the other Party
shall be entitled, in addition to any remedy that may be available to it hereunder, to (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such obligation, and (ii) an injunction
restraining such breach or threatened breach. The obligation of confidentiality set forth in this Section 10 shall survive three (3) years from the Closing Date. 
 10. Miscellaneous. 
 (a) Notice. Any notices or other
communications required or permitted under, or otherwise given in connection with, this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered or sent if delivered in person or sent by facsimile
transmission (provided confirmation of facsimile transmission is obtained), (ii) on the fifth Business Day after dispatch by registered or certified mail, (iii) on the next Business Day if

 
transmitted by national overnight courier or (iv) on the date delivered if sent by email (provided confirmation of email receipt is obtained), in each case as follows: 

if to Buyer, to: 
 Monotype Imaging Holdings Inc. 
 500 Unicorn Park Drive 

Woburn, MA 01801 
 Attention: Chief Executive Officer 
 Facsimile No.: (781) 970-6001 

with a copy to: 

Goodwin Procter LLP
 Exchange Place 
 53 State Street 

Boston, MA 02109 
 Attention: John Mutkoski 

                 James Matarese 

Facsimile No.: (617) 523-1231 
 if to the Spin-Off Entity, to: 
 Marlborough Software Development Holdings Inc.

 500 Nickerson Road 
 Marlborough, MA 01752 
 Attention: Chief Executive Officer 

Facsimile No.: (617) 868-0784 
 with a copy to: 
 Seyfarth Shaw LLP 

World Trade Center East 
 Two Seaport Lane 
 Boston, MA 02210-2028 

Attention: Gregory L. White 
                  Blake Hornick 
 Facsimile No.: (617) 790-6730 
 (b) Interpretation.
When a reference is made in this Agreement to a Section or Exhibit, such reference will be to a Section of, or Exhibit to, this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they will be deemed to be followed by
the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole

 
and not to any particular provision of this Agreement. All terms defined in this Agreement will have such defined meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.
Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the
case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns. 
 (c) Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party. 

(d) Amendments; Waiver. This Agreement may not be amended or modified, nor may compliance with any condition or
covenant set forth herein be waived, except by a writing duly and validly executed by Buyer and the Spin-Off Entity, or in the case of a waiver, the Party waiving compliance. Waiver of any term or condition of this Agreement by a Party hereto shall
not be construed as a waiver of any subsequent breach or waiver of the same term or condition by such Party, or a waiver of any other term or condition of this Agreement by such Party. No failure or delay by any Party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies provided by Law. 
 (e) Entire
Agreement; Severability. This Agreement (including the Exhibits, documents and instruments referred to herein), the other agreements, instruments, certificates and documents delivered pursuant hereto constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter of this Agreement. If any term, condition or other provision of this Agreement is found to be invalid, illegal or
incapable of being enforced by virtue of any rule of law, public policy or court determination, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect. 

(f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without regard to the conflicts of law rules of such Commonwealth. 
 (g)
Successors and Assigns. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assignable or transferable by any Party without the prior written consent of the other Party hereto, and any such unauthorized assignment or transfer will be void; provided,

 
however, that Buyer or the Spin-Off Entity may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to one or more of its Affiliates at any
time. 
 [SIGNATURE PAGE FOLLOWS] 

 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed
and delivered by their proper and duly authorized representatives as of the date first set forth above. 
  

			
	SPIN-OFF ENTITY:
	
	 MARLBOROUGH SOFTWARE

DEVELOPMENT HOLDINGS INC.

		
	By:	 	/s/ James Dore
	Name:	 	James Dore
	Title:	 	Executive Vice President and Chief
		 	Financial Officer

 
			
	BUYER:
	
	MONOTYPE IMAGING HOLDINGS INC.
		
	By:	 	/s/ Douglas J. Shaw
	Name:	 	Douglas J. Shaw
	Title:	 	President and Chief Executive Officer

 Exhibit A 

BUYER TRANSITIONAL SERVICES 
  

							
	 Description of Services
	  	 Cost
	  	 Services Period
	  	 Payment Schedule

	The Spin-Off Entity shall, and shall cause its employees, contractors and Affiliates to, permit and facilitate the utilization by Buyer of James Dore’s services to support the
transition of finance, accounting, human resources and other general corporate items from the Spin-Off Entity and its Affiliates to Buyer and its Affiliates (including the Company). Buyer shall not utilize, based on its reasonable estimate,
more than ten (10) hours of Mr. Dore’s services in any one week period.	  	Buyer shall pay $100/hour for the initial eighty (80) hours of Mr. Dore’s services; Buyer may utilize additional hours of Mr. Dore’s services at a rate of $200.00 per
hour.	  	For a period commencing on the Closing Date and terminating on the six (6) month anniversary thereof.	  	The Spin-Off Entity will send an invoice to Buyer on the last Business Day of each month during any Services Period.
				
	The Spin-Off Entity shall, and shall cause its employees, contractors and Affiliates to, permit and facilitate the utilization by Buyer of information technology services and
resources of the Spin-Off Entity and its Affiliates to support information technology systems and data migration from the Spin-Off Entity and its Affiliates to Buyer and its Affiliates (including the Company) (to the extent that such migration has
not been fully satisfied prior to the Closing).	  	Buyer may utilize the hours of services of employees ,other than James Dore, at a rate of $100.00 per hour.	  	For a period commencing on the Closing Date and terminating on the three (3) month anniversary thereof.	  	

 Exhibit B 

SPIN-OFF TRANSITIONAL SERVICES 
  

	1.	Subject to the limitations set forth below, for the period commencing on the Closing Date and terminating on the six (6) month anniversary thereof (the
“Spin-Off Services Period”), Buyer shall and shall cause its employees, contractors and Affiliates to permit and facilitate the utilization by Spin-Off Entity of the services of (i) all employees of Bitstream India Pvt. Ltd. as
of the date of this Agreement or (ii) any other employee of the Company or its Affiliates who, as of the date of this Agreement, was involved in the development, support, maintenance or documentation of any of the Spin-Off Entity’s
products, including without limitation, BOLT (together, the “BOLT-Related Employees”) (the “Product Support Activities”) to be available to the Spin-Off Entity for Product Support Activities.

  

	2.	Notwithstanding the foregoing (and in addition to the obligations in Section 3 below), during the Spin-Off Services Period, Buyer shall not be obligated to
provide more than four (4) full-time equivalent BOLT Related Employees per week on Product Support Activities. The Spin-Off Entity shall pay the Buyer for each such employee’s time based on the proportion of such employee’s
“fully-loaded” cost as the Spin-Off Entity uses in any month of the Spin-Off Services Period. 

  

	3.	For the following named employees (Sampo Kaasila and Lokesh Joshi), regardless of the amount of time each employee spent working on Product Support Activities,
these employees shall only be made available to the Spin-Off Entity for Product Support Activities for no more than 20% of each employee’s time in any week during the Spin-Off Services Period. 

 

	4.	Buyer shall not impose any post-employment contractual restrictions on any BOLT-Related Employees, whether the relationship is in the nature of employment or of
an independent contractor, restricting such person from entering into an employment relationship with the Spin-Off Entity. 

  

	5.	Buyer shall offer to John Collins and Sampo Kaasila compensation packages with Buyer that are substantially similar to compensation packages awarded to peer
employees of Buyer.

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