-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BjpUKvKIew/fYMnZlGZE4V0nNpoEifKLAb5mT2WYd9s656L3HMWXEZ/mJmvAVcle 3kVNMk0emTntrJ1v08XwAg== 0000906287-99-000010.txt : 19990125 0000906287-99-000010.hdr.sgml : 19990125 ACCESSION NUMBER: 0000906287-99-000010 CONFORMED SUBMISSION TYPE: S-6 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19990122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLI VUL 2 SERIES ACCOUNT CENTRAL INDEX KEY: 0001075796 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-6 SEC ACT: SEC FILE NUMBER: 333-70963 FILM NUMBER: 99509533 BUSINESS ADDRESS: STREET 1: 8515 EAST ORCHARD RD CITY: ENGLEWOOD STATE: CO ZIP: 80111 MAIL ADDRESS: STREET 1: 8515 EAST ORCHARD RD CITY: ENGLEWOOD STATE: CO ZIP: 80111 S-6 1 As filed with the Securities and Exchange Commission on January 21, 1999. Registration No. 333-______________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM S-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------- COLI VUL-2 SERIES ACCOUNT (Exact Name of Trust) GREAT-WEST LIFE INSURANCE & ANNUITY COMPANY (Name of Depositor) 8515 East Orchard Road Englewood, Colorado 80111 (Complete Address of Depositor's Principal Executive Offices) William T. McCallum President and Chief Executive Officer GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY 8515 East Orchard Road Englewood, Colorado 80111 (Name and Complete Address of Agent for Service) Copies to: James F. Jorden, Esq. Beverly A. Byrne, Esq. Jorden Burt Boros Cicchetti Counsel Berenson & Johnson Great-West Life & Annuity 1025 Thomas Jefferson Street, N.W. Insurance Company Washington, D.C. 20007-5201 8515 East Orchard Road Englewood, Colorado 80111 Securities being offered -- variable portion of individual flexible premium variable universal life insurance contracts. ----------- Approximate date of proposed public offering: as soon as practicable after the effective date of this registration statement. The registrant is registering an indefinite amount of securities, by reason of Section 24(f) of the Investment Company Act of 1940. The registrant hereby amends this registration statement on such dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- CROSS REFERENCE SHEET TO PROSPECTUS Cross reference sheet pursuant to Rule 404(c) showing location in Prospectus of information required by Items of Form N-8B-2.
Item Number in Form N-8B-2 Caption in Prospectus - -------------------------- --------------------- ORGANIZATION AND GENERAL INFORMATION 1. (a) Name of trust........................................................ Cover, The Series Account, Appendix A - Glossary of Terms (b) Title of each class of securities issued............................. Cover, About the Policy 2. Name & address of each depositor........................................... Cover, Great-West Life & Annuity Insurance Company 3. Name & address of custodian................................................ The Series Account 4. Name & address of principal underwriter.................................... Distribution of the Policy 5. State in which organized................................................... The Series Account 6. Date of organization....................................................... The Series Account 9. Material litigation........................................................ Other Information - - Legal Proceedings GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST General Information Concerning Securities and Rights of Holders - --------------------------------------------------------------- 10. (a), (b)Type of Securities................................................. Cover, About the Policy (c) Rights of security holders........................................... Cover, About the Policy - - re: withdrawal or redemption Termination of Policy, Surrenders, Policy Loans (d) Rights of security holders........................................... Cover, About the Policy - - re: conversion, transfer or partial withdrawal Termination of Policy, Partial Withdrawals, Surrenders, Premium Payments, Transfers Between Divisions, Dollar Cost Averaging, The Rebalancer Option ii (e) Rights of security holders........................................... About the Policy - - re: lapses, default, & reinstatement Termination of Policy, Grace Period, Reinstatement (f) Provisions re: voting rights......................................... Voting Rights (g) Notice to security holders........................................... Report to Owners (h) Consent of security holders.......................................... Addition, Deletion, or Substitution of Investments, Allocation of Net Premium (i) Other principal features............................................. About the Policy Information Concerning Securities Underlying Trust's Securities - --------------------------------------------------------------- 11. Unit of specified securities in which security holders have an interest Cover, The Investment Options 12. (a)-(d) Name of company, name & address of its custodian................... Cover, The Investment Options Information Concerning Loads, Fees, Charges & Expenses - ------------------------------------------------------ 13. (a) With respect to each load, fee, charge & expense..................... About the Policy - - Charges and Deductions (b) Deductions for sales charges......................................... About the Policy - - Charges and Deductions - -Expense Charges Applied to Premium, Supplemental Benefits - - Term Life Insurance Rider (c) Sales load as percentage of amount invested.......................... About the Policy - - Charges and Deductions (d)-(g) Other loads, fees & expenses....................................... About the Policy - - Charges and Deductions Information Concerning Operation of Trust - ----------------------------------------- 14. Procedure for applications for & issuance of trust's securities............ About the Policy - - Policy Application, Issuance and Initial Premium, About the Policy - - Premium Payments - - Allocation of Net Premiums, Distribution of the Policy iii 15. Procedure for receipt of payments from purchases of trust's securities..... About the Policy - - Policy Application, Issuance and Initial Premium, About the Policy - - Premium Payments, About the Policy - - Transfers Between Divisions 16. Acquisition and disposition of underlying securities....................... Cover, The Series Account, The Investment Options 17. (a) Procedure for withdrawal............................................. Cover, About the Policy - - Termination of Policy, Surrenders, Policy Loans, Partial Withdrawals, Premium Payments, Transfers Between Divisions, Dollar Cost Averaging, The Rebalancer Option (b) Redemption or repurchase............................................. Cover, About the Policy - - Termination of Policy, Surrenders, Policy Loans, Partial Withdrawals, Premium Payments, Transfers Between Divisions, Dollar Cost Averaging, The Rebalancer Option (c) Cancellation or resale............................................... Not Applicable 18. (a) Income of the Trust.................................................. The Investment Options, About the Policy - - Premium Payments - -Allocation of Net Premiums 19. Procedure for keeping records & furnishing information to security holders.................................................................... Report to Owner 21. (a) & (b) Loans to security holders........................................ About the Policy - - Policy Loans 23. Bonding arrangements for depositor......................................... Great-West Life & Annuity Insurance Company iv 24. Other material provisions.................................................. About the Policy - -Death Benefit, Changes in Death Benefit Option, Changes in Total Face Amount, Paid-Up Life Insurance, Deferral of Payment, Other Policy Provisions ORGANIZATION, PERSONNEL & AFFILIATED PERSONS OF DEPOSITOR Organization & Operations of Depositor - -------------------------------------- 25. Form, state & date of organization of depositor............................ Great-West Life & Annuity Insurance Company 27. General character of business of depositor................................. Great-West Life & Annuity Insurance Company 28. (a) Officials and affiliates of the depositor............................ Great-West Life & Annuity Insurance Company, Our Directors and Executive Officers (b) Business experience of officers and directors of the depositor....... Our Directors and Executive Officers Companies Owning Securities of Depositor - ---------------------------------------- 29. Each company owning 5% of voting securities of depositor................... Great-West Life & Annuity Insurance Company Controlling Persons - ------------------- 30. Control of depositor....................................................... Great-West Life & Annuity Insurance Company DISTRIBUTION & REDEMPTIONS OF SECURITIES Distribution of Securities 35. Distribution............................................................... Great-West Life & Annuity Insurance Company, Distribution of the Policy 38. (a) General description of method of distribution of securities.......... Distribution of the Policy (b) Selling agreement between trust or depositor & underwriter........... Distribution of the Policy (c) Substance of current agreements...................................... Distribution of the Policy v Principal Underwriter - --------------------- 39. (a) & (b) Principal Underwriter............................................ Distribution of the Policy 41. Character of Underwriter's business........................................ Distribution of the Policy Offering Price or Acquisition Value of Securities of Trust - ---------------------------------------------------------- 44. Information concerning offering price or acquisition valuation of securities of trust. (All underlying securities are shares in registered The Investment Options, About investment companies.)..................................................... the Policy - - Account Value Redemption Valuation of Securities of Trust - ------------------------------------------- 46. Information concerning redemption valuation of securities of trust. (All underlying securities are shares in a registered investment company.)...... The Investment Options, About the Policy - - Account Value Purchase & Sale of Interests in Underlying Securities - ----------------------------------------------------- 47. Maintenance of Position.................................................... Cover, The Series Account, The Investment Options, About the Policy - - Premium Payments - - Allocation of Net Premium INFORMATION CONCERNING TRUSTEE OR CUSTODIAN 48. Custodian of trust......................................................... The Series Account 50. Lien on trust assets....................................................... The Series Account INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES 51. (a) Name & address of insurer............................................ Cover, Great-West Life & Annuity Insurance Company (b) Types of Contracts................................................... Cover, About the Policy - - Policy Application, Issuance and Initial Premium, Federal Income Tax Considerations (c) Risks insured & excluded............................................. About the Policy - - Death Benefit, Paid-Up Insurance, Supplemental Benefits, Other Policy Provisions - - Misstatement of Age or Sex, Suicide vi (d) Coverage............................................................. Cover, About the Policy - - Death Benefit, Changes in Death Benefit Option, Changes in Total Face Amount (e) Beneficiaries........................................................ About the Policy - - Death Benefit, Rights of Beneficiary (f) Terms of cancellations & reinstatement............................... About the Policy - - Termination of Policy (g) Method of determining amount of premium paid by holder............... About the Policy - - Policy Application, Issuance and Initial Premium, Premium Payments POLICY OF REGISTRANT 52. (a) & (c) Selection of Portfolio securities................................ Addition, Deletion, or Substitution of Investments Regulated Investment Company - ---------------------------- 53. (a) Taxable status of trust.............................................. Our Taxes FINANCIAL AND STATISTICAL INFORMATION 59. Financial Statements....................................................... Financial Statements *Items not listed are not applicable to this Registration Statement.
vii Great-West Life & Annuity Insurance Company A Stock Company 8515 East Orchard Road Englewood, Colorado 80111 (303) 689-3000 [logo] PROSPECTUS A Flexible Premium Variable Universal Life Insurance Policy offered by Great-West Life & Annuity Insurance Company in connection with its COLI VUL-2 Series Account This Prospectus describes a flexible premium variable universal life insurance policy (the "Policy") offered by Great-West Life & Annuity Insurance Company ("Great-West," "we" or "us"). The Policy is designed for use by corporations and employers to provide life insurance coverage in connection with, among other things, deferred compensation plans. The Policies are designed to meet the definition of "life insurance contracts" for federal income tax purposes. The Policy allows "you," the Policy owner, within certain limits to: o choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change; o choose the amount and timing of premium payments, within certain limits; o allocate premium payments among 33 investment options and transfer Account Value among available investment options as your investment objectives change; and o access your Policy's Account Value through loans and partial withdrawals or total surrenders. This Prospectus contains important information you should understand before purchasing a Policy. We use certain special terms which are defined in Appendix A. You should read this Prospectus carefully and keep it for future reference. Neither the Securities and Exchange Commission nor any state securities commission has approved these securities or determined that this Prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The Date of this Prospectus is _____, 1999 The Policies currently offer 33 investment options, each of which is a Division of Great-West's COLI VUL-2 Series Account (the "Series Account"). Each Division uses its assets to purchase, at their net asset value, shares of a single mutual fund (collectively the "Funds"). The Divisions are referred to as "variable" because their investment experience depends upon the investment experience of the Funds in which they invest. Following is a list of the Funds in which the Divisions currently invest: American Century Variable Portfolios, Inc. American Century VP Income & Growth American Century VP International American Century VP Value Dreyfus Stock Index Fund Dreyfus Variable Investment Fund Dreyfus Capital Appreciation Portfolio Dreyfus Growth and Income Portfolio Federated Insurance Series Federated American Leaders Fund II Federated Growth Strategies Fund II Federated High Income Bond Fund II Federated International Equity Fund II INVESCO Variable Investments Fund, Inc. INVESCO VIF - High Yield Portfolio INVESCO VIF - Industrial Income Portfolio INVESCO VIF - Total Return Portfolio Janus Aspen Series Balanced Portfolio Flexible Income Portfolio Maxim Series Fund, Inc. Maxim Corporate Bond Portfolio Maxim INVESCO ADR Portfolio Maxim INVESCO Balanced Portfolio Maxim INVESCO Small-Cap Growth Portfolio Maxim MidCap Portfolio Maxim Money Market Portfolio Maxim U.S. Government Securities Portfolio Maxim Profile Portfolios: Maxim Aggressive Profile Portfolio Maxim Moderately Aggressive Profile Portfolio Maxim Moderate Profile Portfolio Maxim Moderately Conservative Profile Portfolio Maxim Conservative Profile Portfolio Neuberger&Berman Advisers Management Trust Guardian Portfolio Mid-Cap Growth Portfolio Partners Portfolio Socially Responsive Portfolio You should contact your representative for further information as to the availability of the Divisions. We may add or delete investment options in the future. The Policy does not have a guaranteed minimum Account Value. Your Policy's Account Value may rise or fall, depending on the investment performance of the Funds underlying the Divisions to which you have allocated your premiums. You bear the entire investment risk on amounts allocated to the Divisions. ii The investment policies and risks of each Fund are described in the accompanying prospectuses for the Funds. Your Account Value will also reflect net premiums, amounts withdrawn and cost of insurance or other charges. The Policy provides for a Total Face Amount as shown on the Policy Specifications page of your Policy. The death benefit payable under your Policy may be greater than the Total Face Amount. As long as the Policy remains in force and you make no withdrawals, the death benefit will never be less than the Total Face Amount. If the Cash Surrender Value is insufficient to pay the Policy charges, however, your Policy may lapse without value. When the Insured dies, we will pay a death benefit to the beneficiary specified by you. We will reduce the amount of the death benefit by any prior withdrawals, unpaid Policy Debt, and unpaid Policy charges. You generally may cancel the Policy by returning it to us within ten days after you receive it. In some states, however, this right to return period may be longer, as provided by state law. We will refund the greater of your premiums, less any withdrawals, or Account Value. It may not be advantageous for you to purchase a Policy to replace existing life insurance coverage. This Prospectus is valid only if accompanied by current prospectuses for the Funds listed above. If any of these prospectuses are missing or outdated, please contact us and we will send your the prospectus you need. We may offer this Policy in group form in certain states, with individual ownership represented by certificates. The description of Policies in this Prospectus applies equally to certificates under group Policies unless the context specifies otherwise. The Policy may not be available in all states. iii Table of Contents Topic Page Summary of Policy...................................................... 2 Great-West Life & Annuity Insurance Company ............................................................. 8 The Series Account..................................................... 9 The Investment Options.................................................10 Expenses of the Funds..................................................16 About the Policy.......................................................16 Policy Application, Issuance and Initial Premium..................16 Free Look Period..................................................18 Premium Payments..................................................18 Premium. .....................................................18 Net Premiums..................................................19 Allocation of Net Premium.....................................19 Planned Periodic Premiums.....................................19 Death Benefit.....................................................20 Changes in Death Benefit Option...................................22 Changes in Total Face Amount......................................23 Minimum Changes...............................................23 Increases.....................................................23 Decreases.....................................................23 Surrenders........................................................23 Partial Withdrawal................................................23 Policy Loans......................................................24 Transfers Between Divisions.......................................24 Dollar Cost Averaging.............................................26 The Rebalancer Option.............................................26 Account Value.....................................................27 Net Investment Factor.........................................28 Splitting Units...............................................30 Charges and Deductions............................................31 Expense Charges Applied to Premium............................31 Mortality and Expense Risk Charge.............................31 Monthly Deduction.............................................32 Monthly Risk Rates...................................32 Service Charge.......................................33 Transfer Fee..................................................34 Partial Withdrawal Fee........................................34 Change of Death Benefit Option Fee............................34 Fund Expenses.................................................34 iv Paid-Up Life Insurance............................................35 Supplemental Benefits.............................................35 Term Life Insurance Rider.....................................35 Change of Insured Rider.......................................37 Continuation of Coverage..........................................37 Grace Period......................................................37 Termination of Policy.............................................38 Reinstatement.....................................................38 Deferral of Payment...............................................39 Rights of Owner...................................................39 Rights of Beneficiary.............................................40 Other Policy Provisions...........................................40 Exchange of Policy............................................40 Addition, Deletion or Substitution of Investments.............40 Entire Contract...............................................41 Alteration....................................................41 Modification..................................................41 Assignments...................................................42 Non-Participating.............................................42 Misstatement of Age or Sex (Non-Unisex Policy)................42 Suicide. .....................................................42 Incontestability..............................................43 Report to Owner...............................................43 Illustrations.................................................43 Notice and Elections..........................................43 Performance Information and Illustrations..............................44 Fund Performance..................................................44 Adjusted Fund Performance.........................................44 Other Information.................................................44 Policy Illustrations..............................................46 Federal Income Tax Considerations......................................46 Tax Status of the Policy..........................................46 Diversification of Investments....................................47 Policy Owner Control..............................................47 Tax Treatment of Policy Benefits..................................47 Life Insurance Death Benefit Proceeds.........................47 Tax Deferred Accumulation.....................................47 Distributions.................................................48 Modified Endowment Contracts..................................48 Distributions Under Modified Endowment Contracts..............49 Distributions Under a Policy That Is Not a MEC................50 Multiple Policies.............................................50 Treatment When Insured Reaches Attained Age 100...............50 Federal Income Tax Withholding................................50 Actions to Ensure Compliance with the Tax Law.................51 v Trade or Business Entity Owns or is Directly or Indirectly a Beneficiary of the Policy...............................................51 Other Employee Benefit Programs...................................52 Policy Loan Interest..............................................52 Our Taxes.........................................................52 Distribution of the Policy.............................................52 Voting Rights..........................................................53 Our Directors and Executive Officers...................................54 Other Information......................................................58 State Regulation..................................................58 Legal Proceedings.................................................58 Legal Matters.....................................................58 Experts...........................................................58 Registration Statements...........................................59 Year 2000 Compliance..............................................59 Financial Statements...................................................61 Appendix A -- Glossary of Terms........................................A-1 Appendix B -- Fees and Expenses of the Funds.............................................................B-1 Appendix C -- Table of Death Benefit Percentages.......................C-1 Appendix D -- Sample Hypothetical Illustrations.....................................................D-1 This Prospectus does not constitute an offering in any jurisdiction where the offering would not be lawful. You should rely only on the information contained in this Prospectus or in the prospectus or statement of additional information of the Funds. We have not authorized anyone to provide you with information that is different. vi Summary of Policy This is a summary of some of the most important features of your Policy. The Policy is more fully described in the remainder of the Prospectus. Please read this Prospectus carefully. Unless otherwise indicated, the description of the Policy in this Prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply. Corporate-Owned Variable Life Insurance o The Policy provides for life insurance coverage on the Insured and for a Cash Surrender Value which is payable if your Policy is terminated during the Insured's lifetime. You may also take partial withdrawals from and borrow portions of your Account Value. o The Account Value and death benefit of your Policy may increase or decrease depending on the investment performance of the Divisions to which you have allocated your premiums and the death benefit option you have chosen. Your Policy has no guaranteed minimum Cash Surrender Value. If the Cash Surrender Value is insufficient to cover Policy charges, your Policy may lapse without value. o Under certain circumstances, a Policy may become a "modified endowment contract" ("MEC") for federal tax purposes. This may occur if you reduce the Total Face Amount of your Policy or pay excessive premiums. We will monitor your premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC. We will not invest any premium or portion of a premium that would cause your Policy to become a MEC. We will promptly refund the money to you and, if you elect to have a MEC contract, you can return the money to us with a signed form of acceptance. o We will issue Policies to corporations and employers to provide life insurance coverage in connection with, among other things, deferred compensation plans. We will issue Policies on the lives of prospective Insureds who meet our underwriting standards. An Insured's Issue Age must be between 20 and 85 for Policies issued on a fully underwritten basis and between 20 and 70 for Policies issued on a guaranteed underwriting or a simplified underwriting basis. 2 Free Look Period You may return your Policy to us for any reason within 10 days of receiving it, or such longer period as required by applicable state law, and receive the greater of your premiums, less any withdrawals, or your Account Value. Premium Payments o You must pay us an Initial Premium to put your Policy in force. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefit option you select. o Thereafter, you choose the amount and timing of premium payments, within certain limits. Death Benefit o You may choose from among three death benefit options -- The Total Face o a fixed benefit equal to the Total Face Amount of your Amount is the Policy; minimum amount of life insu- o a variable benefit equal to the sum of the Total Face rance coverage Amount and your Policy's Account Value; or specified in your Policy o an increasing benefit equal to the sum of the Total Face Amount and the accumulated value of all premiums paid under your Policy accumulated at the interest rate shown on the Policy Specifications page of your Policy. o For each option, the death benefit may be greater if necessary to satisfy federal tax law requirements. o We will deduct any outstanding Policy Debt and unpaid Policy charges before we pay a death benefit. In addition, prior partial withdrawals may reduce the death benefit payable under the first and third options. o At any time, you may increase or decrease the Total Face Amount, subject to our approval and other requirements set forth in the Policy. o After the first Policy Year, you may change your death benefit option once each Policy Year. 3 The Series Account o We have established a separate account to fund the variable benefits under the Policy. o The assets of the separate account are insulated from the claims of our general creditors. Investment Options o You may allocate your net premium payments among the 33 variable Divisions listed on the front cover of this Prospectus. o Each Division invests exclusively in shares of a single mutual fund. Each Fund has distinct investment objectives and policies, which are described in the accompanying prospectuses for the Funds. o You may transfer amounts from one Division to another. Supplemental Benefits o The following riders are available -- o term life insurance; and o change of insured. o We will deduct the cost, if any, of the rider(s) from your Policy's Account Value on a monthly basis. Accessing Your Policy's Account Value o You may borrow from us using your Account Value as collateral. Loans may be treated as taxable income if your Policy is a "modified endowment contract" for federal income Cash Surrender tax purposes and you have had positive net investment Value is Account performance. Value minus any accrued o You may surrender your Policy for its Cash Surrender Value. and unpaid There are no surrender charges associated with your Policy. policy charges and any o You may withdraw a portion of your Policy's Account Value at Policy Debt. any time while your Policy is in force. 4 o A withdrawal may reduce your death benefit, depending on which death benefit option you have chosen. o We will charge an administrative fee not greater than $25 per withdrawal on partial withdrawals after the first in a Policy Year. Account Value o Your Policy's Account Value will reflect -- Account Value is the sum of o the premiums you pay; and the amount of the Loan o the investment performance of the Divisions you select; Account o any Policy loans or partial withdrawals; o your Loan Account balance; and o the charges we deduct under the Policy. Policy Charges and Deductions o Expense Charges Against Premiums-- We will deduct a charge from your premium payments that is guaranteed to be no more than 10% to cover our sales expenses, premium tax expenses, and certain federal tax consequences and other obligations resulting from the receipt of premiums. The premium charge consists of two portions: (i) a sales charge and (ii) a "deferred acquisition cost" tax charge ("DAC charge") and premium tax charge. The current sales charge in Policy Years 1 - 10 consists of 5.5% of premiums up to the target annual premium plus 3.0% of premiums in excess of target, and 0% of premiums in years thereafter. The current DAC and premium tax charge equals 3.5% of premium in all Policy Years. We may change these rates at any time subject to the overall guarantee set forth above. o Monthly Deduction -- At the beginning of each Policy Month, we will deduct from your Policy's Account Value -- o a Monthly Risk Charge, to cover our anticipated costs of providing insurance under the Policy; o the cost of any supplemental benefit riders you choose to add to your Policy; 5 o a Service Charge to cover certain administrative expenses in connection with the Policies. The Service Charge is guaranteed not to exceed $15.00 each Policy Month. Currently, this charge is $10.00 each Policy Month for the first three Policy Years and $7.50 per Policy Month thereafter; and o any extra risk charge if the Insured is in a rated class as specified in your Policy. o Separate Account Charges -- On each Valuation Day we deduct a Mortality and Expense Risk Charge from the Divisions to compensate Great-West for the mortality and expense risks we assume by issuing your Policy. The Mortality and Expense Risk Charge will not exceed 0.90% of net asset value annually of your Account Value. Currently, this charge is 0.45% in Policy Years 1 through 10, 0.30% in Policy Years 11 through 20, and 0.10% thereafter. o Surrender Charges -- Your Policy has no surrender charges. o Transfer Fee -- You may transfer Account Value among the Divisions free of charge up to the first 12 transfers in one calendar year. Thereafter, subject to certain exceptions, a maximum administrative charge of $10 per transfer will be deducted from your Account Value for all transfers in excess of 12 made in the same calendar year. o Partial Withdrawal Fee -- You may make one free partial withdrawal of your Account Value each Policy Year. Thereafter, a maximum administrative charge of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. o Change of Death Benefit Option Fee -- A maximum administrative charge of $100 will be deducted from your Account Value each time you change your death benefit option. The charges assessed under the Policy are described in more detail in "Charges and Deductions", beginning on page 31. Fees and Expenses of the Funds You will indirectly bear the costs of investment management fees and expenses paid from the assets of the mutual fund portfolios you select. The prospectuses for the Funds describe their respective charges and expenses in more detail. We may 6 receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the services we provide and the cost savings resulting from the arrangement and therefore may differ between Funds. What if Charges and Deductions Exceed Account Value? o Your Policy may terminate if your Account Value at the beginning of any Policy Month is insufficient to pay all charges and deductions then due. o If your Policy would terminate due to insufficient value, we will send you notice and allow you a 61 day Grace Period. o If, within the Grace Period, you do not make a premium payment sufficient to cover all accrued and unpaid charges and deductions, your Policy will terminate at the end of the Grace Period without further notice. Reinstatement If your Policy terminates due to insufficient value, we will reinstate it within three years at your request, subject to certain conditions. Paid-Up Life Insurance If the Insured reaches Attained Age 100 and your Policy is in force, the Policy's Account Value, less Policy Debt, will be applied as a single premium to purchase "paid-up" insurance. Your Policy's Account Value will remain in the Series Account allocated to the Divisions in accordance with your instructions. The death benefit under this paid-up insurance generally will be equal to your Account Value. As your Account Value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly. 7 Federal Tax Considerations Your Policy is structured to meet the definition of a "life insurance contract" under the Tax Code. We may need to limit the amount of your premium payments to ensure that your Policy continues to meet that definition. Your purchase of, and transactions under, your Policy may have tax consequences that you should consider before purchasing a Policy. In general, the death benefit will be excluded from the gross income of the beneficiary. Increases in Account Value will not be taxable as earned, although there may be income tax due on a surrender of your Policy or partial withdrawal of your Policy's Account Value. For more information on the tax treatment of the Policy, see "Federal Income Tax Considerations" beginning on page 46 and consult your tax adviser. Great-West Life & Annuity Insurance Company Great-West Life & Annuity Insurance Company ("Great-West") is a stock life insurance company that was originally organized under the laws of the state of Kansas as the National Interment Association. Our name was changed to Ranger National Life Insurance Company in 1963 and to Insuramerica Corporation prior to changing to our current name in February 1982. In September 1990, we redomesticated under the laws of Colorado. We are authorized to do business in forty-nine states, the District of Columbia, Puerto Rico and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies. Great-West is a member of the Insurance Marketplace Standards Association ("IMSA"). Accordingly, we may use the IMSA logo and membership in IMSA in advertisements. Being a member of IMSA means that Great-West has chosen to participate in IMSA's Life Insurance Ethical Market Conduct Program. Great-West is an indirect wholly-owned subsidiary of The Great-West Life Assurance Company. The Great-West Life Assurance Company is a subsidiary of Great-West Lifeco Inc., a holding company. Great-West Lifeco Inc. is in turn a subsidiary of Power Financial Corporation of Canada, a financial services company. Power Corporation of Canada, a holding and management company, has voting control of Power Financial Corporation of Canada. Mr. Paul Desmarais, through a group of private holding companies, which he controls, has voting control of Power Corporation of Canada. Great-West also acts as a sponsor for six other of its separate accounts that are registered with the SEC as investment companies: FutureFunds Series Account, Maxim Series Account, Pinnacle Series Account, Retirement Plan Series Account, Variable Annuity-1 Series Account, and Variable Annuity Account A. 8 The officers and employees of Great-West are covered by a joint fidelity bond. The fidelity bond coverage is $(Canadian) 100,000,000 in the aggregate with a single loss limit of $(Canadian) 50,000,000. In addition to covering officers and employees of Great-West, the joint fidelity bond also covers certain affiliates of Great-West. The Series Account We established "COLI VUL-2 Series Account" (the "Series Account") in accordance with Colorado law on November 25, 1997. The Series Account may also be used to fund benefits payable under other life insurance policies issued by us. We own the assets of the Series Account. The income, gains or losses, realized or unrealized, from assets allocated to the Series Account are credited to or charged against the Series Account without regard to our other income, gains or losses. The assets of We will at all times maintain assets in the Series Account the Series with a total market value at least equal to the reserves and Account are other liabilities relating to the variable benefits under all insulated policies participating in the Series Account. Those assets may from our not be charged with our liabilities from our other business. Our general obligations under those policies are, however, our general liabilities. corporate obligations. The Series Account is registered with the Securities and The Series Exchange Commission (the "SEC") under the Investment Company Act Account is of 1940 ("1940 Act") as a unit investment trust. Registration registered under the 1940 Act does not involve any supervision by the SEC of with the SEC. the management or investment practices or policies of the Series Account. The Series Account is divided into 33 Divisions. Each The Series Division invests exclusively in shares of a corresponding Account has investment portfolio of a registered investment company (commonly 33 Divisions. known as a mutual fund). We may in the future add new or delete Each Divi- existing Divisions. The income, gains or losses, realized or sion invests unrealized, from assets allocated to each Division are credited exclusively to or charged against that Division without regard to the other in shares of income, gains or losses of the other Divisions. All amounts a single allocated to a Division will be used to purchase shares of the mutual fund corresponding Fund. The Divisions will at all times be fully portfolio. invested in Fund shares. We hold the assets of the Series Account. We keep those assets physically segregated and held separate and apart from our general account assets. We maintain records of all purchases and redemptions of shares of the Funds. The Investment Options The Fund The Policy offers a number of investment options, Prospectuses corresponding to the Divisions. Each Division invests in a single have more Fund. Each Fund is a mutual fund registered under the 1940 Act, information or a separate series of shares of such a mutual fund. More about the comprehensive information, including a discussion of potential Funds, and risks, is found in the current prospectuses for the Funds (the may be ob- "Fund Prospectuses"). The Fund Prospectuses should be read in tained from connection with this Prospectus. You may obtain a copy of each us without Fund Prospectus without charge by Request. charge. 9 Each Fund holds its assets separate from the assets of the other Funds, and each Fund has its own distinct investment objective and policies. Each Fund operates as a separate investment fund, and the income, gains and losses of one Fund generally have no effect on the investment performance of any other Fund. The Funds are NOT available to the general public directly. The Funds are available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans. Some of the Funds have been established by investment advisers which manage publicly traded mutual funds having similar names and investment objectives. While some of the Funds may be similar to, and may in fact be modeled after publicly traded mutual funds, the Funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of publicly traded mutual funds and any similarly named Fund may differ substantially. The investment objectives of the current Funds are briefly described below: American Century Variable Portfolios, Inc. (advised by American Century Investment Management, Inc.) American Century VP Income & Growth seeks dividend growth, current income and capital appreciation by investing in common stocks. American Century VP International seeks capital growth by investing primarily in an internationally diversified portfolio of common stocks that are considered by the adviser to have prospects for appreciation. American Century VP Value seeks long-term capital growth by investing in securities that the adviser believes to be undervalued at the time of purchase. Income is a secondary objective. Dreyfus Stock Index Fund (advised by The Dreyfus Corporation and its affiliate Mellon Equity Associates) Dreyfus Stock Index Fund seeks to provide investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate, as represented by the Standard & Poor's 500 Composite Stock Price Index. 10 Dreyfus Variable Investment Fund (advised by The Dreyfus Corporation) Dreyfus Capital Appreciation Portfolio seeks to provide long-term capital growth consistent with the preservation of capital by investing primarily in the common stocks of domestic and foreign issuers. Current income is a secondary investment objective. Fayez Sarofim & Co. is the sub-adviser to this Fund and, as such, provides day-to-day management. Dreyfus Growth and Income Portfolio seeks to provide long-term capital growth, current income and growth of income, consistent with reasonable investment risk by investing primarily in equity securities, debt securities and money market instruments of domestic and foreign issuers. Federated Insurance Series (advised by Federated Advisers) Federated American Leaders Fund II seeks to achieve long-term growth of capital by investing, under normal circumstances, at least 65% of its total assets in common stock of "blue-chip" companies. The Fund's secondary objective is to provide income. Federated Growth Strategies Fund II seeks capital appreciation by investing at least 65% of its assets in equity securities of companies with prospects for above-average growth in earnings and dividends or companies where significant fundamental changes are taking place. Federated High Income Bond Fund II seeks high current income by investing primarily in a professionally managed, diversified portfolio of fixed-income securities, including lower-rated corporate debt obligations commonly referred to as "junk bonds." Federated International Equity Fund II seeks to obtain a total return on its assets by investing at least 65% of its assets in equity securities of issuers located in at least three different countries outside the United States. INVESCO Variable Investments Fund, Inc. (advised by INVESCO Funds Group, Inc.) INVESCO VIF - High Yield Portfolio seeks a high level of current income by investing substantially all of its assets in lower-rated bonds and other debt securities and in preferred stock. INVESCO VIF - Industrial Income Portfolio seeks the best possible current income while following sound investment practices by investing at least 65% of its total assets in dividend-paying common stocks, with up to 10% of its total assets invested in equity securities that do not pay regular dividends and the remainder invested in other income-producing securities such as corporate bonds. Capital growth potential is an additional consideration in the selection of portfolio securities. INVESCO VIF - Total Return Portfolio seeks a high total return on investment through capital appreciation and current income by investing in a combination of equity and fixed-income securities. 11 INVESCO Capital Management, Inc. serves as the sub-adviser to this Fund and, as such, provides day-to- day management. Janus Aspen Series (advised by Janus Capital Corporation) Balanced Portfolio seeks long-term growth of capital, balanced by current income by investing up to 40-60% of its assets in securities selected primarily for their growth potential and 40-60% of its assets in securities selected primarily for their income potential. Flexible Income Portfolio seeks to maximize total return from a combination of income and capital appreciation by investing primarily in income-producing securities. High-Yield Portfolio seeks high current income as its primary objective by investing primarily in high yield/high risk fixed-income securities, commonly referred to as "junk bonds." Capital appreciation is a secondary objective when consistent with the primary objective. Worldwide Growth Portfolio seeks long-term growth of capital by investing primarily in common stocks of foreign and domestic issuers. Maxim Series Fund, Inc. (advised by GW Capital Management, LLC, a wholly-owned subsidiary of Great-West) Maxim Corporate Bond Portfolio seeks high total investment return by investing primarily in debt securities (including convertibles), although up to 20% of its total assets may be invested in preferred stocks. Loomis, Sayles & Company, L.P. serves as sub-adviser to this Fund and, as such, provides day-to-day management. Maxim INVESCO ADR Portfolio seeks to achieve a high total return on investment through capital appreciation and current income, while reducing risk through diversification, by investing in foreign securities that are issued in the form of American Depository Receipts or foreign stocks that are registered with the SEC and traded in the United States. Institutional Trust Company serves as the sub-adviser to this Fund and, as such, provides day-to-day management. Maxim INVESCO Balanced Portfolio seeks to achieve a high total return on investment through capital appreciation and current income by investing in a combination of common stocks and fixed-income securities. Institutional Trust Company serves as the sub-adviser to this Fund and, as such, provides day-to-day management. Maxim INVESCO Small-Cap Growth Portfolio seeks long-term capital growth by investing its assets principally in a diversified group of equity securities of emerging growth companies with market capitalization of $1 billion or less at the time of initial purchase. Institutional Trust Company serves as the sub-adviser to this Fund and, as such, provides day-to-day management. 12 Maxim MidCap Portfolio seeks long-term growth of capital by normally investing at least 65% of its assets in securities issued by medium-sized companies. Janus Capital Corporation serves as the sub-adviser to this Fund and, as such, provides day-to-day management. Maxim Money Market Portfolio seeks preservation of capital, liquidity and the highest possible current income through investments in short-term money market securities. An investment in this Fund is not insured by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money. Maxim U.S. Government Securities Portfolio seeks the highest level of return consistent with preservation of capital and substantial credit protection by investing primarily in mortgage-related securities issued or guaranteed by an agency or instrumentality of the U.S. Government, other U.S. agency and instrumentality obligations and in U.S. Treasury obligations. Maxim Profile Portfolios Maxim Aggressive Profile Portfolio seeks to achieve a high total return on investment through long-term capital appreciation by investing in other Maxim Funds with an emphasis on equity investments. Maxim Moderately Aggressive Profile Portfolio seeks to achieve a high total return on investment through long-term capital appreciation by investing in other Maxim Funds with an emphasis on equity investments, though income is a secondary consideration. Maxim Moderate Profile Portfolio seeks to achieve a high total return on investment through long-term capital appreciation by investing in other Maxim Funds with a relatively equal emphasis on equity and fixed-income investments. Maxim Moderately Conservative Profile Portfolio seeks to achieve the highest possible total return consistent with reasonable risk through a combination of income and capital appreciation by investing in other Maxim Funds with primary emphasis on fixed-income investments, and, to a lesser degree, in other Maxim Funds with an emphasis on equity investments. Maxim Conservative Profile Portfolio seeks to achieve total return consistent with preservation of capital primarily through fixed-income investments by investing in other Maxim Funds with an emphasis on fixed-income investments. 13 Neuberger&Berman Advisers Management Trust The portfolios listed below invest their assets in a corresponding portfolio of Neuberger&Berman Advisers Managers Trust, an open-end investment company registered under the 1940 Act. This type of arrangement is commonly referred to as a "master/feeder" structure and is different from that of many other investment companies which directly acquire and manage their own assets. The investment objectives of the portfolios listed below are identical to the corresponding portfolios in which they invest and their investment performance will directly correspond with the investment performance of those corresponding portfolios. Neuberger&Berman Management Incorporated serves as the investment adviser to Advisers Managers Trust and Neuberger&Berman, LLC acts as sub-adviser. Guardian Portfolio seeks capital appreciation, and, secondarily, current income by investing primarily in common stocks of long-established, high- quality companies. A value-oriented investment approach is used in selecting securities. Mid-Cap Growth Portfolio seeks capital appreciation by investing, under normal market conditions, in equity securities of medium-sized companies. A growth-oriented investment approach is used in selecting securities. Partners Portfolio seeks capital growth by investing in common stocks and other equity securities of medium to large capitalization established companies. A value-oriented investment approach is used in selecting securities. Socially Responsive Portfolio seeks long-term capital appreciation by investing in stocks of medium to large capitalization companies that meet both financial and social criteria. A value-oriented investment approach is used in selecting securities. You should contact your representative for further information on the availability of the Divisions. 14 Each Fund is subject to certain investment restrictions and policies which may not be changed without the approval of a majority of the shareholders of the Fund. See the accompanying Fund Prospectuses for further information. We automatically reinvest all dividends and capital gains distributions from the Funds in shares of the distributing Fund at their net asset value. The income and realized and unrealized gains or losses on the assets of each Division are separate and are credited to or charged against the particular Division without regard to income, gains or losses from any other Division or from any other part of our business. We will use amounts you allocate to a Division to purchase shares in the corresponding Fund and will redeem shares in the Funds to meet Policy obligations or make adjustments in reserves. The Funds are required to redeem their shares at net asset value and to make payment within seven days. The Funds may also be available to separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interests of the Series Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of policyowners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect policyowners, including withdrawal of the Series Account from participation in the Funds which are involved in the conflict or substitution of shares of other Funds. Expenses of the Funds Fund shares are purchased at net asset value, which reflects the deduction of investment management fees and certain other expenses. These expenses, therefore, are not direct charges against Series Account assets or reductions from your Policy's Account Value. You do, however, indirectly bear the expenses of the Funds because those expenses are taken into consideration in computing each Fund's net asset value, which is the share price used to calculate the Unit Values of the Series Account. Fund expenses are shown in Appendix B. The management fees and other expenses of the Funds are more fully described in the Fund Prospectuses. The information relating to the Fund expenses was provided by each Fund and was not independently verified by us. See "Charges and Deductions -- Fund Expenses" beginning on page 34 of this Prospectus. About the Policy Policy Application, Issuance and Initial Premium To purchase a Policy, you must submit an application to our Principal Office. We will then follow our underwriting procedures designed to determine the insurability of the proposed Insured. 15 We may require a full underwriting, which includes a medical examination and further information, before your application is approved. We also may offer the Policy on a simplified underwriting or guaranteed issue basis. Proposed Insureds must be acceptable risks based on our applicable underwriting limits and standards. We will not issue a Policy until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application for any lawful reason or to "rate" an Insured as a substandard risk, which will result in increased Monthly Risk Charges. The Monthly Risk Charge also may vary depending on the type of underwriting we use. You must specify certain information in the application, including the Total Face Amount, the death benefit option and supplemental benefits, if any. The Total Face Amount generally may not be decreased below $100,000. Upon approval of the application, we will issue to you a Policy on the life of the Insured. A specified Initial Premium must be paid before we issue the Policy. The effective date of coverage for your Policy (which we call the "Policy Date") will be the date we receive a premium equal to or in excess of the specified Initial Premium after we have approved your application. If your premium payment is received on the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that month. We generally do not accept premium payments before approval of an application. However, at our discretion, we may elect to do so. While your application is in underwriting, if we accept your premium payment before approval of your application, we will provide you with temporary insurance coverage in accordance with the terms of our temporary insurance agreement. In our discretion, we may limit the amount of premium we accept and the amount of temporary coverage we provide. If we approve your application, we will allocate your premium to the Series Account on the Policy Date, as described below. Otherwise, we will promptly return your payment to you. We will not credit interest to your premium payment for the period while your application is in underwriting. We reserve the right to change the terms or conditions of your Policy to comply with differences in applicable state law. Variations from the information appearing in this Prospectus due to individual state requirements are described in supplements which are attached to this Prospectus or in endorsements to the Policy, as appropriate. Free Look Period If you are not satisfied with your Policy, it may be returned by delivering or mailing it to our Principal Office or to the representative from whom the Policy was purchased within 10 days from the date you receive it (unless a longer period is required under applicable state insurance law) (the "Free Look Period"). A Policy returned under this provision will be deemed void. You will receive a refund equal to the greater of -- o the sum of all premium payments made (less any withdrawals); or 16 o the Policy's Account Value. During the Free Look Period, we will allocate your net premium payments to the Division of the Series Account that invests in the Maxim Money Market Portfolio. We will transfer the Account Value in that Division to the other Divisions of the Series Account in accordance with your allocation instructions five days after the end of the Free Look Period. Premium Payments Premium. All premium payments must be made payable to "Great-West Life & Annuity Insurance Company" and mailed to our Principal Office. The Initial Premium will be due and payable on or before your Policy's Issue Date. You may pay additional premium payments to us in the amounts and at the times you choose, subject to the limitations described below. We reserve the right to limit the number of premium payments we accept on an annual basis. No premium payment may be less than $100 without our consent, although we will accept a smaller premium payment if necessary to keep your Policy in force. We reserve the right to restrict or refuse any premium payments that exceed the Initial Premium amount shown on your Policy. We also reserve the right not to accept a premium payment that causes the death benefit to increase by an amount that exceeds the premium received. Evidence of insurability satisfactory to us may be required before we accept any such premium. We will not accept premium payments that would, in our opinion, cause your Policy to fail to qualify as life insurance under applicable federal tax law. If a premium payment is made in excess of these limits, we will accept only that portion of the premium within those limits, and will refund the remainder to you. Net Premiums. The net premium is the amount you pay as the premium less any Expense Charges Applied to Premium. See "Charges and Deductions - - Expense Charges Applied to Premium," beginning on page 31 of this Prospectus. Allocation of Net Premium. Except as otherwise described herein, your net premium will be allocated in accordance with the allocation percentages you select. Percentages must be in whole numbers. Premiums received prior to the end of the Free Look Period will initially be credited to the Maxim Money Market Portfolio Division. Your initial allocation percentages will take effect five days after the end of your state's Free Look Period. You may change your allocation percentages at any time by Request. Telephone Requests will be honored only if we have a properly completed telephone authorization form for you on file. An allocation change will be effective as of the date we receive the Request for that change. We, our affiliates and the representative from whom you purchased your Policy will not be responsible for losses resulting from acting upon telephone Requests reasonably believed to be genuine. We will use 17 reasonable procedures to confirm that instructions communicated by telephone are genuine. You will be required to identify yourself by name and a personal identification number for transactions initiated by telephone. However, if we do not take reasonable steps to ensure that a telephone authorization is valid, we may be liable for such losses. We may suspend, modify or terminate this telephone privilege at any time without notice. Planned Periodic Premiums. While you are not required to make additional premium payments according to a fixed schedule, you may select a planned periodic premium schedule and corresponding billing period, subject to our limits. We will send you reminder notices for the planned periodic premium, unless you request to have reminder notices suspended. You are not required, however, to pay the planned periodic premium; you may increase or decrease the planned periodic premium subject to our limits, and you may skip a planned payment or make unscheduled payments. Depending on the investment performance of the Divisions you select, the planned periodic premium may not be sufficient to keep your Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of your Policy. Death Benefit You may If your Policy is in force at the time of the Insured's choose from death, we will pay the beneficiary an amount based on the death three death benefit option you select once we have received Due Proof of the benefit op- Insured's death. The amount payable will be: tions. Your choice will o the amount of the selected death benefit option, plus affect the insurance o any amounts payable under any supplemental benefit riders charges we added to your Policy, less deduct from your Account o the value of any Policy Debt on the date of the Insured's Value and the death, less amount of the death benefit. o any accrued and unpaid Policy charges. We will pay this amount to the beneficiary in one lump sum, unless we and the beneficiary agree on another form of settlement. We will pay interest, at a rate not less than that required by law, on the amount of Policy Proceeds, if payable in one lump sum, from the date of the Insured's death to the date of payment. In order to meet the definition of life insurance under the Internal Revenue Code of 1986, as amended (the "Code"), Section 7702 of the Code defines alternative testing procedures for the minimum death benefit under a Policy: the guideline premium test ("GPT") and the cash value accumulation test ("CVAT"). See "Federal Income Tax Considerations - Tax Status of the Policy," at page 46. The Policy must qualify under either the GPT or the CVAT. When you purchase a Policy, you must choose the procedure under which your Policy will qualify. You may not change your choice while the Policy is in force. Under both testing procedures, there is a minimum death benefit required at all times equal to your Policy's Account Value multiplied by some pre-determined factor. The factors used 18 to determined the minimum death benefit depend on the testing procedure chosen and vary by age. The factors used for GPT are shown in Appendix C and those used for CVAT are set forth in your Policy. Under the GPT, there is also a maximum amount of premium which may be paid with respect to your Policy. Use of the CVAT can be advantageous if you intend to maximize the total amount of premiums paid. An offsetting consideration, however, is that the factors used to determine the You may minimum death benefit are higher under the CVAT, which can result select from in a higher death benefit over time and, thus, a higher total among three cost of insurance. death bene- fit options The Policy has three death benefit options. Option 1. The "Level Death" Option. Under this option, the death benefit is -- o the Policy's Total Face Amount on the date of the Insured's death less any partial withdrawals; or, if greater, o the Policy's Account Value on the date of death multiplied by the applicable factor shown in the table set forth in Appendix C or in your Policy. This death benefit option should be selected if you want to minimize your cost of insurance. Option 2. The "Coverage Plus" Option. Under this option, the death benefit is -- o the sum of the Total Face Amount and Account Value of the Policy on the date of the Insured's death; or, if greater, o the Policy's Account Value on the date of death multiplied by the applicable factor shown in the table set forth in Appendix C or in your Policy. This death benefit option should be selected if you want your death benefit to increase with your Policy's Account Value. Option 3. The "Premium Accumulation" Option. Under this option, the death benefit is -- o the sum of the Total Face Amount and premiums paid under the Policy plus interest at the rate specified in your Policy less any partial withdrawals; or, if greater, o the Policy's Account Value on the date of death multiplied by the applicable factor shown in the table set forth in Appendix C or in your Policy. 19 This death benefit option should be selected if you want a specified amount of death benefit plus a return of the premiums you paid with guaranteed interest. Changes in Death Benefit Option After the first Policy Year, but not more than once each Policy Year, you may change the death benefit option by Request. Any change will be effective on the first day of the Policy Month following the date we approve your Request. A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option. A change in the death benefit option will not change the amount payable upon the death of the Insured. Any change is subject to the following conditions: o If the change is from Option 1 to Option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the Policy's Account Value. Evidence of insurability may be required. o If the change is from Option 1 to Option 3, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the accumulated value of all premiums at the interest rate shown in your Policy. Evidence of insurability may be required. o If the change is from Option 2 to Option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the Policy's Account Value. o If the change is from Option 2 to Option 3, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the Policy's Account Value less the accumulated value of all premiums at the interest rate shown in your Policy. o If the change is from Option 3 to Option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the accumulated value of all premiums at the interest rate shown in your Policy. o If the change is from Option 3 to Option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the Policy's Account Value plus the accumulated value of all premiums at the interest rate shown in your Policy. Changes in Total Face Amount You may in- You may increase or decrease the Total Face Amount of your crease or Policy at any time within certain limits. decrease the Total Face Amount within certain limits. 20 Minimum Changes. Each increase or decrease in the Total Face Amount must be at least $25,000. We reserve the right to change the minimum amount by which you may change the Total Face Amount. Increases. To Request an increase, you must provide satisfactory evidence of the Insured's insurability. Once approved by us, an increase will become effective on the Policy Anniversary following our approval of your Request, subject to the deduction of the first Policy Month's Monthly Risk Charge, Service Charge, any extra risk charge if the Insured is in a rated class and the cost of any riders. Decreases. A decrease will become effective at the beginning of the next Policy Month following our approval of your request. The Total Face Amount after the decrease must be at least $100,000. For purposes of the Incontestability Provision of your Policy, any decrease in Total Face Amount will be applied in the following order: o first, to the most recent increase; o second, to the next most recent increases, in reverse chronological order; and o finally, to the initial Total Face Amount. Surrenders If you sur- You may surrender your Policy for its Cash Surrender Value render your at any time while the Insured is living. If you do, the insurance Policy and coverage and all other benefits under the Policy will terminate. receive its Cash Sur- Cash Surrender Value is your Policy's Account Value less the sum render Value, of: you may incur taxes o the outstanding balance of any Policy Debt; and and tax penalties. o any other accrued and unpaid Policy charges. We will determine your Cash Surrender Value as of the end of the first Valuation Date after we receive your Request for surrender. Partial Withdrawal If you with- You may Request a partial withdrawal of Account Value at any draw part of time while the Policy is in force. The amount of any partial the Cash withdrawal must be at least $500 and may not exceed 90% of your Surrender Policy's Account Value less the value of the Loan Account. An Value, your administrative fee will be deducted from your Account Value for Policy's all partial withdrawals after the first made during the same death benefit Policy Year. This administrative fee is guaranteed to be no will be re- greater than $25. duced and you may incur If you have chosen either Death Benefit Option 1 or Death taxes and Benefit Option 3, then the death benefit payable will be reduced tax penal- by the amount of any partial withdrawals. ties. 21 Your Policy's Account Value will be reduced by the amount of a partial withdrawal. The amount of a partial withdrawal will be withdrawn from the Divisions in the proportion the amounts in the Divisions bear to your Policy's Account Value. You cannot repay amounts taken as a partial withdrawal. Any subsequent payments received by us will be treated as additional premium payments and will be subject to our limitations on premiums. A partial withdrawal may have tax consequences. See "Federal Income Tax Considerations - - Tax Treatment of Policy Benefits," beginning on page 47 of this Prospectus. Policy Loans You may You may request a Policy loan of up to 90% of your Policy's borrow from Account Value, decreased by the amount of any outstanding Policy us using Debt on the date the Policy loan is made. When a Policy loan is your Account made, a portion of your Account Value equal to the amount of the Value as Policy loan will be allocated to the Loan Account as collateral collateral. for the loan. This amount will not be affected by the investment experience of the Series Account while the loan is outstanding and will be subtracted from the Divisions in the proportion the amounts in the Divisions bear to your Account Value. The minimum Policy loan amount is $500. The interest rate on the Policy loan will be determined annually at the beginning of each Policy Year. That interest rate will be guaranteed for that Policy Year and will apply to all Policy loans outstanding during that Policy Year. Interest is due and payable on each Policy Anniversary. Interest not paid when due will be added to the principal amount of the loan and will bear interest at the loan interest rate. Presently, the maximum interest rate for Policy loans is The Moody's Corporate Bond Yield Average - Monthly Average Corporates, which is published by Moody's Investor Service, Inc. If that Average ceases to be published, the maximum interest rate for Policy loans will be derived from a substantially similar average adopted by your state's Insurance Commissioner. We must reduce our Policy loan interest rate if the maximum loan interest rate is lower than the loan interest rate for the previous Policy Year by one-half of one percent or more. We may increase the Policy loan interest rate but such increase must be at least one-half of one percent. No increase may be made if the Policy loan interest rate would exceed the maximum loan interest rate. We will send you advance notice of any increase in the Policy loan rate. Interest will be credited to amounts held in the Loan Account. The rate will be no less than the Policy loan interest rate then in effect less 0.9%. All payments we receive from you will be treated as premium payments unless we have received notice, in form satisfactory to us, that the funds are for loan repayment. If you have a Policy loan, it is generally advantageous to repay the loan rather than make a premium payment because premium payments incur expense charges whereas loan repayments do not. Loan repayments will 22 first reduce the outstanding balance of the Policy loan and then accrued but unpaid interest on such loans. We will accept repayment of any Policy loan at any time while the Policy is in force. Amounts paid to repay a Policy loan will be allocated to the Divisions in the proportion the amounts in the Divisions bear to your Account Value. A Policy loan, whether or not repaid, will affect the Policy Proceeds payable upon the Insured's death and the Account Value because the investment results of the Divisions do not apply to amounts held in the Loan Account. The longer a loan is outstanding, the greater the effect is likely to be, depending on the investment results of the Divisions while the loan is outstanding. The effect could be favorable or unfavorable. Transfers Between Divisions Subject to our rules as they may exist from time to time, you may at any time transfer to another Division all or a portion of the Account Value allocated to a Division. We will make transfers pursuant to a Request. Telephone Requests will be honored only if we have a properly completed telephone authorization form for you on file. We, our affiliates and the representative from whom you purchased your Policy will not be responsible for losses resulting from acting upon telephone Requests reasonably believed to be genuine. We will use reasonable procedures to confirm that instructions communicated by telephone are genuine. For transactions initiated by telephone, you will be required to identify yourself by name and a personal identification number. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses. We may suspend, modify or terminate the telephone transfer privilege at any time without notice. Transfers may be Requested by indicating the transfer of either a specified dollar amount or a specified percentage of the Division's value from which the transfer will be made. Transfer privileges are subject to our consent. We reserve the right to impose limitations on transfers, including, but not limited to: (1) the minimum amount that may be transferred; and (2) the minimum amount that may remain in a Division following a transfer from that Division. An administrative charge of $10 per transfer will apply for all transfers in excess of 12 made in a calendar year. We may increase or decrease the transfer charge; however, it is guaranteed to never exceed $10 per transfer. All transfers made in a single day will count as only one transfer toward the 12 free transfers. The transfer of your Initial Premium from the Maxim Money Market Portfolio Division to your selected Divisions does not count toward the twelve free transfers. Likewise, any transfers under Dollar Cost Averaging or periodic rebalancing of your Account Value under the Rebalancer Option do not count toward the twelve free transfers (a one time rebalancing, however, will be counted as one transfer). 23 Dollar Cost Averaging By Request, you may elect Dollar Cost Averaging in order to purchase Units of the Divisions over a period of time. Dollar Cost Averaging permits you to automatically transfer a predetermined dollar amount, subject to our minimum, at regular Dollar Cost intervals from any one or more designated Divisions to one or Averaging more of the remaining, then available Divisions. The Unit Value permits you will be determined on the dates of the transfers. You must to transfer specify the percentage to be transferred into each designated your Account Division. Transfers may be set up on any one of the following Value at frequency periods: monthly, quarterly, semiannually, or annually. regular The transfer will be initiated one frequency period following the intervals date of your request. We will provide a list of Divisions from one or eligible for Dollar Cost Averaging which may be modified from more Divi- time to time. Amounts transferred through Dollar Cost Averaging sions to are not counted against the twelve free transfers allowed in a other calendar year. You may not participate in Dollar Cost Averaging Divisions. and the Rebalancer Option (described below) at the same time. Participation in Dollar Cost Averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. We reserve the right to modify, suspend, or terminate Dollar Cost Averaging at any time. The Rebalancer Option The Reba- By Request, you may elect the Rebalancer Option in order to lancer Option automatically transfer Account Value among the Divisions on a permits you periodic basis. This type of transfer program automatically to reba- reallocates your Account Value so as to maintain a particular lance your percentage allocation among Divisions chosen by you. The amount Account Value allocated to each Division will grow or decline at different so that you rates depending on the investment experience of the Divisions. may main- tain your You may Request that rebalancing occur one time only, in chosen which case the transfer will take place on the date of the percentage Request. This transfer will count as one transfer towards the allocation twelve free transfers allowed in a calendar year. among Divisions. You may also choose to rebalance your Account Value on a quarterly, semiannual, or annual basis, in which case the first transfer will be initiated one frequency period following the date of your request. On that date, your Account Value will be automatically reallocated to the selected Divisions. Thereafter, your Account Value will be rebalanced once each frequency period. In order to participate in the Rebalancer Option, your entire Account Value must be included. Transfers made with these frequencies will not count against the twelve free transfers allowed in a calendar year. You must specify the percentage of Account Value to be allocated to each Division and the frequency of rebalancing. You may terminate the Rebalancer Option at any time by Request. You may not participate in the Rebalancer Option and Dollar Cost Averaging at the same time. Participation in the Rebalancer Option does not assure a greater profit, or any profit, nor will 24 it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate the Rebalancer Option at any time. Account Value Your Account Value is the sum of your interests in each Division you have chosen plus the amount in your Loan Account. The Account Value varies depending upon the premiums paid, Expense Charges Applied to Premium, Mortality and Expense Risk Charge, Service Charges, Monthly Risk Charges, partial withdrawals, fees, Policy loans and the net investment factor (described below) for the Divisions to which your Account Value is allocated. A Valuation We measure the amounts in the Divisions in terms of Units Date is any and Unit Values. On any given date, your interest in a Division day on which is equal to the Unit Value multiplied by the number of Units we, the appli- credited to you in that Division. Amounts allocated to a Division cable Fund, will be used to purchase Units of that Division. Units are and the NYSE redeemed when you make partial withdrawals, undertake Policy are open for loans or transfer amounts from a Division, and for the payment of business. Service Charges, Monthly Risk Charges and other fees. The number of Units of each Division purchased or redeemed is determined by The Valuation dividing the dollar amount of the transaction by the Unit Value Period is the for the Division. The Unit Value for each Division was period of established at $10.00 for the first Valuation Date of the time from one Division. The Unit Value for any subsequent Valuation Date is determination equal to the Unit Value for the preceding Valuation Date of Unit multiplied by the net investment factor (determined as provided Values to below). The Unit Value of a Division for any Valuation Date is the next. determined as of the close of the Valuation Period ending on that Valuation Date. Transactions are processed on the date we receive a premium at our Principal Office or upon approval of a Request. If your premium or Request is received on a date that is not a Valuation Date, or after the close of the New York Stock Exchange on a Valuation Date, the transaction will be processed on the next Valuation Date. We apply your The Account Value attributable to each Division of the Initial Pre- Series Account on the Policy Date equals: mium on the Policy Date, o that portion of net premium received and allocated to the which will Division, less be the Issue Date (if we o the Service Charges due on the Policy Date, less have already received o the Monthly Risk Charge due on the Policy Date, less your Initial Premium) or o the Monthly Risk Charge for any riders due on the Policy the Business Date. Day we receive a premium The Account Value attributable to each Division of the equal to or Series Account on subsequent Valuation Dates is equal to: in excess of the Initial o the Account Value attributable to the Division on the Premium after preceding Valuation Date multiplied by that Division's net we have investment factor, plus approved your Policy application. 25 o that portion of net premium received and allocated to the Division during the current Valuation Period, plus o that portion of the value of the Loan Account transferred to the Division upon repayment of a Policy loan during the current Valuation Period; plus o any amounts transferred by you to the Division from another Division during the current Valuation Period, less o any amounts transferred by you from the Division to another Division during the current Valuation Period, less o that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less o that portion of any Account Value transferred from the Division to the Loan Account during the current Valuation Period, less o that portion of fees due in connection with a partial surrender charged to the Division, less o if the first day of a Policy Month occurs during the current Valuation Period, that portion of the Service Charge for the Policy Month just beginning charged to the Division, less o if the first day of a Policy Month occurs during the current Valuation Period, that portion of the Monthly Risk Charge for the Policy Month just beginning charged to the Division, less o if the first day of a Policy Month occurs during the current Valuation Period, that Division's portion of the cost for any riders and any extra risk charge if the Insured is in a rated class as specified in your Policy, for the Policy Month just beginning. Net Investment Factor. The net investment factor for each Division for any Valuation Period is determined by deducting the Mortality and Expense Risk Charge for each day in the Valuation Period from the quotient of (1) and (2) where: (1) is the net result of: o the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus o the per share amount of any dividend or other distribution declared on Fund shares held in the Division if the "ex-dividend" date occurs during the current Valuation Period, plus or minus 26 o a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the current Valuation Period which are determined by us to be attributable to the operation of the Division; and (2) is the net result of: o the net asset value of a Fund share held in the Division determined as of the end of the preceding Valuation Period; plus or minus o a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the preceding Valuation Period which are determined by us to be attributable to the operation of the Division. The Mortality and Expense Risk Charge for the Valuation Period is the annual Mortality and Expense Risk Charge divided by 365 multiplied by the number of days in the Valuation Period. The net investment factor may be greater or less than or equal to one. Splitting Units. We reserve the right to split or combine the value of Units. In effecting any such change, strict equity will be preserved and no such change will have a material effect on the benefits or other provisions of your Policy. Charges and Deductions Expense Charges Applied to Premium. We will deduct a maximum charge of 10% from each premium payment. A maximum of 6.5% of this charge will be deducted as sales load to compensate us in part for sales and promotional expenses in connection with selling the Policies, such as commissions, the cost of preparing sales literature, other promotional activities and other direct and indirect expenses. A maximum of 3.5% of this charge will be used to cover premium taxes and certain federal income tax obligations resulting from the receipt of premiums. All states and a few cities and municipalities impose taxes on premiums paid for life insurance, which generally range from 2% to 4% of premium but may exceed 4% in some states (for example, Kentucky). The amount of your state's premium tax may be higher or lower than the amount attributable to premium taxes that we deduct from your premium payments. The current Expense Charge Applied to Premium for sales load is 5.5% of premium up to target and 3.0% of premium in excess of target for Policy Years 1 through 10. Your target premium will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any). Thereafter, there is no charge for sales load. The current Expense Charge Applied to Premium to cover our premium taxes and the federal tax obligation described above is 3.5% in all Policy Years. As described in "Term Life Insurance Rider", we may offer a Term Life Insurance Rider that may have the effect of reducing the sales charge you pay on purchasing an equivalent amount of insurance. 27 We offer this rider in circumstances which result in the savings of sales and distribution expenses and administrative costs. To qualify, a corporation, employer, or other purchaser must satisfy certain criteria such as, for example, the number of Policies it expects to purchase, and the expected Total Face Amount under all such Policies. Generally, the sales contacts and effort and administrative costs per Policy depend on factors such as the number of Policies purchased by a single owner, the purpose for which the Policies are purchased, and the characteristics of the proposed Insureds. The amount of reduction and the criteria for qualification are related to the sales effort and administrative costs resulting from sales to a qualifying owner. Great-West from time to time may modify on a uniform basis both the amounts of reductions and the criteria for qualification. Reductions in these charges will not be unfairly discriminatory against any person, including the affected owners funded by the Series Account. Mortality and Expense Risk Charge. This charge is for the mortality and expense risks we assume with respect to the Policy. It is based on an annual rate that we apply against each Division of the Series Account on a daily basis. We convert the Mortality and Expense Risk Charge into a daily rate by dividing the annual rate by 365. The Mortality and Expense Risk Charge will be determined by us from time to time based on our expectations of future interest, mortality experience, persistency, expenses and taxes, but will not exceed 0.90% annually. Currently, the charge is 0.45% for Policy Years 1 through 10, 0.30% for Policy Years 11 through 20 and 0.10% thereafter. The mortality risk we assume is that the group of lives insured under the Policies may, on average, live for shorter periods of time than we estimated. The expense risk we assume is that the costs of issuing and administering Policies may be more than we estimated. Monthly Deduction. We make a monthly deduction from your Account Value on the Policy Date and the first day of each Policy Month. This monthly deduction will be charged proportionally to the amounts in the Divisions. The monthly deduction equals the sum of (1), (2), (3) and (4) where: (1) is the cost of insurance charge (the Monthly Risk Charge) equal to the current Monthly Risk Rate (described below) multiplied by the net amount at risk divided by 1,000; (2) is the Service Charge; (3) is the monthly cost of any additional benefits provided by riders which are a part of your Policy; and (4) is any extra risk charge if the Insured is in a rated class as specified in your Policy. The net amount at risk equals: o the death benefit divided by 1.00327374; less 28 o your Policy's Account Value on the first day of a Policy Month prior to assessing the monthly deduction. If there are increases in the Total Face Amount other than increases caused by changes in the death benefit option, the monthly deduction described above is determined separately for the initial Total Face Amount and each increase in the Total Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the most recent increase in the death benefit and then to each increase in the Total Face Amount in the reverse order in which the increases were made. Monthly Risk Rates. The Monthly Risk Rate is used to determine the cost of insurance charge for providing insurance coverage under the Policy. The Monthly Risk Rates (except for any such rate applicable to an increase in the Total Face Amount) are based on the length of time your Policy has been in force and the Insured's sex (in the case of non-unisex Policies) and Issue Age. If the Insured is in a rated class as specified in your Policy, we will deduct an extra risk charge that reflects that class rating. The Monthly Risk Rates applicable to each increase in the Total Face Amount are based on the length of time the increase has been in force and the Insured's sex (in the case of non-unisex Policies), Issue Age, and class rating, if any. The Monthly Risk Rates will be determined by us from time to time based on our expectations of future experience with respect to mortality, persistency, interest rates, expenses and taxes, but will not exceed the Guaranteed Maximum Monthly Risk Rates based on the 1980 Commissioner's Standard Ordinary, Age Nearest Birthday, Male/Female, Unismoke Ultimate Mortality Table ("1980 CSO"). Our Monthly Risk Rates for unisex Policies will never exceed a maximum based on the 1980 CSO using male lives. The Guaranteed Maximum Monthly Risk Rates reflect any class rating applicable to the Policy. We have filed a detailed statement of our methods for computing Account Values with the insurance department in each jurisdiction where the Policy was delivered. These values are equal to or exceed the minimum required by law. Service Charge. We will deduct a maximum of $15.00 from your Policy's Account Value on the first day of each Policy Month to cover our administrative costs, such as salaries, postage, telephone, office equipment and periodic reports. This charge may be increased or decreased by us from time to time based on our expectations of future expenses, but will never exceed $15.00 per Policy Month. The Service Charge will be deducted proportionally from the Divisions. The current Service Charge is $10.00 per Policy Month for Policy Years 1 through 3 and $7.50 per Policy Month thereafter. Transfer Fee. A maximum administrative charge of $10 per transfer of Account Value from one Division to other Divisions will be deducted from your Policy's Account Value for all transfers in excess of 12 made in the same calendar year. The allocation of your Initial Premium from the Maxim Money Market Portfolio Division to your selected Divisions will not count toward the 12 free transfers. Similarly, transfers made under Dollar Cost Averaging and periodic rebalancing under the Rebalancer Option do not count as transfers for this purpose (although, a one-time rebalancing under the Rebalancer Option will count as one transfer). All transfers requested on the same Business Day will be aggregated and counted as one transfer. The current charge is $10 per transfer. 29 Partial Withdrawal Fee. A maximum administrative fee of $25 will be deducted from your Policy's Account Value for all partial withdrawals after the first made in the same Policy Year. Change of Death Benefit Option Fee. A maximum administrative fee of $100 will be deducted from your Policy's Account Value each time you change your death benefit option. Fund Expenses. You indirectly bear the charges and expenses of the Funds whose shares are held by the Divisions to which you allocate your Account Value. The Series Account purchases shares of the Funds at net asset value. Each Fund's net asset value reflects investment advisory fees and administrative expenses already deducted from the Fund's assets. For a summary of current estimates of these charges and expenses, see Appendix B to this Prospectus. For more information concerning the investment advisory fees and other charges against the Funds, see the Fund Prospectuses and the statements of additional information for the Funds, which are available upon Request. We may receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the services we provide or the cost savings resulting from the arrangement and, therefore, may differ between Funds. Paid-Up Life Insurance When the Insured reaches Attained Age 100 (if your Policy is in force at that time), the entire Account Value of your Policy (less outstanding Policy Debt) will be applied as a single premium to purchase "paid-up" insurance. Outstanding Policy Debt will be repaid at this time. This repayment may be treated as a taxable distribution to you if your Policy is not a MEC. The net single premium for this insurance will be based on the 1980 Commissioner's Standard Ordinary, Sex Distinct, Non-Smoker Mortality Table. The cash value of your paid-up insurance, which initially is equal to the net single premium, will remain in the Divisions of the Series Account in accordance with your then current allocation. While the paid-up life insurance is in effect your assets will remain in the Series Account. You may change your Division allocation instructions and you may transfer your cash value among the Divisions. All charges under your Policy, to the extent applicable, will continue to be assessed, except we will no longer make a deduction each Policy Month for the Monthly Risk Charge. Your death benefit will be equal to the cash value of the paid-up policy and, thus, as your cash value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly. You may surrender the paid-up insurance policy at any time and, if surrendered within 30 days of a Policy Anniversary, its cash value will not be less than it was on that Policy Anniversary. See "Federal Income Tax Considerations -- Treatment When Insured Reached Attained Age 100." Supplemental Benefits The following supplemental benefit riders are available, subject to certain limitations. An additional Monthly Risk Charge will be assessed for each rider which is in force as part of the monthly deduction from your Account Value. 30 Term Life Insurance Rider This Rider provides term life insurance on the Insured. Coverage is renewable annually to the Insured's Attained Age 100. The amount of coverage provided under this Rider varies from month to month as described below. We will pay the Rider's death benefit to the beneficiary when we receive Due Proof of death of the Insured while this Rider is in force. This Rider provides the same three death benefit options as your Policy. The option you choose under the Rider must at all times be the same as the option you have chosen for your Policy. The Rider's death benefit will be determined at the beginning of each Policy Month in accordance with one of those options. For each of the options, your death benefit will be reduced by any outstanding Policy Debt. If you purchase this Rider, the Total Face Amount shown on your Policy's Specifications Page will be equal to the minimum amount of coverage provided by this Rider plus the Base Face Amount (which is the minimum death benefit under your Policy without the Rider's death benefit). The minimum allocation of Total Face Amount between your Policy and the Rider is 10% and 90% at inception, respectively. The total death benefit payable under the Rider and the Policy will be determined as described in "Death Benefit" above, using the Total Face Amount shown on your Policy's Specifications page. Coverage under this Rider will take effect on the later of: o the Policy Date of the Policy to which this Rider is attached; or o the Policy Anniversary following our approval of your Request to add this Rider to your Policy, subject to the deduction of the first Monthly Risk Charge for the Rider. 31 The Monthly Risk Rate for this Rider will be the same as that used for the Policy and the Monthly Risk Charge for the Rider will be determined by multiplying the Monthly Risk Rate by the Rider's death benefit. This charge will be calculated on the first day of each Policy Month and added to the Policy's Monthly Risk Charge. If you purchase this Rider, the target premium amount, to which the sales charge applies, will be proportionately lower. As a result, the sales charge deducted from your premium payments will be less than you would pay on a single Policy providing the same Total Face Amount of coverage as your Policy and Rider. We will offer this Rider only in circumstances which result in the savings of sales and distribution expenses. As a result, in our discretion, we may decline to offer the Term Rider or refuse to consent to a proposed allocation of coverage between a Base Policy and Term Rider. In exercising this discretion, we will not discriminate unfairly against any person, including the affected owners funded by the Series Account. For more information see "Expense Charges Applied to Premium" at page 31 above. You may terminate this Rider by Request. This Rider also will terminate on the earliest of the following dates: o the date the Policy is surrendered or terminated; o the expiration of the Grace Period of the Policy; or o the death of the Insured. Change of Insured Rider This Rider permits you to change the Insured under your Policy or any Insured that has been named by virtue of this Rider. Before we change the Insured you must provide us with (1) a Request for the change signed by you and approved by us; (2) evidence of insurability for the new Insured; (3) evidence that there is an insurable interest between you and the new Insured; (4) evidence that the new Insured's age, nearest birthday, is under 70 years; and (5) evidence that the new Insured was born prior to the Policy Date. We may charge a maximum fee of $25 for administrative expenses when you changed the Insured. When a change of Insured takes effect, Policy premiums will be based on the new Insured's age, sex, mortality class and the premium rate in effect on the Policy Date. Continuation of Coverage If you cease making premium payments, coverage under your Policy and any Riders to the Policy will continue until your Policy's Account Value, less any Policy Debt, is insufficient to cover the monthly deduction. When that occurs, the Grace Period will go into effect. 32 Grace Period If the first day of a Policy Month occurs during the Valuation Period and your Policy's Account Value, less any Policy Debt, is not sufficient to cover the monthly deduction for that Policy month, then your Policy will enter the Grace Period described below. If you do not pay sufficient additional premiums during the Grace Period, your Policy will terminate without value. The Grace Period will allow 61 days for the payment of premium sufficient to keep the Policy in force. Any such premium must be in an amount sufficient to cover deductions for the Monthly Risk Charge, the Service Charge, the cost for any riders and any extra risk charge if the Insured is in a rated class for the next two Policy Months. Notice of premium due will be mailed to your last known address or the last known address of any assignee of record at least 31 days before the date coverage under your Policy will cease. If the premium due is not paid within the Grace Period, then the Policy and all rights to benefits will terminate without value at the end of the 61 day period. The Policy will continue to remain in force during this Grace Period. If the Policy Proceeds become payable by us during the Grace Period, then any due and unpaid Policy charges will be deducted from the amount payable by us. Termination of Policy Your Policy will terminate on the earlier of the date we receive your Request to surrender, the expiration date of the Grace Period due to insufficient value or the date of death of the Insured. Reinstatement Before the Insured's death, we will reinstate your Policy, provided that the Policy has not been surrendered, and provided further that: o you make your reinstatement Request within three years from the date of termination; o you submit satisfactory evidence of insurability to us; o you pay an amount equal to the Policy charges which were due and unpaid at the end of the Grace Period; o you pay a premium equal to four times the monthly deduction applicable on the date of reinstatement; and o you repay or reinstate any Policy loan that was outstanding on the date coverage ceased, including interest at 6.00% per year compounded annually to the date of reinstatement of your Policy. A reinstated Policy's Total Face Amount may not exceed the Total Face Amount at the time of termination. Your Account Value on the reinstatement date will reflect: o the Account Value at the time of termination; plus o net premiums attributable to premiums paid to reinstate the Policy; less o the Monthly Expense Charge; less 33 o the Monthly Cost of Insurance charge applicable on the date of reinstatement. The effective date of reinstatement will be the date the application for reinstatement is approved by us. Deferral of Payment We will usually pay any amount due from the Series Account within seven days after the Valuation Date following your Request giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment of any amount payable from the Series Account on death, surrender, partial surrender, or Policy loan may be postponed whenever: o the New York Stock Exchange is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted; o the Securities and Exchange Commission, by order, permits postponement for the protection of policyowners; or o an emergency exists as determined by the Securities and Exchange Commission, as a result of which disposal of securities is not reasonably practicable, or it is not reasonably practicable to determine the value of the assets of the Series Account. Rights of Owner While the Insured is alive, unless you have assigned any of these rights, you may: o transfer ownership to a new owner; o name a contingent owner who will automatically become the owner of the Policy if you die before the Insured; o change or revoke a contingent owner; o change or revoke a beneficiary (unless a previous beneficiary designation was irrevocable); o exercise all other rights in the Policy; o increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and o change the death benefit option, subject to the other provisions of the Policy. When you transfer your rights to a new owner, you automatically revoke any prior contingent owner designation. When you want to change or revoke a prior beneficiary designation, you have to specify that action. You do not affect a prior beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation. You do not need the consent of a beneficiary or a contingent owner in order to exercise any of your rights. However, you must give us written notice satisfactory to us of the Requested action. Your 34 Request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before it was received by us. Rights of Beneficiary The beneficiary has no rights in the Policy until the death of the Insured, except an irrevocable beneficiary cannot be changed without the consent of that beneficiary. If a beneficiary is alive at that time, the beneficiary will be entitled to payment of the Policy Proceeds as they become due. Other Policy Provisions Exchange of Policy. You may exchange your Policy for a new policy issued by Great-West that does not provide for variable benefits. The new policy will have the same Policy Date, Issue Age, and Insured as your Policy on the date of the exchange. The exchange must be made within 24 Policy Months after the Issue Date of your Policy and all Policy Debt must be repaid. Addition, Deletion or Substitution of Investments. Shares of any or all of the Funds may not always be available for purchase by the Divisions of the Series Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, shares of other registered open-end investment companies or unit investment trusts may be substituted both for Fund shares already purchased by the Series Account and/or as the security to be purchased in the future, provided that these substitutions have been approved by the Securities and Exchange Commission, to the extent necessary. We also may close a Division to future premium allocations and transfers of Account Value. If we do so, we will notify you and ask you to change your premium allocation instructions. If you do not change those instructions by the Division's closing date, premiums allocated to that Division automatically will be allocated to the Maxim Money Market Portfolio Division until you instruct us otherwise. A Division closing may affect Dollar Cost Averaging and the Rebalancer Option. We reserve the right to operate the Series Account in any form permitted by law, to take any action necessary to comply with applicable law or obtain and continue any exemption from applicable laws, to assess a charge for taxes attributable to the operation of the Series Account or for other taxes, as described in "Charges and Deductions" beginning on page 31 of this Prospectus, and to change the way in which we assess other charges, as long as the total other charges do not exceed the maximum guaranteed changes under the Policies. We also reserve the right to add Divisions, or to eliminate or combine existing Divisions or to transfer assets between Divisions, or from any Division to our general account. In the event of any substitution or other act described in this paragraph, we may make appropriate amendment to the Policy to reflect the change. Entire Contract. Your entire contract with us consists of the Policy, including the attached copy of your Policy application and any attached copies of supplemental applications for increases in the Total Face Amount, any endorsements and any riders. Any illustrations prepared in connection with the Policy do not form a part of our contract with you and are intended solely to provide information about how values under the Policy, such as Cash Surrender Value, death benefit and Account Value, will change with the investment experience of the Divisions, and such information is based solely upon data available at the time such illustrations are prepared. 35 Alteration. Sales representatives do not have any authority to either alter or modify your Policy or to waive any of its provisions. The only persons with this authority are our president, secretary, or one of our vice presidents. Modification. Upon notice to you, we may modify the Policy if such a modification -- o is necessary to make the Policy or the Series Account comply with any law or regulation issued by a governmental agency to which we are or the Series Account is subject; o is necessary to assure continued qualification of the Policy under the Internal Revenue Code or other federal or state laws as a life insurance policy; o is necessary to reflect a change in the operation of the Series Account or the Divisions; or o adds, deletes or otherwise changes Division options. We also reserve the right to modify certain provisions of the Policy as stated in those provisions. In the event of any such modification, we may make appropriate amendment to the Policy to reflect such modification. Assignments. During the lifetime of the Insured, you may assign all or some of your rights under the Policy. All assignments must be filed at our Principal Office and must be in written form satisfactory to us. The assignment will then be effective as of the date you signed the form, subject to any action taken before it was received by us. We are not responsible for the validity or legal effect of any assignment. Non-Participating. The Policy does not pay dividends. Misstatement of Age or Sex (Non-Unisex Policy). If the age or (in the case of a non-unisex Policy) sex of the Insured is stated incorrectly in your Policy application or rider application, we will adjust the amount payable appropriately as described in the Policy. If we determine that the Insured was not eligible for coverage under the Policy after we discover a misstatement of the Insured's age, our liability will be limited to a return of premiums paid, less any partial withdrawals, any Policy Debt, and the cost for riders. Suicide. If the Insured, whether sane or insane, commits suicide within two years after your Policy's Issue Date (one year if your Policy is issued in Colorado or North Dakota), we will not pay any part of the Policy Proceeds. We will pay the beneficiary premiums paid, less the amount of any Policy Debt, any partial withdrawals and the cost for riders. If the Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Total Face Amount (one year if your Policy is issued in Colorado or North Dakota), then our liability as to that increase will be the cost of insurance for that increase and that portion of the 36 Account Value attributable to that increase. The Total Face Amount of the Policy will be reduced to the Total Face Amount that was in effect prior to the increase. Incontestability. All statements made in the application or in a supplemental application are representations and not warranties. We relied and will rely on those statements when approving the issuance, increase in face amount, increase in death benefit over premium paid, or change in death benefit option of the Policy. In the absence of fraud, no statement can be used by us in defense of a claim or to cancel the Policy for misrepresentation unless the statement was made in the application or in a supplemental application. In the absence of fraud, after the Policy has been in force during the lifetime of the Insured for a period of two years from its Issue Date, we cannot contest it except for non-payment of premiums. However, any increase in the Total Face Amount which is effective after the Issue Date will be incontestable only after such increase has been in force during the lifetime of the Insured for two years from the effective date of coverage of such increase. Report to Owner. We will maintain all records relating to the Series Account and the Divisions. We will send you a report at least once each Policy Year within 30 days after a Policy Anniversary. The report will show current Account Value, current allocation in each Division, death benefit, premiums paid, investment experience since your last report, deductions made since the last report, and any further information that may be required by laws of the state in which your Policy was issued. It will also show the balance of any outstanding Policy loans and accrued interest on such loans. There is no charge for this report. In addition, we will send you the financial statements of the Funds and other reports as specified in the Investment Company Act of 1940, as amended. We also will mail you confirmation notices or other appropriate notices of Policy transactions quarterly or more frequently within the time periods specified by law. Please give us prompt written notice of any address change. Please read your statements and confirmations carefully and verify their accuracy and contact us promptly with any question. Illustrations. Upon request, we will provide you with an illustration of how Cash Surrender Value, Account Value and death benefits change with the investment experience of your Policy. This illustration will be furnished to you for a nominal fee not to exceed $50. Notice and Elections. To be effective, all notices and elections under the Policy must be in writing, signed by you, and received by us at our Principal Office. Certain exceptions may apply. Unless otherwise provided in the Policy, all notices, requests and elections will be effective when received at our Principal Office complete with all necessary information. Performance Information and Illustrations We may pre- We may sometimes publish performance information related to sent mutual the Fund, the Series Account or the Policy in advertising, sales fund port- literature and other promotional materials. This information is folio per- based on past investment results and is not an indication of formance in future performance. sales literature. 37 Fund Performance. We may publish a mutual fund portfolio's total return or average annual total return. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains. Average annual total return is a hypothetical rate of return that, if achieved annually, would have produced the same total return over a stated period if performance had been constant over the entire period. Average annual total returns smooth variations in performance, and are not the same as actual year-by-year results. We may also publish a mutual fund portfolio's yield. Yield refers to the income generated by an investment in a portfolio over a given period of time, expressed as an annual percentage rate. When a yield assumes that income earned is reinvested, it is called an effective yield. Seven-day yield illustrates the income earned by an investment in a money market fund over a recent seven-day period. Total returns and yields quoted for a mutual fund portfolio include the investment management fees and other expenses of the portfolio, but do not include charges and deductions attributable to your Policy. These expenses would reduce the performance quoted. Adjusted Fund Performance. We may publish a mutual fund portfolio's total return and yields adjusted for charges against the assets of the Series Account. We may publish total return and yield quotations based on the period of time that a mutual fund portfolio has been in existence. The results for any period prior to any Policy being offered will be calculated as if the Policy had been offered during that period of time, with all charges assumed to be those applicable to the Policy. Other Information. Performance information may be compared, in reports and promotional literature, to: o the S&P 500, Dow Jones Industrial Average, Lehman Brothers Aggregate Bond Index or other unmanaged indices so that investors may compare the Division results with those of a group of unmanaged securities widely regarded by investors as representative of the securities markets in general; o other groups of variable life variable accounts or other investment products tracked by Lipper Analytical Services, a widely used independent research firm which ranks mutual funds and other investment products by overall performance, investment objectives, and assets, or tracked by other services, companies, publications, or persons, such as Morningstar, Inc., who rank such investment products on overall performance or other criteria; or o the Consumer Price Index (a measure for inflation) to assess the real rate of return from an investment in the Division. Unmanaged indices may assume the reinvestment of dividends but generally do not reflect deductions for administrative and management expenses. 38 We may provide policy information on various topics of interest to you and other prospective policyowners. These topics may include: o the relationship between sectors of the economy and the economy as a whole and its effect on various securities markets; o investment strategies and techniques (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing); o the advantages and disadvantages of investing in tax-deferred and taxable investments; o customer profiles and hypothetical purchase and investment scenarios; o financial management and tax and retirement planning; and o investment alternatives to certificates of deposit and other financial instruments, including comparisons between a Policy and the characteristics of, and market for, such financial instruments. Policy Illustrations. Upon request we will provide you with an illustration of Cash Surrender Value, Account Value and death benefits. The first illustration you Request during a Policy Year will be provided to you free of charge. Thereafter, each additional illustration Requested during the same Policy Year will be provided to you for a nominal fee not to exceed $50. Federal Income Tax Considerations The following summary provides a general description of the federal income tax considerations associated with the Policy and does not purport to be complete or to cover all situations. This discussion is not intended as tax advice. You should consult We do not counsel or other competent tax advisers for more complete make any information. This discussion is based upon our understanding of guarantees the current federal income tax laws as they are currently about the interpreted by the Internal Revenue Service (the "IRS"). We make Policy's no representation as to the likelihood of continuation of the tax status. current federal income tax laws or of the current interpretations by the IRS. We do not make any guarantee regarding the tax status of any policy or any transaction regarding the Policy. The Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the use of the Policy in any such arrangement is contemplated, you should consult a qualified tax adviser for advice on the tax attributes and consequences of the particular arrangement. 39 Tax Status of the Policy We believe A Policy has certain tax advantages when treated as a life the Policy insurance contract within the meaning of Section 7702 of the will be Internal Revenue Code of 1986, as amended (the "Code"). We treated as believe that the Policy meets the Section 7702 definition of a a life in- life insurance contract and will take whatever steps are surance appropriate and reasonable to attempt to cause the Policy to contract comply with Section 7702. We reserve the right to amend the under federal Policies to comply with any future changes in the Code, any tax laws. regulations or rulings under the Code and any other requirements imposed by the IRS. Diversification of Investments Section 817(h) of the Code requires that the investments of each Division of the Series Account be "adequately diversified" in accordance with certain Treasury regulations. We believe that the Divisions will be adequately diversified. Policy Owner Control In certain circumstances, the owner of a variable life insurance policy may be considered, for federal income tax purposes, the owner of the assets of the variable account used to support the policy. In those circumstances, income and gains from the variable account assets would be includible in the policyowner's gross income. We do not know what standards will be established, if any, in the regulations or rulings which the Treasury has stated it expects to issue on this question. We therefore reserve the right to modify the Policy as necessary to attempt to prevent a policyowner from being considered the owner of a pro-rata share of the assets of the Series Account. The following discussion assumes that your Policy will qualify as a life insurance contract for federal income tax purposes. Tax Treatment of Policy Benefits Death bene- Life Insurance Death Benefit Proceeds. In general, the amount of fits general- the death benefit payable under your Policy is excludible from ly are not your gross income under the Code. subject to federal in- If the death benefit is not received in a lump sum and is, come tax. instead, applied under a proceeds option agreed to by us and the beneficiary, payments generally will be prorated between amounts attributable to the death benefit, which will be excludable from the beneficiary's income, and amounts attributable to interest (occurring after the insured's death), which will be includable in the beneficiary's income. Investment Tax Deferred Accumulation. Any increase in your Account Value is gains are generally not taxable to you unless you receive or are deemed to normally not receive amounts from the Policy before the Insured dies. taxed unless distributed to you be- fore the Insured dies. 40 Distributions. If you surrender your Policy, the amount you will receive as a result will be subject to tax as ordinary income to the extent that amount exceeds the "investment in the contract," which is generally the total of premiums and other consideration paid for the Policy, less all amounts previously received under the Policy to the extent those amounts were excludible from gross income. Depending on the circumstances, any of the following transactions may have federal income tax consequences: o the exchange of a Policy for a life insurance, endowment or annuity contract; o a change in the death benefit option; o a policy loan; o a partial surrender; o a surrender; o a change in the ownership of a Policy; o a change of the named Insured; or o an assignment of a Policy. In addition, federal, state and local transfer and other tax consequences of ownership or receipt of Policy Proceeds will depend on your circumstances and those of the named beneficiary. Whether partial withdrawals (or other amounts deemed to be distributed) constitute income subject to federal income tax depends, in part, upon whether your Policy is considered a "modified endowment contract." If you pay Modified Endowment Contracts. Section 7702A of the Code treats more pre- certain life insurance contracts as "modified endowment miums than contracts" ("MECs"). In general, a Policy will be treated as a permitted MEC if total premiums paid at any time during the first seven under the Policy Years exceed the sum of the net level premiums which would seven-pay have been paid on or before that time if the Policy provided for test, your paid-up future benefits after the payment of seven level annual Policy will premiums ("seven-pay test"). In addition, a Policy may be treated be a MEC. as a MEC if there is a "material change" of the Policy. We will monitor your premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC. We will not invest any premium or portion of a premium that would cause your Policy to become a MEC. We will promptly refund that money to you and, if you elect to have a MEC contract, you can return the money to us with a signed form of acceptance. Further, if a transaction occurs which decreases the Total Face Amount of your Policy during the first seven years, we will retest your Policy, as of the date of its purchase, based on the lower Total Face Amount to determine compliance with the seven-pay test. Also, if a decrease in Total Face Amount occurs within seven years of a "material change," we will retest your Policy for compliance as of the date of the "material change." Failure to comply in either case would result in the Policy's classification as a MEC regardless of our efforts to provide a payment schedule that would not otherwise violate the seven-pay test. 41 The rules relating to whether a Policy will be treated as a MEC are complex and cannot be fully described in the limited confines of this summary. Therefore, you should consult with a competent tax adviser to determine whether a particular transaction will cause your Policy to be treated as a MEC. Distributions Under Modified Endowment Contracts. If treated as a MEC, your Policy will be subject to the following tax rules: o First, partial withdrawals are treated as ordinary income If your Policy subject to tax up to the amount equal to the excess (if any) becomes a MEC, of your Account Value immediately before the distribution Policy loans over the "investment in the contract" at the time of the and surrenders distribution. may incur taxes and tax o Second, policy loans and loans secured by a Policy are penalties. treated as partial withdrawals and taxed accordingly. Any past-due loan interest that is added to the amount of the loan is treated as a loan. o Third, a 10 percent additional penalty tax is imposed on that portion of any distribution (including distributions upon surrender), policy loan, or loan secured by a Policy, that is included in income, except where the distribution or loan is: o made when you are age 59 1/2 or older; o attributable to your becoming disabled; or o is part of a series of substantially equal periodic payments for the duration of your life (or life expectancy) or for the duration of the longer of your or the beneficiary's life (or life expectancies). If your Distributions Under a Policy That Is Not a MEC. If your Policy is Policy is not a MEC, a distribution is generally treated first as a not a MEC, tax-free recovery of the "investment in the contract," and then partial with- as a distribution of taxable income to the extent the drawals or distribution exceeds the "investment in the contract." An surrenders exception is made for cash distributions that occur in the first are taxed 15 Policy Years as a result of a decrease in the death benefit or only if they other change which reduces benefits under the Policy which are exceed your made for purposes of maintaining compliance with Section 7702. investment Such distributions are taxed in whole or part as ordinary income in your Policy (to the extent of any gain in the Policy) under rules prescribed and Policy in Section 7702. loans are generally If your Policy is not a MEC, policy loans and loans secured not taxed. by the Policy are generally not treated as distributions. Such loans are instead generally treated as your indebtedness. Finally, if your Policy is not a MEC, distributions (including distributions upon surrender), policy loans and loans secured by the Policy are not subject to the 10 percent additional tax. Multiple Policies. All modified endowment contracts issued by us (or our affiliates) to you during any calendar year will be treated as a single MEC for purposes of determining the amount of a policy distribution which is taxable to you. 42 Treatment When Insured Reaches Attained Age 100. As described above, when the Insured reaches Attained Age 100, we will issue you a "paid-up" life insurance policy. We believe that the paid-up life insurance policy will continue to qualify as a "life insurance contract" under the Code. However, there is some uncertainty regarding this treatment. It is possible, therefore, that you would be viewed as constructively receiving the Cash Surrender Value in the year in which the Insured attains age 100 and would realize taxable income at that time, even if the Policy Proceeds were not distributed at that time. In addition, any outstanding Policy Debt will be repaid at that time. This repayment may be treated as a taxable distribution to you, if your contract is not a MEC. We may be Federal Income Tax Withholding. We will withhold and remit to the required to federal government the amount of any tax due on that portion of a withhold policy distribution which is taxable, unless you direct us taxes from otherwise in writing at or before the time of the distribution. certain dis- As the policyowner, however, you will be responsible for the tributions payment of any taxes and early distribution penalties that may be to you. due on policy distributions, regardless of whether those amounts are subject to withholding. Actions to Ensure Compliance with the Tax Law. We believe that the maximum amount of premiums we intend to permit for the Policies will comply with the Code definition of a "life insurance contract." We will monitor the amount of your premiums, and, if you pay a premium during a Policy Year that exceeds those permitted by the Code, we will promptly refund the premium or a portion of the premium before any allocation to the Funds. We reserve the right to increase the death benefit (which may result in larger charges under a Policy) or to take any other action deemed necessary to ensure the compliance of the Policy with the federal tax definition of a life insurance contract. Trade or Business Entity Owns or Is Directly or Indirectly a Beneficiary of the Policy Where a Policy is owned by other than a natural person, the owner's ability to deduct interest on business borrowing unrelated to the Policy can be impacted as a result of its ownership of cash value life insurance. No deduction will be allowed for a portion of a taxpayer's otherwise deductible interest expense unless the policy covers only one individual, and such individual is, at the time first covered by the policy, a 20 percent owner of the trade or business entity that owns the policy, or an officer, director, or employee of such trade or business. Although this limitation generally does not apply to policies held by natural persons, if a trade or business (other than one carried on as a sole proprietorship) is directly or indirectly the beneficiary under a policy (e.g., pursuant to a split-dollar agreement), the policy shall be treated as held by such trade or business. The effect will be that a portion of the trade or business entity's deduction for its interest expenses will be disallowed unless the above exception for a 20 percent owner, employee, officer or director applies. The portion of the entity's interest deduction that is disallowed will generally be a pro rata amount which bears the same ratio to such interest expense as the taxpayer's average unborrowed cash value bears to the sum of the taxpayer's average unborrowed cash value and average adjusted bases of all other assets. Any corporate or business use of the life insurance should be carefully reviewed by your tax adviser with attention to these rules as well as any other rules and possible tax law changes that could occur with respect to business-owned life insurance. 43 Other Employee Benefit Programs Complex rules may apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of employee benefits. These Policy owners also must consider whether the Policy was applied for by or issued to a person having an insurable interest under applicable state law, as the lack of insurable interest may, among other things, affect the qualification of the Policy as life insurance for federal income tax purposes and the right of the beneficiary to death benefits. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult your legal adviser. Policy Loan Interest Generally, no tax deduction is allowed for interest paid or accrued on any indebtedness under a Policy. Our Taxes We are taxed as a life insurance company under Part I of Subchapter L of the Code. The operations of the Series Account are taxed as part of our operations. Investment income and realized capital gains are not taxed to the extent that they are applied under the Policies. As a result of the Omnibus Budget Reconciliation Act of 1990, we are currently making, and are generally required to capitalize and amortize certain policy acquisition expenses over a 10-year period rather than currently deducting such expenses. This so-called "deferred acquisition cost" tax ("DAC tax") applies to the deferred acquisition expenses of a Policy and results in a significantly higher corporate income tax liability for Great-West. We reserve the right to adjust the amount of a charge to premium to compensate us for these anticipated higher corporate income taxes. A portion of the Expense Charges Applied to Premium is used to offset the federal, state or local taxes that we incur which are attributable to the Series Account or the Policy. We reserve the right to adjust the amount of this charge. Distribution of the Policy The Policy will be sold by licensed insurance agents in those states where the Policy may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc. and who have entered into selling agreements with our general distributor, BenefitsCorp Equities, Inc. ("BCE"). BCE is an indirect, wholly-owned subsidiary of Great-West and is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 as broker-dealer and is a member of the National Association of Securities Dealers, Inc. BCE also acts as the general distributor of certain annuity contracts issued by us. The maximum sales commissions payable to our agents, independent registered insurance agents and other registered broker-dealers 44 is 40% of the first year target premium. In addition, asset-based trail commissions may be paid. A sales representative may be required to return all the commissions paid if a Policy terminates prior to the second Policy Anniversary. The directors and executive officers of BCE are: Charles P. Nelson, Chairman of the Board and President, Robert K. Shaw, Director, John A. Brown, Director, Dennis Low, Director, G.E. Seller, Director and Vice President, Major Accounts, Douglas L. Wooden, Director, J. Baker, Vice President, Licensing and Contracts, Glen Ray Derback, Treasurer, Beverly A. Byrne, Secretary and T. L. Buckley, Compliance Officer. The principal business address of each director and executive officer, except G.E. Seller, is 8515 East Orchard Road, Englewood, Colorado 80111. G.E. Seller's principal business address is 18101 Von Karman Avenue, Suite 1460, Irvine, California 92612. Voting Rights We are the legal owner of all shares of the Funds held in the Divisions of the Series Account, and as such have the right to vote upon matters that are required by the 1940 Act to be approved or ratified by the shareholders of the Funds and to vote upon any other matters that may be voted upon at a shareholders' meeting. We will, however, vote shares held in the Divisions in accordance with instructions received from policyowners who have an interest in the respective Divisions. We will vote shares held in each Division for which no timely instructions from policyowners are received, together with shares not attributable to a Policy, in the same proportion as those shares in that Division for which instructions are received. The number of shares in each Division for which instructions may be given by a policyowner is determined by dividing the portion of the Account Value derived from participation in that Division, if any, by the value of one share of the corresponding Fund. We will determine the number as of the record date chosen by the Fund. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders' meeting. We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in our next communication to policyowners. This description reflects our current view of applicable law. Should the applicable federal securities laws change so as to permit us to vote shares held in the Series Account in our own right, we may elect to do so. 45 Our Directors and Executive Officers Our directors and executive officers are listed below, together with information as to their ages, dates of election and principal business occupations during the last five years (if other than their present business occupations). The asterisks below denote the year that the indicated director was elected to our board of directors.
Name, Age and Position with Great-West Principal Occupation(s) - -------------------------------------- ----------------------- Directors James Balog (70) Company Director since 1993 James W. Burns, O.C. (69) Chairman of the Boards of Great-West Lifeco, Great-West Life, London Insurance Group Inc. and London Life Insurance Company; Deputy Chairman, Power Corporation since 1991 Orest T. Dackow (62) President and Chief Executive Officer, Great- West Lifeco since 1991 Andre Desmarais (42) President and Co-Chief Executive Officer, Power Corporation; Deputy Chairman, Power Financial since 1997 Paul Desmarais, Jr. (44) Chairman and Co-Chief Executive Officer, Power Corp; Chairman, Power Financial since 1991 Robert G. Graham (67) Company Director since January 1996; previously Chairman and Chief Executive Officer, Inter-City Products Corporation since 1991 Robert Gratton (55) Chairman of the Board of the Company; President and Chief Financial Officer, Power Financial since 1991 N. Berne Hart (69) Company Director since 1991 Kevin P. Kavanagh (66) Company Director since 1996 William Mackness (60) Company Director since July 1995; previously Dean, Faculty of Management, University of Manitoba since 1991 45 Name, Age and Position with Great-West Principal Occupation(s) - -------------------------------------- ----------------------- William T. McCallum (56) President and Chief Executive Officer of the Company; President and Chief Executive Officer, United States Operations, Great-West since 1990 Jerry Edgar Alan Nickerson (62) Chairman of the Board, H.B. Nickerson & Sons Limited since 1994 The Honourable P. Michael Pittfield, P.C., Vice-Chairman, Power Corporation; Member of Q.C. (61) the Senate of Canada since 1991 Michel Plessis-Belair, F.C.A. (56) Vice-Chairman and Chief Financial Officer, Power Corporation; Executive Vice-President and Chief Financial Officer, Power Financial since 1991 Brian E. Walsh (45) Co-Founder and Managing Partner, Veritas Capital Management, LLC since September 1997; previously Partner, Trinity L.P. from January 1996; previously Managing Director and Co-Head, Global Investment Bank, Bankers Trust Company since 1995 Executive Officers John A. Brown (51) Senior Vice President, Sales, Financial Services of the Company and Great-West Life since 1992 Donna A. Goldin (51) Executive Vice President and Chief Operating Officer, One Corporation since June 1996; previously Executive Vice President and Chief Operating Officer, Harris Methodist Health Plan since March 1995; previously Executive Vice President and Chief Operating Officers, Private Healthcare Systems, Inc. since 1996 Mitchell T. G. Graye (43) Senior Vice President, Chief Financial Officer of the Company; Senior Vice President, Chief Financial Officer, United States, Great-West Life since 1997 46 Name, Age and Position with Great-West Principal Occupation(s) - -------------------------------------- ----------------------- John T. Hughes (62) Senior Vice President, Chief Investment Officer of the Company; Senior Vice President, Chief Investment Officer; United States, Great-West Life since 1989 D. Craig Lennox (51) Senior Vice President, General Counsel and Secretary of the Company; Senior Vice President and Chief U.S. Legal Officer, Great-West Life since 1984 William T. McCallum (56) President and Chief Executive Officer of the Company; President and Chief Executive Officer, United States Operations, Great-West Life since 1984 Steve H. Miller (46) Senior Vice President, Employee Benefits Sales of the Company and Great-West Life since 1997 James D. Motz (49) Executive Vice President, Employee Benefits of the Company and Great-West Life since 1992 Charles P. Nelson (37) Senior Vice President, Public Non-Profit Markets of the Company and Great-West life since 1998 Martin Rosenbaum (46) Senior Vice President, Employee Benefits Operations of the Company and Great-West Life since 1997 Robert K. Shaw (43) Senior Vice President, Individual Markets of the Company and Great-West Life since 1998 Douglas L. Wooden (42) Executive Vice President, Financial Services of the Company and Great-West Life since 1991 47
Other Information State Regulation We are subject to the laws of Colorado governing life insurance companies and to regulation by Colorado's Commissioner of Insurance, whose agents periodically conduct an examination of our financial condition and business operations. We are also subject to the insurance laws and regulations of the all jurisdictions in which we are authorized to do business. We are required to file an annual statement with the insurance regulatory authority of those jurisdictions where we are authorized to do business relating to our business operations and financial condition as of December 31st of the preceding year. Legal Proceedings There are no pending legal proceedings which would have an adverse material effect on the Series Account. Great-West is engaged in various kinds of routine litigation which, in our judgment, is not material to its total assets or material with respect to the Series Account. Legal Matters All matters of Colorado law pertaining to the Policy, including the validity of the Policy and our right to issue the Policy under Colorado law, have been passed upon by Ruth B. Lurie, Vice President, Counsel and Associate Secretary of Great-West. The law firm of Jorden Burt Boros Cicchetti Berenson & Johnson LLP, 1025 Thomas Jefferson St., Suite 400, East Lobby, Washington, D.C. 20007-5201, serves as special counsel to Great-West with regard to the federal securities laws. Experts The consolidated financial statements for Great-West Life & Annuity Insurance Company as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 have been audited by Deloitte & Touch LLP, 555 17th Street, Suite 3600, Denver, Colorado 80202, independent auditors, as stated in their reports. We have included those financial statements in reliance upon the reports of Deloitte & Touche LLP, given upon their authority as experts in accounting and auditing. Actuarial matters included in this Prospectus and the registration statement of which it is a part, including the hypothetical 48 Policy illustrations, have been examined by Ron Laeyendecker, F.S.A., M.A.A.A., Actuary of the Company, and are included in reliance upon his opinion as to their reasonableness. Registration Statements This Prospectus is part of a registration statement that has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to the Policy. It does not contain all of the information set forth in the registration statement and the exhibits filed as part of the registration statement. You should refer to the registration statement for further information concerning the Series Account, Great-West, the mutual fund investment options, and the Policy. The descriptions in this Prospectus of the Policies and other legal instruments are summaries. You should refer to those instruments as filed for their precise terms. Year 2000 Compliance The year 2000 ("Y2K") problem arises when a computer performing date-based computations or operations produces erroneous results due to the historical practice of using two digit years within computer hardware and software. This causes errors or misinterpretations of the century in date calculations. Virtually all businesses, including Great-West, are required to determine the extent of their Y2K problems. Systems that have a Y2K problem must then be converted or replaced by systems that will operate correctly with respect to the year 2000 and beyond. Great-West has a written plan that encompasses all computer hardware, software, networks, facilities (embedded systems) and telephone systems. The plan also includes provisions for identifying and verifying that major vendors and business partners are Y2K compliant. Great-West is developing contingency plans to address the possibility of both internal and external failures as well. The plan calls for full Y2K compliance for core systems by March 31, 1999 and full Y2K compliance for all Great-West systems by October 31, 1999. Great-West's plan establishes five phases for becoming Y2K compliant. Phase 1 is "impact analysis" which includes initial inventory and preliminary assessment of Y2K impact. Phase 2 is "solution planning" which includes system by system planning to outline the approach and timing for reaching compliance. Phase 3 is "conversion/renovation" which means the actual process of replacing or repairing non-compliant systems. Phase 4 is "testing" to ensure that the systems function correctly under a variety of different date scenarios including current dates, year 49 2000 and leap year dates. Phase 5 is "implementation" which means putting Y2K compliant systems back into production. As of September 1, 1998, Great-West had completed impact analysis (phase 1) and solution planning (phase 2) for all of its core systems and was more than 93% complete for phase 1 and 2 with respect to its systems as a whole. In addition, Great-West was approximately 58% complete with respect to conversion and renovation (phase 3), 42% complete with respect to testing (phase 4) and 38% complete with respect to implementation (phase 5). In addition to ensuring that Great-West's own systems are Y2K compliant, Great-West has identified third parties with which Great-West has significant business relationships in order to assess the potential impact on Great-West of the third parties' Y2K issues and plans. Great-West expects to complete this process during the first quarter of 1999 and will conduct system testing with third parties throughout 1999. Great-West does not have control over these third parties and cannot make any representations as to what extent Great-West's future operating results may be adversely affected by the failure of any third party to address successfully its own Y2K issues. On the basis of currently available information, the expense incurred by Great-West, including anticipated future expenses, related to the Y2K issue has not and is not expected to be material to Great-West's financial condition or results of operations. Great-West has spent approximately $7.5 million on its Y2K project through the end of August 1998 and expects to spend up to approximately $15.3 million on its Y2K project by the end of 2000. All of these funds will come from Great-West's cash flow from operations. Great-West has continued other scheduled non-Y2K information systems changes and upgrades. Although work on Y2K issues may have resulted in minor delays on the other projects, the delays are not expected to have a material adverse effect on Great-West's consolidated financial condition or results of operations. The most reasonably likely worst case Y2K scenario is that Great-West will experience isolated internal or third party computer failures and will be temporarily unable to process insurance and annuity benefit transactions. All of Great-West's Y2K efforts have been designed to prevent such an occurrence. However, if Great-West identifies internal or third party Y2K issues which cannot be timely corrected, there can be no assurance that Great-West can avoid Y2K problems or that the cost of curing the problem will not be material. 50 In an effort to mitigate risks associated with Y2K failures, Great-West is in the process of developing contingency plans to address its core functions, including relations with third parties. It is Great-West's expectation that contingency plans will address possible failures generated internally, by vendors or business partners and by customers. Possible general approaches include manual processing, payments on an estimated basis and use of disaster recovery facilities. Financial Statements Great-West's financial statements, which are included in this prospectus, should be considered only as bearing on our ability to meet our obligations with respect to the death benefit and our assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares held in the Series Account. There are no financial statements for the Series Account because it had not commenced operations as of the date of this Prospectus, has no assets or liabilities, and has received no income or incurred any expense. 51 Appendix A -- Glossary of Terms Account Value -- The sum of the value of your interests in the Divisions and the Loan Account. Attained Age -- The Insured's Issue Age plus the number of completed Policy Years. Business Day -- Any day that we are open for business. We are open for business every day that the New York Stock Exchange is open for trading. Cash Surrender Value -- The Account Value minus any outstanding Policy Debt. Divisions -- Divisions into which the assets of the Series Account are divided, each of which corresponds to an investment choice available to you. DueProof -- Such evidence as we may reasonably require in order to establish that Policy Proceeds are due and payable. Fund -- An underlying mutual fund in which a Division invests. Each Fund is an investment company registered with the SEC or a separate investment series of a registered investment company. Initial Premium -- The initial premium amount specified in a Policy. Insured -- The person whose life is insured under the Policy. Issue Age -- The Insured's age as of the Insured's birthday nearest the Policy Date. Issue Date -- The date on which we issue a Policy. Loan Account -- An account established for amounts transferred from the Divisions as security for outstanding Policy Debt. Policy Anniversary -- The same day in each succeeding year as the day of the year corresponding to the Policy Date. Policy Date -- The date coverage commences under your Policy and the date from which Policy Months, Policy Years and Policy Anniversaries are measured. Policy Debt -- The principal amount of any outstanding loan against the Policy, plus accrued but unpaid interest on such loan. Policy Month -- The one-month period commencing on the same day of the month as the Policy Date. A-1 Policy Proceeds -- The amount determined in accordance with the terms of the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt, and increased by the amounts payable under any supplemental benefits. Policy Year -- The one-year period commencing on the Policy Date or any Policy Anniversary and ending on the next Policy Anniversary. Principal Office -- Great-West Life & Annuity Insurance Company, 8515 East Orchard Road, Englewood, Colorado 80111, or such other address as we may hereafter specify to you by written notice. Request -- Any instruction in a form, written, telephoned or computerized, satisfactory to us and received at our Principal Office from you as required by any provision of your Policy or as required by us. The Request is subject to any action taken or payment made by us before it is processed. SEC -- The United States Securities and Exchange Commission. Series Account -- COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company. Total Face Amount -- The amount of life insurance coverage you request as specified in your Policy. Unit -- An accounting unit of measurement that we use to calculate the value of each Division. Unit Value -- The value of each Unit in a Division. Valuation Date -- Any day that benefits vary and on which the New York Stock Exchange is open for regular business, except as may otherwise be required or permitted by the applicable rules and regulations of the SEC. Valuation Period -- The period of time from one determination of Unit Values to the next following determination of Unit Values. We will determine Unit Values for each Valuation Date as of the close of the New York Stock Exchange on that Valuation Date. A-2
Appendix B -- Fees and Expenses of the Funds Management Other Total Operating Fund Fees Expenses 12b-1 Fees Expenses - --------------------------------------------- ------------ -------- ---------- --------------- American Century Variable Portfolios, Inc. o American Century VP Income & --- --- --- --- Growth o American Century VP International --- --- --- --- o American Century VP Value --- --- --- --- Dreyfus Stock Index Fund Dreyfus Variable Investment Fund o Dreyfus Capital Appreciation Portfolio --- --- --- --- o Dreyfus Growth and Income Portfolio --- --- --- --- Federated Insurance Series o Federated American Leaders Fund II --- --- --- --- o Federated Growth Strategies Fund II --- --- --- --- o Federated High Income Bond Fund II --- --- --- --- o Federated International Equity Fund II --- --- --- --- INVESCO Variable Investments Fund, Inc. o INVESCO VIF - High Yield Portfolio --- --- --- --- o INVESCO VIF - Industrial Income --- --- --- --- Portfolio o INVESCO VIF - Total Return Portfolio --- --- --- --- B-1 Management Other Total Operating Fund Fees Expenses 12b-1 Fees Expenses - --------------------------------------------- ------------ -------- ---------- --------------- Janus Aspen Series o Balanced Portfolio --- --- --- --- o Flexible Income Portfolio --- --- --- --- o High-Yield Portfolio --- --- --- --- o Worldwide Growth Portfolio --- --- --- --- Maxim Series Fund, Inc. o Maxim Corporate Bond Portfolio --- --- --- --- o Maxim INVESCO ADR Portfolio --- --- --- --- o Maxim INVESCO Balanced Portfolio --- --- --- --- o Maxim INVESCO Small-Cap Growth --- --- --- --- Portfolio o Maxim MidCap Portfolio --- --- --- --- o Maxim Money Market Portfolio --- --- --- --- o Maxim U.S. Government Securities --- --- --- --- Portfolio Maxim Profile Portfolios: o Maxim Aggressive Profile Portfolio --- --- --- --- o Maxim Moderately Aggressive Portfolio --- --- --- --- o Maxim Moderate Profile Portfolio --- --- --- --- o Maxim Moderately Conservative Profile --- --- --- --- Portfolio o Maxim Conservative Profile Portfolio --- --- --- --- B-2 Management Other Total Operating Fund Fees Expenses 12b-1 Fees Expenses - --------------------------------------------- ------------ -------- ---------- --------------- Neuberger&Berman Advisers Management Trust o Guardian Portfolio --- --- --- --- o Mid-Cap Growth Portfolio --- --- --- --- o Partners Portfolio --- --- --- --- o Socially Responsive Portfolio --- --- --- ---
The Fund expenses shown above are assessed at the Fund level and are not direct charges against Series Account assets or reductions from Account Values. These expenses are taken into consideration in computing each Fund's net asset value, which is the share price used to calculate the Unit Values of the Series Account. The following Funds are subject to the following fee waiver and/or expense reimbursement arrangements. [INSERT WAIVER & REIMBURSEMENT INFORMATION IN PRE-EFFECTIVE AMENDMENT] The management fees and other expenses are more fully described in the prospectuses for each Fund. The information relating to the Fund expenses was provided by the Fund and was not independently verified by us. B-3 Appendix C -- Table of Death Benefit Percentages
Applicable Applicable Age Percentage Age Percentage 20 250% 60 130% 21 250% 61 128% 22 250% 62 126% 23 250% 63 124% 24 250% 64 122% 25 250% 65 120% 26 250% 66 119% 27 250% 67 118% 28 250% 68 117% 29 250% 69 116% 30 250% 70 115% 31 250% 71 113% 32 250% 72 111% 33 250% 73 109% 34 250% 74 107% 35 250% 75 105% 36 250% 76 105% 37 250% 77 105% 38 250% 78 105% 39 250% 79 105% 40 250% 80 105% 41 243% 81 105% 42 236% 82 105% 43 229% 83 105% 44 222% 84 105% 45 215% 85 105% 46 209% 86 105% 47 203% 87 105% 48 197% 88 105% 49 191% 89 105% 50 185% 90 105% 51 178% 91 104% 52 171% 92 103% 53 164% 93 102% 54 157% 94 101% 55 150% 95 100% 56 146% 96 100% 57 142% 97 100% 58 138% 98 100% 59 134% 99 100%
C-1 Appendix D -- Sample Hypothetical Illustrations Illustrations of Death Benefits, Surrender Values And Accumulated Premiums The illustrations in this prospectus have been prepared to help show how values under the Policy change with investment performance. The illustrations on the following pages illustrate the way in which a Policy Year's death benefit, Account Value and Cash Surrender Value could vary over an extended period of time. They assume that all premiums are allocated to and remain in the Series Account for the entire period shown and are based on hypothetical gross annual investment returns for the Funds (i.e., investment income and capital gains and losses, realized or unrealized) equivalent to constant gross annual rates of 0%, 6%, and 12% over the periods indicated. The Account Values and death benefits would be different from those shown if the gross annual investment rates of return averaged 0%, 6%, and 12% over a period of years, but fluctuated above or below such averages for individual Policy Years. The values would also be different depending on the allocation of a Policy's total Account Value among the Divisions of the Series Account, if the actual rates of return averaged 0%, 6% or 12%, but the rates of each Fund varied above and below such averages. The amounts shown for the death benefits and Account Values take into account all charges and deductions imposed under the Policy based on the assumptions set forth in the tables below. These include the Expense Charges Applied to Premium, the Daily Risk Percentage charged against the Series Account for mortality and expense risks, the Monthly Expense Charge and the Monthly Cost of Insurance. The Expense Charges Applied to Premium is equal to a % charge for sales load and our federal tax obligations and the applicable local and state premium tax assumed to be %. The Daily Risk Percentage charged against the Series Account for mortality and expense risks is an annual effective rate of 0.45% for the first 10 Policy Years, 0.30% for Policy Years 11 through 20, and 0.10% thereafter and is guaranteed not to exceed an annual effective rate of .90%. The Monthly Expense Charge is $10.00 per month for first three Policy Years and $7.50 per Policy Month for all Policy Years thereafter. This Charge is guaranteed not to exceed $15 per Policy Month. The amounts shown in the tables also take into account the Funds' advisory fees and operating expenses, which are assumed to be at an annual rate of % of the average daily net assets of each Fund. This is based upon a simple average of the advisory fees and expenses of all the Funds for the most recent fiscal year taking into account any applicable expense caps or expense reimbursement arrangements. Actual fees and expenses that you will incur may be more or less than %, and will vary from year to year. See the prospectuses for the Fund for more information on Fund expenses. The gross annual rates of investment return of 0%, 6% and 12% correspond to net annual rates of %, %, and %, respectively, during the first three policy years, ___%, ___%, and ___%, respectively, for Policy Years 4 through 10, and _____%, ______% and _____%, respectively, thereafter. The hypothetical returns shown in the tables do not reflect any charges for income taxes against the Series Account since no charges are currently made. If, in the future, such charges are made, in order D-1 to produce the illustrated death benefits, Account Values and Cash Surrender Values, the gross annual investment rate of return would have to exceed 0%, 6%, or 12% by a sufficient amount to cover the tax charges. The second column of each table shows the amount which would accumulate if an amount equal to each premium were invested and earned interest, after taxes, at % per year, compounded annually. We will furnish upon request a comparable table using any specific set of circumstances. In addition to a table assuming Policy charges at their maximum, we will furnish a table assuming current Policy charges. D-2 TABLE 1 GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY COLI VUL-2 SERIES ACCOUNT Male, Preferred, Age 45 $ TOTAL FACE AMOUNT ANNUAL PREMIUM $ DEATH BENEFIT OPTION ___ CURRENT POLICY CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12% Premiums Gross Investment Return Gross Investment Return Gross Investment Return Paid Plus Net_____% Net_____% Net_____% --------------------------------- ---------------------------------- --------------------------------- Interest Cash Cash Cash Policy At % Surrender Account Death Surrender Account Death Surrender Account Death Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit - ---------- -------- ---------- ---------- ---------- ----------- --------- ---------- ---------- ---------- ---------- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 D-3 Age 60 Age 65 Age 70 Age 75
(1) Assumes a $ premium is paid at the beginning of each Policy Year. Values will be different if premiums are paid with a different frequently or in different amounts. (2) Assumes that no policy loans have been made. Excessive loans or partial withdrawals may cause this your Policy to lapse due to insufficient Account Value. The hypothetical investment rates of return are illustrative only, and should not be deemed a representation of past or future investment rates of return. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by a policy owner, and the different investment rates of return for the Funds. The Cash Surrender Value and death benefit for a Policy would be different from those shown if the actual rates of investment return averaged 0%, 6%, and 12% over a period of years, but fluctuated above and below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. D-4 TABLE 2 GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY COLI VUL-2 SERIES ACCOUNT Male, Preferred, Age 45 $ TOTAL FACE AMOUNT ANNUAL PREMIUM $ DEATH BENEFIT OPTION GUARANTEED POLICY CHARGES
Hypothetical 0% Hypothetical 6% Hypothetical 12% Premiums Gross Investment Return Gross Investment Return Gross Investment Return Paid Plus Net______% Net_____% Net_____% --------------------------------- ---------------------------------- --------------------------------- Interest Cash Cash Cash Policy At % Surrender Account Death Surrender Account Death Surrender Account Death Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit - ---------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 D-5 Age 60 Age 65 Age 70 Age 75
(1) Assumes a $ premium is paid at the beginning of each Policy Year. Values will be different if premiums are paid with a different frequently or in different amounts. (2) Assumes that no policy loans have been made. Excessive loans or partial withdrawals may cause this your Policy to lapse due to insufficient Account Value. The hypothetical investment rates of return are illustrative only, and should not be deemed a representation of past or future investment rates of return. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by a policy owner, and the different investment rates of return for the Funds. The Cash Surrender Value and death benefit for a Policy would be different from those shown if the actual rates of investment return averaged 0%, 6%, and 12% over a period of years, but fluctuated above and below those averages for individual Policy Years. They would also be different if any policy loans or partial withdrawals were made. No representations can be made that these hypothetical investment rates of return can be achieved for any one year or sustained over any period of time. D-6 [ Back Cover ] The Securities and Exchange Commission maintains an Internet Web site (http//www.sec.gov) that contains additional information about Great-West Life & Annuity Insurance Company, the Policy and the Series Account which may be of interest to you. The Web site also contains additional information about the Policy Year's mutual fund investment options. PART II - OTHER INFORMATION UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, as amended, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. REPRESENTATION AS TO FEES AND CHARGES Great-West Life & Annuity Insurance Company hereby represents that the fees and charges deducted under the Corporate Flexible Premium Variable Universal Life Insurance Policies hereby registered by this Registration Statement in the aggregate are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Great-West Life & Annuity Insurance Company. REPRESENTATION PURSUANT TO RULE 6e-3(T) This filing is made pursuant to Rule 6e-3(T) under the Investment Company Act of 1940, as amended (the "1940 Act"). UNDERTAKING AS TO INDEMNIFICATION Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the Registrant, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-1 CONTENTS OF THIS REGISTRATION STATEMENT This Registration Statement consists of the following papers and documents: Facing Sheet Cross-Reference Sheet Prospectus consisting of 78 pages (including appendices) Undertaking to File Reports Undertaking As To Indemnification Representation As To Fees and Charges Representation Pursuant to Rule 6e-3(T) Signature Pages Exhibits EXHIBIT LIST 1. Exhibits required by paragraph A of the instructions as to Exhibits of Form N-8B-2 (1) Resolution of the Board of Directors of Great-West Life & Annuity Insurance Company authorizing establishment of COLI VUL-2 Series Account (filed herewith) (2) Custodian Agreement (not applicable) (3) (a) Form of Distribution Agreement (filed herewith) (b) Form of Broker-Dealer and General Agent Sales Agreement (filed herewith) (c) Schedule of Sales Commissions (filed herewith) (4) Other Agreements between the depositor, principal underwriter, and custodian with respect to Registrant or its securities (not applicable) (5) (a) Specimen Policy (filed herewith) (b) Specimen Term Life Insurance Rider (filed herewith) (6) (a) Articles of Incorporation of Great-West Life & Annuity Insurance Company, as amended(1) (b) By-laws of Great-West Life & Annuity Insurance Company(2) (7) Not applicable II-2 (8) Form of Participation Agreement (filed herewith) (9) Other Material Contracts (not applicable) (10) Specimen Application (to be filed by pre-effective amendment) 2. Opinion and Consent of Counsel (to be filed by pre-effective amendment) 3. All financial statements omitted from the Prospectus (not applicable) 4. Not applicable 5. Financial Data Schedule (not applicable) 6. Procedures memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) (to be filed by pre-effective amendment) 7. Actuarial Opinion and Consent (to be filed by pre-effective amendment) 8. Consent of Independent Accountants (to be filed by pre-effective amendment) - ------------------------- (1) Incorporated by reference to Pre-Effective Amendment No. 2 to Form S-1 of Great-West Life & Annuity Insurance Company (File No. 333-1173, filed on October 29, 1996). (2) Incorporated by reference to Amendment No. 1 to Form 10-K of Great-West Life & Annuity Insurance Company (File No. 333-1173, filed on March 31, 1998). II-3 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the registrant has duly caused this Registration Statement to be signed on its behalf in the City of Englewood, State of Colorado, on the 21st day of January, 1999. COLI VUL-2 SERIES ACCOUNT (Registrant) BY: GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (Depositor) By: /s/ William T. McCallum -------------------------------------- William T. McCallum President and Chief Executive Officer As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
/s/ Robert Gratton* - ----------------------------- Robert Gratton Chairman of the Board January 21, 1999 /s/ William T. McCallum - ----------------------------- William T. McCallum President, Chief Executive Officer January 21, 1999 and Director /s/ Mitchell T. G. Graye - ----------------------------- Mitchell T.G. Graye Chief Financial Officer January 21, 1999 /s/ January __, 1999 - ----------------------------- James Balog Director /s/ James W. Burns, O.C.* - ----------------------------- James W. Burns, O.C. Director January 21, 1999 /s/ Orest T. Dackow* - ----------------------------- Orest T. Dackow Director January 21, 1999 /s/ Andre Desmarais* - ----------------------------- Andre Desmarais Director January 21, 1999 /s/ Paul Desmarais, Jr.* - ----------------------------- Paul Desmarais, Jr. Director January 21, 1999 /s/ - ----------------------------- Robert G. Graham Director January __, 1999 /s/ N. Berne Hart* - ----------------------------- N. Berne Hart Director January 21, 1999 /s/ - ----------------------------- Kevin P. Kavanagh Director January __, 1999 /s/ - ----------------------------- William Mackness Director January __, 1999 /s/ - ----------------------------- Jerry Edgar Allan Nickerson Director January __, 1999 /s/P. Michael Pittfield, P.C., Q.C.* - ----------------------------- The Honourable P. Michael Director January 21, 1999 Pittfield, P.C., Q.C. /s/ Michel Plessis-Belair, F.C.A.* - ----------------------------- Michel Plessis-Belair, F.C.A. Director January 21, 1999 /s/ - ----------------------------- Brian E. Walsh Director January __, 1999 *By: /s/ D.C. Lennox ------------------------ D.C. Lennox Attorney-in-fact pursuant to Powers of Attorney filed with this Registration Statement.
POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, J.W. Burns, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of January, 1999. /s/J.W. Burns ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Michelle Thompson - --------------------------- Name: Michelle Thompson (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, O.T. Dackow, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of January, 1999. /s/O.T. Dackow ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Beverly A. Byrne - --------------------------- Name: Beverly A. Byrne (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, A. Desmarais, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of January, 1999. /s/A. Desmarais ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Lise Gagnon - --------------------------- Name: Lise Gagnon (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, P. Desmarais, Jr., a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of January, 1999. /s/P. Desmarais, Jr. ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Lucie Filteau - --------------------------- Name: Lucie Filteau (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, R. Gratton, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of January, 1999. /s/R. Gratton ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Nicole Barolet - --------------------------- Name: Nicole Barolet (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, N.B. Hart, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of January, 1999. /s/N.B. Hart ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Wilma J. Hart - --------------------------- Name: Wilma J. Hart (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, M. Plessis-Belair, a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of January, 1999. /s/M. Plessis-Belair ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Danielle Durocher - --------------------------- Name: Danielle Durocher (Type or print name of witness) POWER OF ATTORNEY PRIVATE RE GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY Know all men by these presents, that I, P. Michael Pittfield, P.C., Q.C., a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, a Colorado corporation, do hereby constitute and appoint each of D.C. Lennox and G.R. Derback as my true and lawful attorney and agent for me and in my name and on my behalf to do, individually and without the concurrence of the other attorney and agent, any and all acts and things and to execute any and all instruments which either said attorney and agent may deem necessary or desirable to enable Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account, a separate and distinct account of Great-West Life & Annuity Insurance Company governed under the provisions of the Colorado Insurance Code, to comply with the Securities Act of 1933 and the Investment Company Act of 1940 and any rules, regulations, and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under said Acts of variable life contracts, including specifically, but without limiting the generality of the foregoing, power and authority to sign my name, in my capacity as a Member of the Board of Directors of Great-West Life & Annuity Insurance Company, to the Registration Statement (Form S-6) of Great-West Life & Annuity Insurance Company and COLI VUL-2 Series Account (Registration No. _________), and to any and all amendments thereto, and I hereby ratify and confirm all that either said attorney and agent shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of January, 1999. /s/P. Michael Pittfield, P.C., Q.C. ------------------------------------------ Member, Board of Directors Great-West Life & Annuity Insurance Company Witness: /s/Diane Meilleur - --------------------------- Name: Diane Meilleur (Type or print name of witness) EXHIBIT INDEX 1.(1) Resolution of the Board of Directors of Great-West Life & Annuity Insurance Company authorizing establishment of COLI VUL-2 Series Account 1.(3)(a) Form of Distribution Agreement 1.(3)(b) Form of Broker-Dealer and General Agent Sales Agreement 1.(3)(c) Schedule of Sales Commissions 1.(5)(a) Specimen Policy 1.(5)(b) Specimen Term Life Insurance Rider 1.(8) Form of Participation Agreement EX-99.11 2 Exhibit 1.(1) GREAT-WEST Life & Annuity Insurance Company 8515 East Orchard Road Englewood, CO 80111 This will certify that the following is a true and correct copy of a resolution passed at a meeting of the Board of Directors of Great-West Life & Annuity Insurance Company duly called and held on the twenty-fifth day of November, 1997, at which meeting a quorum was present and acting throughout, and that said resolution is still in full force and effect: That the Company hereby authorizes the establishment of separate accounts designated GWL&A VUL Series Accounts 1 - 5 (hereinafter "the Accounts"), subject to such conditions as hereafter set forth, said use, purposes, and conditions to be in full compliance with C.R.S. ?10-7-402 and all rules and regulations of the Colorado Division of Insurance; Further, that the appropriate officers are hereby authorized to determine the terms of the offering of the Accounts; to designate from time to time the number of separate investment divisions as may be necessary or appropriate for each Account to which net payments under the Contracts will be allocated in accordance with instructions received from contractholders; and, to establish all procedures, standards, and arrangements necessary or appropriate for the operation of the Accounts; and Further, that the Accounts shall be established for the purpose of allowing the Company to issue corporate-owned or bank-owned variable universal life insurance contracts ("Contracts") as the President or a Vice-President may designate and shall constitute separate accounts into which will be allocated amounts paid to the Company which are to be applied under the terms of such Contracts; and Further, that the income, gains and losses, realized or unrealized, from assets allocated to the Accounts shall be credited to or charged against such Accounts without regard to other income, gains, or losses of the Company to the extent provided in the Contracts; and Further, that the fundamental investment policy of the Accounts shall be to invest or reinvest the assets of the Accounts in securities issued by investment companies registered under the Investment Company Act of 1940 or invest or reinvest the assets of the Accounts directly in other separate accounts and other investments according to the investment objective and policy established for such Contract or Contracts; and Further, that the President or a Vice-President each be, and hereby is, authorized to deposit such amounts in the Accounts or in each investment division as may be necessary or appropriate to facilitate the commencement of the Accounts? operations; and Further, that the President or a Vice-President each be, and hereby is, authorized to transfer funds from time to time into the Accounts in order to establish the Accounts or to support the operation of the Contracts with respect to the Accounts or to transfer funds from time to time out of the Accounts if transfer is made by cash or securities having a readily determined market value, if such transfer is approved by the Commissioner of the Division of Insurance; and Further, that the President or a Vice-President each be, and is hereby authorized to change the designation of the Accounts to such other designation as he may deem necessary or appropriate; and Further, that the appropriate officers of the Company, with such assistance from the Company's auditors, legal counsel and independent consultants or others as they may require, be, and they hereby are, authorized and directed to take all action necessary to take all actions which are necessary in connection with the offering of said Contracts for sale and the operation of the Account in order to comply with the Investment Company Act of 1940, the Securities Exchange Act of 1934, the Securities Act of 1933 and other applicable federal laws, including the filing of registration statements and amendments thereto, any undertakings, and any applications for exemptions from the Investment Company Act of 1940 or other applicable federal laws as the officers of the Company shall deem necessary or appropriate; and Further, that the appropriate officers of the Company be, and they hereby are, authorized on behalf of the Accounts and on behalf of the Company to take any and all action they may deem necessary or advisable in order to sell the Contracts, including any registrations, filings and qualifications of the Company, its officers, agents and employees, and the Contracts under the insurance and securities laws of any of the states of the United States of America or other jurisdictions, and in connection therewith to prepare, execute, deliver and file all such applications, reports, covenants, resolutions, applications for exemptions, consents to service of process and other papers and instruments as may be required under such laws, and to take any and all further action which said officers or counsel of the Company may deem necessary or desirable (including entering into whatever agreements may be necessary) in order to maintain such registrations or qualifications for as long as said officers or counsel deem it to be in the best interests of the Accounts and the Company; and Further, that the President, the Vice-Presidents and the Secretary of the Company be, and they hereby are, each authorized in the names and on behalf of the Accounts and the Company to execute and file irrevocable written consents on the part of the Accounts and of the Company to be used in such states wherein such consents to service of process may be required under the insurance or securities laws therein in connection with said registration or qualification of the Contracts and to appoint the appropriate state official or such other person as may be allowed by said insurance or securities laws, agent of the Accounts and of the Company for the purpose of receiving and accepting process; and Further, that the President or a Vice-President each be, and hereby is, authorized to cause the Company to institute procedures for providing voting rights for owners of such Contracts with respect to securities owned by the Accounts; and Further, that the President or a Vice-President each be, and is hereby authorized to execute such agreement or agreements as deemed necessary and appropriate with underwriters and distributors for the Contracts in connection with the establishment and maintenance of the Accounts or the design, administration and offer and sale of the Contracts; provided, however, that the Company is directed to finalize such agreements before effecting any registrations or filings of the Contracts or the Accounts; and Further, that the appropriate officers of the Company are hereby authorized to execute whatever agreement or agreements may be necessary or appropriate to enable the Accounts to invest in securities issued by one or more investment companies registered under the Investment Company Act of 1940 as may be specified in the respective Contracts; and Further, that the appropriate officers of the Company, and each of them, are hereby authorized to execute and deliver all such documents and papers and to do or cause to be done all such acts and things as they may deem necessary or desirable to carry out the foregoing resolutions and the intent and purposes thereof; and Further, that the term "appropriate officers" as used herein, shall include all of the elected and appointed officers of the Company, either severally or individually, subject to any applicable resolutions of the Board of Directors dealing with signing authority for the Company. Dated at Englewood, /s/ B.A. Byrne Colorado this 30th day ----------------------------------- of December, 1998. B.A. Byrne Assistant Vice President, Associate Counsel and Assistant Secretary EX-99.13A 3 Exhibit 1.(3)(a) UNDERWRITING AGREEMENT THIS UNDERWRITING AGREEMENT made this ______ day of ____________ 199__, by and between BenefitsCorp Equities, Inc. (the "Underwriter") and Great-West Life & Annuity Insurance Company (the "Insurance Company"), on its own behalf and on behalf of GWL&A VUL Series Account 2 (the "Series Account"), as follows: WHEREAS, the Insurance Company has or will register the Series Account as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act") and has or will register the Contracts under the Securities Act of 1933; WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, the Insurance Company and the Series Account desire to have the Contracts sold and distributed through the Underwriter, and the Underwriter is willing to sell and distribute such Contracts under the terms stated herein; NOW THEREFORE, the parties hereto agree as follows: 1. Representations, Responsibilities and Warranties of Insurance Company 1.01 The Insurance Company represents that it has the authority, and hereby agrees to, grant the Underwriter the right to serve as the distributor and principal underwriter of the Contracts during the term of this Agreement. 1.02 The Insurance Company represents and warrants that it is duly licensed as an insurance company under the laws of the State of Colorado and that it has taken all appropriate actions to establish the Series Account in accordance with state and federal laws. 1.03 The Insurance Company agrees to update and maintain a current prospectus for the Contracts as required by law. 1.04 The Insurance Company represents that it reserves the right to appoint or refuse to appoint, any proposed associated person of the Underwriter as an agent or broker of the Insurance Company. The Insurance Company also retains the right to terminate such agents or brokers once appointed. 1.05 On behalf of the Series Account, the Insurance Company shall furnish the Underwriter with copies of all financial statements and other documents which the Underwriter reasonably requests for use in connection with the distribution of the contracts. 1 2. Representations, Responsibilities and Warranties of Underwriter 2.01 Underwriter represents that it has the authority and hereby agrees to serve as distributor and principal underwriter of the Contracts during the term of this Agreement. 2.02 The Underwriter represents that it is duly registered as a broker-dealer under the 1934 Act and is a member in good standing of the NASD and to the extent necessary to offer the Contracts, shall be duly registered or otherwise qualified under the securities laws of any state or other jurisdiction. 2.03 The Underwriter agrees to use its best efforts to solicit applications for the Contracts, and to undertake, at its own expense, to provide all sales services relative to the Contracts and otherwise to perform all duties and functions which are necessary and proper for the distribution of the Contracts. 2.04 The Underwriter agrees to offer the Contracts for sale in accordance with the prospectus therefor, then in effect. The Underwriter represents and agrees that it is not authorized to give any information or make any representations concerning the Contracts other than those contained in the current prospectus as filed with the SEC or in such sales literature as may be authorized by the Insurance Company. 2.05. The Underwriter shall be fully responsible for carrying out its sales, underwriting and compliance supervisory obligations hereunder in compliance with the NASD Conduct Rules and all other relevant federal and state securities laws and regulations. Without limiting the generality of the foregoing, the Underwriter agrees that it shall have full responsibility for: (a) ensuring that no person shall offer or sell the Contracts on its behalf until such person is duly registered as a representative of the Underwriter, and duly licensed and appointed by the Insurance Company; (b) ensuring that no person shall offer or sell the Contracts on its behalf until the Underwriter has confirmed that the Insurance Company is appropriately licensed, or otherwise qualified to offer and sell such Contracts under the federal securities laws and any applicable state or jurisdictional securities and/or insurance laws in each state or jurisdiction in which such Contracts may be lawfully sold; (c) continually training, supervising, and controlling all registered representatives and other agents of the Underwriter for purposes of complying with the NASD Conduct Rules and with federal and state securities laws which may be applicable to the offering and sale of the Contracts. In this respect, the Underwriter shall: (1) conduct training programs (including the preparation and utilization of training materials) as is necessary, in the Underwriter's opinion, to comply with applicable laws and regulations; 2 (2) establish and implement reasonable written procedures for the supervision of the sales practices of agents, representatives or brokers who sell the Contracts; and (3) take reasonable steps to ensure that its associated persons shall not make recommendations to an applicant to purchase a Contract in the absence of reasonable grounds to believe that the purchase of the Contract is suitable for such applicants; and (d) supervising and ensuring compliance with NASD rules of all administrative functions performed by the Underwriter with respect to the offering and sale of the Contracts and representations with respect to the Series Account. 2.06 The Underwriter, or its affiliates, on behalf of the Insurance Company, shall apply for the proper insurance licenses in the appropriate states or jurisdictions for the designated persons associated with the Underwriter or with independent broker-dealers which have entered into agreements with the Underwriter for the sale of the Contracts. The Underwriter agrees to pay all licensing or other fees necessary to properly authorize such persons for the sale of the Contracts. 2.07 The Underwriter shall have the responsibility for paying (i) all commissions or other fees to its associated persons which are due for the sale of the Contracts and (ii) any compensation to independent broker-dealers and their associated persons due under the terms of any sales agreements between the Underwriter and such broker-dealers. Provided, however, the Insurance Company retains the ultimate right to reject any commission rate allowed by the Underwriter. Furthermore, no associated person or independent broker-dealer shall have an interest in the surrender charges, deductions or other fees payable to Underwriter as set forth herein. The Underwriter shall have the responsibility for calculating and furnishing periodic reports to the Insurance Company as to the sale of the Contracts, and as to the commissions and service fees payable to persons selling the Contracts. 3. Records and Confidentiality 3.01 The Insurance Company and the Underwriter shall cause to be maintained and preserved for the periods prescribed, such accounts, books, records, files and other documents and materials ("Records") as are required of it by the 1940 Act and any other applicable laws and regulations. The Records of the Insurance Company, the Series Account and the Underwriter as to all transactions hereunder shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. 3.02 The Underwriter shall cause the Insurance Company to be furnished with such Records, or copies thereof, as the Insurance Company may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under the insurance laws of the State of Colorado and any other applicable states or jurisdictions. 3 3.03 The Insurance Company shall cause the Underwriter to be furnished with any Records, or copies thereof, as the Underwriter may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under the federal securities laws or the securities laws of any inquiring jurisdiction. 3.04 The Underwriter agrees and understands that all Records shall be the sole property of the Insurance Company and that such property shall be held by the Underwriter, or its agents during the term of this agreement. Upon termination, all Records shall be returned to the Insurance Company. 3.05 Insurance Company agrees and understands that the Underwriter may maintain copies of the Records as is required by any relevant securities law, the SEC, the NASD or any other self regulatory agency. 3.06 Underwriter shall establish and maintain facilities and procedures for the safekeeping of all Records relative to this Agreement. 3.07 The parties hereto agree that all Records pertaining to the business of the other party which are exchanged or received pursuant to this Agreement, shall remain confidential and shall not be voluntarily disclosed to any other person, except to the extent disclosure thereof may be required by law. All such confidential information in the possession of each of the parties hereto shall be returned to the party from whom it was obtained upon the termination or expiration of this Agreement. 4. Relationship of the Parties 4.01 Notwithstanding anything in this Agreement to the contrary, the Underwriter or the Insurance Company may enter into sales agreements with independent broker-dealers for the sale of the Contracts. 4.02 All such sales agreements as described in 4.01, above, which are entered into by the Insurance Company or the Underwriter shall provide that each independent broker-dealer will assume full responsibility for continued compliance by itself and its associated persons with NASD Conduct Rules and applicable federal and state securities laws. All associated persons of such independent broker-dealers soliciting applications for the Contracts shall be duly and appropriately licensed and/or appointed for the sale of the Contracts under the insurance laws of the applicable state or jurisdiction in which the Contracts may be lawfully sold. 4.03 The services of the Underwriter to the Series Account hereunder are not to be deemed exclusive and the Underwriter shall be free to render similar services to others so long as the services rendered hereunder are not interfered with or impaired. 4 5. Term and Termination 5.01 Subject to termination, the Agreement shall remain in full force and effect for one year, and shall continue in full force and effect from year to year until terminated as provided below. Each additional year shall be an additional term of this Agreement. 5.02 This Agreement may be terminated: (a) by either party upon sixty (60) days written notice to the other party; (b) immediately, upon written notice in the event of bankruptcy or insolvency of one party; (c) at any time upon mutual written consent of the parties; (d) immediately in the event of its assignment; provided however, "assigned" shall not include any transaction exempted from section 15(b)(2) of the 1940 Act; (e) immediately in the event that the Underwriter no longer qualifies as a broker-dealer under applicable federal law; and (f) immediately in the event of fraud, misrepresentation, conversion or unlawful withholding of funds by a party. 5.03 Upon termination of this Agreement, all authorization, rights, and obligations shall cease except the obligations to settle accounts hereunder, including payments or premiums or contributions subsequently received for Contracts in effect at the time of termination or issued pursuant to applications received by the Insurance Company prior to termination. 5.04 After notice of termination, the parties agree to cooperate to effectuate an orderly transition of all accounts, payments and Records. 6. Miscellaneous 6.01 This Agreement shall be subject to the provisions of the 1940 Act, the 1934 Act and the rules, regulations and rulings thereunder. In addition it shall be subject to the rulings of the NASD, as issued from time to time, and any exemptions from the 1940 Act the SEC may grant. All terms of this Agreement will be interpreted and construed in accordance with compliance of this section 6.01. 6.02 Except as otherwise provided, Underwriter acknowledges that Insurance Company retains the overall right and responsibility to direct and control the activities of the Underwriter. 5 6.03 If any provisions of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall remain in full force and effect. 6.04 This Agreement constitutes the entire Agreement between the parties hereto and may not be modified except in a written instrument executed by all the parties hereto. 6.05 This Agreement shall be governed by the internal laws of the State of Colorado. IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective duly authorized officers and have caused their respective seals to be affixed hereto, as of the day and year first written above. Great-West Life & Annuity Insurance Company ______________________ By: _______________________________________ Witness: William T. McCallum President and Chief Executive Officer BenefitsCorp Equities, Inc. ______________________ By: _______________________________________ Witness: Charles P. Nelson President 6 EX-99.13B 4 Exhibit 1.(3)(b) CORPORATE OWNED VARIABLE UNIVERSAL LIFE INSURANCE CONTRACT BROKER-DEALER SELLING AGREEMENT This Agreement, dated ____________________, 19____, is by and among _______________________________________________________ (individually "Broker/Dealer") and ___________________________________________________ (individually "Insurance Agency"), (or collectively "Broker/Dealer,") Great-West Life & Annuity Insurance Company ("Insurer") and BenefitsCorp Equities, Inc., a registered Broker/Dealer ("Distributor"). WHEREAS, This Agreement is entered to arrange for the distribution of certain corporate owned variable universal life insurance ("COLI VUL") contracts (the "Contracts"), issued by Insurer and underwritten by Distributor, through sales people who are licensed agents of the Insurance Agency and Registered Representatives of the Broker/Dealer (collectively referred to as "Registered Representatives"). WHEREAS, Broker/Dealer hereby represents that it is, or is affiliated with an entity which is, registered as a Broker/Dealer with the Securities and Exchange Commission ("SEC") and which is a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"); WHEREAS, Broker/Dealer is affiliated with Insurance Agency which is licensed as a life insurance agency under the insurance laws of the various states in which it operates. NOW THEREFORE, In consideration of the mutual promises and covenants contained in this Agreement, Insurer and Distributor appoint those persons who are Registered Representatives of Broker/Dealer and licensed agents of Insurance Agency to solicit and procure applications for the COLI VUL Contracts, which are or will be properly registered under the Securities Act of 1933, as amended and are offered in connection with a unit investment trust which is registered under the Investment Company Act of 1940, as amended. Broker/Dealer is authorized to offer and sell the Contracts subject to the following conditions: A. Scope of Appointment 1. This appointment is not deemed to be exclusive in any manner and only extends to those jurisdictions in which the Contracts have been approved for sale and in which Broker/Dealer, Insurance Agency and their Registered Representatives are properly licensed and appointed. 2. Applications shall be taken only on the application forms supplied by Insurer. All completed applications, supporting documents and initial and subsequent payments are the sole property of Insurer and must be remitted immediately upon execution or payment to Insurer at such address as it may designate from time to time. All applications are subject to acceptance by Insurer in its sole discretion. 3. Broker/Dealer agrees that it will not act as the collector of deposits, transfers, or rollovers from other insurance carriers, banks, trusts, savings institutions, or other financial institutions, or of other amounts to be deposited to the Contracts. 4. Broker/Dealer further agrees that if, on occasion, it receives such deposits under the Contract, the full amount of such deposits shall be immediately remitted to Insurer without reduction. B. Registered Representatives 1. Broker/Dealer is authorized to recommend Registered Representatives for appointment with Insurer to solicit sales of the Contracts. Further, Broker/Dealer warrants that each such person recommended for appointment is fully licensed under the applicable state insurance and securities laws and is a duly Registered Representative of Broker/Dealer. 2. Broker/Dealer is responsible for such supervision of its Registered Representatives which will enable Broker/Dealer to ensure that its Registered Representatives are in compliance with applicable federal and state securities and insurance laws, rules, regulations and statements of policy promulgated thereunder as may apply to the Contracts. Broker/Dealer is responsible for conducting all background investigations which may be required by law or regulation and represents that its Registered Representatives have all the necessary licenses to transact business. C. Sales Materials 1. Broker/Dealer shall cause its officers, employees and Registered Representatives not to use any sales material or information, including but not limited to written, audio, or video sales material, or offering documents, unless such material has been provided or approved in writing by Insurer or Distributor. 2. Broker/Dealer shall cause its officers, employees and Registered Representatives not to use any sales material or information, including but not limited to written, audio, or video sales material, or offering documents, unless such material has been approved in writing by the NASD, as required, if such materials were not provided by Insurer or Distributor and copies of such materials will be submitted to the Insurer and Distributor pursuant to Section C.1. above for their approval. 3. In accordance with the requirements of law and regulations, Broker/Dealer shall maintain complete records indicating the manner, date and extent of distribution of any such solicitation material. Such records and material shall be made available to appropriate regulatory agencies as required by law or regulation. Broker/Dealer shall hold Insurer, Distributor and their affiliates and agents harmless from any liability arising from the use of any material which has not been specifically approved by Insurer, Distributor and/or NASD, as applicable, in writing, or which is used in a manner inconsistent with Insurer's or Distributor's approval. 4. Broker/Dealer, its officers, employees, and Registered Representatives are not authorized to make any other representations concerning the Contracts except those contained in the then-current offering materials and/or sales materials issued and/or approved by Insurer or Distributor. 5. Insurer and Distributor will use reasonable effort to provide to Broker/Dealer and its Registered Representatives information and marketing assistance, including reasonable quantities of advertising materials, sales literature, reports, and current offering documents for the Contracts. All material provided by Insurer or Distributor to Broker/Dealer under this Agreement shall remain property of Insurer or Distributor and upon termination, any materials in the possession of Broker/Dealer or its Registered Representatives shall be returned promptly to Insurer or Distributor or at Insurer's or Distributor's request, shall be properly disposed. D. Broker/Dealer and Insurance Agency Compliance 1. Broker/Dealer is a Broker/Dealer registered with the SEC and a member in good standing of the NASD and shall comply fully with the rules of conduct of the NASD and all other applicable laws, rules and regulation, including insurance laws, applicable to the transactions hereunder. 2. Insurance Agency is properly registered and licensed in all jurisdictions in which the Contracts will be sold and shall comply fully with all laws, rules and regulations applicable to the transactions hereunder. 3. Broker/Dealer and/or Insurance Agency shall establish forms, procedures, supervisory and inspection techniques necessary to supervise the activities of their Registered Representatives. Upon request by Distributor or Insurer, Broker/Dealer and/or Insurance Agency shall furnish appropriate records as are necessary to establish diligent supervision. 4. In the event that Broker/Dealer uses an affiliated entity to satisfy the Broker/Dealer requirements pursuant to permission granted by a no-action letter issued by the SEC, such affiliated Broker/Dealer shall countersign this Agreement and shall be bound hereby and a copy of such no action letter shall be attached to this Agreement as an Exhibit. E. Recordkeeping 1. Broker/Dealer is responsible for preparation and maintenance of full and accurate records of the business transacted by its Registered Representatives under this Agreement. Insurer and Distributor shall have the right to examine Broker/Dealer's records at reasonable times. F. Commissions 1. Insurer shall pay commissions to Distributor for the sales of the Contracts as defined therein. Distributor will pay a commission to Broker/Dealer for those sales of the Contract procured by Broker/Dealer as described in Exhibit A. 2. Broker/Dealer shall not be entitled to an agrees to return to Distributor any commissions paid in connection with the Contracts if a Contract owner elects to terminate the Contract in accordance with any Free-Look Provision, if any or under any other applicable state or federal law or regulation or NASD rule or policy. G. Indemnification 1. Broker/Dealer agrees to hold harmless and indemnify Distributor and Insurer and their respective officers, directors, agents and affiliates from any and all claims, direct or indirect liabilities, losses and expenses which any such party may incur (including attorney's fees) resulting from: (a) requests, directions, actions or initiations of Broker/Dealer and/or its officers, employees, or Registered Representatives, or (b) Any alleged true or untrue statement made by Broker/Dealer, its officers, employees, or Registered Representatives, unless such statement is contained in the offering or sales materials provided by Distributor or Issuer for the Contract, or (c) The failure of Broker/Dealer, its officers, employees, or Registered Representatives to comply with any provision of this Agreement, or (d) Any negligent, intentional or fraudulent act, omission or error of Broker/Dealer, its officers, employees or Registered Representatives relating to the solicitation, sale or servicing of the Contract, or (e) Any violation of any federal or state law, regulation, or ruling, or of any violation of any other applicable rules or regulation arising from an act or error of Broker/Dealer, its officers, employees or Registered Representatives. 2. Insurer and Distributor agree to hold harmless and indemnify Broker/Dealer and its Registered Representatives from any and all claims, direct or indirect liabilities, losses and expenses which any such party may incur (including attorney's fees) resulting from: (a) Any negligent, intentional or fraudulent act, omission, or error of Insurer or Distributor, their officers, employees or affiliates in the solicitation or servicing of the Contract, or (b) Any act or error of Insurer or Distributor, their officers, employees or affiliates which is in violation of any federal or state law, regulation, or ruling or of any violation of any other applicable rules or regulation. (c) Any false or materially misleading statement or omission in any Contract prospectus or registration statement, if Broker/Dealer relied upon such statement or omission and such statement or omission is the basis of the Broker/Dealer's liability. H. Fidelity Bond 1. Broker/Dealer represents that all its directors, officers, employees and Registered Representatives who are licensed or appointed pursuant to this Agreement are and will continue to be covered by a blanket fidelity bond including coverage for larceny, embezzlement and other defalcations, issued by a reputable bonding company. This bond shall be maintained at Broker/Dealer's expense. Such bond shall be at least equivalent to the minimum coverage required under the NASD Rules, and will be endorsed, as necessary, to extend coverage to variable contract transactions. Broker/Dealer acknowledges that, from time to time, Insurer may require evidence that such coverage is in force and Broker/Dealer shall promptly give notice to Insurer of any notice of cancellation or change of coverage. 2. Broker/Dealer assigns any proceeds received from the fidelity bond company to Insurer or Distributor, as applicable, to the extent of Insurer's or Distributor's loss caused by activities covered by the bond. If there is any deficiency, Broker/Dealer shall pay Insurer or Distributor, as applicable, that amount promptly on demand and Broker/Dealer indemnifies and holds harmless Insurer and/or Distributor from any deficiency and from the costs of collection. I. Limitation of Authority 1. The Contract forms are the sole property of Insurer. No person other than Insurer has the authority to make, alter or discharge any policy, contract, certificate, supplemental contract or form issued by Insurer. Insurer may make such changes as it deems advisable in the conduct of its business or discontinue at any time issuing any of its forms or contracts and no liability to the Broker/Dealer will attach to Insurer or Distributor by reason of Insurer so doing. 2. No person other than Insurer has the right to waive any provision with respect to the Contract. 3. No person other than Insurer or Distributor, as applicable, has the authority to enter any proceeding in a court of law or before a regulatory agency in the name of or on behalf of Insurer or Distributor. J. Cooperation 1. Broker/Dealer agrees to notify Insurer and Distributor promptly of any change of address or of any written complaint by any Contract owner, state insurance department, or other regulatory or oversight agency, litigation or other legal proceeding, whether criminal or civil, with respect to the Contract(s), brought against it, its officers, employees or Registered Representatives, by any person, including regulatory agencies of any state or the federal government. 2. Insurer and Distributor will notify Broker/Dealer promptly of any written complaint by any Contract owner, state insurance department, or other regulatory or oversight agency, litigation or other legal proceeding, whether criminal or civil, with respect to the Contract(s), brought against them, their officers, employees or affiliates, by any person, including regulatory agencies of any state or the federal government. 3. Broker/Dealer, its directors, officers, employees and Registered Representatives shall cooperate with Insurer and Distributor in the investigation and settlement of any or all claims against Broker/Dealer, its officers, directors, employees and Registered Representatives relating to the solicitation or sale of Contracts under this Agreement. Broker/Dealer shall promptly forward to Insurer and Distributor any notice or other relevant information which may come into Broker/Dealer's possession. K. General Provisions 1. Failure of any of the parties to insist upon strict compliance with any of the obligations of another party under this Agreement shall not be deemed to constitute a waiver of the right to enforce strict compliance. 2. Broker/Dealer and its Registered Representatives are independent contractors and not employees of or subsidiaries of or affiliated with Distributor or Insurer. 3. No assignment of this Agreement or of any commissions or any other payments under this Agreement shall be valid without the prior written consent of Insurer and/or Distributor. 4. Any notice pursuant to this Agreement shall be mailed, postage paid, to the address listed on the last page of this Agreement unless changed in writing by the applicable party. 5. To the extent this Agreement may be in conflict with any applicable law or regulation, this Agreement shall be construed in a manner not inconsistent with such law or regulation. The invalidity or illegality of any provision of this Agreement shall not be deemed to affect the validity or legality of any other provision of this Agreement. 6. This agreement may be amended in writing signed by all parties to this Agreement, except that this Agreement may be amended by notification from Insurer or Distributor and applications submitted by Broker/Dealer or its Registered Representatives following such notification shall be deemed to be an acceptance of such amendments. 7. This Agreement may be terminated immediately by any party upon written notice. 8. This Agreement shall be construed in accordance with the laws of the State of Colorado. IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth above. BROKER/DEALER - ----------------------------- -------------------------------- Address: Address: - ----------------------------- -------------------------------- - ----------------------------- -------------------------------- By: _________________________ By: ____________________________ Name: _______________________ Name: __________________________ Title: ______________________ Title: _________________________ Date: _______________________ Date: __________________________ Great-West Life & Annuity BenefitsCorp Equities, Inc. Insurance Company 8515 E. Orchard Road 8515 E. Orchard Road Englewood, CO 80111 Englewood, CO 80111 By: __________________________ By: __________________________ Name: ________________________ Name: ________________________ Title: _______________________ Title: _______________________ Date: ________________________ Date: ________________________ EX-99.13C 5 Exhibit 1.(3)(c) Exhibit 1.(3)(c) Schedule of Sales Commissions I. Introduction This Schedule of Sales Commission relates to Flexible Premium Variable Universal Life Insurance Policies issued by Great-West Life & Annuity Insurance Company on Form J355 (and any variation of that form as may be required by insurance regulatory authorities) through its separate account, COLI VUL-2 Series Account. Capitalized terms used herein have the meaning given to them in the Prospectus. II. Commissions as a Percentage of Premium The first year commissions on a 7-pay premium are equal to 15% of the premium. The target premium is equal to .10/.35 of the 7-pay premium. The targets will change if there is an increase or decrease in the Total Face Amount. Commissions will be calculated as a percentage of premium and will be paid based on the following schedule: 1. Policy Year 1: 40% of the amount of the target premium plus 5% of the amount of premium paid in excess of the target premium. 2. Policy Years 2-4: 25% of the amount of the target premium plus 5% of the amount of premium paid in excess of the target premium. 3. Policy Years 5-10: 2.5% of the amount of the target premium plus 2.5% of the amount of premium paid in excess of the target premium. III. Asset-Based Compensation Asset-based compensation will be calculated as a percentage of Account Value, less the value of the Loan Account, and will be paid based on the following schedule: 1. Policy Years 1-4: None 2. Policy Years 5-15: 0.20% of Account Value less the value of the Loan Account. 3. Policy Years 16+: 0.10% of Account Value less the value of the Loan Account. IV. Chargebacks If a Policy is surrendered at any time before the end of the second Policy Year, there shall be a chargeback of 100% of commissions paid. Thereafter, there shall be no chargebacks. EX-99.15A 6 Exhibit 1.(5)(a) Great-West Life & Annuity Insurance Company A Stock Company 8515 East Orchard Road Englewood, CO 80111 Insured: John Doe Policy Number: 1234567 INDIVIDUAL FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE Great-West Life & Annuity Insurance Company, herein referred to as the Company, will pay the Death Benefit Proceeds to the Beneficiary subject to the policy provisions, when the Company receives due proof of the Insured's death. (Payment of such proceeds will completely discharge the Company's liability with respect to the amount payable.) The Owner and Beneficiary are as shown in the application unless changed as provided for in this policy. The provisions on the following pages are a part of this policy. Signed for the Company on the Issue Date. /s/D.C. Lennox /s/W.T. McCullum - ------------------------- ------------------------- D.C. Lennox, W.T. McCallum, Secretary President and Chief Executive Officer This policy is a legal contract between the Owner and the Company. PLEASE READ THIS POLICY CAREFULLY. FREE LOOK PERIOD 10 DAY RIGHT TO EXAMINE POLICY: IF NOT SATISFIED WITH THE POLICY, RETURN IT TO THE COMPANY OR AN AUTHORIZED REPRESENTATIVE WITHIN 10 DAYS OF RECEIVING IT. THE POLICY WILL THEN BE DEEMED VOID FROM THE START, AND THE COMPANY WILL REFUND THE GREATER OF: 1) PREMIUMS RECEIVED LESS SURRENDERS AND/OR WITHDRAWALS; OR 2) THE POLICY VALUE ACCOUNT LESS SURRENDERS. DURING THE 10 DAY RIGHT TO EXAMINE PERIOD, THE CASH VALUE WILL BE ALLOCATED TO THE MONEY MARKET INVESTMENT DIVISION. AT THE END OF THE 10 DAY PERIOD, THE CASH VALUE WILL BE ALLOCATED IN THE INVESTMENT DIVISIONS AS SPECIFIED IN THE APPLICATION. FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE ADJUSTABLE DEATH BENEFIT. Proceeds payable at death are subject to policy provisions. See Death Benefit Provisions. Flexible Premiums payable while the Insured is alive. If no Premiums are paid after the first Premium, or if subsequent Premiums prove to be too low, this coverage may cease prior to age 100. ALL PAYMENTS AND VALUES BASED ON THE INVESTMENT EXPERIENCE OF THE INVESTMENT DIVISIONS ARE VARIABLE, MAY INCREASE OR DECREASE ACCORDINGLY, AND ARE NOT GUARANTEED AS TO AMOUNT. Non-Participating. J355 (98) POLICY SPECIFICATIONS This Policy Specifications Page, together with the Premium Allocation Information, reflects the information with which your policy has been established as of the Policy Date. - -------------------------------------------------------------------------------- OWNER/POLICY INFORMATION - -------------------------------------------------------------------------------- Owner: XYZ Corporation Insured: JOHN DOE Policy Number: 1234567 Policy Date: January 1, 1998 Total Face Amount: $250,000 Issue Date: January 1, 1998 Issue Age/Sex: 35/ Male Plan: Individual Flexible Premium Variable Universal Life Insurance: Non-Participating Employer Number: 54321 - -------------------------------------------------------------------------------- PREMIUM AND EXPENSE INFORMATION - -------------------------------------------------------------------------------- Premium Class: Standard Initial Periodic Premium Amount: $1,593.36 Per Year If no Premiums are paid after the first Premium or if subsequent Premiums prove to be too low, this coverage may cease prior to age 100. The Owner may have to pay more than the Premiums shown above to keep this policy and coverage in force. Summary of Charges: Service Charge: $15.00 per month maximum Expense Charge: 10.00% of premium maximum Mortality & Expense Charge: .90% maximum Risk Charges: Shown on Page 1a - -------------------------------------------------------------------------------- SCHEDULE OF BENEFITS AND PREMIUMS - -------------------------------------------------------------------------------- BENEFITS FACE AMOUNT MONTHLY COSTS PREMIUM PERIOD Total Face To Insured's Age 100 Amount $250,000 See Page 1a Base Face $200,000 See Page 1a Rider Face Amount $50,000 See Page 1a The Owner has elected Death Benefit Option 1, Level Death: the Total Face Amount, less any partial withdrawals, less any outstanding loans, and loan interest accrued, will be payable upon the insured's death. Each partial withdrawal will cause a decrease in the death benefit. In some cases, growth of the Policy Value Account may require the Company to adjust the Death Benefit in order to comply with Internal Revenue Code Regulations. The Owner has elected Cash Value Accumulation Test, for this calculation. The Table is shown on Policy Page 1b. J355LD Page 1 Table A FACTORS ATTAINED ATTAINED AGE MALE FEMALE AGE MALE FEMALE 20 6.52076 7.78152 60 1.91115 2.20053 21 6.33350 7.53356 61 1.86315 2.13871 22 6.14981 7.29258 62 1.81717 2.07893 23 5.96381 7.05840 63 1.77320 2.02134 24 5.79038 6.83085 64 1.73126 1.96617 25 5.61443 6.61014 65 1.69130 1.91343 26 5.44092 6.39568 66 1.65326 1.86300 27 5.27031 6.18766 67 1.61699 1.81470 28 5.10316 5.98586 68 1.58236 1.76827 29 4.93975 5.79038 69 1.54923 1.72343 30 4.78046 5.60097 70 1.51753 1.68009 31 4.62543 5.41767 71 1.48726 1.63827 32 4.47504 5.24022 72 1.45844 1.59809 33 4.32914 5.06840 73 1.43116 1.55974 34 4.18798 4.90198 74 1.40548 1.52338 35 4.05148 4.74131 75 1.38142 1.48910 36 3.91965 4.58592 76 1.35889 1.45684 37 3.79247 4.43621 77 1.33775 1.42648 38 3.66997 4.29213 78 1.31783 1.39782 39 3.55206 4.15360 79 1.29892 1.37069 40 3.43868 4.02063 80 1.28090 1.34496 41 3.32968 3.89305 81 1.26375 1.32058 42 3.22506 3.77070 82 1.24746 1.29761 43 3.12447 3.65328 83 1.23212 1.27608 44 3.02787 3.54035 84 1.21783 1.25607 45 2.93502 3.43166 85 1.20460 1.23755 46 2.84584 3.32701 86 1.19234 1.22040 47 2.76008 3.22611 87 1.18093 1.20448 48 2.67761 3.12877 88 1.17021 1.18963 49 2.59824 3.03494 89 1.16000 1.17566 50 2.52192 2.94449 90 1.15008 1.16236 51 2.44849 2.85732 91 1.14024 1.14954 52 2.37800 2.77329 92 1.13021 1.13694 53 2.31039 2.69235 93 1.11971 1.12430 54 2.24563 2.61451 94 1.10841 1.11132 55 2.18370 2.53953 95 1.09607 1.10301 56 2.12443 2.46726 96 1.08265 1.08350 57 2.06772 2.39746 97 1.06839 1.06873 58 2.01335 2.32987 98 1.05387 1.05396 59 1.96120 2.26425 99 1.04000 1.04000 J355LD Page 1b GUARANTEED MAXIMUM MONTHLY RISK CHARGES FOR POLICY 1234567 (Based on the Attained Age of the Insured) Monthly Monthly Policy Risk Rate Policy Risk Rate Age Year Per $1,000 Age Year Per $1,000 35 1 0.17 70 36 3.29 36 2 0.18 71 37 3.60 37 3 0.20 72 38 3.97 38 4 0.21 73 39 4.38 39 5 0.23 74 40 4.84 40 6 0.25 75 41 5.34 41 7 0.27 76 42 5.87 42 8 0.29 77 43 6.42 43 9 0.32 78 44 6.99 44 10 0.34 79 45 7.58 45 11 0.37 80 46 8.23 46 12 0.41 81 47 8.95 47 13 0.44 82 48 9.77 48 14 0.47 83 49 10.68 49 15 0.51 84 50 11.68 50 16 0.55 85 51 12.74 51 17 0.60 86 52 13.84 52 18 0.66 87 53 14.96 53 19 0.72 88 54 16.10 54 20 0.79 89 55 17.27 55 21 0.87 90 56 18.48 56 22 0.95 91 57 19.74 57 23 1.04 92 58 21.12 58 24 1.13 93 59 22.67 59 25 1.23 94 60 24.65 60 26 1.34 95 61 27.49 61 27 1.46 96 62 32.04 62 28 1.59 97 63 40.01 63 29 1.75 98 64 54.83 64 30 1.92 99 65 83.33 65 31 2.11 66 32 2.32 67 33 2.53 68 34 2.76 69 35 3.01 Guaranteed net single premium at Attained Age 100: $1,000 per $1,000 J355 Page 2 Table of Contents DEFINITIONS....................................................................5 Definitions continued..........................................................6 OWNERSHIP PROVISIONS Rights of Owner............................................................6 Assignments/Transfers......................................................6 Beneficiary................................................................7 Ownership of Series Account................................................7 GENERAL PROVISIONS Entire Contract............................................................7 Policy Modification........................................................7 Incontestability Provision.................................................7 Suicide Exclusion..........................................................8 Voting Rights..............................................................8 Currency...................................................................8 Non-Participating..........................................................8 Misstatement of Age and/or Sex.............................................8 Policy Years and Anniversaries.............................................8 Payment of Premiums........................................................8 Allocation of Premiums.....................................................8 Grace Period Provision.....................................................9 Periodic Premium Amount....................................................9 Additional Premium Payments Provision......................................9 Reinstatement..............................................................9 Annual Statement...........................................................9 Illustration of Benefits and Values.......................................10 Exchange of Policy........................................................10 Change of Total Face Amount...............................................10 DEATH BENEFIT PROVISIONS Death Benefit Provision...................................................10 Change of Death Benefit Option............................................11 Death Benefit Payment.....................................................11 POLICY VALUES, LOAN AND NONFORFEITURE PROVISIONS Cost of Insurance.........................................................11 Risk Rate.................................................................12 Expense Charge............................................................12 Service Charge............................................................12 Policy Value Account......................................................12 Sub-Account Value.........................................................12 Net Investment Factor.....................................................12 Continuation of Insurance.................................................13 Policy Loan...............................................................13 Effect of a Loan..........................................................13 J355 Page 3 Table of Contents (continued) POLICY VALUES, LOAN AND NONFORFEITURE PROVISIONS (continued) Loan Interest.............................................................13 Loan Value................................................................13 Loan Interest Rate........................................................14 Surrender Benefit.........................................................14 Paid-Up Life Insurance Provision..........................................14 Tax Considerations........................................................14 Partial Withdrawal Provision..............................................15 Postponement..............................................................15 Emergency Procedure.......................................................15 How Values Are Computed...................................................15 TRANSFER PROVISIONS Transfers.................................................................15 Dollar Cost Averaging.....................................................16 The Rebalancer Option.....................................................16 J355 Page 4 Definitions Attained Age - the age of the Insured, nearest birthday, as of the Policy Date and each policy anniversary thereafter. Beneficiary - the person(s) named by the Owner to receive the Death Benefit Proceeds upon the death of the Insured. Cash Surrender Value - is equal to: (a) Policy Value Account on the effective date of the surrender; less (b) outstanding policy loans and accrued loan interest, if any; less (c) any monthly cost of insurance charges. Corporate Headquarters - Great-West Life & Annuity Insurance Company ("the Company"), 8515 East Orchard Road, Englewood, Colorado 80111. Death Benefit Proceeds - the amount payable upon the Insured's death. A full description of the Death Benefit is described in the Death Benefit Provision. Effective Date - the date on which the first Premium payment is credited to the policy. Evidence of Insurability - information about an Insured which is used to approve or reinstate this policy or any additional benefit. Insured - the person named on Page 1 as the Insured. Investment Divisions - the divisions of the Series Account that purchase shares in specific securities. The Company may, at times: o make additional Series Accounts or additional Series Account Investment Divisions available; o eliminate Investment Divisions; o combine two or more Investment Divisions; or o substitute a new portfolio for the portfolio in which an Investment Division invests. Subject to any required regulatory approvals, the Company has the right to transfer assets of a Series Account or of an Investment Division to another Series Account or Investment Division. When permitted by law, the Company may modify the policy to comply with applicable federal and state laws and combine the Series Account with other Series Accounts. Issue Date - the date from which the incontestability and suicide exclusions are measured and is shown on Page 1. Loan Account - all outstanding loans plus credited loan interest held in the general account of the Company. The Loan Account is not part of the Series Account. J355 Page 5 Definitions (continued) Loan Account Value - the sum of all outstanding loans plus credited loan interest for this policy. Policy Date - the effective date of coverage under this policy. The Policy Months, policy years and anniversaries are measured from the Policy Date shown on Page 1. Policy Value Account - the Sub-Account Value plus the Loan Account Value. Premiums - amounts received and allocated to the Sub-Account(s) prior to any deductions. Request - any instruction in a form, written, telephoned or computerized, satisfactory to the Company and received at the Corporate Headquarters from the Owner or the Owner's assignee (as specified in a form acceptable to the Company) or the Beneficiary, (as applicable) as required by any provision of this policy or as required by the Company. The Request is subject to any action taken or payment made by the Company before it was processed. Series Account - the segregated investment account established by the Company as a separate account under Colorado law named the COLI VUL-2 Series Account. It is registered as a unit investment trust under the Investment Company Act of 1940, as amended. The Company owns the assets in the Series Account. The investments held in the Series Account provide variable life insurance benefits under this policy and the Series Account is used for other purposes permitted by applicable laws and regulations. This account is kept separate from the general account and other series accounts the Company may have. Sub-Account - sub-division(s) of the Owner's Policy Value Account containing the value credited to the Owner from the Series Account. Sub-Account Value - the sum of the values of the Sub-Accounts credited to the Owner under the Policy Value Account. The Sub-Account Value is credited with a return based upon the investment experience of the Investment Division(s) selected by the Owner and will increase or decrease accordingly. Transaction Date - the date on which any Premium payment or Request from the Owner will be processed by the Company. Premium payments and Requests received after 4:00 p.m. EST/EDT will be deemed to have been received on the next business day. Requests will be processed and the Sub-Account Value will be valued on each date that the New York Stock Exchange ("NYSE") is open for trading. Transfer - the moving of money from one Sub-Account to one or more Sub-Account(s). J355 Page 6 Definitions (continued) Underlying Fund - a portfolio of securities managed in accordance with a specified investment objective, or a registered management investment company in which the assets of the Series Account may be invested. Valuation Date - the date on which the net asset value of each Underlying Fund is determined. A Valuation Date is each day that the New York Stock Exchange is open for regular business. The value of an Investment Division's assets is determined at the end of each Valuation Date. To determine the value of an asset on a day that is not a Valuation Date, the value of that asset as of the end of the previous Valuation Date will be used. Valuation Period - the period between two successive Valuation Dates, starting at the close of the NYSE on one Valuation Date and ending at the close of the NYSE on the next succeeding Valuation Date. Ownership Provisions RIGHTS OF OWNER While the Insured is living, all benefits and rights under this policy belong to the Owner. However, the Owner's rights are subject to the rights of any assignee or irrevocably named Beneficiary. ASSIGNMENTS/TRANSFERS The Owner may assign this policy while the Insured is living. The Company will not recognize an assignment until the original or a certified copy is recorded at the Corporate Headquarters. When filed, the Owner's rights and those of the Beneficiary are subject to the assignment. The Company is not responsible for the validity of any assignment. When recorded by the Company, a transfer of ownership will revoke any designation of a Secondary Owner. It will not change a Beneficiary. All benefits and rights under this policy will belong to the new Owner, subject to the terms and conditions of the policy and the interest of any recorded assignee. BENEFICIARY While the Insured is living, the Owner may change the Beneficiary by Request unless a previous designation was made irrevocable. Any change is subject to any existing assignment of this policy. A recorded change of Beneficiary will take effect as of the date the notice was signed. However, the change will not affect any payment made by the Company before it received a Request for a change of Beneficiary. J355 Page 7 Ownership Provisions (continued) The Company may rely on an affidavit by any responsible person to identify a Beneficiary or verify the non-existence of a Beneficiary not identified by name. OWNERSHIP OF SERIES ACCOUNT The Company has absolute ownership of the assets of the Series Account. The portion of the assets of the Series Account equal to the reserves and other Contract liabilities with respect to the Series Account are not chargeable with liabilities arising out of any other business the Company may conduct. Income and realized and unrealized gains or losses from the assets in the Series Account are credited to or charged against the account without regard to other income, gains or losses arising out of any other business the Company may conduct. Assets of the Series Account held in or represented by any other separate account of the Company used in connection with this policy, in an amount equal to such other account's reserves and other contract liabilities shall not be chargeable with the liabilities arising out of any other business the Company may conduct. General Provisions ENTIRE CONTRACT This policy, any endorsements, any riders, and the application form the entire contract. A copy of the application is attached. After issue, amendments or changes in writing and agreed to by the Company are part of the contract. All statements in the application, in the absence of fraud, are considered representations and not warranties. Only statements in the application will be used to defend a claim or to cancel the policy for misrepresentation. Only the President, a Vice-President, or the Secretary of the Company have the authority to change or waive any provisions of the policy. No agent or broker has the authority to change any term of this policy or to make any agreements binding to the Company. J355 Page 8 General Provisions (continued) POLICY MODIFICATION The Company may terminate an Investment Division or Underlying Fund. In that event, the Owner, by Request, may change the allocation of the Premium. If no Request is made by the date of termination, future Premium allocations to the terminated Investment Division or Underlying Fund will be allocated to the Money Market Investment Division. Any modification will not affect the terms, provisions or conditions which are, or may be, applicable to Premium payments previously made to any such Investment Division. incontestability provision This policy will not be contested on the basis of misrepresentation after it has been in force during the Insured's lifetime for 2 years from the Issue Date. However, this 2 year limit does not apply to any rider attached to this policy which provides: (a) benefits in the event of disability; or (b) additional insurance in the event of accidental death. If the Total Face Amount is increased, the amount of the increase will in like manner be incontestable after it has been in force during the Insured's lifetime for 2 years from the effective date of the increase. SUICIDE EXCLUSION If the Insured commits suicide, while sane or insane, within 2 years from the Issue Date (1 year if issued in Colorado or North Dakota), the proceeds payable under this policy will be limited to an amount equal to all Premiums paid on this policy less outstanding policy loans, accrued loan interest, partial withdrawals and the cost for riders. Payment will be made to the Beneficiary. If the face amount is increased, and if the Insured commits suicide, while sane or insane, within 2 years from the effective date of any increase (1 year if issued in Colorado or North Dakota), the Company will pay only that portion of the Policy Value Account and the cost of insurance paid for the amount of increase. The face amount of the policy will be reduced to the face amount that was in effect prior to the increase. VOTING RIGHTS The Company will exercise any voting rights associated with the Series Account investments in its sole discretion in accordance with applicable law. J355 Page 9 General Provisions (continued) CURRENCY All amounts to be paid to or by the Company will be in the currency of the United States of America. NON-PARTICIPATING This policy is non-participating. It is not eligible to share in the Company's divisible surplus. MISSTATEMENT OF AGE AND/OR SEX If the Insured's age and/or sex on the Policy Date has been misstated, the benefits payable under this policy will be the amount of insurance that the cost of insurance (deducted from the Policy Value Account at the beginning of the month in which death occurred) would have purchased for the correct age and/or sex on the Policy Date. If the age and/or sex of the Insured or any other person covered under a rider has been misstated on the Policy Date, the benefits payable under the rider will be the benefit that the amount charged would have purchased for the correct age and/or sex on the Policy Date. If the age is misstated in such a way that the Insured was not eligible for coverage under the policy, the Company's liability will be limited to a return of the Premiums paid, less any partial withdrawals and outstanding loans and accrued loan interest and the cost for riders. POLICY YEARS AND ANNIVERSARIES Policy years and anniversaries will be measured from the Policy Date shown on Page 1. PAYMENT OF PREMIUMS The first Premium is due on or before the Policy Date shown on Page 1. The Company will mail the Owner a billing notice 30 days in advance of the Premium due date. All Premiums after the first are to be made payable to the Company at the Corporate Headquarters and will be due on the first day of any Policy Month in which the cost of insurance exceeds the Policy Value Account less any outstanding loans and less any accrued loan interest. Subject to limitations as provided in this policy, Premiums paid after the first may be paid in any amount and at any time before the Paid-Up Life Insurance Provision goes into effect. Receipts will be furnished upon Request. ALLOCATION OF PREMIUMS During the Free Look Period, amounts to be allocated to one or more of the Investment Divisions will first be allocated to the Money Market Investment Division and will remain there until the next Transaction Date following the end of the Free Look Period plus 5 calendar days. On that date, the Sub-Account Value held in the Money Market Investment Division will be allocated to the Investment Division(s) selected by the Owner. J355 Page 10 General Provisions (continued) If the policy is returned during the Free Look Period, it will be void from the start, and the Company will refund the amount described on the front cover of this policy. After the Free Look Period, subsequent Premium payments will be allocated in the Policy Value Account as Requested by the Owner. If there are no accompanying instructions, then allocations will be made in accordance with standing instructions. Allocations will be effective upon the Transaction Date. GRACE PERIOD PROVISION The first day of each Policy Month is the due date for any Premium required to keep the policy in force for that month. Except for the first Premium, if the amount in the Policy Value Account, less any outstanding policy loans and less any accrued loan interest, on the last day of a Policy Month is not sufficient to cover the monthly deduction for the cost of insurance for the next Policy Month, a grace period of 61 days from the due date will be allowed for the payment of an amount sufficient to cover the monthly cost of insurance for the next 2 months. Coverage will remain in force during the grace period. If the Premium due is not paid within the grace period, all coverage under this policy will cease at the end of the 61 day period. Notice of such Premium due will be mailed to the last known address of the Owner and any assignee of record at least 31 days prior to the date coverage will cease. If the Insured dies during the grace period, any cost of insurance charges due and unpaid will be deducted from the Death Benefit Proceeds. PERIODIC PREMIUM AMOUNT The Company may suggest a periodic premium amount. The actual amount of Premiums needed may change, depending on the number of Premium payments made, changes in coverage, investment experience, monthly risk rate, and partial withdrawals made. ADDITIONAL PREMIUM PAYMENTS PROVISION Besides the periodic premium amount, the Owner may make additional Premium payments as described below prior to the date the Paid-Up Life Insurance Provision goes into effect. J355 Page 11 General Provisions (continued) Additional Premium payments may be limited to amounts that will not exceed tax guidelines and jeopardize the tax status of the policy as life insurance. The minimum additional Premium that will be accepted at one time is $100. The Company reserves the right to restrict or refuse additional Premium payments that exceed the Initial Periodic Premium Amount shown on Page 1. REINSTATEMENT This policy may be reinstated within 3 years after the coverage ceased, unless it has been surrendered. The Company must receive: o A Request from the Owner. o Evidence of Insurability for the Insured and any other person covered by rider, at the Owner's expense. o Payment of the cost of insurance for the grace period. o Payment of an amount equal to 4 months' cost of insurance. Such payment less the expense charges will be credited to the Policy Value Account as of the date of reinstatement. o Payment or reinstatement of any policy loan which was outstanding as of the date the coverage ceased, including interest thereon. Interest will be 6.00% per year. Interest will be compounded annually to the date of the policy reinstatement. Reinstatement will become effective on the date the application for reinstatement is approved by the Company. ANNUAL STATEMENT Within 30 days after each policy anniversary, the Company will send the Owner a statement showing: o The Policy Value Account; o The Death Benefit o Premiums paid and investment experience since the last statement; o Partial withdrawals and charges since the last statement; o Outstanding policy loans and loan interest paid since the last statement; o The current allocation in each of the Investment Divisions; and o Any further information required by the state in which the policy was issued. J355 Page 12 General Provisions (continued) ILLUSTRATION OF BENEFITS AND VALUES The Owner may at any time Request from the Company an illustration of future Death Benefits and Cash Surrender Values. The first illustration provided during a policy year will be at no charge. Each additional illustration during that policy year will be subject to a maximum fee of $50. This illustration will be based on: o The current Policy Value Account; o Assumed investment experience; o Coverage amounts and the Death Benefit option elected; o Recommended periodic premium amounts; and o Current monthly risk rates. EXCHANGE OF POLICY Subject to the Company's approval, the Owner may exchange this policy for a new fixed policy with the Company. The new policy will have the same Policy Date, Issue Age, and Insured as this policy on the date of exchange. The Total Face Amount of the new policy may not exceed the Total Face Amount of this policy on the date of exchange. The premium rate will be the rate used for the new policy of insurance on the Policy Date for the mortality class in which this policy has been placed. The Company will determine any other requirements or costs. Any excess Cash Surrender Value will be payable to the Owner; this distribution may be a taxable event to the Owner. Although evidence of insurability will not be required, the following terms apply: o the exchange must be made within 24 months after the Issue Date of this policy; and o any Loan Account Value must be repaid. CHANGE OF TOTAL FACE AMOUNT By Request, the Owner may at any time increase or decrease the Total Face Amount provided by this policy, subject to the Company's approval. Any change in Total Face Amount may be limited to amounts that will not exceed tax guidelines and jeopardize the tax status of the policy as life insurance. For a decrease in Total Face Amount: o The Company must receive a Request. o The decrease will become effective on the first day of the Policy Month following receipt of the Request. o The decrease will apply first to the most recent increase or increases in Total Face Amount for purposes of the Incontestability Provision. The minimum decrease amount will be $25,000. The Total Face Amount may not be decreased below $100,000 unless prior approval is obtained from the Company. J355 Page 13 General Provisions (continued) For an increase in Total Face Amount: o The Company must receive a Request. o The increase will be subject to Evidence of Insurability satisfactory to the Company. o The increase will be effective on the policy anniversary following the approval of the Request for the increase, subject to the deduction of the first month's cost of insurance from the Policy Value Account. The minimum increase amount will be $25,000. Death Benefit Provisions DEATH BENEFIT PROVISION The Death Benefit option for this policy as of the Issue Date is shown on Page 1. The Death Benefit is determined by the option in effect at the Insured's date of death. Option 1: Level Death The Death Benefit will be the greater of: a) the Total Face Amount shown on Page 1, less any partial withdrawals; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on Page 1b. The Death Benefit will be reduced by the amount of any outstanding loans and loan interest accrued. Option 2: Coverage Plus The Death Benefit will be the greater of: a) the Total Face Amount shown on Page 1, plus the Policy Value Account on the Insured's date of death; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on Page 1b. The Death Benefit will be reduced by the amount of any outstanding loans and loan interest accrued. Option 3: Premium Accumulation The Death Benefit will be the greater of: a) the Total Face Amount shown on Page 1, plus the accumulated value of all Premiums paid at interest shown on Page 1, less any partial withdrawals; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on Page 1b. J355 Page 14 Death Benefit Provisions (continued) The Death Benefit will be reduced by the amount of any outstanding loans and loan interest accrued. CHANGE OF DEATH BENEFIT OPTION After the first policy year, but not more than once each policy year, the Owner may change the Death Benefit option by Request. Any change will be effective on the first day of the Policy Month following the date the Company approves the Request. A maximum fee of $100 will be deducted from the Policy Value Account for each change. A change in the Death Benefit option is subject to the following conditions: o If the change is from Option 1 to Option 2, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the Policy Value Account. Evidence of Insurability may be required. o If the change is from Option 1 to Option 3, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the accumulated value of all Premiums at the interest rate shown on Page 1. Evidence of insurability may be required. o If the change is from Option 2 to Option 1, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the Policy Value Account. o If the change is from Option 2 to Option 3, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the policy value account less the accumulated value of all Premiums at the interest rate shown on Page 1. o If the change is from Option 3 to Option 1, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the accumulated value of all Premiums at the interest rate shown on Page 1. o If the change is from Option 3 to Option 2, the amount payable upon the death of the Insured will remain the same and the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the policy value account plus the accumulated value of all Premiums at the interest rate shown on Page 1. J355 Page 15 Death Benefit Provisions (continued) DEATH BENEFIT PAYMENT The Death Benefit payable on the Insured's death will be paid in a lump sum unless the Owner elects to receive all or a portion of the Death Benefit Proceeds under a settlement option that the Company is then offering. The Company will pay interest on the Death Benefit Proceeds from the date of death to the date of settlement at a rate not less than that required by law. Policy Values, Loan and Nonforfeiture Provisions COST OF INSURANCE An amount will be deducted on the first day of each Policy Month from the Policy Value Account to pay the cost of insurance for that Policy Month. The cost of insurance is calculated on the first day of each Policy Month and is equal to: the Death Benefit divided by 1.00327374 less the Policy Value Account on the first day of each Policy Month, multiplied by the current monthly risk rate for the Insured's Attained Age plus the extra charge for any rated class plus the monthly Service Charge plus the cost of any riders. If there has been an increase or decrease in Death Benefit during the policy year, the cost of insurance calculation will be adjusted accordingly to reflect the change. RISK RATE The maximum monthly risk rate is shown on Page 1a. The Company may charge a lower monthly risk rate. The maximum risk rates shown on Page 1a are based on the Sex-Distinct Commissioners 1980 Standard Ordinary Mortality Table, age nearest birthday. Any change in the monthly risk rate will be made uniformly by class. EXPENSE CHARGE The maximum expense charge for this policy is shown on Page 1. The charge is a percentage of all Premiums paid. This charge is guaranteed and may not be increased. The expense charge will be deducted from each Premium paid. This would include any Premium paid to reinstate the policy. SERVICE CHARGE The maximum service charge for this policy is shown on Page 1. This charge is deducted from the Policy Value Account on the first day of each policy month. This charge is guaranteed and may not be increased. J355 Page 16 Policy Values, Loan and Nonforfeiture Provisions (continued) POLICY VALUE ACCOUNT The Policy Value Account is equal to the Sub-Account Value plus the Loan Account Value. Each Premium less any expense charge will be credited to the Policy Value Account on the date received at the Corporate Headquarters. On the first day of each Policy Month a deduction will be made from this account for the cost of insurance. SUB-ACCOUNT VALUE The Sub-Account Value is the total dollar amount of all accumulation units under each of the Owner's Sub-Accounts. Initially, the value of each Accumulation Unit was set at $10.00. Each Sub-Account's Value is equal to the sum of: o the value of the Sub-Account at the last Valuation Date; o any Premium, less Expense Charges deducted from Premiums received during the current Valuation Period which is allocated to the Sub-Account; o any loan repayment amount; o all values transferred to the Sub-Account; and o any net investment return allocated to the Sub-Account. MINUS the following: o all values transferred to another Sub-Account and the Loan Account Value taken from the Sub-Account during the current Valuation Period; o all partial withdrawals from the Sub-Account during the current Valuation Period. In addition, whenever a Valuation Period includes the monthly anniversary day, value of the Sub-Account at the end of such period is reduced by the portion of the cost of insurance charges allocated to the Sub-Account and any other investment charges specified on Page 1. The Sub-Account Value is expected to change from Valuation Period to Valuation Period, reflecting the investment experience of the selected Investment Division(s) as well as the deductions for charges. Premiums which the Owner allocates to an Investment Division are used to purchase accumulation units in the Investment Division(s) the Owner selects. The number of accumulation units to be credited will be determined by dividing the portion of each Premium allocated to or amount transferred to the Investment Division by the value of an Accumulation Unit determined at the end of the Valuation Period during which the Premium was received or the amount was transferred to the Investment Division. In the case of the initial Premium, accumulation units for that payment will be credited to the Sub-Account Value held in the Money Market Investment Division until the end of the Free Look Period. In the case of any subsequent Premium, accumulation units for that payment will be credited at the end of the Valuation Period during which we receive the Premium. The value of an Accumulation Unit for each Investment Division for a Valuation Period is established at the end of each Valuation Period and is calculated by multiplying the value of that unit at the end of the prior Valuation Period by the Investment Division's Net Investment Factor for the Valuation Period. J355 Page 17 Policy Values, Loan and Nonforfeiture Provisions (continued) NET INVESTMENT FACTOR The net investment factor for any Investment Division for any Valuation Period is determined by dividing (a) by (b), and subtracting (c) from the result where: (a) is the net result of: (i) the net asset value held in the Investment Division determined as of the end of the current Valuation Period; plus (ii) the amount of any dividend (or, if applicable, capital gain distributions) on assets held in the Investment Division if the "ex-dividend" date occurs during the current Valuation Period; minus or plus (iii) a charge or credit for any taxes incurred by or reserved for in the Investment Division, which is determined by the Company to have resulted from the investment operations of the Investment Division. (b) is the net result of: (i) the net asset value held in the Investment Division determined as of the end of the immediately preceding Valuation Period; minus or plus (ii) the charge or credit for any taxes incurred by or reserved for in the Investment Division for the immediately preceding Valuation Period. (c) is an amount representing the Mortality and Expense risk charge deducted from each Investment Division on a daily basis, equal to an annual rate as a percentage of the daily net asset value of each Investment Division. The actual mortality and expense charge is determined by the company, but may not exceed the annual guaranteed maximum Mortality and Expense charge of .90% The net investment factor may be greater than, less than, or equal to one. Therefore, the accumulation unit value may increase, decrease or remain unchanged. The net asset value includes a deduction for an investment advisory fee. This fee compensates the investment adviser for services provided to the Underlying Fund. The fee may differ between Underlying Funds and may be renegotiated each year. CONTINUATION OF INSURANCE If Premium payments cease, coverage under this policy or any attached riders will continue until the Policy Value Account, less any outstanding loans, and less loan interest accrued is insufficient to cover the monthly deduction for the cost of insurance. When the amount is insufficient, the Grace Period Provision will go into effect. POLICY LOAN While this policy is in force, the Owner, by Request, may obtain a loan from the Company on the security of the policy. The minimum loan amount is $500. The total amount of loans cannot be more than the maximum described in the Loan Value Provision. J355 Page 18 Policy Values, Loan and Nonforfeiture Provisions (continued) EFFECT OF A LOAN When a policy loan is made, funds are transferred out of the Series Account and into the Loan Account. When a policy loan is repaid, the amount of repayment is added according to current allocations to the Series Account. A loan, whether or not repaid, will have a permanent effect on the Cash Surrender Value and on the Death Benefit, as described in this policy. If not repaid, any indebtedness will reduce the amount of Death Benefit Proceeds and the amount available upon surrender of this policy. A policy loan will not be treated as a taxable distribution under Section 72 unless: o this policy is surrendered or lapsed while there is an outstanding loan; or o this policy is a modified endowment contract. If this policy is a modified endowment contract, a 10% penalty will apply to the amount of the loan included as gross income unless the loan is made after the date the Owner becomes 59[]or becomes disabled. LOAN INTEREST Interest credited on the Loan Account is the loan interest rate less a maximum of .90%. A policy loan will be a first lien on the policy in favor of the Company. The Owner must Request if any part of a Premium is to be applied to repay a policy loan. The expense charge will not apply to repayments of policy loans. Loan amounts will be withdrawn from all the Sub-Accounts on a pro rata basis. The Owner may designate Loan repayments will be added to all the Sub-Accounts on a pro rata basis. LOAN VALUE The maximum loan value is equal to: 90% of the Policy Value Account at the time of the loan less the current monthly deductions remaining for the balance of the policy year less interest on the loan to the next policy anniversary date. J355 Page 19 Policy Values, Loan and Nonforfeiture Provisions (continued) LOAN INTEREST RATE The loan interest rate will be determined annually at the beginning of each policy year. It is guaranteed for that policy year and applies to all loans outstanding during that policy year. Interest is due and payable on each policy anniversary. Interest not paid when due will be added to the loan and will bear interest at the loan interest rate. The maximum loan interest rate for policy loans is based on a Published Monthly Average. That average is: (a) The Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc. or any successor thereto; or (b) In the event that the Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the Commissioner. The Company must reduce the loan interest rate if the maximum loan interest rate is lower than the loan interest rate for the previous policy year by one-half of one percent or more. Any increase to the loan interest rate must be at least one-half of one percent. No increase may be made if the loan interest rate would exceed the maximum loan interest rate. The Company will send to the Owner and any assignee of record with loans advance notice of any increase in the rate. SURRENDER BENEFIT The Owner may surrender this policy for the Surrender Benefit. The Surrender Benefit is the Policy Value Account less any outstanding policy loans and less accrued loan interest on the date of surrender. PAID-UP LIFE INSURANCE PROVISION If the Insured is living and the policy is in force on the policy anniversary at Attained Age 100, the entire Policy Value Account less any outstanding loans and less loan interest accrued will be applied as a single Premium to purchase paid-up insurance. This net single Premium will be based on the Sex-Distinct Commissioners 1980 Standard Ordinary Smoker or Non-Smoker Mortality Table and 4% interest. J355 Page 20 Policy Values, Loan and Nonforfeiture Provisions (continued) The paid-up policy may be surrendered at any time. If it is surrendered within 30 days after a policy anniversary, the Cash Value will not be less than it would have been on that policy anniversary. TAX CONSIDERATIONS This policy is intended to constitute life insurance for tax purposes and is designed to meet the requirements of Internal Revenue Code (Code) Sections 101 and 7702, as they existed on the Issue Date. If, in the Company's sole discretion, the Cash Value at any time reaches an amount which could jeopardize this policy's treatment as life insurance for tax purposes, the Company reserves the right to refund the portion of the Premium or Cash Value in excess of the allowable limits. This policy may be purchased as a modified endowment contract. Distributions from modified endowment contracts are subject to different taxation rules than distributions from a life insurance policy that is not a modified endowment contract. If the policy is not a modified endowment contract when issued, the payment of excess Premium or a material change in the benefits or terms of the contract as provided in Code Section 7702A will cause the policy to be treated as a new contract and may cause the policy to become a modified endowment contract. It is entirely the Owner's responsibility to monitor Premium payments and material changes to ensure that the contract does not become a modified endowment contract. Nothing in this policy is to be construed as tax advice, and the Company recommends that the Owner discuss the tax consequences under the policy with a competent tax adviser. PARTIAL WITHDRAWAL PROVISION The Owner may make a partial withdrawal from the Policy Value Account at any time while the policy is in force. The minimum amount per withdrawal is $500. The maximum amount that may be withdrawn is 90% of the Policy Value Account less the Loan Account Value. There is no administrative fee charged for the first partial withdrawal in any policy year. However, a maximum administrative fee of $25 will be deducted from the Policy Value Account for each additional partial withdrawal made in the same policy year. J355 Page 21 Policy Values, Loan and Nonforfeiture Provisions (continued) The partial withdrawal will be effective on the Transaction Date. The Policy Value Account will be reduced by the withdrawal amount, which will be taken from all the Sub-Accounts on a pro-rata basis. If the policy is in force under Option 1, Level Death Benefit, or Option 3, Premium Accumulation, then the Death Benefit also will be reduced by the amount of each withdrawal. Withdrawals may not be repaid directly into the Policy Value Account. Any payments received will be subject to the Additional Premium Payments Provision. POSTPONEMENT In accordance with state law, if the Company receives a Request for surrender, partial withdrawal, or a loan, the Company may postpone any payment for up to 7 days. For Investment Divisions which are not valued on each business day, the Company may defer until the next Valuation Date: o determination and payment of any surrenders, partial withdrawals or loans; o determination and payment of any death proceeds in excess of the face amount; and reallocation of the Sub-Account value. During the postponement period, the Sub-Account Value will continue to be subject to the investment experience (gains or losses) of the Underlying Fund(s) and all applicable charges. EMERGENCY PROCEDURE If the Company cannot value the Investment Divisions due to a national stock exchange closure, with the exception of weekends or holidays, or if trading is restricted due to an existing emergency as defined by the Securities and Exchange Commission (SEC), or as otherwise ordered by the SEC, the Company may postpone all procedures which require valuation of the Investment Divisions until valuation is possible. HOW VALUES ARE COMPUTED All guaranteed calculations are based on the Sex-Distinct Commissioners 1980 Standard Ordinary Mortality Table, age nearest birthday, at an interest rate of 4% per year. These computations assume that Death Benefits are to be paid at the end of the policy year in which death occurs. Any net single Premium will be computed on the basis of the Insured's Attained Age and Premium class. A detailed statement of the method of computing the values of this policy has been filed with the Insurance Department of the state in which this policy is delivered. All policy values equal or exceed those required by the law of that state or jurisdiction. J355 Page 22 Policy Values, Loan and Nonforfeiture Provisions (continued) Transfer Provisions TRANSFERS The Owner may make Transfers by Request. The following provisions apply: o While this policy is in force, the Owner, by request may Transfer all or a portion of the Sub-Account Value among the Investment Divisions currently offered by the Company. o A Transfer will be effective upon the Transaction Date. o There is no administrative charge for the first twelve Transfers made in a calendar year. There is a maximum $10 administrative fee for each subsequent Transfer. All Transfers made on a single Transaction Date will be aggregated to count as only one Transfer toward the twelve free Transfers; however, if a one time rebalancing Transfer also occurs on the Transaction Date, it will be counted as a separate and additional Transfer. DOLLAR COST AVERAGING By Request, the Owner may elect Dollar Cost Averaging in order to purchase units of the Variable Sub-Accounts over a period of time. The Owner may Request to automatically Transfer a predetermined dollar amount, subject to the Company's minimum, at regular intervals from any one or more designated Variable Sub-Accounts to one or more of the remaining, then available, Variable Sub-Accounts. The unit value will be determined on the dates of the Transfers. The Owner must specify the percentage to be Transferred into each designated Variable Sub-Account. Transfers may be set up on any one of the following frequency periods: monthly, quarterly, semiannually, or annually. The Transfer will be initiated on the Transaction Date one frequency period following the date of the Request. The Company will provide a list of Variable Sub-Accounts eligible for Dollar Cost Averaging which may be modified from time to time. Amounts Transferred through Dollar Cost Averaging are not counted against the twelve free Transfers allowed in a calendar year. The Owner may terminate Dollar Cost Averaging at any time by Request. Dollar Cost Averaging will terminate automatically upon the annuity commencement date. J355 Page 23 Transfer Provisions (continued) Participation in Dollar Cost Averaging and the Rebalancer Option at the same time is not allowed. Participation in Dollar Cost Averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate Dollar Cost Averaging at any time. THE REBALANCER OPTION By Request, the Owner may elect the Rebalancer Option in order to automatically Transfer among the Variable Sub-Accounts on a periodic basis. This type of automatic Transfer program automatically reallocates the Variable Account Value to maintain a particular percentage allocation among Variable Sub-Accounts selected by the Owner. The amount allocated to each Variable Sub-Account will grow or decline at different rates depending on the investment experience of the Variable Sub-Account. The Owner may Request that rebalancing occur one time only, in which case the Transfer will take place on the Transaction Date of the Request. This Transfer will count as one Transfer towards the twelve free Transfers allowed in a calendar year. Rebalancing may also be set up on a quarterly, semiannual, or annual basis, in which case the first Transfer will be initiated on the Transaction Date one frequency period following the date of the Request. On the Transaction Date for the specified Request, assets will be automatically reallocated to the selected funds. Rebalancing will continue on the same Transaction Date for subsequent periods. In order to participate in the Rebalancer Option, the entire Variable Account Value must be included. Transfers set up with these frequencies will not count against the twelve free Transfers allowed in a calendar year. The Owner must specify the percentage of Variable Account Value to be allocated to each Variable Sub-Account and the frequency of rebalancing. The Owner may terminate the Rebalancer Option at any time by Request. The Rebalancer Option will terminate automatically upon the annuity commencement date. Participation in the Rebalancer Option and Dollar Cost Averaging at the same time is not allowed. Participation in the Rebalancer Option does not assure a greater profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate the Rebalancer Option at any time. J355 Page 24 ADJUSTABLE DEATH BENEFIT. Proceeds payable at death are subject to policy provisions. See Death Benefit Provisions. Flexible Premiums payable while the Insured is alive. If no Premiums are paid after the first Premium, or if subsequent Premiums prove to be too low, this coverage may cease prior to age 100. ALL PAYMENTS AND VALUES BASED ON THE INVESTMENT EXPERIENCE OF THE INVESTMENT DIVISIONS ARE VARIABLE, MAY INCREASE OR DECREASE ACCORDINGLY, AND ARE NOT GUARANTEED AS TO AMOUNT. Non-Participating. J355 Page 25 EX-99.15B 7 Exhibit 1.(5)(b) TERM LIFE INSURANCE RIDER - -------------------------------------------------------------------------------- THIS RIDER IS ISSUED BY GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY AS PART OF THE POLICY TO WHICH IT IS ATTACHED. IT IS ISSUED BASED ON THE INFORMATION GIVEN IN THE APPLICATION AND PAYMENT OF THE PREMIUMS SHOWN ON THE POLICY SPECIFICATIONS PAGE. EACH PREMIUM FOR THIS RIDER IS PAYABLE ONLY WITH EACH CORRESPONDING PREMIUM FOR THE POLICY. THE PROVISIONS OF THE POLICY APPLY TO THIS RIDER UNLESS OTHERWISE STATED HEREIN. - -------------------------------------------------------------------------------- BENEFIT This Rider provides Term Life insurance on the Insured. The Insured is the person insured under the policy to which this Rider is attached. Coverage is annually renewable to the Insured's Attained Age 100. The amount of coverage provided under this Rider varies from month to month as described below. The Company will pay the Rider's Death Benefit to the Beneficiary when the Company receives satisfactory proof that the death of the Insured occurred while this Rider was in force. RIDER DEATH BENEFIT The Rider's Death Benefit will be determined at the beginning of each Policy Month in accordance with one of the following options, whichever is in effect on the date of the Insured's death. The Rider's Death Benefit Option at all times must be the same as the policy's Death Benefit Option. The Death Benefit option for the policy and this Rider as of the Issue Date is shown on the Policy Specifications Page 1. The Rider's Death Benefit is determined by the option in effect at the Insured's date of death. The Rider Death Benefit is included in, and will not be an addition to, the Death Benefit Provision described on page 10 of the policy to which it is attached. For each of the options described below, the Death Benefit will be reduced by any outstanding loans and loan interest accrued. Option 1: Level Death The Rider's Death Benefit will be: o the greater of: a) the Total Face Amount shown on the Policy Specifications Page 1, less any partial withdrawals; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on the Policy Specifications Page 1b. 1 Term Life Insurance Rider (continued) o less the greater of: c) the Base Face Amount shown on the Policy Specifications Page 1; and d) the Policy Value Account of the policy to which this Rider is attached. Option 2: Coverage Plus The Rider's Death Benefit will be: o the greater of: a) the Total Face Amount shown on the Policy Specifications Page 1, plus the Policy Value Account on the Insured's date of death; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on the Policy Specifications Page 1b. o less c) the Base Policy Face Amount shown on the Policy Specifications Page 1; plus d) the Policy Value Account of the policy to which this Rider is attached. Option 3: Premium Accumulation The Rider's Death Benefit will be: o the greater of: a) the Total Face Amount shown on the Policy Specifications Page 1, plus the accumulated value of all Premiums paid at interest shown on the Policy Specifications Page 1, less any partial withdrawals; and b) the Policy Value Account on the Insured's date of death times the applicable Factor shown in the Table on the Policy Specifications Page 1b. o less the greater of c) the Base Policy Face Amount shown on the Policy Specifications Page 1 plus the accumulated value of all premiums paid at the interest shown on the Policy Specifications Page 1; and d) the Policy Value Account of the policy to which this Rider is attached. COVERAGE EFFECTIVE Coverage under this Rider will take effect on the later of: o the effective date of the policy to which this Rider is attached; or o the date this Rider is delivered and the first Rider premium is paid to the Company. CHANGE OF FACE AMOUNT By Request, the Owner may at any time increase or decrease the Rider Face Amount, subject to the Company's approval. Any change in Rider Face Amount may be limited to amounts that will not exceed tax guidelines and jeopardize the tax status of the policy as life insurance. 2 Term Life Insurance Rider (continued) For a decrease in Rider Face Amount: o The Company must receive a Request. o The decrease will become effective on the first day of the Policy Month following receipt of the Request. o The decrease will apply first to the most recent increase or increases in Total Face Amount for purposes of the Incontestability Provision. The minimum decrease amount for the Total Face Amount will be $25,000. The Total Face Amount may not be decreased below $100,000 unless prior approval is obtained from the Company. For an increase in Rider Face Amount: o The Company must receive a Request. o The increase will be subject to Evidence of Insurability satisfactory to the Company. o The increase will be effective on the Rider anniversary following the approval of the Request for the increase, subject to the deduction of the first month's cost of insurance for the Rider from the Policy Value Account. The minimum increase amount Total Face Amount will be $25,000. COST OF INSURANCE While this Rider is in force, the cost of insurance for the Rider will be determined on the first day of each Policy Month and added to the policy's monthly deduction. The monthly cost of insurance charge for this Rider is determined by multiplying the monthly cost of insurance rate by the Rider Death Benefit. Monthly cost of insurance rates for this Rider will be determined by the Company from time to time, based on the Company's expectations as to future experience for factors such as mortality, persistency, expenses and taxes. Any change in the Company's cost of insurance rates will be made uniformly by class. These rates will never be greater than the Maximum Monthly Cost of Insurance Rates shown on the Policy Specifications Page. The Company may charge a lower monthly rate. The maximum risk rates for this Rider are based on the Sex-Distinct Commissioners 1980 Standard Ordinary Mortality Table, age nearest birthday. 3 Term Life Insurance Rider (continued) REINSTATEMENT If the policy to which this Rider is attached is reinstated, the Company will also reinstate this Rider if the Company receives proof, satisfactory to the Company, that the Insured is still insurable at the same rates. INCONTESTABILITY This Rider will not be contested on the basis of misrepresentation after it has been in force during the Insured's lifetime for 2 years from its Issue Date. SUICIDE If the Insured commits suicide, while sane or insane, within 2 years of the Issue Date of this Rider, (1 year if issued in Colorado or North Dakota), payment will be limited to an amount equal to the cost of insurance deducted for this Rider. MISSTATEMENT OF AGE AND/OR SEX If the Insured's age and/or sex has been misstated, the Rider Death Benefit will be adjusted. The adjusted Rider Death Benefit will be that which the Rider cost of insurance charge would have purchased, based on the Insured's correct age and sex on the Effective Date of the Rider. This Rider cost of insurance charge will be determined on the last Monthly Anniversary Day prior to the death of the Insured. NON-PARTICIPATING This Rider is non-participating; no dividends are payable. It is not eligible to share in the Company's divisible surplus. TERMINATION The Owner may terminate this Rider by Request. In order to terminate this Rider, the Company has the right to require this policy for endorsement. This Rider also will also terminate on the earliest of the following dates: o the date the policy is surrendered or terminated; o the expiration of the grace period of the policy; or o the death of the Insured. Signed for Great-West Life & Annuity Insurance Company on the Issue Date of the policy (unless a different Issue Date is shown here.) /s/W.T. McCallum --------------------------- W.T. McCallum, President and Chief Executive Officer 4 EX-99.18 8 Exhibit 1.(8) FUND PARTICIPATION AGREEMENT TABLE OF CONTENTS ARTICLE I. Sale of Fund Shares.........................................3 ARTICLE II. Representations and Warranties..............................7 ARTICLE III. Prospectuses and Proxy Statements; Voting..................11 ARTICLE IV. Sales Material and Information.............................13 ARTICLE V. Fees and Expenses..........................................15 ARTICLE VI. Diversification and Qualification..........................16 ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding Exemptive Order ..................19 ARTICLE VIII. Indemnification ...........................................22 ARTICLE IX. Applicable Law.............................................31 ARTICLE X. Termination................................................32 ARTICLE XI. Notices....................................................35 ARTICLE XII. Miscellaneous..............................................36 SCHEDULE A Contracts..................................................39 SCHEDULE B Designated Portfolios......................................40 SCHEDULE C Reports per Section 6.6....................................41 SCHEDULE D Expenses...................................................43 PARTICIPATION AGREEMENT Among GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY XYZ FUNDS, XYZ INVESTMENT ADVISER, and XYZ DISTRIBUTOR THIS AGREEMENT, made and entered into as of this ____ day of _______________, 1997 by and among GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter "GWL&A"), a Colorado life insurance company, on its own behalf and on behalf of its Separate Account Maxim Series Account (the "Account"); XYZ FUND, a organized under the laws of (hereinafter the "Fund"); XYZ INVESTMENT ADVISER (hereinafter the "Adviser"), a organized under the laws of ; and XYZ DISTRIBUTOR, a organized under the laws of (hereinafter the "Distributor"). WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and/or variable annuity contracts (collectively, the "Variable Insurance Products") to be offered by insurance companies, including GWL&A, which have entered into participation agreements similar to this Agreement (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a "Portfolio" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission (hereinafter the "SEC"), dated (File No. ), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (here inafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of life insurance companies that may or may not be affiliated with one another and qualified pension and retirement plans ("Qualified Plans") (hereinafter the "Mixed and Shared Funding Exemptive Order"); and WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolio(s) are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Adviser is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities laws; and WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, GWL&A has registered certain variable annuity contracts supported wholly or partially by the Account (the "Contracts") under the 1933 Act and said Contracts are listed in Schedule A attached hereto and incorporated herein by reference, as such Schedule may be amended from time to time by mutual written agreement; and WHEREAS, the Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of GWL&A on June 24, 1981, under the insurance laws of the State of Colorado, to set aside and invest assets attributable to the Contracts; and WHEREAS, GWL&A has registered the Account as a unit investment trust under the 1940 Act and has registered the securities deemed to be issued by the Account under the 1933 Act; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, GWL&A intends to purchase shares in the Portfolio(s) listed in Schedule B attached hereto and incorporated herein by reference, as such Schedule may be amended from time to time by mutual written agreement (the "Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and the Fund is authorized to sell such shares to unit investment trusts such as the Account at net asset value; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Account also intends to purchase shares in other open-end investment companies or series thereof not affiliated with the Fund (the "Unaffiliated Funds") on behalf of the Account to fund the Contracts; and NOW, THEREFORE, in consideration of their mutual promises, GWL&A, the Fund, the Distributor and the Adviser agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to GWL&A those shares of the Designated Portfolio(s) which the Account orders, executing such orders on each Business Day at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Portfolios. For purposes of this Section 1.1, GWL&A shall be the designee of the Fund for receipt of such orders and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of any such order by 12:00 noon Eastern time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Fund agrees to make shares of the Designated Portfolio(s) available for purchase at the applicable net asset value per share by GWL&A and the Account on those days on which the Fund calculates its Designated Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund will not sell shares of the Designated Portfolio(s) to any other Participating Insurance Company separate account unless an agreement containing provisions substantially the same as Sections 2.1, 3.5, 3.6, 3.7, and Article VII of this Agreement is in effect to govern such sales. 1.4. The Fund agrees to redeem for cash, on GWL&A's request, any full or fractional shares of the Fund held by GWL&A, executing such requests on each Business Day at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. Requests for redemption identified by GWL&A, or its agent, as being in connection with surrenders, annuitizations, or death benefits under the Contracts, upon prior written notice, may be executed within seven (7) calendar days after receipt by the Fund or its designee of the requests for redemption. This Section 1.4 may be amended, in writing, by the parties consistent with the requirements of the 1940 Act and interpretations thereof. For purposes of this Section 1.4, GWL&A shall be the designee of the Fund for receipt of requests for redemption and receipt by such designee shall constitute receipt by the Fund, provided that the Fund receives notice of any such request for redemption by 12:00 noon Eastern time on the next following Business Day. 1.5. The Parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund's shares may be sold to other Participating Insurance Companies (subject to Section 1.3 and Article VI hereof) and the cash value of the Contracts may be invested in other investment companies. 1.6. GWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire and/or by a credit for any shares redeemed the same day as the purchase. 1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund shares by 12:00 noon Eastern Time on the next Business Day after a redemption order is received in accordance with Section 1.4 hereof. Payment shall be in federal funds transmitted by wire and/or a credit for any shares purchased the same day as the redemption. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to GWL&A or the Account. Shares ordered from the Fund will be recorded in an appropriate title for the Account or the appropriate sub-account of the Account. 1.9. The Fund shall furnish same day notice (by wire or telephone, followed by written confirmation) to GWL&A of any income, dividends or capital gain distributions payable on the Designated Portfolio(s)' shares. GWL&A hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. GWL&A reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify GWL&A by the end of the next following Business Day of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Designated Portfolio available to GWL&A on each Business Day as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 6:00 p.m. Eastern time. In the event of an error in the computation of a Designated Portfolio's net asset value per share ("NAV") or any dividend or capital gain distribution (each, a "pricing error"), the Adviser or the Fund shall immediately notify GWL&A as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing in accordance with Article XI of this Agreement. A pricing error shall be corrected as follows: (a) if the pricing error results in a difference between the erroneous NAV and the correct NAV of less than $0.01 per share, then no corrective action need be taken; (b) if the pricing error results in a difference between the erroneous NAV and the correct NAV equal to or greater than $0.01 per share, but less than 1/2 of 1% of the Designated Portfolio's NAV at the time of the error, then the Adviser shall reimburse the Designated Portfolio for any loss, after taking into consideration any positive effect of such error; however, no adjustments to Contractowner accounts need be made; and (c) if the pricing error results in a difference between the erroneous NAV and the correct NAV equal to or greater than 1/2 of 1% of the Designated Portfolio's NAV at the time of the error, then the Adviser shall reimburse the Designated Portfolio for any loss (without taking into consideration any positive effect of such error) and shall reimburse GWL&A for the costs of adjustments made to correct Contractowner accounts in accordance with the provisions of Schedule D. If an adjustment is necessary to correct a material error which has caused Contractowners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of such Contractowners will be adjusted and the amount of any underpayments shall be credited by the Adviser to GWL&A for crediting of such amounts to the applicable Contractowners accounts. Upon notification by the Adviser of any overpayment due to a material error, GWL&A shall promptly remit to Adviser any overpayment that has not been paid to Contractowners; however, Adviser acknowledges that GWL&A does not intend to seek additional payments from any Contractowner who, because of a pricing error, may have underpaid for units of interest credited to his/her account. In no event shall GWL&A be liable to Contractowners for any such adjustments or underpayment amounts. A pricing error within categories (b) or (c) above shall be deemed to be "materially incorrect" or constitute a "material error" for purposes of this Agreement. The standards set forth in this Section 1.10 are based on the Parties' understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all Parties. ARTICLE II. Representations and Warranties 2.1. GWL&A represents and warrants that the Contracts and the securities deemed to be issued by the Account under the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. GWL&A further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established the Account prior to any issuance or sale of units thereof as a segregated asset account under Section 10-7-401, et. seq. of the Colorado Insurance Law and has registered the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts and that it will maintain such registration for so long as any Contracts are outstanding as required by applicable law. 2.2. The Fund represents and warrants that Designated Portfolio(s) shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with all applicable federal securities laws including without limitation the 1933 Act, the 1934 Act, and the 1940 Act and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. 2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1 under the 1940 Act and to impose an asset-based or other charge to finance distribution expenses as permitted by applicable law and regulation. In any event, the Fund and Adviser agree to comply with applicable provisions and SEC staff interpretations of the 1940 Act to assure that the investment advisory or management fees paid to the Adviser by the Fund are in accordance with the requirements of the 1940 Act. To the extent that the Fund decides to finance distribution expenses pursuant to Rule 12b- 1, the Fund undertakes to have its Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses. 2.4. The Fund represents and warrants that it will make every effort to ensure that the investment policies, fees and expenses of the Designated Portfolio(s) are and shall at all times remain in compliance with the insurance and other applicable laws of the State of Colorado and any other applicable state to the extent required to perform this Agreement. The Fund further represents and warrants that it will make every effort to ensure that Designated Portfolio(s) shares will be sold in compliance with the insurance laws of the State of Colorado and all applicable state insurance and securities laws. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states if and to the extent required by applicable law. GWL&A and the Fund will endeavor to mutually cooperate with respect to the implementation of any modifications necessitated by any change in state insurance laws, regulations or interpretations of the foregoing that affect the Designated Portfolio(s) (a "Law Change"), and to keep each other informed of any Law Change that becomes known to either party. In the event of a Law Change, the Fund agrees that, except in those circumstances where the Fund has advised GWL&A that its Board of Directors has determined that implementation of a particular Law Change is not in the best interest of all of the Fund's shareholders with an explanation regarding why such action is lawful, any action required by a Law Change will be taken. 2.5. The Fund represents and warrants that it is lawfully organized and validly existing under the laws of the State of and that it does and will comply in all material respects with the 1940 Act. 2.6. The Adviser represents and warrants that it is and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of and any applicable state and federal securities laws. 2.7. The Distributor represents and warrants that it is and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Fund in compliance in all material respects with the laws of the State of and any applicable state and federal securities laws. 2.8. The Fund and the Adviser represent and warrant that all of their respective officers, employees, investment advisers, and other individuals or entities dealing with the money and/or securities of the Fund are, and shall continue to be at all times, covered by one or more blanket fidelity bonds or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bonds shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.9. The Fund will provide GWL&A with as much advance notice as is reasonably practicable of any material change affecting the Designated Portfolio(s) (including, but not limited to, any material change in the registration statement or prospectus affecting the Designated Portfolio(s)) and any proxy solicitation affecting the Designated Portfolio(s) and consult with GWL&A in order to implement any such change in an orderly manner, recognizing the expenses of changes and attempting to minimize such expenses by implementing them in conjunction with regular annual updates of the prospectus for the Contracts. The Fund agrees to share equitably in expenses incurred by GWL&A as a result of actions taken by the Fund, consistent with the allocation of expenses contained in Schedule D attached hereto and incorporated herein by reference. 2.10. GWL&A represents and warrants, for purposes other than diversification under Section 817 of the Internal Revenue Code of 1986 as amended ("the Code"), that the Contracts are currently and at the time of issuance will be treated as annuity contracts under applicable provisions of the Code, and that it will make every effort to maintain such treatment and that it will notify the Fund, the Distributor and the Adviser immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. In addition, GWL&A represents and warrants that the Account is a "segregated asset account" and that interests in the Account are offered exclusively through the purchase of or transfer into a "variable contract" within the meaning of such terms under Section 817 of the Code and the regulations thereunder. GWL&A will use every effort to continue to meet such definitional requirements, and it will notify the Fund, the Distributor and the Adviser immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future. GWL&A represents and warrants that it will not purchase Fund shares with assets derived from tax-qualified retirement plans except, indirectly, through Contracts purchased in connection with such plans. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1. At least annually, the Adviser or Distributor shall provide GWL&A with as many copies of the Fund's current prospectus for the Designated Portfolio(s) as GWL&A may reasonably request for marketing purposes (including distribution to Contractowners with respect to new sales of a Contract), with expenses to be borne in accordance with Schedule D hereof. If requested by GWL&A in lieu thereof, the Adviser, Distributor or Fund shall provide such documentation (including a camera-ready copy and computer diskette of the current prospectus for the Designated Portfolio(s)) and other assistance as is reasonably necessary in order for GWL&A once each year (or more frequently if the prospectuses for the Designated Portfolio(s) are amended) to have the prospectus for the Contracts and the Fund's prospectus for the Designated Portfolio(s) printed together in one document. The Fund and Adviser agree that the prospectus (and semi-annual and annual reports) for the Designated Portfolio(s) will describe only the Designated Portfolio(s) and will not name or describe any other portfolios or series that may be in the Fund unless required by law. 3.2. If applicable state or federal laws or regulations require that the Statement of Additional Information ("SAI") for the Fund be distributed to all Contractowners, then the Fund, Distributor and/or the Adviser shall provide GWL&A with copies of the Fund's SAI or documenta tion thereof for the Designated Portfolio(s) in such quantities, with expenses to be borne in accordance with Schedule D hereof, as GWL&A may reasonably require to permit timely distribution thereof to Contractowners. The Adviser, Distributor and/or the Fund shall also provide SAIs to any Contractowner or prospective owner who requests such SAI from the Fund (although it is anticipated that such requests will be made to GWL&A). 3.3. The Fund, Distributor and/or Adviser shall provide GWL&A with copies of the Fund's proxy material, reports to stockholders and other communications to stockholders for the Designated Portfolio(s) in such quantity, with expenses to be borne in accordance with Schedule D hereof, as GWL&A may reasonably require to permit timely distribution thereof to Contractowners. 3.4. It is understood and agreed that, except with respect to information regarding GWL&A provided in writing by that party, GWL&A is not responsible for the content of the prospectus or SAI for the Designated Portfolio(s). It is also understood and agreed that, except with respect to information regarding the Fund, the Distributor, the Adviser or the Designated Portfolio(s) provided in writing by the Fund, the Distributor or the Adviser, neither the Fund, the Distributor nor Adviser are responsible for the content of the prospectus or SAI for the Contracts. 3.5. If and to the extent required by law GWL&A shall: (i) solicit voting instructions from Contractowners; (ii) vote the Designated Portfolio(s) shares held in the Account in accordance with instructions received from Contractowners: and (iii) vote Designated Portfolio shares held in the Account for which no instructions have been received in the same proportion as Designated Portfolio(s) shares for which instructions have been received from Contractowners, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. GWL&A reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. 3.6. GWL&A shall be responsible for assuring that each of its separate accounts holding shares of a Designated Portfolio calculates voting privileges as directed by the Fund and agreed to by GWL&A and the Fund. The Fund agrees to promptly notify GWL&A of any changes of interpretations or amendments of the Mixed and Shared Funding Exemptive Order. 3.7. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends, comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of directors or trustees and with whatever rules the Commission may promulgate with respect thereto. ARTICLE IV. Sales Material and Information 4.1. GWL&A shall furnish, or shall cause to be furnished, to the Fund or its designee, a copy of each piece of sales literature or other promotional material that GWL&A, respectively, develops or proposes to use and in which the Fund (or a Portfolio thereof), its Adviser or one of its sub-advisers or the Distributor is named in connection with the Contracts, at least ten (10) Business Days prior to its use. No such material shall be used if the Fund objects to such use within five (5) Business Days after receipt of such material. 4.2. GWL&A shall not give any information or make any representations or statements on behalf of the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or SAI for the Fund shares, as the same may be amended or supplemented from time to time, or in sales literature or other promotional material approved by the Fund, Distributor or Adviser, except with the permission of the Fund, Distributor or Adviser. 4.3. The Fund or the Adviser shall furnish, or shall cause to be furnished, to GWL&A, a copy of each piece of sales literature or other promotional material in which GWL&A and/or its separate account(s), is named at least ten (10) Business Days prior to its use. No such material shall be used if GWL&A objects to such use within five (5) Business Days after receipt of such material. 4.4. The Fund, the Distributor and the Adviser shall not give any information or make any representations on behalf of GWL&A or concerning GWL&A, the Account, or the Contracts other than the information or representations contained in a registration statement, prospectus or SAI for the Contracts, as the same may be amended or supplemented from time to time, or in sales literature or other promotional material approved by GWL&A or its designee, except with the permission of GWL&A. 4.5. The Fund will provide to GWL&A at least one complete copy of all registration statements, prospectuses, SAIs, sales literature and other promotional materials, applications for ex emptions, requests for no-action letters, and all amendments to any of the above, that relate to the Designated Portfolio(s), contemporaneously with the filing of such document(s) with the SEC or NASD or other regulatory authorities. 4.7. GWL&A will provide to the Fund at least one complete copy of all registration statements, prospectuses, SAIs, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Account, contemporaneously with the filing of such document(s) with the SEC, NASD, or other regulatory authority. 4.8. For purposes of Articles IV and VIII, the phrase "sales literature and other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media; e.g., on-line networks such as the Internet or other electronic media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and shareholder reports, and proxy materials (including solicitations for voting instructions) and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. 4.9. At the request of any party to this Agreement, each other party will make available to the other party's independent auditors and/or representative of the appropriate regulatory agencies, all records, data and access to operating procedures that may be reasonably requested in connection with compliance and regulatory requirements related to this Agreement or any party's obligations under this Agreement. ARTICLE V. Fees and Expenses 5.1. The Fund and the Adviser shall pay no fee or other compensation to GWL&A under this Agreement, and GWL&A shall pay no fee or other compensation to the Fund or Adviser under this Agreement, although the parties hereto will bear certain expenses in accordance with Schedule D, Articles III, V, and other provisions of this Agreement. 5.2. All expenses incident to performance by the Fund, the Distributor and the Adviser under this Agreement shall be paid by the appropriate party, as further provided in Schedule D. The Fund shall see to it that all shares of the Designated Portfolio(s) are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent required, in accordance with applicable state laws prior to their sale. 5.3. The parties shall bear the expenses of routine annual distribution (mailing costs) of the Fund's prospectus and distribution (mailing costs) of the Fund's proxy materials and reports to owners of Contracts offered by GWL&A, in accordance with Schedule D. 5.4. The Fund, the Distributor and the Adviser acknowledge that a principal feature of the Contracts is the Contractowner's ability to choose from a number of unaffiliated mutual funds (and portfolios or series thereof), including the Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the Contract's cash value between funds and portfolios. The Fund, the Distributor and the Adviser agree to cooperate with GWL&A in facilitating the operation of the Account and the Contracts as described in the prospectus for the Contracts, including but not limited to cooperation in facilitating transfers between Unaffiliated Funds. ARTICLE VI. Diversification and Qualification 6.1. The Fund, the Distributor and the Adviser represent and warrant that the Fund will at all times sell its shares and invest its assets in such a manner as to ensure that the Contracts will be treated as annuity contracts under the Code, and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund, Distributor and Adviser represent and warrant that the Fund and each Designated Portfolio thereof will at all times comply with Section 817(h) of the Code and Treasury Regulation ss.1.817-5, as amended from time to time, and any Treasury interpretations thereof, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications or successor provisions to such Section or Regulations. The Fund, the Distributor and the Adviser agree that shares of the Desig nated Portfolio(s) will be sold only to Participating Insurance Companies and their separate accounts and to Qualified Plans. 6.2. No shares of any Designated Portfolio of the Fund will be sold to the general public. 6.3. The Fund, the Distributor and the Adviser represent and warrant that the Fund and each Designated Portfolio is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that each Designated Portfolio will maintain such qualification (under Subchapter M or any successor or similar provisions) as long as this Agreement is in effect. 6.4. The Fund, Distributor or Adviser will notify GWL&A immediately upon having a reasonable basis for believing that the Fund or any Designated Portfolio has ceased to comply with the aforesaid Section 817(h) diversification or Subchapter M qualification requirements or might not so comply in the future. 6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4 hereof and without in any way limiting or restricting any other remedies available to GWL&A, the Adviser or Distributor will pay all costs associated with or arising out of any failure, or any anticipated or reasonably foreseeable failure, of the Fund or any Designated Portfolio to comply with Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with reasonable and appropriate corrections or responses to any such failure; such costs may include, but are not limited to, the costs involved in creating, organizing, and registering a new investment company as a funding medium for the Contracts and/or the costs of obtaining whatever regulatory authorizations are required to substitute shares of another investment company for those of the failed Portfolio (including but not limited to an order pursuant to Section 26(b) of the 1940 Act); such costs are to include, but are not limited to, fees and expenses of legal counsel and other advisors to GWL&A and any federal income taxes or tax penalties and interest thereon (or "toll charges" or exactments or amounts paid in settlement) incurred by GWL&A with respect to itself or owners of its Contracts in connection with any such failure or anticipated or reasonably foreseeable failure. 6.6. The Fund at the Fund's expense shall provide GWL&A or its designee with reports certifying compliance with the aforesaid Section 817(h) diversification and Subchapter M qualification requirements, at the times provided for and substantially in the form attached hereto as Schedule C and incorporated herein by reference; provided, however, that providing such reports does not relieve the Fund of its responsibility for such compliance or of its liability for any non-compliance. 6.7. GWL&A agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of GWL&A or, to GWL&A's knowledge, or any Contractowner that any Designated Portfolio has failed to comply with the diversification requirements of Section 817(h) of the Code or GWL&A otherwise becomes aware of any facts that could give rise to any claim against the Fund, Distributor or Adviser as a result of such a failure or alleged failure: (a) GWL&A shall promptly notify the Fund, the Distributor and the Adviser of such assertion or potential claim; (b) GWL&A shall consult with the Fund, the Distributor and the Adviser as to how to minimize any liability that may arise as a result of such failure or alleged failure; (c) GWL&A shall use its best efforts to minimize any liability of the Fund, the Distributor and the Adviser resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations, Section 1.817-5(a)(2), to the commissioner of the IRS that such failure was inadvertent; (d) any written materials to be submitted by GWL&A to the IRS, any Contractowner or any other claimant in connection with any of the foregoing proceedings or contests (including, without limitation, any such materials to be submitted to the IRS pursuant to Treasury Regulations, Section 1.817-5(a)(2)) shall be provided by GWL&A to the Fund, the Distributor and the Adviser (together with any supporting information or analysis) within at least two (2) business days prior to submission; (e) GWL&A shall provide the Fund, the Distributor and the Adviser with such cooperation as the Fund, the Distributor and the Adviser shall reasonably request (including, without limitation, by permitting the Fund, the Distributor and the Adviser to review the relevant books and records of GWL&A) in order to facilitate review by the Fund, the Distributor and the Adviser of any written submissions provided to it or its assessment of the validity or amount of any claim against it arising from such failure or alleged failure; (f) GWL&A shall not with respect to any claim of the IRS or any Contractowner that would give rise to a claim against the Fund, the Distributor and the Adviser (i) compromise or settle any claim, (ii) accept any adjustment on audit, or (iii) forego any allowable administrative or judicial appeals, without the express written consent of the Fund, the Distributor and the Adviser, which shall not be unreasonably withheld; provided that, GWL&A shall not be required to appeal any adverse judicial decision unless the Fund and the Adviser shall have provided an opinion of independent counsel to the effect that a reasonable basis exists for taking such appeal; and further provided that the Fund, the Distributor and the Adviser shall bear the costs and expenses, including reasonable attorney's fees, incurred by GWL&A in complying with this clause (f). ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding Exemptive Order 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners. The Board shall promptly inform GWL&A if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. GWL&A will report any potential or existing conflicts of which it is aware to the Board. GWL&A will assist the Board in carrying out its responsibilities under the Mixed and Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by GWL&A to inform the Board whenever contract owner voting instructions are to be disregarded. Such responsibilities shall be carried out by GWL&A with a view only to the interests of its Contractowners. 7.3. If it is determined by a majority of the Board, or a majority of its directors who are not interested persons of the Fund, the Distributor, the Adviser or any sub-adviser to any of the Designated Portfolios (the "Independent Directors"), that a material irreconcilable conflict exists, GWL&A and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the Independent Directors), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Designated Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or var iable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by GWL&A to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, GWL&A may be required, at the Fund's election, to withdraw the Account's investment in the Fund and terminate this Agreement; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the Independent Directors. Any such with drawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Adviser, the Distributor and the Fund shall continue to accept and implement orders by GWL&A for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to GWL&A conflicts with the majority of other state regulators, then GWL&A will withdraw the Account's investment in the Fund and terminate this Agreement within six months after the Board informs GWL&A in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Fund shall continue to accept and implement orders by GWL&A for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. GWL&A shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contractowners affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then GWL&A will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs GWL&A in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the Independent Directors. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Compa nies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e- 3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By GWL&A 8.1(a). GWL&A agrees to indemnify and hold harmless the Fund, the Distributor and the Adviser and each of their respective officers and directors or trustees and each person, if any, who controls the Fund, Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages and liabilities (including amounts paid in settlement with the written consent of GWL&A) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus or SAI covering the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished in writing to GWL&A by or on behalf of the Adviser, Distributor or Fund for use in the registration statement or prospectus for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature or other promotional material of the Fund not supplied by GWL&A or persons under its control) or wrongful conduct of GWL&A or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI, or sales literature or other promotional material of the Fund, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such a statement or omission was made in reliance upon information furnished in writing to the Fund by or on behalf of GWL&A; or (iv) arise as a result of any failure by GWL&A to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by GWL&A in this Agreement or arise out of or result from any other material breach of this Agreement by GWL&A, including without limitation Section 2.11 and Section 6.7 hereof, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). GWL&A shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to any of the Indemnified Parties. 8.1(c). GWL&A shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified GWL&A in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify GWL&A of any such claim shall not relieve GWL&A from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision, except to the extent that GWL&A has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, GWL&A shall be entitled to participate, at its own expense, in the defense of such action. GWL&A also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from GWL&A to such party of GWL&A's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and GWL&A will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify GWL&A of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2. Indemnification by the Adviser 8.2(a). The Adviser agrees to indemnify and hold harmless GWL&A and its directors and officers and each person, if any, who controls GWL&A within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature or other promotional material of the Fund prepared by the Fund, the Distributor or the Adviser (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished in writing to the Adviser, the Distributor or the Fund by or on behalf of GWL&A for use in the registration statement, prospectus or SAI for the Fund or in sales literature or other promotional material (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or the Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature or other promotional material for the Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Fund, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI, or sales literature or other promotional material covering the Contracts, or any amendment thereof or supple ment thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished in writing to GWL&A by or on behalf of the Adviser, the Distributor or the Fund; or (iv) arise as a result of any failure by the Fund, the Distributor or the Adviser to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Fund, the Distributor or the Adviser in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Fund; or (vi) arise out of or result from the incorrect or untimely calculation or reporting by the Fund, the Distributor or the Adviser of the daily net asset value per share or dividend or capital gain distribution rate; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. This indemnification is in addition to and apart from the responsibilities and obligations of the Adviser specified in Article VI hereof. 8.2(b). The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to any of the Indemnified Parties. 8.2(c). The Adviser shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Adviser in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Adviser of any such claim shall not relieve the Adviser from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision, except to the extent that the Adviser has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, the Adviser will be entitled to participate, at its own expense, in the defense thereof. The Adviser also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser to such party of the Adviser's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). GWL&A agrees to promptly notify the Adviser of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account. 8.3. Indemnification By the Fund 8.3(a). The Fund agrees to indemnify and hold harmless GWL&A and its directors and officers and each person, if any, who controls GWL&A within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, expenses, damages and liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may be required to pay or become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to any of the Indemnified Parties. 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve it from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnifi cation provision, except to the extent that the Fund has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund shall also be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). GWL&A each agrees to promptly notify the Fund of the commencement of any litigation or proceeding against itself or any of its respective officers or directors in connection with the Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Fund. 8.4. Indemnification by the Distributor 8.4(a). The Distributor agrees to indemnify and hold harmless GWL&A and its directors and officers and each person, if any, who controls GWL&A within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.4) against any and all losses, claims, expenses, damages and liabilities (including amounts paid in settlement with the written consent of the Distributor) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature or other promotional material of the Fund prepared by the Fund, Adviser or Distributor (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished in writing to the Adviser, the Distributor or Fund by or on behalf of GWL&A for use in the registration statement or SAI or prospectus for the Fund or in sales literature or other promotional material (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus, SAI, sales literature or other promotional material for the Contracts not supplied by the Distributor or persons under its control) or wrongful conduct of the Fund, the Distributor or Adviser or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI, sales literature or other promotional material covering the Contracts, or any amendment thereof or supple ment thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished in writing to GWL&A by or on behalf of the Adviser, the Distributor or Fund; or (iv) arise as a result of any failure by the Fund, Adviser or Distributor to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Fund, Adviser or Distributor in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund, Adviser or Distributor; or (vi) arise out of or result from the incorrect or untimely calculation or reporting of the daily net asset value per share or dividend or capital gain distribution rate; as limited by and in accordance with the provisions of Sections 8.4(b) and 8.4(c) hereof. This indemnification is in addition to and apart from the responsibilities and obligations of the Distributor specified in Article VI hereof. 8.4(b). The Distributor shall not be liable under this indemnification provision with respect to any losses, claims, expenses, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or negligence in the performance or such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to any of the Indemnified Parties. 8.4(c) The Distributor shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Distributor in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Distributor of any such claim shall not relieve the Distributor from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision, except to the extent that the Distributor has been prejudiced by such failure to give notice. In case any such action is brought against the Indemnified Parties, the Distributor will be entitled to participate, at its own expense, in the defense thereof. The Distributor also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Distributor to such party of the Distributor's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Distributor will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.4(d) GWL&A agrees to promptly notify the Distributor of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Colorado, without regard to the Colorado Conflict of Laws provisions. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Mixed and Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall terminate: (a) at the option of any party, with or without cause, with respect to some or all Portfolios, upon six (6) months advance written notice delivered to the other parties; provided, however, that such notice shall not be given earlier than six (6) months following the date of this Agreement; or (b) at the option of GWL&A by written notice to the other parties with respect to any Portfolio based upon GWL&A's determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) at the option of GWL&A by written notice to the other parties with respect to any Portfolio in the event any of the Portfolio's shares are not registered, issued or sold in accordance with applicable state and/ or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by GWL&A; or (d) at the option of the Fund, Distributor or Adviser in the event that formal administrative proceedings are instituted against GWL&A by the NASD, the SEC, the Insurance Commissioner or like official of any state or any other regulatory body regarding GWL&A's duties under this Agreement or related to the sale of the Contracts, the operation of any Account, or the purchase of the Fund shares, if, in each case, the Fund, Distributor or Adviser, as the case may be, reasonably determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of GWL&A to perform its obligations under this Agreement; or (e) at the option of GWL&A in the event that formal administrative proceedings are instituted against the Fund, the Distributor or the Adviser by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, if GWL&A reasonably determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund, the Distributor or the Adviser to perform their obligations under this Agreement; or (f) at the option of GWL&A by written notice to the Fund with respect to any Portfolio if GWL&A reasonably believes that the Portfolio will fail to meet the Sec tion 817(h) diversification requirements or Subchapter M qualifications specified in Article VI hereof; or (g) at the option of either the Fund, the Distributor or the Adviser, if (i) the Fund, Distributor or Adviser, respectively, shall determine, in its sole judgment reasonably exercised in good faith, that GWL&A has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact on GWL&A's ability to perform its obligations under this Agreement, (ii) the Fund, Distributor or Adviser notifies GWL&A of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by GWL&A and any other changes in circumstances since the giving of such a notice, the deter mination of the Fund, Distributor or Adviser shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (h) at the option of either GWL&A, if (i) GWL&A shall determine, in its sole judgment reasonably exercised in good faith, that the Fund, Distributor or Adviser has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and that material adverse change or publicity will have a material adverse impact on the Fund's, Distributor's or Adviser's ability to perform its obligations under this Agreement, (ii) GWL&A notifies the Fund, Distributor or Adviser, as appropriate, of that determination and its intent to terminate this Agreement, and (iii) after considering the actions taken by the Fund, Distributor or Adviser and any other changes in circumstances since the giving of such a notice, the determination of GWL&A shall continue to apply on the sixtieth (60th) day following the giving of that notice, which sixtieth day shall be the effective date of termination; or (i) at the option of any non-defaulting party hereto in the event of a material breach of this Agreement by any party hereto (the "defaulting party") other than as described in 10.1(a)-(j); provided, that the non-defaulting party gives written notice thereof to the defaulting party, with copies of such notice to all other non-defaulting parties, and if such breach shall not have been remedied within thirty (30) days after such written notice is given, then the non-defaulting party giving such written notice may terminate this Agreement by giving thirty (30) days written notice of termination to the defaulting party. 10.2. Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice shall set forth the basis for the termination. Furthermore, (a) in the event any termination is based upon the provisions of Article VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this Agreement, the prior written notice shall be given in advance of the effective date of termination as required by those provisions unless such notice period is shortened by mutual written agreement of the parties; (b) in the event any termination is based upon the provisions of Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the prior written notice shall be given at least sixty (60) days before the effective date of termination; and (c) in the event any termination is based upon the provisions of Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given in advance of the effective date of termination, which date shall be determined by the party sending the notice. 10.3. Effect of Termination. Notwithstanding any termination of this Agreement, other than as a result of a failure by either the Fund or GWL&A to meet Section 817(h) of the Code diversification requirements, the Fund, the Distributor and the Adviser shall, at the option of GWL&A, continue to make available additional shares of the Designated Portfolio(s) pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Designated Portfolio(s), redeem investments in the Designated Portfolio(s) and/or invest in the Designated Portfolio(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.3 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.4. Surviving Provisions. Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties shall survive and not be affected by any termination of this Agreement. In addition, with respect to Existing Contracts, all provisions of this Agreement shall also survive and not be affected by any termination of this Agreement. ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: XYZ Fund Attention: If to GWL&A: Great-West Life & Annuity Insurance Company 8515 East Orchard Road Englewood, CO 80111 Attention: Vice President, Institutional Insurance If to the Adviser: XYZ Investment Adviser Attention: If to the Distributor: XYZ Distributor Attention: ARTICLE XII. Miscellaneous 12.1. Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as such information may come into the public domain. Without limiting the foregoing, no party hereto shall disclose any information that another party has designated as proprietary. 12.2. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.3. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.4. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.5. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the Colorado Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the variable annuity operations of GWL&A are being conducted in a manner consistent with the Colorado Variable Annuity Regulations and any other applicable law or regulations. 12.6. Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in a forum jointly selected by the relevant parties (but if applicable law requires some other forum, then such other forum) in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 12.7. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto. 12.9. GWL&A is hereby expressly put on notice of the limitation of liability as set forth in the Declarations of Trust of the Fund and agree that the obligations assumed by the Fund, Distributor and the Adviser pursuant to this Agreement shall be limited in any case to the Fund, Distributor and Adviser and their respective assets and GWL&A shall not seek satisfaction of any such obligation from the shareholders of the Fund, Distributor or the Adviser, the Trustees, officers, employees or agents of the Fund, Distributor or Adviser, or any of them. 12.10. The Fund, the Distributor and the Adviser agree that the obligations assumed by GWL&A pursuant to this Agreement shall be limited in any case to GWL&A and its assets and neither the Fund, Distributor nor Adviser shall seek satisfaction of any such obligation from the shareholders of GWL&A, the directors, officers, employees or agents of GWL&A, or any of them, except to the extent permitted under this Agreement. 12.11. No provision of this Agreement may be deemed or construed to modify or supersede any contractual rights, duties, or indemnifications, as between the Adviser and the Fund, and the Distributor and the Fund. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY By its authorized officer, By:______________________________ Title: Date: XYZ FUND By its authorized officer, By:______________________________ Title: Date: XYZ INVESTMENT ADVISER By its authorized officer, By:____________________________ Title: Date: XYZ DISTRIBUTOR By its authorized officer, By:____________________________ Title: Date: SCHEDULE A Contracts Form Numbers SCHEDULE B Designated Portfolios SCHEDULE C Reports per Section 6.6 With regard to the reports relating to the quarterly testing of compliance with the requirements of Section 817(h) and Subchapter M under the Internal Revenue Code (the "Code") and the regulations thereunder, the Fund shall provide within twenty (20) Business Days of the close of the calendar quarter a report to GWL&A in the Form D1 attached hereto and incorporated herein by reference, regarding the status under such sections of the Code of the Designated Portfolio(s), and if necessary, identification of any remedial action to be taken to remedy non-compliance. With regard to the reports relating to the year-end testing of compliance with the requirements of Subchapter M of the Code, referred to hereinafter as "RIC status," the Fund will provide the reports on the following basis: (i) the last quarter's quarterly reports can be supplied within the 20-day period, and (ii) a year-end report will be provided 45 days after the end of the calendar year. However, if a problem with regard to RIC status, as defined below, is identified in the third quarter report, on a weekly basis, starting the first week of December, additional interim reports will be provided specially addressing the problems identified in the third quarter report. If any interim report memorializes the cure of the problem, subsequent interim reports will not be required. A problem with regard to RIC status is defined as any violation of the following standards, as referenced to the applicable sections of the Code: (a) Less than ninety percent of gross income is derived from sources of income specified in Section 851(b)(2); (b) Thirty percent or greater gross income is derived from the sale or disposition of assets specified in Section 851(b)(3); (c) Less than fifty percent of the value of total assets consists of assets specified in Section 851(b)(4)(A); and (d) No more than twenty-five percent of the value of total assets is invested in the securities of one issuer, as that requirement is set forth in Section 851(b)(4)(B). FORM C1 CERTIFICATE OF COMPLIANCE For the quarter ended: I, , a duly authorized officer, director or agent of Fund hereby swear and affirm that Fund is in compliance with all requirements of Section 817(h) and Subchapter M of the Internal Revenue Code (the "Code") and the regulations thereunder as required in the Fund Participation Agreement among Great-West Life & Annuity Insurance Company, and other than the exceptions discussed below: Exceptions Remedial Action If no exception to report, please indicate "None." Signed this day of , . (Signature) By: (Type or Print Name and Title/Position) SCHEDULE D EXPENSES The Fund and/or the Distributor and/or Adviser, and GWL&A will coordinate the functions and pay the costs of the completing these functions based upon an allocation of costs in the tables below. Costs shall be allocated to reflect the Fund's share of the total costs determined according to the number of pages of the Fund's respective portions of the documents.
Party Responsible for Party Responsible Item Function Coordination for Expense Mutual Fund Prospectus Printing of combined GWL&A Fund, Distributor or prospectuses Adviser, as applicable Fund, Distributor or GWL&A Fund, Distributor or Adviser shall supply Adviser, as GWL&A with such applicable numbers of the Designated Portfolio(s) prospectus(es) as GWL&A shall reasonably request Distribution to New and GWL&A GWL&A Inforce Clients Distribution to GWL&A GWL&A Prospective Clients Product Prospectus Printing for Inforce GWL&A GWL&A Clients Printing for Prospective GWL&A GWL&A Clients Distribution to New and GWL&A GWL&A Inforce Clients Distribution to GWL&A GWL&A Prospective Clients Party Responsible for Party Responsible Item Function Coordination for Expense Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund, Distributor or Update & Distribution Distributor or Adviser Adviser Adviser, as applicable If Required by GWL&A GWL&A GWL&A Product Prospectus If Required by Fund, GWL&A Fund, Distributor or Update & Distribution Distributor or Adviser Adviser Item Function Party Responsible for Party Responsible Coordination for Expense If Required by GWL&A GWL&A GWL&A Mutual Fund SAI Printing Fund, Distributor or Fund, Distributor or Adviser Adviser Distribution GWL&A GWL&A Product SAI Printing GWL&A GWL&A Distribution GWL&A GWL&A Item Function Party Responsible for Party Responsible Coordination for Expense Proxy Material for Printing if proxy required Fund, Distributor or Fund, Distributor or Mutual Fund: by Law Adviser Adviser Distribution (including GWL&A Fund, Distributor or labor) if proxy required Adviser by Law Printing & distribution if GWL&A GWL&A required by GWL&A Item Function Party Responsible for Party Responsible Coordination for Expense Mutual Fund Annual & Printing of combined GWL&A Fund, Distributor or Semi-Annual Report reports Adviser Distribution GWL&A GWL&A Other communication to If Required by the Fund, GWL&A Fund, Distributor or New and Prospective Distributor or Adviser Adviser clients If Required by GWL&A GWL&A GWL&A Item Function Party Responsible for Party Responsible Coordination for Expense Other communication to Distribution (including GWL&A Fund, Distributor or inforce labor and printing) if Adviser required by the Fund, Distributor or Adviser Distribution (including GWL&A GWL&A labor and printing)if required by GWL&A Item Function Party Responsible for Party Responsible Coordination for Expense Errors in Share Price Cost of error to GWL&A Fund or Adviser calculation pursuant to participants Section 1.10 Cost of administrative GWL&A Fund or Adviser work to correct error Operations of the Fund All operations and related Fund, Distributor or Fund or Adviser expenses, including the Adviser cost of registration and qualification of shares, taxes on the issuance or transfer of shares, cost of management of the business affairs of the Fund, and expenses paid or assumed by the fund pursuant to any Rule 12b-1 plan Operations of the Federal registration of GWL&A GWL&A Account units of separate account (24f-2 fees)
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