UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN

PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities
Exchange Act of 1934 (Amendment

(Amendment No.     )

Filed by the Registrantx                     Filed by a Party other than the Registrant¨

Check the appropriate box:

¨
Filed by the Registrant   þ
Filed by a Party other than the Registrant   o
Check the appropriate box:

oPreliminary Proxy Statement

¨oConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

xþDefinitive Proxy Statement

¨oDefinitive Additional Materials

¨oSoliciting Material Pursuant to §240.14a-12

Scott’s Liquid Gold, Gold–Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x
þNo fee required.

¨oFee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 1)Title of each class of securities to which transaction applies:

 2)Aggregate number of securities to which transaction applies:

 3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 4)Proposed maximum aggregate value of transaction:

 5)Total fee paid:

¨
oFee paid previously with preliminary materials.

¨
oCheck box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 1)Amount Previously Paid:

 2)Form, Schedule or Registration Statement No.:

 3)Filing Party:

 4)Date Filed:

SEC 1913 (11-01)Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

SCOTT’S LIQUID GOLD-INC.

4880 Havana Street

Denver, Colorado 80239

NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS

To Be Held May 6, 2008

18, 2011

TO OUR SHAREHOLDERS:

The Annual Meeting of Shareholders of Scott’s Liquid Gold-Inc., a Colorado corporation (the “Company”), will be held at 9:00 a.m., Mountain Time, on Tuesday,Wednesday, May 6, 200818, 2011 at the Company’s offices, 4880 Havana Street, Denver, Colorado 80239 for the purpose of considering and acting upon the following:

 (1)The election of sevensix directors;

 (2)ApprovalAn increase in the number of an amendment to increase shares of common stock available under the Company’s 2005 Stock Incentive Plan by upfrom 1,500,000 to 900,0003,000,000 shares; and

 (3)Such other matters as may properly come before the meeting or any adjournment thereof.

Only shareholders of record at the close of business on March 17, 200829, 2011 are entitled to notice of and to vote at the meeting.

Important notice regarding availability of proxy materials for the Annual Meeting of Shareholders to be held on May 18, 2011 or any adjournment thereof: The Proxy Statement for the Annual Meeting, the form of proxy and the Annual Report on Form 10-K for the year ended December 31, 2010 are available at the Company’s website atwww.scottsliquidgold.com under the “Company & Investor Relations” tab.

BY ORDER OF THE BOARD OF DIRECTORS

Dennis P. Passantino

/s/ Jeffrey R. Hinkle

Jeffrey R. Hinkle

Corporate Secretary

Denver, Colorado

April 1, 2008

20, 2011

THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

 

TABLE OF CONTENTS

Page

VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

   1  

SECURITY OWNERSHIP OF BENEFICIAL OWNERS

2

SECURITY OWNERSHIP OF MANAGEMENT

   3  

PROPOSAL 1: ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION

   43  
Nominees4
Directors’ Meetings and Committees

BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

   5  
Nomination Process

EXECUTIVE OFFICERS

   76  
Director Attendance at Company Annual Meetings

DIRECTORS’ MEETINGS AND COMMITTEES

   76  
Stockholder Communications with the Board7
Code of Business Conduct and Ethics

NOMINATION PROCESS

   8  
Compensation Committee Interlocks and Insider Participation8
Executive Compensation

DIRECTOR ATTENDANCE AT COMPANY ANNUAL MEETINGS

   9  
Stock Plans

SHAREHOLDER COMMUNICATIONS WITH THE BOARD

9

CODE OF BUSINESS CONDUCT AND ETHICS

9

EXECUTIVE COMPENSATION

9

STOCK PLANS

   11  
Compensation of Directors13
AMENDMENT TO 2005 STOCK INCENTIVE PLAN

COMPENSATION OF DIRECTORS

   14  
CERTAIN TRANSACTIONS

PROPOSAL 2: AMENDMENT TO STOCK INCENTIVE PLAN

   2116  
SECTION 16 REPORTS21
COMPANY ACCOUNTANTS

CERTAIN TRANSACTIONS

   22  
General

SECTION 16 REPORTS

   22  
Disclosure of Auditor Fees

COMPANY ACCOUNTANTS

   23  
Policy on Pre-Approval of Audit and Non-Audit Services23

SHAREHOLDER PROPOSALS

��23
2007 ANNUAL REPORT ON FORM 10-KSB23
SOLICITATION OF PROXIES

   24  
OTHER BUSINESS

2010 ANNUAL REPORT ON FORM 10-K

   24  

SOLICITATION OF PROXIES

24

OTHER BUSINESS

25

APPENDIX A

APPENDIX B

FORM OF PROXY

 

i

SCOTT’S LIQUID GOLD-INC.
4880 Havana Street

Denver, Colorado 80239

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 6, 2008

18, 2011

The enclosed Proxyproxy is solicited by and on behalf of the Board of Directors (the “Board”) of Scott’s Liquid Gold-Inc., a Colorado corporation (the “Company”), for use at the Company’s Annual Meeting of Shareholders to be held at 9:00 a.m., Mountain Time, on TuesdayWednesday May 6, 200818, 2011 at the Company’s offices, 4880 Havana Street, Denver, Colorado 80239, or any adjournment thereof. This Proxy Statement, and the accompanying form of Proxyproxy and a copy of the Annual Report on Form 10-K for the year ended December 31, 2010 are first being mailed or given to the shareholders of the Company on or about April 1, 2008.

22, 2011.

Any shareholder signing and mailing the enclosed Proxyproxy may revoke it at any time before it is voted by giving written notice of the revocation to the Company’s Corporate Secretary, by voting in person at the meeting or by filing at the meeting a later executed proxy.

VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS

All voting rights are vested exclusively in the holders of the Company’s $0.10 par value common stock. Each share of the Company’s common stock is entitled to one vote. Cumulative voting in the election of directors is not permitted. Holders of a majority of shares entitled to vote at the meeting, when present in person or by proxy, constitute a quorum. On March 17, 2008,29, 2011, the record date for shareholders entitled to vote at the meeting, the Company had 10,595,00010,898,500 shares of its $0.10 par value common stock issued and outstanding.

When a quorum is present, in the election of directors, those sevensix nominees having the highest number of votes cast in favor of their election will be elected to the Company’s Board of Directors.Board. Consequently, any shares not voted (whether by abstention, broker non-vote or otherwise) have no impact in the election of directors except to the extent the failure to vote for an individual results in another individual receiving a larger number of votes. Approval of the amendment of the 2005 Stock Incentive Plan to increase the available shares requires that the votes cast in favor of the amendment exceed the votes cast in opposition. With respect to any other matter, unless a greater number of votes is required by law, a matter is approved by the shareholders if the votes cast in favor of the matter exceed the votes cast in opposition. Any shares not voted (whether by abstention, broker non-vote or otherwise) have no impact on the vote for approval of the amendment to the 2005 Plan or for such other matters, if any, so long as a quorum is present.

1

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons are the only persons known to the Company who on March 17, 2008,31, 2011, owned beneficially more than 5% of the Company’s common stock, its only class of outstanding voting securities:
         
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
Mark E. Goldstein  2,815,090(1)(2)  26.0%
4880 Havana Street
Denver, Colorado 80239		        
     
Scott’s Liquid Gold-Inc.  1,188,586(3)  11.2%
Employee Stock
Ownership Plan
4880 Havana Street
Denver, Colorado 80239		        
     
Yorktown Avenue Capital, LLC  1,578,530(4)  14.9%
and Boston Avenue Capital, LLC
415 South Boston, 9th Floor
Tulsa, Oklahoma 74103
        

Title of Class

(1)

Name and Address of Beneficial Owner

  Amount
and Nature
of Beneficial
Ownership		Percent
of Class

Mark E. Goldstein

4880 Havana Street

Denver, Colorado 80239

    Common Stock

2,685,578(1)(2)24.4% 

Scott’s Liquid Gold-Inc.

Employee Stock

Ownership Plan

4880 Havana Street

Denver, Colorado 80239

    Common Stock

1,263,820(3)11.6% 

Yorktown Avenue Capital, LLC

and Boston Avenue Capital, LLC

415 South Boston, 9th Floor

Tulsa, Oklahoma 74103

    Common Stock

1,461,530(4)13.4% 

Timothy Stabosz

1307 Monroe Street

Laporte, IN 46350

    Common Stock

541,936(5)5% 

(1)Includes 2,126,473 shares held by the Goldstein Family Partnership, Ltd., a limited partnership of which the general partner is the Goldstein Family Corporation and whose limited partners include Mark E. Goldstein, his children, a sister, and certain other relatives. Mr. Goldstein is the sole director and sole executive officer of the Goldstein Family Corporation, and he owns 100% of the outstanding stock of the Goldstein Family Corporation. Mr. Goldstein has the sole voting and disposition powers with respect to these shares of the Company owned by the Goldstein Family Partnership, Ltd. Also includes 223,62594,113 shares underlying stock options granted by the Company and exercisable within 60 days, and 86,670 shares held by Mr. Goldstein’s minor children. Includes 52,600 shares held jointly by Mr. Goldstein and his wife,spouse, and does not include 25,890 shares of the Company’s common stock owned by Mr. Goldstein’s spouse, and 500 shares underlying stock options granted on March 23, 2010 by the Company to Mr. Goldstein’s spouse as an employee and which vest over 48 months, as to which Mr. Goldstein disclaims any beneficial ownership.
(2)Does not include 122,174140,808 shares held by the Company’s Employee Stock Ownership Plan attributable to Mr. Goldstein’s vested interest in the Plan as of December 31, 2007.2010.
(3)The five-person committee administering the Employee Stock Ownership Plan directs the voting of shares held under such Plan. The Company’s four executive officers are members of this five-person committee.
(4)Yorktown Avenue Capital, LLC and Boston Avenue Capital, LLC are limited liability companies managed by Value Fund Advisors, LLC. This information is based upon filings by Yorktown Avenue Capital, LLC and Boston Avenue Capital, LLC with the Securities and Exchange Commission.Commission (the “SEC”).

2

(5)This information is based upon a filing by Mr. Stabosz with the SEC.

SECURITY OWNERSHIP OF MANAGEMENT

The following table shows as of March 17, 2008,31, 2011, the shares of the Company’s common stock beneficially owned by each director and executive officer of the Company and the shares beneficially owned by all of the directors and executive officers as a group:

         
  Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
Mark E. Goldstein  2,815,090(2)(3)(4)  26.0%
Jeffrey R. Hinkle  354,003(3)(4)(5)  3.3%
Jeffry B. Johnson  199,875(3)(4)(6)  1.9%
Dennis P. Passantino  171,417(3)(4)  1.6%
Carl A. Bellini  105,883(3)  1.0%
Dennis H. Field  102,667(3)  1.0%
Gerald J. Laber  98,750(3)  .9%
All Directors and executive officers as a Group (seven persons)  3,847,685(3)(4)  33.1%

Title of Class

(1)

Name of Beneficial Owner

 Amount and
Nature of
Beneficial
Ownership (1)		Percent
of Class

Mark E. Goldstein

2,685,578(2)(3)(4)24.4% 

Jeffrey R. Hinkle

221,303(3)(4)(5)2.0% 

Dennis P. Passantino

153,082(3)(4)1.4% 

Brian L. Boberick

41,620(3)(4)0.4% 

Carl A. Bellini

94,998(3)0.9% 

Dennis H. Field

142,823(3)1.3% 

Jeffry B. Johnson

207,664(3)(4)(6)1.9% 

Gerald J. Laber

58,126(3)0.5% 

All Directors and executive officers as a Group (eight persons)

3,523,705(3)(4)31.1% 

(1)Beneficial owners listed have sole voting and disposition power with respect to the shares shown unless otherwise indicated.
(2)For information regarding Mr. Goldstein’s beneficial ownership of shares, see footnote 1 under the table in “Voting Securities and Principal Shareholders.“Security Ownership of Certain Beneficial Owners.”
(3)For each named person, includes the following number of shares underlying stock options granted by the Company and exercisable within 60 days: 223,62594,113 for Mr. Goldstein; 232,12599,425 for Mr. Hinkle; 162,875103,082 for Mr. Passantino; 39,620 for Mr. Boberick; 88,698 for Mr. Bellini; 139,323 for Mr. Field; 89,175 for Mr. Johnson; 121,417 for Mr. Passantino; 99,583 for Mr. Bellini; 99,167 for Mr. Field; 98,75058,126 for Mr. Laber; and 1,037,542711,562 for directors and executive officers as a group.
(4)Does not include shares owned by the Company’s Employee Stock Ownership Plan under which, at December 31, 2007,2010, Mark E. Goldstein had a vested interest in 122,174140,808 shares, Jeffrey R. Hinkle had a vested interest in 81,55996,943 shares, Jeffry B. Johnson had a vested interest in 77,097 shares, and Dennis P. Passantino had a vested interest in 63,78377,081 shares, and Brian L. Boberick had a vested interest in 25,090 shares.
(5)Of Mr. Hinkle’s shares, 121,878 shares are held in a revocable trust of which Mr. Hinkle and his wifespouse are co-trustees.
(6)Of Mr. Johnson’s shares, 32,000 are held jointly by Mr. Johnson and his wife.spouse.

There has been no change in control of the Company since the beginning of the last fiscal year, and there are no arrangements known to the Company, including any pledge of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

Because of his beneficial ownership of the Company’s stock and his positions as President, Chief Executive Officer and Chairman, Mark E. Goldstein may be considered a parent (i.e., a controlling person) of the Company.

3

PROPOSAL 1: ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
Nominees

The Company’s Board currently consists of Directors consists currentlysix directors. On April 15, 2011, Mr. Passantino resigned from the Board and the Board reduced the number of seats from seven directors. to six following such resignation. Mr. Passantino will continue to serve as the Company’s Vice President of Operations.

Unless authority to vote is withheld, the persons named in the enclosed form of proxy will vote the shares represented by such proxy for the election of the sevensix nominees for director named below. If, at the time of the Meeting,meeting, any of these nominees shall have become unavailable for any reason to serve as a

director, the persons entitled to vote the proxy will vote for such substitute nominee or nominees, if any, as they determine in their discretion. If elected, the nominees for director will hold office until the next annual meeting of shareholders or until their successors are elected and qualified. The nominees for director, each of whom has consented to serve if elected, are as follows:

           
Name of Nominee and
     Director Principal Occupation for
Position in the Company
 Age Since Last Five Years
Mark E. Goldstein
(Chairman of the Board, President and Chief Executive Officer)		  52   1983  Chairman of the Board of the Company since February 2000, President and Chief Executive Officer of the Company since August, 1990. From 1982 to 1990, Vice President-Marketing of Company. Employed by the Company since 1978.
           
Jeffrey R. Hinkle
(Vice President – Marketing and
Sales)		  54   2000  Vice President-Marketing and Sales of the Company since February 2000. Vice President of Marketing and Sales for the Company’s subsidiaries from November 1992 to 2000. Employed by the Company since 1981.
           
Jeffry B. Johnson
(Treasurer and Chief
Financial Officer)		  62   2000  Treasurer and Chief Financial Officer of the Company since November 2000. From 1981 to 2000, Controller of Company. Employed by the Company since 1976.
           
Dennis P. Passantino
(Vice President – Operations
and Corporate Secretary)		  52   2002  Vice President – Operations and Corporate Secretary since November 2002. From 1991 to 2002, Operations Manager. Employed by the Company since 1981.
           
Carl A. Bellini  74   2000  Management Consultant since 1997. From 1987 to 1997, Executive Vice President and Chief Operating Officer of Revco D.S., Inc. (a large drug store chain).
           
Dennis H. Field  75   1991  Management Consultant since 1990. From 1984 to 1990, Executive Vice President/General Manager, Faberge USA, Inc. (mass market health and beauty aids).
           
Gerald J. Laber, CPA  64   2004  President, The Catholic Foundation for the Roman Catholic Church in Northern Colorado since January 2008. Investor and community volunteer since 2000. From 1980 to 2000 partner with Arthur Andersen L.L.P. Director with Smart Balance, Inc. and Qualmark Corporation.

4

Name of Nominee and Position
in the Company

   Age  

  Director  
Since

  

Principal Occupation for

Last Five Years

Mark E. Goldstein

(Chairman of the Board, President

and Chief Executive Officer)

  55   1983  Chairman of the Board of the Company since February 2000, President and Chief Executive Officer of the Company since August, 1990, Vice President-Marketing of the Company from 1982 to 1990. Employed by the Company since 1978. Mr. Goldstein was selected as a director for his extensive experience in management, marketing, sales, consumer products and other aspects of the Company’s business.

Jeffrey R. Hinkle

(Vice President – Marketing and

Sales and Corporate Secretary)

   57  2000  Vice President-Marketing and Sales of the Company since February 2000. Vice President of Marketing and Sales for the Company’s subsidiaries from November 1992 to 2000. Employed by the Company since 1981. Mr. Hinkle was selected as a director for his in-depth knowledge of consumer products, the marketplace for the Company’s products, the Company’s sales force, international suppliers of distributed products and customers. Mr. Hinkle was selected as a director for his extensive experience in marketing, sales and management.

Carl A. Bellini

   77  2000  Management Consultant since 1997. From 1987 to 1997, Executive Vice President and Chief Operating Officer of Revco D.S., Inc. (a large drug store chain). Mr. Bellini was selected as a director for his extensive experience in management, retail sales, marketing and strategic planning.

Dennis H. Field

   78  1991  Management Consultant since 1990. From 1984 to 1990, Executive Vice President/General Manager, Faberge USA, Inc. (mass market health and beauty aids). Mr. Field was selected as a director for his extensive experience in marketing and sales of consumer products, including cosmetic and skin care products, and strategic planning.

Jeffry B. Johnson

   65  2000  Retired. Formerly Treasurer and Chief Financial Officer of the Company from November 2000 to January 2009. From 1981 to 2000, Controller of the Company. Employed by the Company since 1976. Mr. Johnson was selected as a director for his extensive knowledge of the Company’s finances and experience in management and financial matters.
Gerald J. Laber, CPA   67  2004  President, The Catholic Foundation for the Roman Catholic Church in Northern Colorado since January

2008. Investor and community volunteer since 2000. From 1980 to 2000 partner with Arthur Andersen L.L.P. Currently a director, chair of the audit committee and member of the finance, compensation and nominating and governance committee of Smart Balance, Inc. (a manufacturer and distributor of heart-healthy food products); currently a director, member of the compensation committee and chair of the audit committee of Allied Motion Technologies; currently a director of three companies (Centennial Specialty Foods Corporation, HealtheTech, Inc. and Qualmark Corporation) which were public reporting companies while Mr. Laber served as a director and which ceased being public reporting companies during the past five years. Formerly, during the past five years, a director and chair of the audit committee of Spectralink Corporation until it was acquired in March 2007 and a director and chair of audit committee of Applied Films Corporation until it was acquired in July 2007. Mr. Laber was selected as a director for his extensive experience in accounting, financial matters and strategic planning and his ability to serve as an audit committee financial expert.

All of the foregoing persons are currently directors of the Company. Their positions on standing committees of the Board of Directors are shown below under “Directors’ Meetings and Committees”.
     The Company’s only executive officers are those who are described in the foregoing table. The officers of the Company are elected annually at the first meeting of the Company’s Board of Directors held after each annual meeting of shareholders and serve at the pleasure of the Board of Directors.
Committees.”

There are no family relationships among the executive officers or directors of the Company. There are no arrangements or understandings pursuant to which any of these persons were elected as an executive officer or director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.

Directors’ MeetingsBOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

The Board is actively involved in assessing and Committeesmanaging risks that could affect the Company. Part of the Board's role is to periodically assess the processes utilized by management with respect to risk assessment and risk management, including identification by management of the primary risks of the Company’s business, and the implementation by management of appropriate systems to deal with such risks. The Board fulfills these responsibilities either directly, through delegation to committees of the Board, or, as appropriate, through delegation to individual directors. When the Board determines to delegate any risk management oversight responsibilities, typically such delegation is made to the standing committees of the Board.

Mr. Goldstein serves as both the Chairman of the Board and the Chief Executive Officer of the Company. The Company believes this is appropriate in light of Mr. Goldstein’s significant experience and leadership roles with the Company, and his in-depth knowledge of consumer products and the Company’s management, marketplace, customers, marketing, sales and strategic vision.

EXECUTIVE OFFICERS

The Company has four executive officers. They are Mr. Goldstein, Mr. Hinkle, Mr. Passantino and Brian L. Boberick. Information regarding Mr. Goldstein and Mr. Hinkle is stated above under “Nominees.” Information concerning Mr. Passantino and Mr. Boberick is as follows:

Mr. Passantino, 55, has been employed by the Company since 1981. He has been Vice President – Operations of the Company since November 2002 and Corporate Secretary from 2002 until 2011. From 1991 to 2002, he served as Operations Manager of the Company.

Mr. Boberick, 55, a certified public accountant, has been the Chief Financial Officer and Treasurer of the Company since his election to these positions by the Board on February 24, 2009. Mr. Boberick was formerly Controller/Credit Manager of the Company since October 2000. While Controller/Credit Manager, he was involved in, among other things, the daily operations of the finance department, preparation of annual and quarterly reports to the SEC, and the Company’s relationships with lenders and others. Prior to joining the Company, Mr. Boberick was a controller at a sports marketing company, held finance positions at two other companies and was a senior auditor at an accounting firm.

The officers of the Company are elected annually at the first meeting of the Company’s Board held after each annual meeting of shareholders and serve at the pleasure of the Board.

DIRECTORS’ MEETINGS AND COMMITTEES

During the year ended December 31, 2007,2010, the Company had five directorsfour Board meetings plus fivetwo actions by unanimous written consent. The Company’s Board of Directors has both a Compensation Committee and an Audit Committee. The Company does not have a nominating committee.

No member of the Board attended fewer than 75% of the meetings of the Board or of committees for which such member served during 2010.

Compensation Committee

The primary responsibilities of the Compensation Committee include, without limitation, reviewing the development of an executivea compensation philosophy for the Company; origination of allCompany, reviewing the compensation packages for executive officers and engaging and overseeing compensation proposals; review of the appropriate mix of variable versus fixed compensation;consultants and review of all transactions between the Company and any executive officer or director, whether or not involving compensation. There is no authority on the part of theadvisers. The Compensation Committee tomay not delegate any of these functions to other persons.its authority. The Compensation Committee consists currently of three outside directors of the Company and, in addition, the Chairman ofoperates under resolutions adopted by the Board of the Company.Directors that may constitute a charter, a copy of which is attached hereto asAppendix B. Current members of the Compensation Committee are Dennis H. Field (Chairperson), Carl A. Bellini, and Gerald J. Laber, and Mark E. Goldstein (with Mr. Goldstein having no vote), each of whom is an independent director as defined inunder the NASDAQ rules, except for Mr. Goldstein.rules. The Compensation Committee had one meeting during 2007.

     The Compensation Committee recommends to the Company’s Board of Directors all elements of the compensation of the Company’s executive officers. 2010.

In making decisions regarding the executive compensation, the Compensation Committee requests the comments of the chief executive officerChief Executive Officer and the other executive officers about their compensation and considers a number of factors. In determining the executive compensation in 20072009 and 2008,2010, the Committee considered, among other things, the following matters:

Overview

•The objectives of the Company’s compensation program.
•What the compensation program is designed to reward.
•Each element of the compensation.
•How does the Company determine the amount (and, where applicable, the formula) for each element?

The objectives of the Company’s compensation program;

5

What the compensation program is designed to reward;

Each element of the compensation;

How doesthe Company determines the amount (and, where applicable, the formula) for each element; and

How each compensation element and the Company’s decisions regarding that element fit into the Company’s overall compensation objectives and affect decisions regarding other elements?elements.

Specific Factors

Services performed and time devoted to the Company by the executive;

•Services performed and time devoted to the corporation by the executive;
•Amounts paid to executives in comparable companies;
•The size and complexities of the business;
•Successes achieved by the executive;
•The executive’s abilities;
•The executive’s tenure;
•Corporate financial results;
•Prevailing economic conditions;
•Compensation paid to other employees of the corporation; and
•The amount previously paid to the executive.

Amounts paid to executives in comparable companies;

The size and complexities of the Company’s business;

Successes achieved by the executive;

The executive’s abilities;

The executive’s tenure;

The Company’s financial results;

Prevailing economic conditions;

Compensation paid to other employees of the Company; and

The amount previously paid to the executive.

The Compensation Committee hashad previously determined that an outside consultant on compensation matters should be used once every three yearsperiodically to provide information about the compensation paid to the Company’s executive officers compared to compensation paid by other companies. Most recently, the Compensation Committee engaged The Hay Group in 2004 to provide this type of market analysis. The report from The Hay Group compared each element of the Company’s base salary, total cash compensation and total direct compensation for the executive officers to The Hay Group’s all company executive compensation survey and to a peer group of 14 companies in the consumer products and specialty chemical industries. This report showed, among other things, that the aggregate actual total direct compensation levels for the Company’s executive officers fell between the 25th and 50th percentile levels of the peer group market, with the Chief Executive Officer’s actual total direct compensation levels below the median of such market by approximately 20% to 25%. The Compensation Committee has not engaged aan independent compensation consultantexpert to assist the Compensation Committee in 2007evaluating the Company’s

current compensation programs and policies. The Company anticipates having the results of this compensation analysis in the third quarter of the year. To the extent such evaluation leads to changes in compensation, the Company will make any required disclosures in current or 2008 in order to save onperiodic reports it files with the costs.

SEC.

The Board of DirectorsCompensation Committee also determines the fees paid to the non-employee directors. The Board does so without the use of a compensation consultant. The fees for the non-employee directors result from discussions between the executive officers and each of the non-employee directors as to a reasonable amount. The Company pays the same director fees to all non-employee directors.

Audit Committee

The Audit Committee has as itsCommittee’s primary responsibilities the appointment ofinclude appointing the independent auditor for the Company, the pre-approval ofpre-approving all audit and non-audit services, and assistance toassisting the Board of Directors in monitoring the integrity of the financial statements of the Company, the independent auditor’s qualifications, independence and performance and the Company’s compliance with legal requirements. The Audit Committee operates under a written charter adopted by the Board, of Directors, a copy of which has been filed with the SEC and is attached as an exhibit to this proxy statement.available at the Company’s website at www.scottsliquidgold.com. The current members of the Audit Committee are Gerald J. Laber (Chairperson), Carl A. Bellini and Dennis H. Field. Each member of the Audit Committee is an independent director as defined in the NASDAQ rules. Mr. Laber has the professional experience deemed necessary to qualify as an audit committee financial expert under rules of the Securities and Exchange Commission.SEC. The Audit Committee had eightfour meetings during 2007.

6

2010.

NOMINATION PROCESS

Nomination Process
The Board of Directors of the Company does not have a nominating committee. The full Board of Directors performs the functions of a nominating committee. The Board of Directors believes that it does not need a separate nominating committee because the full Board is relatively small, has the time to perform the functions of selecting Board nominees and in the past has acted unanimously in regard to nominees.

In considering an incumbent director whose term of office is to expire, the Board of Directors reviews the director’s overall service during the person’s term, the number of meetings attended, level of participation and quality of performance. In the case of new directors, the directors on the Board of Directors are asked for suggestions as to potential candidates, discuss any candidates suggested by a shareholder of the Company and apply the criteria stated below. The Company may engage a professional search firm to locate nominees for the position of director of the Company. However, to date the Board of Directors has not engaged professional search firms for this purpose. A selection of a nominee by the Board of Directors requires a majority vote of the Company’s directors. The Board of Directors consists of sevensix members of which Carl A. Bellini, Dennis H. Field, and Gerald J. Laber are independent as defined inunder NASDAQ rules.

The boardBoard seeks candidates for nomination to the position of director who have excellent decision-making ability, business experience, particularly those relevant to consumer products, personal integrity and a high reputation, diverse backgrounds and who meet such other criteria as may be set forth in a writing adopted by a majority vote of the Board.

During 2011, the Board is undertaking a search for a qualified, independent director. The Board’s preference is to nominate a candidate who has experience and expertise in consumer products marketing, advertising, branding and sales. While it is not a requirement for the Company, the goal of Directors.

the Board is to have a majority of its members meet the independence requirements under the NASDAQ rules in the near term.

Pursuant to a policy adopted by the Board, of Directors, the directors will take into consideration a director nominee submitted to the Company by a shareholder; provided that the shareholder submits the director nominee and reasonable supporting material concerning the nominee by the due date for a shareholder proposal to be included in the Company’s proxy statementProxy Statement for the applicable annual meeting as set forth in rules of the Securities and Exchange CommissionSEC then in effect. See “Shareholder Proposals” below.

Director Attendance at Company Annual MeetingsDIRECTOR ATTENDANCE AT COMPANY ANNUAL MEETINGS

The Company does not have a policy regarding attendance by members of the Board of Directors at the Company’s annual meeting of shareholders. The Company has always encouraged its directors to attend its annual meeting. In 2007,2009, the year of our last annual meeting, all directors attended the Company’s annual meeting of shareholders.

Stockholder Communications With the BoardSHAREHOLDER COMMUNICATIONS WITH THE BOARD

Historically, the Company has not had a formal process for stockholdershareholder communications with the Board of Directors.Board. The Company does not believe a formal process for handling stockholdershareholder communications is necessary because the Board of Directors reviews and considers all material communications from stockholders.

7

shareholders.

CODE OF BUSINESS CONDUCT AND ETHICS

Code of Business Conduct and Ethics
The Company has a Code of Business Conduct and Ethics that reflects long-standing positions of the Company and contains additional provisions.provisions that address the Company’s expectations relating to ethical business conduct. The Code applies to all employees, including executive officers, and to directors. The Code concerns, among other things, compliance with applicable law, the avoidance of conflicts of interest, no trading by such a person if the person isrestrictions imposed on persons who are aware of material non-public information, that may be considered material, a prohibition on taking corporate opportunities, competing fairly and honestly, diversity as an asset, the Company’s efforts to provide a safe and healthful work environment, recordkeeping, confidentiality, proper use of Company assets and payments to government personnel. The Code sets forth steps which may be followed if there is a situation where it is difficult to know right from wrong. A copy of the Code of Business Conduct and Ethics may be obtained upon request to: Corporate Secretary, Scott’s Liquid Gold–Inc., 4880 Havana Street, Denver, Colorado 80239.
Compensation Committee Interlocks and Insider Participation
     Mr. Dennis Field serves on both the Compensation Committee and the Audit Committee. From 1978 to 1982, Mr. Field was President and Chief Operating Officer of Aquafilter Corporation, a wholly-owned subsidiary of the Company which manufactured cigarette filters. After leaving Aquafilter Corporation, Mr. Field had virtually no contact with the Company from the date of his resignation to 1991 when he was asked to join The Code is also available at the Company’s Board. Prior to 1991, he was Executive Vice President/General Manager, U.S. Division, of Faberge. Mr. Field has a distinguished career with significant consumer product companies.
     During 2007, none of the Company’s executive officers served on the board or compensation committee of another entity which had one of its executive officers serve as a director of the Company or a member of the Company’s Compensation Committee.

8

website.

EXECUTIVE COMPENSATION

Executive Compensation
     Summary Compensation Table
The following Summary Compensation Table shows the annual and other compensation of the chief executive officerChief Executive Officer and all other executive officers of the Company at December 31, 2007,2010, for services in all capacities provided to the Company and its subsidiaries for the past two years.
The Company's compensation packages to the executive officers, as determined by the Compensation Committee, are designed to enable the Company to recruit, retain and motivate a talented and diverse group of people who contribute to the Company’s success. The packages are also intended to synchronize executive compensation with the Company's performance, motivate executive officers to achieve the Company’s business objectives, provide performance incentives and minimize undue risk to the Company. The Company's Chief Executive Officer provides input on determining and recommending compensation packages of the executive officers other than himself.

SUMMARY COMPENSATION TABLE

                                     
                          Non-qualified    
                      Non-equity deferred    
Name and             Stock     incentive plan compensation All Other  
Principal     Salary Bonus Awards Option awards compensation earnings Compensation Total
Position Year $(1) $(2) $ $(3) $ $ ($)(4) $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Mark E. Goldstein  2007   360,000   —   —   1,483   —   —   49,543   411,026 
Chairman of the  2006   387,684   —   —   —   —   —   47,929   435,513 
Board, President and Chief Executive Officer                                    
     
Jeffrey R. Hinkle  2007   202,500   —   —   1,483   —   —   15,232   219,215 
Vice President –  2006   218,203   —   —   —   —   —   14,270   232,473 
Marketing and Sales                                    
     
Jeffry B. Johnson  2007   171,000   —   —   1,483   —   —   11,271   183,754 
Treasurer and Chief  2006   184,860   —   —   —   —   —   17,178   202,038 
Financial Officer                                    
     
Dennis P. Passantino  2007   165,375   —   —   2,325   —   —   25,305   193,005 
Vice President –  2006   178,152   —   —   —   —   —   19,258   197,410 
Operations and Corporate Secretary                                    

(1)

Name and

Principal

Position

 In YearSalary
$(1)		Bonus
$(2)		Stock
Awards
$		Option
awards
$(3)		Non-equity
incentive
plan
compensation
$		Non-qualified
deferred
compensation
earnings $		All Other
Compensation
($)(4)		Total
$

(a)

(b)(c)(d)(e)(f)(g)(h)(i)(j)

Mark E. Goldstein

Chairman of the Board, President and Chief Executive Officer


2010
2009

342,000
342,000
23,914
56,614
66,706

422,528
408,706

Jeffrey R. Hinkle

Vice President – Marketing and Sales


2010
2009

192,375
192,375
24,448
14,129
11,969

230,952
204,344

Dennis P. Passantino

Vice President – Operations and Corporate Secretary


2010
2009

165,375
165,375
17,563
25,029
25,640

207,967
191,015

Brian L. Boberick

Controller until February 2009; Treasurer and Chief Financial Officer commencing on February 24, 2009


2010
2009

135,000
130,708

3,804
3,511

27,494

23,588



166,298
157,807

(1)September 20062008 through the date of this Proxy Statement, the Company, as a cost cutting measure, reduced the base salary of each of its executive officersMr. Goldstein and Mr. Hinkle, with their consents, by 5%. Prior to that, in September 2006, the base salary of each of Mr. Goldstein and Mr. Hinkle was reduced by 10%, for an aggregate reduction through the date of this Proxy Statement of 15%.
(2)The Company has adoptedhad a bonus plan for its executive officers for the year 2008.2010. The plan providesprovided that an amount willwould be distributed to the Company’sCompany's executive officers equal to 10% of the annual before tax profit exceeding $1 million, excluding items that are infrequent, unusual, or extraordinary. Such amount if any, for 2008 will be2010 would have been divided among the Company’sCompany's executive officers as follows: President, 31%, Vice President-Marketing and Sales, 25%, Treasurer, 22%, and Vice President – Operations, 22%. In no event iswould a bonus have been paid unless pre-tax profits, excluding the above-mentioned items, exceedexceeded $1,000,000 for the fiscal year, nor iswould any bonus have been paid on the first $1,000,000 of pre-tax earnings, excluding the above-mentioned items. The Company hadAfter receiving the recommendation of the Compensation Committee, the Board has adopted substantially the same plan in 2007 and 2006.for 2011.
(3)Amounts shown in the column “Option Awards” reflectare the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2007 of grantsaggregate grant date fair value of stock options granted in 2010 and prior to 2007. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures

9

related to service-based vesting conditions.2009, computed in accordance with ASC 718. For additional information on the valuation assumptions for the stock options, please refer to Note 1(m)1(n) of the Company’s Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20072010 as filed with the Securities and Exchange Commission.SEC on March 29, 2011, a copy of which accompanies this Proxy Statement. These amounts reflect the Company’s accounting expense for these awards and do not necessarily correspond to the actual value that may be recognized by the executive officers.officers in the future.

(4)The dollar amount of All Other Annual Compensation changes from year to year because of fluctuations in the costs of benefits and their timing. All Other Annual Compensation in the table above for 20072010 and 20062009 is comprised of the following:

                 
  Mark E. Goldstein  Jeffrey R. Hinkle 
  2007  2006  2007  2006 
Automobile purchase (a) $—  $—  $—  $— 
Income taxes on automobile purchase (a)  —   —   —   — 
Other automobile expenses  3,958   4,122   2,319   391 
Memberships  23,009   22,887   —   — 
Life insurance  2,546   2,412   1,478   1,478 
Income taxes on life insurance  1,941   1,839   1,035   1,035 
Medical plan (b)  8,725   5,785   3,638   2,908 
Disability insurance  4,672   4,672   4,987   4,987 
ESOP (c)  1,960   3,480   1,775   3,471 
Other  2,732   2,732   —   — 
             
Total other compensation $49,543  $47,929  $15,232  $14,270 
             
                 
  Jeffry B. Johnson  Dennis P. Passantino 
  2007  2006  2007  2006 
Automobile purchase (a) $—  $—  $7,349  $7,349 
Income taxes on automobile purchase (a)  —   —   5,155   5,155 
Other automobile expenses  2,896   1,263   818   313 
Memberships  —   —   —   — 
Life insurance  2,044   4,332   966   966 
Income taxes on life insurance  1,434   3,039   678   678 
Medical plan (b)  2,548   4,649   2,908   1,369 
Disability insurance  845   929   5,938   514 
ESOP (c)  1,504   2,966   1,493   2,914 
Other  —   —   —   — 
             
Total other compensation $11,271  $17,178  $25,305  $19,258 
             

   Mark E. Goldstein   Jeffrey R. Hinkle 
   2010   2009   2010   2009 

Automobile lease/allowance(a)

  $9,081   $12,961   $—      $—    

Income taxes on automobile lease/allowance(a)

   6,890    9,832    —       —    

Other automobile expenses

   953     1,810     1,012     668  

Memberships

   16,884    16,882     —       —    

Life insurance

   4,716    4,716     1,814     1,814  

Income taxes on life insurance

   3,578    3,578     1,280     1,280  

Medical plan(b)

   5,421    8,288     3,814     2,354  

Disability insurance

   4,672    4,672     4,987     4,987  

ESOP(c)

   1,545    1,094     1,222     866  

Other

   2,874    2,873     —       —    
                    

Total other compensation

  $56,614   $66,706    $14,129    $11,969  
                    
   Dennis P. Passantino   Brian L. Boberick 
   2010   2009   2010   2009 

Automobile lease/allowance(a)

  $6,066   $7,341   $6,000   $5,125  

Income taxes on automobile lease/allowance(a)

   4,274    5,165    4,225    3,608  

Other automobile expenses

   858    477    401    757  

Memberships

   —       —       —       —    

Life insurance

   1,245    1,245    2,719    4,065  

Income taxes on life insurance

   876    875    1,915    2,862  

Medical plan(b)

   8,269    6,644    8,991    5,305  

Disability insurance

   2,365    3,127    2,314    1,228  

ESOP(c)

   1,076    766    929    638  

Other

   —       —       —       —    
                    

Total other compensation

  $25,029   $25,640   $27,494   $23,588  
                    

(a)Every three to six years, theThe Company provides funds needed, plus an amount to pay resulting income taxes, to each executive officer for the purchaselease or allowance for the use of an automobile. In the case of Mr. Passantino, the amount shown for 20072010 and 20062009 represents the lease value, and income tax on that value, for his use in 20072010 and 20062009 of a vehicle leased by the Company. In the third quarter of 2009, under this policy, Mr. Goldstein leased a vehicle for use by Mr. Goldstein. Mr. Goldstein had previously not purchased or leased an automobile under this policy since 2000. In the case of Mr. Boberick, the amount shown for 2010 and 2009 represents an allowance for use of his personally-owned vehicle.
(b)In addition to group life, health, hospitalization and medical reimbursement plans which generally are available to all employees, the Company has adopted a plan which provides for additional medical coverage of not more than $50,000 per year to each of the Company’sCompany's executive officers.

10

(c)All Other CompensationESOP compensation for each of the executive officers consists of Company contributions under an Employee Stock Ownership Plan and Trust Agreement (“ESOP”("ESOP"). The Company may contribute annually to the ESOP cash or common stock which, in combination with any employer contribution made to the 401(k) Plan, cannot exceed 25% of all participants’participants' total compensation (the maximum amount currently deductible under tax laws). The Board of Directors determines whether any contributions will be made for the year. Benefits are allocated to all eligible employees according to a formula based on compensation, except that any income earned on assets of the Trust is allocated to ESOP participants based upon the value that each participant’sparticipant's account bears to the total value of Trust assets.

Stock PlansSTOCK PLANS

Executive officers and non-employee directors of the Company are eligible to receive stock awards under the Company’s 1998 Stock Option Plan and 2005 Stock Incentive Plan as amended, which expireexpires on November 9, 2008 and March 31, 2015. The number of shares available under the 1998 Plan and 2005 Plan are 1,100,000 and 600,000is 1,500,000 shares of common stock.stock; however, under Proposal 2 of this Proxy Statement, shareholders are being asked to approve of an increase in the number of available shares to a total of 3,000,000. The 1998 Plan provides for the issuance of incentive stock options or non-qualified stock options; the 2005 Plan provides for the issuance of stock awards consisting of incentive and non-qualified stock options, stock appreciation rights, restrictiverestricted stock or restrictive

restricted stock units. To date, the Company has only granted stock options under its plans. Eligible persons are full-time employees and non-employee directors for purposes ofunder the 19982005 Plan and they are full-time and part-time employees, non-employee directors and consultants under the 2005 Plan.consultants. Under the 2005 Plan, stock awards vest upon a change in control. All options granted in or prior to 20072006 were 100% vested on the date of grant. Options granted in 2007 andafter 2006 including those granted to date in 20082011 vest 1/1/48 of the shares subject to the options each month after the date of grant and upon a change in control.

The Company’s 1998 Stock Option Plan expired on November 8, 2008 and had covered 1,100,000 shares of common stock. Options under the 1998 Plan remain outstanding. The terms of the 1998 Plan are similar to those of the 2005 Plan.

Option Grants in 2007

2009

On February 27, 2007,24, 2009, the Company’s Board of Directors granted five-year options, effective February 26, 2009, for a total of 448,55090,000 shares of common stock to employees,an executive officersofficer and certain non-employee directors at an exercise price of $0.82$0.17 per share (the closing market price on February 27, 2007), except the exercise price is $0.902 per share for Mr. Goldstein. These options vest at 1/48 per month from the date of grant or upon a change in control as indicated above.26, 2009). The number of shares subject to these options were 16,200 for each of Mr. Goldstein, Mr. Hinkle and Mr. Johnson, 26,20030,000 for Mr. Passantino (of which 10,000 replaced an expired option), 50,000Laber, 30,000 for Mr. Bellini (replacing an expired option), 100,000 for Mr. Field (replacing an expired option),Boberick and 30,000 for Mr. Laber.

     Option Grants in 2008
Bellini. On February 26, 2008,August 11, 2009, the Company’s Board of Directors granted a five-year optionsoption, effective on that date, for a total of 134,0003,000 shares of common stock to employees, and executive officersMr. Boberick at an exercise price of $0.55$0.25 per share (the closing market price on February 26, 2008)August 11, 2009). These options vest at 1/48 per month from the date of grant or upon a change in control as indicated above.

Option Grants in 2010

On May 13, 2010, the Company’s Board granted five-year options, effective on that date, for a total of 357,000 shares of common stock to the four executive officers and two non-employee directors at an exercise price of $0.22 per share (the closing market price on May 13, 2010), except in the case of Mr. Goldstein whose options have an exercise price of $0.24, representing 110% of the closing market price. The number of shares subject to these options were 42,00080,000 each for Mr. Goldstein, Mr. Hinkle, Mr. Passantino and Mr. Johnson, (replacing an expired option) and 57,00030,000 for Mr. Passantino (replacing an expired option).

11

     Outstanding Options
     No options were exercised by any ofBellini and 7,000 for Mr. Boberick. On August 10, 2010, the Company’s Board granted five-year options, effective on that date, for a total of 265,000 shares of common stock to three executive officers during 2007. On February 22, 2008 Mr. Passantino exercised 20,000 shares of his options which were granted on February 25, 2003and the four non-employee directors at an exercise price of $0.46. $0.23 per share (the closing market price on August 10, 2010), except in the case of Mr. Goldstein whose options have an exercise price of $0.25, representing 110% of the closing market price. The number of shares subject to these options were 50,000 each for Mr. Goldstein, Mr. Hinkle and Mr. Johnson, 5,000 for Mr. Passantino, 55,000 for Mr. Belini, 25,000 for Mr. Field and 30,000 for Mr. Laber. On November 10, 2010, the Company’s Board granted five-year options, effective December 14, 2010, for a total of 122,000 shares of common stock to the four executive officers and two non-employee directors at an exercise price of $0.20 per share (the closing market price on December 14, 2010), except in the case of Mr. Goldstein whose options have an exercise price of $0.22, representing 110% of the closing market price. The number of shares subject to these options were 18,400 each for Mr. Goldstein, Mr. Hinkle, Mr. Passantino, Mr. Boberick and Mr. Johnson, and 30,000 for Mr. Laber. These options vest at 1/48 per month from the date of grant or upon a change in control as indicated above.

The following table summarizes information with respect to each person’s outstanding stock options at December 31, 2007.

                                     
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2007
                      Stock Awards
                              Equity  
  Option Awards         incentive Equity
          Equity                 plan incentive plan
          incentive                 awards: awards:
          plan                 Number of Market or payout
          awards:             Market unearned value of
  Number of Number of Number of         Number of value of shares, unearned
  securities securities securities         shares or shares or units or shares,
  underlying underlying underlying         units of units of other units or
  unexercised unexercised unexercised Option     stock that stock that rights that other rights
  options options unearned exercise Option have not have not have not that have
  # # options price expiration vested vested vested not vested
Name Exercisable Unexercisable # $ date # $ # $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Mark E. Goldstein70,500   —   —   0.68  Nov. 27, 2008  —   —   —   — 
   80,000   —   —   0.59  May 3, 2010  —   —   —   — 
   50,000   —   —   0.66  Aug. 22, 2010  —   —   —   — 
   18,400   —   —   1.06  Dec. 13, 2010  —   —   —   — 
   3,375(1)  12,825(1)  —   0.90  Feb. 26, 2012  —   —   —     
Jeffrey R. Hinkle79,000   —   —   0.62  Nov. 27, 2008  —   —   —   — 
   80,000   —   —   0.54  May 3, 2010  —   —   —   — 
   50,000   —   —   0.60  Aug. 22, 2010  —   —   —   — 
   18,400   —   —   0.96  Dec. 13, 2010  —   —   —   — 
   3,375(1)  12,825(1)  —   0.82  Feb. 26, 2012  —   —   —   — 
Jeffry B. Johnson42,000   —   —   0.46  Feb. 24, 2008  —   —   —   — 
   8,000   —   —   0.62  Nov. 27, 2008  —   —   —   — 
   80,000   —   —   0.54  May 3, 2010  —   —   —   — 
   50,000   —   —   0.60  Aug. 22, 2010  —   —   —   — 
   18,400   —   —   0.96  Dec. 13, 2010  —   —   —   — 
   3,375(1)  12,825(1)  —   0.82  Feb. 26, 2012  —   —   —   — 
Dennis P. Passantino77,000   —   —   0.46  Feb. 24, 2008  —   —   —   — 
   8,000   —   —   0.62  Nov. 27, 2008  —   —   —   — 
   80,000   —   —   0.54  May 3, 2010  —   —   —   — 
   5,000   —   —   0.60  Aug. 22, 2010  —   —   —   — 
   18,400   —   —   0.96  Dec. 13, 2010  —   —   —   — 
   5,458(1)  20,742(1)  —   0.82  Feb. 26, 2012  —   —   —   — 
2010.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2010

 
   Option Awards  Stock Awards 

Name

(a)

  Number
of
securities
underlying
unexercised
options
#
Exercisable
(b)		  Number
of  securities
underlying
unexercised
options
#
Unexercisable
(c)		  Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
#
(d)		   Option
exercise
price
$
(e)		   Option
expiration
date
(f)		  Number
of
shares
or units
of stock
that
have
not
vested
#
(g)		   Market
value
of
shares
or
units of
stock
that
have
not
vested
$
(h)		   Equity
incentive
plan
awards:
Number
of
unearned
shares,
units or
other
rights
that have
not
vested
#
(i)		   Equity
incentive
plan
awards:
Market
or
payout
value of
unearned
shares,
units or
other
rights
that have
not
vested
$
(j)		 

Mark E. Goldstein

   15,525(1)   675    —       0.90    Feb. 26, 2012   —       —       —       —    
   36,719(4)   33,781    —       0.19    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.24    May 12, 2015   —       —       —       —    
   4,688(8)   45,312    —       0.25    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.22    Dec. 13, 2015   —       —       —       —    

Jeffrey R. Hinkle

   15,525(1)   675    —       0.82    Feb. 26, 2012   —       —       —       —    
   41,146(4)   37,854    —       0.17    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.22    May 12, 2015   —       —       —       —    
   4,688(8)   45,312    —       0.23    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.20    Dec. 13, 2015   —       —       —       —    

Dennis P. Passantino

   25,108(1)   1,092    —       0.82    Feb. 26, 2012   —       —       —       —    
   40,375(3)   16,625    —       0.55    Feb. 25, 2013   —       —       —       —    
   4,167(4)   3,833    —       0.17    Nov. 27, 2013   —       —       —       —    
   12,500(7)   67,500    —       0.22    May 12, 2015   —       —       —       —    
   469(8)    4,531    —       0.23    Aug. 9, 2015   —       —       —       —    
   192(9)    18,208    —       0.20    Dec. 13, 2015   —       —       —       —    

Brian L. Boberick

   7,083(1)   2,917    —       0.82    Feb 26, 2012   —       —       —       —    
   1,750(2)   1,250    —       0.82    Sep. 3, 2012   —       —       —       —    
   2,292(3)   2,708    —       0.55    Feb. 25, 2013   —       —       —       —    
   6,250(5)   23,750   —       0.17    Feb. 23, 2014   —       —       —       —    
   250(6)    2,750   —       0.25    Aug. 10, 2014   —       —       —       —    
   1094(7)   5,906   —       0.22    May 12, 2015   —       —       —       —    
   192(9)   18,208   —       0.20    Dec. 13, 2015   —       —       —       —    

(1)

These options were granted on February 27, 2007 and vest 1/1/ 48 per month from date of grant.

12

(2)

These options were granted on September 4, 2007 and vest1/ 48 per month from date of grant.

(3)

These options were granted on February 26, 2008 and vest1/ 48 per month from date of grant.

(4)

These options were granted on November 28, 2008 and vest1/ 48 per month from date of grant.

(5)

These options were granted on February 24, 2009 and vest1/ 48 per month from date of grant.

(6)

These options were granted on August 11, 2009 and vest1/ 48 per month from date of grant.

(7)

These options were granted on May 13, 2010 and vest1/ 48 per month from date of grant.

(8)

These options were granted on August 10, 2010 and vest1/ 48 per month from date of grant.

(9)

These options were granted on December 14, 2010 and vest1/ 48 per month from date of grant.

COMPENSATION OF DIRECTORS

Compensation of Directors
     FourThree directors are full-time executive officers of the Company and receive no additional compensation for service as a director. Carl A. Bellini, Dennis H. Field, and Gerald J. Laber were in 2009 and are currently non-employee directors. Mr. Johnson was an executive officer until January 29, 2009 and is currently a non-employee director. The Company payspaid $2,250 per month (through November 30, 2009) to each non-employee director for his services as director.
                             
director compensation
                  Non-Qualified    
              Non-Equity Deferred    
  Fees Earned Stock Option Incentive Plan Compensation All Other  
Name or Paid in Cash Awards Awards Compensation Earnings Compensation Total
  ($) ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d)(1) (e) (f) (g) (j)
Carl A. Bellini  27,000   —   4,438   —   —   —   31,438 
Dennis H. Field  27,000   —   8,875   —   —   —   35,875 
Gerald J. Laber  27,000   —   2,663   —   —   —   29,663 
Beginning December 2009, compensation paid per month to Messrs. Bellini, Field, and Johnson was reduced to $1,125 per month, while Mr. Laber’s compensation was reduced to $1,250 per month. The following table shows the annual and other compensation of the non-employee directors at December 31, 2010 for services to the Company for 2010.

DIRECTOR COMPENSATION FOR 2010

 

Name

(a)

  Fees Earned
or Paid in Cash
($)
(b)		   Stock
Awards
($)
(c)		   Option
Awards
($)
(d)(1)		   Non-Equity
Incentive Plan
Compensation
($)
(e)		   Non-Qualified
Deferred
Compensation
Earnings
($)
(f)		   All Other
Compensation
($)
(g)		   Total
($ ) (j)		 

Carl A. Bellini

   13,500     —       13,763    —       —       —       27,263  

Dennis H. Field

   13,500     —       3,824     —       —       —       17,324  

Gerald J. Laber

   15,000     —       8,753     —       —       —       23,753  

Jeffry B. Johnson

   13,500     —       24,469     —       —       —       37,969  

(1)Amounts shown in the column “Option Awards” reflectare the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2007 of grantsaggregate grant date fair value of stock options granted in and prior to 2007. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.2010, computed in accordance with ASC 718. For additional information on the valuation assumptions for the stock options, please refer to Note 1(m)1(n) of the Company’s Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 20072010 as filed with the Securities and Exchange Commission.Commission on March 29, 2011, a copy of which accompanies this Proxy Statement. These amounts reflect the Company’s accounting expense for these awards and do not necessarily correspond to the actual value that may be recognized by the directors.directors in the future.

The following table summarizes information with respect to each non-employee director’s outstanding stock options at December 31, 2007:

                 
  Outstanding Options at December 31, 2007
  Number of Securities Number of Securities    
  Underlying Unexercised Underlying Unexercised Option  
  Options Options Exercise Option
  # # Price Expiration
Name Exercisable Unexercisable $ Date
Carl A. Bellini  30,000   —   0.54  May 4, 2010
   30,000   —   0.60  August 22, 2010
   25,000   —   0.60  August 22, 2010
   10,417(1)  39,583(1)  0.82  February 26, 2012
Dennis H. Field  45,000   —   0.62  November 27, 2008
   25,000   —   0.60  August 22, 2010
   20,833(1)  79,167(1)  0.82  February 26, 2012
Gerald J. Laber  30,000   —   0.76  February 25, 2009
   30,000   —   0.60  August 22, 2010
   30,000   —   0.96  December 13, 2010
   6,250(1)  23,750(1)  0.82  February 26, 2012

13

2010:

   Outstanding Options at December 31, 2010 

Name

  Number of Securities
Underlying Unexercised
Options
#
Exercisable		  Number of Securities
Underlying Unexercised
Options
#
Unexercisable		   Option
Exercise
Price
$		   Option
Expiration
Date		 

Carl A. Bellini

   47,917(1)   2,083    0.82     Feb. 26, 2012  
   13,750(4)   16,250    0.17     Feb. 23, 2014  
   4,688(5)   25,312    0.22     May 12, 2015  
   5,156(6)   49,844     0.23     Aug. 9, 2015  

Dennis H. Field

   95,833(1)   4,167    0.82     Feb. 26, 2012  
   23,438(2)   21,562     0.17     Nov. 27, 2013  
   2,344(6)   22,656     0.23     Aug. 9, 2015 

Gerald J. Laber

   28,750(1)   1,250    0.82     Feb. 26, 2012  
   13,750(4)   16,250    0.17     Feb. 23, 2014  
   2,813(6)   27,187    0.23     Aug. 9, 2015  
   313(7)   29,687     0.20     Dec. 13, 2015  

Jeffry B. Johnson

   15,525(1)   675     0.82     Feb. 26, 2011  
   29,750(3)   12,250     0.55     Feb. 25, 2013  
   4,167(4)   3,833     0.17     Nov. 27, 2013  
   12,500(5)   67,500     0.22     May 12, 2015  
   4,688(6)   45,312     0.23     Aug. 9, 2015  
   192(7)   18,208     0.20     Dec. 31, 2015  

(1)

These options were granted on February 27, 2007 and vest 1/1/ 48 per month from the date of grant.

     For information on plans under which non-employee directors may receive stock awards and on the grant that stock options to non-employee directors in February 2007, please see “Stock Plans” above.
AMENDMENT TO 2005 STOCK INCENTIVE PLAN
Amendment
     The Company’s Board of Directors amended

(2)

These options were granted on November 28, 2008 and vest1/ 48 per month from the date of grant.

(3)

These options were granted on February 26, 2008 and vest1/ 48 per month from the date of grant.

(4)

These options were granted on February 24, 2009 and vest1/ 48 per month from the date of grant.

(5)

These options were granted on May 13, 2010 and vest1/ 48 per month from the date of grant.

(6)

These options were granted on August 10, 2010 and vest1/ 48 per month from the date of grant.

(7)

These options were granted on December 14, 2010 and vest1/ 48 per month from the date of grant.

PROPOSAL 2: AMENDMENT TO STOCK INCENTIVE PLAN

Amendment

The Company’s Board amended on March 16, 2011, the Company’s 2005 Stock Incentive Plan (the “2005 Plan”) to increase the number of shares of common stock available under the 2005 Plan by 900,0001,500,000 shares of common stock, less thefor a total authorized number of shares issued after the effective date of the amendment as a result of the exercise of stock options under the 1997 Stock Option Plan and the 1998 Stock Option Plan. (The 1997 and 1998 Plans only provide for options.)3,000,000 shares. The amendment increasing the number of shares under the 2005 Plan is subject to approval of the Company’s shareholders.shareholders and is included asAppendix A hereto. The effective date of the amendment will be the date of shareholder approval.

Prior to the amendment, 600,0001,500,000 shares have been available under the 2005 Plan. After the amendment, the total number of shares available under the 2005 Plan will be 1,500,000 shares, less the number of shares issued after the effective date as a result of the exercise of options under the 1997 and 1998 Plans. (Shares subject to options that expire without being exercised will not be subtracted.)3,000,000 shares. The reasons for the amendment to the 2005 Plan include:

The Company’s Board believes that the Company must have available and grant options to employees in order to retain employees in a competitive environment, particularly employees who are subject to the Company’s salary and wage freeze.

•The Company’s Board of Directors believes that the Company must have available and grant options to employees in order to retain employees in a competitive environment, particularly employees who are subject to the Company’s salary and wage freeze.
•The 1997 Plan expired in 2007, and the 1998 Plan expires on November 8, 2008. The 2005 Plan will then be the only stock plan under which grants may be made.
•The increase in options is intended in part to replace options which expire, without being exercised, under the Company’s 1997 Stock Option Plan and 1998 Stock Option Plan. See “Shares Under All Plans as of February 29, 2008” below. Stock options issued under the 1997 and 1998 Plans remain outstanding after the expiration of those Plans and continue for the term of the options, which has typically been five years from the date of grant. The amendment will subtract from the total number of shares available under the 2005 Plan the number of shares which are actually issued under the 1997 and 1998 Plans after the effective date of the amendment.
•

The 2005 Plan is the only stock plan of the Company’s under which grants may be made.

The increase in options is intended in part to replace options which expire, without being exercised, under the Company’s 1997 Stock Option Plan and 1998 Stock Option Plan. See “Shares Under All Plans as of March 31, 2011” below. Stock options issued under the 1997 and 1998 Plans remain outstanding after the expiration of those Plans and continue for the term of the options, which has typically been five years from the date of grant. The amendment will subtract from the total number of shares available under the 2005 Plan the number of shares which are actually issued under the 1997 and 1998 Plans.

Options reward persons who have stayed with the Company.

Options provide an incentive on the part of officers and other employees, as well as directors, to improve the Company’s performance.

The grant of options aligns the goals of the optionees with those of the shareholders.

The options provide to directors and executive officers a meaningful stake in the Company.

•Options provide an incentive on the part of officers and other employees, as well as directors, to improve the Company’s performance.

14

•The grant of options aligns the goals of the optionees with those of the shareholders.
•The options provide to directors and executive officers a meaningful stake in the Company.
Shares Under All Plans
As of February 29, 2008
March 31, 2011

The Company currently has outstanding options under three stock option plans. They are the 1997 Stock Option Plan (for which the executive officers and directors are ineligible), the Company’s 1998 Stock Option Plan and the 2005 Plan. The number of shares available under the Plans are shown in the following table:

                 
          2005 Plan    
  1997 Plan  1998 Plan  With Amendment  Total 
Shares authorized  300,000   1,100,000   1,500,000(1)(2)  2,900,000(1)(2)
Shares subject to outstanding options  287,000   1,048,500   585,900   1,922,150 
Shares previously issued upon exercise of options  —   22,000   —   22,000 
Shares available for option grants (Expired)  29,500   914,100   943,600 
      (Expires (Expires    
      November 8, 2008) March 31, 2015)    

  2005 Plan(3) 
  1997 Plan  1998 Plan  With Amendment  Total 

Shares authorized for future issuances

  —          —          3,000,000 (1)(2)   3,000,000 (1)(2) 

Shares subject to outstanding options

  240,500    296,900    1,396,150    1,933,550  

Shares previously issued upon exercise of options

  —          22,000    3,500    25,500  

Shares available for option grants

    1,600,350    1,040,950 (2)

(1)Includes 1,500,000 shares added by the amendment being submitted to the shareholders for approval.

(2)The number of shares under the 2005 Plan is decreased by options exercised under the 1997 and 1998 Plans after the effective date of the 2005 Plan amendment.May 6, 2008.

(3)Expires on March 31, 2015.

Significant features of the 2005 Plan are summarized below, as currently in effect and as the 2005 Plan will be in effect after the amendment which solely increases the number of shares.shares available for awards. This summary is qualified in its entirety by reference to the full text of the 2005 Plan which is available from the Company and is an exhibit to filings with the Securities and Exchange Commission.

SEC.

General

In March, 2005, the Company’s Board of Directors adopted the 2005 Plan, subject to approval and ratification by shareholders. The shareholders approved the 2005 Plan in May 2005.

The shareholders approved an amendment to increase the number of shares available under the 2005 Plan from 900,000 to 1,500,000 on May 6, 2008.

The 2005 Plan provides that the 2005 Plan administrator may issue stock awards consisting of incentive and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units. The 2005 Plan administrator may grant one or more of these types of awards. The Board will administer the 2005 Plan unless the Board delegates the administration of the 2005 Plan to a committee, which will be appointed by and serve at the pleasure of the Board. The 2005 Plan administrator determines and designates from time to time

15

(a) those eligible persons to whom awards are granted, (b) the size, form, terms (including vesting, if any) and conditions of awards under the 2005 Plan and (c) rules with respect to the administration of the 2005 Plan. The 2005 Plan administrator may at any time cancel an award, whether vested or unvested, if the participant engages in conduct that the 2005 Plan administrator determines to be detrimental to the best interest of the Company, including failure to comply with policies or procedures of the Company.

Shares Subject to 2005 Plan; Limitations

The aggregate number of shares of Common Stock that may be issued under awards granted pursuant to the 2005 Plan will be 1,500,0003,000,000 shares of the Company’s common stock, less the number of shares issued after the effective date of the amendment as a result of the exercise of options under the 1997 and 1998 Plans.Plans, after May 6, 2008. If there is a stock dividend, subdivision, reclassification, recapitalization, merger, consolidation, stock split, combination or exchange of stock, or other event described under the terms of the 2005 Plan, the administrator will make appropriate adjustments to the total number of shares available under the 2005 Plan and to outstanding awards. If an outstanding award expires or ceases to be exercisable, the shares that were subject to the award will continue to be available under the 2005 Plan.

During any single calendar year, no participant will be eligible to be granted awards exceeding 10% of the limit on shares under the 2005 Plan. From March, 2005 to the date on which the 2005 Plan terminates, no participant will be eligible to be granted awards exceeding 20% of the limit on shares.

Term of 2005 Plan

The 2005 Plan was effective as of March 31, 2005. The 2005 Plan will terminate on March 31, 2015, unless terminated earlier by the Board. Termination of the 2005 Plan will not affect grants made prior to termination.

Eligibility

All full-time and part-time employees are eligible to receive any award under the 2005 Plan. Directors and consultants of the Company and its subsidiaries, who are not employees, are eligible to receive any award, other than incentive stock options, under the 2005 Plan.

Securities Issuable Under the 2005 Plan

Stock Options

The exercise price for an option granted under the 2005 Plan must not be less than 100% of the fair market value of the shares subject to the option at the date of grant. No option will be repriced. The term of each option may not be more than ten years from the date of grant. An option is fully vested unless otherwise provided by the 2005 Plan administrator in the option agreement. A participant may pay the exercise price and withholding taxes in cash or, upon approval of the 2005 Plan administrator, in common stock of the Company or another form of legal consideration. No incentive stock option may be granted to an employee who, at the time the incentive stock option is granted, owns stock (as determined in accordance with the Internal Revenue Code) representing more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary, unless the option price of such incentive stock option is at least 110% of the fair market

16

value of the stock subject to the incentive stock option and the incentive stock option by its terms is not exercisable more than five years from the date it is granted.

Stock Appreciation Rights

A stock appreciate right, or SAR, is exercisable for the receipt of a number of shares of common stock having a fair market value equal to (1) the fair market value on the date of exercise of the number of shares as to which the SAR has been exercised over (2) the aggregate exercise price of the SAR for such number of shares. The exercise price for each SAR will be no less than the fair market value of the common stock at the time the SAR is granted. No SAR will be repriced. The term of any SAR may not

exceed ten years from the date of grant. SARs will be fully vested unless otherwise determined by the 2005 Plan administrator and stated in a stock appreciation rights agreement.

Restricted Stock and Restricted Stock Units

Restricted stock may be granted to a participant without the payment of a purchase price. If a grant of restricted stock requires the payment of a purchase price, the purchase price of the restricted stock may not be repriced. If restricted stock has a purchase price, a participant must pay the purchase price in cash or, upon approval of the 2005 Plan administrator, in common stock or another form of legal consideration. If a participant fails to satisfy any applicable restriction (including vesting requirements) on the restricted stock, the restricted stock will be forfeited to the Company in return for no consideration or such consideration as specified in the applicable award agreement. Restricted stock constitutes issued and outstanding shares of common stock for all corporate purposes. The participant will have the right to vote the restricted stock, to receive and retain all regular cash dividends and such other distributions as the Board may, in its discretion, pay on the common stock, and to exercise all other rights, powers and privileges of a holder of common stock.

A restricted stock unit represents an obligation of the Company to deliver a specific number of shares of common stock to the participant on a specified date. Any award of restricted stock or an RSU will be fully vested or will vest in accordance with a vesting schedule provided in the agreement for that award as determined by the 2005 Plan administrator.

Valuation

For purposes of the 2005 Plan, the fair market value of common stock means the average of the closing sales prices for the common stock on its trading market for the five preceding trading days as reported in The Wall Street Journal or another publication or source for market prices selected by the Board of Directors.Board. If there has not been trading of the common stock on a specific day, then a trading day is the next preceding day on which there was such trading. If closing sales prices are not available for the trading market, the average of the closing bid and asked prices are used. If none of these alternatives are available, the 2005 Plan administrator will determine the fair market value by applying any reasonable valuation method.

Change in Control

If a change in control event occurs, then the vesting of all awards held by participants in continuous service at the time will be accelerated in full. In anticipation of a change in control event, the 2005 Plan

17

administrator may require that all unexercised awards be exercised upon the change in control event or within a specified number of days of the change in control. The 2005 Plan administrator may in its discretion also accelerate the vesting of any outstanding award in connection with any proposed or completed change in control event, and prior to a change in control event the 2005 Plan administrator may in its discretion terminate all unexercised awards (after acceleration of vesting) in exchange for consideration similar to that received by stockholdersshareholders of common stock of the Company in the change of control event less the exercise price of the award. Alternatively, if a change in control event occurs, any surviving corporation or acquiring corporation may assume any outstanding award under the 2005 Plan or may substitute similar stock awards.

Termination of Continuous Service

Any vesting of an award ceases upon termination of a participant’s service with the Company. A stock option or SAR will terminate and may not be exercised after three months after a participant’s

service with the Company ceases for any reason other than cause, disability or death. If a participant ceases service with the Company for cause or if the participant breaches any covenant not to compete or non-disclosure agreement, an unexercised stock option or SAR terminatesshall terminate immediately. If a participant ceases their service with the Company due to death or disability, an outstanding stock option or SAR will be exercisable for one year after that time but not later than the expiration date of the award. The 2005 Plan administrator may in its discretion extend the dates for termination of awards as stated in this paragraph.

If a participant terminates service with the Company for any reason, any unvested restricted stock or unvested RSUs held by the participant as of the date of termination of service will be forfeited to the Company unless otherwise provided in an applicable award agreement.

Amendment of 2005 Plan

The Board may at any time and from time to time alter, amend, suspend or terminate the 2005 Plan or any part thereof as it may deem proper, except that no such action can diminish or impair the rights under an award previously granted. However, approval of the stockholdersshareholders shall be required to increase the total number of shares issuable under the 2005 Plan, to reduce the exercise price for any option, SAR or RSU or the purchase price for any restricted stock below a level required by the 2005 Plan or to modify materially requirements for eligibility under the 2005 Plan. The 2005 Plan administrator may modify, extend or renew outstanding awards except that this action must not diminish or impair the rights of a previously granted award without the consent of the participant.

18

Federal Income Tax Consequences

The rules governing the tax treatment of stock awards granted under the 2005 Plan depend largely on the surrounding facts and circumstances. Generally, under current federal income tax laws, a participant will recognize income, and the Company will be entitled to a deduction as follows:

Stock Options

If an employee does not dispose of the shares acquired pursuant to the exercise of an incentive stock option within one year after the transfer of the shares to the participant and within two years from the grant of the option, the employee will not realize taxable income as a result of the grant or exercise of the option (except for purposes of the alternative minimum tax upon the exercise of the option), and any gain or loss that is subsequently realized may be treated as a long term capital gain or loss, depending on the circumstances. The Company will not be able to deduct any amount for the grant of the incentive stock option or the transfer of shares upon exercise. If the employee disposes of the stock prior to one year after the transfer of the shares (or two years prior to the option grant date), the participant will realize ordinary income in an amount equal to the lesser of (a) the excess of the fair market value of the common stock acquired on the date of exercise over the exercise price or (b) the gain recognized on such disposition. Upon the exercise of a nonqualified stock option, the participant will generally realize ordinary income equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. The Company will be able to deduct an amount equal to the ordinary income realized by the participant.

Restricted Stock

A participant who receives an award of restricted stock will realize ordinary income (on a per share basis) at the time any restrictions lapse equal to the difference between the fair market value of the common stock at the time such restrictions lapse and the amount (if any) paid for the stock. Alternatively,

under Section 83 of the Internal Revenue Code, the participant may elect to accelerate the tax event and realize ordinary income (on a per share basis) equal to the difference between the purchase price (if any) of the common stock and the fair market value of the common stock on the date of grant upon the receipt of an award of restricted stock. When the participant recognizes ordinary income, the Company will be able to deduct an amount equal to the ordinary income recognized by the participant.

Restricted Stock Units

A participant who is granted an RSU will generally not recognize any income upon the grant of the award. The participant will generally recognize as ordinary income an amount equal to the fair market value of any shares transferred to the participant upon the vesting of such award. The Company will ordinarily be entitled to a deduction, in the amount of the ordinary income recognized by the participant, at the same time the participant recognizes such income, so long as the amount constitutes reasonable compensation.

19

Stock Appreciation Rights

Upon the exercise of any SAR, the value of any stock received will constitute ordinary income to the participant equal to the fair market value of the shares transferred to a participant upon the exercise. The Company will ordinarily be entitled to a deduction in the same amount and at the same time, so long as the amount constitutes reasonable compensation.

Section 409A

Section 409A, a section added to the Code in 2004, can affect the tax treatment of certain types of deferred compensation. Failure to comply with the requirements of Section 409A results in current income of amounts deferred, along with interest and a significant tax penalty. Certain types of equity-based compensation are exempt from Section 409A. The Company intends to operate the 2005 Plan so that all grants under the 2005 Plan are exempt from Section 409A.

Amendment Benefits

As of the date of this proxy statement,Proxy Statement, no executive officer, employee, director or consultant has been granted any award based upon the proposed amendment to the 2005 Plan. The benefits to be received by the eligible participants pursuant to the proposed amendment to the 2005 Plan are not determinable at this time.

20

Other Equity Compensation Plan Information

The following table provides, as of December 31, 2007,2010, information regarding the Company’s equity compensation plans, which consist of the 1997 and 1998 Stock Option Plans and the 2005 Plan. The 1997 Plan expired in 2007; and accordingly no shares are available for future option grants under that Plan.plans. The Company also has an Employee Stock Ownership Plan which invests only in common stock of the Company, but which is not included in the table below.

             
  Number of      
  Securities      
  to be issued     Number of securities
  upon     remaining available for
  exercise of Weighted-average future issuance under
  outstanding exercise price of equity compensation
  options, outstanding plans
  warrants and options, (excluding securities
  rights warrants and rights reflected in column (a))
Plan Category (a) (b) (c)
Equity compensation plans approved by security holders  1,942,150  $0.69   43,600 
Equity compensation plans not approved by security holders  -0-   -0-   -0- 
Total  1,942,150  $0.69   43,600 

Plan Category

 

 

Number of

Securities

to be issued

upon

exercise of

outstanding

options,

warrants and

rights

(a)

 

 

Weighted average

exercise price of

outstanding

options,

warrants and

rights

(b)

 

 

Number of securities

remaining available

for future issuance

under equity

compensation plans

(excluding securities

reflected in

column (a))

(c)

 

Equity compensation plans approved by security holders 1,933,550 $0.39 100,350
Equity compensation plans not approved by security holders __ __ __

Total

 1,933,550 $0.39 100,350

Vote required and Recommendation

The approval of the amendment to the 2005 Plan requires a majority of shares present and voting at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDMENT TO THE 2005 PLAN

PLAN.

CERTAIN TRANSACTIONS

The Company has indemnification agreements with each of its directors and executive officers. These agreements provide for indemnification and advancement of expenses to the full extent permitted by law in connection with any proceeding in which the person is made a party because the person is a director or officer of the Company. They also state certain procedures, presumptions and terms relevant to indemnification and advancement of expenses.

SECTION 16 REPORTS

Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and beneficial owners of more than 10% of the outstanding shares of the Company to file with the Securities and Exchange CommissionSEC reports regarding changes in their beneficial ownership of shares in the Company. To the Company’s knowledge, based solely upon review of Forms 3, 4 and 5, and amendments thereto furnished to the Company, there was full compliance with all Section 16(a) filing requirements applicable to those persons for reports filed in 2007, except that reports for the grant of stock options on February 27, 2007 to each of the directors and executives were filed approximately one week after their due date.

212010.

COMPANY ACCOUNTANTS

General

Ehrhardt Keefe Steiner & Hottman PC, has been selected by the Audit Committee of the Board of Directorsan independent registered public accounting firm, served as the Company’s independent auditors for the fiscal year ended December 31, 2008.2010 and has been selected by the Audit Committee of the Board as the Company’s independent auditors for the fiscal year ending December 31, 2011. Ehrhardt Keefe Steiner and& Hottman PC has been the Company’s independent auditors since June 2003. A representative of Ehrhardt Keefe Steiner & Hottman PC is expected to be present at the Annual Meeting of Shareholders and to have the opportunity to make a statement if the representative so desires. Such representative also is expected to be available to respond to appropriate questions at that time.

REPORT OF AUDIT COMMITTEE

February 26, 2008

March 16, 2011

To the Board of Directors of Scott’s Liquid Gold-Inc.:

We have reviewed and discussed with management the Company’s audited financial statements. We have discussed with Ehrhardt Keefe Steiner & Hottman PC, its independent auditors, the matters required to be discussed by Statement on Auditing Standards No. 61,114,The Auditors’ Communication with Audit Committees,Those Charged with Governance.as amended, by the Auditing Standards Boardadopted in a rule of the American Institute of Certified Public Accountants.Company Accounting Oversight Board (“PCAOB”). We have received and reviewed the written disclosures and the letter from the independent auditors required by Independence Standard No. 1,Independence Discussionsapplicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committees,as amended, by the Independence Standards Board,Committee concerning independence and have discussed with the auditors the auditors’ independence.

Based on the reviews and discussions referred to above, we recommendrecommended to the Board of Directors that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-KSB10-K for the year ended December 31, 20072010 and filed with the Securities and Exchange Commission.

SEC.

The Audit Committee is composed of the three directors named below, all of whom are independent directors as defined in Rule 4200(a)(15) of the NASDAQ Stock Market listing standards.

The Board has adopted a written charter for the Audit Committee.

Submitted by the members of the Audit Committee of the Board of Directors.

Board.

Gerald J. Laber, Chairman

Carl A. Bellini

Dennis H. Field

The preceding information under the caption “Report of the Audit Committee” shall be deemed to be “furnished” but not “filed” with the Securities and Exchange Commission.

22SEC.

Disclosure of Auditor Fees

The following is a description of the fees billed to the Company by its independent auditor (Ehrhardt Keefe Steiner & Hottman PC) for each of the years ended December 31, 20072010 and 2006.

         
Audit and Non-Audit Fees 2007  2006 
Audit fees $97,449  $85,916 
Audit-related fees  16,839   10,965 
Tax fees  2,208   2,022 
All other fees  —   — 
       
Total
 $116,496  $98,903 
       
2009.

Audit and Non-Audit Fees  2010   2009 

Audit fees

  $60,693    $60,184  

Audit-related fees

   1,185     1,185  

Tax fees

   2,523     2,500  

All other fees

   —       —    
          

Total

  $64,401    $63,869  
          

Audit fees are for the audit of the Company’s annual financial statements and the review of the Company’s Annual Report on Form 10-KSB.10-K and the quarterly reviews of the financial statements included in the quarterly reports on form 10-Q. Audit-related fees include required review of certain filings with the SEC, issuance of consents, review of correspondence between the Company and the SEC and services concerning internal controls.controls and transactions. Tax fees primarily include tax compliance, tax advice, including the review of, and assistance in the preparation of, federal and state tax returns.

Policy on Pre-Approval of Audit and Non-Audit Services

The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent public accountants. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services. The Audit Committee has delegated limited pre-approval authority to its chairperson. The chairperson is required to report any decisions to pre-approve such services to the full Audit Committee at its next meeting.

SHAREHOLDER PROPOSALS

Shareholder proposals for inclusion in the Company’s proxy materials relating to the next annual meeting of shareholders must be received by the Company on or before December 2, 2008.24, 2011. Also, persons named in the proxy solicited by the Board of Directors of the Company for its year 20092011 annual meeting of shareholders may exercise discretionary authority on any proposal presented by a shareholder of the Company at that meeting if the Company has not received notice of the proposal by February 15, 2009.

200724, 2011.

2010 ANNUAL REPORT ON FORM 10-KSB

10-K

Shareholders who wish to obtain, without charge, a copy of the Company’s Annual Report on Form 10-KSB report10-K for the year ended December 31, 20072010 in the form filed with the Securities and Exchange CommissionSEC should address a written request to Dennis P. Passantino, Corporate Secretary, Scott’s Liquid Gold-Inc., 4880 Havana Street, Denver, Colorado 80239. The Company’s annual report to shareholders consists of such Form 10-KSB and accompanies this proxy statement.

23

SOLICITATION OF PROXIES

The Company will pay the cost of soliciting proxies in the accompanying form. In addition to solicitation by mail, proxies may be solicited by officers and other regular employees of the Company by telephone, telegraph or by personal interview for which employees will not receive additional compensation. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to beneficial owners of the shares held of record by such

persons, and the Company may reimburse such persons for reasonable out-of pocket expenses incurred by them in so doing.

OTHER BUSINESS

As of the date of this Proxy Statement, Managementmanagement was not aware that any business not described above would be presented for consideration at the meeting. If any other business properly comes before the meeting, it is intended that the shares represented by proxies will be voted in respect thereto in accordance with the judgment of the persons voting them.

The above Notice and Proxy Statement are sent by order of the Board of Directors.

Dennis P. Passantino
Corporate Secretary
Denver, Colorado
April 1, 2008

24

Board.

APPENDIX A
SCOTT’S LIQUID GOLD-INC.
AUDIT COMMITTEE CHARTER
August 19, 2003
Purpose
The Audit Committee is appointed by the Board to assist the Board in monitoring (1) the integrity of the financial statements of the Company, (2) the independent auditor’s qualifications and independence, (3) the performance of the Company’s independent auditors, and (4) the compliance by the Company with legal and regulatory requirements.
The Audit Committee shall prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.
Committee Membership
The Audit Committee shall consist of no fewer than two members. The members of the Audit Committee shall meet the independence requirements of the Securities and Exchange Commission.
The members of the Audit Committee shall be appointed by the Board. Audit Committee members may be replaced by the Board.
Committee Authority and Responsibilities
The Audit Committee shall have the sole authority to appoint or replace the independent auditor, and shall pre-approve all audit engagement fees and terms and all non-audit services with the independent auditors. The Audit Committee shall consult with management but shall not delegate these responsibilities.
The Audit Committee shall meet as often as it determines, but not less frequently than quarterly. The Audit Committee may form and delegate authority to subcommittees when appropriate.
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants to advise the Committee. The Company must provide appropriate funding, as determined by the Audit Committee, for payment for the services of such advisors. The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Audit Committee shall meet with management, any internal auditors and the independent auditor in separate executive sessions at least quarterly.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
The Audit Committee, to the extent it deems necessary or appropriate, shall:

25

Financial Statement and Disclosure Matters
1.Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.

/s/ Jeffrey R. Hinkle

2.Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditors’ reviews of the quarterly financial statements.
3.Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls, the development, selection and disclosure of critical accounting estimates, and analyses of the effect of alternative assumptions, estimates or GAAP methods on the Company’s financial statements.
4.Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as any financial information and earnings guidance provided to analysts and rating agencies.
5.Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as any off-balance sheet structures on the Company’s financial statements.
6.Discuss with management the Company’s major financial risk exposures, if any, and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
7.Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 as amended from time to time and any successor standards relating to the conduct of the audit. In particular, discuss:
(a)The adoption of, or changes to, the Company’s significant auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management.
(b)The management letter provided by the independent auditor and the Company’s response to that letter.
(c)Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, and any significant disagreements with management

Jeffrey R. Hinkle

Corporate Secretary

26

Denver, Colorado

April 20, 2011

APPENDIX A

Oversight of the Company’s Relationship with the Independent Auditor
8.Review the experience and qualifications of the senior members of the independent auditor team.
9.Obtain and review a report from the independent auditor at least annually regarding (a) the auditor’s internal quality-control procedures, (b) any material issues raised by the most recent quality-control review of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and the internal auditor. The Audit Committee shall present its conclusions to the Board and, if so determined by the Audit Committee, recommend that the Board take additional action to satisfy itself of the qualifications, performance and independence of the auditor.
10.Review and approve any audit and non-audit services that management of the Company propose be rendered by the firm performing the Company’s independent audit.
11.Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the lead audit partner or even the independent auditing firm itself on a regular basis.
12.Make a recommendation to the Board as to the Company’s hiring of any employees or former employees of the independent auditor who were engaged on the Company’s account.
13.Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
Compliance Oversight Responsibilities
14.Obtain from the independent auditor assurance that Section 10A of the Securities Exchange Act of 1934 has not been implicated.
15.Obtain reports from management and the independent auditor that the Company and its subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and any code of business conduct of the Company. Review reports and disclosures of insider and affiliated party transactions. Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with any code of business conduct.
16.Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any employee complaints or published reports which raise material issues regarding the Company’s financial statements or accounting policies.
17.Discuss with the Company’s counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.
18.Approve or reject all related party transactions.

27

Oversight of the Company’s Anonymous Complaint Policy
19.Establish and oversee any anonymous complaint policy, which may be contained within any code of business conduct of the Company, regarding:
(a)The receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and
(b)The confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
Limitation of Audit Committee’s Role
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor. It is not the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any between management and the independent auditor or to assure compliance with laws and regulations and the Company’s Code of Business Conduct and Ethics.

28

SCOTT’S LIQUID GOLD-INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, May 6, 2008
9:00 A.M. Mountain Time
4880 HAVANA STREET
DENVER, COLORADO 80239
(SCOTT’S LIQUID GOLD LOGO)
Scott’s Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239proxy
This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 6, 2008, at 9:00 A.M. Mountain Time, or any adjournment thereof.
The shares of stock you hold in your account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted “FOR” Item 1 and Item 2.
By signing the proxy, you revoke all prior proxies and appoint Mark E. Goldstein, Jeffrey R. Hinkle, Jeffry B. Johnson and Dennis P. Passantino, and each of them acting in the absence of the others, with full power of substitution, as your proxies to vote all your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.

òò
Please detach here
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of directors:01 Mark E. Goldstein05 Carl A. Bellini      Vote FOR      Vote WITHHELD
02 Jeffrey R. Hinkle06 Dennis H. Fieldo  all nomineeso from all nominees
03 Jeffry B. Johnson07 Gerald J. Laber      (except as marked)
04 Dennis P. Passantino
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. ApprovalForm of Amendment to 2005 Stock Incentive Plan.o Foro Againsto Abstain
3. In their discretion, the Proxies are authorized to vote upon such other business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR PROPOSAL 1 AND FOR PROPOSAL 2.
Address Change ? Mark Boxo Indicate changes below:Date




Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.

Scott’s Liquid Gold-Inc.
2005 Stock Incentive Plan
Effective Date: March 31, 2005
Approved by Stockholders: May 4, 2005
Termination Date: March 31, 2015
As Amended On February 27, 2007
And May [6], 2008

1.       Recitals. Pursuant to corporate resolution and subject to shareholder approval, Scott’s Liquid Gold-Inc.
2005 Stock Incentive Plan
Table of Contents
ARTICLE 1.
DEFINITIONS
       
1.1 Award  1 
1.2 Board of Directors  1 
1.3 Cause  1 
1.4 Change in Control  1 
1.5 Code  2 
1.6 Common Stock or Stock  2 
1.7 Consultant  2 
1.8 Continuous Service  2 
1.9 Director  3 
1.10 Disability  3 
1.11 Effective Date  3 
1.12 Employee  3 
1.13 Exchange Act  3 
1.14 Fair Market Value  3 
1.15 Incentive Stock Option  3 
1.16 Nonqualified Stock Option  3 
1.17 Option  3 
1.18 Option Agreement  3 
1.19 Parent  3 
1.20 Participant  4 
1.21 Plan Administrator  4 
1.22 Repriced  4 
1.23 Restricted Stock  4 
1.24 Restricted Stock Award Agreement  4 
1.25 Restricted Stock Unit or RSU  4 
1.26 Restricted Stock Unit Award Agreement  4 
1.27 Restriction Period  4 
1.28 Rule 16b-3  4 
1.29 Stock Appreciation Right or SAR  4 
1.30 Stock Appreciation Right Award Agreement  4 
1.31 Subsidiary  4 
1.32 Termination Date  5 
ARTICLE 2.
EFFECTIVE DATE
ARTICLE 3.
ADMINISTRATION
       
3.1 Plan Administrator  5 
3.2 Meetings and Actions  5 
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005
i

       
3.3 Powers of Plan Administrator  5 
3.4 Interpretation of Plan  5 
ARTICLE 4.
STOCK SUBJECT TO THE PLAN
       
4.1 Plan Limit  6 
4.2 Individual Limit  6 
4.3 Unused Stock  6 
4.4 Adjustment for Change in Outstanding Shares  6 
4.5 Retention of Rights  7 
4.6 Cancellation of Award  7 
ARTICLE 5.
ELIGIBILITY
ARTICLE 6.
STOCK OPTIONS
       
6.1 Grant of Options  8 
6.2 Option Agreement  8 
6.3 Manner of Exercise  9 
6.4 Payment of Option Price  9 
ARTICLE 7.
STOCK APPRECIATION RIGHTS
       
7.1 Grant of SARs  10 
7.2 Award Agreement  10 
7.3 Manner of Exercise  10 
ARTICLE 8.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
       
8.1 Grant of Restricted Stock and Restricted Stock Units  11 
8.2 Award Agreement  11 
ARTICLE 9.
TERMINATION OF CONTINUOUS SERVICE
       
9.1 Termination of Continuous Service for Options and SARs  13 
9.2 Termination of Continuous Service for Restricted Stock and RSUs  14 
ARTICLE 10.
CHANGE IN CONTROL
       
10.1 Substitution of Awards  14 
10.2 Acceleration of Vesting  14 
ARTICLE 11.
ISSUANCE OF SHARES
       
11.1 Transfer of Shares to Participant  15 
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005
ii

       
11.2 Legend  15 
11.3 Compliance with Laws  15 
11.4 Investment Representation  16 
ARTICLE 12.
AMENDMENT AND TERMINATION
       
12.1 Amendment of the Plan  16 
12.2 Termination of the Plan  16 
ARTICLE 13.
GENERAL PROVISIONS
       
13.1 Tax Obligations  17 
13.2 No Employment Rights  17 
13.3 Nontransferability of Awards  17 
13.4 Participants in Foreign Countries  18 
13.5 Other Employee Benefits  18 
13.6 Confidentiality of Information  18 
13.7 Severability  18 
13.8 Governing Law and Venue  18 
13.9 Use of Proceeds  18 
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005
iii

Scott’s Liquid Gold-Inc.
2005 Stock Incentive Plan
INTRODUCTION
     The purpose of wishes to amend the Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan (the “Plan”) by increasing by 1,500,000 the number of shares available under the Plan from 1,500,000 shares to 3,000,000 shares.

2.       Amendment of Plan. The following amendment to the Plan is to further the growth and development of Scott’s Liquid Gold-Inc., a Colorado corporation (the “Company”), by affording an opportunity for stock ownership to selected Employees, Directors and Consultants of the Company and its Subsidiaries who are responsible for the conduct and management of its business or who are involvedadopted, effective as provided in endeavors significant to its success. Paragraph 3 below:

The Plan is also intendedhereby amended to assistrevise the Company in attracting new Employees and Consultants and retaining existing Employees and Consultants; to encourage growthfirst sentence of Section 4.1 of the Company through incentives that are consistent with the Company’s goals;Plan to provide incentives for individual performance; and to promote teamwork.

ARTICLE 1.
DEFINITIONS
     When usedread in this Plan, the following capitalized terms shall have the meanings set forth below unless a different meaning is plainly required by the context:
1.1Awardmeans the grant of Options, Restricted Stock or other stock-based grant under the Plan.
1.2Board of Directorsmeans the Board of Directors of the Company.
1.3Causemeans “Cause,” as defined in the Participant’s employment agreement, if applicable, or if the Participant has not entered into an employment agreement with the Company, as determined in the sole and absolute discretion of the Company, a termination on account of dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential information or trade secrets or conviction or confession of a crime punishable by law (except minor violations), in each such case as determined by the Plan Administrator, and its determination shall be conclusive and binding. Such actions constituting “Cause” shall include, without limitation, a violation of the Company’s Code of Business Conduct and Ethics. A Participant who agrees to resign from his or her affiliation with the Company in lieu of being terminated for Cause shall be deemed to have been terminated for Cause for purposes of the Plan.
1.4Change in Controlmeans, as may be further limited by Code Section 409A, the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following:
its entirety as follows:

 (a)Any third person, including a “group” as defined in Section 13(d) or 14(d) of the Exchange Act, becomes the beneficial owner of shares of the Company having 50% or more of the total number of votes that may be cast for the election of Directors of the Company.

(b)The stockholder(s) of the Company approve: (i) any agreement for a merger or consolidation of the Company with another entity, provided that there shall be no change of control if the persons and entities who were the stockholders of the Company immediately before such merger or consolidation continue to own, directly or indirectly, more than two-thirds of the outstanding voting securities of the corporation resulting from such merger or consolidation in substantially the same proportion as their ownership of the voting securities of the Company outstanding immediately before such merger or consolidation; (ii) any sale, exchange or other disposition of all or substantially all of the Company’s assets; or (iii) a plan of complete dissolution or liquidation of the Company (or a complete dissolution or liquidation of the Company shall otherwise occur).
(c)There is a consummated sale, exchange or other disposition of greater than 50% in fair market value of the Company’s assets, other than in the ordinary course of business, whether in a single transaction or a series of related transactions.
In determining whether subsection (a) has been satisfied, the third person owning shares must be someone other than a person or an Affiliate of a person that, as of the Effective Date, was the beneficial owner of shares of the Company having 20% or more of the total number of votes that may be cast for the election of Directors of the Company.
The Plan Administrator’s reasonable determination as to whether such an event has occurred shall be final and conclusive.
1.5Codemeans the Internal Revenue Code of 1986, as amended from time to time.
1.6Common StockorStockmeans the Company’s Common Stock and any share or shares of the Company’s capital stock hereafter issued or issuable in substitution for such shares.
1.7Consultantmeans a consultant, agent, advisor or independent contractor who provides service to the Company and who does not receive wages subject to income tax federal withholding under Code Section 3401; provided, however, that such person is a natural person, renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital raising transaction and does not directly or indirectly promote or maintain a market for the Company’s securities.Consultantdoes not include Directors who are not compensated by the Company for services as Directors, and the payment of a Director’s fee by the Company for services as a Director shall not cause a Director to be considered aConsultantfor purposes of the Plan.
1.8Continuous Servicemeans that the Participant’s service with the Company, its Parent or Subsidiary, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company, its Parent or Subsidiary as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

2

interruption or termination of the Participant’s Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of a Subsidiary or a Director will not constitute an interruption of Continuous Service. The Plan Administrator, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence, including sick leave, military leave or any other personal leave.
1.9Directormeans a member of the board of directors of the Company, its Parent or Subsidiary.
1.10Disabilitymeans disability within the meaning of the long-term disability policy maintained by the Company, or if none, within the meaning of Code Section 22(e)(3).
1.11Effective Datemeans the effective date of the Plan, as first set forth above.
1.12Employeemeans a common law employee of the Company or its Subsidiary and any person who has accepted a binding offer of employment from the Company or its Subsidiary, but excludes any individual classified by the Company or its Subsidiary as an independent contractor or leased employee.
1.13Exchange Actmeans the Securities Exchange Act of 1934, as amended from time to time.
1.14Fair Market Valuemeans the value of the Common Stock, determined in accordance with the following: If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market, the Nasdaq SmallCap Market, the OTC Bulletin Board or otherwise over the counter, then the Fair Market Value per share shall be deemed to be the average of the closing sales prices (or, if closing sales prices are not available for the trading market, the average of closing bid and asked prices) for the Common Stock or security for the five preceding trading days as reported in the Wall Street Journal or another publication or source for market prices selected by the Board of Directors. If there has not been trading of the Common Stock on a specific date, then a trading day is the next preceding day on which there was such trading. If none of these conditions apply, the Fair Market Value per share shall be deemed to be an amount as determined in good faith by the Plan Administrator by applying any reasonable valuation method.
1.15Incentive Stock Optionmeans any option granted to an eligible Employee under the Plan, which the Company intends at the time the option is granted to be an Incentive Stock Option within the meaning of Code Section 422.
1.16Nonqualified Stock Optionmeans any option granted to an eligible Employee, Director or Consultant under the Plan that is not an Incentive Stock Option.
1.17Optionmeans and refers collectively to Incentive Stock Options and Nonqualified Stock Options.
1.18Option Agreementmeans the agreement specified in Section 6.2.
1.19Parentmeans a parent corporation of the Company as defined in Code Section 424(e).
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

3

1.20Participantmeans any Employee, Director or Consultant who is granted an Award under the Plan.Participantalso means the personal representative of a Participant and any other person who acquires the right to exercise or receive payment pursuant to an Award by bequest or inheritance.
1.21Plan Administratormeans the body that is responsible for the administration of the Plan, as determined pursuant to Section 3.1.
1.22Repricedmeans any amendment or adjustment of the exercise price or the purchase price of an Award through amendment, cancellation, replacement grants or any other means.
1.23Restricted Stockmeans shares of Common Stock granted to a Participant that are subject to the restrictions set forth in Article 8 of the Plan and the Restricted Stock Award Agreement.Restricted Stockalso means any shares of the Company’s capital stock issued as the result of a dividend on or split of Restricted Stock. Upon termination of the restrictions, such Common Stock or other capital stock shall no longer be Restricted Stock.
1.24Restricted Stock Award Agreementmeans the agreement specified in Section 8.2 between the Company and a Participant pursuant to which Restricted Stock is granted to the Participant.
1.25Restricted Stock UnitorRSUmeans a contingent obligation of the Company to deliver shares of Common Stock to the Participant who is a party to a Restricted Stock Unit Award Agreement pursuant to Article 8 of the Plan. Each RSU represents the unfunded, unsecured right of the Participant to receive a share of Common Stock on the date(s) specified herein. RSUs do not constitute issued and outstanding shares of Common Stock for any corporate purposes and do not confer on the Participant any right to vote on matters that are submitted to a vote of shareholders.
1.26Restricted Stock Unit Award Agreementmeans the agreement specified in Section 8.2 between the Company and a Participant pursuant to which a contingent right to shares of Common Stock is granted to the Participant.
1.27Restriction Periodmeans the period set forth in the Restricted Stock Award Agreement that is the period beginning on the date of grant of the Award and ending on the final vesting date of the Restricted Stock.
1.28Rule 16b-3means Rule 16b-3 promulgated by the Securities Exchange Commission under the Exchange Act, together with any successor rule, as in effect from time to time.
1.29Stock Appreciation RightorSARmeans a standalone stock appreciation right that has been granted pursuant to Article 7 of the Plan.
1.30Stock Appreciation Right Award Agreementmeans the agreement specified in Section 7.2 between the Company and a Participant pursuant to which a contingent right to shares of Common Stock is granted to the Participant.
1.31Subsidiarymeans a subsidiary corporation of the Company as defined in Code Section 424(f).
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

4

1.32Termination Datemeans the termination date of the Plan, as first set forth above.
ARTICLE 2.
EFFECTIVE DATE
The Effective Date of the Plan shall be the date on which the Plan is approved by the stockholders of the Company.
ARTICLE 3.
ADMINISTRATION
3.14.1Plan Administrator. The Plan shall be administered by the Board of Directors, unless and until such time as the Board of Directors delegates the administration of the Plan to a committee, which shall be appointed by and shall serve at the pleasure of the Board of Directors. Any committee member shall be deemed to have resigned automatically from the committee upon his or her termination of service with the Company. To the extent the Board considers it desirable for transactions relating to an Award to be eligible to qualify for an exemption under Rule 16b-3, the Plan Administrator shall consist of a committee of two or more Directors of the Company, all of whom qualify as “non-employee directors” within the meaning of Rule 16b-3. To the extent the Board considers it desirable for compensation delivered pursuant to an Award to be eligible to qualify for an exemption under Code Section 162(m), the Plan Administrator shall consist of a committee of two or more Directors of the Company, all of whom qualify as “outside directors” within the meaning of Code Section 162(m). The Board may from time to time remove members from or add members to any such committee; fill vacancies on the committee, howsoever caused; and otherwise increase or decrease the number of members of such committee, in each case as the Board deems appropriate to permit transactions in Common Stock pursuant to the Plan and to satisfy such conditions of Rule 16b-3 or Code Section 162(m) as then in effect.
3.2Meetings and Actions. The Plan Administrator shall hold meetings at such times and places as it may determine. A majority of the members of the Plan Administrator shall constitute a quorum, and the acts of the majority of the members present at a meeting or a consent in writing signed by all members of the Plan Administrator shall be the acts of the Plan Administrator and shall be final, binding and conclusive upon all persons, including the Company, its Subsidiaries, its stockholders, and all persons having any interest in Awards that may be or have been granted pursuant to the Plan.
3.3Powers of Plan Administrator. The Plan Administrator shall have the full and exclusive right to grant and determine terms and conditions of all Awards granted under the Plan and to prescribe, amend and rescind rules and regulations for administration of the Plan. In selecting Participants and granting Awards, the Plan Administrator shall take into consideration the contribution the Participant has made or may make to the success of the Company or its Subsidiaries and such other factors as the Plan Administrator shall determine.
3.4Interpretation of Plan. The Plan Administrator may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any agreement entered into hereunder. The determination of the Plan Administrator as to any disputed question
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

5

arising under the Plan, including questions of construction and interpretation, shall be final, binding and conclusive upon all persons, including the Company, its Subsidiaries, its stockholders, and all persons having any interest in Awards that may be or have been granted pursuant to the Plan.
ARTICLE 4.
STOCK SUBJECT TO THE PLAN
4.1Plan Limit. Subject to the provisions of Section 4.4, the aggregate number of shares of Common Stock that may be issued under Awards granted pursuant to the Plan shall not exceed 1,500,0003,000,000 shares, less the number of shares issued after May [6],6, 2008 (which is the effective date of an amendment) as a result of the exercise of stock options under the 1997 Stock Option Plan and the 1998 Stock Option Plan of the Company. Shares that may be issued under Awards may consist, in whole or in part, of authorized but unissued stock or treasury stock of the Company not reserved for any other purpose.

3.       Effective Date. The Effective Date of this Amendment shall be the date on which the shareholders approve this amendment.

4.       Terms and Conditions of Plan. Except for the amendment in paragraph 2, all terms and conditions of the Plan are unamended and shall remain in full force and effect.

5.       Execution. Scott’s Liquid Gold-Inc. has executed this Amendment as of the date set forth below.

SCOTT’S LIQUID GOLD-INC.

COMPANY

4.2

By:

 Individual Limit. During any single calendar year, no Participant shall be eligible to be granted Awards exceeding 10% of the limits set forth in Section 4.1. From the Effective Date to the date on which the Plan terminates, no Participant shall be eligible to be granted Awards exceeding 20% of the limits set forth in Section 4.1.
4.3Unused Stock. If any outstanding Award under the Plan expires or for any other reason ceases to be exercisable, is forfeited or repurchased by the Company, in whole or in part (other than upon exercise of an Award), the shares that were subject to such Award (and as to which the Award had not been exercised) shall continue to be available under the Plan or revert to the Plan to again be available for issuance under the Plan;provided, however,that subject to the provisions of Section 4.4 relating to adjustments, the aggregate maximum number of shares of Common Stock that may be issued as Incentive Stock Options shall be the number of shares of Common Stock as may be approved by the stockholders of the Company from time to time for issuance as Incentive Stock Options under Section 4.1.
4.4Adjustment for Change in Outstanding Shares.
(a)In General. If there is any change, increase or decrease, in the outstanding shares of Common Stock that is effected without receipt of additional consideration by the Company, by reason of a stock dividend, subdivision, reclassification, recapitalization, merger, consolidation, stock split, combination or exchange of stock, or other similar circumstances not involving the receipt of consideration by the Company (each a Capitalization Event), then in each such event, the Plan Administrator shall make an appropriate adjustment in the aggregate number of shares of Common Stock available under the Plan, the number of shares of Common Stock subject to each outstanding Award and the exercise prices in order to prevent the dilution or enlargement of any Participant’s rights. In the event of any adjustment in the number of shares of Common Stock covered by any Award, including those provided in subsection (b) below, each such Award shall cover only the number of full shares resulting from such adjustment. The Plan Administrator’s determinations in making any adjustment shall be final and conclusive.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

6

APPENDIX B

COMPENSATION COMMITTEE CHARTER

SCOTT’S LIQUID GOLD-INC.

COMPENSATION COMMITTEE RESOLUTION

April 2011

RESOLVED, that the members of the Compensation Committee shall consist of at least two or more outside Directors of the Company as determined by the Board of Directors from time to time;

RESOLVED, that the Compensation Committee of the Board of Directors shall have the following authority and responsibilities:

1. To review the development of an executive compensation philosophy for the Company; and to obtain all relevant data and information to perform its functions, including the retention of outside consultants at the Company’s expense, if necessary;

2. To review all executive compensation proposals, including recommendations as to salaries, bonuses, determinations of stock grants under various stock plans and other executive benefits and perquisites;

3. To review the duties and responsibilities of the executive officers over time; and to recommend adjustments to compensation of executive officers up or down as appropriate;

4. To review the appropriate mix of variable versus fixed compensation for the Company’s executives and to make recommendations on this issue, as appropriate; and

5. To review the Company’s bonus and other long-term incentive plans and to determine if procedures followed historically are the most effective.

Form of Proxy

LOGO

SCOTT’S LIQUID GOLD-INC. 4880 HAVANA ST.

DENVER, CO 8023 ATTN: SHELLEY KENNISON

1

(b)

Adjustments for Certain Distributions of Property. If the Company at any time distributes with respect to its Common Stock securities or other property (except cash or Common Stock), a proportionate part of those securities or other property shall be set aside and delivered to the Participant when he exercises an Option or the restrictions on Restricted Stock lapse. The securities or other property shall be in the same ratio to the total securities and property set aside for the Participant as the number of shares of Common Stock with respect to which the Option is then exercised or the Restricted Stock then vests is to the total shares of Common Stock subject to the Award.
(c)Exceptions to Adjustment. Except as expressly provided herein, the issue by the Company of shares of Common Stock of any class, or securities convertible into or exchangeable for shares of Common Stock of any class, for cash or property or for labor or services, or upon sale or upon exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into or exchangeable for shares of Common Stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to any Award granted under the Plan.

4.5Retention of Rights. The existence of this Plan and any Award granted pursuant to the Plan shall not affect the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other change in the Company’s capital structure or its business, or a merger or consolidation of the Company, or any issue of bonds, debentures, or preferred or preference stock ranking before or affecting the Common Stock, or the dissolution of the Company or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether similar or not.
4.6Cancellation of Award. The Plan Administrator may at any time cancel an Award, whether vested or unvested, if the Participant engages in conduct that the Plan Administrator in its sole discretion determines to be detrimental to the best interest of the Company. Without limiting the foregoing, the Plan Administrator may cancel all or any portion of an Award, whether vested or unvested, if the Plan Administrator determines that the Participant has failed at an time during the Participant’s employment or other affiliation with the Company to comply with any policies or procedures of the Company, including the Company’s Code of Business Conduct and Ethics.
ARTICLE 5.
ELIGIBILITY
     All full-time

Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 1 1 OF Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET 2 ANY CITY, ON A1A 1A1

NAME

THE COMPANY NAME INC.—COMMON THE COMPANY NAME INC.—CLASS A THE COMPANY NAME INC.—CLASS B THE COMPANY NAME INC.—CLASS C THE COMPANY NAME INC.—CLASS D THE COMPANY NAME INC.—CLASS E THE COMPANY NAME INC.—CLASS F THE COMPANY NAME INC.—401 K

x

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

VOTE BY INTERNET—www.proxyvote.com

Use the Internet to transmit your voting instructions and part-time Employees shall be eligiblefor electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE—1-800-690-6903

Use any Awardtouch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

CONTROL # 000000000000

SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345

PAGE 1 OF 2

KEEP THIS PORTION FOR YOUR RECORDS

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

DETACH AND RETURN THIS PORTION ONLY

For Withhold For All

To withhold authority to vote for any

All

All

Except

individual nominee(s), mark “For All

Except” and write the number(s) of the

The Board of Directors recommends you vote

nominee(s) on

the line below.

02

FOR the following:

0

0

0

1. Election of Directors

Nominees

01 Mark E. Goldstein 02 Jeffrey R. Hinkle 03 Carl A. Bellini 04 Dennis H. Field 05 Jeffry B. Johnson

06 Gerald J. Laber 0000000000

The Board of Directors recommends you vote FOR the following proposal:

For

Against

Abstain

2. To increase the number of shares of common stock available under the Plan. Directors and Consultants who are not Employees shall be eligibleCompany’s 2005 Stock Incentive Plan from 1,500,000 to receive

0

0

0 3,000,000 shares.

NOTE: Such other business as may properly come before the meeting or any Award,adjournment thereof.

Investor Address Line 1 Investor Address Line 2 R1.0.0.11699

Investor Address Line

3

Investor Address Line

4

Investor Address Line

5

1 Please sign exactly as your name(s) appear(s) hereon. When signing as

_

John Sample

attorney, executor, administrator, or other than Incentive Stock Options, under the Plan. Any Director who is otherwise eligible to participate, who makes an electionfiduciary, please give fulltitle as such. Joint owners should each sign personally. All holders must

1234 ANYWHERE

STREET

sign. If a corporation or partnership, please sign in writing not to receive any grants under the Plan, shall not be eligible to receive any such grants during the period set forth in such election.

Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005
full corporate or

7ANY CITY, ON

A1A 1A1

partnership name, by authorized officer.

0000106163

SHARES

CUSIP #

JOB #

SEQUENCE #

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

LOGO

ARTICLE 6.
STOCK OPTIONS
6.1Grant of Options. The Plan Administrator may from time to time in its discretion determine which of the eligible Employees, Directors and Consultants of the Company or its Subsidiaries should receive Options, the type of Options to be granted (whether Incentive Stock Options or Nonqualified Stock Options), the number of shares subject to such Options, and the dates on which such Options are to be granted. No Employee may be granted Incentive Stock Options to the extent that the aggregate Fair Market Value (determined as of the time each Option is granted) of the Common Stock with respect to which any of the Employee’s Options are exercisable for the first time during a calendar year (under all incentive stock option plans of the Company and its Parent and Subsidiaries) would exceed $100,000. To the extent that the limitation set forth in the preceding sentence has been exceeded, the Options that exceed the annual limitation shall be deemed to be Nonqualified Stock Options rather than Incentive Stock Options.
6.2Option Agreement. Each Option granted under the Plan shall be evidenced by a written Option Agreement setting forth the terms upon which the Option is granted. Each Option Agreement shall designate the type of Options being granted (whether Incentive Stock Options or Nonqualified Stock Options), and shall state the number of shares of Common Stock, as designated by the Plan Administrator, to which that Option pertains. More than one Option, and any combination of Options, SARs and Restricted Stock Awards, may be granted to an eligible person.
(a)Option Price. The Option price (i.e., exercise price) per share of Common Stock under each Option shall be determined by the Plan Administrator and stated in the Option Agreement. The Option price for any Options granted under the Plan shall not be less than 100% of the Fair Market Value (determined as of the day the Option is granted) of the shares subject to the Option. The exercise price of the Common Stock under each Option may not be Repriced.
(b)Duration of Options. Each Option shall be of a duration as specified in the Option Agreement; provided, however, that the term of any Option shall be no more than ten years from the date on which the Option is granted and shall be subject to early termination as provided herein.
(c)Vesting. Unless otherwise stated in the Option Agreement, Options shall be fully vested. Any vesting schedule may be waived or accelerated by the Plan Administrator at any time.
(d)Additional Limitations on Grant for 10% Stockholders. No Incentive Stock Option shall be granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock (as determined in accordance with Code Section 424(d)) representing more than 10% of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary, unless the option price of such Incentive Stock Option is at least 110% of the Fair Market Value (determined as of the day the Incentive Stock Option is granted) of the stock subject to the Incentive Stock Option and the Incentive Stock Option by its terms is not exercisable more than five years from the date it is granted.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

8

0000106163_2 R1.0.0.11699

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report is/

are available at www.proxyvote.com .

(e)Rights as Stockholder. A Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock covered by an Option until the date of the issuance of the stock certificate for such shares.
(f)Other Terms and Conditions. The Option Agreement may contain such other provisions, which shall not be inconsistent with the Plan, as the Plan Administrator shall deem appropriate, including, without limitation, provisions that relate to the Participant’s ability to exercise an Option in whole or in part to the passage of time or the achievement of specific goals or the occurrence of certain events, as specified by the Plan Administrator.
6.3Manner of Exercise. Subject to the limitations and conditions of the Plan or the Option Agreement, an Option shall be exercisable, in whole or in part, from time to time, by giving written notice of exercise to the Chief Financial Officer of the Company, which notice shall specify the number of whole shares of Common Stock to be purchased and shall be accompanied by (a) payment in full to the Company of the exercise price of the whole number of shares to be purchased; plus (b) payment in full of such amount as the Company shall determine to be sufficient to satisfy any liability it may have for any withholding of federal, state or local income or other taxes incurred by reason of the exercise of the Option; and (c) representations meeting the requirements of Section 11.4 if requested by the Company. The conditions of this section shall be satisfied at the time that the Option or any part thereof is exercised, and no shares of Common Stock shall be issued or delivered until such conditions have been satisfied by the Participant.
6.4Payment of Option Price. Payment for shares and withholding taxes shall be in the form of either (a) cash, (b) a certified or bank cashier’s check to the order of the Company, or (c) shares of the Common Stock, properly endorsed to the Company, in an amount the Fair Market Value of which on the date of receipt by the Company equals or exceeds the aggregate option price of the shares with respect to which the Option is being exercised, provided that such shares have been held outright by the Participant for at least six months, (d) any other form of legal consideration that may be acceptable to the Plan Administrator, or (e) in any combination thereof; provided, however, that no payment may be made in shares of Common Stock unless the Plan Administrator has approved of payment in such form by such Participant with respect to the Option exercise in question. If the Common Stock is registered under Section 12 of the Exchange Act at the time an Option is exercised and if the procedure stated in this sentence is expressly permitted by the Plan Administrator, and to the extent the option is exercised for vested shares, then payment may also be made through a special sale and remittance procedure pursuant to which the Participant shall concurrently provide irrevocable written instructions (1) to a brokerage firm designated by the Company to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable withholding taxes, and (2) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

9

SCOTT’S LIQUID GOLD-INC.

Annual Meeting of Shareholders

May 18, 2011 9:00 AM

ARTICLE 7.
STOCK APPRECIATION RIGHTS
7.1GrantThis proxy is solicited by the Board of SARs. The Plan Administrator may from time to time in its discretion determine which of the eligible Employees, Directors and Consultants should receive SARs, the number of shares subject to such SARs, and the dates on which such SARs are to be granted. The grant of the SAR shall be evidenced in a written Stock Appreciation Rights Award Agreement. The Stock Appreciation Rights Award Agreement shall state the number of shares of SARs being granted, as designated by the Plan Administrator, the exercise price per share of each SAR, and the duration of the SAR.
7.2Award Agreement. Each SAR granted under the Plan shall be evidenced by a written Stock Appreciation Right Award Agreement setting forth the terms upon which the SAR is granted. Each Stock Appreciation Right Award Agreement shall state the number of shares of Common Stock, as designated by the Plan Administrator, to which that SAR pertains. More than one SAR, and any combination of Options, SARs and Restricted Stock Awards, may be granted to an eligible person.
(a)SAR Exercise Price. The exercise price per share of Common Stock under each SAR shall be determined by the Plan Administrator shall not be less than 100% of the Fair Market Value (determined as the day the SAR is granted ) of the Common Stock subject to the SAR, and shall be stated in the Stock Appreciation Right Award Agreement. The exercise price of the Common Stock under each SAR may not be Repriced.
(b)Duration of SARs. Each SAR shall be of a duration as specified in the Stock Appreciation Right Award Agreement; provided, however, that the term of any SAR shall be no more than ten years from the date on which the SAR is granted and shall be subject to early termination as provided herein.
(c)Vesting. Unless otherwise stated in the Stock Appreciation Right Award Agreement, SARs shall be fully vested. Any vesting schedule may be waived or accelerated by the Plan Administrator at any time.
(d)Rights as Stockholder. A Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock covered by a SAR until the date of the issuance of the stock certificate for such shares.
(e)Other Terms and Conditions. The Stock Appreciation Right Award Agreement may contain such other provisions, which shall not be inconsistent with the Plan, as the Plan Administrator shall deem appropriate, including, without limitation, provisions that relate to the Participant’s ability to exercise an SAR in whole or in part to the passage of time or the achievement of specific goals or the occurrence of certain events, as specified by the Plan Administrator.
7.3Manner of Exercise. Subject to the limitations and conditions of the Plan or the Stock Appreciation Right Award Agreement, a SAR shall be exercisable, in whole or in part, from time to time, by giving written notice of exercise to the Chief Financial Officer of the Company, which notice shall specify the number of whole shares of Common Stock to be purchased and shall be accompanied by (a) payment in full of such amount as the
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

10

This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 18, 2011, at 9:00 A.M. Mountain Time, or any

adjournment thereof.

Company shall determine to be sufficient to satisfy any liability it may have for any withholding of federal, state or local income or other taxes incurred by reason of the exercise of the SAR; and (b) representations meeting the requirements of Section 11.4 if requested by the Company. The conditions of this section shall be satisfied at the time that the SAR or any part thereof is exercised, and no shares of Common Stock shall be issued or delivered until such conditions have been satisfied by the Participant. The effective date of exercise of a SAR shall be the date on which the Company shall have received notice from the Participant of the exercise thereof. Upon the exercise of SARs, the Participant shall receive a number of shares of Common Stock having a Fair Market Value equal to the Fair Market Value on the date of exercise of such SAR of the number of shares of Common Stock with respect to which such SAR shall have been exercised over the aggregate exercise price of the SAR or portion thereof exercised.
ARTICLE 8.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
8.1Grant of Restricted Stock and Restricted Stock Units. The Plan Administrator may from time to time in its sole discretion determine which of the eligible Employees, Directors, or Consultants should receive grants of Restricted Stock and/or Restricted Stock Units, the number of shares with respect to which Restricted Stock or RSUs are to be granted to each such eligible Employee, Director, and Consultant, the dates on which such Awards are to be granted, and the restrictions applicable to each Award grant.
8.2Award Agreement. Each Restricted Stock Award or RSU granted under the Plan shall be evidenced by a written Award Agreement setting forth the terms upon which the Award is granted. Each Award Agreement shall state the number of shares of Common Stock, as designated by the Plan Administrator, to which that Award pertains; the price, if any, to be paid by the Participant for the shares; and the restrictions applicable to each grant. More than one Award may be granted to an eligible person. The terms of any Award Agreement need not be identical to the terms of any other Award Agreement applicable to other grants under the Plan to the same or other Participants. No Restricted Stock or RSU shall be issued under the Plan until the Participant provides the Company with a signed Restricted Stock or RSU Award Agreement in the form specified by the Plan Administrator with respect to the grant of such Restricted Stock or RSU to that Participant. No shares of Common Stock shall be issued under the Plan with respect to a Restricted Stock Unit Award until the Participant provides the Company with a signed Award Agreement and satisfies the conditions described in that Award Agreement.
(a)��Issuance of Restricted Stock. The right to receive Restricted Stock shall be conditioned upon the delivery of the purchase price, if any, by the Participant by (i) payment in full, in cash, check, or by certified or bank cashier’s check to the Company (or payment by such other consideration as shall be permitted by the Plan Administrator) or, upon approval of the Plan Administrator, shares of the Common Stock, properly endorsed to the Company, in an amount the Fair Market Value of which on the date of receipt by the Company equals or exceeds the aggregate purchase price of the shares; (ii) payment in similar form equal to such amount as the Company shall determine to be sufficient to satisfy any liability it may have for any withholding of federal, state or local income or other taxes incurred by reason of the vesting of the Restricted Stock or the Participant’s
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

11

The shares of stock you hold in your account will be voted as you specify on the reverse side.

If no choice is specified, the proxy will be voted “FOR” Item 1 and Item 2.

By signing the proxy, you revoke all prior proxies and appoint Mark E. Goldstein, and Jeffrey R. Hinkle and each of them acting in the

election under Code Section 83(b); (iii) a representation meeting the requirements of Section 11.4 if requested by the Plan Administrator;absence of the others, with full power of substitution, as your proxies to vote all your shares on the matters shown on the reverse side and (iv) a copy of the executed Restricted Stock Award Agreement in the form specified by the Plan Administrator with respect to the grant of Restricted Stock to that Participant.
(b)Purchase Price. Restricted Stock may be granted under the Plan without the payment of a purchase price. If a grant is made with a purchase price, the purchase price of the Restricted Stock may not be Repriced.
(c)Vesting. Unless otherwise stated in the Restricted Stock Award Agreement or Restricted Stock Unit Award Agreement, as applicable, the Award shall be fully vested. Any vesting schedule may be waived or accelerated by the Plan Administrator at any time.
(d)Redemption of RSUs. Subject to the limitations and conditions of the Plan or the Restricted Stock Unit Award Agreement, RSUs shall be redeemed, in whole or in part, from time to time, according to the terms of the applicable Restricted Stock Unit Award Agreement, which notice shall specify the number of whole shares of Common Stock to be issued; provided that the Participant provides the Company (a) payment in full of such amount as the Company shall determine to be sufficient to satisfy any liability it may have for any withholding of federal, state or local income or other taxes incurred by reason of the redemption of the RSU; and (b) representations meeting the requirements of Section 11.4 if requested by the Company. The conditions of this section shall be satisfied at the time that the RSU or any part thereof is redeemed, and no shares of Common Stock shall be issued or delivered until such conditions have been satisfied by the Participant.
(e)Stock Certificates. The stock certificate or certificates representing the Restricted Stock shall be registered in the name of the Participant to whom such Restricted Stock shall have been granted. Such certificates shall remain in the custody of the Company and the Participant shall deposit with the Company stock powers or other instruments of assignment, each endorsed in blank, so as to permit retransfer to the Company of all or a portion of the Restricted Stock that shall be forfeited or otherwise not become vested in accordance with the Plan and the applicable Restricted Stock Award Agreement.
(f)Restrictions and Rights. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Participant shall have the right to vote such Restricted Stock, to receive and retain all regular cash dividends and such other distributions, as the Board of Directors may, in its discretion, designate, pay or distribute on such Restricted Stock, and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to such Restricted Stock, except as set forth in this Article 8. The Restricted Stock Award Agreement or Restricted Stock Unit Award Agreement, as applicable, may contain such other provisions, which shall not be inconsistent with the Plan, as the Plan Administrator shall deem appropriate.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

12

any other matters which may come before the Annual Meeting and all adjournments

Continued and to be signed on reverse side

(g)Forfeiture. If the Participant fails to satisfy any applicable restrictions (including without limitation any vesting requirements), terms and conditions set forth in this Plan or in the Restricted Stock Award Agreement or Restricted Stock Unit Award Agreement, as applicable, for any reason, any Restricted Stock or RSUs held by such Participant and affected by such conditions shall be forfeited to the Company in return for such consideration as shall be specified in the applicable Award Agreement. The Company and its officers are authorized to reflect such forfeiture of Restricted Stock on the Company’s stock ledger.
ARTICLE 9.
TERMINATION OF CONTINUOUS SERVICE
9.1Termination of Continuous Service for Options and SARs. This Section 9.1 applies only to Options and SARs. Any vesting of any Award shall cease upon termination of the Participant’s Continuous Service, and any Award shall be exercisable only to the extent that it was exercisable on the date of such termination of Continuous Service. Any Award not exercisable as of the date of termination, and any Award or portions thereof not exercised within the period specified herein, shall terminate.
(a)Termination Other than for Cause. Subject to any limitations set forth in the agreement for an Award, and provided that the notice of exercise is provided as required by the Plan prior to the expiration of the Award, the Participant shall be entitled to exercise the Award (i) during the Participant’s Continuous Service, and (ii) for a period of three months after the date of termination of the Participant’s Continuous Service for reason other than Cause, or such longer period as may be set forth in the Award Agreement.
(b)Termination by Death. Notwithstanding subsection (a), if a Participant’s Continuous Service should terminate as a result of the Participant’s death, or if a Participant should die within a period of three months after termination of the Participant’s Continuous Service under circumstances in which subsection (a) would permit the exercise of the Award following termination, the personal representatives of the Participant’s estate or the person or persons who shall have acquired the Award from the Participant by bequest or inheritance may exercise the Award at any time within one year after the date of death, but not later than the expiration date of the Award.
(c)Termination by Disability. Notwithstanding subsection (a), if a Participant’s Continuous Service should terminate by reason of the Participant’s Disability, the Participant may exercise the Award at any time within one year after the date of termination but not later than the expiration date of the Award.
(d)Termination for Cause; Breach of Covenant Not to Compete or Nondisclosure Agreement. Notwithstanding anything herein to the contrary, and unless otherwise provided by the Award Agreement, all unexercised Awards granted to the Participant shall terminate immediately if the Participant is terminated for Cause, breaches any obligation under a covenant not to compete with the Company or any of its Subsidiaries, or breaches any obligation under an
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

13

agreement not to use or disclose proprietary information obtained from or through the Company or any of its Subsidiaries, upon such occurrence.
(e)Extension of Option Termination Date. The Plan Administrator, in its sole discretion, may extend the termination date of an Award granted under the Plan without regard to the preceding provisions of this section. Such extension may be made in the Award Agreement as originally executed or by amendment to the Award Agreement, either prior to or following termination of a Participant’s Continuous Service. The Plan Administrator shall have no power to extend the termination date of an Incentive Stock Option beyond the periods provided in subsections (a), (b) and (c) prior to the termination of the Participant’s Continuous Service or without the approval of the Participant, which may be granted or withheld in the Participant’s sole discretion. Any extension of the termination date of an Incentive Stock Option may be deemed to be the grant of a new Option for purposes of the Code.
9.2Termination of Continuous Service for Restricted Stock and RSUs. In the event that a Participant terminates Continuous Service with the Company for any reason, including Disability of the Participant, any unvested Restricted Stock or RSUs held by such Participant as of the date of such termination of Continuous Service shall be forfeited to the Company as of the date of termination of Continuous Service unless otherwise provided in the applicable Award Agreement.
ARTICLE 10.
CHANGE IN CONTROL
10.1Substitution of Awards. In the event of a Change in Control Event, any surviving corporation or acquiring corporation may assume any outstanding Award under the Plan or may substitute similar stock awards on an equitable basis of appropriate stock of the Company, or of the surviving corporation or acquiring corporation, which will be issuable in respect of the Common Stock (including an award to acquire the same consideration paid to the stockholders in the Change in Control Event ) for those outstanding under the Plan.
10.2Acceleration of Vesting. In the event of a Change in Control Event, then the vesting of Awards held by Participants whose Continuous Service has not terminated (and, if applicable, the time during which such Awards may be exercised) shall be accelerated in full. In anticipation of a Change in Control Event, the Plan Administrator may, upon written notice to all Participants holding Awards, provide that all unexercised Awards must be exercised upon the Change in Control Event or within a specified number of days of the date of such change in Control Event or such Awards will terminate. In response to such notice, a Participant may make an irrevocable election to exercise the Participant’s Award contingent upon and effective as of the effective date stated in such notice. Any Award shall terminate if not exercised upon the time frame stated in the notice. The Plan Administrator may, in its sole discretion, accelerate the vesting of any outstanding Award in connection with any proposed or completed Change in Control Event. Prior to such a Change in Control Event, the Plan Administrator may, in its sole discretion, terminate any or all unexercised Awards (after acceleration of vesting) in exchange for consideration similar to that received by stockholders of Common Stock of
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

14

the Company in the Change in Control Event, less the exercise price required under such Awards. Notwithstanding this Section 10.2 and Section 1.4, there shall not be a Change of Control Event for purposes of this Section 10.2 (including, without limitation, any accelerated vesting) if (a) the transaction or transactions which would otherwise result in a Change of Control Event are not a complete dissolution or liquidation of the Company or stockholder approval of a complete dissolution or liquidation, (b) the persons and entities who are stockholders of the Company immediately before such transaction or transactions continue to own, directly or indirectly, more than 2/3 of the outstanding voting securities of the corporation resulting from such transaction or transactions in substantially the same proportion as their ownership of the voting securities of the Company outstanding immediately before such transaction or transactions and (c) the Company and its Subsidiaries continue operations of an active business immediately after such transaction or transactions.
ARTICLE 11.
ISSUANCE OF SHARES
11.1Transfer of Shares to Participant. As soon as practicable after (a) a Participant has given the Company written notice of exercise of an Option and has otherwise met the requirements of Section 6.3, with respect to an Option, or (b) a Participant has satisfied any applicable restrictions, terms and conditions set forth in this Plan or in the Stock Appreciation Award Agreement with respect to a SAR, or (c) a Participant has satisfied any applicable restrictions, terms and conditions set forth in this Plan or in the Restricted Stock Award Agreement with respect to a Restricted Stock Award, or (d) a Participant has satisfied any applicable restrictions, terms and conditions set forth in this Plan or in the Restricted Stock Unit Award Agreement with respect to an RSU, the Company shall register a certificate in such Participant’s name for the number of shares of Common Stock as to which the Award has been exercised or satisfied and shall, upon the Participant’s request, deliver such certificate to the Participant. In no event shall the Company be required to transfer fractional shares to the Participant, and in lieu thereof, the Company may pay an amount in cash equal to the Fair Market Value of such fractional shares on the date of exercise or vesting, as applicable.
11.2Legend. All certificates evidencing shares of Common Stock originally issued pursuant to this Plan or subsequently transferred to any person or entity, and any shares of capital stock received in respect thereof, may bear such legends and transfer restrictions as the Company shall deem reasonably necessary or desirable, including, without limitation, legends restricting transfer of the Common Stock until there has been compliance with federal and state securities laws and until the Participant or any other holder of the Common Stock has paid the Company such amounts as may be necessary in order to satisfy any withholding tax liability of the Company.
11.3Compliance with Laws. If the issuance or transfer of shares by the Company would for any reason, in the opinion of counsel for the Company, violate any applicable federal or state laws or regulations, the Company may delay issuance or transfer of such shares to the Participant until compliance with such laws can reasonably be obtained. In no event shall the Company be obligated to effect or obtain any listing, registration, qualification, consent or approval under any
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

15

applicable federal or state laws or regulations or any contract or agreement to which the Company is a party with respect to the issuance of any such shares. If, after reasonable efforts, the Company is unable to obtain the authority that counsel for the Company deems necessary for the lawful issuance and sale of shares upon exercise of Options or vesting of an Award under the Plan, the Company shall be relieved from any liability for failure to issue and sell shares upon exercise of such Options or vesting of an Award unless and until such authority is obtained.
11.4Investment Representation. The Company may require any Participant, as a condition precedent to exercising any Option or acquiring or exercising any SAR, Restricted Stock, or RSU, to provide a written representation providing assurances satisfactory to the Company (a) as to the Participant’s knowledge and experience in financial and business matters and/or that the Participant has engaged a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, (b) that the Participant is capable of evaluating, alone or together with the purchaser representative, the merits and risks of acquiring the Common Stock or other security; and (c) that the Participant is acquiring the stock subject to the Option, SAR, Restricted Stock or RSU for such person’s own account and not with any present intention of selling or otherwise distributing the stock. Such a representation shall not be required if (1) the issuance of the shares pursuant to an Award has been registered under a then currently effective registration statement under the Securities Act, or (2) as to any particular requirement, a determination is made by counsel for the Company that such representation is not required.
ARTICLE 12.
AMENDMENT AND TERMINATION
12.1Amendment of the Plan. The Board of Directors may at any time and from time to time alter, amend, suspend or terminate the Plan or any part thereof as it may deem proper, except that no such action shall diminish or impair the rights under an Award previously granted. Unless the shareholders of the Company shall have given their approval, the total number of shares which may be issued under the Plan shall not be increased, except as provided in Section 4.4, and no amendment shall be made which reduces exercise price for the grant of any Option, SAR or RSU or purchase price for the grant of any Restricted Stock as required by the Plan, except as provided in Section 4.4, or which materially modifies the requirements as to eligibility under the Plan to receive any Award. Subject to the terms and conditions of the Plan, the Plan Administrator may modify, extend or renew outstanding Awards granted under the Plan, except that no such action shall diminish or impair the rights under an Award previously granted without the consent of the Participant.
12.2Termination of the Plan. This Plan shall not have any fixed Termination Date. The Board of Directors may at any time suspend or terminate the Plan. No such suspension or termination shall diminish or impair the rights under an Award previously granted without the consent of the Participant. Notwithstanding the foregoing, no Award under the Plan may be granted any time after ten years after the Effective Date of the Plan.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

16

ARTICLE 13.
GENERAL PROVISIONS
13.1Tax Obligations.
(a)General. To the extent provided by the terms of an Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the right to withhold from any compensation paid to the Participant by the Company, its Parent or Subsidiary) or by a combination of such means: (i) tendering a cash payment; (ii) if and only if permitted by the Plan Administrator, authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award;provided, however,that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid variable award accounting); or (iii) if and only if permitted by the Plan Administrator, delivering to the Company owned and unencumbered shares of Common Stock.
(b)Code Section 409A. To the extent required to avoid penalties under Code Section 409A, the Plan Administrator intends any Award issued under the Plan to comply in all respects with Code Section 409A and related regulations and intends to interpret and administer any Award issued under the Plan in accordance with Code Section 409A. Notwithstanding any provision to the contrary, all taxes associated with participation in the Plan, including any liability imposed under Code Section 409A, shall be borne by the Participant.
13.2No Employment Rights. Nothing contained in this Plan or in any Award granted under the Plan shall confer upon any Participant any right with respect to the continuation of such Participant’s Continuous Service by the Company or any Subsidiary or interfere in any way with the right of the Company or any Subsidiary, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such Continuous Service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of the Award.
13.3Nontransferability of Awards. Awards granted pursuant to the Plan are not transferable by the Participant other than by will or the laws of descent and distribution and shall be exercisable during the Participant’s lifetime only by the Participant. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Awards contrary to the provisions hereof, or upon the levy of any attachment or similar process upon the Award, the Award shall immediately become null and void. Notwithstanding the foregoing, to the extent specified in an Award Agreement, an Award may be transferred by a Participant solely to (1) the Participant’s immediate family (children, grandchildren, or spouse) or trusts or other entities established for the benefit of the Participant’s immediate family; or (2) the trust underlying a nonqualified deferred compensation plan established and maintained by the Company, to the extent specifically
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

17

permitted in the trust agreement. Any such transfer of an Incentive Stock Option shall result in the conversion of the Option to a Nonqualified Stock Option.
13.4Participants in Foreign Countries. The Plan Administrator shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company may operate to assure the viability of the benefits from Awards granted to Participants employed in such countries and to meet the objectives of the Plan.
13.5Other Employee Benefits. Unless so provided by the applicable plan, the amount of compensation deemed to be received by a Participant as a result of the exercise of an Award shall not constitute earnings with respect to which any other employee benefits of the person are determined, including without limitation benefits under any pension, profit sharing, life insurance, or disability or other salary continuation plan.
13.6Confidentiality of Information. Information regarding the grant of Awards under this Plan is confidential and may not be shared with anyone other than the Participant’s immediate family and personal financial advisor and other person(s) designated by Participant by power of attorney or assignment.
13.7Severability. If any provision of this Plan is held by any court or governmental authority to be illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions. Instead, each provision held to be illegal or invalid shall, if possible, be construed and enforced in a manner that will give effect to the terms of such provision to the fullest extent possible while remaining legal and valid.
13.8Governing Law and Venue. This Plan, and all Awards granted under this Plan, shall be construed and shall take effect in accordance with the laws of the State of Colorado without regard to conflicts of laws principles. Resolution of any disputes under the Plan or any Award under the Plan shall only be held in courts in Denver County, Colorado.
13.9Use of Proceeds. Any cash proceeds received by the Company from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.
Adopted as of the Effective Date as first set forth above.
Scott’s Liquid Gold-Inc. 2005 Stock Incentive Plan3/2005

18