Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between Scott’s Liquid
Gold-Inc. (“Company”), and Mark Goldstein (“Executive”) (individually, a “Party”
and together, the “Parties”), as of the date on which the Agreement is executed
by the Parties (“Effective Date”).

W I T N E S S E T H:

WHEREAS, Company desires to continue to employ the Executive in a capacity and
on the terms and conditions, and for the consideration, hereinafter set forth
and the Executive desires to be employed by Company on such terms and conditions
and for such consideration;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, Company and Executive agree as follows:

ARTICLE 1
EMPLOYMENT AND DUTIES

1.1.Employment; Effective Date.  As of the Effective Date, and continuing for
the period of time set forth in Article 2 of this Agreement, Executive’s
employment by Company shall be subject to the terms and conditions of this
Agreement.

1.2.Positions.  Company shall continue to employ Executive in the positions of
Chief Executive Officer and President reporting to the Board of Directors (the
“Board”).  Executive agrees to serve as Chairman of the Board of Company until
his resignation or removal.

1.3.Duties and Services.  Executive agrees to serve in the positions referred to
in paragraph 1.2 and to perform diligently and to the best of his abilities the
duties and services pertaining to such offices, as well as such additional
duties and services appropriate to such office which the Parties mutually may
agree upon from time to time.  Executive’s employment shall also be subject to
the policies maintained and established by Company that are of general
applicability to Company’s executive employees, as such policies may be amended
from time to time, to the extent they do not otherwise conflict with the express
terms of this Agreement.

1.4.Other Interests.  Executive agrees, during the period of his employment by
Company, to devote all of his primary business time, energy and best efforts to
the business and affairs of Company and its affiliates and not to engage,
directly or indirectly, for any pay or remuneration as an employee, consultant,
or director in any other business or businesses, whether or not similar to that
of Company, or to invest in any private companies that compete with Company,
except with the advance written consent of the Board.  The foregoing
notwithstanding, the Parties recognize and agree that Executive may engage in
charitable and civic pursuits without the consent of the Board, as long as such
pursuits do not, in the sole and good faith determination of the Board, conflict
with the business and affairs of Company or its affiliates or interfere with
Executive’s performance of his duties hereunder.

 

 

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1.5.Duty of Loyalty.  Executive acknowledges and agrees that Executive owes a
fiduciary duty of loyalty to act at all times in the best interests of
Company.  In keeping with such duty, Executive shall make full disclosure to
Company of all business opportunities pertaining to Company’s business and shall
not appropriate for Executive’s own benefit or the benefit of another business
opportunities concerning Company’s business.

ARTICLE 2
TERM AND TERMINATION OF EMPLOYMENT

2.1.Term.  Unless sooner terminated pursuant to paragraph 2.2 or 2.3 below,
Company agrees to continue to employ Executive through the third anniversary of
the Effective Date (the “Initial Expiration Date”); provided, however, that
beginning on the Initial Expiration Date, and on each anniversary of the Initial
Expiration Date thereafter, if this Agreement has not been terminated pursuant
to paragraph 2.2 or 2.3, then said term of employment will automatically be
extended for an additional one-year period, unless on or before the date that is
90 days prior to the first day of any such extension period either Party gives
written notice to the other that no such automatic extension shall occur.

2.2.Company’s Right to Terminate.  Company has the right to terminate
Executive’s employment under this Agreement for any of the following reasons:

(i)

upon Executive’s death or presumed death;

(ii)

upon Executive’s disability, which shall mean Executive’s becoming incapacitated
by accident, sickness, or other circumstances which renders him mentally or
physically incapable of performing the duties and services required of him
hereunder for 90 or more days (whether or not consecutive) out of any
consecutive 180-day period;

(iii)

for “Cause,” which shall mean Executive has (A) engaged in gross negligence,
gross incompetence or willful misconduct in the performance of the duties
required of him hereunder; (B) refused without proper reason to perform the
material duties and responsibilities required of him hereunder; (C) willfully
engaged in conduct that is materially injurious to Company or its affiliates
(monetarily or otherwise); (D) committed an act of fraud, embezzlement or breach
of fiduciary duty to Company or an affiliate (including the unauthorized
disclosure of confidential or proprietary material information of Company or an
affiliate); (E) been charged, through indictment or criminal complaint, entry of
pretrial diversion or sentencing agreement, or has been convicted of (or pleaded
no contest to) a crime involving fraud, dishonesty or moral turpitude or any
felony; or (F) engaged in dishonesty that is materially injurious to Company; or

(iv)

at any time for any other reason, or for no reason whatsoever, in the sole
discretion of the Board.

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2.3.Executive’s Right to Terminate.  Executive shall have the right to terminate
his employment under this Agreement for any of the following reasons:

(i)

for “Good Reason,” which shall mean a voluntary separation from service
following the initial existence of one or more of the following conditions
(which arises without the consent of Executive): (A) a material diminution in
Executive’s responsibilities, duties or authority, including but not limited to
being involuntarily removed from the position of Chairman of Board; (B) a
material diminution in Executive’s base compensation; (C) a material breach by
Company of any material provision of this Agreement, or (D) a change in the
geographic location of Executive’s principal place of employment by Company of
more than 50 miles from the location where he is principally employed as of the
Effective Date; or

(ii)

at any time for any other reason, or for no reason whatsoever, in the sole
discretion of Executive.

2.4.Notice of Termination.  

(i)

If Company desires to terminate Executive’s employment hereunder at any time
prior to expiration of the term of employment as provided in paragraph 2.1 for
any reason other than for Cause as defined in paragraph 2.2(iii), it will do so
by giving a 30-day written notice to Executive that it has elected to terminate
Executive’s employment hereunder and stating the effective date and reason for
such termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder.  

(ii)

In the case of any notice by Company of its intent to terminate this Agreement
for Cause, Company shall provide Executive with notice of the existence of the
condition(s) constituting the Cause and the effective date of the termination,
provided that in the instance that Cause has arisen under paragraph 2.2(iii)(B)
exclusively, provide Executive with 30 days to cure such condition, provided,
however, that in the event Executive engages in the same or similar conduct
after curing such condition the first time, then the Board has the unconditional
right to terminate for Cause without further advance notice or opportunity to
cure.  

(iii)

If Executive desires to terminate his employment hereunder at any time prior to
expiration of the term of employment as provided in paragraph 2.1, he shall do
so by giving a 30-day written notice to Company that he has elected to terminate
his employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder and Company may, in its sole
discretion, decide to pay Executive for the 30-day notice period (or any portion
thereof) in lieu of Executive continuing to work during the notice period.  In
the case of any notice by Executive of his intent to terminate his employment
hereunder for Good Reason, Executive shall provide Company with notice of the
existence of the condition(s) constituting the Good Reason within 30 days after

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the initial existence of such condition(s) and Company shall have 30 days
following Executive’s provision of such notice to remedy such condition(s).  If
Company remedies the condition(s) constituting the Good Reason within such 30
day period, then Executive’s employment hereunder shall continue and his notice
of termination shall become void and of no further effect.  If Company does not
remedy the condition(s) constituting the Good Reason within such 30 day period,
Executive’s employment with Company shall terminate on the date that is 31 days
following the date of Executive’s notice of termination and Executive shall be
deemed to have separated from service for Good Reason.  

2.5.Deemed Resignations.  Any termination of Executive’s employment (regardless
of which Party initiated the termination, or whether it occurred due to an
expiration of the term of employment) shall constitute an automatic resignation
of Executive as an officer of Company and each affiliate of Company, if any, an
automatic resignation as trustee of the Company’s Employee Stock Ownership Plan
and 401(k) plan, an automatic resignation of Executive from the Board and from
the board of directors or similar governing body of any affiliate of Company, if
any, and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which Company or any
affiliate, if any, holds an equity interest and with respect to which board or
similar governing body Executive serves as Company’s or such affiliate’s
designee or other representative.

ARTICLE 3
COMPENSATION AND BENEFITS

3.1.Base Salary.  During the period of this Agreement, Executive shall receive
an annual base salary of $351,727.40, less usual and customary withholdings, for
the period of this Agreement.  Executive’s annual base salary shall be reviewed
by the Board (or a committee thereof) on an annual basis, and, in the sole
discretion of the Board (or such committee), such annual base salary may be
increased, but not decreased (except for a decrease that is consistent with
reductions taken generally by other executives of Company), effective as of any
date determined by the Board.  Executive’s annual base salary shall be paid in
equal installments in accordance with Company’s standard policy regarding
payment of compensation to executives, but no less frequently than monthly.

3.2.Equity Compensation.  The Board (or a committee thereof) may, in its sole
discretion, offer or award Executive any form of equity or phantom equity as is
permitted by any written plan or policy adopted by the Company, effective as of
any date determined by the Board, in accordance with the terms of a separate
agreement to be executed by Company and Executive concerning such award.

3.3.Bonus.  Executive is eligible to receive an annual bonus of between 25-50%
of Executive’s base salary during the applicable bonus period, provided
Executive remains employed the entire calendar year, and the Board, in its sole
discretion, determines that Executive and/or the Company, as applicable, met or
exceeded all of the goals and objectives of the written annual bonus plan
approved by the Board or a committee thereof.  A bonus will not be earned or
vested until such time as the Board or a committee thereof determines that the

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goals and objectives have been achieved, and a bonus, if any, shall be paid to
Executive on or before March 14 of the year following the year in which the
bonus was earned.

3.4.Other Perquisites.  During his employment hereunder, Executive shall be
afforded the following benefits as incidences of his employment:

(i)

Business and Entertainment Expenses.  Subject to Company’s standard policies and
procedures with respect to expense reimbursement as applied to its executive
employees generally, Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive for
business related purposes, including dues and fees to industry and professional
organizations and costs of entertainment and business development.

(ii)

Vacation. During his employment hereunder, Executive shall be entitled to
vacation pay in accordance with the terms and conditions of Company policies
applied to its executive employees generally, provided Executive shall receive a
minimum of three weeks of paid vacation each calendar year, which shall accrue
per pay period, and shall similarly be entitled to all holidays provided to
executives of Company generally.  

(iii)

Automobile. Company will provide Executive with a minimum monthly automobile
allowance in the same amount as he is currently receiving, subject to applicable
taxes, withholdings and deductions. To the extent that Executive incurs taxable
income relating to the automobile allowance, Company will pay Executive such
additional amount as is necessary to “gross up” such benefits and cover the
anticipated income tax liability resulting from such taxable income.  Executive
acknowledges and agrees that certain fringe benefits may be subject to income
tax withholding and reporting to the extent required by the Internal Revenue
Code of 1986, as amended (the “Code”).

(iv)

Other Company Benefits.  With the exception of severance, which is governed by
this Agreement, Executive will be eligible for all customary and usual fringe
benefits generally available to similarly situated executive employees of
Company and such other benefits as he is currently receiving (including Company
payment of a long-term disability policy for Executive, a life insurance policy,
and a supplemental medical insurance program, and payment of Executive’s
reasonable annual tax preparation expenses upon receipt of appropriate
documentation thereof), subject to the terms and conditions of Company’s benefit
plan documents, as such documents may be amended or modified from time to time.
In addition, Company reserves the right to change or eliminate the fringe
benefits (with the exception of Company’s payment of Executive’s annual tax
preparation expenses, payment of 100% of Executive’s premiums for Executive’s
long-term disability policy and life insurance policy, and full payment for
Executive’s participation in a supplemental medical insurance program) on a
prospective basis, at any time, effective upon notice to Executive, and any such
change or elimination shall not constitute “Good Reason” hereunder or under
paragraph 2.3 hereof.  

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ARTICLE 4
EFFECT OF TERMINATION ON COMPENSATION

4.1.Termination By Expiration.  If Executive’s employment hereunder is
terminated upon expiration of the term provided in paragraph 2.1 hereof because
either party has provided the notice contemplated in such paragraph, then all
compensation and all benefits to Executive hereunder shall continue to be
provided until the expiration of such term and such compensation and benefits
shall terminate contemporaneously with termination of his employment (except as
otherwise provided under any other agreement or plan of Company that provides
post-termination benefits).  

4.2.Termination Benefits.  

(i)

In General.  If Executive’s employment hereunder is terminated by Company or
Executive prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, except as hereinafter provided, all compensation and benefits
to Executive hereunder shall terminate contemporaneously with the termination of
such employment (except as otherwise provided under any other written agreement
or plan of Company that provides post-termination benefits).

(ii)

Severance Pay.  Subject to paragraph 4.3 below, if Executive’s termination of
employment is for Good Reason, or by Company for any reason other than the
expiration of the term as described in paragraph 4.1 or for any reason other
than a reason encompassed by paragraph 2.2(i) (Executive’s death or presumed
death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for Cause), then Company
shall provide Executive with 18 months of his then current base salary (which
excludes bonus pay and the value of any fringe or other benefits) (“Severance
Pay”), payable in accordance with paragraph 4.2(vi).

(iii)

Reimbursement for COBRA Premiums.  Subject to paragraph 4.3 below, if
Executive’s termination of employment is for Good Reason, or by Company for any
reason other than the expiration of the term as described in paragraph 4.1 or
for any reason other than a reason encompassed by paragraph 2.2(i) (Executive’s
death or presumed death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for
Cause), and Executive elects continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) in accordance with the COBRA
materials that will be provided to Executive by the Company or the Company’s
third party COBRA administrator, the Company shall reimburse Executive the full
COBRA premium and applicable administrative fee (if any) for the same medical,
dental and vision benefit plan coverage (“Group Health Plan Coverage”) Executive
and Executive’s dependents had as of the termination of employment (“Termination
Date”) for a period of 18 months, or until Executive elects to receive group
medical, dental and vision insurance from another source, whichever occurs first
(such payments referred to herein as “COBRA Reimbursements”).  COBRA
Reimbursements will be made by the Company promptly upon proof of payment of
Executive’s COBRA coverage and will be subject to usual and customary
withholdings.  Company will pay Executive such

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additional amount as is necessary to “gross up” the anticipated income tax
liability resulting from such taxable income.  Executive will be mailed a COBRA
packet at his last known address.  Such packet will contain additional
information about Executive’s COBRA rights and responsibilities.  

(iv)

Bonus Payment.  If Executive has earned a bonus pursuant to paragraph 3.3, but
between January 1 of the year following the year in which the bonus was earned
and the time in which the bonus is paid the Company terminates Executive’s
employment without Cause or Executive terminates his employment for Good Reason,
Executive will be entitled to receive the bonus payment that was otherwise
earned in the timeframe contemplated by paragraph 3.3, notwithstanding any
language to the contrary in any applicable bonus plan.   

(v)

Compliance with Code Section 409A.  Company and Executive intend that payments
pursuant to paragraph 4.2(ii) constitute payments on account of an involuntary
separation from service or a separation from service for good reason within the
meaning of Treasury Regulation section 1.409A-1(n)(1) and (2), and amounts paid
pursuant to paragraph 4.2(ii) constitute separation pay exempt from Code Section
409A under Treasury Regulation section 1.409A-1(b)(9)(iii), up until the lesser
of: (a) two times (2x) the Executive’s annualized compensation based upon the
annual rate of pay in effect for the taxable year preceding the Termination Date
(including any additional compensation paid, including bonuses), adjusted for
any increase for the year of termination if such increase was expected to
continue indefinitely; and (b) the maximum amount that may be taken into account
under a qualified plan pursuant to Code section 401(a)(17) for the year of
Executive’s Termination Date (the lesser of (a) and (b) referred to herein as
the “Limit”).  In the event the payments exceed the Limit, the remaining
payments shall constitute deferred compensation subject to Code Section 409A and
shall be subject to paragraph 4.5.  Company and Executive intend that payments
pursuant to paragraph 4.2(iii) will be exempt from Code Section 409A as a
reimbursement or in-kind benefit plan.  The coincident gross-up payments are
intended to be exempt under Treasury Regulation section 1.409A-3(i)(1)(v).  In
any event, neither Party shall be liable to the other if any such payment
receives different tax treatment.

(vi)

Time and Form of Payment.   Payments under paragraph 4.2(ii) will be made in
accordance with Company’s standard payroll procedures and will be paid in equal
installments over an 18-month period with the first payment to be paid as
promptly as reasonably possible after the timely execution and expiration of any
revocation periods of the release described in paragraph 4.3, provided Executive
is not permitted, directly or indirectly, to designate the taxable year of
payment.  Interest shall not be credited on remaining installment payments.  All
payments will be subject to deductions for taxes and other applicable
withholdings.  In the event of Executive’s death prior to receipt of all
installments, payment shall be made at the same time and in the same matter as
described herein to Executive’s estate.

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(vii)

Accelerated Vesting.  The Company may provide for accelerated vesting of equity
awards in the documents governing such equity awards or by separate Board
action.

4.3. Release and Full Settlement.  Anything to the contrary herein
notwithstanding, as a condition to the receipt of the termination payments and
benefits under paragraph 4.2 hereof, as applicable, Executive shall (i) execute
a release, in the form established by the Board and similar to the release
attached hereto as Exhibit A, releasing the Board, Company, and Company’s parent
corporation, subsidiaries, affiliates, and their respective shareholders,
partners, officers, directors, employees, attorneys and agents from any and all
claims and from any and all causes of action of any kind or character including,
but not limited to, all claims or causes of action arising out of Executive’s
employment with Company or its affiliates or the separation of such employment,
but excluding all claims to vested benefits and payments Executive may have
under any compensation or benefit plan, program or arrangement, including this
Agreement, and (ii) provide such release to Company no later than 60 days after
the date of his termination of employment with Company.  The performance of
Company’s obligations hereunder and the receipt of any benefits provided under
paragraph 4.2 shall constitute full settlement of all such claims and causes of
action.  

4.4.No Duty to Mitigate Losses.  Executive shall have no duty to find new
employment following the termination of his employment under circumstances which
require Company to pay any amount to Executive pursuant to this Article 4.  Any
salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 4 apply shall not reduce Company’s
obligation to make a payment to Executive (or the amount of such payment)
pursuant to the terms of this Article 4.

4.5.Deferred Compensation Subject to Code Section 409A.  Notwithstanding
anything to the contrary set forth herein, any payments and benefits provided
under this Agreement that constitute “deferred compensation” within the meaning
of Code Section 409A shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a
“separation from service” (as such term is defined in Treasury Regulation
Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably
determines that such amounts may be provided to Executive without causing
Executive to incur additional tax under Code Section 409A.  It is intended that
each installment of Severance Pay provided for in this Agreement is a “separate
“payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For
the avoidance of doubt, it is intended that Severance Pay set forth in this
Agreement satisfy, to the greatest extent possible, the exceptions from the
application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9).  If the Company (or, if
applicable, the successor entity thereto) determines that any payments or
benefits constitute “deferred compensation” under Code Section 409A and
Executive is, on the termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in Code Section
409A(a)(2)(B)(i), then, solely to the extent necessary to avoid the incurrence
of the adverse personal tax consequences to Executive under Section 409A, the
timing of the payments and benefits shall be delayed until the earlier to occur
of: (a) the date that is 6 months

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and one day after Executive’s Separation From Service, or (b) the date of
Executive’s death (such applicable date, the “Specified Executive Initial
Payment Date”).  On the Specified Executive Initial Payment Date, the Company
(or the successor entity thereto, as applicable) shall (i) pay to Executive a
lump sum amount equal to the sum of the payments and benefits that Executive
would otherwise have received through the Specified Executive Initial Payment
Date if the commencement of the payment of such amounts had not been so delayed
pursuant to this Paragraph 4.5, and (ii) commence paying the balance of the
payments and benefits in accordance with the applicable payment schedules set
forth in this Agreement.

4.6.Application of Section 280G. In the event that it is determined that the
Severance Pay payable to Executive pursuant to paragraph 4.2 of this Agreement,
when added to any other payment or benefit to Executive from the Company, would
be considered a “parachute payment” (a “Parachute Payment”), within the meaning
of section 280G of the Code, would cause Executive to be considered to receive
an “excess parachute payment” within the meaning of section 280G of the Code (an
“Excess Parachute Payment”), the amount payable to Executive pursuant to
paragraph 4.2 of this Agreement will be reduced to the maximum amount that, when
added to any other Parachute Payments made to Executive, could be paid to
Executive without causing Executive to receive an Excess Parachute
Payment.  Notwithstanding the foregoing, the Severance Pay payable to Executive
pursuant to paragraph 4.2 of this Agreement will not be reduced if (i) the net
amount payable to Executive without the reduction described in the preceding
sentence, but reduced by all Federal, state and local income and employment
taxes payable by Executive on the Severance Pay payable pursuant to this
Agreement and all other Parachute Payments plus the excise tax payable on the
Excess Parachute Payment pursuant to Section 4999 of the Code, is greater than
(ii) the net amount that would be payable to Executive with the reduction
described in the preceding sentence and reduced by all Federal, state and local
income and employment taxes payable by Executive on the Severance Pay payable
pursuant to this Agreement and all other Parachute Payments.  For purposes of
this paragraph 4.6, Executive will be deemed to pay Federal income tax and
employment taxes at the highest marginal rate of Federal income and employment
taxation in the calendar year in which the Excess Parachute Payment would occur
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive’s residence in the calendar year in which the
Excess Parachute Payment would be made, net of the reduction in Federal income
taxes that Executive may obtain from the deduction of such state and local
income taxes.  In addition, all determinations to be made under this paragraph
4.6 will be made by the Company’s independent public accountant (the “Accounting
Firm”) immediately before the date the Severance Pay under paragraph 4.2 is to
be paid.  The Accounting Firm will provide its determinations and any supporting
calculations and work papers both to the Company and to Executive within 10 days
of such date, and any such determination by the Accounting Firm shall be binding
upon the Company and Executive.

4.7.Other Benefits.  This Agreement governs the rights and obligations of
Executive and Company with respect to Executive’s base salary and certain
perquisites of employment.  Except as expressly provided herein, Executive’s
rights and obligations both during the term of his employment and thereafter
with respect to his ownership rights in Company, and other benefits under the
plans and programs maintained by Company shall be governed by the terms (which
are not, and are not required to be, affected, altered or amended) of the
separate agreements, plans and the other documents and instruments governing
such matters.

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ARTICLE 5
PROTECTION OF CONFIDENTIAL INFORMATION

5.1.Disclosure to and Property of Company.  All information, designs, ideas,
concepts, improvements, product developments, discoveries and inventions,
whether patentable or not, that are conceived, made, developed or acquired by
Executive, individually or in conjunction with others, during the period of
Executive’s employment (including the period of employment preceding this
Agreement) by Company (whether during business hours or otherwise and whether on
Company’s premises or otherwise) that relate to Company’s (or any of its
affiliates’) business, trade secrets, products or services (including, without
limitation, all such information relating to corporate opportunities, product
specification, compositions, manufacturing and distribution methods and
processes, research, financial and sales data, pricing terms, evaluations,
opinions, interpretations, acquisitions prospects, the identity of customers or
their requirements, the identity of key contacts within the customer’s
organizations or within the organization of acquisition prospects, marketing and
merchandising techniques, business plans, computer software or programs,
computer software and database technologies, prospective names and marks)
(collectively, “Confidential Information”) shall be disclosed to Company and are
and shall be the sole and exclusive property of Company (or its
affiliates).  Moreover, all documents, videotapes, written presentations,
brochures, drawings, memoranda, notes, records, files, correspondence, manuals,
models, specifications, computer programs, E-mail, voice mail, electronic
databases, maps, drawings, architectural renditions, models and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression (collectively, “Work Product”) are and shall be the sole and
exclusive property of Company (or its affiliates).  Upon Executive’s termination
of employment with Company, for any reason, or earlier upon request of Company,
Executive promptly shall deliver such Confidential Information and Work Product,
and all copies thereof, to Company.  Confidential Information does not include
information which (i) is generally known to the public, or which may later
become generally known to the public, except where such knowledge is the result
of an unauthorized disclosure by Executive or another person or entity, provided
Executive has knowledge, after reasonable inquiry, that the other person’s or
entity’s disclosure was unauthorized; (ii) is lawfully and in good faith made
available to Executive by a third party who, to Executive’s knowledge after
inquiry, did not derive it from the Company and who imposed no obligation of
confidence on Executive; (iii) is developed by Executive independent of any
Confidential Information owned by the Company, as verified and evidenced by the
prior written records of Executive; or (iv) is required to be disclosed in a
judicial or administrative proceeding, or is otherwise required to be disclosed
by law, in any such case after all reasonable legal remedies for maintaining
such information in confidence have been exhausted, including, but not limited
to, giving the Company as much advance notice of the possibility of such
disclosure as practical so that the Company may attempt to stop such disclosure
or obtain a protective order concerning such disclosure.  Executive shall
provide the Company with written notice no less than ten (10) business days
prior to the disclosure of any Confidential Information that may be required by
law.

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5.2.Disclosure to Executive.  Company has disclosed and will disclose to
Executive, or placed Executive in a position to have access to or develop,
Confidential Information and Work Product of Company (or its affiliates); and/or
has entrusted and will entrust Executive with business opportunities of Company
(or its affiliates); and/or has placed and will place Executive in a position to
develop business good will on behalf of Company (or its affiliates).  Executive
agrees to preserve and protect the confidentiality of all Confidential
Information or Work Product of Company (or its affiliates).

5.3.No Unauthorized Use or Disclosure.  Executive agrees that he will not, at
any time during or after Executive’s employment by Company, make any
unauthorized disclosure of, and will prevent the removal from Company premises
of, Confidential Information or Work Product of Company (or its affiliates), or
make any use thereof, except in the carrying out of Executive’s responsibilities
during the course of Executive’s employment with Company.  Executive shall use
commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby.  At the request of Company at any time, Executive agrees to
deliver to Company all Confidential Information that he may possess or
control.  Executive agrees that all Confidential Information of Company (whether
now or hereafter existing) conceived, discovered or made by him during the
period of Executive’s employment by Company exclusively belongs to Company (and
not to Executive), and Executive will promptly disclose such Confidential
Information to Company and perform all actions reasonably requested by Company
to establish and confirm such exclusive ownership.  Affiliates of Company shall
be third party beneficiaries of Executive’s obligations under this Article
5.  As a result of Executive’s employment by Company, Executive may also from
time to time have access to, or knowledge of, Confidential Information or Work
Product of third parties, such as customers, suppliers, partners, joint
venturers, and the like, of Company and its affiliates.  Executive also agrees
to preserve and protect the confidentiality of such third party Confidential
Information and Work Product to the same extent, and on the same basis, as
Company’s Confidential Information and Work Product.

5.4.Ownership by Company.  If, during Executive’s employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression that is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company’s business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company’s premises or
otherwise), including any Work Product, Company shall be deemed the author of
such work if the work is prepared by Executive in the scope of Executive’s
employment; or, if the work is not prepared by Executive within the scope of
Executive’s employment but is specially ordered by Company as a contribution to
a collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Company
shall be the author of the work.  

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5.5.Assistance by Executive.  During the period of Executive’s employment by
Company and thereafter, Executive shall assist Company and its nominee, at any
time, in the protection of Company’s (or its affiliates’) worldwide right, title
and interest in and to Work Product and the execution of all formal assignment
documents requested by Company or its nominee and the execution of all lawful
oaths and applications for patents and registration of copyright in the United
States and foreign countries.

ARTICLE 6
NON-COMPETITION AND NON-SOLICITATION OBLIGATIONS

6.1.Non-competition Obligations.  As part of the consideration for the
compensation and benefits to be paid to Executive hereunder; in light of
Executive’s position as executive personnel to Company; to protect the trade
secrets and confidential information of Company and its affiliates that have
been or will in the future be disclosed or entrusted to Executive, the business
goodwill of Company and its affiliates that has been and will in the future be
developed in Executive, or the business opportunities that have been and will in
the future be disclosed or entrusted to Executive by Company and its affiliates;
and as an additional incentive for Company to enter into this Agreement, Company
and Executive agree to the provisions of this Article 6.  Executive agrees that
during the period of Executive’s non-competition obligations hereunder,
Executive shall not, directly or indirectly for Executive or for others, in the
United States (regardless of the reason, if any, for the cessation of
employment):

(i)

engage in any business that is competitive with the business conducted by
Company;

(ii)

render any advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, with any business
that is competitive with the business conducted by Company;

(iii)

induce any employee of Company or its affiliates to terminate his or her
employment with Company or its affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company; or

(iv)

request, solicit, induce, or cause any customer of Company or its affiliates to
terminate, reduce, or limit any business relationship with Company or its
affiliates.

The non-competition obligations under this Agreement shall apply during the
period that Executive is employed by Company and shall continue for 18 months
after the date Executive’s employment with Company ends if Executive’s
termination of employment is for Good Reason, or by Company for any reason other
than the expiration of the term as described in paragraph 4.1 or for any reason
other than a reason encompassed by paragraph 2.2(i) (Executive’s death or
presumed death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for Cause).
Executive understands that the foregoing restrictions may limit Executive’s
ability to engage in certain businesses during the period provided for above,
but acknowledges that the restrictions

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are reasonable and necessary, and Executive acknowledges that Executive will
receive sufficiently high remuneration and other benefits under this Agreement
to justify such restriction.

6.2.Enforcement and Remedies.  Executive acknowledges that money damages alone
would not be sufficient remedy for any breach of Article 5 or 6 by Executive,
that any material breach or threatened material breach of Article 5 or 6 based
on a good faith determination by the Board will result in irreparable harm to
Company, and Company shall be entitled to enforce the provisions of Article 5 or
6 by terminating any payments then owing to Executive under this Agreement
and/or to specific performance and injunctive relief as remedies for such breach
or any threatened breach without posting any bond or other security, barring
Executive from violating any such provision.  Such remedies shall not be deemed
the exclusive remedies for a breach of Article 5 or 6, but shall be in addition
to all remedies available at law or in equity to Company, including, without
limitation, the recovery of damages from Executive and Executive’s agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.

6.3.Reformation.  It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article 6 to be reasonable
and necessary to protect the proprietary information of Company and its
affiliates.  Nevertheless, if any of the aforesaid restrictions are found by a
court having jurisdiction to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such courts so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.

ARTICLE 7
NONDISPARAGEMENT

Executive shall refrain, both during the employment relationship and after the
employment relationship ends, from publishing any oral or written statements
about Company, its affiliates, or any of such entities’ directors, officers,
employees, agents or representatives that (i) are slanderous, libelous, or
defamatory; (ii) place Company, its affiliates, or any of such entities’
directors, officers, employees, agents, or representatives in a false light
before the public; or (iii) constitute a misappropriation of the name or
likeness of Company, its affiliates, or any of such entities’ directors,
officers, employees, agents, or representatives.  A violation or threatened
violation of this prohibition may be enjoined by the courts.  The rights
afforded Company and its affiliates under this provision are in addition to any
and all rights and remedies otherwise afforded by law.

Company agrees that, both during Executive’s employment relationship and after
the employment relationship terminates, Company’s directors, officers,
employees, agents and representatives shall, during their employment or
affiliation with Company, refrain from publishing any oral or written statements
about Executive that (i) are slanderous, libelous, or defamatory; (ii) place
Executive  in a false light before the public; or (iii) constitute a
misappropriation of the name or likeness of Executive.  A violation or
threatened violation of this prohibition may be enjoined by the courts.  The
rights afforded Executive under this provision are in addition to any and all
rights and remedies otherwise afforded by law.

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The nondisparagement obligations of this Article 7 shall not apply to
communications with law enforcement or required testimony under law or court
process.

ARTICLE 8
MISCELLANEOUS

8.1.Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered, e-mailed, or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, to Company at its regular business address, and to the Executive at
Executive’s address on file with Company, or to such other address as either
party may furnish to the other in writing in accordance herewith, except that
notices or changes of address shall be effective only upon receipt.

8.2.Applicable Law and Waiver of Jury Trial.  This Agreement has been negotiated
within the State of Colorado and the rights and obligations of the Parties to
this Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Colorado without regard to any jurisdiction’s
principles of conflict of laws.  Any action brought to enforce this Agreement
shall be brought in Colorado in a court of competent jurisdiction.  In any
action brought to enforce this Agreement, the action shall be tried to a court
without a jury.

8.3.No Waiver.  No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

8.4.Severability.  Subject to paragraph 6.3, if a court of competent
jurisdiction determines that any provision of this Agreement is invalid or
unenforceable, then the invalidity or unenforceability of that provision shall
not affect the validity or enforceability of any other provision of this
Agreement, and all other provisions shall remain in full force and effect.

8.5.Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

8.6.Withholding of Taxes and Other Employee Deductions.  Company may withhold
from any benefits and payments made pursuant to this Agreement or otherwise all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company’s employees generally.

8.7.Headings.  The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

8.8.Gender and Plurals.  Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.

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8.9.Affiliate.  As used in this Agreement, the term “affiliate” shall mean any
entity which owns or controls, is owned or controlled by, or is under common
ownership or control with, Company.

8.10.Assignment and Assumption.  This Agreement shall be binding upon and inure
to the benefit of Company and any successor of Company, by merger or
otherwise.  Executive shall not have the right to assign his rights or
obligations under this Agreement.

8.11.Term.  This Agreement has a term co-extensive with the term of employment
provided in paragraph 2.1.  Termination of the employment relationship shall not
affect any right or obligation of any party which is accrued or vested prior to
such termination, nor shall termination of the employment relationship impact
any post-employment obligations under this Agreement.

8.12.Entire Agreement.  Except as provided in (i) the written benefit plans and
programs referenced in paragraph 3.4(iv) (and any agreements between Company and
Executive that have been executed under such plans and programs) and (ii) any
signed written agreement contemporaneously or hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties with
regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company.  Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.  

8.13.Legal Expenses.  In the event of a dispute under this Agreement, the
prevailing party shall be entitled to its or his legal costs and expenses
(including reasonable attorneys’ fees) incurred in connection with such
dispute.  

8.14.Liability Insurance.  Company shall maintain a directors’ and officers’
insurance liability policy throughout the term of this Agreement and shall
provide Executive with coverage under such policy on terms not less favorable
than provided to other Company directors and officers.

8.15No Conflicting Agreements or Use of Third Party Information.  During his
employment with Company, Executive shall not improperly use or disclose any
proprietary information or trade secrets of any former employer or other person
or entity, and Executive shall not bring on to the premises of Company or any
affiliate any unpublished document or proprietary information belonging to any
such former employer, person or entity, unless consented to in writing by the
former employer, person or entity.  Executive represents that he has not
improperly used or disclosed any proprietary information or trade secrets of any
other person or entity during the application process or while employed or
affiliated with Company.  Executive also acknowledges and agrees that he is not
subject to any contract, agreement, or understanding that would prevent him from
performing his duties for Company or otherwise complying with this
Agreement.  To the extent Executive violates this provision, or his employment
with Company constitutes a breach or threatened breach of any contract,
agreement, or obligation to any third party, Executive shall indemnify and hold
Company harmless from all damages, expenses, costs (including reasonable
attorneys’ fees) and

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liabilities incurred in connection with, or resulting from, any such violation
or threatened violation.

8.16.Construction.  The language used in this Agreement will be deemed to be
language chosen by the Executive and Company to express their mutual intent, and
no rules of strict construction will be applied against either party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 26th
day of March, 2014.

 

SCOTT’S LIQUID GOLD-INC.

 

By:   /s/ Barry J. Levine

Name: Barry J. Levine

Title: Chief Operating Officer and Chief Financial Officer

 

 

 

MARK GOLDSTEIN

 

/s/ Mark E. Goldstein

Signature

 

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Exhibit A

SEPARATION AGREEMENT, WAIVER AND RELEASE

YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING THIS AGREEMENT

 

This Separation Agreement, Waiver and Release (the “Agreement”) is a contract
between Mark Goldstein (“Executive”) and Scott’s Liquid Gold-Inc. (the “Company”
and together with the Executive, the “Parties”).  Executive and the Company wish
to separate on an amicable basis.  Executive’s last day of employment will be
_________________, 20__ (“Termination Date”). Executive has been presented this
Agreement on ________________, 20__ (“Presentation Date”).

THEREFORE, in consideration of the foregoing and this Agreement’s mutual
promises, the sufficiency of which is acknowledged, the Parties agree as
follows:

I.

TERMINATION FROM EMPLOYMENT AND PAYMENT OF WAGES THROUGH THE TERMINATION DATE.

A.Pay at Termination.  On the Termination Date, the Company paid Executive’s
wages and compensation earned through the Termination Date, and any accrued and
unused vacation or paid time off (“PTO”) accrued through the Termination Date.

B.No Other Consideration Due.  Executive acknowledges and agrees that except as
expressly set forth in this Agreement, Executive is entitled to no other wages,
commissions, PTO, vacation pay, sick pay, bonuses, incentive pay, benefits or
other compensation.  Executive also acknowledges and agrees that but for signing
this Agreement, Executive would not be entitled to the consideration from the
Company as set forth below.  

II.

CONSIDERATION FROM THE COMPANY.

The Company will pay Executive severance pay and provide those other benefits on
the terms and conditions expressly set forth in the Employment Agreement dated
March 26, 2014, as such agreement may have been amended  (attached as Exhibit 1)
(the “Employment Agreement”), provided Executive has signed this Agreement prior
to expiration of the Consideration Period (defined below), Executive has not
revoked this Agreement before expiration of the Revocation Date (as defined in
Section V.C. below),  Executive has returned all Company property and
information as required by Section III.E. below, and Executive complies with all
confidentiality requirements in this Agreement (“Payment Conditions”).

III.

EXECUTIVE’S AGREEMENTS.

A.Release of All Claims.  The term “Releasee” or “Releasees” shall be construed
as broadly as possible and includes: the Company, parent companies,
subsidiaries, divisions, successors, and affiliates, and as to each of them,
their former or current agents, joint venture members, stockholders, directors,
officers, employees, and all other persons acting by, through, under or in
concert with any of them.  In exchange for the Company’s consideration,
Executive

 

 

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fully releases and discharges the Releasees from all claims, actions and causes
of action of any kind, known or unknown, which Executive may presently have or
claim to have against any Releasee based on acts or omissions occurring on or
before the date on which Executive signs this Agreement including, but not
limited to, all contract claims; all wrongful discharge or employment claims;
all tort claims; all claims arising under the United States or any state’s
constitution; all claims under Title VII of the Civil Rights Act of 1964, Equal
Pay Act, Age Discrimination in Employment Act, Older Workers Benefit Protection
Act, Rehabilitation Act, Americans with Disabilities Act, Family and Medical
Leave Act, Fair Labor Standards Act, Fair Credit Reporting Act, Worker
Adjustment Retraining and Notification Act, Sarbanes-Oxley Act, Immigration
Reform and Control Act, Occupational Safety and Health Act, National Labor
Relations Act, Colorado Wage Payment Act, and Colorado Anti-Discrimination Act;
all claims arising under any other civil rights or employment laws or
regulations (whether federal, state or local); any federal or state
whistleblower laws or statutes; any claims based on Company policies or
agreements, including severance policies or agreements to provide notice; any
claims for short-term or long-term incentive compensation or other benefits; and
all claims to attorneys’ fees or costs.

B.Filed and Non-Assignment of Claims.  Executive has not filed any charge or
claim or any part or portion thereof (“Filed Claim”).  Executive has not
assigned or transferred any claim or any part or portion thereof (“Assigned
Claim”).  Executive shall defend and indemnify the Releasees and hold the
Releasees harmless from and against any Filed or Assigned Claim (including
attorneys’ fees and costs).

C.Representations.  Executive represents and warrants that Executive was
permitted by the Company to take all leave to which Executive was entitled,
Executive was properly classified as exempt from overtime (if Executive was so
classified), Executive has been properly paid for all time worked while employed
by the Company and Executive has received all benefits to which Executive was or
is entitled, except as expressly set forth in this Agreement.  Executive
represents and warrants that Executive knows of no facts and has no reason to
believe that Executive’s rights under the Fair Labor Standards Act, the Family
and Medical Leave Act, or Colorado Wage Payment Act (or any other state wage
payment law) have been violated.

D.Confidentiality, Noncompetition & Developments.  Executive agrees as a
condition of the Company’s obligations under this Agreement, including but not
limited to the Company’s obligations under Section II, to comply at all times
with the continuing obligations in Executive’s Employment Agreement, including
but not limited to obligations of confidentiality, noncompetition,
nonsolicitation, and nondisparagement.  Nothing in this Agreement shall be
construed to narrow, supersede, modify or affect in any way the obligations of
Executive imposed by the Employment Agreement.

E.Return of Company Property.  As of the Termination Date, Executive has
returned (and has not retained any copies in any form) all Company documents and
information (including all Confidential Information, as that term is defined in
Executive’s Employment Agreement, and any other information stored on personally
owned computer hard drives, flash drives or other format), and any vehicles,
badges, pagers, cell phones, computers, software, equipment or other property
belonging to the Company.  Executive certifies, by signing this Agreement, that
Executive has returned to the Company all versions of Company property,

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including Confidential Information, in Executive’s possession and that Executive
has destroyed and not retained any source codes or other Company intellectual
property on Executive’s home computer or in any other form.

F.Report of Misconduct.  Executive has had the opportunity to notify appropriate
personnel within the Company of any violation or potential violation of any laws
or regulations or any other misconduct by the Company or any of its management
personnel or other representatives in the course of their duties on behalf of
the Company.  To the extent Executive is aware of any such misconduct, Executive
has reported it to appropriate Company personnel.  If Executive subsequently
becomes aware of any such misconduct, Executive will notify appropriate
personnel within the Company.  Appropriate personnel to whom such misconduct
should be reported include the Company’s Chief Executive Officer or Chief
Financial Officer.

G.Cooperation with Litigation or Other Matters.  Executive acknowledges that
Executive may have factual information or knowledge that may be useful to the
Company in connection with current or future legal, regulatory or administrative
proceedings.  Executive will reasonably cooperate with the Company in the
defense or prosecution of any such claims.  Executive’s cooperation shall
include being reasonably available to meet with counsel to prepare for discovery
or trial, and to testify truthfully as a witness. The Company will not
compensate Executive for testifying as a fact witness, but may reimburse
Executive for reasonable expenses associated with travel, meals, lodging or
other out of pocket expenses.  In all litigation or legal matters, Executive
shall testify truthfully.  

H.Injunctive and Other Relief.  Executive agrees and acknowledges that the
Company may exercise any or all of its rights as set forth in Executive’s
Employment Agreement with respect to any violation or threatened violation of
any provision of this Section III. Any suspension of separation payments or
other consideration to be paid, or any recovery of paid separation payments or
other paid consideration, shall not void Executive’s release of claims under
this Agreement, which shall remain in full force and effect.  

IV.

DENIAL OF ANY LIABILITY.

The Company denies any liability to Executive.  The Parties agree that this
Agreement may not be used as evidence; does not constitute an adjudication or
finding on the merits; and is not, and shall not be construed as, an admission
by the Company of a breach of any contract or agreement, a violation of the
Company’s policies and procedures, or a violation of any state or federal laws
or regulations.  After execution (including signatures by both Executive and the
Company), this Agreement may be introduced in evidence to enforce its terms.

V.

OPPORTUNITY TO CONFER AND OBTAIN ADVICE FROM OTHERS, INCLUDING ATTORNEYS.

A.Opportunity to Confer.  The Company advises Executive to confer with an
attorney of Executive’s own choosing before entering into this
Agreement.  Executive represents that Executive has had a full opportunity to
confer with an attorney before signing this Agreement. If Executive signs this
Agreement without conferring with an attorney, Executive knowingly and
voluntarily waives the opportunity to confer with an attorney before signing
this Agreement.  

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B.Opportunity to Consider. Executive may take up to a maximum of twenty-one (21)
days after the Presentation Date (the “Consideration Period”) to decide whether
to enter into this Agreement, after which the Company’s offer to enter into this
Agreement shall automatically expire.  If Executive signs this Agreement before
the Consideration Period expires, Executive represents and agrees that Executive
fully understands that Executive has been given the opportunity to take a
period, starting with the Presentation Date, of up to twenty-one (21) days
within which to decide whether to enter into this Agreement and has voluntarily
waived that opportunity.

C.Opportunity to Revoke.  Executive has the opportunity to revoke this Agreement
within seven (7) days after signing it (such seventh day after signing being the
“Revocation Date”).  If this Agreement is revoked by Executive, it will be
revoked in its entirety.  Revocation will be effective only upon delivering a
written revocation to Chief Executive Officer or Chief Financial Officer,
Scott’s Liquid Gold-Inc., 4880 Havana Street, Suite 400, Denver, Colorado
80239.  This Agreement shall become effective on the eighth day after Executive
timely signs the Agreement, provided Executive does not timely exercise
Executive’s right to revoke the Agreement (the “Effective Date”).

D.No Waiver of Future Claims.  Notwithstanding anything to the contrary, by
entering into this Agreement, Executive is not waiving any rights or claims that
may arise after the date on which Executive signs this Agreement.

VI.

COMPLETE AGREEMENT.

This Agreement, including Exhibit(s), is an integrated document.  It constitutes
and contains the entire agreement and understanding between the Parties, and
supersedes and replaces all prior negotiations and all agreements concerning the
subject matters hereof.  In the event of a conflict between this Agreement and
the Employment Agreement, the Employment Agreement controls.

VII.

SEVERABILITY OF INVALID PROVISIONS.

The provisions of this Agreement are severable.  If any provision of this
Agreement or its application is held invalid, the invalidity shall not affect
other provisions or applications of this Agreement that can be given effect
without the invalid provisions or application.

VIII.

VENUE/CHOICE OF LAW/ATTORNEYS’ FEES/ WAIVER OF RIGHT TO TRIAL BY JURY.

With the exception of any claim for unemployment benefits, workers compensation
benefits, or for injunctive relief, any dispute arising under or related to this
Agreement shall be tried to a court without a jury.  This Agreement has been
negotiated within the State of Colorado and the rights and obligations of the
Parties to this Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of Colorado without regard to any
jurisdiction’s principles of conflict of laws.  Any action brought to enforce
this Agreement shall be brought in Colorado in a court of competent
jurisdiction.

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IX.

NO WAIVER OF BREACH.

No waiver of any breach of any term or provision of this Agreement shall be
binding unless in writing and signed by the party waiving the breach.  No waiver
of any breach of any term or provision of this Agreement shall be construed to
be, nor shall be, a waiver of any other breach of this Agreement.

X.

KNOWING AND VOLUNTARY WAIVER.

Executive has carefully read and fully understands all of the provisions of this
Agreement.  Executive knowingly and voluntarily enters into this Agreement.

XI.

FURTHER ASSURANCES.

The Parties agree to cooperate fully and to execute any and all supplementary
documents and to take all additional actions that may be necessary or
appropriate to give full force to the terms of this Agreement.  

XII.

HEADINGS NOT BINDING/COUNTERPARTS/ORIGINALS AND COPIES.

The use of headings in this Agreement is only for ease of reference and the
headings have no effect and are not to be considered part of or terms of this
Agreement.  This Agreement may be executed in counterparts.  A photocopy or
facsimile copy of this Agreement shall be as effective as an original.

EXECUTIVE HAS CAREFULLY READ AND FULLY UNDERSTANDS ALL THE PROVISIONS OF THIS
AGREEMENT.  EXECUTIVE REPRESENTS THAT EXECUTIVE IS ENTERING INTO THIS AGREEMENT
VOLUNTARILY AND THAT THE CONSIDERATION EXECUTIVE RECEIVES IN EXCHANGE FOR
EXECUTING THIS AGREEMENT IS GREATER THAN THAT TO WHICH EXECUTIVE WOULD BE
ENTITLED IN THE ABSENCE OF THIS AGREEMENT.  EXECUTIVE REPRESENTS THAT EXECUTIVE
IS NOT RELYING ON ANY REPRESENTATION OR UNDERSTANDING NOT STATED IN THIS
AGREEMENT.

Executed this ____ day of ____, 201_.

Mark Goldstein

 

Executed this ____ day of _____, 201_.

Scott’s Liquid Gold-Inc.

 

By

Its: Authorized Officer

 

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Exhibit 1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between Scott’s Liquid
Gold-Inc. (“Company”), and Mark Goldstein (“Executive”) (individually, a “Party”
and together, the “Parties”), as of the date on which the Agreement is executed
by the Parties (“Effective Date”).

W I T N E S S E T H:

WHEREAS, Company desires to continue to employ the Executive in a capacity and
on the terms and conditions, and for the consideration, hereinafter set forth
and the Executive desires to be employed by Company on such terms and conditions
and for such consideration;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, Company and Executive agree as follows:

ARTICLE 1
EMPLOYMENT AND DUTIES

1.1.Employment; Effective Date.  As of the Effective Date, and continuing for
the period of time set forth in Article 2 of this Agreement, Executive’s
employment by Company shall be subject to the terms and conditions of this
Agreement.

1.2.Positions.  Company shall continue to employ Executive in the positions of
Chief Executive Officer and President reporting to the Board of Directors (the
“Board”).  Executive agrees to serve as Chairman of the Board of Company until
his resignation or removal.

1.3.Duties and Services.  Executive agrees to serve in the positions referred to
in paragraph 1.2 and to perform diligently and to the best of his abilities the
duties and services pertaining to such offices, as well as such additional
duties and services appropriate to such office which the Parties mutually may
agree upon from time to time.  Executive’s employment shall also be subject to
the policies maintained and established by Company that are of general
applicability to Company’s executive employees, as such policies may be amended
from time to time, to the extent they do not otherwise conflict with the express
terms of this Agreement.

1.4.Other Interests.  Executive agrees, during the period of his employment by
Company, to devote all of his primary business time, energy and best efforts to
the business and affairs of Company and its affiliates and not to engage,
directly or indirectly, for any pay or remuneration as an employee, consultant,
or director in any other business or businesses, whether or not similar to that
of Company, or to invest in any private companies that compete with Company,
except with the advance written consent of the Board.  The foregoing
notwithstanding, the Parties recognize and agree that Executive may engage in
charitable and civic pursuits without the consent of the Board, as long as such
pursuits do not, in the sole and good faith determination of the Board, conflict
with the business and affairs of Company or its affiliates or interfere with
Executive’s performance of his duties hereunder.

 

 

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1.5.Duty of Loyalty.  Executive acknowledges and agrees that Executive owes a
fiduciary duty of loyalty to act at all times in the best interests of
Company.  In keeping with such duty, Executive shall make full disclosure to
Company of all business opportunities pertaining to Company’s business and shall
not appropriate for Executive’s own benefit or the benefit of another business
opportunities concerning Company’s business.

ARTICLE 2
TERM AND TERMINATION OF EMPLOYMENT

2.1.Term.  Unless sooner terminated pursuant to paragraph 2.2 or 2.3 below,
Company agrees to continue to employ Executive through the third anniversary of
the Effective Date (the “Initial Expiration Date”); provided, however, that
beginning on the Initial Expiration Date, and on each anniversary of the Initial
Expiration Date thereafter, if this Agreement has not been terminated pursuant
to paragraph 2.2 or 2.3, then said term of employment will automatically be
extended for an additional one-year period, unless on or before the date that is
90 days prior to the first day of any such extension period either Party gives
written notice to the other that no such automatic extension shall occur.

2.2.Company’s Right to Terminate.  Company has the right to terminate
Executive’s employment under this Agreement for any of the following reasons:

(i)

upon Executive’s death or presumed death;

(ii)

upon Executive’s disability, which shall mean Executive’s becoming incapacitated
by accident, sickness, or other circumstances which renders him mentally or
physically incapable of performing the duties and services required of him
hereunder for 90 or more days (whether or not consecutive) out of any
consecutive 180-day period;

(iii)

for “Cause,” which shall mean Executive has (A) engaged in gross negligence,
gross incompetence or willful misconduct in the performance of the duties
required of him hereunder; (B) refused without proper reason to perform the
material duties and responsibilities required of him hereunder; (C) willfully
engaged in conduct that is materially injurious to Company or its affiliates
(monetarily or otherwise); (D) committed an act of fraud, embezzlement or breach
of fiduciary duty to Company or an affiliate (including the unauthorized
disclosure of confidential or proprietary material information of Company or an
affiliate); (E) been charged, through indictment or criminal complaint, entry of
pretrial diversion or sentencing agreement, or has been convicted of (or pleaded
no contest to) a crime involving fraud, dishonesty or moral turpitude or any
felony; or (F) engaged in dishonesty that is materially injurious to Company; or

(iv)

at any time for any other reason, or for no reason whatsoever, in the sole
discretion of the Board.

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2.3.Executive’s Right to Terminate.  Executive shall have the right to terminate
his employment under this Agreement for any of the following reasons:

(i)

for “Good Reason,” which shall mean a voluntary separation from service
following the initial existence of one or more of the following conditions
(which arises without the consent of Executive): (A) a material diminution in
Executive’s responsibilities, duties or authority, including but not limited to
being involuntarily removed from the position of Chairman of Board; (B) a
material diminution in Executive’s base compensation; (C) a material breach by
Company of any material provision of this Agreement, or (D) a change in the
geographic location of Executive’s principal place of employment by Company of
more than 50 miles from the location where he is principally employed as of the
Effective Date; or

(ii)

at any time for any other reason, or for no reason whatsoever, in the sole
discretion of Executive.

2.4.Notice of Termination.  

(i)

If Company desires to terminate Executive’s employment hereunder at any time
prior to expiration of the term of employment as provided in paragraph 2.1 for
any reason other than for Cause as defined in paragraph 2.2(iii), it will do so
by giving a 30-day written notice to Executive that it has elected to terminate
Executive’s employment hereunder and stating the effective date and reason for
such termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder.  

(ii)

In the case of any notice by Company of its intent to terminate this Agreement
for Cause, Company shall provide Executive with notice of the existence of the
condition(s) constituting the Cause and the effective date of the termination,
provided that in the instance that Cause has arisen under paragraph 2.2(iii)(B)
exclusively, provide Executive with 30 days to cure such condition, provided,
however, that in the event Executive engages in the same or similar conduct
after curing such condition the first time, then the Board has the unconditional
right to terminate for Cause without further advance notice or opportunity to
cure.  

(iii)

If Executive desires to terminate his employment hereunder at any time prior to
expiration of the term of employment as provided in paragraph 2.1, he shall do
so by giving a 30-day written notice to Company that he has elected to terminate
his employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder and Company may, in its sole
discretion, decide to pay Executive for the 30-day notice period (or any portion
thereof) in lieu of Executive continuing to work during the notice period.  In
the case of any notice by Executive of his intent to terminate his employment
hereunder for Good Reason, Executive shall provide Company with notice of the
existence of the condition(s) constituting the Good Reason within 30 days after

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the initial existence of such condition(s) and Company shall have 30 days
following Executive’s provision of such notice to remedy such condition(s).  If
Company remedies the condition(s) constituting the Good Reason within such 30
day period, then Executive’s employment hereunder shall continue and his notice
of termination shall become void and of no further effect.  If Company does not
remedy the condition(s) constituting the Good Reason within such 30 day period,
Executive’s employment with Company shall terminate on the date that is 31 days
following the date of Executive’s notice of termination and Executive shall be
deemed to have separated from service for Good Reason.  

2.5.Deemed Resignations.  Any termination of Executive’s employment (regardless
of which Party initiated the termination, or whether it occurred due to an
expiration of the term of employment) shall constitute an automatic resignation
of Executive as an officer of Company and each affiliate of Company, if any, an
automatic resignation as trustee of the Company’s Employee Stock Ownership Plan
and 401(k) plan, an automatic resignation of Executive from the Board and from
the board of directors or similar governing body of any affiliate of Company, if
any, and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which Company or any
affiliate, if any, holds an equity interest and with respect to which board or
similar governing body Executive serves as Company’s or such affiliate’s
designee or other representative.

ARTICLE 3
COMPENSATION AND BENEFITS

3.1.Base Salary.  During the period of this Agreement, Executive shall receive
an annual base salary of $351,727.40, less usual and customary withholdings, for
the period of this Agreement.  Executive’s annual base salary shall be reviewed
by the Board (or a committee thereof) on an annual basis, and, in the sole
discretion of the Board (or such committee), such annual base salary may be
increased, but not decreased (except for a decrease that is consistent with
reductions taken generally by other executives of Company), effective as of any
date determined by the Board.  Executive’s annual base salary shall be paid in
equal installments in accordance with Company’s standard policy regarding
payment of compensation to executives, but no less frequently than monthly.

3.2.Equity Compensation.  The Board (or a committee thereof) may, in its sole
discretion, offer or award Executive any form of equity or phantom equity as is
permitted by any written plan or policy adopted by the Company, effective as of
any date determined by the Board, in accordance with the terms of a separate
agreement to be executed by Company and Executive concerning such award.

3.3.Bonus.  Executive is eligible to receive an annual bonus of between 25-50%
of Executive’s base salary during the applicable bonus period, provided
Executive remains employed the entire calendar year, and the Board, in its sole
discretion, determines that Executive and/or the Company, as applicable, met or
exceeded all of the goals and objectives of the written annual bonus plan
approved by the Board or a committee thereof.  A bonus will not be earned or
vested until such time as the Board or a committee thereof determines that the

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goals and objectives have been achieved, and a bonus, if any, shall be paid to
Executive on or before March 14 of the year following the year in which the
bonus was earned.

3.4.Other Perquisites.  During his employment hereunder, Executive shall be
afforded the following benefits as incidences of his employment:

(i)

Business and Entertainment Expenses.  Subject to Company’s standard policies and
procedures with respect to expense reimbursement as applied to its executive
employees generally, Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive for
business related purposes, including dues and fees to industry and professional
organizations and costs of entertainment and business development.

(ii)

Vacation.  During his employment hereunder, Executive shall be entitled to
vacation pay in accordance with the terms and conditions of Company policies
applied to its executive employees generally, provided Executive shall receive a
minimum of three weeks of paid vacation each calendar year, which shall accrue
per pay period, and shall similarly be entitled to all holidays provided to
executives of Company generally.  

(iii)

Automobile.  Company will provide Executive with a minimum monthly automobile
allowance in the same amount as he is currently receiving, subject to applicable
taxes, withholdings and deductions. To the extent that Executive incurs taxable
income relating to the automobile allowance, Company will pay Executive such
additional amount as is necessary to “gross up” such benefits and cover the
anticipated income tax liability resulting from such taxable income.  Executive
acknowledges and agrees that certain fringe benefits may be subject to income
tax withholding and reporting to the extent required by the Internal Revenue
Code of 1986, as amended (the “Code”).

(iv)

Other Company Benefits.  With the exception of severance, which is governed by
this Agreement, Executive will be eligible for all customary and usual fringe
benefits generally available to similarly situated executive employees of
Company and such other benefits as he is currently receiving (including Company
payment of a long-term disability policy for Executive, a life insurance policy,
and a supplemental medical insurance program, and payment of Executive’s
reasonable annual tax preparation expenses upon receipt of appropriate
documentation thereof), subject to the terms and conditions of Company’s benefit
plan documents, as such documents may be amended or modified from time to time.
In addition, Company reserves the right to change or eliminate the fringe
benefits (with the exception of Company’s payment of Executive’s annual tax
preparation expenses, payment of 100% of Executive’s premiums for Executive’s
long-term disability policy and life insurance policy, and full payment for
Executive’s participation in a supplemental medical insurance program) on a
prospective basis, at any time, effective upon notice to Executive, and any such
change or elimination shall not constitute “Good Reason” hereunder or under
paragraph 2.3 hereof.  

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ARTICLE 4
EFFECT OF TERMINATION ON COMPENSATION

4.1.Termination By Expiration.  If Executive’s employment hereunder is
terminated upon expiration of the term provided in paragraph 2.1 hereof because
either party has provided the notice contemplated in such paragraph, then all
compensation and all benefits to Executive hereunder shall continue to be
provided until the expiration of such term and such compensation and benefits
shall terminate contemporaneously with termination of his employment (except as
otherwise provided under any other agreement or plan of Company that provides
post-termination benefits).  

4.2.Termination Benefits.  

(i)

In General.  If Executive’s employment hereunder is terminated by Company or
Executive prior to expiration of the term provided in paragraph 2.1, then, upon
such termination, except as hereinafter provided, all compensation and benefits
to Executive hereunder shall terminate contemporaneously with the termination of
such employment (except as otherwise provided under any other written agreement
or plan of Company that provides post-termination benefits).

(ii)

Severance Pay.  Subject to paragraph 4.3 below, if Executive’s termination of
employment is for Good Reason, or by Company for any reason other than the
expiration of the term as described in paragraph 4.1 or for any reason other
than a reason encompassed by paragraph 2.2(i) (Executive’s death or presumed
death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for Cause), then Company
shall provide Executive with 18 months of his then current base salary (which
excludes bonus pay and the value of any fringe or other benefits) (“Severance
Pay”), payable in accordance with paragraph 4.2(vi).

(iii)

Reimbursement for COBRA Premiums.  Subject to paragraph 4.3 below, if
Executive’s termination of employment is for Good Reason, or by Company for any
reason other than the expiration of the term as described in paragraph 4.1 or
for any reason other than a reason encompassed by paragraph 2.2(i) (Executive’s
death or presumed death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for
Cause), and Executive elects continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) in accordance with the COBRA
materials that will be provided to Executive by the Company or the Company’s
third party COBRA administrator, the Company shall reimburse Executive the full
COBRA premium and applicable administrative fee (if any) for the same medical,
dental and vision benefit plan coverage (“Group Health Plan Coverage”) Executive
and Executive’s dependents had as of the termination of employment (“Termination
Date”) for a period of 18 months, or until Executive elects to receive group
medical, dental and vision insurance from another source, whichever occurs first
(such payments referred to herein as “COBRA Reimbursements”).  COBRA
Reimbursements will be made by the Company promptly upon proof of payment of
Executive’s COBRA coverage and will be subject to usual and customary
withholdings.  Company will pay Executive such

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additional amount as is necessary to “gross up” the anticipated income tax
liability resulting from such taxable income.  Executive will be mailed a COBRA
packet at his last known address.  Such packet will contain additional
information about Executive’s COBRA rights and responsibilities.  

(iv)

Bonus Payment.  If Executive has earned a bonus pursuant to paragraph 3.3, but
between January 1 of the year following the year in which the bonus was earned
and the time in which the bonus is paid the Company terminates Executive’s
employment without Cause or Executive terminates his employment for Good Reason,
Executive will be entitled to receive the bonus payment that was otherwise
earned in the timeframe contemplated by paragraph 3.3, notwithstanding any
language to the contrary in any applicable bonus plan.   

(v)

Compliance with Code Section 409A.  Company and Executive intend that payments
pursuant to paragraph 4.2(ii) constitute payments on account of an involuntary
separation from service or a separation from service for good reason within the
meaning of Treasury Regulation section 1.409A-1(n)(1) and (2), and amounts paid
pursuant to paragraph 4.2(ii) constitute separation pay exempt from Code Section
409A under Treasury Regulation section 1.409A-1(b)(9)(iii), up until the lesser
of: (a) two times (2x) the Executive’s annualized compensation based upon the
annual rate of pay in effect for the taxable year preceding the Termination Date
(including any additional compensation paid, including bonuses), adjusted for
any increase for the year of termination if such increase was expected to
continue indefinitely; and (b) the maximum amount that may be taken into account
under a qualified plan pursuant to Code section 401(a)(17) for the year of
Executive’s Termination Date (the lesser of (a) and (b) referred to herein as
the “Limit”).  In the event the payments exceed the Limit, the remaining
payments shall constitute deferred compensation subject to Code Section 409A and
shall be subject to paragraph 4.5.  Company and Executive intend that payments
pursuant to paragraph 4.2(iii) will be exempt from Code Section 409A as a
reimbursement or in-kind benefit plan.  The coincident gross-up payments are
intended to be exempt under Treasury Regulation section 1.409A-3(i)(1)(v).  In
any event, neither Party shall be liable to the other if any such payment
receives different tax treatment.

(vi)

Time and Form of Payment.   Payments under paragraph 4.2(ii) will be made in
accordance with Company’s standard payroll procedures and will be paid in equal
installments over an 18-month period with the first payment to be paid as
promptly as reasonably possible after the timely execution and expiration of any
revocation periods of the release described in paragraph 4.3, provided Executive
is not permitted, directly or indirectly, to designate the taxable year of
payment.  Interest shall not be credited on remaining installment payments.  All
payments will be subject to deductions for taxes and other applicable
withholdings.  In the event of Executive’s death prior to receipt of all
installments, payment shall be made at the same time and in the same matter as
described herein to Executive’s estate.

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(vii)

Accelerated Vesting.  The Company may provide for accelerated vesting of equity
awards in the documents governing such equity awards or by separate Board
action.

4.3. Release and Full Settlement.  Anything to the contrary herein
notwithstanding, as a condition to the receipt of the termination payments and
benefits under paragraph 4.2 hereof, as applicable, Executive shall (i) execute
a release, in the form established by the Board and similar to the release
attached hereto as Exhibit A, releasing the Board, Company, and Company’s parent
corporation, subsidiaries, affiliates, and their respective shareholders,
partners, officers, directors, employees, attorneys and agents from any and all
claims and from any and all causes of action of any kind or character including,
but not limited to, all claims or causes of action arising out of Executive’s
employment with Company or its affiliates or the separation of such employment,
but excluding all claims to vested benefits and payments Executive may have
under any compensation or benefit plan, program or arrangement, including this
Agreement, and (ii) provide such release to Company no later than 60 days after
the date of his termination of employment with Company.  The performance of
Company’s obligations hereunder and the receipt of any benefits provided under
paragraph 4.2 shall constitute full settlement of all such claims and causes of
action.  

4.4.No Duty to Mitigate Losses.  Executive shall have no duty to find new
employment following the termination of his employment under circumstances which
require Company to pay any amount to Executive pursuant to this Article 4.  Any
salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 4 apply shall not reduce Company’s
obligation to make a payment to Executive (or the amount of such payment)
pursuant to the terms of this Article 4.

4.5.Deferred Compensation Subject to Code Section 409A.  Notwithstanding
anything to the contrary set forth herein, any payments and benefits provided
under this Agreement that constitute “deferred compensation” within the meaning
of Code Section 409A shall not commence in connection with Executive’s
termination of employment unless and until Executive has also incurred a
“separation from service” (as such term is defined in Treasury Regulation
Section 1.409A-1(h) (“Separation From Service”), unless the Company reasonably
determines that such amounts may be provided to Executive without causing
Executive to incur additional tax under Code Section 409A.  It is intended that
each installment of Severance Pay provided for in this Agreement is a “separate
“payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i).  For
the avoidance of doubt, it is intended that Severance Pay set forth in this
Agreement satisfy, to the greatest extent possible, the exceptions from the
application of Section 409A provided under Treasury Regulation Sections
1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9).  If the Company (or, if
applicable, the successor entity thereto) determines that any payments or
benefits constitute “deferred compensation” under Code Section 409A and
Executive is, on the termination of service, a “specified employee” of the
Company or any successor entity thereto, as such term is defined in Code Section
409A(a)(2)(B)(i), then, solely to the extent necessary to avoid the incurrence
of the adverse personal tax consequences to Executive under Section 409A, the
timing of the payments and benefits shall be delayed until the earlier to occur
of: (a) the date that is 6 months

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and one day after Executive’s Separation From Service, or (b) the date of
Executive’s death (such applicable date, the “Specified Executive Initial
Payment Date”).  On the Specified Executive Initial Payment Date, the Company
(or the successor entity thereto, as applicable) shall (i) pay to Executive a
lump sum amount equal to the sum of the payments and benefits that Executive
would otherwise have received through the Specified Executive Initial Payment
Date if the commencement of the payment of such amounts had not been so delayed
pursuant to this Paragraph 4.5, and (ii) commence paying the balance of the
payments and benefits in accordance with the applicable payment schedules set
forth in this Agreement.

4.6.Application of Section 280G. In the event that it is determined that the
Severance Pay payable to Executive pursuant to paragraph 4.2 of this Agreement,
when added to any other payment or benefit to Executive from the Company, would
be considered a “parachute payment” (a “Parachute Payment”), within the meaning
of section 280G of the Code, would cause Executive to be considered to receive
an “excess parachute payment” within the meaning of section 280G of the Code (an
“Excess Parachute Payment”), the amount payable to Executive pursuant to
paragraph 4.2 of this Agreement will be reduced to the maximum amount that, when
added to any other Parachute Payments made to Executive, could be paid to
Executive without causing Executive to receive an Excess Parachute
Payment.  Notwithstanding the foregoing, the Severance Pay payable to Executive
pursuant to paragraph 4.2 of this Agreement will not be reduced if (i) the net
amount payable to Executive without the reduction described in the preceding
sentence, but reduced by all Federal, state and local income and employment
taxes payable by Executive on the Severance Pay payable pursuant to this
Agreement and all other Parachute Payments plus the excise tax payable on the
Excess Parachute Payment pursuant to Section 4999 of the Code, is greater than
(ii) the net amount that would be payable to Executive with the reduction
described in the preceding sentence and reduced by all Federal, state and local
income and employment taxes payable by Executive on the Severance Pay payable
pursuant to this Agreement and all other Parachute Payments.  For purposes of
this paragraph 4.6, Executive will be deemed to pay Federal income tax and
employment taxes at the highest marginal rate of Federal income and employment
taxation in the calendar year in which the Excess Parachute Payment would occur
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive’s residence in the calendar year in which the
Excess Parachute Payment would be made, net of the reduction in Federal income
taxes that Executive may obtain from the deduction of such state and local
income taxes.  In addition, all determinations to be made under this paragraph
4.6 will be made by the Company’s independent public accountant (the “Accounting
Firm”) immediately before the date the Severance Pay under paragraph 4.2 is to
be paid.  The Accounting Firm will provide its determinations and any supporting
calculations and work papers both to the Company and to Executive within 10 days
of such date, and any such determination by the Accounting Firm shall be binding
upon the Company and Executive.

4.7.Other Benefits.  This Agreement governs the rights and obligations of
Executive and Company with respect to Executive’s base salary and certain
perquisites of employment.  Except as expressly provided herein, Executive’s
rights and obligations both during the term of his employment and thereafter
with respect to his ownership rights in Company, and other benefits under the
plans and programs maintained by Company shall be governed by the terms (which
are not, and are not required to be, affected, altered or amended) of the
separate agreements, plans and the other documents and instruments governing
such matters.

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ARTICLE 5
PROTECTION OF CONFIDENTIAL INFORMATION

5.1.Disclosure to and Property of Company.  All information, designs, ideas,
concepts, improvements, product developments, discoveries and inventions,
whether patentable or not, that are conceived, made, developed or acquired by
Executive, individually or in conjunction with others, during the period of
Executive’s employment (including the period of employment preceding this
Agreement) by Company (whether during business hours or otherwise and whether on
Company’s premises or otherwise) that relate to Company’s (or any of its
affiliates’) business, trade secrets, products or services (including, without
limitation, all such information relating to corporate opportunities, product
specification, compositions, manufacturing and distribution methods and
processes, research, financial and sales data, pricing terms, evaluations,
opinions, interpretations, acquisitions prospects, the identity of customers or
their requirements, the identity of key contacts within the customer’s
organizations or within the organization of acquisition prospects, marketing and
merchandising techniques, business plans, computer software or programs,
computer software and database technologies, prospective names and marks)
(collectively, “Confidential Information”) shall be disclosed to Company and are
and shall be the sole and exclusive property of Company (or its
affiliates).  Moreover, all documents, videotapes, written presentations,
brochures, drawings, memoranda, notes, records, files, correspondence, manuals,
models, specifications, computer programs, E-mail, voice mail, electronic
databases, maps, drawings, architectural renditions, models and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression (collectively, “Work Product”) are and shall be the sole and
exclusive property of Company (or its affiliates).  Upon Executive’s termination
of employment with Company, for any reason, or earlier upon request of Company,
Executive promptly shall deliver such Confidential Information and Work Product,
and all copies thereof, to Company.  Confidential Information does not include
information which (i) is generally known to the public, or which may later
become generally known to the public, except where such knowledge is the result
of an unauthorized disclosure by Executive or another person or entity, provided
Executive has knowledge, after reasonable inquiry, that the other person’s or
entity’s disclosure was unauthorized; (ii) is lawfully and in good faith made
available to Executive by a third party who, to Executive’s knowledge after
inquiry, did not derive it from the Company and who imposed no obligation of
confidence on Executive; (iii) is developed by Executive independent of any
Confidential Information owned by the Company, as verified and evidenced by the
prior written records of Executive; or (iv) is required to be disclosed in a
judicial or administrative proceeding, or is otherwise required to be disclosed
by law, in any such case after all reasonable legal remedies for maintaining
such information in confidence have been exhausted, including, but not limited
to, giving the Company as much advance notice of the possibility of such
disclosure as practical so that the Company may attempt to stop such disclosure
or obtain a protective order concerning such disclosure.  Executive shall
provide the Company with written notice no less than ten (10) business days
prior to the disclosure of any Confidential Information that may be required by
law.

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5.2.Disclosure to Executive.  Company has disclosed and will disclose to
Executive, or placed Executive in a position to have access to or develop,
Confidential Information and Work Product of Company (or its affiliates); and/or
has entrusted and will entrust Executive with business opportunities of Company
(or its affiliates); and/or has placed and will place Executive in a position to
develop business good will on behalf of Company (or its affiliates).  Executive
agrees to preserve and protect the confidentiality of all Confidential
Information or Work Product of Company (or its affiliates).

5.3.No Unauthorized Use or Disclosure.  Executive agrees that he will not, at
any time during or after Executive’s employment by Company, make any
unauthorized disclosure of, and will prevent the removal from Company premises
of, Confidential Information or Work Product of Company (or its affiliates), or
make any use thereof, except in the carrying out of Executive’s responsibilities
during the course of Executive’s employment with Company.  Executive shall use
commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby.  At the request of Company at any time, Executive agrees to
deliver to Company all Confidential Information that he may possess or
control.  Executive agrees that all Confidential Information of Company (whether
now or hereafter existing) conceived, discovered or made by him during the
period of Executive’s employment by Company exclusively belongs to Company (and
not to Executive), and Executive will promptly disclose such Confidential
Information to Company and perform all actions reasonably requested by Company
to establish and confirm such exclusive ownership.  Affiliates of Company shall
be third party beneficiaries of Executive’s obligations under this Article
5.  As a result of Executive’s employment by Company, Executive may also from
time to time have access to, or knowledge of, Confidential Information or Work
Product of third parties, such as customers, suppliers, partners, joint
venturers, and the like, of Company and its affiliates.  Executive also agrees
to preserve and protect the confidentiality of such third party Confidential
Information and Work Product to the same extent, and on the same basis, as
Company’s Confidential Information and Work Product.

5.4.Ownership by Company.  If, during Executive’s employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression that is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company’s business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company’s premises or
otherwise), including any Work Product, Company shall be deemed the author of
such work if the work is prepared by Executive in the scope of Executive’s
employment; or, if the work is not prepared by Executive within the scope of
Executive’s employment but is specially ordered by Company as a contribution to
a collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Company
shall be the author of the work.  

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5.5.Assistance by Executive.  During the period of Executive’s employment by
Company and thereafter, Executive shall assist Company and its nominee, at any
time, in the protection of Company’s (or its affiliates’) worldwide right, title
and interest in and to Work Product and the execution of all formal assignment
documents requested by Company or its nominee and the execution of all lawful
oaths and applications for patents and registration of copyright in the United
States and foreign countries.

ARTICLE 6
NON-COMPETITION AND NON-SOLICITATION OBLIGATIONS

6.1.Non-competition Obligations.  As part of the consideration for the
compensation and benefits to be paid to Executive hereunder; in light of
Executive’s position as executive personnel to Company; to protect the trade
secrets and confidential information of Company and its affiliates that have
been or will in the future be disclosed or entrusted to Executive, the business
goodwill of Company and its affiliates that has been and will in the future be
developed in Executive, or the business opportunities that have been and will in
the future be disclosed or entrusted to Executive by Company and its affiliates;
and as an additional incentive for Company to enter into this Agreement, Company
and Executive agree to the provisions of this Article 6.  Executive agrees that
during the period of Executive’s non-competition obligations hereunder,
Executive shall not, directly or indirectly for Executive or for others, in the
United States (regardless of the reason, if any, for the cessation of
employment):

(i)

engage in any business that is competitive with the business conducted by
Company;

(ii)

render any advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, with any business
that is competitive with the business conducted by Company;

(iii)

induce any employee of Company or its affiliates to terminate his or her
employment with Company or its affiliates, or hire or assist in the hiring of
any such employee by any person, association, or entity not affiliated with
Company; or

(iv)

request, solicit, induce, or cause any customer of Company or its affiliates to
terminate, reduce, or limit any business relationship with Company or its
affiliates.

The non-competition obligations under this Agreement shall apply during the
period that Executive is employed by Company and shall continue for 18 months
after the date Executive’s employment with Company ends if Executive’s
termination of employment is for Good Reason, or by Company for any reason other
than the expiration of the term as described in paragraph 4.1 or for any reason
other than a reason encompassed by paragraph 2.2(i) (Executive’s death or
presumed death), 2.2(ii) (Executive’s disability), or 2.2(iii) (for
Cause).  Executive understands that the foregoing restrictions may limit
Executive’s ability to engage in certain businesses during the period provided
for above, but acknowledges that the restrictions

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are reasonable and necessary, and Executive acknowledges that Executive will
receive sufficiently high remuneration and other benefits under this Agreement
to justify such restriction.

6.2.Enforcement and Remedies.  Executive acknowledges that money damages alone
would not be sufficient remedy for any breach of Article 5 or 6 by Executive,
that any material breach or threatened material breach of Article 5 or 6 based
on a good faith determination by the Board will result in irreparable harm to
Company, and Company shall be entitled to enforce the provisions of Article 5 or
6 by terminating any payments then owing to Executive under this Agreement
and/or to specific performance and injunctive relief as remedies for such breach
or any threatened breach without posting any bond or other security, barring
Executive from violating any such provision.  Such remedies shall not be deemed
the exclusive remedies for a breach of Article 5 or 6, but shall be in addition
to all remedies available at law or in equity to Company, including, without
limitation, the recovery of damages from Executive and Executive’s agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.

6.3.Reformation.  It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article 6 to be reasonable
and necessary to protect the proprietary information of Company and its
affiliates.  Nevertheless, if any of the aforesaid restrictions are found by a
court having jurisdiction to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such courts so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.

ARTICLE 7
NONDISPARAGEMENT

Executive shall refrain, both during the employment relationship and after the
employment relationship ends, from publishing any oral or written statements
about Company, its affiliates, or any of such entities’ directors, officers,
employees, agents or representatives that (i) are slanderous, libelous, or
defamatory; (ii) place Company, its affiliates, or any of such entities’
directors, officers, employees, agents, or representatives in a false light
before the public; or (iii) constitute a misappropriation of the name or
likeness of Company, its affiliates, or any of such entities’ directors,
officers, employees, agents, or representatives.  A violation or threatened
violation of this prohibition may be enjoined by the courts.  The rights
afforded Company and its affiliates under this provision are in addition to any
and all rights and remedies otherwise afforded by law.

Company agrees that, both during Executive’s employment relationship and after
the employment relationship terminates, Company’s directors, officers,
employees, agents and representatives shall, during their employment or
affiliation with Company, refrain from publishing any oral or written statements
about Executive that (i) are slanderous, libelous, or defamatory; (ii) place
Executive  in a false light before the public; or (iii) constitute a
misappropriation of the name or likeness of Executive.  A violation or
threatened violation of this prohibition may be enjoined by the courts.  The
rights afforded Executive under this provision are in addition to any and all
rights and remedies otherwise afforded by law.

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The nondisparagement obligations of this Article 7 shall not apply to
communications with law enforcement or required testimony under law or court
process.

ARTICLE 8
MISCELLANEOUS

8.1.Notices.  For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered, e-mailed, or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, to Company at its regular business address, and to the Executive at
Executive’s address on file with Company, or to such other address as either
party may furnish to the other in writing in accordance herewith, except that
notices or changes of address shall be effective only upon receipt.

8.2.Applicable Law and Waiver of Jury Trial.  This Agreement has been negotiated
within the State of Colorado and the rights and obligations of the Parties to
this Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Colorado without regard to any jurisdiction’s
principles of conflict of laws.  Any action brought to enforce this Agreement
shall be brought in Colorado in a court of competent jurisdiction.  In any
action brought to enforce this Agreement, the action shall be tried to a court
without a jury.

8.3.No Waiver.  No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

8.4.Severability.  Subject to paragraph 6.3, if a court of competent
jurisdiction determines that any provision of this Agreement is invalid or
unenforceable, then the invalidity or unenforceability of that provision shall
not affect the validity or enforceability of any other provision of this
Agreement, and all other provisions shall remain in full force and effect.

8.5.Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.

8.6.Withholding of Taxes and Other Employee Deductions.  Company may withhold
from any benefits and payments made pursuant to this Agreement or otherwise all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company’s employees generally.

8.7.Headings.  The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.

8.8.Gender and Plurals.  Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.

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8.9.Affiliate.  As used in this Agreement, the term “affiliate” shall mean any
entity which owns or controls, is owned or controlled by, or is under common
ownership or control with, Company.

8.10.Assignment and Assumption.  This Agreement shall be binding upon and inure
to the benefit of Company and any successor of Company, by merger or
otherwise.  Executive shall not have the right to assign his rights or
obligations under this Agreement.

8.11.Term.  This Agreement has a term co-extensive with the term of employment
provided in paragraph 2.1.  Termination of the employment relationship shall not
affect any right or obligation of any party which is accrued or vested prior to
such termination, nor shall termination of the employment relationship impact
any post-employment obligations under this Agreement.

8.12.Entire Agreement.  Except as provided in (i) the written benefit plans and
programs referenced in paragraph 3.4(iv) (and any agreements between Company and
Executive that have been executed under such plans and programs) and (ii) any
signed written agreement contemporaneously or hereafter executed by Company and
Executive, this Agreement constitutes the entire agreement of the parties with
regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company.  Any modification of this Agreement will be
effective only if it is in writing and signed by the party to be charged.  

8.13.Legal Expenses.  In the event of a dispute under this Agreement, the
prevailing party shall be entitled to its or his legal costs and expenses
(including reasonable attorneys’ fees) incurred in connection with such
dispute.  

8.14.Liability Insurance.  Company shall maintain a directors’ and officers’
insurance liability policy throughout the term of this Agreement and shall
provide Executive with coverage under such policy on terms not less favorable
than provided to other Company directors and officers.

8.15No Conflicting Agreements or Use of Third Party Information.  During his
employment with Company, Executive shall not improperly use or disclose any
proprietary information or trade secrets of any former employer or other person
or entity, and Executive shall not bring on to the premises of Company or any
affiliate any unpublished document or proprietary information belonging to any
such former employer, person or entity, unless consented to in writing by the
former employer, person or entity.  Executive represents that he has not
improperly used or disclosed any proprietary information or trade secrets of any
other person or entity during the application process or while employed or
affiliated with Company.  Executive also acknowledges and agrees that he is not
subject to any contract, agreement, or understanding that would prevent him from
performing his duties for Company or otherwise complying with this
Agreement.  To the extent Executive violates this provision, or his employment
with Company constitutes a breach or threatened breach of any contract,
agreement, or obligation to any third party, Executive shall indemnify and hold
Company harmless from all damages, expenses, costs (including reasonable
attorneys’ fees) and

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liabilities incurred in connection with, or resulting from, any such violation
or threatened violation.

8.16.Construction.  The language used in this Agreement will be deemed to be
language chosen by the Executive and Company to express their mutual intent, and
no rules of strict construction will be applied against either party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 26th
day of March, 2014.

 

SCOTT’S LIQUID GOLD-INC.

 

By:  /s/ Barry J. Levine

Name: Barry J. Levine

Title: Chief Operating Officer and Chief Financial Officer

 

 

 

MARK GOLDSTEIN

 

/s/ Mark E. Goldstein

Signature

 

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