ERISA Disclosure
ERISA Compliance
Many businesses offer some form of qualified retirement plan and, in doing so, they fall under the governance guidelines of the Employee Retirement Income Security Act of 1974, better known as ERISA. ERISA establishes guidelines and minimum standards designed to protect employees of private sector companies who participate in retirement and welfare benefit plans. Businesses administering a qualified retirement plan that aren’t in full compliance with ERISA could be subject to costly penalties.1
If your employee retirement plan provides a future retirement income or allows employees to defer earnings for retirement, then it is an ERISA plan. As an employer who provides these ERISA plan benefits, you are also considered by ERISA to be a named fiduciary who takes on the responsibility of administering these plans and, likewise, the liability should your plans not comply with the guidelines and standards established by ERISA.2
Each fiduciary of a pension, profit sharing or other employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended (hereinafter “ERISA”) , (a
“Plan”) should consider the fiduciary standards of ERISA in the context of the Plans particular
circumstances before authorizing an investment in the Securities. Accordingly, among other
factors, the fiduciary should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents and
instruments governing the Plan.
In addition, we and certain of our subsidiaries and affiliates, including Great Lakes Angel Fund,
LLC, may be considered a party in interest within the meaning of ERISA, or a disqualified
person within the meaning of the Internal Revenue Code of 1986, as amended (the Code), with
respect to many Plans, as well as many individual retirement accounts and Keogh plans (also
Plans). Prohibited transactions within the meaning of ERISA or the Code would likely arise, for
example, if the Securities are acquired by or with the assets of a Plan with respect to which
Great Lakes Angel Venture Fund, LLC or any of its affiliates is a service provider or other party
in interest, unless the Securities are acquired pursuant to an exemption from the prohibited
transaction rules. A violation of these prohibited transaction rules could result in an excise tax
or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless
exemptive relief is available under an applicable statutory or administrative exemption.
The U.S. Department of Labor has issued five prohibited transaction class exemptions (PLACEs)
that may provide exemptive relief for direct or indirect prohibited transactions resulting from
the purchase or holding of the Securities. Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain transactions
involving insurance Fund general accounts), PTCE 91-38 (for certain transactions involving bank
collective investment funds), PTCE 90-1 (for certain transactions involving insurance Fund
separate accounts) and PTCE 84-14 (for certain transactions determined by independent
qualified asset managers). In addition, ERISA Section 408(b)(17) provides a limited exception for
the purchase and sale of securities and related lending transactions, provided that neither the
issuer of the securities nor any of its affiliates have or exercise any discretionary authority or
control or render any investment advice with respect to assets of any Plan involved in the
Exhibit D – ERISA Disclosure Master PPM for Review Only!
transaction and provided further that the Plan pays no more than adequate consideration in
connection with the transaction (the so-called service provider exemption ).
Because we may be considered a party in interest with respect to many Plans, the Securities
may not be purchased, held or disposed of by any Plan, any entity whose underlying assets
include plan assets by reason of any Plan s investment in the entity (a “Plan Asset Entity”) or
any person investing plan assets of any Plan, unless such purchase, holding or disposition is
eligible for exemptive relief, including relief available under PTCE 96-23, 95-60, 91-38, 90-1,
84-14 or the service provider exemption or such purchase, holding or disposition is otherwise
not prohibited. Any purchaser, including any fiduciary purchasing on behalf of a Plan,
transferee or holder of the Securities will be deemed to have represented, in its corporate and
its fiduciary capacity, by its purchase and holding of the Securities that either (a) it is not a Plan
or a Plan Asset Entity and is not purchasing such Securities on behalf of or with plan assets of
any Plan, or with any assets of a governmental or church plan that is subject to any federal,
state, local or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code (Similar Law) or (b) its purchase, holding and disposition are
eligible for exemptive relief or such purchase, holding and disposition are not prohibited by
ERISA or Section 4975 of the Code or any Similar Law. Under ERISA, assets of a Plan may
include assets of certain commingled vehicles and entities in which the Plan has invested
(including, in certain cases, the general account of an insurance Fund). Accordingly,
commingled vehicles and entities, which include assets of a Plan must ensure that one of the
foregoing exemptions is available. Due to the complexity of these rules and the penalties that
may be imposed upon persons involved in non exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering purchasing the Securities
on behalf of or with plan assets of any Plan consult with their counsel regarding the availability
of exemptive relief under any available exemptions, such as PTCE 96-23, 95-60, 91-38, 90-1 or
84-14 or the service provider exemption.
Purchasers of the Securities have exclusive responsibility for ensuring that their purchase,
holding and disposition of the Securities do not violate the prohibited transaction rules of
ERISA or the Code or any Similar Law. The sale of any Securities to any Plan or plan subject to
Exhibit D – ERISA Disclosure Master PPM for Review Only!
Similar Law is in no respect a representation by us or any of our affiliates or representatives
that such an investment meets all relevant legal requirements with respect to investments by
plans generally or any particular plan, or that such an investment is appropriate for plans
generally or any particular plan.
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