QSBS Terms and Conditions
By executing an Order Form that references these QSBS Terms and Conditions (this “Agreement”), you agree to terms and conditions in this Agreement and will be referred to as “you” or “Customer” in this Agreement. “Party” or “Parties” shall mean, individually, Customer or Carta Valuations LLC (“Carta Valuations”) as the context requires and, collectively, Customer and Carta Valuations.
The terms and conditions of the Master Subscription Agreement (the “MSA”) between eShares, Inc. DBA Carta, Inc. (together with all of its subsidiaries and affiliates, “Carta”) and the Customer are incorporated in this Agreement. The MSA and this Agreement are incorporated into any QSBS Letter provided to the Customer by Carta Valuations. Carta Valuations is a wholly-owned subsidiary of Carta. All capitalized terms not defined in this Agreement shall take the meaning assigned to them in the MSA.
1. Scope of Engagement
The QSBS letter (the “QSBS Letter”), evidenced by a written report that will include terms and assumptions and become part of this Agreement, may be used solely by the Board of Directors and Management of the Customer for the following exclusive purposes:
For general corporate planning
Tax planning
It is agreed that Carta Valuations will define the scope of work, including but not limited to the approaches, methodology, and procedures to perform under the Agreement, at its sole discretion as it may deem appropriate.
Carta Valuations will specifically rely on the completeness and accuracy of the materials and information provided by the Customer in making its determination of eligibility, and the Customer warrants that the information provided to Carta Valuations is true and correct. Customer is solely responsible for the accuracy of the information provided to Carta Valuations, and that Customer will review the draft QSBS Letter provided by Carta Valuations for accuracy of the information provided by the Customer. Carta Valuations will not independently verify any information provided to it by the Customer. Based on the information provided by the Customer, Carta Valuations will use independent and objective judgment to reach its conclusions and will decide all matters on their merits, free from bias, advocacy, and conflicts of interest.
The QSBS Letter is not to be used for any purposes not specifically enumerated and permitted in this Agreement. Carta Valuations will not provide testimony to the IRS or in any related cases without a separate agreement between the parties, unless otherwise required by law or legal process.
2. Deliverables and Timing
After Carta Valuations has received all of the information requested in its initial information request, Carta Valuations will provide the formal QSBS Letter or request to meet via teleconference to review the materials. During the course of the engagement, the Customer may submit corrected or updated information (capitalization table, actual historical financials) used as the basis for the QSBS Letter. However, Carta Valuations reserves the right to charge an additional fee each time such updated information is provided. The formal QSBS Letter will be marked “FINAL” upon delivery, provided that Carta Valuations has no obligation to deliver a QSBS letter in the event Carta Valuations determines that no Customer shares constitute qualified small business stock.
In addition, Carta Valuations will participate in communications (e.g., email, teleconference) to discuss any issues raised during an audit of the Customer related to the QSBS Letter and will spend up to two (2) hours of additional time to answer any questions and make any necessary revisions to the QSBS Letter.
Unanticipated events and circumstances may occur and actual results may vary from those assumed. The variations may be material and Carta Valuations assumes no responsibility for any such variations, and Carta Valuations has no obligation to update the QSBS Letter for such events or otherwise comment on or consider such events.
Possession of the QSBS Letter or other written documentation regarding the Agreement does not grant the right of publication of all or part of it, nor may it be used or relied upon for any purpose other than that set forth above without previous written consent by Carta Valuations. Schedules, information, and other work product developed during the engagement by Carta Valuations are the sole property of Carta Valuations and are not subject to examination or production to the Customer at any time during or after this engagement.
3. Fees and Expenses
Carta Valuations’ fee is based on the Order Form as agreed between Carta and Customer.
If the Customer requests in writing that Carta Valuations perform additional professional services, any time and expenses associated with those services will be billed at Carta Valuations’ hourly rate. Any further services regarding the subject matter of the QSBS Letter not explicitly provided for in this engagement letter, including, but not limited to, testimony or appearance in any legal or similar proceeding (including with any tax authority), shall not be required of Carta Valuations unless expressly agreed to in writing by Carta Valuations.
4. General Provisions
4.1 Shareholder Qualified Small Business Stock Attestations. Carta Valuations will automatically provide a personalized QSBS attestation letter for Customer’s Security Holders with potentially QSBS eligible holdings on behalf of Customer. Customer acknowledges and agrees that Customer’s Security Holders with potentially QSBS eligible holdings will receive a personalized QSBS attestation letter delivered to their Carta portfolio on Customer’s behalf.
4.2 Customer Representations. The Customer represents that they provided Carta Valuations with all significant and relevant information known and knowable and acknowledges that (1) Carta Valuations relied on that information and upon discussions with employees of the Customer during the engagement and has not undertaken any procedures to verify the reasonableness of this information; (2) Carta Valuations expresses no opinion as to the accuracy of the information and that any alterations or modifications to this information could materially affect the conclusions; (3) the Customer has no reason to dispute the underlying financial information and internal discussions upon which Carta Valuations relied in this analysis; and, (4) the Customer understands that the conclusions are to be relied upon solely in connection with the circumstances set forth in this Agreement.
4.3 Indemnification by Customer. Customer shall defend, indemnify and hold Carta harmless against (i) any Claims made or brought against Carta by a third party related to any information provided by the Customer to Carta under this Agreement; (ii) any Claims made or brought against Carta by a third party related to any use of the QSBS Letter for a purpose not expressly authorized by Carta or in violation of this Agreement; provided, that Carta (a) promptly gives written notice of the Claim to Customer; (b) gives Customer control of the defense and settlement of the Claim (provided that Carta may participate in such defense at its own expense and that Customer may not settle any Claim in a manner that admits liability on behalf of Carta); and (c) provides to Customer, at Customer’s expense, reasonable assistance in connection with the defense and settlement of the Claim. Customer shall pay Carta any damages finally awarded against Carta, settlements agreed to in accordance with subsection (b) of this section and reasonable costs and expenses (including reasonable legal fees) directly attributable to such Claim.
4.4 Waiver of Jury Trial; Judicial Reference. CARTA AND THE CUSTOMER (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS EQUITY HOLDERS) IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THE ENGAGEMENT OF CARTA VALUATIONS PURSUANT TO, OR THE PERFORMANCE BY CARTA VALUATIONS OF THE SERVICES CONTEMPLATED BY, THE AGREEMENT AND THESE TERMS AND CONDITIONS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER THIS AGREEMENT.
WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the San Francisco County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in San Francisco County, California; and the parties hereby submit to the jurisdiction of such court. The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive. The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers. All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed. If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the San Francisco County, California Superior Court for such relief. The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings. The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings. The private judge shall oversee discovery and may enforce all discovery rules and order applicable to judicial proceedings in the same manner as a trial court judge. The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies. The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.
4.5 Integration Provisions and Survival of Provisions. All of the terms and conditions set forth in this Agreement and any additional terms set forth in any report provided by Carta Valuations shall survive termination of the MSA and this Agreement. If any provision of this Agreement is held to be unenforceable, the remainder of this Agreement shall still continue in full force and effect.
4.6 Amendment. Carta reserves the right to alter this Agreement at any time. Customer agrees to review the latest version of this Agreement on Carta’s website periodically to remain aware of any modifications to this Agreement about which Customer is not alerted by Carta. The Agreement available on the website will be dated so as to make clear what version is currently in force.
Last Updated August 23, 2024