SCOTTS LIQUID GOLD INC (Form: 10-K, Received: 03/21/2005 15:42:30)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-13458

SCOTT'S LIQUID GOLD-INC.
(Exact name of Registrant as specified in its charter)

Colorado (State or other jurisdiction of incorporation or organization)		84-0920811 (I.R.S. Employer Identification No.)
4880 Havana Street Denver, CO 80239 (Address of principal executive offices and Zip Code)
(303) 373-4860 (Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: $0.10 Par Value Common Stock

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $3,783,200.

As of March 15, 2005, the Registrant had 10,471,000 shares of its $0.10 par value common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's definitive Proxy Statement for the Annual Meeting of shareholders scheduled to be held in May 4, 2005, is incorporated by reference in Part III.

TABLE OF CONTENTS


PART I
	Item 1.	Business
	Item 2.	Properties
	Item 3.	Legal Proceedings
	Item 4.	Submission of Matters to a Vote of Security Holders
PART II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
	Item 6.	Selected Financial Data
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk
	Item 8.	Financial Statements and Supplementary Data
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A.	Controls and Procedures
	Item 9B.	Other Information
PART III
	Item 10.	Directors and Executive Officers of the Company
	Item 11.	Executive Compensation
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13.	Certain Relationships and Related Transactions
	Item 14.	Principal Accountant Fees and Services
PART IV
	Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K

PART I

Item 1. Business

General

Scott's Liquid Gold-Inc., a Colorado corporation, was incorporated on February 15, 1954. Through its wholly-owned subsidiaries, the Company manufactures and markets quality household and skin care products and acts as a distributor in the United States of beauty care products contained in individual sachets and manufactured by Montagne Jeunesse. In this Report, the term "Company" refers to Scott's Liquid Gold-Inc. and its subsidiaries. The Company's business is comprised of two segments, household products and skin care products.

The Company's household products consist of Scott's Liquid Gold® for wood, a wood preservative and cleaner, sold nationally for over 30 years, and Touch of Scent®, an aerosol room air freshener, distributed nationally since 1982. In early 1992, the Company entered into the skin care business through its subsidiary, Neoteric Cosmetics, Inc. The Company's skin care products consist primarily of Alpha Hydrox® products, other products manufactured by the Company, and sachets of Montagne Jeunesse. At the end of 2004, more than 15 skin care products were being marketed by the Company, as well as the Montagne Jeunesse sachets.

For information on the Company's operating segments, please see Note 8, Segment Information, to the Consolidated Financial Statements of the Company.

This report may contain "forward-looking statements" within the meaning of U.S. federal securities laws. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the Company's performance inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace; the degree of success of any new product or product line introduction by the Company; competitive factors; any decrease in distribution of (i.e. retail stores carrying) the Company's significant products; continuation of the Company's distributorship agreement with Montagne Jeunesse; the limited amount and effectiveness of advertising of the Company's products; limited resources available for such advertising; new competitive products and/or technological changes; dependence upon third party vendors and upon sales to major customers; changes in the regulation of the Company's products, including applicable environmental regulations; adverse developments in pending litigation; the loss of any executive officer; and other matters discussed in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this report.

Strategy

The Company's strategy is to manufacture and market high quality consumer products which are distinct within each category in which the Company competes. Scott's Liquid Gold for wood distinguishes itself from competing products as a wood cleaner and preservative, not simply a polish. Touch of Scent is different from most competing aerosol air fresheners in that it need not be shaken before each use, and, because it may be activated by an attractive dispenser which may be mounted on any hard, smooth surface, it is more convenient to use than competing aerosol brands. With respect to the Company's line of skin care products, Alpha Hydrox was one of the first alpha hydroxy acid skin care products sold to retailers for resale to the public at affordable prices. In 1998, the Company added a retinol product to its skin care line. In the first half of 1999, the Company introduced Neoteric Diabetic Skin Care ®. In 2000, the Company introduced Alpha Hydrox Fade Cream as well as certain other skin care products which were subsequently discontinued. In 2001, the Company introduced a

topical analgesic called RubOut ™. Since 2001, the Company has sold Montagne Jeunesse sachets which are reasonably priced and designed for single use by the consumer. The Company will continue to examine other possible new products which the Company believes may fit well with the Company's know-how and financial capabilities.

In the last ten years, the Company operated profitably from 1995 through 1997, incurred losses in 1998 through 2001, 2003, and 2004, and was profitable in 2002. Although the Company experienced a net loss in 1996 because of the settlement of an environmental lawsuit with the United States Army, it nonetheless produced an operating profit for that year. In the years 1998 through 2004, the Company experienced significant declines in sales of Alpha Hydrox skin care products manufactured by the Company and, to a lesser extent, the Company's major lines of household products until 2004. Information regarding reasons for the decline in sales of these products are stated in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

The growth in sales of Alpha Hydrox from 1992 through 1996 caused the Company to make substantial investments in property, plant and equipment to handle that growth and the anticipated future growth of the Company's skin care products. The decline in sales of those products in 1998 through 2004, as well as declines in sales of household chemical products until 2004, has resulted in efforts by the Company to maintain or increase sales of the existing products, to introduce new products, and to decrease the Company's costs of doing business. The Company introduced new products and engaged in cost-cutting programs during 2000, 2001 and 2002.

The goal of the Company for 2005 is to resume sales growth and attain profitability. To achieve these goals, the Company will continue to work on expansion of the distribution of Montagne Jeunesse® products and to focus its efforts on increasing sales of core Alpha Hydrox products and Scott's Liquid Gold for wood. The Company will also consider the development of new niche products, offer to manufacture private label products for others, and explore the possibility of joint ventures and other projects which would utilize the manufacturing or marketing capabilities of the Company.

Products

Scott's Liquid Gold for wood, a wood cleaner and preservative, has been the Company's core product since the Company's inception. It has been popular throughout the U.S. for over thirty years. Scott's Liquid Gold for wood, when applied to wood surfaces such as furniture, paneling, kitchen cabinets, outside stained doors and decking, penetrates microscopic pores in the surface and lubricates beneath, restoring moisture and, at the same time, minimizes the appearance of scratches, darkening the wood slightly. Scott's Liquid Gold preserves wood's natural complexion and beauty without wax. In May, 2004 the Company commenced the introduction of an additional wood care product in a wipe form; however, sales have been minimal so far.

In 1982 the Company added the room air freshener Touch of Scent, to its line of household products. Touch of Scent, available in many fragrances, is intended to be used in conjunction with a decorative dispenser which can be mounted on any hard surface and into which the consumer inserts an aerosol refill unit. At a touch, the dispenser propels the fragrance from a refill unit into the air, masking unpleasant odors and refreshing the air with a pleasant scent. The Company manufactures both the dispenser and the refill unit. Unlike some competitive aerosol air fresheners, Touch of Scent is extremely dry and, therefore, leaves practically no residue after use. Touch of Scent sales have not been strong in recent years. In this regard, see Item 7 below, Management's Discussion and Analysis.

Household products accounted for 41.3% of the Company's consolidated net sales in 2004, and 36.8% in 2003.

In early 1992, the Company began to market two skin care products under the trade name of Alpha Hydrox. At the end of 2004, the Company's skin care line consisted of over 15 products. The

Company's Alpha Hydrox skin care products are sold through a wholly-owned subsidiary, Neoteric® Cosmetics, Inc. Except for the Montagne Jeunesse sachets distributed by the Company, the Company's skin care products are manufactured by Neoteric Cosmetics. Several of the Alpha Hydrox products contain alpha hydroxyethanoic acids in low but effective concentrations. Properly blended with a carrier, alpha hydroxyethanoic acids gently slough off dead skin cells to promote a healthier, more youthful appearance and diminish fine lines and wrinkles. The Company's products with alpha hydroxy acids ("AHAs") include facial care products, a body lotion and a foot crème. In 2002, the Company reduced the number of Alpha Hydrox products containing AHAs to five in order to concentrate marketing and distribution resources of the Company and in response to decreasing sales of other items in the Alpha Hydrox line of skin care products. Other skin care products of the Company do not contain AHAs. These products include Neoteric Diabetic Skin Care, which is a healing crème and a therapeutic moisturizer developed by the Company to address the skin conditions of diabetics, caused by poor blood circulation, and which contains a patented oxygenated oil technology; an Alpha Hydrox Oxygenated Moisturizer, which is our second skin care product based on the oxygenated oil technology; a Retinol product containing a patented Microsponge technology that softens fine lines and wrinkles; an Alpha Hydrox Fade Cream designed to lighten age spots and skin discoloration caused by sun exposure and other factors; RubOut ™, which is a topical analgesic which helps fade the discoloration of bruises and eases the pain from muscle sprains and bruises; and a body wash. The Montagne Jeunesse sachets, described more below, do not contain AHAs. Neoteric skin care products (including Montagne Jeunesse products) accounted for 58.7% of the Company's consolidated net sales in 2004, and 63.2% in 2003.

In April of 2001, the Company made its first sale of skin care sachets under a distributorship agreement with Montagne Jeunesse. The agreement of the Company covers sales in the United States. Montagne Jeunesse is a trading division of Medical Express (UK) Ltd., a company located in England. Montagne Jeunesse sachet products are currently sold by others in the United Kingdom, Holland, Italy, Ireland, Canada, Australia, Germany and Austria. Examples of the Montagne Jeunesse products are a facial scrub, a mud pack, face masks, a cream for foot rubs, and "one night" hair color. A significant portion of the Company's sales are now generated through the distribution of the Montagne Jeunesse products and, therefore, are dependent on the agreement under which they are purchased by the Company. See "Manufacturing and Suppliers" below.

The Company's business is seasonal to some extent. Sales of Montagne Jeunesse products have been higher in the fourth quarter than other quarters because of holiday promotions.

The Company, through its research and development group, continually considers and evaluates possible new products to be manufactured or sold by the Company. Generally these products involve household products or skin care products. At this time, the Company has not selected any specific product for introduction in 2005 but may introduce one or more products currently under consideration.

The Company also manufactures injection molded components, currently consisting of plastic caps for Touch of Scent and Scott's Liquid Gold, and dispensers for Touch of Scent.

Marketing and Distribution

All of the Company's products are sold nationally, directly and through independent brokers, to mass marketers, drugstores, supermarkets, and other retail outlets and to wholesale distributors. In 2004, Wal-Mart Stores, Inc. ("Wal-Mart") of Bentonville, Arkansas, accounted for approximately 34% of the Company's sales of household products. With regard to the Company's skin care products, Wal-Mart accounted for approximately 38% of 2004 sales, and K-Mart Corporation accounted for approximately 12% of 2004 sales. Wal-Mart and K-Mart accounted for approximately 36% and 13%, respectively, of the combined sales of household products and skin care products in 2004. The loss of

these customers for either household or skin care products could have a material adverse effect on the Company because it is uncertain whether the consumer base served by these customers would purchase the Company's products at other retail outlets. No long-term contracts exist between the Company and Wal-Mart, K-Mart Corporation or any other customer. The Company permits returns of its products by its customers, a common industry practice. A recent practice of retailers has been to return products that have either been discontinued or not sold after a period of time. The Company subtracts any returns from gross sales in determining the net sales shown on its financial statements.

During the years 2001 through 2004, the Company experienced a decrease in the distribution of the Alpha Hydrox products as a result of slowing sales. If sales of a Company product continue to decline, other retail stores, including potentially Wal-Mart and K-Mart, may discontinue the product. One of the Company's strategies is to maintain or increase sales of products through limited television advertising as described above. The level of advertising for the Company's products is constrained by the Company's size and financial resources. Any significant decrease in the distribution of Alpha Hydrox or Scott's Liquid Gold products at retail stores could have a material adverse effect on the Company's sales and operating results.

The Company's household products and Alpha Hydrox have been advertised nationally on network television, on cable television, and, at times, in print media. In the past, the Company has also used radio advertising in selected areas and may do so in the future. During 2005, but subject to change, the Company plans a slight decrease in advertising expenditures from 2004. To date, the Company has not used television advertising for the Montagne Jeunesse products. The Company periodically reviews its advertising plans and may revise planned advertising expenditures based upon actual sales results and competitive conditions.

To enable consumers to make informed decisions, the Company's containers and promotional materials note the concentration of alpha hydroxy acid contained in each of its Alpha Hydrox products which contain such acids. The Company recommends the use of sunscreen in its written directions contained in every box of Alpha Hydrox products with such acids. The Company does not exaggerate benefits to be expected from the use of its products. The Company also maintains a 24-hour, toll free telephone number and website for use by consumers of its products.

The Company sells its household and skin care products in Canada and other foreign countries. Please see Note 8, Segment Information, to the Consolidated Financial Statements for information regarding sales in foreign countries. Currently, foreign sales are made to distributors who are responsible for the marketing of the products, and the Company is paid for these products in United States currency.

Manufacturing and Suppliers

The Company owns and operates its manufacturing facilities and equipment. With the exception of the Montagne Jeunesse sachets, the Company manufactures all of its products, maintaining a high quality standard. For all of its products, the Company must maintain sufficient inventories to ship most orders as they are received. Quality control is enforced at all stages of production, as well as upon the receipt of raw materials from suppliers. Raw materials are purchased from a number of suppliers and, at the present time, are readily available. Currently, the Company's sole supplier of glycolic acid, which is the most common type of alpha hydroxy acid used by the Company in its Alpha Hydrox products, is E.I. DuPont de Nemours. To the Company's knowledge, this supplier is one of only two U.S. manufacturers of the grade of glycolic acid approved for use by the Company. No contract exists between the Company and its supplier of glycolic acid. The Company's sole supply for the oxygenated oil used in Neoteric Diabetic Skin Care products is a French company with which the Company has a non-exclusive supply agreement. Relations with these suppliers and other suppliers are satisfactory.

Most of the Company's manufacturing operations, including most packaging, are highly automated, and, as a result, the Company's manufacturing operations are not labor intensive, nor, for the most part, do they involve extensive training. An addition to the Company's plant facilities, completed in early 1996, greatly increased the Company's capacity to produce skin care products. The Company currently operates on a one-shift basis. The Company's manufacturing facilities are capable of producing substantially more quantities of the Company's products without any expansion, and, for that reason, the Company believes that its physical plant facilities are adequate for the foreseeable future.

In 2001, the Company commenced purchases of the skin care sachets from Montagne Jeunesse under a distributorship agreement covering the United States. Montagne Jeunesse is the sole supplier of that product. The term of this distributorship agreement is five years with automatic rolling one-year renewals, subject to the rights of either party to terminate upon three months' notice or if certain minimum sales are not met or certain other events occur. For the year 2004, this minimum sales requirement was waived.

Competition

The Company's business is highly competitive in both household and skin care products. Household products are comprised of Touch of Scent air fresheners and Scott's Liquid Gold, a wood cleaner and preservative. Both the air freshener and wood care categories are dominated by three to five companies significantly larger than the Company, each of which produce several products. Irrespective of the foregoing, the Company maintains a visible position in the wood care category, but does not have sufficient information to make an accurate representation as to the market share of its products. Over the last several years, sales of the Company's air freshener products have fallen off significantly and may continue to do so in the future. From time to time, to stem the attrition of this product line, the Company offers price incentives to its customers.

The skin care category is also highly competitive. Several competitors are significantly larger than Scott's Liquid Gold-Inc., and each of these competitors produces several products. Some of these companies also produce retinol and alpha hydroxy acid products with which Alpha Hydrox must compete. Because of the number of varied products produced by competitors, the Company cannot make an accurate representation as to the market share of its skin care products. Irrespective of the foregoing, the Company currently has a national base of distribution for Alpha Hydrox.

Conforming to its corporate philosophy, the Company competes on the basis of quality and distinguishing characteristics of its products.

Regulation

The Company is subject to various federal, state and local laws and regulations which pertain to the type of products it manufactures and sells. The Company's skin care products containing alpha hydroxy acids are cosmetics within the meaning of the Federal Food Drug and Cosmetic Act ("FFDCA"). The FFDCA defines "cosmetics" as products intended for cleansing, beautifying, promoting attractiveness or altering the appearance. The Company's cosmetic products are subject to regulation under the FFDCA and the Fair Packaging and Labeling Act ("FPLA"), and the regulations promulgated under these acts. The relevant laws and regulations are enforced by the U.S. Food & Drug Administration ("FDA"). Such laws and regulations govern the ingredients and labeling of cosmetic products and set forth general manufacturing practices for companies to follow. Although FDA regulations require that the safety of a cosmetic ingredient be substantiated prior to marketing, there is no requirement that a company contemplating inclusion of a cosmetic ingredient in its products submit to the FDA the results of its testing or any other data or information with respect to the ingredient. Prior to marketing its products, the Company conducts studies to demonstrate that its

Alpha Hydrox products do not irritate the skin or eyes. Consistent with regulations, the Company does not submit the results of its studies to the FDA.

In April of 1994, an FDA official raised some questions about the safety of alpha hydroxy acids in skin care products, and later stated that the effects of long-term usage of such products are unknown. Because of the FDA's questions, the Cosmetic Ingredient Review Expert Panel ("CIR") sponsored by the cosmetics industry, was requested to conduct a review of a compilation of alpha hydroxy acid safety data assembled by cosmetic manufacturers. The CIR is a cooperative proceeding in which an FDA representative can and does participate as a nonvoting, liaison member. In June of 1997, the CIR issued its final report which, among other things, concluded that glycolic acid (the most common type of alpha hydroxy acid used by the Company) is safe for use in retail domestic products at concentrations of up to 10%, with a pH level of no less than 3.5, and when the directions for use include the daily use of sun protection. The Company's products and directions for use meet the CIR's criteria.

Following the issuance in June, 1997 of the CIR report, the FDA, in December, 1998, created a joint working group using staff from both the Center for Food Safety and Applied Nutrition and the Center for Drug Evaluation and Research to consider, among other things, whether products containing alpha hydroxy acid should be classified for regulatory purposes as drugs. This group is expected to analyze additional research initiated at the FDA's request. It is not expected that final recommendations by the working group will be forthcoming in the near-term future. Further, any recommendation of the group that dramatically restricts the availability of products containing alpha hydroxy acids would probably face strong opposition by manufacturers of these products. In addition, since 2003 the FDA's National Center for Toxicological Research has been investigating the effects of long-term exposure to alpha hydroxy acid. These studies have not been completed. The FDA in December, 2002 issued a draft guidance suggesting that cosmetic products containing alpha hydroxy acid alert users about the potential for increased skin sensitivity to sun and particularly the possibility of sunburn and what steps may be taken to avoid such consequences. A draft label was proposed by the FDA. That guidance was finalized with the same proposed label on January 10, 2005. The Company's labeling, as in effect for many years, is similar to the guidance; the Company has included, and continues to include, the suggested caution on its product labels. On December 31, 2003, the FDA published a call for data on certain ingredients in various products, including AHAs which are part of wrinkle remover products. Manufacturers were asked to submit any data supporting the reclassification of these cosmetic products as over-the-counter drugs. The study results were due in December 2004; however, they have not yet been published. If the FDA should change the regulatory classification of the Company's AHA products, there would be additional regulatory requirements applicable to the Company. The financial impact, if any, of any additional regulatory requirements cannot be determined at this time.

The Company's advertising is subject to regulation under the Federal Trade Commission Act and related regulations, which prohibit false and misleading claims in advertising. The Company's labeling and promotional materials are believed to be in full compliance with applicable statutes and regulations.

Some chemicals used in consumer products, including some used by the Company, have come under scrutiny by various state governments and the Congress of the United States in connection with clean air laws and regulations. These chemicals are volatile organic compounds ("VOCs") that are contained in various categories of consumer products. As a result of VOC regulation, it has been necessary, from time to time, for the Company to reformulate some of its products including a reformulation of Touch of Scent to conform to certain regulations of the California Air Resources Board ("CARB") which became effective on January 1, 1996. The Company's household chemical products currently meet the most stringent VOC regulations. Effective December 31, 2004 in California and January 1, 2005 in certain other states, there was a change in regulations which reduced the VOC

limit for aerosol furniture care products from 25% to 17%. The Company had no significant manufacturing or cost issues in meeting the new standard. The regulations concerning VOC content are relevant to the household products of the Company but have not to date affected the Company's skin care products. CARB is conducting a new consumer products survey based on sales for the year 2003 to update their information on consumer products VOC emissions and to evaluate the feasibility of further reducing consumer product VOC emissions. Company products that are being surveyed include Scott's Liquid Gold for wood pourable product, Touch of Scent air freshener, and certain Neoteric products—Body Wash, Fade Cream, and Toner. There is another CARB survey scheduled for 2006, which will be based on 2005 sales and will include most of the Company's products.

The Company believes it has done all that is now necessary to satisfy the current requirements of the Clean Air Act and laws of various state governments. Currently, all of the Company's products may be sold in all areas of the United States.

Limitations regarding the VOC content of consumer products by both state and federal agencies will continue to be a part of regulatory efforts to achieve compliance for ozone at or near ground level. Under the Clean Air Act Amendments of 1990, the Environmental Protection Agency ("EPA") is required to study the contribution of consumer products to ozone problems and to promulgate regulations designed to reduce the VOC content of consumer products. During 1995, the EPA published a prioritized list of categories of consumer products for regulation, including categories which affect Scott's Liquid Gold for wood and Touch of Scent. Final regulations to control VOC's from these consumer products, which are no more stringent than those issued previously by CARB with which the Company complies, were published in September, 1998. Various states, in addition to California, have enacted or are considering promulgating VOC regulations for consumer products. The Company is unable to predict how many or which other states might enact legislation regulating the VOC content of consumer products or what effect such legislation might have upon its household products. The Company is aware that a group of approximately twelve northeastern states and the District of Columbia have collectively drafted the Ozone Transport Commission (OTC) Model Consumer Products Rule with standards substantially the same as those contained in the CARB regulations. To the Company's knowledge, at least some of these states including Delaware, New York, Maryland, and Pennsylvania have adopted VOC regulations based on this model. New Jersey and the District of Columbia recently promulgated their final rules based on this model. These new regulations became effective January 1, 2005. Other states are considering adoption of regulations based on this model.

Employees

The Company employs 93 persons (compared to 98 persons at the end of 2003), 43 in plant and production related functions and 50 in administrative, sales and advertising functions. The number of employees decreased in 2001 and 2002, as part of the Company's cost cutting steps started in 2000. No contracts exist between the Company and any union. The Company monitors wage and salary rates in the Rocky Mountain area and pursues a policy of providing competitive compensation to its employees. The compensation of the Company's executive officers is under the review of the Compensation Committee of the Company's Board of Directors. Fringe benefits for Company employees include a medical and dental plan, life insurance, a 401(k) plan with matching contributions for lower paid employees (those earning $35,000 or less per annum), an employee stock ownership (ESOP) plan, and a profit sharing plan. The Company considers its employee relations to be satisfactory.

Patents and Trademarks

At present, the Company owns one patent covering an ingredient used in some of the Company's skin care products. Additionally, the Company actively uses its registered trademarks for Scott's Liquid Gold, Liquid Gold, Touch of Scent, Alpha Hydrox, TriOxygen ^C ®, and Neoteric in the United States and has registered trademarks in a number of additional countries. The Company's registered

trademarks and pending trademark applications concern names and logos relating to its products as well as the design of boxes for certain of its products.

In December 2000 (amended October 1, 2003), the Company entered into a license agreement with TriStrata Technology, Inc. which owns patents dealing with the use of alpha hydroxy acids for the purpose of reducing the appearance of wrinkles or fine lines. Under the license agreement, Neoteric Cosmetics and its affiliates have been granted a non-exclusive license for the life of the patents to make and sell skin care products using alpha hydroxy acids for, among other things, the reduction of the appearance of skin wrinkles and the reduction in the appearance of skin changes associated with aging. The license agreement covers a territory which includes the United States and certain foreign countries. In accordance with the license agreement, Neoteric Cosmetics pays a royalty on net sales of products covered by the agreement. This license agreement was part of the settlement of a lawsuit brought by TriStrata Technology against the Company and others alleging infringement of patents in selling and promoting skin care products which contain alpha hydroxy acid.

Available Information and Code of Ethics

We will make available free of charge through the website http://www.businesswire.com/cnn/slgd.htm, this annual report, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and amendments to such reports, as soon as reasonably practicable after we electronically file or furnish such material with the Securities and Exchange Commission. These reports are not available on our website because of the expense of maintaining the reports on our website and because the reports are available at Business Wire's website. We will provide upon request and at no charge electronic or paper copies of these filings with the Securities and Exchange Commission (excluding exhibits).

The Company will provide to any person without charge, upon request, a copy of the code of business conduct and ethics which has been adopted by the Company and which applies to the Company's principal executive officer, principal financial officer and principal accounting officer, among others.

A request for reports filed with the SEC or the code of business conduct and ethics may be made to: Corporate Secretary, Scott's Liquid Gold-Inc., 4880 Havana Street, Denver, Colorado 80239.

Item 2. Properties

The Company's facilities, located in Denver, Colorado, are currently comprised of three connected buildings and a parking garage (approximately 261,100 square feet in total) and about 16.2 acres of land, of which approximately 6 acres are available for future expansion. These buildings range in age from 7 to 32 years (126,600 square feet having been added in 1995 and 1996). The Denver facility houses the Company's corporate headquarters and all of its operations, and serves as one of several distribution points. The Company believes that its current space will provide capacity for growth for the foreseeable future. All of the Company's land and buildings serve as collateral under a deed of trust for a $6.0 million bank loan consummated by the Company on November 21, 2000.

Item 3. Legal Proceedings

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

Market Information

The Company's $0.10 par value common stock is listed on the NASD OTCBB under the ticker symbol "SLGD". The high and low prices of Scott's Liquid Gold-Inc. common stock as traded on the NASD OTC Bulletin Board were as follows. The over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

2004 Three Months Ended					2003 Three Months Ended
	High		Low			High		Low
March 31	$	1.00	$	0.70	March 31	$	0.55	$	0.46
June 30	$	0.92	$	0.57	June 30	$	0.58	$	0.47
September 30	$	0.67	$	0.53	September 30	$	0.58	$	0.48
December 31	$	0.61	$	0.52	December 31	$	0.75	$	0.63

Shareholders

As of March 15, 2005 the Company had approximately 1,012 shareholders of record.

Dividends

The Company did not pay any cash dividends during the two most recent fiscal years. No decision has been made as to future dividends. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for information concerning restrictions on dividends.

Other

Current stock quotes, SEC filings of the Company, quarterly earnings and press releases can be found at: http://www.businesswire.com/cnn/slgd.htm.

Equity Plans

The following table provides, as of December 31, 2004, information regarding the Company's equity compensation plans, which consists of the 1993, 1997 and 1998 Stock Option Plans. The 1993 plan expired in January of 2003, and accordingly no shares are available for option under that plan.

The Company also has an Employee Stock Ownership Plan which invests only in common stock of the Company, but which is not included in the table below.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	1,115,500	$	.63	414,500
Equity compensation plans not approved by security holders	—		—	—

Total	1,115,500	$	.63	414,500

Stock Purchases

The Company did not make any repurchases of its outstanding shares during the fourth quarter of 2004.

Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October, 2004	—	—	—	—
November, 2004	—	—	—	—
December, 2004	—	—	—	—

Pursuant to board resolutions, on December 31, 2004, the Company contributed 20,000 shares of its common stock to its Employee Stock Ownership Plan (the "Plan"). On November 10, 2004 the Company contributed 40,000 shares of its common stock to the Plan. On September 2, 2004, the Company contributed 30,000 shares of its common stock to the Plan. On June 4, 2004, the Company contributed 20,000 shares of its common stock to the Plan. No consideration was paid by the Plan for these contributions. The Company believes that these contributions were not subject to the securities registration requirements of the Securities Act of 1933 because they did not involve a sale. The contributions of the shares to the Plan may also be exempt from such securities registration as a non-public offering under Section 4(2) of the Securities Act of 1933.

Item 6. Selected Financial Data

		2004			2003			2002			2001			2000
		(In Thousands of Dollars Except for Per Share Data)
Net sales:
	Scott's Liquid Gold household products	$	9,343		$	9,016		$	10,155		$	11,619		$	11,823
	Skin care products		13,304			15,455			14,804			13,050			15,096

		$	22,647			24,471		$	24,959		$	24,669		$	26,919

Net income (loss) before income taxes		$	(901	)		(190	)	$	1,092		$	(1,290	)	$	(2,280	)
Income tax expense (benefit)			2			—			(480	)		—			(435	)

Net income (loss)		$	(903	)	$	(190	)	$	1,572		$	(1,290	)	$	(1,845	)

Basic earnings (loss) per common share		$	(0.09	)	$	(0.02	)	$	.15		$	(0.13	)	$	(0.18	)

Diluted earnings (loss) per share		$	(0.09	)	$	(0.02	)	$	.15		$	(0.13	)	$	(0.18	)

Dividends declared per common share		$	—		$	—		$	—		$	—		$	—

Assets		$	23,828		$	24,453		$	26,079		$	26,299		$	27,681

Working capital		$	3,804		$	5,058		$	6,046		$	4,619		$	6,047

Capital additions		$	113		$	21		$	14		$	107		$	95

Depreciation		$	673		$	693		$	722		$	742		$	801

Long-term debt, net of current maturities		$	1,893		$	2,807		$	3,685		$	4,515		$	5,309

Selected Quarterly Financial Data

	2004
	First			Second			Third			Fourth		Year
Net Sales	$	5,209		$	5,308		$	5,117		$	7,013	$	22,647
Gross Profit	$	2,458		$	2,338		$	1,988		$	2,956	$	9,740
Income (loss) before income taxes	$	(351	)	$	(276	)	$	(360	)	$	86	$	(901	)
Net income (loss)	$	(351	)	$	(276	)	$	(360	)	$	84	$	(903	)
Income (loss) per share	$	(0.03	)	$	(0.03	)	$	(0.03	)	$	0.00	$	(0.09	)
Diluted income (loss per share)	$	(0.03	)	$	(0.03	)	$	(0.03	)	$	0.00	$	(0.09	)

	2003
	First			Second			Third		Fourth		Year
Net Sales	$	5,736		$	5,608		$	6,023	$	7,104	$	24,471
Gross Profit	$	2,878		$	2,545		$	2,721	$	3,458	$	11,602
Income (loss) before income taxes	$	(416	)	$	(747	)	$	231	$	742	$	(190	)
Net income (loss)	$	(416	)	$	(747	)	$	231	$	742	$	(190	)
Income (loss) per share	$	(0.04	)	$	(0.07	)	$	0.02	$	0.07	$	(0.02	)
Diluted income (loss per share)	$	(0.04	)	$	(0.07	)	$	0.02	$	0.07	$	(0.02	)

Item 7. Management's Discussion & Analysis Of Financial Condition and Results of Operations

General

The Company manufactures and markets both household and skin care products. The Company's products are sold throughout the United States and Canada and insignificantly in other countries.

Critical Accounting Policies

The Company has identified the policies below as critical to the Company's business operations and the understanding of the Company's results of operations. These policies involve significant judgments, estimates and assumptions by the Company's management. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements.

Revenue Recognition

The Company's revenue recognition policy is significant because the amount and timing of revenue is a key component of the Company's results of operations. The Company follows the guidance of Staff Accounting Bulletin No. 104 ("SAB 104"), which requires that a strict series of criteria are met in order to recognize revenue related to product shipment. If these criteria are not met, the associated revenue is deferred until the criteria are met. Generally, these criteria are that there be an arrangement to sell the product, the Company has delivered the product in accordance with that arrangement, the sales price is determinable, and collectibility is probable.

The Company's reserves for accounts receivable consist of a bad debt reserve and reserves for returns and customer allowances. Reserves for marketing rebates, pricing allowances and returns, coupons and certain other promotional activities involve estimates made by management based upon an assessment of historical trends, information from customers, and anticipated returns and allowances related to current sales activity. The level of returns and allowances are impacted by, among other things, promotional efforts performed by customers, changes in customers, changes in the mix of products sold, and the stage of the relevant product life cycle. Changes in estimates may occur based on actual results and consideration of other factors that cause returns and allowances. In the event that actual results differ from these estimates, results of future periods may be impacted.

Reserves for bad debts ($83,000 and $82,000 at December 31, 2004 and December 31, 2003, respectively) are recorded based on estimates by management including factors surrounding the credit risk of specific customers and historical trends. The Company has been exposed to potential losses on receivables due from specific customers that have suffered financial difficulties. The Company has provided reserves against certain receivables from such customers in addition to amounts related to unidentified losses. Those reserves are reduced as those accounts are settled or written off. In the event that actual losses differ from these estimates or there is an increase in exposure relating to sales to specific customers, results of future periods may be impacted.

Income Taxes

As of December 31, 2004, the Company has deferred income tax assets of $1,140,000 which primarily relate to expenses that are not yet deductible for tax purposes and net operating loss carryforwards, offset by deferred income tax liabilities for differences in the book and tax bases of property and equipment. The net deferred tax asset is fully reserved by a valuation allowance. The valuation allowance represents management's determination that the Company will more likely than not be unable to realize the value of such assets due to the uncertainty of future profitability.

During the quarter ended March 31, 2002, the Company recorded a tax benefit of $483,000 related to taxes to be recouped pursuant to changes in the federal tax law which allowed the Company to carryback tax losses incurred in 2001 against taxes paid in prior years.

Inventory Valuation and Reserves

The Company's inventory is a significant component of the Company's total assets. In addition, the carrying value of such inventory directly impacts the gross margins that the Company recognizes when the Company sells the inventory and records adjustments to carrying values. The Company's inventory is valued at the lower of cost or market, cost being determined under the first-in, first-out method. Management estimates reserves for slow moving and obsolete products and raw materials based upon historical and anticipated sales. In the event that actual results differ from these estimates, results of future periods may be impacted.

Recently Issued Accounting Pronouncements

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123, (revised 2004) "Share-Based Payment" ("SFAS 123(R)"). This statement is a revision of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" as amended ("SFAS 123"), and requires entities to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost will be recognized over the period during which an employee is required to provide services in exchange for the award (usually the vesting period). SFAS 123(R) covers various share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. SFAS 123(R) eliminates the ability to use the intrinsic value method of accounting for share options, as provided in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS 123(R) is effective as of the beginning of the first interim period that begins after June 15, 2005, with early adoption encouraged. The Company is currently evaluating the statement's transition methods and does not expect this statement to have an effect materially different than that of the pro forma SFAS 123 disclosures provided in Note 1 to the Company's Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data."

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153, "Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29" ("SFAS 153"). This Statement amends APB Opinion No. 29 to permit the exchange of nonmonetary assets to be recorded on a carry over basis when the nonmonetary assets do not have commercial substance. This is an exception to the basic measurement principal of measuring a nonmonetary asset exchange at fair value. A nonmonetary asset exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. If the Company enters into significant nonmonetary asset exchanges in the future, SFAS 153 could have a material effect on its consolidated financial position, results of operations or cash flows.

required to be applied for periods ending after March 15, 2004 for all other types of entities. The Company was required to perform this assessment at December 31, 2004, and consolidate any variable interest entries for which it would absorb a majority of the entities' expected losses or receive a majority of the expected residual gains. The Company does not have any variable interest entities as of December 31, 2004, therefore this assessment had no impact on the Company's consolidated financial statements.

Results of Operations

During 2004 we experienced a small increase in sales of household chemical products primarily because of the increased distribution of Scott's Liquid Gold for wood. The Company commenced in May, 2004 the introduction of an additional wood care product in a wipe form during this period; however, sales have been minimal so far. During 2004 the Company experienced a decrease in sales of our skin care products, including the Montagne Jeunesse line of products, for reasons explained below. Our net loss for 2004 was $903,100 versus a loss of $189,600 in 2003. The loss for 2004 was primarily due to slower sales of Montagne Jeunesse products and reduced gross profit over all product lines in 2004 versus 2003 as explained below.

Summary of Results as a Percentage of Net Sales

		Year Ended December 31,
		2004		2003		2002
Net sales
	Scott's Liquid Gold household products	41.3	%	36.8	%	40.7	%
	Skin care products	58.7	%	63.2	%	59.3	%

Total net sales		100.0	%	100.0	%	100.0	%
Cost of sales		57.0	%	52.6	%	53.5	%

Gross profit		43.0	%	47.4	%	46.5	%
Other revenue		0.2	%	0.2	%	2.6	%

		43.2	%	47.6	%	49.1	%

Operating expenses		46.4	%	47.5	%	43.7	%
Interest expense		0.8	%	0.9	%	1.0	%

		47.2	%	48.4	%	44.7	%

Income (loss) before income taxes		(4.0	)%	(0.8	)%	4.4	%

Year Ended December 31, 2004
Compared to Year Ended December 31, 2003

Comparative Net Sales

			2004		2003		Percentage Increase (Decrease)
Scott's Liquid Gold			$	6,872,300	$	6,577,800	4.5	%
Touch of Scent				2,470,500		2,438,100	1.3	%

	Total household chemical Products			9,342,800		9,015,900	3.6	%

Alpha Hydrox and other skin care				3,293,900		3,969,400	(17.0	)%
Montagne Jeunesse skin care				10,010,500		11,485,400	(12.8	)%

	Total skin care products			13,304,400		15,454,800	(13.9	)%

		Total net Sales	$	22,647,200	$	24,470,700	(7.5	)%

Consolidated net sales for 2004 were $22,647,200 versus $24,470,700 for 2003, a decrease of $1,823,500 or 7.5%. Average selling prices for 2004 were down by $354,500, or 1.5% from those of 2003. Average selling prices of household products were down by $150,300, or 1.7%, and average selling prices of skin care products were down by $204,200, or 1.3%. This decrease in average selling prices was primarily due to an increase in coupon usage in 2004 versus 2003 offset somewhat by an increase in pricing on our Scott's Liquid Gold for wood products, while the decrease in average prices of our skin care products was primarily due to holiday promotional pricing on our Montagne Jeunesse sachet products offset somewhat by a decrease in couponing in 2004 versus 2003. Co-op advertising, marketing funds, slotting fees, and coupons paid to retailers are deducted from gross sales, and totaled $2,074,700 in 2004 versus $1,916,600 in 2003, an increase of $158,100 or 8.2%, the majority of which was due to an increase in coupon and slotting fee expenses due to expanding to new customers and reintroduction to former customers.

During 2004, net sales of skin care products accounted for 58.7% of consolidated net sales compared to 63.2% in 2003. Net sales of those products were $13,304,400 in 2004 compared to $15,454,800 in 2003, a decrease of $2,150,400 or 13.9%. The Company has continued to experience a drop in unit sales of the Company's earlier-established alpha hydroxy acid ("AHA") products due at least in part to maturing in the market for AHA-based skin care products and intense competition from producers of similar or alternative products, many of which are considerably larger than Neoteric Cosmetics, Inc. Sales of the Company's Alpha Hydrox products (with and without alpha hydroxy acid) decreased during 2003 and 2004, due to slower sales at retail and reduced distribution of those products at retail stores, including the Company's largest and other customers having reduced in prior quarters the number of types of those products carried on their shelves and discontinuation in 2003 of these products at certain retail chains. In addition, increased television advertising for Alpha Hydrox products in the first half of 2003 was not cost effective in terms of the impact on sales. In the second quarter of 2003, the Company's largest customer (which accounted for 23.6% of sales of Alpha Hydrox skin care products in 2002) decreased significantly the number of stores carrying Alpha Hydrox products of the Company. This change has resulted, and may result in the future, in lower sales of those products. For 2004, the sales of the Company's Alpha Hydrox products accounted for 15.3% of net sales of skin care products and 9.0% of total net sales, compared to 16.1% of net sales of skin care products and 10.2% of total net sales in 2003.

For 2004, sales of Montagne Jeunesse products comprised a majority of net sales of the Company's skin care products. Net sales of Montagne Jeunesse were approximately $10,010,500 in 2004 compared to $11,485,400 in 2003. The Company believes that this decrease in sales of Montagne Jeunesse is attributable primarily to a decrease in the number of display promotions at retailers in the first half of

2004 versus 2003 and to 2003 products that had not sold through the retail stores until 2004 thus resulting in fewer sales by the Company.

As part of its sales efforts in 2003, the Company used direct response television (infomercial) commercials for the sale of its Alpha Hydrox products. These efforts were not repeated in 2004. The Company has not used television advertisements for the Montagne Jeunesse products. The Company did not introduce new skin care products during 2004, except different items in Montagne Jeunesse sachets. The Company has prepared, and will start selling in 2005, a refined formulation of certain Alpha Hydrox products.

Sales of household products in 2004 accounted for 41.3% of consolidated net sales compared to 36.8% in 2003. These products are comprised of Scott's Liquid Gold for wood, a wood cleaner which preserves as it cleans, and Touch of Scent, a room air freshener. Sales of household products were $9,342,800 in 2004 compared to $9,015,900 in 2003, an increase of $326,900, or 3.6%. Sales of Scott's Liquid Gold for wood increased from $6,577,800 in 2003 to $6,872,300 in 2004 (up by $294,500 or 4.5%). This increase was due to increased distribution at retail stores offset by introduction of new competing products and limited advertising of the Company's products. Sales of "Touch of Scent" were up by $32,400 or 1.3%, primarily due to an increase in distribution which commenced in late 2004.

As sales of a consumer product decline, there is the risk that retail stores will stop carrying the product. The loss of any significant customer for any skin care products, "Scott's Liquid Gold" for wood or "Touch of Scent", could have a significant adverse impact on the Company's revenues and operating results. The Company believes that its future success is highly dependent on favorable acceptance in the marketplace of Montagne Jeunesse products and the sales of its Alpha Hydrox products and "Scott's Liquid Gold" for wood.

On a consolidated basis, cost of goods sold was $12,907,200 in 2004 compared to $12,868,500 for 2003, an increase of $38,700 (on a sales decrease of about 7.5%). As a percentage of consolidated net sales, cost of goods sold was 57.0% in 2004 compared to 52.6% in 2003, which was caused by a combination of a greater percentage of promotional allowances, a slight increase in raw material and Montagne Jeunesse sachet costs, reduced prices on some holiday promotions in 2004 versus 2003, and spreading the ongoing manufacturing costs over the lower aggregate number of units sold. We are seeing increases in raw material costs in 2005, particularly the cost of steel cans which have been affected by a shortage of steel.

The Company is working on ways to more fully utilize its production capacity at its manufacturing facilities in Denver. The Company discusses from time to time manufacturing private label products, but those discussions have not resulted in any agreements to date. The Company is currently considering with a party the possibility of manufacturing certain products as part of a project to manufacture and sell products in the United States. The Company does not know whether it will be successful in these efforts to manufacture products for third parties.

Operating Expenses, Interest Expense and Other Income

			2004		2003		Percentage Increase (Decrease)
Operating Expenses
	Advertising		$	1,143,400	$	1,843,800	(38.0	)%
	Selling			5,804,800		6,151,500	(5.6	)%
	General & Administrative			3,557,900		3,641,500	(2.3	)%

		Total operating expenses	$	10,506,100	$	11,636,800	(9.7	)%

Interest Income			$	42,500	$	58,300	(27.1	)%
Other Income			$	—	$	—	—	%
Interest Expense			$	177,800	$	213,300	(16.6	)%

Operating expenses, comprised primarily of advertising, selling, and general and administrative expenses, decreased by $1,130,700 or 9.7% in 2004, when compared to 2003. The various components of operating expenses are discussed below.

Advertising expenses for 2004 were $1,143,400 compared to $1,843,800 for 2003, a decrease of $700,400 or 38.0% (primarily from a decrease in television advertising). In 2004, the Company spent $255,000 to advertise its cosmetics products, compared to $976,100 in 2003, a decrease of 73.9%, and $888,400 in 2004 compared to $867,700 in 2003 to advertise household products, an increase of 2.4%. The Company plans to advertise its skin care products in 2005 at about 2004 levels, while decreasing slightly its advertising of household products in 2005 versus 2004. The Company periodically reviews its advertising plans and may revise planned advertising expenditures based upon actual sales results and competitive conditions.

Selling expenses for 2004 were $5,804,800 compared to $6,151,500 for 2003, a decrease of $346,700 or 5.6%. That decrease was comprised of a decrease in promotional costs of $350,000 primarily because there were fewer sales promotions in 2004 versus 2003, a decrease in internet and direct television sales expense of $84,800, primarily because of a decrease in direct television sales advertising in 2004 versus 2003, a decrease in depreciation and royalty expense of $94,600, offset by an increase in salaries and fringe benefits and related travel expense of $105,900 primarily because of an increase in personnel in 2004 versus 2003, and a net increase in other selling expenses, none of which by itself is significant, of $76,800.

General and administrative expenses for 2004 were $3,557,900 compared to $3,641,500 for 2003, a decrease of $83,600 or 2.3%. That decrease is made up of a decrease in professional fees of $107,300 primarily because of a decrease in audit fees in 2004 versus 2003, offset by a net increase in other administrative expenses, none of which by itself was material, of $23,700.

Interest expense for 2004 was $177,800 versus $213,300 for 2003. Interest expense decreased because of the reduced principal of the Company's bank loan. Interest income for 2004 was $42,500 compared to $58,300 for 2003, which consists of interest earned on the Company's cash reserves in 2004 and 2003.

During 2004 and 2003, expenditures for research and development were not material (under 2% of revenues.)

Year Ended December 31, 2003
Compared to Year Ended December 31, 2002

Comparative Net Sales

			2003		2002		Percentage Increase (Decrease)
Scott's Liquid Gold			$	6,577,800	$	7,356,100	(10.60	)%
Touch of Scent				2,438,100		2,798,500	(12.90	)%

	Total household chemical Products			9,015,900		10,154,600	(11.20	)%

Alpha Hydrox and other skin care				3,969,400		4,937,400	(19.60	)%
Montagne Jeunesse skin care				11,485,400		9,867,000	16.40	%

	Total skin care products			15,454,800		14,804,400	4.40	%

		Total Net Sales	$	24,470,700	$	24,959,000	(2.00	)%

Consolidated net sales for 2003 were $24,470,700 versus $24,959,000 for 2002, a decrease of $488,300 or 2.0%. Average selling prices for 2003 were up by $623,800, or 2.5% from those of 2002. Average selling prices of household products being up by $160,500, or 1.6%, and average selling prices of skin care products were up by $463,300, or 3.1%. This increase in average selling prices was primarily due to a decrease in coupon usage during 2003 and an increase in pricing on our Scott's Liquid Gold for wood products in 2003 versus 2002. Co-op advertising, marketing funds, slotting fees, and coupons paid to retailers are deducted from gross sales, and totaled $1,916,600 in 2003 versus $2,860,900 in 2002, a decrease of $944,300 or 33.0%, the majority of which was a decrease in coupon and co-op advertising expenses.

During 2003, net sales of skin care products accounted for 63.2% of consolidated net sales compared to 59.3% in 2002. Net sales of those products were $15,454,800 in 2003 compared to $14,804,400 in 2002, an increase of $650,400 or 4.4%. The Company has continued to experience a drop in unit sales of the Company's earlier-established alpha hydroxy acid ("AHA") products due at least in part to maturing in the market for AHA-based skin care products and intense competition from producers of similar or alternative products, many of which are considerably larger than Neoteric Cosmetics, Inc. Sales of the Company's Alpha Hydrox products (with and without alpha hydroxy acid) have also decreased during 2002 and 2003, due to reduced distribution of those products at retail stores, including the Company's largest and other customers having reduced in 2003 the number of types of those products carried on their shelves and discontinuation of these products at certain retail chains. In addition, increased television advertising for Alpha Hydrox products in the first half of 2003 was not cost effective in terms of the impact on sales. In the second quarter of 2003, the Company's largest customer (which accounted for 23.6% of sales of Alpha Hydrox skin care products in 2002) decreased significantly the number of stores carrying Alpha Hydrox products of the Company. This change resulted in lower sales of those products. For 2003, the sales of the Company's Alpha Hydrox products accounted for 16.1% of net sales of skin care products and 10.2% of total net sales, compared to 23.5% of net sales of skin care products and 13.9% of total net sales in 2002.

For 2003, sales of Montagne Jeunesse products comprised a majority of net sales of the Company's skin care products and offset declining shipments of Alpha Hydrox products. Net sales of Montagne Jeunesse were approximately $11,485,400 in 2003 compared to $9,867,000 in 2002. The Company believes that this increase in sales of Montagne Jeunesse is attributable primarily to wider distribution of the product, with more retail store chains carrying brands of Montagne Jeunesse sachets, new skin and hair care items in sachets of Montagne Jeunesse, and consumer acceptance of the product.

As part of its sales efforts in the first half of 2003, the Company used direct response television (infomercial) commercials for the sale of its Alpha Hydrox products. The Company has not used television advertisements for the Montagne Jeunesse products. The Company did not introduce new products during 2003, except different items in Montagne Jeunesse sachets.

Sales of household products in 2003 accounted for 36.8% of consolidated net sales compared to 40.7% in 2002. These products are comprised of Scott's Liquid Gold for wood, a wood cleaner which preserves as it cleans, and Touch of Scent, a room air freshener. Sales of household products were $9,015,900 in 2003 compared to $10,154,600 in 2002, a decrease of $1,138,700, or 11.2%. Sales of Scott's Liquid Gold for wood decreased from $7,356,100 in 2002 to $6,577,800 in 2003 (down by $778,300 or 10.6%) which the Company believes is due to limited television advertisement to support this product and to increased competition from existing and new products. Decreased distribution of this product in retail stores during the first half of 2003 and earlier periods may also have caused in part the sales decline. In the second half of 2003, the Company focused its efforts on the re-establishment or establishment of Scott's Liquid Gold for wood in certain national and local retail store chains. These efforts resulted in sales of the product to several retail store chains not carrying it. Sales of Touch of Scent decreased to $2,438,100 in 2003 compared to $2,798,500 in 2002 (down by $360,400 or 12.9%) primarily due to a decrease in orders for, and distribution of, the Company's Touch of Scent dispenser package. Touch of Scent is primarily sold in a few large retail store chains in the United States.

On a consolidated basis, cost of goods sold was $12,868,500 in 2003 compared to $13,354,800 for 2002, a decrease of $486,300 or 3.6% (on a sales decrease of about 1.2%). As a percentage of consolidated net sales, cost of goods sold was 52.6% in 2003 compared to 53.5% in 2002. The cost of goods sold as a percentage of consolidated net sales for 2003 compared to 2002 is almost unchanged as a result of offsetting factors. These factors include higher sales in 2003 of Montagne Jeunesse products (which have a higher cost than products manufactured by the Company) and spreading ongoing manufacturing costs of the Company over lower unit production in 2003 compared to 2002, offset by a decrease in 2003 of coupons and cooperative advertising deducted from gross revenues.

Operating Expenses, Interest Expense and Other Income

			2003		2002		Percentage Increase (Decrease)
Operating Expenses
	Advertising		$	1,843,800	$	1,200,300	53.6	%
	Selling			6,151,500		5,594,500	10.0	%
	General & Administrative			3,641,500		4,105,000	(11.3	)%

		Total operating expenses	$	11,636,800	$	10,899,800	6.8	%

Interest Income			$	58,300	$	54,000	8.0	%
Other Income			$	—	$	594,600	(100.0	)%
Interest Expense			$	213,300	$	261,100	(18.3	)%

Operating expenses, comprised primarily of advertising, selling, and general and administrative expenses, increased by $737,000 or 6.8% in 2003, when compared to 2002. The various components of operating expenses are discussed below.

Advertising expenses for 2003 were $1,843,800 compared to $1,200,300 for 2002, an increase of $643,500 or 53.6% (primarily from an increase in television advertising). In 2003, the Company spent $976,100 to advertise its cosmetics products, compared to $742,500 in 2002, an increase of 31.5% and $867,700 in 2003 compared to $457,800 in 2002 to advertise household products, an increase of 89.5%.

Selling expenses for 2003 were $6,151,500 compared to $5,594,500 for 2002, an increase of $557,000 or 10.0%. That increase was comprised of an increase of $165,200 in freight and brokerage costs, an increase in travel expenses of $61,700, an increase in salary and fringe benefits of $161,300, an increase in internet and direct television sales expenses of $94,000 and a net increase in a variety of other expenses, none of which, by itself, was significant of $74,800.

General and administrative expenses for 2003 were $3,641,500 compared to $4,105,000 for 2002, a decrease of $463,500 or 11.3% That decrease is made up of a decrease in salaries and fringe benefits of $656,800 (the year 2002 included the expensing of a separation agreement pertaining to the retirement of the Company's executive vice president), all offset by an increase in professional fees of $138,500, an increase in travel expenses of $37,200 and a net increase in other administrative expenses, none of which, by itself, was significant, of $17,600.

Interest expense for 2003 was $213,300 versus $261,100 for 2002. Interest expense decreased because of the reduced principal of the Company's bank loan. Interest income for 2003 was $58,300 compared to $54,000 for 2002, which consists of interest earned on the Company's cash reserves in 2003 and 2002.

Other revenue for 2002 reflects $594,000 received from a lawsuit settlement. This amount was the final judgment in the lawsuit against an insurer not participating in the settlement of an earlier environmental matter.

Liquidity and Capital Resources

On August 10, 2004 the Company obtained a $1,500,000 line of credit from a bank to finance additional inventory and accounts receivable associated with upcoming holiday sales. The line of credit bears interest at a rate of .5% over the bank's base rate (5.75% at December 31, 2004) and matures on August 10, 2005. The line of credit is secured by inventory and accounts receivable. The covenants are the same as the bank loan described below. At December 31, 2004, the outstanding amount under this line of credit was $790,000; and as of the date of this Report, the Company had $660,000 outstanding under this line of credit.

The Company has a bank loan for approximately $2.8 million at the bank's base rate, adjustable yearly (5.00% at December 31, 2004), secured by the Company's land and buildings, with principal and interest payable monthly through November 2007. The loan agreement contains a number of covenants, including the requirement for maintaining a current ratio of at least 1:1 and a ratio of consolidated long-term debt to consolidated net worth of not more than 1:1. The Company may not declare any dividends that would result in a violation of either of these covenants. The foregoing requirements were met at the end of the each quarter during 2004 and at December 31, 2004.

During 2004, the Company's working capital decreased by $1,253,800 to $3,804,400, while its current ratio (current assets divided by current liabilities) decreased from 2.3:1 at December 31, 2003 to 1.8:1 at December 31, 2004. This decrease in working capital is attributable to a net loss of $903,100, a reduction of long-term debt of $914,300, a decrease in deferred tax liabilities of $43,000, an increase in non-current deferred tax assets of $26,000, a decrease in accumulated comprehensive income of $1,400, offset by depreciation in excess of capital additions of $559,700, and an increase in common stock and capital in excess of par of $63,500, and a decrease in other assets of $10,800.

At December 31, 2004, net trade accounts receivable were $1,419,700 compared to $1,108,600 at the end of 2003, an increase of $311,100, primarily due to an increase in December 2004 sales versus those of the same period last year. Inventories were down by $182,300 at the end of 2004 compared to 2003, largely due to late fourth quarter sales (inventory was not replenished until early in 2005). Prepaid expenses increased by $233,200, primarily because of an increase in prepaid advertising and an increase in prepaid insurance expense. Trade accounts payable increased by $538,800 primarily due to

an increase in sales promotion, advertising and trade suppliers payables. Accrued payroll and benefits decreased $55,800 from December 31, 2003 to December 31, 2004 primarily because of the timing related to accrued payroll. Other accrued liabilities decreased by $138,800 primarily because of a decrease in accrued coupon expense related to skin care products.

The Company has no significant capital expenditures planned for 2005 and has no current plans for any external financing, other than its existing bank loans. The Company expects that its available cash and cash flows from operating activities will fund the next twelve months' cash requirements.

The Company's dependence on operating cash flow means that risks involved in its business can significantly affect its liquidity. Any loss of a significant customer, any further decreases in distribution of its skin care or household chemical products, any new competitive products affecting sales levels of the Company's products, or any significant expense not included in the Company's internal budget could result in the need to raise cash, such as through a bank financing. Except for the short-term line of credit described above, the Company has no arrangements for an external financing of debt or equity, and the Company is not certain whether any such financing would be available on acceptable terms. Please also see other risks summarized in "Forward Looking Statements" above in Item 1. The Company expects its operating cash flows to improve if the Company achieves profitability in 2005.

The following table sets forth the contractual obligations of the Company in the aggregate. The Company has no capital lease obligations, unconditional purchase obligations or other long-term contractual obligations. The Company's long-term debt interest rate is a variable rate. The table below assumes a 5.00% annual interest rate for the Company's long-term debt, and a 5.75% annual interest rate for the Company's line of credit.

CONTRACTUAL OBLIGATIONS

	Payments due by Period
	Total		Less than 1-Year		1-3 Years		4-5 Years		5 Years
Long-term debt, including interest	$	3,028,600	$	1,038,400	$	1,990,200	$	—	$	—
Line of credit, including interest		820,300		820,300		—		—		—
Employee separation agreement		73,100		63,100		5,000		5,000		—
Operating lease obligations		134,800		71,900		62,900		—		—

Total Contractual Cash Obligations	$	4,056,800	$	1,993,700	$	2,058,100	$	5,000		—

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss due to adverse changes in financial and commodity market prices and rates. The Company is not materially exposed to market risks regarding interest rates because the interest on the Company's outstanding debt is at the lender's base rate, which approximates the prime rate, adjustable yearly. The Company's investments in debt and equity securities are short-term and not subject to significant fluctuations in fair value. If interest rates were to rise 10% from year-end levels, the fair value of the Company's debt and equity securities would have decreased by approximately $11,800. Further, the Company does not use foreign currencies in its business. Currently, it receives payments for sales to parties in foreign countries in U.S. dollars. Additionally, the Company does not use derivative instruments or engage in hedging activities. As a result, the Company does not believe that near-term changes in market risks will have a material effect on results of operations, financial position or cash flows of the Company.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Scott's Liquid Gold-Inc.

We have audited the accompanying consolidated balance sheets of Scott's Liquid Gold-Inc. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations, shareholders' equity and comprehensive income (loss), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Scott's Liquid Gold-Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.


	/s/ EHRHARDT, KEEFE, STEINER & HOTTMAN P.C.
Denver, Colorado February 11, 2005

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Scott's Liquid Gold-Inc.:

We have audited the accompanying consolidated statements of operations, shareholders' equity and comprehensive income (loss), and cash flows of Scott's Liquid Gold-Inc. and subsidiaries for the year ended December 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and the cash flows of Scott's Liquid Gold-Inc. and subsidiaries for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.


	/s/ KPMG LLP
Denver, Colorado April 3, 2003

Consolidated Statements of Operations

		Year ended December 31,
		2004			2003			2002
Net sales		$	22,647,200		$	24,470,700		$	24,959,000
Operating costs and expenses:
	Cost of sales		12,907,200			12,868,500			13,354,800
	Advertising		1,143,400			1,843,800			1,200,300
	Selling		5,804,800			6,151,500			5,594,500
	General and administrative		3,557,900			3,641,500			4,105,000

			23,413,300			24,505,300			24,254,600

Income (loss) from operations			(766,100	)		(34,600	)		704,400
Interest income			42,500			58,300			54,000
Interest expense			(177,800	)		(213,300	)		(261,100	)
Other income			—			—			594,600

Income (loss) before income taxes			(901,400	)		(189,600	)		1,091,900
Income tax (expense)benefit (Note 5)			(1,700	)		—			480,100

Net income (loss)		$	(903,100	)	$	(189,600	)	$	1,572,000

Net income (loss) per common share (Note 7):
	Basic	$	(0.09	)	$	(0.02	)	$	.15

	Diluted	$	(0.09	)	$	(0.02	)	$	.15

Weighted average shares outstanding:
	Basic		10,404,500			10,209,200			10,153,100

	Diluted		10,404,500			10,209,200			10,153,100

See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets

			December 31,
			2004		2003
ASSETS
Current assets:
	Cash and cash equivalents		$	3,354,600	$	3,498,600
	Investment securities			54,200		305,300
	Trade receivables, net of allowance for doubtful accounts of $83,000 and $82,000, respectively			1,419,700		1,108,600
	Other receivables			56,900		35,400
	Inventories (Note 2)			2,940,300		3,122,600
	Prepaid expenses			489,600		256,400
	Deferred tax assets (Note 5)			456,000		525,000

		Total current assets		8,771,300		8,851,900
Property, plant and equipment, net (Note 3)				14,349,600		14,909,300
Deferred tax assets (Note 5)				684,000		658,000
Other assets				22,600		33,400

			$	23,827,500	$	24,452,600

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Line of Credit (Note 4)		$	790,000	$	—
	Accounts payable			1,795,700		1,256,900
	Accrued payroll and benefits			1,050,500		1,106,300
	Other accrued expenses			413,700		552,500
	Current maturities of long-term debt (Note 4)			917,000		878,000

		Total current liabilities		4,966,900		3,793,700
Long-term debt, net of current maturities (Note 4)				1,893,000		2,807,300
Deferred tax liabilities (Note 5)				1,140,000		1,183,000

				7,999,900		7,784,000
Commitments and contingencies (Notes 4, 6, 9 and 10)
Shareholders' equity (Note 6):
	Common stock; $.10 par value, authorized 50,000,000 shares; issued and outstanding 10,471,000 shares (2004), and 10,356,000 shares (2003)			1,047,100		1,035,600
	Capital in excess of par			4,979,200		4,927,200
	Accumulated comprehensive income			4,200		5,600
	Retained earnings			9,797,100		10,700,200

		Shareholders' equity		15,827,600		16,668,600

			$	23,827,500	$	24,452,600

See accompanying notes to consolidated financial statements.

Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)

		Common Stock
Years ended December 31, 2004, 2003, and 2002		Common Stock			Capital in Excess of Par		Accumulated Comprehensive Income (loss)			Retained Earnings			Comprehensive Income (loss)
Years ended December 31, 2004, 2003, and 2002		Shares	Amount		Capital in Excess of Par		Accumulated Comprehensive Income (loss)			Retained Earnings			Comprehensive Income (loss)
Balance, December 31, 2001		10,153,100	$	1,015,300	$	4,847,000	$	8,200		$	9,317,800
Unrealized gain on investment securities		—		—		—		200			—		$	200
	Net income	—		—		—		—			1,572,000			1,572,000

Balance, December 31, 2002		10,153,100		1,015,300		4,847,000		8,400			10,889,800
Total comprehensive income													$	1,572,200

Stock issued to ESOP Plan		202,900		20,300		80,200		—			—
Unrealized loss on investment securities		—		—		—		(2,800	)		—		$	(2,800	)
	Net loss	—		—		—		—			(189,600	)		(189,600	)

Balance, December 31, 2003		10,356,000		1,035,600		4,927,200		5,600			10,700,200
Total comprehensive loss													$	(192,400	)

Stock issued to ESOP Plan		110,000		11,000		49,900		—			—
Stock issued for services		5,000		500		2,100		—			—
Unrealized loss on investment securities		—		—		—		(1,400	)		—		$	(1,400	)
	Net loss	—		—		—		—			(903,100	)		(903,100	)

Balance, December 31, 2004		10,471,000	$	1,047,100	$	4,979,200	$	4,200		$	9,797,100

Total comprehensive loss													$	(904,500	)

See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

				Year ended December 31,
				2004			2003			2002
Cash Flows from Operating Activities:
	Net income (loss)			$	(903,100	)	$	(189,600	)	$	1,572,000
	Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
		Depreciation and amortization			683,500			704,200			756,000
		Stock issued for services			2,600			—			—
		Stock issued to ESOP			60,900			100,500			—
		Change in assets and liabilities:
			Trade and other receivables, net		(332,600	)		688,500			(767,600	)
			Inventories		182,300			(516,000	)		1,590,200
			Prepaid expenses and other assets		(233,200	)		173,100			(308,400	)
			Accounts payable and accrued expenses		344,200			(662,000	)		(970,000	)

			Total adjustments to net income (loss)		707,700			488,300			300,200

		Net Cash Provided (Used) by Operating Activities			(195,400	)		298,700			1,872,200

Cash Flows from Investing Activities:
	Purchase of investment securities				—			(495,600	)		(1,605,800	)
	Proceeds from sale or maturity of investment securities				250,000			1,760,500			2,102,000
	Purchases of property, plant and equipment				(113,300	)		(21,300	)		(13,900	)

		Net Cash Provided by Investing Activities			136,700			1,243,600			482,300

Cash Flows from Financing Activities:
	Proceeds from short-term borrowings				950,000			—			—
	Principal payments on short-term borrowings				(160,000	)		—			—
	Principal payments on long-term borrowings				(875,300	)		(830,100	)		(788,900	)

		Net Cash Used by Financing Activities			(85,300	)		(830,100	)		(788,900	)

Net Increase (Decrease) in Cash and Cash Equivalents					(144,000	)		712,200			1,565,600
Cash and Cash Equivalents, beginning of year					3,498,600			2,786,400			1,220,800

Cash and Cash Equivalents, end of year				$	3,354,600		$	3,498,600		$	2,786,400

Supplemental disclosures:
	Cash paid during the year for:
			Interest	$	178,700		$	214,900		$	261,900
			Income taxes	$	1,700		$	400		$	1,900

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary Of Significant Accounting Policies

(a) Company Background

Scott's Liquid Gold-Inc. (a Colorado corporation) was incorporated on February 15, 1954. Scott's Liquid Gold-Inc. and its wholly owned subsidiaries (collectively, the "Company"), manufactures and markets quality household and skin care products. In the first quarter of 2001, the Company began acting as a distributor in the United States of beauty care products contained in individual sachets and manufactured by Montagne Jeunesse. The Company's business is comprised of two segments, household products and skin care products.

(b) Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

(c) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, realizability of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, and bad debts.

(d) Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents.

(e) Investments in Marketable Securities

The Company accounts for investments in marketable securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and Equity Securities", which requires that the Company classify investments in marketable securities according to management's intended use of such investments. The Company invests its excess cash and has established guidelines relative to diversification and maturities in an effort to maintain safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates. The Company considers all investments as available for use in its current operations, and therefore classifies them as short-term, available-for-sale investments. Available-for-sale investments are stated at fair value, with unrealized gains and losses, if any, net of tax, reported as a separate component of shareholders' equity and comprehensive income (loss). The cost of the securities sold is based on the specific identification method. Investments in corporate and government securities as of December 31, 2004 are scheduled to mature within one year.

(f) Inventories

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first out method) or market The Company records a reserve for slow moving and obsolete products and raw materials.

Amounts are discussed in Note 2.

(g) Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over estimated useful lives of the assets ranging from three to forty-five years. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the assets or provide improved efficiency are capitalized.

(h) Financial Instruments

Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, investments in marketable securities, and trade receivables. The Company maintains its cash balances in the form of bank demand deposits with financial institutions that management believes are creditworthy. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The Company has no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements.

The recorded amounts for cash and cash equivalents, receivables, other current assets, and accounts payable and accrued expenses approximate fair value due to the short-term nature of these financial instruments. The fair value of investments in marketable securities is based upon quoted market value. The Company's long-term debt bears interest at a variable rate, the lender's base rate, which approximates the prime rate. The carrying value of long-term debt approximates fair value as of December 31, 2004 and 2003.

(i) Long-Lived Assets

The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(j) Income Taxes

The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

(k) Revenue Recognition

Revenue is recognized upon delivery of products to customers, which is when title passes. Reserves for estimated market development support, pricing allowances and returns are provided in the period of sale as a reduction of revenue. Reserves for returns and allowances are recorded as a reduction of revenue, and are maintained at a level that management believes is appropriate to account for amounts applicable to existing sales. Reserves for coupons and certain other promotional activities are recorded as a reduction of revenue at the later of the date at which the related revenue is recognized or the date at which the sales incentive is offered. At December 31, 2004 and December 31, 2003, approximately $862,600 and $873,400, respectively, had been reserved as a reduction of accounts receivable, and approximately $90,000 and $175,000, respectively, had been reserved as current liabilities. Co-op advertising, marketing funds, slotting fees and coupons are deducted from gross sales, and totaled $2,074,700 and $1,916,600, and $2,860,900 in 2004, 2003, and 2002, respectively.

(l) Advertising Costs

The Company expenses advertising costs as incurred.

(m) Stock-based Compensation

The Company has elected to follow Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its employee stock options. Under APB No. 25, employee stock options are accounted for based upon the intrinsic value, which is the difference between the exercise price and fair value of the underlying common stock. Generally, if the exercise price of employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recorded. The Company has adopted the disclosure only provisions of SFAS No. 123, "Accounting for Stock-based Compensation" (See Note 6—Shareholders' Equity).

The Company granted no options for shares of the Company's common stock during the fourth quarter of 2004, 5,000 options for shares of the Company's common stock during the third quarter of 2004 with an exercise price equal to $0.53 and 35,000 options for shares of the Company's common stock were granted in the first quarter of 2004 with an exercise price of $0.76.

Had compensation cost been recorded based on the fair value of the options granted, the Company's pro-forma net income (loss) and net income (loss) per share for the years ended December 31, 2004, 2003, and 2002 would have been as follows:

	2004						2003						2002
	As Reported			Pro Forma			As Reported			Pro-Forma			As Reported		Pro Forma
Net income (loss)	$	(903,100	)	$	(920,500	)	$	(189,600	)	$	(393,300	)	$	1,572,000	$	1,454,700
Basic earnings (loss) per share	$	(0.09	)	$	(0.09	)	$	(0.02	)	$	(0.04	)	$	0.15	$	0.14
Diluted earnings (loss) per share	$	(0.09	)	$	(0.09	)	$	(0.02	)	$	(0.04	)	$	0.15	$	0.14

(n) Comprehensive Income

The Company follows SFAS No. 130, "Reporting Comprehensive Income" which establishes standards for reporting and displaying comprehensive income and its components. Comprehensive income includes all changes in equity during a period from non-owner sources.

(o) Shipping and Handling Costs

The Company classifies amounts billed to a customer in a sale transaction related to shipping and handling as revenue and classifies shipping and handling costs as a component of selling expense on the

accompanying Consolidated Statement of Operations. Shipping and handling costs totaled $1,544,100, $1,503,000, and $1,239,000 for the years ended December 31, 2004, 2003, and 2002, respectively.

(p) Recently Issued Accounting Pronouncements

In December 2003, the FASB issued Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46R"). FIN 46R requires a company to consolidate a variable interest entity, as defined, when the company will absorb a majority of the variable interest entity's expected losses, receive a majority of the variable interest entity's expected residual returns, or both. FIN 46R also requires certain disclosures relating to consolidated variable interest entities and unconsolidated variable interest entities in which a company has a significant variable interest. The provisions of FIN 46R are required for companies that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. The provisions of FIN 46R are required to be applied for periods ending after March 15, 2004 for all other types of entities. The Company was required to perform this assessment at December 31, 2004, and consolidate any variable interest entries for which it would absorb a majority of the entities' expected losses or receive a majority of the expected residual gains. The Company does not have any variable interest entities as of December 31, 2004, therefore this assessment had no impact on the Company's consolidated financial statements.

Note 2: Inventories

Inventories consisting of materials, labor and overhead at December 31 were comprised of the following:

	2004			2003
Finished goods	$	2,256,100		$	2,413,700
Raw Materials		993,200			1,072,900
Inventory valuation in reserve		(309,000	)		(364,000	)

	$	2,940,300		$	3,122,600

The reduction of the inventory reserves was the result of the disposal of products and materials previously reserved.

Note 3: Property, Plant and Equipment

Property, plant and equipment at December 31 were comprised of the following:

	2004		2003
Land	$	1,091,500	$	1,091,500
Buildings		16,283,000		16,257,300
Production equipment		7,530,000		7,502,800
Office furniture and equipment		1,920,000		1,880,100
Other		182,000		182,000

		27,006,500		26,913,700
Less accumulated depreciation		12,656,900		12,004,400

	$	14,349,600	$	14,909,300

Depreciation expense for the years ended December 31, 2004, 2003, and 2002 was $673,000, $693,400, and $721,500, respectively.

Note 4: Debt

The Company has a term loan agreement in the original amount of $6.0 million with a commercial bank. The loan agreement with the Company's bank contains affirmative and negative covenants, including the requirement for maintaining a current ratio of at least 1:1 and a ratio of consolidated long-term debt to consolidated net worth of not more than 1:1 and limits the payment of dividends on common stock. The covenants were met at the end of each quarter during 2004, 2003 and 2002 and at December 31, 2004 and 2003.

Long-term debt at December 31 is presented below:

	2004		2003
First mortgage loan, secured by land and buildings, due November 20, 2007, principal and interest of $86,200 payable monthly, interest at bank base rate (5.75% at December 31, 2004), adjusted annually	$	2,810,000	$	3,685,300
Less current maturities		917,000		878,000

Long-term debt	$	1,893,000	$	2,807,300

Maturities of long-term debt for the years 2005 through 2007 are respectively: $917,000; $965,000; and $928,000.

On August 10, 2004 the Company obtained a $1,500,000 line of credit from a bank to finance additional inventory and accounts receivable. The line of credit bears interest at a rate of .5% over the bank's base rate (5.75% at December 31, 2004) and matures on August 10, 2005. The line of credit is secured by inventory and accounts receivable. The covenants are the same as the bank loan described above. At December 31, 2004, the outstanding amount under this line of credit was $790,000; and as of the date of this Report, the Company had $660,000 outstanding under this line of credit.

The average interest rate on the above debt as of December 31, 2004 was 5.19%.

Note 5: Income Taxes

The benefit for income tax for the years ended December 31 is as follows:

			2004			2003			2002
Current provision (benefit):
	Federal		$	—		$	—		$	(483,000	)
	State			1,700			—			2,900

		Total current provision (benefit)		1,700			—			(480,100	)

Deferred provision (benefit):
	Federal			(258,900	)		(24,100	)		783,900
	State			(23,600	)		(2,200	)		70,500
	Valuation allowance			282,500			26,300			(854,400	)

		Total deferred provision (benefit)		—			—			—

Provision (benefit):
	Federal			—			—			(483,000	)
	State			1,700			—			2,900

		Total provision (benefit)	$	1,700		$	—		$	(480,100	)

Income tax expense (benefit) at the statutory tax rate is reconciled to the overall income tax expense (benefit) as follows:

		2004			2003			2002
Federal income tax at statutory rates		$	(307,000	)	$	(64,500	)	$	371,200
State income taxes, net of federal tax effect			(27,600	)		(5,800	)		41,900
Other			53,800			44,000			(38,800	)

	Total		(280,800	)		(26,300	)		374,300
Change in valuation allowance			282,500			26,300			(854,400	)

	Effective tax	$	1,700		$	—		$	(480,100	)

Deferred taxes are determined based on estimated future tax effects of differences between the amounts reflected in the financial statements and the tax basis of assets and liabilities given the

provisions of enacted tax laws. The net deferred tax assets and liabilities as of December 31, 2004 and 2003 are comprised of the following:

			2004			2003
Deferred tax assets:
	Trade receivables		$	30,800		$	30,400
	Inventories			103,400			133,800
	Accrued insurance			21,700			18,300
	Accrued vacation			262,400			252,300
	Accrued payroll			27,100			78,000
	Net operating loss carryforwards			1,187,900			879,400
	Other			10,600			12,200
	Valuation allowance			(503,900	)		(221,400	)

		Total deferred tax assets		1,140,000			1,183,000
	Less current portion			456,000			525,000

		Net non-current deferred tax assets	$	684,000		$	658,000

Deferred tax liability:
	Accelerated depreciation for tax purposes		$	(1,140,000	)	$	(1,183,000	)

		Net noncurrent deferred tax liability	$	(1,140,000	)	$	(1,183,000	)

At December 31, 2004, the Company had federal net operating loss carryforwards of approximately $2,619,000, which expire over a period ending in 2024, and federal tax credit carryforwards related to research and development efforts of approximately $145,000. The Company has state net operating losses of approximately $9,500,000 expiring over a period ending in 2024.

Prior to 2002, the Company established a valuation allowance due mainly to the uncertainty relating to the realization of the Company's net operating loss carryforwards. Tax law changes in 2002 permitted the Company to carryback its 2001 tax loss to 1997 and recover $483,000 in previously paid federal income taxes. This change in the tax law, along with taxable income in 2002 resulted in the utilization of operating losses from both 2001 and 2000. As a result of the utilization of net operating loss carryforwards, the Company reduced the valuation allowance by $854,400 during the year ended December 31, 2002. The Company further increased the valuation allowance by $282,100 and $26,300 for 2004 and 2003, respectively, primarily related to uncertainty as to realization of its operating losses for these years. The amount of the deferred tax assets considered realizable could be adjusted in the future based upon changes in circumstances that result in a change in management's assessment of the Company's ability to realize those deferred tax assets through the generation of taxable income or other tax events.

A reconciliation of the Company's income (loss) before taxes for financial statement purposes to taxable income (loss) is as follows:

		Year Ended December 31,
		2004			2003			2002
Income (loss) before income taxes		$	(901,400	)	$	(189,600	)	$	1,091,900
Differences between income (loss) before income taxes and taxable income (loss):
	Permanent differences		20,000			12,000			10,600
	Net changes in temporary differences		(53,200	)		(105,600	)		(320,500	)

Federal taxable income (loss)		$	(934,600	)	$	(283,200	)	$	782,000

Note 6: Shareholders' Equity

In 1993, a non-qualified stock option plan was adopted for the outside directors and in 1997, an incentive stock option plan was adopted for Company employees. The 1993 plan expired in January of 2003, and accordingly no shares are available for option under that plan. In 1998, a stock option plan for Company employees, officers and directors was adopted. All of the plans permitted the Company to grant options up to an aggregate of 1,800,000 shares of common stock. Options are granted at not less than fair market value of the stock on the date of grant and are exercisable for up to ten years from the grant date. All options granted to employees are fully vested on the date of grant.

		1993 Plan				1997 Plan				1998 Plan
		Number of Shares		Average Option Price Per Share		Number of Shares		Average Option Price Per Share		Number of Shares		Average Option Price Per Share
Maximum number of shares under the plans		400,000				300,000				1,100,000

Outstanding, December 31, 2001		181,700		$	1.55	232,200		$	1.64	625,800		$	0.96
	Granted in 2002	100,000			0.57	50,000			0.50	50,000			0.57
	Exercised	—			—	—			—	—			—
	Cancelled/Expired	(106,700	)		1.66	(15,000	)		1.59	(161,000	)		1.11

Outstanding, December 31, 2002		175,000			0.92	267,200			1.43	514,800			0.87
	Granted in 2003	—			—	—			—	569,000			0.58
	Exercised	—			—	—			—	—			—
	Cancelled/Expired	(45,000	)		1.69	(215,200	)		1.63	(126,500	)		1.10

Outstanding, December 31, 2003		130,000			0.65	52,000			0.61	957,300			0.67
	Granted in 2004	—			—	10,000			0.65	30,000			0.76
	Exercised	—			—	—			—	—			—
	Cancelled/Expired	—			—	(2,000	)		0.97	(61,800	)		1.30

Outstanding, December 31, 2004		130,000		$	0.65	60,000		$	0.60	925,500		$	0.63

Available for issuance, December 31, 2004						240,000				174,500

A summary of additional information related to the options outstanding as of December 31, 2004 is as follows:

	Options Outstanding and Exercisable
		Weighted Average
Range of Exercise Prices	Number Outstanding	Remaining Contractual Life	Exercise Price
$0.46 - $0.97	1,115,500	2.4 years	$	0.63

Total	1,115,500	2.4 years	$	0.63

The weighted average fair value of each option grant has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions at December 31:

	2004			2003			2002
Dividend rate	$	—		$	—		$	—
Expected volatility		169	%		169	%		172	%
Risk-free interest rate		3.04	%		3.04	%		3.06	%
Expected life		4.5 years			4.5 years			4.5 years

Using these assumptions, the fair value of the stock options granted in 2004, 2003, and 2002 were estimated to be approximately $17,400, $203,700, and $117,300, respectively, net of income taxes.

The Company has an Employee Stock Ownership Plan ("Plan") to provide retirement benefits for its employees. The Plan is designed to invest primarily in the Company's common stock and is non-contributory on the part of the Company's employees. Contributions to the Plan are discretionary as determined by the Company's Board of Directors. The Company expenses the cost of contributions to the Plan which amounted to $60,900 (110,000 shares),$100,500 (202,900 shares), and $27,700 (50,000 shares), in 2004, 2003 and 2002, respectively. In 2004 and 2003 the shares contributed were issued from authorized but unissued shares, in 2002 all shares contributed were purchased on the open market.

Note 7: Earnings per Share

The Company presents basic and diluted earnings or loss per share in accordance with SFAS No. 128 "Earnings per Share" which establishes standards for computing and presenting basic and diluted earnings per share. Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive (as in the years 2004 and 2003). Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock. A reconciliation of the weighted average number of common shares outstanding is as follows:

	2004	2003	2002
Common shares outstanding, beginning of the year	10,356,000	10,153,100	10,153,100
Common stock issued	5,000	202,900	—
Stock issued to ESOP	110,000	—	—
Stock options exercised	—	—	—

Common shares outstanding, end of year	10,471,000	10,356,000	10,153,100

Weighted average number of common shares outstanding	10,404,500	10,209,200	10,153,100
Common share equivalents	—	—	—

Diluted weighted average number of common shares outstanding	10,404,500	10,209,200	10,153,100

The Company has authorized 20,000,000 shares of preferred stock issuable in one or more series, none of which is issued or outstanding as of December 31, 2004.

At December 31, 2004, the Company had 1,115,500 stock options outstanding which have been excluded from diluted common shares outstanding due to their antidilutive effect.

Note 8: Segment Information

The Company operates in two different segments: household products and skin care products. The Company's products are sold nationally and internationally (primarily Canada), directly and through independent brokers, to mass merchandisers, drug stores, supermarkets, wholesale distributors and other retail outlets. Management has chosen to organize the Company around these segments based on differences in the products sold. The household products segment includes "Scott's Liquid Gold" for wood, a wood cleaner which preserves as it cleans, and "Touch of Scent," a room air freshener. The skin care segment includes "Alpha Hydrox," alpha hydroxy acid cleansers and lotions, a retinol product, and "Diabetic Skin Care", a healing cream and moisturizer developed to address skin conditions of diabetics, and beauty care sachets of Montagne Jeunesse distributed by the Company.

The Company's accounting policies for its segments are the same as those described in Note 1, "Summary of Significant Accounting Policies." Management evaluates segment performance based on segment income or loss before profit sharing, bonuses, income taxes and nonrecurring gains and losses. The following provides information on the Company's segments as of and for the years ended December 31:

	2004						2003						2002
	Household Products			Skin Care Products			Household Products			Skin Care Products			Household Products		Skin Care Products
Net sales to external customers	$	9,342,800		$	13,304,400		$	9,015,900		$	15,454,800		$	10,154,600	$	14,804,400
Income (loss) before profit sharing, bonuses and income taxes	$	(673,000	)	$	(228,400	)	$	(106,900	)	$	(82,700	)	$	1,207,000	$	(100,600	)
Identifiable assets	$	3,733,200		$	6,402,200		$	3,640,100		$	6,416,100		$	3,907,300	$	6,681,200

The following is a reconciliation of segment information to consolidated information:

	2004			2003			2002
Net sales to external customers	$	22,647,200		$	24,470,700		$	24,959,000

Income (loss) before profit sharing, bonuses and income taxes	$	(901,400	)	$	(189,600	)	$	1,106,400

Consolidated income (loss) before income taxes	$	(901,400	)	$	(189,600	)	$	1,091,900

Identifiable assets	$	10,135,400		$	10,056,200		$	10,588,500
Corporate assets		13,692,100			14,396,400			15,490,700

Consolidated total assets	$	23,827,500		$	24,452,600		$	26,079,200

The Company attributes net sales to different geographic areas based on the location of the customer. All of the Company's long-lived assets are located in the United States. For the year ended December 31, revenues for each geographical area are as follows:

	2004		2003		2002
United States	$	22,475,900	$	24,214,100	$	24,694,400
Foreign countries		171,300		256,600		264,600

Total net sales	$	22,647,200	$	24,470,700	$	24,959,000

In 2004, 2003 and 2002, one customer accounted for approximately $8,200,000, $9,100,000, and $9,400,000, respectively, of consolidated net sales. Both segments sell to this customer. This customer is not related to the Company. A loss of this customer could have a material effect on the Company because it is uncertain whether the Company's consumer base served by this customer would purchase the Company's products at other retail outlets. The outstanding trade receivable from this same customer accounted for 40.1% and 29.2% of total trade receivables at December 31, 2004 and 2003, respectively. Another customer accounted for approximately $3,000,000 of consolidated net sales in both 2004 and 2003; and, the outstanding trade receivables from this customer accounted for 10.0% and 6.0% of total trade receivables at December 31, 2004 and 2003, respectively. No long-term contracts exist between the Company and these customers or any other customer.

Note 9: Retirement Plans

The Company has a 401(k) Profit Sharing Plan ("401(k) Plan") covering its full-time employees who have completed four months of service as defined in the 401(k) Plan, and are age 18 or older. Participants may defer from 1 to 75% of their compensation up to the maximum limit determined by law. The Company may make discretionary "matching" contributions up to a maximum of 6% of each participant's compensation, but only for those employees earning no more than $35,000 annually. Additionally, the Company can make discretionary "profit sharing" contributions to eligible employees. Participants are always fully vested in their contributions, matching contributions and allocated earnings thereon. Vesting in the Company's profit sharing contribution is based on years of service, with a participant fully vested after five years. Company matching contributions totaled $12,000, $6,600, and $9,600, in 2004, 2003, and 2002, respectively. The Company has made no discretionary profit sharing contributions in 2004, 2003 or 2002.

Note 10: Commitments and Contingencies

The Company has entered into various operating lease agreements, primarily for office equipment. Annual rental expense under these leases totaled $85,400, $110,600, and $97,800 in 2004, 2003 and 2002, respectively. Minimum annual rental payments under noncancellable operating leases are approximately $72,000, $33,000, $20,000, and $10,000 for the years ending December 31, 2005, 2006, 2007, and 2008, respectively.

Note 11. Transactions with Related Parties

In 2001, the Company commenced purchases of the skin care sachets from Montagne Jeunesse under a distributorship agreement covering the United States. Montagne Jeunesse is the sole supplier of that product. Sales of these products represent a significant source of the Company's revenues. The term of this distributorship agreement is five years with automatic rolling one-year renewals, subject to the rights of either party to terminate upon three months' notice or if certain minimum sales are not met or certain other events occur. For the years 2004 and 2003, this minimum sales requirement was waived, with no conditions. The principal and controlling owner of Montagne Jeunesse is the managing director and sole owner of Atchinson Investments, Ltd., which owned, to the knowledge of the Company, at December 31, 2004, approximately five percent of the Company's outstanding common stock.

The Company adopted a bonus plan for its executive officers for 2004. The plan provided that an amount would be distributed to the Company's executive officers equal to 10% of the annual before tax profit exceeding $1,000,000, excluding items that are infrequent, unusual, or extraordinary. In 2002, although before tax profit exceeded $1,000,000 no executive bonuses were paid under substantially the same plan because of the exclusions mentioned above, and in 2004 and 2003, no bonuses were accrued or paid due to net losses. The Company has adopted substantially the same plan for its executive officers in 2005.

Note 12. Valuation and Qualifying Accounts (in thousands)

		Balance at beginning of year		Additions charged to expense	Deductions	Balance at end of year
Year ended December 31, 2002:
	Returns and allowances, market development support and doubtful accounts reserve	$	1,760,200	5,051,300	5,387,200	$	1,424,300
	Inventory valuation reserve	$	750,000	382,800	732,800		400,000
Year ended December 31, 2003:
	Returns and allowances, market development support and doubtful accounts reserve	$	1,424,300	3,621,300	4,090,200	$	955,400
	Inventory valuation reserve	$	400,000	17,000	53,000	$	364,000
Year ended December 31, 2004:
	Returns and allowances, market development support and doubtful accounts reserve	$	955,400	3,251,300	3,261,100	$	945,600
	Inventory valuation reserve	$	364,000	22,700	77,700	$	309,000

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

As of December 31, 2004, the Company conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms as of December 31, 2004. There was no change in our internal control over financial reporting during the quarter ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions.

Item 14. Principal Accountant Fees and Services.

For Part III, the information set forth in the Company's definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held in May, 2005, hereby is incorporated by reference into this Report.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

Financial Statements:
Consolidated Statements of Operations— Years ended December 31, 2004, 2003 and 2002
Consolidated Balance Sheets— At December 31, 2004 and 2003
Consolidated Statements of Cash Flows— Years ended December 31, 2004, 2003 and 2002
Consolidated Statements of Shareholders' Equity Years ended December 31, 2004, 2003 and 2002
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Financial Statement Schedules:
None.

(c): Exhibits:

Exhibit Number		Document
3.1		Restated Articles of Incorporation, as amended and restated through May 1, 1996, incorporated by reference to Exhibit 3.1 of the Company's Annual Report on From 10-K for the year ended December 31, 2001.
3.2		Bylaws, as amended through February 27, 1996.
4.1		Promissory Note, dated November 21, 2000, payable to Citywide Banks; Assignment of Rents, dated November 21, 2000, between the Company and Citywide Banks; Deed of Trust, dated November 21, 2000, by the Company for Citywide Banks; and Business Loan Agreement, dated November 21, 2000, between the Company and Citywide Banks, incorporated by reference to Exhibit 4.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
4.2		Business Loan Agreement, incorporated by reference to Exhibit 10.0 of the Company's Quarterly report on Form 10-Q for the quarter ended June 30, 2004.
10.1	*	Scott's Liquid Gold-Inc. Health and Accident Plan, Plan Document and Summary Plan Description Amended and Restated Effective October 1, 2003.
10.2		Scott's Liquid Gold & Affiliated Companies Employee Benefit Health And Welfare Plan Amendment #1-2004.
10.3	*	Amended Key Executive Disability Plan—Scott's Liquid Gold-Inc. incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
10.4	*	2005 Key Executive Bonus Plan.
10.5	*	Indemnification Agreement dated May 6, 1987, between the Registrant and Mark E. Goldstein, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement dated December 23, 1991, between the Registrant and Dennis H. Field, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Amendment to Indemnification Agreement dated January 17, 1992, between the Registrant and Dennis H. Field, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated July 12, 2000, between the Company and Jeffrey R. Hinkle, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated August 16, 2000, between the Company and Carl A. Bellini, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated November 2, 2000, between the Company and Jeffry B. Johnson, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated November 20, 2002 between the Company and Dennis P. Passantino, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; and, an Indemnification Agreement, dated January 26, 2004 between the Company and Gerald J. Laber, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2003.

10.6		Sales Distribution Rights Agreement dated December 1, 2000 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001; Amendment dated August 15, 2001 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001; Amendment dated October 21, 2002 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.5 of the Company's 2002 Annual Report on form 10-K for the year ended December 31, 2002; Amendment dated November 24, 2003 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K for the year ended December 31, 2003; and Amendment dated January 27, 2005 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company.
10.7	*	Scott's Liquid Gold-Inc. Employee Stock Ownership Plan and Trust Agreement, Amended and Restated Effective January 1, 2001, incorporated by reference to Exhibit 10.6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2001; and Second Amendment to Scott's Liquid Gold-Inc. Employee Stock Ownership Plan, effective as of January 1, 2003, incorporated by reference to Exhibit 10.6 of the Company's annual Report on Form 10-K for the year ended December 31, 2003.
10.8	*	Scott's Liquid Gold-Inc. 1993 Stock Option Plan for Outside Directors, incorporated by reference to Exhibit 4.7 of the Company's Registration Statement No. 33-63254 on Form S-8, filed with the Commission on May 25, 1993.
10.9	*	Scott's Liquid Gold-Inc. 1998 Stock Option Plan, incorporated by reference to Exhibit 4.3 of the Company's Registration Statement No. 333-51710, filed with the Commission on December 12, 2000.
21		List of Subsidiaries.
23		Consent of Ehrhardt, Keefe, Steiner & Hottman PC.
23.1		Consent of KPMG LLP.
24		Powers of Attorney.
31.1		Rule 13a-14(a) Certification of the Chief Executive Officer.
31.2		Rule 13a-14(a) Certification of the Chief Financial Officer.
32.1		Section 1350 Certification.

*: Management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SCOTT'S LIQUID GOLD-INC., a Colorado corporation
		By:		/s/ MARK E. GOLDSTEIN Mark E. Goldstein, President and Chief Executive Officer Principal Executive Officer
		By:		/s/ JEFFRY B. JOHNSON Jeffry B. Johnson, Treasurer and Chief Financial Officer Principal Financial Officer
		By:		/s/ BRIAN L. BOBERICK, CONTROLLER Brian L. Boberick, Controller
		Date:		March 16, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of the Registrant and in the capacities and on the dates indicated:

Date	Name and Title		Signature
March 16, 2005	Mark E. Goldstein, Director	) )
		)
March 16, 2005	Jeffrey R. Hinkle, Director	) )	/s/ JEFFRY B. JOHNSON
		)
March 16, 2005	Jeffry B. Johnson, Director	) ) )	Jeffry B. Johnson, for himself and as Attorney-in-Fact for the named directors who together constitute of all of the members
		)
March 16, 2005	Dennis P. Passantino, Director	) )
		)
March 16, 2005	Carl A. Bellini, Director	) )
		)
March 16, 2005	Dennis H. Field, Director	) )
		)
March 16, 2005	Gerald J. Laber, Director	) )

EXHIBIT INDEX

Exhibit Number		Document
3.1		Restated Articles of Incorporation, as amended and restated through May 1, 1996, incorporated by reference to Exhibit 3.1 of the Company's Annual Report on From 10-K for the year ended December 31, 2001.
3.2		Bylaws, as amended through February 27, 1996.
4.1		Promissory Note, dated November 21, 2000, payable to Citywide Banks; Assignment of Rents, dated November 21, 2000, between the Company and Citywide Banks; Deed of Trust, dated November 21, 2000, by the Company for Citywide Banks; and Business Loan Agreement, dated November 21, 2000, between the Company and Citywide Banks, incorporated by reference to Exhibit 4.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
4.2		Business Loan Agreement, incorporated by reference to Exhibit 10.0 of the Company's Quarterly report on Form 10-Q for the quarter ended June 30, 2004.
10.1	*	Scott's Liquid Gold-Inc. Health and Accident Plan, Plan Document and Summary Plan Description Amended and Restated Effective October 1, 2003.
10.2		Scott's Liquid Gold & Affiliated Companies Employee Benefit Health And Welfare Plan Amendment #1-2004.
10.3	*	Amended Key Executive Disability Plan—Scott's Liquid Gold-Inc. incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
10.4	*	2005 Key Executive Bonus Plan.
10.5	*	Indemnification Agreement dated May 6, 1987, between the Registrant and Mark E. Goldstein, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement dated December 23, 1991, between the Registrant and Dennis H. Field, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Amendment to Indemnification Agreement dated January 17, 1992, between the Registrant and Dennis H. Field, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated July 12, 2000, between the Company and Jeffrey R. Hinkle, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated August 16, 2000, between the Company and Carl A. Bellini, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated November 2, 2000, between the Company and Jeffry B. Johnson, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; Indemnification Agreement, dated November 20, 2002 between the Company and Dennis P. Passantino, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 31, 2002; and, an Indemnification Agreement, dated January 26, 2004 between the Company and Gerald J. Laber, incorporated by reference to Exhibit 10.4 of the Company's Annual Report on Form 10-K for the year ended December 21, 2003.

10.6		Sales Distribution Rights Agreement dated December 1, 2000 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001; Amendment dated August 15, 2001 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001; Amendment dated October 21, 2002 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.5 of the Company's 2002 Annual Report on form 10-K for the year ended December 31, 2002; and Amendment dated November 24, 2003 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company, incorporated by reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K for the year ended December 31, 2003; and Amendment dated January 27, 2005 between Montagne Jeunesse, a trading division of Medical Express (UK) Ltd., and the Company.
10.7	*	Scott's Liquid Gold-Inc. Employee Stock Ownership Plan and Trust Agreement, Amended and Restated Effective January 1, 2001, incorporated by reference to Exhibit 10.6 of the Company's Annual Report on Form 10-K for the year ended December 31, 2001; and Second Amendment to Scott's Liquid Gold-Inc. Employee Stock Ownership Plan, effective as of January 1, 2003, incorporated by reference to Exhibit 10.6 of the Company's annual Report on Form 10-K for the year ended December 31, 2003.
10.8	*	Scott's Liquid Gold-Inc. 1993 Stock Option Plan for Outside Directors, incorporated by reference to Exhibit 4.7 of the Company's Registration Statement No. 33-63254 on Form S-8, filed with the Commission on May 25, 1993.
10.9	*	Scott's Liquid Gold-Inc. 1998 Stock Option Plan, incorporated by reference to Exhibit 4.3 of the Company's Registration Statement No. 333-51710, filed with the Commission on December 12, 2000.
21		List of Subsidiaries.
23		Consent of Ehrhardt, Keefe, Steiner & Hottman PC.
23.1		Consent of KPMG LLP.
24		Powers of Attorney.
31.1		Rule 13a-14(a) Certification of the Chief Executive Officer.
31.2		Rule 13a-14(a) Certification of the Chief Financial Officer.
32.1		Section 1350 Certification.

*: Management contract or compensatory plan or arrangement

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TABLE OF CONTENTS

Exhibit 3.2

BYLAWS

SCOTT'S LIQUID GOLD-INC.

(A Colorado Corporation)

Effective as of February 27, 1996

BYLAWS

SCOTT'S LIQUID GOLD-INC.

TABLE OF CONTENTS


ARTICLE I		Offices
	1.	Business Offices
	2.	Principal Office
	3.	Registered Office
ARTICLE II		Shareholders' Meetings
	1.	Annual Meetings
	2.	Special Meetings
	3.	Place of Special Meetings
	4.	Notice of Meetings
	5.	Shareholders' List
	6.	Organization
	7.	Agenda and Procedure
	8.	Quorum
	9.	Adjournment
	10.	Voting
	11.	Inspectors
	12.	Meeting by Telecommunication
ARTICLE III		Board of Directors
	1.	Authority, Election and Tenure
	2.	Number and Qualification
	3.	Regular Meetings
	4.	Special Meetings
	5.	Place of Meetings
	6.	Notice of Meetings
	7.	Quorum and Voting
	8.	Organization, Agenda and Procedure
	9.	Resignation
	10.	Removal
	11.	Vacancies
	12.	Executive and Other Committees
	13.	Compensation of Directors
	14.	Meeting by Telecommunication
ARTICLE IV		Waiver of Notice by Shareholders and Directors and Action of Shareholders and Directors by Consent
	1.	Waiver of Notice
	2.	Action Without a Meeting
ARTICLE V		Officers
	1.	Election and Tenure
	2.	Resignation, Removal and Vacancies
	3.	Chairman of the Board

	4.	President
	5.	Vice Presidents
	6.	Secretary
	7.	Treasurer
	8.	Assistant Secretaries and Assistant Treasurers
	9.	Bond of Officers
	10.	Compensation
ARTICLE VI		Indemnification
	1.	Indemnification
	2.	Provisions Not Exclusive
	3.	Effect of Modification
	4.	Definitions
	5.	Insurance
	6.	Expenses as a Witness
	7.	Notice to Shareholders
ARTICLE VII		Execution of Instruments; Loans; Checks and Endorsements; Deposits; Proxies
	1.	Execution of Instruments
	2.	Borrowing
	3.	Loans to Directors, Officers and Employees
	4.	Checks and Endorsements
	5.	Deposits
	6.	Proxies
ARTICLE VIII		Shares of Stock
	1.	Certificates of Stock
	2.	Shares Without Certificates
	3.	Record
	4.	Transfer of Stock
	5.	Transfer Agents and Registrars; Regulations
	6.	Lost, Destroyed or Mutilated Certificates
ARTICLE IX		Corporate Seal
ARTICLE X		Fiscal Year
ARTICLE XI		Corporate Records
	1.	Corporate Records
	2.	Addresses of Shareholders
	3.	Fixing Record Date
	4.	Inspection of Corporate Records
	5.	Distribution of Financial Statements
	6.	Audits of Books and Accounts
ARTICLE XII		Emergency Bylaws
ARTICLE XIII		Amendments

BYLAWS

OF

SCOTT'S LIQUID GOLD-INC.

(a Colorado Corporation)

ARTICLE I

Offices

1. Business Offices. The Corporation may have one or more offices at such place or places within or without the State of Colorado as the Board of Directors may from time to time determine or as the business of the Corporation may require.

2. Principal Office. The initial principal office of the Corporation shall be as set forth in the Articles of Incorporation. The Board of Directors, from time to time, may change the principal office of the Corporation.

3. Registered Office. The registered office of the Corporation shall be as set forth in the Articles of Incorporation, unless changed as provided by the provisions of the Colorado Business Corporation Act, as it may be amended from time to time, or any successor law (the "Act").

ARTICLE II

Shareholders' Meetings

1. Annual Meetings. The annual meetings of shareholders for the election of directors to succeed those directors whose terms expire and for the transaction of such other business as may come before the meeting shall be held each year at such date, time and place, either within or without the State of Colorado, as may be designated by resolution of the Board of Directors from time to time; provided, however, that an annual meeting shareholders shall be held each year on a date that is within the earlier of six months after the close of the last fiscal year or fifteen months after the last annual meeting. If the day so fixed for such annual meeting shall be a legal holiday at the place of the meeting, then such meeting shall be held on the next succeeding business day at the same hour.

2. Special Meetings. Special meetings of shareholders for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation, may be called at any time by the President or by the Board of Directors and shall be called by the President or the Secretary upon one or more written demands (which shall state the purpose or purposes therefor) signed and dated by the holders of shares representing not less than ten percent of all votes entitled to be cast on any issue proposed to be considered £t the meeting. The record date for determining the shareholders entitled to demand a special meeting is the date of the earliest of any of the demands pursuant to which the meeting is called, or the date that is 60 days before the date on which the first of such demands is received, whichever is later. Business transacted at any special meeting of shareholders shall be limited to the purpose or purposes stated in the notice of such meeting.

3. Place of Special Meetings. Special meetings of shareholders shall be held at such place or places, within or without the State of Colorado, as may be determined by the Board of Directors and designated in the notice of the meeting, or, if no place is so determined and designated in the notice, special meetings of shareholders shall be held at the principal office of the Corporation.

4. Notice of Meetings. Not less than 10 nor more than 60 days prior to each annual or special meeting of shareholders, written notice of the date, time and place of each annual and special shareholders' meeting shall be given to each shareholder entitled to vote at such meeting; provided,

however, that if the authorized shares of the Corporation are proposed to be increased, at least 30 days' notice in like manner shall be given; and provided, further, that if the Act prescribes notice requirements for particular circumstances (as in the case of the sale, lease or exchange of the Corporation's assets other than in the usual and regular course of business, or the merger or dissolution of the Corporation), the provisions of the Act shall govern. Notice may be given in person; by telephone, telegraph, teletype, electronically transmitted facsimile, or other form of wire or wireless communication; and, if so given, shall be effective when received by the shareholder. Notice may also be given by deposit in the United States mail, postage prepaid, if addressed to the shareholder at the address of such shareholder shown in the Corporation's current record of shareholders, and, of so given, shall be effective when mailed. If three successive notices mailed to any shareholder in accordance with the provisions of this Section 4 are returned as undeliverable, no further notices to such shareholder shall be necessary until another address for such shareholder is made known to the Corporation. The notice of a special meeting shall, in addition, state the meeting's purposes.

5. Shareholders' List. A complete record of the shareholders entitled to notice of any shareholders' meeting (or an adjourned meeting described in Section 9 of this Article II) shall be prepared by the Secretary of the Corporation. Such shareholders' list shall be arranged by voting groups and, within each voting group by class or series of shares, shall be alphabetical within each class or series and shall show the address of, and the number of shares of each such class and series that are held by, each shareholder. (When used in these Bylaws, the term "voting group" or "voting groups" shall have the meaning assigned by the Act.) The shareholders' list shall be available for inspection by any shareholder beginning on the earlier of ten days before the meeting for which the list was prepared or two business days after notice is given and continuing through the meeting and any adjournment thereof at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting will be held. A shareholder or his agent or attorney is entitled on written demand to inspect and, subject to the requirements of the Act, to copy the list during regular business hours and during the period it is available for inspection.

6. Organization. The President or, in the President's absence, the Chairman of the Board, or, in the absence of both these persons, any Vice President shall call meetings of shareholders to order and act as chairperson of such meetings. In the absence of said officers, any shareholder entitled to vote at the meeting, or any proxy of any such shareholder, may call the meeting to order and a chairperson shall be elected by a majority of the votes present and entitled to be cast at the meeting. The Secretary or any Assistant Secretary of the Corporation or any person appointed by the chairperson may act as secretary of such meetings.

7. Agenda and Procedure. The Board of Directors shall have the responsibility of establishing an agenda for each meeting of shareholders, subject to the rights of shareholders to raise matters, if any, which may properly be brought before the meeting although not included within the agenda. The chairperson shall be charged with the orderly conduct of all meetings of shareholders and may impose rules or procedures for this purpose.

8. Quorum. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless otherwise provided in the Act or in the Corporation's Articles of Incorporation, a majority of the votes entitled to be cast on a matter by a voting group constitutes a quorum of that voting group for action on that matter. In the absence of a quorum at any shareholders' meeting, a majority of the votes present in person or represented by proxy and entitled to vote on any matter at the meeting may adjourn the meeting from time to time for a period not to exceed 120 days from the original date of the meeting without further notice (except as provided in Section 9 of this Article II) until a quorum shall be present or represented.

9. Adjournment. When a meeting is for any reason adjourned to another date, time or place, notice need not be given of the adjourned meeting if the date, and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than 120 days from the date of the original meeting, or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder as of the new record date.

10. Voting.

(a) Except as provided by law or in the Articles of Incorporation, at every meeting of shareholders, or with respect to corporate action which may be taken without a meeting, each outstanding share having voting power is entitled to one vote, and each fractional share, if any is outstanding, is entitled to a corresponding fractional vote, on each matter voted on at a shareholders' meeting.

(b) A shareholder may vote the shareholder's shares in person or by proxy. A shareholder may appoint a proxy by signing an appointment form, either personally of by the shareholder's attorney-in-fact. A shareholder may appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype or other electronic transmission providing a written statement of the appointment to the proxy, to a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the Corporation; except that the transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment. An appointment of a proxy is not effective against the Corporation until the appointment is received by the Corporation. The appointment is effective for eleven months unless a different period is expressly provided in the appointment form. An appointment of a proxy shall be revocable by the shareholder except as may be permitted or provided by law.

(c) When a quorum is present at any meeting of shareholders, action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless the matter is one upon which a different vote is required by express provision of a statute, or the Articles of Incorporation, or these Bylaws, in which case such express provision shall govern and control the decision on such matter.

11. Inspectors. The chairperson of the meeting may at any time appoint two or more inspectors to serve at a meeting of the shareholders. Such inspectors shall decide upon the qualifications of voters, including the validity of proxies, accept and count the votes for and against the matters presented, report the results of such votes, and subscribe and deliver to the secretary of the meeting a certificate stating the number of shares of stock within each voting group that is issued and outstanding and entitled to vote thereon and the number of shares within each voting group that voted for and against the matters presented. The voting inspectors need not be shareholders of the Corporation, and any director or officer of the Corporation may be an inspector on any matter other than a vote for or against such director's or officer's election to any position with the Corporation or on any other matter in which such officer or director may be directly interested.

12. Meeting by Telecommunication. If and only if permitted by the Board of Directors, any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. If the Board of Directors determines to allow shareholders to participate in a shareholders' meeting by telecommunication, the Board shall establish the terms and conditions under which shareholders may participate by such means and shall cause the notice of the meeting to contain such terms and conditions. Only shareholders who comply with the

terms and conditions indicated in such notice shall be entitled to so participate by telecommunication in the shareholders' meeting. A shareholder participating in a meeting by telecommunication in compliance with the terms and conditions established by the Board of Directors is deemed to be present in person at the meeting.

ARTICLE III

Board of Directors

1. Authority, Election and Tenure. All corporate power shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed by, a Board of Directors. The Board of Directors shall be elected at each annual meeting of shareholders. In an election of directors, that number of candidates equaling the number of directors to be elected having the highest number of votes cast in favor of their election shall be elected to the Board of Directors.

2. Number and Qualification. In accordance with the Corporation's Articles Of Incorporation, the number of directors shall be at least three and not more than nine. Within that range, the number of directors shall be as stated by resolution of the Board of Directors from time to time (which latest enacted resolution shall be deemed a part of these Bylaws and is incorporated herein by reference), but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Directors must be natural persons at least eighteen years of age but need not be shareholders or residents of the State of Colorado.

3. Regular Meetings. Regular meetings of the Board of Directors shall be held at such dates, times and places as may be determined by the Board of Directors. Regular meetings of the Board of Directors may be held without notice of the date, time, place or purpose of the meeting.

4. Special Meetings. Special meetings of the Board of Directors may be called by the President at any time and shall be called by the President or the Secretary on the written request of any two directors.

5. Place of Meetings. Any meeting of the Board of Directors may be held at such place or places either within or without the State of Colorado as shall from time to time be determined by the Board of Directors and as shall be designated ha the resolution of the Board of Directors fixing the date, time and place of the regular meetings of the Board of Directors or in the notice of special meeting.

6. Notice of Meetings. Notice of the date, time and place of each special meeting of directors shall be given to each director at least two days prior to such meeting. The notice of a special meeting of the Board of Directors need not state the purposes of the meeting. Notice to each director of any special meeting may be given in person; by telephone, telegraph, teletype, electronically transmitted facsimile, or other form of wire or wireless communication; or by mail or private carrier. Oral notice to a director of any special meeting, is effective when communicated. Written notice to a director of any special meeting, including without limitation notice sent by electronic mail, is effective at the earliest of: (a) the date received; (b) five days after it is deposited in the United States mail, properly addressed to the last address for the director shown on the records of the Corporation first class postage prepaid; (c) the date shown on the return receipt if mailed by registered or certified mail, return receipt requested, postage prepaid, in the United States mail and if the return receipt is signed by or on behalf of the director to whom the notice is addressed.

7. Quorum and Voting. A majority of the number of directors fixed by or in accordance with Section 2 of this Article III shall constitute a quorum at all meetings of the Board of Directors. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise required by the Act.

8. Organization, Agenda and Procedure. The Chairman of the Board or, in the absence of the Chairman of the Board, the President shall act as chairperson of the meetings of the Board of Directors. The Secretary, any Assistant Secretary, or any other person appointed by the chairperson shall act as secretary of each meeting of the Board of Directors. The agenda of and procedure for such meetings shall be as determined by the Board of Directors.

9. Resignation. Any director of the Corporation may resign at any time by giving written resignation notice to the Corporation or the Secretary of the Corporation at the Corporation's principal office. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective, unless it so provides. A director who resigns may, but is not required to, deliver to the Secretary of State for filing a statement to that effect.

10. Removal. Any director may be removed, either with or without cause, at any time, at a special meeting of the shareholders called and held for such purpose if the number of votes cast in favor of removal exceeds the number of votes cast against removal; provided, however, that if a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that director. A vacancy in the Board of Directors caused by any such removal may be filled by the Corporation's shareholders at such meeting or, if the shareholders at such meeting shall fail to fill such vacancy, by the Board of Directors as provided Section 11 of this Article III.

11. Vacancies. If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (a) the shareholders may fill the vacancy at the next annual meeting or at a special meeting called for that purpose; or (b) the Board of Directors may fill the vacancy; or (c) if the directors remaining in office constitute fewer than a quorum of the Board of Directors, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. The term of a director elected to fill a vacancy pursuant to subparagraph (b) or (c) of the foregoing sentence expires at the next annual shareholders' meeting. The term of a director elected to fill a vacancy pursuant to subparagraph (a) of this Section 11 shall be the unexpired term of such director's predecessor in office; except that, if the director's predecessor had been elected to fill a vacancy pursuant to Subparagraph (b) or (c) of this Section 11, the term of a director elected pursuant to Section (a) of this Section 11 shall be the unexpired term of the last predecessor elected by the shareholders. If the vacant directorship was held by a director elected by a voting group of shareholders and one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and only the holders of shares of that voting group are entitled to vote to fill such vacancy if it is filled by the shareholders.

12. Executive and Other Committees. Except as otherwise required by the Act, the Board of Directors, by resolution adopted by the greater of a majority of the number of directors fixed by or in accordance with Section 2 of this Article III or the number of directors required to take action pursuant to Section 7 of the Article III, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in the resolution and except as otherwise prescribed by the Act, shall have and may exercise all of the authority of the Board of Directors in the management of the Corporation, except that no committee shall: (a) authorize distributions; (b) approve or propose to shareholders action that the Act requires to be approved by shareholders; (c) fill vacancies on the Board Of Directors or on any of its committees; (d) amend the Articles of Incorporation; (e) adopt, amend, or repeal these Bylaws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or (h) authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that with respect to this

clause (h) the Board of Directors may authorize a committee to do so within limits specifically prescribed by the Board of Directors. The provision of these Bylaws governing meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements of the Board of Directors shall apply to committees and the members thereof.

13. Compensation of Directors. Each director may be paid such compensation as fixed from time to time by resolution of the Board of Directors, together with reimbursement for the reasonable and necessary expenses incurred by such director in connection with the performance of such director's duties. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity or any of its subsidiaries in any other capacity and receiving proper compensation therefor.

14. Meeting by Telecommunication. One or more members of the Board of Directors or any committee designated by the Board of Directors may hold or participate in a meeting of the Board of Directors or such committee through the use of any means of communication by which all persons participating can hear each other at the same time.

ARTICLE IV

Waiver of Notice by Shareholders and Directors and Action
of Shareholders and Directors by Consent

1. Waiver of Notice. A shareholder may waive any notice required by the Act or by the Articles of Incorporation or these Bylaws, and a director may waive any notice of a directors' meeting, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the shareholder or director entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. Attendance of a shareholder at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice unless the shareholder objects to considering the matter when it is presented. A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless the director, at the beginning of the meeting or promptly upon his or her later arrival, objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting, or if special notice was required of a particular purpose pursuant to the Act, the director objects to transacting business with respect to the purpose for which such special notice was required and does not thereafter vote for or assent to action taken at the meeting with respect to such purpose.

2. Action Without a Meeting. Any action required or permitted to be taken at a meeting of the shareholders, directors or members of an executive or other committee, as applicable, may be taken without a meeting if all shareholders entitled to vote with respect to such action, or all directors or all members of an executive or other committee, as the case may be, give written consent to such action in writing: The record date for determining shareholders entitled to take action without a meeting is the date a writing upon which the action is taken pursuant to this Section 2 of Article IV, is first received by the Corporation. Any shareholder who has signed a writing describing and consenting to action taken pursuant to this Section 2 of this Article IV may revoke such consent by a writing signed by such shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the Corporation before the effectiveness of the action. Action taken without a meeting shall be effective: in the case of an action of shareholders, as of the date the last writing necessary to effect the action is received by the Corporation unless all of the writings necessary to effect the action specify another date, which may be before or after the date the writings are received by the Corporation; and in the case of directors' action, action is taken when the last director signs a writing describing the action taken unless before such time the Secretary has received a written revocation of the consent of any other director, and any action so taken shall be effective at the time taken unless the directors specify a different effective date.

ARTICLE V

Officers

1. Election and Tenure. The officers of the Corporation shall consist of a Chairman of the Board, a President, a Secretary and Treasurer, each of whom shall be appointed annually by the Board of Directors. The Board of Directors may also designate and appoint such other officers and assistant officers as may be deemed necessary. The Board of Directors may delegate to any such officer the power to appoint or remove subordinate officers, agents or employees. Any two or more offices may be held by the same person. Each officer so appointed shall continue in office until a successor shall be appointed and shall qualify, or until the officer's earlier death, resignation or removal. Each officer shall be a natural person who is eighteen years of age or older.

2. Resignation, Removal and Vacancies. Any officer may resign at any time by giving written notice of resignation to the Board of Directors or the President. Such resignation shall take effect when the notice is received by the Corporation unless the notice specifies a later effective date, and acceptance of the resignation shall not be necessary to render such resignation effective. Any officer may at any time be removed by the Board of Directors. If any office becomes vacant for any reason, the vacancy may be filled by the Board of Directors. An officer appointed to fill a vacancy shall be appointed for the unexpired term of such officer's predecessor in office and shall continue in office until a successor shall be elected or appointed and shall qualify, or until such officer's earlier death, resignation or removal. The appointment of an officer shall not itself create contract rights in favor of be officer, and the removal of an officer does not affect the officer's contract rights, if any, with the Corporation and the resignation of an officer does not affect the Corporation's contract rights, if any, with the officer.

3. Chairman of the Board. The Chairman of the Board shall preside at meetings of the Board of Directors and shall give counsel and advice to the Board of Directors and the officers of the Corporation on all subjects concerning the welfare of the Corporation and the conduct of its business. The Chairman of the Board of Directors shall perform all other duties incident to the office of the Chairman of the Board and such other duties as the Board may from time to time determine.

4. President. The President shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. The President shall, when present, preside at all meetings of the shareholders. The President in general shall perform all duties incident to the office of President and such other duties as may be assigned by the Board of Directors from time to time.

5. Vice Presidents. The Vice Presidents, if any, shall perform such duties and possess such powers as from time to time may be assigned to them by the Board of Directors or the President. In the absence of the President or in the event of the inability or refusal of the President to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of the election or appointment of the Vice Presidents) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President.

6. Secretary. The Secretary shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the President. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of Secretary including, without limitation, the duty and power to give notice of all meetings of shareholders and the Board of Directors, the preparation and maintenance of minutes of the directors' and shareholders' meetings and other records and information required to be kept by the Corporation under Article XI and for authenticating records of the Corporation, and to be custodian of the corporate seal and to affix and

attest to the same on documents, the execution of which on behalf of the Corporation is authorized by these Bylaws or by the action of the Board of Directors.

7. Treasurer. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the President. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of Treasurer including, without limitation, the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as ordered by the Board of Directors, making proper accounts thereof, and to render as required by the Board of Directors statements of all these transactions taken as Treasurer and of the financial condition of the Corporation.

8. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries and Assistant Treasurers, if any, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. In the absence, inability or refusal to act of the Secretary or the Treasurer, the Assistant Secretaries or Assistant Treasurers, respectively, in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election or appointment, shall perform the duties and exercise the powers of the Secretary or Treasurer, as the case may be.

9. Bond of Officers. The Board of Directors may require any officer to give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for such terms and conditions as the Board of Directors may specify, including without limitation for the faithful performance of such officer's duties and for the restoration to the Corporation of any property belonging to the Corporation in such officer's possession or under the control of such officer.

10. Compensation. Officers of the Corporation shall be entitled to such salaries, emoluments, compensation or reimbursement as shall be fixed or authorized from time to time by the Board of Directors.

ARTICLE VI

Indemnification

1. Indemnification. To the extent permitted or required by the Act and any other applicable law, if any director or officer of the Corporation is made a party to or is involved in any proceeding because such person is or was a director or officer of the Corporation, the Corporation shall (a) indemnify such person from and against any liability, including but not limited to expenses of investigation and preparation, expenses in connection with appearance as a witness, and fees and disbursements of counsel, accountants or other experts, incurred by such person in such proceeding, and (b) advance to such person expenses incurred in such proceeding. The Corporation may in its discretion, but is not obligated in any way to, indemnify and advance expenses to an employee or agent of the Corporation to the same extent as to a director or officer, and the Corporation may indemnify an employee, fiduciary, or agent of the Corporation to a greater extent than expressly permitted herein for officers and directors if not inconsistent with public policy.

2. Provisions Not Exclusive. The foregoing provisions for indemnification and advancement of expenses are not exclusive, and the Corporation may at its discretion provide for indemnification or advancement of expenses in a resolution of its shareholders or directors, in a contract or in its Articles of Incorporation.

3. Effect of Modification. Any repeal or modification of the foregoing provisions of this Article for indemnification or advancement of expenses shall not affect adversely any right or protection stated in such provisions with respect to any act or omission occurring prior to the time of such repeal or modification. If any provision of this Article or any part thereof shall be held to be prohibited by or

invalid under applicable law, such provision or part thereof shall be deemed amended to accomplish the objectives of the provision or part thereof as originally written to the fullest extent permitted by law, and all other provisions or parts shall remain in full force and effect.

4. Definitions. As used in this Article, the following terms have the following meanings:

(a) Act. When used with reference to an act or omission occurring prior to the effectiveness of any amendment to the Act which occurs after the effectiveness of the adoption of this Article, the term "Act" shall include such amendment only to the extent that the amendment permits a corporation to provide broader indemnification rights than the Act permitted prior to the amendment.

(b) Corporation. The term "Corporation" includes any domestic or foreign entity that is a predecessor of the Corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.

(c) Director or Officer. A "director" or "officer" is an individual who is or was a director or officer of the Corporation or an individual who, while a director or officer of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or entity or of an employee benefit plan. A director or officer is considered to be serving an employee benefit plan at the Corporation's request if his or her duties to the Corporation also impose duties on, or otherwise involve services by, the director or officer to the plan or to participants in or beneficiaries of the plan. The terms "director' and "officer" include, unless the context requires otherwise, the estate or personal representative of a director, or officer.

(d) Liability. The term "liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine (including any excise tax assessed with respect to an employee benefit plan), or reasonable expenses.

(e) Proceeding. The term "proceeding" means any threatened, pending or completed action, suit, or proceeding whether civil, criminal, administrative or investigative, and whether formal or informal.

5. Insurance. The Corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or entity or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify the person against the same liability under the Act. Any such insurance may be procured from any insurance company designated by the Board of Directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise.

6. Expenses as a Witness. The Corporation may pay or reimburse expenses incurred by a director, officer, employee, fiduciary, or agent in connection with an appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent in the proceeding.

7. Notice to Shareholders. If the Corporation indemnifies or advances expenses to a director under this Article in connection with a proceeding by or in the right of the Corporation, the Corporation shall give written notice of the indemnification or advance to the shareholders with or

before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the Board of Directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.

ARTICLE VII

Execution of Instruments; Loans; Checks and Endorsements; Deposits; Proxies

1. Execution of Instruments. The President or any Vice President shall have the power to execute and deliver on behalf of and in the name of the Corporation any instrument requiring the signature of an officer of the Corporation, except as otherwise provided in these Bylaws or when the execution and delivery of the instrument shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.

2. Borrowing. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness for borrowed money shall be issued, endorsed or accepted in its name, unless authorized by the Board of Directors or a committee designated by the Board of Directors so to act. Such authority may be general or confined to specific instances. When so authorized, an officer may (a) effect loans at any time for the Corporation from any bank or other entity and for such loans may execute and deliver promissory notes or other evidences of indebtedness of the Corporation; and (b) mortgage, pledge or otherwise encumber any real or personal property, or any interest therein, owned or held by the Corporation as security for the payment of any loans or obligation of the Corporation, and to that end may execute and deliver for the Corporation such instruments as may be necessary or proper in connection with such transaction.

3. Loans to Directors. Officers and Employees. The Corporation may lend money to, guarantee the obligations of and otherwise assist directors, officers and employees of the Corporation, or directors of another corporation of which the Corporation owns a majority of the voting stock only upon compliance with the requirements of the Act.

4. Checks and Endorsements. All checks, drafts or other orders for the payment of money, obligations, notes or other evidences of indebtedness, bills of lading, warehouse receipts, trade acceptances and other such instruments shall be signed or endorsed for the Corporation by such officers or agents of the Corporation as shall from time to time be determined by resolution of the Board of Directors, Which resolution may provide for the use of facsimile signatures.

5. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the Corporation's credit in such banks or other depositories as shall from time to time be determined by resolution of the Board of Directors, which resolution may specify the officers or agents of the Corporation who shall have the power, and the manner in which such power shall be exercised, to make such deposits and to endorse, assign and deliver for collection and deposit checks, drafts and other orders for the payment of money payable to the Corporation or its order.

6. Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the President or any Vice President: (a) may from time to time appoint one or more agents of the Corporation, in the name and on behalf of the Corporation, (i) to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, association or other entity whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, association or other entity, or (ii) to consent in writing to any action by such other corporation, association or other entity; (b) may instruct the person so appointed as to the manner of casting such votes or giving such consent; and (c) may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, all such written proxies or other instruments as may be deemed necessary or proper.

ARTICLE VIII

Shares of Stock

1. Certificates of Stock. The shares of the Corporation may but need not be represented by certificates. Unless the Act or another law expressly provides otherwise, the fact that the shares are not represented by certificates shall have no effect on the rights and obligations of shareholders. If the shares are represented by certificates, such certificates shall be signed either manually or in facsimile by the President and the Secretary or such other representatives of the Corporation as are designated by the Board of Directors. If the person who signed, either manually or in facsimile, a share certificate, no longer holds office when the certificate is issued, the certificate is nevertheless valid. Every certificate representing shares issued by the Corporation shall state the number and class of shares and the designation of the series, if any, the certificate represents, and shall otherwise be in such form as is required by law and as the Board of Directors shall prescribe.

2. Shares Without Certificates. The Board of Directors may authorize the issuance of any class or series of shares of the Corporation without certificates. Such authorization shall not affect shares already represented by certificates until they are surrendered to the Corporation. Within a reasonable time following the issue or transfer of shares without certificates, the Corporation shall send the shareholder a complete written statement of the information required on certificates by the Act.

3. Record. A record shall be kept of the names and addresses of the Corporation's shareholders, in a form that permits preparation of a list of shareholders that is arranged by voting group and within each voting group by class or series of shares, that is alphabetical within each class or series, and that shows the addresses of, and the number of shares of each class and series and the date of issuance of the shares (and in case of cancellation the date of cancellation) held by, each shareholder. The person or other entity in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof, and thus a holder of record of such shares of stock, for purposes as regards the Corporation.

4. Transfer of Stock. Transfers of shares of the stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by such registered holder's attorney thereunto authorized, and on the surrender of the certificate or certificates for such shares properly endorsed.

5. Transfer Agents and Registrars; Regulations. The Board of Directors may appoint one or more transfer agents or registrars with respect to shares of the stock of the Corporation. The Board of Directors may make such rules and regulations as it may deem expedient and as are not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation.

6. Lost, Destroyed or Mutilated Certificates. In case of the alleged loss, destruction or mutilation of a certificate representing stock of the Corporation, a new certificate may be issued in place thereof, in such manner and upon such terms and conditions as the Board of Directors may prescribe, and shall be issued in such situations as required by the Act.

ARTICLE IX

Corporate Seal

The corporate seal shall be in the form approved by resolution of the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. The impression of the seal may be made and attested by either the Secretary or any Assistant Secretary for the authentication of contracts or other papers requiring the seal.

ARTICLE X

Fiscal Year

The fiscal year of the Corporation shall be the year established by the Board of Directors.

ARTICLE XI

Corporate Records

1. Corporate Records. The Corporation shall comply with the provisions of the Act regarding maintenance of records and shall keep such records at such place as the Act may designate or, if the Act does not designate the place for such records, then at such place or places as may be from time to time designated by the Board of Directors.

2. Addresses of Shareholders. Each shareholder shall furnish to the Secretary of the Corporation or the Corporation's transfer agent an address to which notices from the Corporation, including notices of meetings, may be directed and if any shareholder shall fail so to designate such an address, it shall be sufficient for any such notice to be directed to such shareholder at such shareholder's address last known to the Secretary or transfer agent.

3. Fixing Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the shareholders entitled to a notice of or to vote at any meeting of shareholders or entitled to receive payment of any dividend or other distribution or allotment of rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 70 days before the meeting or action requiring a determination of shareholders; except that the record date for determining shareholders entitled to take action without a meeting or entitled to be given notice of action so taken is the date upon which a writing upon which such action is taken is first received by the Corporation. Only such shareholders as shall be shareholders of record on the date so fixed shall be so entitled with respect to the matter to which the same relates. If the Board of Directors shall not fix a record date as above provided, then the record date shall be determined in accordance with the Act.

4. Inspection of Corporate Records. Shareholders shall have those rights to inspect and copy the Corporation's records as provided in the Act.

5. Distribution of Financial Statements. Upon the written request of any shareholder of the Corporation, the Corporation shall mail to such shareholder its last annual and most recently published financial statement, if any.

6. Audits of Books and Accounts. The Corporation's books and accounts may be audited at such times and by such auditors as shall be specified and designated by resolution of the Board of Directors.

ARTICLE XII

Emergency Bylaws and Actions

Subject to repeal or change by action of the shareholders, the Board of Directors may adopt emergency bylaws and exercise other powers in accordance with and pursuant to the provisions of the Act.

ARTICLE XIII

Amendments

The Board of Directors may amend or repeal these Bylaws or adopt new bylaws. The shareholders may also amend or repeal these Bylaws or adopt new bylaws.

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TABLE OF CONTENTS

EXHIBIT 10.1

SCOTT'S LIQUID GOLD
& AFFILIATED COMPANIES

EMPLOYEE BENEFIT HEALTH AND WELFARE PLAN

GROUP # 398

PLAN DOCUMENT AND SUMMARY PLAN DESCRIPTION
AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 2003

IMPORTANT TELEPHONE NUMBERS

EMPLOYER:
Scott's Liquid Gold-Inc.		(303) 373-4860
PREFERRED PROVIDER ORGANIZATION(s) (PPOs):
Sloans Lake Managed Care (Inside Colorado)		(800) 850-2249
	Internet website: www.sloanslake.com	(303) 691-2200
	Language Other than English	(303) 691-2200 Ext. #5718
MultiPlan (Outside Colorado)		(800) 546-3887
	Internet website: www.multiplan.com
PRESCRIPTION DRUG PLAN:
Express Scripts
	Member Rx Services	(888) 201-5863
	Pharmacy Help Desk	(800) 763-5550
	Internet website: www.express-scripts.com
CLAIMS ADMINISTRATOR:
Mountain States Administration Co., Inc.
	Denver Metro Area	(303) 360-9600
	Toll free	(877) 440-0301
	Internet website: www.msaclaims.com

FOREWORD

Scott's Liquid Gold-Inc. & Affiliated Companies intends for this Plan to be permanent, but since future conditions affecting your employer cannot be anticipated or foreseen, Scott's Liquid Gold-Inc. & Affiliated Companies reserves the right to amend, modify, or terminate the Plan at any time, which may result in the termination or modification of your coverage. Expenses incurred prior to the Plan termination will be paid as provided under the terms of the Plan prior to its termination. Changes in the Plan may occur in any or all parts of the Plan including, but not limited to, benefit coverage, deductibles, maximums, coinsurance, exclusions, definitions, eligibility and the like.

The employer has initiated the Plan to provide benefits for its employees and their eligible dependents, and it shall be maintained for this exclusive purpose.

The employer desires to provide a health care benefit plan that financially assists employees and dependents with health care expenses and provides affordable care. While part of increasing health care costs result from new technology and important medical advances, another significant cause is the way health care services are used.

Employee benefits are affected by certain limitations and conditions which require the employee to be a wise consumer of health services and to use only those services he or she needs.

Some studies indicate that a high percentage of the cost for health care services may be unnecessary. For example, hospital stays can be longer than necessary. Some hospitalizations may be entirely avoidable, such as when surgery could be performed at an outpatient facility with equal safety.

Alternative care at home, other alternative methods of treatment, or medical care not otherwise covered under the Plan may be suggested to patients for which additional inpatient care is medically necessary. This allows the patient to be discharged from the hospital sooner than would otherwise be possible, providing a savings to the employee and the Plan while maintaining care equal to a hospital confinement.

PLEASE NOTE THE FOLLOWING

The Employee Benefit Health and Welfare Plan as summarized in this booklet is provided through a combination of insured and self-funded benefits. This booklet describes your Health and Welfare Plan in an easily understood manner and is both the Plan Document and the Summary Plan Description. The following are summaries of the Medical, Dental, Vision and Prescription Drug benefits provided by the Plan. It does not, however, create or confer any rights, as it merely summarizes some of the essential provisions of the Plan and may not describe your particular circumstances. Your eligibility and coverage is subject to all the terms, provisions, and conditions that are contained in this Document.

The Plan is intended to be consistent with any contracts for policies of insurance under which the contributions are made, and with any contracts for medical review services. To the extent the terms of the Plan are inconsistent with such contracts, the terms of such contracts shall prevail.

The Plan will not be deemed to constitute a contract of employment or give any person the right to be retained in the service of the employer or to interfere with the right of the employer to discharge or otherwise terminate the employment of any person.

CHANGE IN DEPENDENT STATUS

It is the covered employee's responsibility to advise the employer in writing, within thirty (30) days, of any change in Dependent status including marriage, divorce, legal separation, the addition of newborns, and adoptions.

AUTHORITY TO INTERPRET PLAN

The Plan Administrator shall perform its duties as the Plan Administrator and in its sole discretion shall determine appropriate courses of action in light of the reason and purpose for which the Plan is established and maintained. In particular, the Plan Administrator shall have full and sole discretionary authority to interpret all plan documents and to make all interpretive and factual determinations as to whether any individual is entitled to receive any benefit under the terms of this Plan. Any construction of the terms of any plan document and any determination of fact adopted by the Plan Administrator shall be final and legally binding on all parties.

Any interpretation, determination or other action of the Plan Administrator shall be subject to review only if it is arbitrary and capricious or otherwise an abuse of discretion. Any review of a final decision or action of the Plan Administrator shall be based only on such evidence presented to or considered by the Plan Administrator at the time it made the decision that is the subject of review. Accepting any benefits or making any claim for benefits under this Plan constitutes agreement with and consent to any decisions that the Plan Administrator makes, in its sole discretion and, further, constitutes agreement to the limited standard and scope of review described by this section.

BILLING AUDIT BONUS

The Plan will pay the employee a cash bonus if he/she finds an overcharge on a hospital bill (excluding double billings and very obvious mistakes which would be caught during claims processing).The overcharge must be for a covered expense. To receive the bonus, the employee must follow the following procedures:

1. Within five (5) working days of receiving your hospital bill, call Mountain States Administration at 303-360-9600 or 1-800-828-8847 to inform them that you have found an error(s) in the bill. This must be done before the hospital bill has been processed by Mountain States Administration.

2. Next, within the same five (5) day period, you must follow up with a letter to Mountain States Administration explaining how or why the bill is in error.

3. Once the error is confirmed with the hospital by Mountain States Administration and a corrected bill is received, you will receive your audit savings.

TABLE OF CONTENTS

INTRODUCTION

SCHEDULE OF MEDICAL BENEFITS

SCHEDULE OF DENTAL BENEFITS

DENTAL CARE PROGRAM

COVERED DENTAL EXPENSES

DENTAL EXPENSES NOT COVERED

PRESCRIPTION DRUG PLAN

ELIGIBILITY

PRE-EXISTING CONDITION EXCLUSION

CASE MANAGEMENT AND ALTERNATE TREATMENT PROVISION

COVERED MEDICAL EXPENSES

GENERAL PLAN EXCLUSIONS AND LIMITATIONS

DEFINITIONS

COBRA CONTINUATION OPTIONS

CERTIFICATION AND REVIEW OF CREDITABLE COVERAGE

COORDINATION OF BENEFITS (COB)

THIRD PARTY RECOVERY PROVISION

CLAIMS PROCEDURES

RESPONSIBILITIES FOR PLAN ADMINISTRATION

GENERAL PLAN PROVISIONS

GROUP LIFE INSURANCE

SUMMARY PLAN DESCRIPTION

INTRODUCTION

This document is a description of Scott's Liquid Gold & Affiliated Companies Employee Benefit Health and Welfare Plan ("the Plan"). No oral interpretations can change this Plan. This self-funded health and welfare Plan is designed to protect covered persons against catastrophic health expenses. The purpose of this Plan Document and Summary Plan Description is to state the terms, provisions, conditions, limitations and exclusions of the Plan.

Self-funding means that Scott's Liquid Gold-Inc. has established an employee benefit Plan to reimburse you for covered medical expenses. The self-funded Plan is reinsured with a major insurance company to limit the liability of the self-funded Plan for catastrophic individual or group claims.

Coverage under the Plan will take effect for an eligible employee and designated dependents when the employee and such dependents satisfy the waiting period and all the eligibility requirements of the Plan.

The Plan will pay benefits only for the expenses incurred while this coverage is in force. No benefits are payable for expenses incurred before coverage began or after coverage terminated, even if the expenses were incurred as a result of an accident, injury or disease that occurred, began, or existed while coverage was in force. An expense for a service or supply is incurred on the date the service or supply is furnished.

HOW THE MEDICAL PLAN WORKS

The Medical Plan provides health care coverage under two options:

1.: The Preferred Provider Organization (PPO) option. The Plan's PPOs are Sloans Lake Managed Care and MultiPlan. The PPOs are groups of participating physicians and hospitals that provide services for which benefits are paid at special levels, often with lower fees and resulting in lower calendar year out-of-pocket maximum expenses. You can contact Sloans Lake Managed Care at (303) 591-2200 or (800) 850-2249 or on their website at www.sloanslake.com and MultiPlan at (800) 546-3887 or on their website at www.multiplan.com.
2.: The Non-Preferred Provider (Non-PPO) option. This is coverage where covered persons go to any provider of their choice and the out-of-pocket expenses are usually higher because there are no discounts to the Plan from Non-PPO providers. Covered persons have the choice of selecting either the PPO option (Participating) or the Non-PPO (Non-Participating) option, or a combination of both options, for medical care. See the Schedule of Medical Benefits for a summary of benefits, and see specific sections of the Plan for more information.

HOW THE PRESCRIPTION DRUG PLAN WORKS

The Plan has contracted with Express Scripts to administer the pharmacy drug plan using a nationwide network of participating retail pharmacies in order to charge covered persons reduced fees for covered pharmacy drugs. The Plan also provides a mail order drug benefit option for long-term, maintenance medications available directly from Express Scripts. Please see the Prescription Drug Plan section for a listing of benefits and copayments, and see the section on the Prescription Drug Plan for more information. You can contact Express Scripts toll free at (888) 201-5863 for Member Rx Services, or Pharmacy Help Desk (800) 763-5550 or on their website at: www.express-scripts.com.

HOW THE DENTAL PLAN WORKS

The dental Plan provides dental coverage for covered persons under the Plan. Covered persons can visit any licensed dental professional he or she chooses to have dental services performed. Please see the Schedule of Dental Benefits for a listing of benefits including the maximum benefit amounts, and see the section on Dental Benefits for more information.

HOW THE VISION PLAN WORKS

Vision care services and vision care materials may be received from a licensed Optician, Optometrist, or Ophthalmologist that the covered person wishes to go to for such services and/or materials. The covered person will be responsible for the full cost of the charges for any vision care services and/or vision care materials at the time that services are rendered or materials are purchased. The covered person will then need to submit the receipt along with the appropriate claim form to the Claims Administrator for reimbursement under the Plan for the Usual, Customary and Reasonable amounts of eligible expenses up to the limits set forth in the Schedule of Medical Benefits .

SCHEDULE OF MEDICAL BENEFITS

All eligible and covered medical charges are subject to applicable deductible and coinsurance provisions unless indicated differently. Charges are limited to usual, customary, and reasonable for the area in which services are rendered. Charges excluded as not covered, over usual, customary, and reasonable or as otherwise noted, do not count toward either deductible or out-of-pocket maximum. This is a summary of benefits only; for specific restrictions and limitations, see detailed explanations elsewhere in the Plan. The Plan has entered into arrangements with Sloans Lake Managed Care for covered persons in Colorado and MultiPlan for covered persons living or traveling outside Colorado. The preferred provider organizations (PPOs) negotiate hospital, doctor and other provider fees with contracting health care providers.

LIFETIME MAXIMUM	$	5,000,000	per Covered person
(While covered under this Plan)	$	2,000	for Temporomandibular Joint Disorders
	$	30,000	for Alcoholism or Substance Abuse Treatment
	$	25,000	for Hospice Benefits

The term "lifetime maximum" means the total amount of benefits which may be payable while covered under this Plan, or any other health plan sponsored by Scott's Liquid Gold-Inc. & Affiliated Companies. It will not be interpreted to mean the lifetime of the covered person.

ANNUAL OVERALL MAXIMUM $2,000,000 per Covered person

The term "Annual Overall Maximum" means the total amount of benefits that may be payable each year while covered under this Plan, or any other health plan sponsored by Scott's Liquid Gold-Inc. and Affiliated Companies. The Annual Overall Maximum amounts accrue toward the Lifetime Maximum amount as specified in the Schedule of Medical Benefits.

PRESCRIPTION DRUG BENEFIT

The prescription drug benefits are described later in this Plan. Prescription drugs obtained through Express Scripts are not subject to the deductible as applied to the medical portion of this Plan. Prescriptions obtained through non-participating providers will be subject to deductible and coinsurance provisions. For information regarding the prescription drug benefit, its deductibles and coinsurance, please see that portion of the Plan.

DEDUCTIBLE

The term "deductible" means a specified dollar amount of covered expenses which must be incurred during a calendar year, or as specified, before any other covered expenses can be considered for payment.

CALENDAR YEAR DEDUCTIBLE
(Combined Medical and Dental)		Single Coverage Maximum: $200
		Family Coverage Maximum: $400

DEDUCTIBLE CARRYOVER

If a covered person has not met his/her deductible in the first nine (9) months of the year, then any charges incurred in the last three (3) months will apply to the deductible for both the current year and the next calendar year.

SEPARATE MOTORIZED VEHICLE ACCIDENT DEDUCTIBLE
Per Covered Person per Accident $500

This separate deductible does not accrue towards meeting any portion of the Calendar Year Deductible and is not eligible for the Deductible Carryover under this Plan. Once the Separate Motorized Vehicle Accident Deductible is met per Accident, the Calendar Year Deductible does not have to be met before eligible medical expenses for the injuries sustained due to a motorized vehicle accident are paid by the Plan. Please see the Covered Medical Expenses section beginning on page 38 for more details regarding this benefit. The Supplemental Accident Benefit is not available for injuries sustained due to motorized vehicle accidents. Please note: The exclusion of coverage under this Plan still applies for any applicable no-fault motor vehicle coverage that a Covered Person has.

COINSURANCE FOR ELIGIBLE MEDICAL EXPENSES

The term "coinsurance" means the amount payable by the Plan for a covered expense. The covered person is required to pay the amount not paid by the Plan.

For Single Coverage under the Plan		After the single coverage deductible, eligible expenses (other than outpatient mental health disorders, alcoholism or substance abuse or as otherwise noted) are paid at 80% of the next $5,500, then 100% for the balance of the calendar year.
For Family Coverage under the Plan		After the family coverage deductible, eligible expenses (other than outpatient mental health disorders, alcoholism or substance abuse, or as otherwise noted) are paid at 80% of the next $11,000 (individual or family), then 100% for the balance of the calendar year.
See Covered Medical Expenses on page 38 for important information.
AIDS BENEFIT		Eligible expenses for treatment of Acquired Immune Deficiency Syndrome (AIDS), AIDS-related Complex, or HIV-positive are paid as for any other illness, subject to deductible and coinsurance provisions.
ALCOHOLISM AND SUBSTANCE ABUSE BENEFITS (See specific restrictions on page 54.)
Inpatient		Covered as any other illness, subject to deductible and coinsurance provisions, to a maximum of thirty (30) days per calendar year.
Outpatient		Eligible expenses are subject to the deductible provision and are then paid at 50% to fifty (50) visits per calendar year. Alcoholism and substance abuse inpatient, partial, and outpatient treatment combined:
		Calendar year maximum, per person: $15,000 Lifetime maximum, per person: $30,000
CHIROPRACTIC SERVICES		Eligible expenses are limited to twenty (20) visits in six (6) consecutive months for vertebral column problems only, and are subject to deductible and coinsurance provisions. (See #15, page 39).

HOME HEALTH CARE		Eligible expenses are paid, subject to deductible and coinsurance provisions, to a maximum of sixty (60) visits per calendar year. (See specific restrictions on page 49.) HOSPICE BENEFIT 100% of eligible expenses not to exceed a maximum of six (6) months from the time a covered person is certified terminally ill and subject to a $25,000 lifetime maximum. (See specific restrictions on page 51.)
HOSPITAL ROOM LIMIT		Semiprivate rate, paid subject to deductible and coinsurance provisions.
INTENSIVE CARE UNIT & SPECIAL CARE UNIT		Usual, customary, and reasonable, subject to deductible and coinsurance provisions.
MENTAL HEALTH DISORDER BENEFITS (See page 53.)
Inpatient		Covered as any other illness, subject to deductible and coinsurance provisions, to a maximum of forty-five (45) days per calendar year.
Outpatient		Eligible expenses are subject to the deductible provision and then paid at 50% to 100 visits per calendar year.
MOTORIZED VEHICLE ACCIDENT BENEFIT		Eligible expenses are paid, subject to the separate motorized vehicle accident deductible and coinsurance provisions per covered person per accident, to a maximum of $35,000 per covered person per accident where a motorized vehicle is involved. This includes owner-operators of, non-owner operators of, passengers in or on, and pedestrians struck by or injured because of any motorized vehicle. Charges in excess of $35,000 per covered person per accident are not covered. This benefit does not apply to motor vehicle accidents where no-fault motor vehicle coverage exists. The Supplemental Accident Benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents.
NEWBORN WELL-BABY CARE		Usual, customary, and reasonable hospital nursery expenses, subject to deductible and coinsurance provisions. Eligible physician charges are paid under the Wellness Benefit. (See Covered Medical Expenses, page 55 for additional information.)
OUTPATIENT DIAGNOSTIC LAB AND X -RAY BENEFIT		Eligible expenses are subject to the deductible provision and then paid at 80% for outpatient expenses incurred for illness or injury.
OUTPATIENT SURGICAL BENEFIT		100% of eligible expenses incurred in conjunction with a surgical procedure performed on an outpatient basis, and incurred on the date of surgery, with the deductible waived.
PRE-ADMISSION TESTING		100% of eligible expenses incurred for outpatient tests within seven (7) days of a scheduled hospital admission, with the deductible waived. (See page 55).

SECOND SURGICAL OPINION		100% of the amount charged by physician rendering a second opinion, with the deductible waived. (See page 56)
SKILLED NURSING CARE FACILITY		One-half ( ¹ / 2 ) of hospital semiprivate rate where previously confined, to a maximum of sixty (60) days per illness or injury, subject to deductible and coinsurance provisions. (See page 56)
SMOKING CESSATION BENEFIT		Charges for generally recognized programs to stop smoking are eligible to a $200 maximum per person, subject to deductible and coinsurance provisions, in any three (3) year period for employees and spouses who have been covered by the Plan at least eighteen (18) months. (See page 57)
SUPPLEMENTAL ACCIDENT BENEFIT		100% of the first $500 of eligible expenses incurred within ninety (90) days of the accident, due to a non-work related accident, with the deductible waived. Eligible expenses in excess of $500 or ninety (90) day period are subject to the deductible and coinsurance provisions. This benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents
TMJ BENEFIT		Eligible expenses incurred for the diagnosis and treatment of temporomandibular joint dysfunction are paid, subject to deductible and coinsurance provisions, to the $2,000 lifetime maximum. (See #59, page 44.)
TRANSPLANT BENEFIT		Covered transplants are paid as any other illness, subject to deductible and coinsurance provisions. (See #60 page 44).
VISION BENEFITS		Eye exams by an ophthalmologist or optometrist are covered, subject to deductible and coinsurance provisions. Prescription lenses and frames are covered at 100% to a $50 maximum per calendar year, with the deductible waived. (See #23, page 40)
WEIGHT REDUCTION BENEFIT		Charges for weight reduction programs under direct physician supervision are eligible to a $1,000 maximum, subject to deductible and coinsurance provisions, in any five (5) year period for employees only, who have been covered by the Plan at least twenty four (24) months. (See page 58)
WELLNESS BENEFIT		100% of the first $350 per calendar year, with the deductible waived for examinations and diagnostic tests related to routine wellness care, including flu shots, routine immunizations, vaccinations and pneumovax injections for adults, and well baby/child checkups. (See Covered Medical Expenses, #63, page 45 for additional information).
MEDICAL CASE MANAGEMENT		Medical Case Management optimizes the treatment and recovery phase of major illness or injury. Services otherwise not covered under the Plan will be eligible for reimbursement if recommended by the medical case management coordinator. (See page 37 for notification information).
		See Covered Medical Expenses section on page 38 for more information.

SCHEDULE OF DENTAL BENEFITS

CALENDAR YEAR MAXIMUM		$2,000 per covered person
CALENDAR YEAR DEDUCTIBLE Combined medical and dental)		Single Coverage Maximum: $200 Family Coverage Maximum: $400
PREVENTIVE AND BASIC SERVICES		After the deductible, eligible expenses are paid at 100% to the calendar year maximum.
MAJOR RESTORATIVE AND PROSTHODONTIC SERVICES		After the deductible, eligible expenses are paid at 50% to the calendar year maximum.
TMJ BENEFITS		See under medical benefits.
ORTHODONTIC SERVICES		Eligible expenses are paid at 50% to a $1,000 per calendar year and $2,000 per lifetime maximum, only for dependent children under 19 years old.
PRE-TREATMENT ESTIMATE*		Please pre-notify the Plan of any non-emergency course of treatment exceeding $250.

*Note: If the dentist's office calls the Claims Administrator (Mountain States Administration) for a pre-estimate on work to be performed immediately, verification of coverage for the services to be performed is not a guarantee of payment.

See Dental Care Program section on page 10 for more information.

DENTAL CARE PROGRAM

If a covered person incurs covered dental expenses, the Schedule of Dental Benefits set forth in this Plan shall apply.

MAXIMUM BENEFIT AMOUNT

The total amount payable for all covered expenses incurred for a covered person in a calendar year will not be more than the maximum benefit amount shown in the Schedule of Dental Benefits ($2,000 per calendar year per covered person).

DENTAL ELIGIBILITY

If dental coverage is desired, the employee must enroll within thirty (30) days of date of hire. Benefits will be effective the first working day following ninety (90) days of full-time employment.

If an employee does not enroll for dental benefits within this time frame and subsequently desires coverage, there is a twelve (12) month waiting period before any benefits are payable, except for accidental injuries to sound, natural teeth. Refer to Late Entrant Provision (For Dental Benefits). All other enrollment procedures follow the guidelines outlined under the Eligibility section on page 18.

DENTAL PRE-NOTIFICATION OF BENEFITS

When charges for dental treatment (other than emergency treatment) are expected to exceed $250 for you or any of your dependents, it is strongly recommended that you pre-notify the Plan before treatment begins. The Claims Administrator will estimate which charges will be payable under the Plan and return the estimate to the dentist. This procedure allows the dentist to make financial arrangements with you for payment of charges not covered under the Plan, or to make necessary adjustments to the proposed treatment plan.

DEDUCTIBLE AMOUNT

Single coverage maximum calendar year deductible for both medical and dental expenses combined is $200. Family coverage maximum calendar year deductible for both medical and dental expenses combined is $400.

LATE ENTRANT PROVISION (FOR DENTAL BENEFITS)

If an employee did not elect coverage for himself or herself and/or his or her eligible dependents within thirty (30) days of the employee's date of full-time hire, benefits will be limited as follows:

No benefits will be payable, except for accidental injuries to sound, natural teeth, until the person has been covered under the Plan for twelve (12) consecutive months. Treatment for injuries to sound, natural teeth are covered under the Medical Plan.

The dental waiting period for the late entrant, as described above, must be reduced by the period of creditable coverage the individual has under any previous dental plan as of the enrollment date. Refer to Creditable Coverage on page 94.

COVERED DENTAL EXPENSES

The term "covered dental expenses" means usual, customary, and reasonable expenses incurred for a dental service when that service:

1.: Is performed by or under the direction of a licensed dentist;
2.: Is essential for the necessary care of the teeth;
3.: Starts and is completed while the person is covered (Refer to Extended Dental Benefits on this page); and
4.: Is not excluded under the Dental Expenses Not Covered and General Plan Exclusions and Limitations sections of the Plan.

A dental service is deemed to start on the date it is performed, except that:

1.: Full or partial dentures, start when first impressions are taken;
2.: Crown, bridge, inlay or onlay, start on the first date of tooth preparations; and
3.: Root canal therapy, starts when the pulp chamber of the tooth is opened.

Note: Any dental claim which is payable under any benefits in this Plan other than dental benefits will be paid under the other benefits first; then the dental claim will be calculated under dental benefits. The amount paid under dental benefits will be only the amount, if any, which exceeds the amount paid under the other benefits.

EXTENDED DENTAL BENEFITS

Dental benefits will be extended for thirty (30) days following the date the covered person ceases to be covered under this Plan, but only for an expense incurred for a dental service which started while the person was covered. In no event will an oral examination, prophylaxis or x-ray be deemed a dental service started.

COVERED DENTAL EXPENSES

PREVENTIVE AND BASIC SERVICES

Eligible expenses are subject to the deductible and are then paid at 100% of usual, customary, and reasonable, to the calendar year maximum, and include:

1.: Oral exams, initial or periodic.
2.: Prophylaxis, including periodontal prophylaxis (perio prophys).
3.: Topical application of fluoride for dependents under age nineteen (19).
4.: X-rays; one full mouth series per twenty-four (24) months, bitewing films, and periapicals.
5.: Laboratory and other tests and pathology.
6.: Topical sealants for dependents under age fourteen (14).
7.: Palliative, emergency treatment.
8.: Restorative fillings.
9.: Oral surgery, including extractions, except those required for orthodontia.
10.: General anesthetics when necessary and in connection with oral surgery.
11.: Periodontal treatment.
12.: Endodontia, including root canal therapy.
13.: Injection of antibiotic drugs, prescription drugs and medicines.
14.: Space maintainers for deciduous teeth.
15.: Consultations.
16.: Diagnostic casts, not for TMJ or orthodontia.

MAJOR RESTORATIVE AND PROSTHODONTIC SERVICES

Eligible expenses are subject to the deductible, and are then paid at 50% of usual, customary, and reasonable, to the calendar year maximum, and include:

1.: Major restorative services: inlays, onlays, crowns, crown buildups and posts.
2.: Initial placement of a bridge, a partial or a full denture to replace one or more teeth extracted, including adjustment during the six (6) months following the placement.
3.: Recement a crown, inlay or onlay.
4.: Replacement of existing bridge or denture if the original is (a) at least five (5) years old and unserviceable; or (b) damaged while being worn and cannot be fixed and while the person is covered under the Plan.
5.: Dental implants including the attached crown or replacement tooth.

ORTHODONTIC SERVICES

Benefits are payable for orthodontia procedures performed on your covered dependent children who are age nineteen (19) or less on the date the orthodontia procedure starts. Coverage is not extended after the date a person ceases to be a covered person.

Eligible charges are paid at 50% to a $1,000 per calendar year and $2,000 per lifetime maximum, per person.

The service or supply should be made part of an orthodontic treatment plan that, before the orthodontic procedure is performed, has been sent to Mountain States Administration for review; and returned by Mountain States Administration to the dentist showing estimated benefits.

Eligible charges must meet the condition that they be made for a service or supply furnished in connection with an orthodontic procedure and furnished before the end of the estimated duration shown in the orthodontic treatment.

DENTAL EXPENSES NOT COVERED

Covered dental expenses will not include, and no payment will be made, for expenses incurred as follows:

1.: Services that are cosmetic in nature, excluding orthodontia.
2.: Any replacement of a bridge or denture which is or can be made serviceable.
3.: Initial installation of a bridge or denture to replace teeth all of which are missing prior to the person's becoming covered by this Plan.
4.: Replacement of a lost, missing or stolen prosthetic device.
5.: Replacement of a bridge or denture if the existing bridge or denture is less than five (5) years old, unless the replacement is required to replace one or more natural teeth extracted.
6.: Procedures, appliances or restorations whose main purpose is to (1) change vertical dimension; (2) diagnose or treat dysfunction of the temporomandibular joint; (3) stabilize periodontally involved teeth; or (4) restore occlusion. (See Special Coverage section under the medical portion of the Plan.)
7.: Veneers of crown or pontics placed on or replacing the upper and lower first, second and third molars.
8.: Bite registrations; precision or semi-precision attachments; or splinting.
9.: Instruction for plaque control, oral hygiene and diet.
10.: Dental services that do not meet accepted dental standards.
11.: Services that are deemed to be medical services (such as TMJ).
12.: Services and supplies received from a hospital.
13.: Services or procedures considered experimental in nature or not yet approved by the American Dental Association.
14.: Services for which benefits are not payable according to the section, "General Plan Exclusions and Limitations."
15.: Replacement of serviceable restorations with restoration material of differing chemical composition.
16.: Dental treatment involving the use of gold, porcelain or white restoration materials, if such treatment could have been rendered at a lower cost by means of a reasonable substitute consistent with generally accepted dental practice.

PRESCRIPTION DRUG PLAN

PHARMACY OPTION		NETWORK
Copayment, per Prescription
	For name brands	20% of the total cost of the prescription*
	For Generic drugs	10% of the total cost of the prescription*
MAIL ORDER
Copayment, per Prescription
	For name brands or brand equivalent	20% of the total cost of the prescription*
	For Generic drugs	10% of the total cost of the prescription*

*: no minimum copayment amount

Participating pharmacies have contracted with Express Scripts, the administrator of the Prescription Drug Plan, to charge Plan covered persons reduced fees for covered prescription drugs. Express Scripts is the administrator of the Prescription Drug Plan. The telephone number for Express Scripts is (888) 201-5863.

The Prescription Drug Plan does not have a deductible. The copayment is applied to each covered pharmacy drug charge. The copayment is not a covered expense under the Medical Plan. Any one prescription is limited to a ninety (90)-day supply per prescription or refill.

If a drug is purchased from a non-participating provider, or not through Express Scripts, the covered person will pay for his/her prescription in full, and submit the paid receipt with a claim form, to Mountain States Administration for reimbursement. Reimbursement will be subject to the deductible and coinsurance provisions as described in the Medical portion of the Plan.

MAIL ORDER BENEFIT OPTION

A mail order option is also available. If you wish to order by mail, you need to obtain an order form from the Benefits Department, complete it, and mail the form together with the physician's original (not copy) prescription and credit card information for payment of your coinsurance.

COVERED PHARMACY EXPENSES

1.: Only drugs approved by the FDA are approved by this Plan.
2.: Up to a ninety (90)-day supply for maintenance medications (those that are taken for a long time, such as drugs sometimes prescribed for heart disease, high blood pressure, asthma, etc.) whether obtained at a pharmacy or through mail order.
3.: Federal legend drugs that bear the legend "Caution: Federal law prohibits dispensing without a prescription", except as noted.
4.: Insulin and insulin needles/syringes on prescription, glucose testing strips, ketone testing strips and tablets, diabetic lancets and glucose monitors.
5.: Prescriptions for skin care products to treat acne, for individuals through the age of twenty-five (25).
6.: Compounded medication of which at least one ingredient is a prescription legend drug.
7.: Growth hormones.
8.: Imitrex (one [1] kit per prescription), glucagon (not to exceed one [1] vial per prescription) and bee sting kits (two [2] per prescription).

9.: FDA approved medication or supplies used for the treatment of sexual dysfunction. (Viagra only)
10.: Physician recommended smoking cessation products—limit of $200 maximum per year.
11.: Contraceptive drugs.

PHARMACY EXPENSES NOT COVERED

1.: Minoxidil (Rogaine) for the treatment of alopecia.
2.: Non-legend drugs other than insulin.
3.: Prescriptions for skin care products to treat acne, for individuals twenty-six (26) years of age or older (without prior approval).
4.: Sales tax.
5.: Therapeutic devices or appliances, including support garments and other non-medical substances.
6.: Experimental drugs, except as approved by a physician for the treatment of a life-threatening medical condition.
7.: Replacement of lost or stolen prescriptions.
8.: Infertility drugs with no other approved indications.
9.: Charges for the administration or injection of any drug.
10.: Prescriptions which you or your eligible dependents are entitled to receive without charge from any Workers' Compensation laws.
11.: Medication which is to be taken by or administered to a covered person, in whole or in part, while he or she is a patient in a licensed Hospital, nursing home or similar institution which operates on its premises, a facility for dispensing pharmaceuticals. (Such expenses are covered under the medical portion of the Plan).
12.: Drugs, medicines or supplies that do not require a Physician's prescription, even if administered or prescribed by a Physician. This shall not apply in cases where such drugs, medicines, or supplies are the only available source of nutrients for the covered person.
13.: Medications, drugs or hormones to stimulate growth unless there is a laboratory confirmed diagnosis of growth hormone deficiency.
14.: Drugs with cosmetic indications.
15.: Biological sera, blood or blood plasma.
16.: Allergy extracts (injectable form).
17.: Vitamins, except prenatal vitamins available only by prescription, minerals, non-prescription supplements, nutritional supplements, appetite suppressants, dietary supplements, and formulas whether or not prescribed by a physician.
18.: Newly approved drugs are not automatically covered, and may require Plan approval.

ELIGIBILITY

EMPLOYEES ELIGIBLE FOR COVERAGE

Employees eligible for coverage under the Plan are as follows:

1.: Full-time regular employees who have completed the waiting period and who are scheduled to work at least thirty (30) hours per week in the employment of the employer.
2.: Ineligible employees who have an employment status change which makes them eligible for coverage will be given credit for prior service in order to determine their effective date of coverage.

Eligibility for Medicaid or the receipt of Medicaid benefits will not be taken into account in determining eligibility.

EMPLOYEE'S EFFECTIVE DATE OF COVERAGE

The employee will be covered under the Plan provided he/she applies and meets eligibility and waiting period requirements as listed, and provided any required contributions are made.

WAITING PERIOD

New employees and the dependents they enroll will be eligible on the first day following the completion of ninety (90) days of full-time employment.

When an employee has satisfied the eligibility and waiting period requirements, such employee is required to submit enrollment paperwork within thirty (30) days of his or her date of full-time employment. If the employee submits enrollment paperwork within thirty (30) days of his or her date of full-time employment, and then requests a change within the ninety (90) day waiting period, the change will be honored as a timely entrant request.

If an employee fails to enroll within thirty (30) days of full-time employment such employee will be considered a late entrant unless he/she becomes eligible under the special enrollment periods provision. Medical coverage for a late entrant will begin the date the application is received. Dental coverage starts later, see Dental Eligibility on page 10.

DEPENDENTS ELIGIBLE FOR COVERAGE

Dependents eligible for coverage under the Plan are as follows:

1.

The employee's lawful wife or husband, unless legally separated, or, with documentation or appropriate paperwork, a spouse by a common-law marriage agreement. A dependent spouse who is eligible for coverage under his or her employer's health benefit plan is not eligible for coverage under this Plan, regardless of the benefits or the contribution required by the other plan.

2.

A child from birth to age nineteen (19), or to age twenty-three (23) if attending an accredited high school, college, university or vocational school on a full-time basis, provided:

a.: he/she is not married; and
b.: he/she is primarily dependent upon the employee for support and maintenance;
c.: he/she is not covered, as an employee, by another employer group health plan; and
d.: proof of Full-Time Student status from the registrar of the educational institution is provided when requested.

Additional Provisions That Apply to Dependents:

1.: Semester breaks do not jeopardize a child's full-time status. However, if a child is not attending as a full-time student during the semester following the break, that child will no longer be considered a dependent under the Plan. Coverage will terminate as of the first day of the semester following the break. It is the responsibility of the Employee to inform the Employer of this event.
2.: A previously ineligible dependent child under age twenty-three (23) who later becomes a full-time student at an accredited educational institution may be enrolled under the Plan as a new dependent within thirty (30) days of the date the semester begins. Proof of full-time attendance from the registrar of the educational institution must be provided to the Plan Administrator within the same thirty (30) day period.

If the employee completes and submits enrollment paperwork more than thirty (30) days from the date of eligibility of a dependent, the dependent will be considered a late entrant unless he/she becomes eligible under the special enrollment periods provision. Medical coverage for a late entrant will begin the date the application is received. Dental coverage starts later. See Dental Eligibility on page 10.

3.: The term "child" as used herein shall mean an employee's natural child, stepchild, legally adopted child, or a child placed under the legal guardianship of the employee or the covered spouse of the employee who resides in the employee's home in a parent-child relationship, or a child for whose medical care an employee or the covered spouse of the employee is legally responsible through a divorce decree or other court order. In each case, the child must satisfy the requirements for dependent eligibility.

Coverage for adopted children under the age of eighteen (18) begins on the date of placement for the purpose of adoption and is continued unless the placement is disrupted prior to legal adoption of the child. Provided the child is enrolled within thirty (30) days of placement, the pre-existing condition limitation will not apply. If the employee completes and submits enrollment paperwork more than thirty (30) days from the date of placement, the adopted child will be considered a late entrant unless he/she becomes eligible under the special enrollment periods provision. Medical coverage for a late entrant will begin the date the application is received. Dental coverage starts later. See Dental Eligibility on page 10.

4.

A dependent child's coverage may be extended beyond age nineteen (19) or twenty-three (23), if the child is:

a.: incapable of self-sustaining employment by reason of mental retardation or physical disability; and
b.: primarily dependent upon the employee for support and maintenance; and
c.: not covered, as an employee, by another employer group health plan.

A letter of certification from the parents of the child and the attending physician is required stating that the condition began before or during the year in which the child reached the attained age and showing proof of incapacity and dependency. Such proof must be submitted within thirty (30) days of the dependent's attainment of age nineteen (19), or within thirty (30) days of age twenty-three (23) in case of a full-time student. During the two (2) years after the child reaches the attaining age, the Plan may ask for regular proof of the child's continued disability. A physician's examination may be required as part of the proof. After the two (2) year period, the Plan cannot ask for proof more than once a year. The Plan may require that a physician examine the child before granting a continuation of the dependent's coverage. The Plan chooses the doctor and pays the fees for all required examinations.

This provision stops on the earliest of the following dates:

a.: The date the child is no longer disabled according to the Plan.
b.: The date the Plan is not furnished with proof of the child's disability when requested.

Situations specifically excluded from the definition of a dependent are:

1.: A spouse eligible for coverage under his or her employer's health benefit plan.
2.: A spouse who is legally separated or divorced from the employee. Such spouse must have met all requirements of a valid separation or divorce contract in the state granting such separation or divorce.
3.: If both husband and wife are eligible as employees, only one (1) may cover a dependent.
4.: A person cannot be covered under the Plan as an employee and as a dependent.
5.: Dependents whose permanent residence is not in the United States are not eligible for coverage.

Note: The Plan may require proof (such as a copy of the employee's income tax form, court order, legal adoption or legal guardianship papers) that the spouse or child qualifies as a dependent under the employee's coverage.

QUALIFIED MEDICAL CHILD SUPPORT ORDERS (QMCSOs)

The following information sets forth the procedures to be followed by the Plan to administer "Qualified Medical Child Support Orders" (QMCSOs), including National Medical Support Notices, as required by Section 609(a) of the Employee Retirement Income Security Act of 1974 (ERISA).

If the employer determines that the eligible employee's separated or divorced spouse or any state child support agency or Medicaid agency has obtained a legal medical child support order (MCSO), through a court order or an administrative process established under state law, and if the current Plan offers dependent coverage, the eligible employee will be required to provide coverage for any child(ren) named in the MCSO if the order is deemed to be "qualified." If dependent coverage is not normally offered under the Plan or the Employee is not eligible to participate, then no coverage for such child(ren) can be offered under this Plan.

A QMCSO is a court judgment, decree, or order, or a state administrative order that has the force and effect of law, that is typically issued as part of a divorce or as part of a state child support order proceeding, and that requires health plan coverage for an "alternate recipient." An alternate recipient is either the child of an eligible employee or a state or political subdivision acting on behalf of such child. Federal law requires a group health plan to pay benefits in accordance with such an order, if it is deemed "qualified." A QMCSO may apply to a health plan, dental plan, vision plan and/or health care spending account. It requires that the child(ren) named in the order have the right to receive benefits from the eligible employee through any group medical plan under which the eligible Employee is enrolled, whether or not the eligible employee has family coverage. The QMCSO must contain:

1.: the name and last known mailing address of the eligible employee;
2.: the name and last known mailing address of each child (alternate recipient) covered under the order;
3.: a reasonable description of the type of coverage to be provided by the group health plan to each alternate recipient or the manner in which coverage will be determined;
4.: the period of time to which the order applies; and

5.: the identification of each plan to which the order applies.

A Medical Child Support Order, to be qualified, must not require the Plan to provide any type or form of benefits or any option not otherwise provided under the Plan except to the extent necessary to meet the requirements described in Section 1908 of the Social Security Act (relating to enforcement of state laws regarding child support and reimbursement of Medicaid).

In general, an alternate recipient child under a QMCSO is to be treated like any other covered person under the Plan. Unless the individual QMCSO is more restrictive, the alternate recipient should be given the same coverage as would be provided to any other dependent child of the eligible employee.

Unless the alternate recipient is a newborn or newly-adopted child, the Plan's pre-existing conditions limitations will apply to an alternative recipient under a QMCSO to the same extent it would be applied against a newly-eligible person under the Plan. Please see the Pre-Existing Conditions Limitations section for more details.

Upon receipt of an order, the Plan Administrator must:

1.: Promptly send written notice of the receipt of the order to the eligible employee and all alternate recipient children named in the order and their legal representatives. Such notice shall include a copy of the order and these QMCSO procedures for determining whether such order is a QMCSO; and
2.: Permit the alternate recipient to designate a representative to receive copies of notices sent to the alternate recipient regarding the medical child support order; and
3.: Within a reasonable period of time after receiving a Medical Child Support Order, review the order to determine if it meets the legal requirements of a QMCSO and notify the eligible employee and each alternate recipient; and
4.: Ensure the alternate recipient is treated by the Plan as a beneficiary for reporting and disclosure purposes, such as by distributing to the alternate recipient a copy of the Plan Document/Summary Plan Description and any subsequent Summaries of Material Modifications generated by a Plan amendment.

Upon receipt of a valid National Medical Support Notice, the Plan must:

1.: Notify the state agency whether coverage for the child is available under the Plan;
2.: If so, indicate whether such child is covered under the Plan and the effective date of coverage or the steps necessary to make the coverage effective;
3.: Provide a description of the coverage; and
4.: Provide the forms necessary to cause the coverage to become effective.

Within a reasonable time after receipt of the order (defined under the National Medical Support Notice regulations not to exceed 40 days), the Plan Administrator must notify the eligible employee and alternate recipient that either:

1.: The order is a valid QMCSO; or
2.: The order is not a valid QMCSO including an explanation of what provisions are defective or missing.

If the order is determined to be a "Qualified" order, each named child will be covered by this Plan in the same manner as any other dependent child is covered by this Plan. In order for the child's coverage to become effective as of the date the order has been issued, the eligible employee must apply

for coverage for himself/herself (if not already enrolled) and for the child(ren) who is an alternate recipient in the order within the time periods specified under the Eligibility section of this Plan. If a QMCSO requires that the eligible employee provide health coverage the child(ren) named in the order and the eligible employee does not enroll the child(ren), the employer must enroll the the eligible employee (if not already enrolled) and the child(ren) upon application from the separated/divorced spouse, the state child support agency or Medicaid agency and withhold from the employee's pay for the eligible employee's share of the cost of such coverage. If the employee is not eligible for coverage under this Plan, then no coverage can be offered under this Plan for such child(ren) and/or Employee regardless of the Order.

Once coverage becomes effective, the eligible employee may not drop coverage for the child(ren) unless he/she submits written evidence to the employer that the child support order is no longer in effect. The Plan may make benefit payments for the child(ren) unless the eligible employee submit written evidence to the employer that the child support order is no longer in effect. The Plan may make direct benefit payments for the child(ren) covered by a QMCSO directly to the custodial parent or legal guardian for such child(ren).

Each named child will be considered a covered person under this Plan but may designate another person, such as a custodial parent or legal guardian, to receive copies of explanations of benefits, checks and other material which would otherwise be sent directly to the named child.

If it is determined that the order is not a "Qualified" order, each named child may appeal that decision by submitting a written letter of appeal to the Plan Administrator. The Plan Administrator shall review the appeal and reply in writing within thirty (30) days of receipt of the appeal.

Plans are not required to provide coverage in accordance with child support or other court orders which are NOT "qualified." The Plan Administrator has the ultimate authority to determine whether or not the order meets all the requirement of ERISA's Section 609(a). If the order does not meet all of the qualification requirements, the Plan need not (and should not) provide any benefits to the alternate recipient, unless the child is otherwise eligible or deficiencies are later corrected by the parties.

This Plan will not provide any type or form of benefit, or any option, not otherwise provided under this Plan, and all other Plan benefit provisions will apply (e.g., exclusions, limitations, maximums, etc.).

This provision overrides any and all Plan provisions as to the determination of eligibility for coverage, except when dependent coverage under the Plan is not normally offered or the employee is not eligible for coverage under the Plan. For example, if coverage under the Plan normally ceases when a dependent child attains age nineteen (19), but under state law requires coverage until the child attains age twenty-one (21), the Plan must go to age twenty-one (21). It is assumed that all states are at age nineteen (19), except Florida—twenty-five (25), Georgia—twenty-five (25), Texas—twenty-one (21) and Utah—twenty-six (26).

DEPENDENTS' EFFECTIVE DATE OF COVERAGE

Dependent coverage will not take effect unless the employee's coverage is in effect.

Eligible dependents become covered under the Plan as follows, provided an application is made and any required contributions are made:

1.: If the dependent is eligible as a dependent on the employee's effective date, such dependent becomes eligible under the Plan on the date the employee's coverage commences.
2.: If the dependent becomes an eligible dependent after the employee's effective date, such dependent becomes eligible for coverage on the date he/she is acquired.

3.: If coverage is due to a Qualified Medical Child Support Order (QMCSO), coverage will become effective on the date of the QMCSO or coinciding with the effective date of coverage, whichever is later.

Eligibility for Medicaid or the receipt of Medicaid benefits will not be taken into account in determining eligibility.

When a dependent has met one (1) of the eligibility requirements above, the employee is required to complete and submit enrollment paperwork within thirty (30) days of the initial date of the dependent's eligibility. If the employee fails to enroll within thirty (30) days of the initial date of the dependent's eligibility, such dependent will be considered a late entrant unless he/she becomes eligible under the special enrollment periods provision. Medical coverage for a late entrant will begin the date the application is received. Dental coverage starts later, see Dental Eligibility on page 10.

The following rules apply for coverage of newborn children from the moment of birth:

A newborn child will be covered automatically from the date of birth, provided that within thirty (30) days of his/her birth, the employee completes and submits all necessary enrollment paperwork changing to family coverage (if necessary) and agreeing to pay the required contribution (if any) for family coverage.

If the employee fails to enroll such newborn within thirty (30) days of the date of birth, the newborn will be considered a late entrant unless he/she becomes eligible under the special enrollment periods provision. Medical coverage for a late entrant will begin the date the application is received.

Note: Newborn "well-baby" care is subject to the newborn's own deductible, out-of-pocket maximum, and all Plan provisions.

CHANGE IN STATUS

It is the covered employee's responsibility to advise the employer and to make in writing any change in dependent status. This includes changes due to marriage, divorce, legal separation, the addition of newborns or adopted children, and any desire to change beneficiaries.

If a person covered under the Plan changes status from employee to dependent or dependent to employee, and the person is covered continuously under the Plan before, during and after the change in status, credit will be applied to all Plan provisions including deductibles and all amounts applied to maximums.

with single coverage, either the employee or their spouse may change to family coverage within thirty (30) days if:

1.: the employee is adding a newborn, adopted child, or child placed for adoption;
2.: or class of employees eligible for coverage with the employer.

If the employee or his/her spouse is covered under the Plan and the employee who is covering the dependent children terminates coverage, dependent coverage may be transferred to the other covered employee as long as coverage has been continuous.

SPECIAL ENROLLMENT PERIODS (CHANGE IN EMPLOYEE STATUS)

If an eligible employee or dependent declined coverage under the Plan at the time of initial eligibility (and stated in writing at the time that coverage was declined because of alternative group health coverage); or there is an employee status change as defined below, the employee may make a written request to change coverage by completing an enrollment form. Such request must be made

within thirty (30) days of the employee status change, and such addition or change will take effect on the later of:

1.: for loss of other coverage, the date of the loss of eligibility under another group health plan or through a health insurance issuer offering group health insurance coverage; or
2.: or a marriage, the date of marriage; or
3.: or a birth, the date of birth; or
4.: or an adoption or placement for adoption, the date of the adoption or placement.

The special enrollment rights may apply with respect to an employee, a dependent of an employee, or both.

The term "special enrollment periods (change in employee status)" means only the following:

1.

A loss of eligibility for an employee and/or affected dependents under another group health plan or through a health insurance issuer offering group health insurance coverage due to:

a.: legal separation,
b.: divorce,
c.: death,
d.: termination of employment,
e.: reduction in work hours,
f.: employer contributions for the coverage were terminated, or
g.: COBRA continuation coverage under the other plan has been exhausted.

An individual does not have to elect COBRA continuation coverage or exercise similar continuation rights in order to preserve the right to special enrollment. However, an individual does not have a special enrollment right if the individual loses the other coverage as a result of the individual's failure to pay premiums/ contributions or for termination of coverage for cause (such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the Plan).

2.

A change in family status due to:

a.: marriage,
b.: birth of a child, or
c.: adoption or placement for adoption of a child.

The special enrollment rules allow an eligible employee to enroll when he or she marries or has a new child (as a result of marriage, birth, adoption, or placement for adoption). A spouse of an eligible employee can be enrolled separately at the time of marriage or when a child is born, adopted, or placed for adoption. The spouse can be enrolled together with the employee when they marry or when a child is born, adopted, or placed for adoption. A child who becomes a dependent of a covered person as a result of marriage, birth, adoption, or placement for adoption can be enrolled when the child becomes a dependent. Similarly, a child who becomes a dependent of an eligible employee as a result of marriage, birth, adoption, or placement for adoption can be enrolled if the employee enrolls at the same time. Individuals who enroll under these special enrollment conditions are not considered late entrants.

DELETING A DEPENDENT

To remove a dependent from the employee's coverage, the employee must complete a change form. The employer must receive this form within thirty (30) days after the effective date of change. If the employee fails to timely remove an ineligible dependent, the employer reserves the right to recoup any benefit payments made on behalf of such dependent back to the date such dependent should have been deleted.

WAIVER OF PARTICIPATION

Waiver of participation means an employee's failure to enroll himself/herself and his/her eligible dependent(s) within thirty (30) days of his or her date of full-time employment. This waiver will also include coverage under the Plan which was canceled by the employee while the person remained eligible.

Waiver of participation means that future coverage under the Plan is subject to the Plan's special enrollment periods provision or enrollment as a late entrant. A "late entrant" means an employee or dependent who does not enroll during the initial period in which he/she is eligible to enroll, or during a special enrollment period when there is a change in family status or loss of group health coverage under another plan. Medical coverage for a late entrant will begin the date the application is received. The dental coverage provision is on page 10.

LOSS OF COVERAGE DUE TO MISREPRESENTATION

The employer has the right to rescind any coverage of the employee and/or his/her dependents for cause, such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the Plan. The employer will refund all contributions paid for any coverage rescinded; however, claims paid will be offset from this amount. The employer reserves the right to collect additional monies if claims are paid in excess of the employee's and/or dependent's paid contributions.

EMPLOYEE TERMINATION OF COVERAGE
(See COBRA Continuation Coverage on page 87.)

The coverage of any employee will automatically terminate at midnight on the earliest date indicated below:

1.: On the date employment ends.
2.: On the date an employee ceases to be in a class of employees eligible for coverage.
3.: On the date the required contribution for coverage is not made, unless due to a clerical error whereby past contributions may be paid to bring coverage current.
4.: On the date coverage is discontinued with respect to the class of employees to which such employee belongs.
5.: On the date the Plan is terminated with respect to all employees, or on the date a benefit provided under the Plan is terminated.
6.: On the date the employee retires.
7.: On the date the employee becomes an active full-time member of the armed forces of any country for more than thirty (30) days.
8.: On the date of the employee's death.
9.: On the date the employee elects to terminate coverage.

(For non-work related disability over ninety (90) days, see Extension of Medical Benefits on page 32.)

DEPENDENT TERMINATION OF COVERAGE
(See COBRA Continuation Options on page 87.)

Dependents' coverage will automatically cease at midnight on the earliest date indicated below:

1.: On the date the employee's coverage terminates.
2.: On the date the employee ceases to be in a class eligible for dependent coverage.
3.: On the date the required contribution for dependent coverage is not made, unless due to a clerical error whereby past contributions may be paid to bring coverage current.
4.: On the date the Plan is terminated with respect to all dependents or on the date a dependent benefit provided under the Plan is terminated.
5.: On the date such dependent ceases to be a dependent of the employee as defined herein.
6.: On the date the dependent becomes an active full-time member of the armed forces of any country for more than thirty (30) days.
7.: On the date of the employee's death.
8.: On the date the employee elects to terminate the dependent's coverage.
9.: On the date the dependent becomes effective as an employee under the Plan.

LEAVE OF ABSENCE

1.: During an approved Medical Leave of Absence certified by a physician and approved by the Plan Administrator (unless covered under the Family and Medical Leave Act [twelve [12] weeks], in which case the better benefits apply) coverage may continue under the Plan for up to ninety (90) days providing all required contributions to the Plan are made by the covered employee; or
2.: During a personal leave of absence approved by the Plan Administrator (unless covered under the Family and Medical Leave Act [twelve [12] weeks], in which case the better benefits apply), coverage may continue under the Plan for a maximum of ninety (90) days providing all required contributions to the Plan are made by the covered employee.

Regardless of any other provisions of this Plan, benefits will be paid in accordance with the rules and regulations as specified by the Family and Medical Leave Act (Public Law 103-3).

FAMILY AND MEDICAL LEAVE ACT (FMLA)

If the employer is subject to the Family and Medical Leave Act (FMLA) of 1993, eligible employees may take up to twelve (12) weeks of unpaid, job-protected leave for the following family and medical reasons:

1.: The birth, adoption or foster care placement of a child, if the leave is taken within twelve (12) months of the birth, adoption, or placement;
2.: he serious medical condition of a parent, spouse, or child (under age nineteen [19] or an adult child who cannot care for him/herself); or
3.: The employee's own serious medical condition that prevents him/her from performing the functions of his/her job.

An employee is eligible for FMLA if he/she has worked for the employer for at least twelve (12) months and for at least 1250 hours over the last twelve (12) months prior to the leave. While on FMLA leave, the employer will continue to make its contribution toward the cost of coverage. The employee must make the same contributions toward the cost of coverage as before he/she began the leave. If such contributions are not made, coverage will terminate on the last day of the month in which the employee makes the required contribution.

If the employee does not return to work after a FMLA leave, regardless if coverage has lapsed due to non-payment of employee contributions, a COBRA qualifying event occurs on the earlier of the end of the FMLA leave or the date a notice is given to the employer that the employee will not be returning to work.

If coverage lapses and the employee does return to work following an approved FMLA leave, coverage will be restored effective on the date of return to employment at the same level of benefit with no additional pre-existing condition limitation requirements or waiting period requirements. However, no benefits will be paid for expenses incurred during the period of time when coverage lapsed.

If the employee decides not to return to work, the Plan is entitled to collect the premiums the employer paid for that employee's and employee's dependent(s) coverage during the leave, unless the employee is unable to return to work due to a serious health condition of the employee or employee's immediate family member, or other circumstances beyond his/her control.

If an employee fails to return from family or medical leave and has paid all required premium contributions during the leave, coverage will terminate on the last day of the month in which the FMLA leave terminates. A qualifying event for purposes of COBRA continuation then takes place.

If an employee makes required premium contributions during FMLA leave, but notifies the employer of intent not to return to work during or after the leave, a COBRA qualifying event takes place upon such notification.

Advance Notice and Medical Certification

The employee may be required to provide advance leave notice and medical certification. Taking of leave may be denied if the following requirements are not met.

1.: The employee ordinarily must provide thirty (30) days advance notice when the leave is "foreseeable."
2.: The employer may require medical certification to support a request for leave because of a serious health condition, and may require second or third opinions (at the employer's expense) and a fitness for duty report to return to work.

Job Benefits and Protections

1.: For the duration of FMLA leave, the employer must maintain the employee's health coverage under any "group health plan."
2.: Upon return from FMLA leave, most employees must be restored to their original or equivalent positions with equivalent pay, benefits and other employment terms.
3.: The use of FMLA leave cannot result in the loss of any employment benefit that accrued prior to the start of an employee's leave.

Unlawful Acts by Employers

FMLA makes it unlawful for any employer to:

1.: Interfere with, restrain or deny the exercise of any right provided under FMLA;
2.: Discharge or discriminate against any person for opposing any practice made unlawful by FMLA or for involvement in any proceeding under or relating to FMLA.

Enforcement

1.: The U.S. Department of Labor is authorized to investigate and resolve complaints of violations.
2.: An eligible employee may bring a civil action against an employer for violations.

FMLA does not affect any Federal or State law prohibiting discrimination, or supercede any State or local law or collective bargaining agreement which provides greater family or medical leave rights.

For additional information, contact the nearest office of the Wage and Hour Division, listed in most telephone directories under U.S. Government, Department of Labor.

ACTIVE MILITARY DUTY AND MILITARY RESERVISTS

Employees or covered dependents who are called to active military duty will no longer be considered eligible for benefits under this Plan, but may elect continuation of coverage.

Those individuals returning from active duty in the armed forces may have coverage reinstated under this Plan, for themselves and any eligible dependent, provided:

1.

such individual was covered under the Plan on the day employment with his/her employer ended due to being called to active duty in the armed forces; and

2.

such individual becomes re-employed with his/her employer subsequent to being discharged from active duty, or within two (2) years if such individual was hospitalized or recovering from an illness or injury on the date of his/her discharge; or

3.

such individual who, under normal circumstances, would have a) remained in the service of his/her employer and b) satisfied the eligibility requirements under this Plan, makes application for coverage within thirty (30) days following his/her date of rehire.

4.

the maximum period of coverage of a person under such an election for continuation of coverage shall be the lesser of:

a.: the eighteen (18)-month period beginning on the date on which the person's absence begins; or
b.: the period beginning on the date on which the covered person's absence begins and ending on the date after the date on which the covered person fails to apply for or return to a position of employment, as required by U.S.E.R.R.A.

5.

a person who elects to continue Plan coverage under this section may be required to pay not more than 102% of the full premium under the Plan (determined in the same manner as the applicable premium under section 4980B(f)(4) of the Internal Revenue Code of 1986) associated with such coverage for the employer's other employees, except in the case of a person on active duty for less than thirty-one (31) days, such person may not be required to pay more than the employee's share, if any, for such coverage.

The coverage provided will be the benefits currently provided by the Plan. If an individual returns to employment within the same calendar year, eligible charges accumulated toward the satisfaction of provisions such as the out-of-pocket and deductible provisions or calendar year maximums will be taken into consideration when determining benefits available for the remainder of the calendar year.

It is the intent of the Plan to comply with all existing regulations of The Uniformed Services Employment and Reemployment Rights Act (U.S.E.R.R.A.) of 1993. If for some reason the information presented in the Plan differs from the actual regulations of the U.S.E.R.R.A., the Plan reserves the right to administer Plan benefits in compliance with such actual regulations.

LAYOFF

If coverage terminates due to a company layoff, there is no continuation of coverage except what is chosen through the COBRA election.

All Plan provisions will continue as though there were no lapse of coverage status if COBRA was elected during this termination period and coverage was uninterrupted to the date of rehire.

RECALL FROM LAYOFF

As a general rule, a person who is laid off and called back to full-time regular employment within ninety (90) days receives credit for prior time worked. However, this employee must fill out the appropriate enrollment forms.

For persons recalled from layoff and still in the ninety (90) day waiting period prior to the coverage effective date, the waiting period is shortened by the number of days worked during their previous employment.

For persons whose health coverage was in effect when they were laid off, coverage is effective on the first day they return to work at their previous level.

EXTENSION OF MEDICAL BENEFITS: (Disability)

Should coverage terminate because a covered employee is disabled by a non-work related injury or sickness so as to be continuously prevented from returning to work within ninety (90) days, and, further prevented from engaging in any occupation, benefits under this Plan will continue (provided any required employee contributions are paid) until the earliest of:

1.: nine (9) months from the date coverage terminates; or
2.: the date the covered employee becomes covered under another group plan; or
3.: the date such total disability terminates.

Proof of disability must be furnished to the Plan Administrator if requested. Dependent coverage in effect at the time employee coverage terminates will continue, provided that required contributions to the Plan are paid and provided the dependent remains eligible for benefits as defined by this plan. However, such dependent coverage shall only extend until the earliest of:

1.: nine (9) months from the date employee coverage terminates; or
2.: the date the covered employee becomes covered under another group plan; or
3.: the date the employee's total disability ceases; or
4.: the date the covered dependent becomes covered under another group plan.

The employee may elect continuation coverage under COBRA once the extension of benefits has expired. Although such election will require premium payments, such continuation coverage will ensure

against all covered medical expenses and may enable the employee to provide dependent coverage for a longer period of time, provided such dependent coverage already exists under this Plan.

DEATH (SURVIVOR) BENEFITS

Upon the death of an employee covered under the Plan for fewer than 365 days, the then covered family members of the employee shall, at company expense, automatically be covered under the Plan for the lesser of the number of calendar days the employee was covered by the Plan or ninety (90) days. For employees who were covered under the Plan for 365 days or more, such extended benefits shall be provided for 180 days following the employee's death. Such extension shall not extend beyond the date that such dependent(s) become eligible, either as an individual or as a dependent, under any other group type of employee benefit program arranged through any other employer, trust, or association. Covered family members may elect continued coverage under the COBRA provisions once survivor benefits have expired.

ELIGIBILITY DATE FOR REINSTATED EMPLOYEE

An employee whose coverage terminates due to termination of employment or ceases to be in a class of employees eligible for coverage and who resumes employment with the employer or has a status change which makes him/her eligible for coverage must meet the same eligibility and waiting period requirements as that of a new hire, with the waiting period starting on the date of rehire.

REINSTATEMENT OF COVERAGE

If the employee or his or her covered dependents qualify and elect COBRA continuation and subsequently again become eligible for coverage under the Plan during the designated COBRA continuation period (with no break in coverage), the employee and his or her covered dependent(s) are not required to re-qualify as a new Plan covered person. All Plan provisions will continue as though there were no lapse of coverage status.

ACQUISITION OF A NEW COMPANY—WHEN COVERAGE BEGINS

When enrollment requirements are met, coverage for eligible employees, and their eligible dependents, who are employed by the newly acquired company will be effective as of the date of the acquisition, or the date of termination of the prior company's coverage, whichever is later, if they were covered under a plan offered by the prior company on the day before the date of the acquisition. The waiting period will be waived. If a bodily injury or sickness is a pre-existing condition, but would not have been a pre-existing condition under the prior plan had it remained in force, it will not be a pre-existing condition under this Plan. Credit will be given for any pre-existing period satisfied under the prior plan. A certificate of prior health coverage may be required to substantiate the creditable period of coverage.

The employee and his/her eligible dependents will be given credit for deductibles and coinsurance provided they submit evidence of amounts satisfied under the prior plan.

New hires will be subject to the waiting period, pre-existing condition exclusion, and all other Plan provisions.

PRE-EXISTING CONDITION EXCLUSION

The pre-existing condition exclusion applies to all new enrollees in the Plan, except as listed below.

This Plan includes a pre-existing condition exclusion period of six (6) months. Generally, Covered Persons are not eligible to receive benefits under this Plan for a pre-existing condition during this period. However, if the Covered Person has been covered under another health plan within sixty-three (63) days of the date of enrollment into this Plan, the pre-existing condition exclusion period may be reduced by the prior coverage.

A pre-existing condition must relate to a condition (whether physical or mental), regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six (6) month period ending on the enrollment date. The enrollment date is defined as the first date the person becomes covered under the Plan or, if earlier, the first day of any waiting period for such enrollment.

The pre-existing condition exclusion does not apply to:

1.: Genetic information in the absence of a diagnosis of the condition related to the genetic information.
2.: Pregnancy.
3.: A newborn child or newly adopted child under age eighteen (18) if the child is covered within thirty (30) days of the date of birth, adoption, or placement for adoption (or who has creditable coverage from birth, adoption, or placement for adoption without a significant break in coverage).
4.: Conditions first discovered during the waiting period.

The medical pre-existing condition exclusion period will not exceed six (6) months after the enrollment. A pre-existing condition must be reduced by the period of creditable coverage the Covered Person has under any previous plan as of the enrollment date. The enrollment date is defined as the first date the person becomes covered under the Plan or, if earlier, the first day of any waiting period for such enrollment.

"Late entrant" means an employee or dependent who does not enroll during the initial period in which he or she is eligible to enroll, or during a special enrollment period when there is a change in family status or loss of group health coverage under another plan.

The pre-existing condition exclusionary period runs concurrently with the waiting period that the employee needs to satisfy before becoming effective under the Plan and before any benefits are payable under this Plan.

In order to make a determination of whether the Covered Person is eligible for credit for prior coverage, the Covered Person must submit a Certificate of Creditable Coverage or any other evidence of prior coverage. If the employee was covered under more than one (1) plan, he or she should provide documentation of coverage from each health plan. Please submit this information to the Benefits Department immediately upon receipt from the prior employer. Employees may request a certificate, free of charge, for themselves or their dependent(s) before losing coverage or within two (2) years of losing coverage. Please let the Benefits Department know if assistance is needed in obtaining this information from the prior employer or carrier.

If it is determined that the employee and/or his/her eligible dependents:

1.: will receive only a partial credit for the prior coverage towards satisfying the pre-existing condition exclusion period; or
2.: will have to satisfy the entire pre-existing condition exclusion period;

based on the information on the certificate of prior health coverage, Mountain States Administration will inform the employee of this determination. If the employee wishes to appeal this decision or provide additional evidence of creditable coverage, contact the eligibility department at Mountain States Administration.

CASE MANAGEMENT AND ALTERNATE TREATMENT PROVISION

The Plan reserves the right to allow for care at home or other alternative methods of treatment or medical care not otherwise covered under the Plan. In cases where the patient's condition is expected to be or is of a serious nature, the Plan Administrator may arrange for review and/or case management services from a professional qualified to perform such services. The Plan Administrator shall have the right to alter or waive the normal provisions of the Plan when it is reasonable to expect a cost effective result without a sacrifice to the quality of patient care, provided such care is approved by the Plan's case management organization, the patient (or patient's legal representative), the attending physician, the Plan Administrator, and the Plan's reinsurance carrier.

Benefits provided under this section are subject to all other Plan provisions. Alternative care will be determined on the merits of each individual case and any care or treatment provided will not be considered as setting any precedent or creating any future liability, with respect to that covered person or any other covered person.

POST- ADMISSION NOTIFICATION

Covered persons that are admitted to the hospital for more than twenty-four (24) hours are encouraged to notify the Plan of Inpatient hospital admissions within forty-eight (48) hours of the admission. This will facilitate the Plan's case management and review and ensure that the treatment follows the provisions of the Plan. Please call Patty Yunker at (303) 576-6046 or (303) 373-4860 Extension 6046. A message may be left after hours and on weekends. Please be prepared to give the following information:

1.: the patient's name;
2.: the date admitted to the hospital; and
3.: the name and address of the hospital.

The large case manager will be provided with this information.

COVERED MEDICAL EXPENSES

Unless specifically provided for in the Plan, covered medical expenses shall include, subject to the "General Plan Exclusions and Limitations," only usual, customary, and reasonable medically necessary charges for services and supplies which are incurred by a covered person and are:

1.: administered or ordered by a Physician or other eligible licensed health care provider, as defined by the Plan; and
2.: medically necessary for the diagnosis and treatment of an illness or injury unless otherwise specifically included as a covered expense; and
3.: within the usual, customary and reasonable range of fees for comparable services in the area in which the expense is incurred; and
4.: incurred while enrolled under this Plan; and
5.: included in the following items of covered medical expenses; and
6.: not paid or payable under another coverage of the Plan; and
7.: not excluded under any provision or section of this Plan.

Such payment:

1.: will generally be subject to deductible and copayment provisions;
2.: will not exceed the maximum individual benefit and any other applicable maximums shown in the Schedule of Medical Benefits; and
3.: will be subject to the Plan Exclusions and Limitations.

An expense is incurred on the date of treatment, service or purchase. Covered expenses are limited to:

1.: Acupuncture performed by a practitioner licensed in the State of Colorado when medically necessary to treat a covered illness or injury, and within the course and scope of such licensure.
2.: Medical care and treatment of alcoholism or substance abuse furnished on an inpatient or outpatient basis by a hospital, treatment facility, physician, or licensed therapist for psychotherapy under direct supervision of an M.D., D.O., Ph.D., Ed.D., or Psy.D., and as described later in this section of the Plan. When direct supervision is not required by the state, that licensed therapist will be a recognized provider.
3.: Allergy testing, treatment, and injections . RAST (radioallergosorbent test) allergy testing will be allowed only when medically necessary as the only alternative to traditional allergy testing.
4.: Professional ambulance service when the covered person cannot be safely transported by any other means to the nearest facility where emergency care or treatment is rendered or when medically necessary, from one facility to another for care; or for professional ambulance from the facility to the patient's home when medically necessary. Air ambulance is covered only when terrain, distance or condition warrants. Ambulance charges for convenience are not covered.
5.: Expenses made by an ambulatory surgical center, urgent care facilities, or minor emergency medical clinic when treatment has been rendered.
6.: Expenses for amniocentesis testing and/or genetic counseling , when recommended by a physician for a covered person who is expected to deliver at age thirty-five (35) or older, or

for a documented high-risk pregnancy, or family history of genetic disorder. Any procedure intended solely for sex determination is not covered.

7.: The cost and administration of an anesthetic by a physician or by a nurse anesthetist (CRNA) if necessary for a covered surgery. Benefit allowances are based on the complexity of the surgical procedure, the amount of time needed to administer the anesthetic, and the patient's physical condition at the time the service is provided. Standby anesthesia is a benefit when anesthesia services may potentially be required. These benefits depend upon the procedure and the circumstances of the case.
8.: Assistant surgeon's fee when the procedure requires an assistant surgeon due to medical necessity.
9.: Expenses for the testing to determine the diagnosis, medication and medical management of the medication for attention deficit disorder will be covered as any other illness under the Plan. All other expenses for treatment of attention deficit disorder will be covered under the mental health disorders provision of the Plan.
10.: Biofeedback and equipment medically necessary for the treatment of a covered illness or injury.
11.: Birthing centers .
12.: Birth control pills, birth control injections, prescription birth control devices, and birth control implants . Removal of a birth control implant or device is not covered unless its removal is deemed prudent on the advice of the treating physician.
13.: Blood transfusions , blood processing costs, blood transport charges, blood handling charges, administration charges, the cost of blood, plasma and blood derivatives, and pre-surgical autologous storage of blood. Any credit allowable for replacement of blood plasma by donor or blood insurance will be deducted from the total of eligible covered expenses.
14.: Cardiac exercise therapy when prescribed by a physician after cardiac surgery or myocardial infarction.
15.: Chiropractic services will only be covered for the detection and correction by manual or mechanical means of a structural imbalance, distortion or subluxation in the human body or for the removal of nerve interference, where such interference is the result of or related to distortion, misalignment, or subluxation of or in the vertebral column. Maximum payable per six (6) consecutive month period is twenty (20) visits.
16.: Accredited facilities, clinics, or centers involved in the testing and treatment of chronic pain for a covered illness or injury.
17.: Cleft palate and cleft lip expenses as described later in this section of the Plan.
18.: Dental treatment as described later in this section of the Plan. Associated medical charges for facility, anesthesia, etc. and related eligible charges are covered when dental surgery requires hospitalization.
19.: Electrocardiograms, electroencephalograms, pneumoencephalograms, basal metabolism tests, or similar well-established diagnostic tests generally approved by physicians throughout the United States.
20.: The rental or purchase (whichever is less) of durable medical equipment . When purchase of durable medical equipment is covered, repair, maintenance, replacement, and adjustments will also be covered. Items such as air conditioners, purifiers, vibrating chairs, whirlpools, saunas, and dehumidifiers are not covered items.

21.: Extracorporeal shock therapy (lithotripsy) for treatment of kidney stones.
22.: Eye examinations by an ophthalmologist or optometrist (in those jurisdictions where permitted by law) for the purpose of prescribing corrective lenses. These vision benefits will include prescription lenses and frames and the replacement of lost, stolen, or broken eyeglass lenses, frames, or contacts payable to a maximum of $50 per person, per calendar year, not subject to deductible or coinsurance.
23.: Prescription eyeglasses, frames or contact lenses will be covered when their function is to replace the human lens absent at birth or lost through intraocular surgery or ocular injury or when caused by a medically ascertainable problem. This benefit is not subject to the $50 maximum stated in the Vision Benefit provision. Limitation will be to one (1) pair of prescription eyeglasses or contact lenses, unless due to a change in prescription as a result of the surgery, injury, or medically ascertainable problem.

The Plan will also cover eyeglasses or contact lenses when prescribed by the covered person's physician as the only method of treatment available for the treatment of aphakia or keratoconus.

24.: Fetal surgery will be considered as part of the mother's care.
25.: Head halter or other traction apparatus .
26.: Expenses for treatment of kidney disorder by hemodialysis or peritoneal dialysis as an inpatient in a hospital, or other facility, or for expenses in an outpatient facility or in your home, including the training of one (1) attendant to perform kidney dialysis at home. The attendant may be a family member. When home care replaces inpatient or outpatient dialysis treatments, the Plan will pay for rental of dialysis equipment and expendable medical supplies for use in your home.
27.: Home health care benefits as described later in this section of the Plan.
28.: Hospice benefits as described later in this section of the Plan.
29.: When hospitalized in a licensed hospital , reimbursement will be provided for care by a hospital for semiprivate room and board, intensive care, coronary care unit, or private room rate when documented in writing from the physician as medically necessary for treatment of the condition, and for all other medically necessary services and supplies. Expenses for a private room will be paid at the private room rate when the hospital only has private rooms.

Hospital supplies covered will include one (1) admission kit. Benefits are also payable for outpatient hospital services and charges made by the hospital for outpatient surgery, emergency room treatment and other outpatient medical care.

30.: Expenses incurred for the initial diagnosis and testing to determine infertility and impotency , whether a medical problem exists or not, is covered; expenses incurred in connection with the treatment, whether a medical problem exists or not, of infertility or promotion of conception, including drug therapy, are not covered.
31.: Insulin , related supplies, syringes.
32.: Laboratory and pathology services, and x-ray and radiology services .
33.: Expenses for massage therap y when it is prescribed by and under the supervision of a physician for medically necessary (not palliative) treatment and performed by a licensed provider. The benefit is limited to twenty (20) visits per calendar year.
34.: Surgery/procedures necessary for reconstruction of breast(s) after mastectomy . This benefit includes the costs of prostheses (implants, special bras, etc.) and physical complications of all

stages of mastectomy, including lymphedemas, as recommended by the attending physician. Coverage also provides for surgery/reconstruction on the breast which did not have the mastectomy, in order to produce a symmetrical appearance.

35.

Medical supplies , including, but not limited to: dressings, sutures, casts, splints, trusses, crutches, colostomy bags, catheters, syringes and needles for administering covered drugs, medicines or insulin. Over-the-counter supplies, except for insulin, syringes and needles, and items that would not serve a useful medical purpose, or which are used for comfort, convenience, or personal hygiene, are not included.

36.

Medical care and treatment of mental health disorder furnished on an inpatient or outpatient basis by a hospital, psychiatric hospital, mental health facility, physician, nurse practitioner or licensed therapist for psychotherapy under direct supervision of an M.D., D.O., Ph.D., Ed.D., or Psy.D., and as described later in this section of the Plan. When direct supervision is not required by the state, that licensed therapist will be a recognized provider.

37.

Licensed or registered midwife .

38.

Any expenses for care or treatment provided by the United States government for non-service connected disabilities will be reimbursed to the Veterans Administration to the extent that the services are otherwise covered under the Plan.

39.

Occupational therapy , only when prescribed by a physician as to type and duration and when the therapy is generally expected to improve bodily function. Occupational therapy for vocational testing, occupational training or retraining, even when due to a covered condition, is not covered.

40.

Outpatient Surgery , paid at 100%, not subject to the Plan deductible.

41.

Oxygen and other gases, and equipment necessary for its administration.

42.

Physical therapy performed by a physician or licensed physical therapist.

43.

The services of a legally qualified physician for medical care and/or surgical treatments including but not limited to office visits, home visits, hospital inpatient care, consulting physician services, hospital outpatient visits/exams, clinic care, and second opinion consultations.

44.

Physician's assistant fee when the procedure requires a physician's assistant due to medical necessity, in lieu of the service of an assistant surgeon.

45.

Expenses for pre-admission testing , as described later in this section of the Plan.

46.

Prescription drugs requiring the written prescription of a physician. Growth hormone therapy must be previously authorized with a letter from the physician documenting the need for such therapy in advance of dates of service. Newly approved drugs are not automatically covered, and must be authorized by the Plan Administrator. See the Prescription Drug Plan section of this document.

47.

Expenses incurred for private-duty nursing services by a practicing registered nurse (R.N.) or licensed practical nurse (L.P.N.) for:

a.: inpatient care only if the hospital does not have intensive care facilities or can not provide the level of care necessary; or
b.: outpatient care in the covered person's home or other outpatient location.

The private nurse cannot be employed by the hospital and cannot reside in the same household with the covered person nor be related by blood, marriage or legal adoption to the employee or employee's spouse.

All claims for private-duty nursing services must include a physician's certification that such services are medically necessary and indicate the nurse's degree and license number.

48.

Prostheses and orthopedic appliances including, but not limited to:

a.: artificial arms, legs, larynx or eyes;
b.: leg braces, including attached shoes;
c.: arm and back braces;
d.: maxillofacial prostheses;
e.: cervical collars; and
f.: non-cosmetic surgical implants.

Benefits include charges for the fitting, adjusting, repair or maintenance of such prosthetic or orthopedic appliances. Covered expenses are limited to the initial placement of prosthetic or orthopedic appliances when required to replace natural limbs or eyes.

Orthopedic shoes are covered only when they are used with an attached leg brace. Prescription orthotics and arch supports are covered when medically necessary for treatment of a covered illness or injury.

49.: Radiation therapy, chemotherapy, radium, and radioactive isotope therapy.
50.: Rehabilitation expenses as described later in this section of the Plan.
51.: Respiratory therapy ordered by a physician and performed by a registered respiratory therapist or qualified medical personnel.
52.: Expenses for second or third surgical opinion as described later in this section of the Plan.
53.: Skilled nursing care facility benefits as described later in this section of the Plan.
54.: Accredited facilities, clinics or centers involved in sleep testing and treatment for a covered illness or injury.
55.: Smoking cessation as described later in this section of the Plan.
56.: Speech therapy , only when prescribed by a physician, with an estimated duration of treatment, and only for conditions caused by injury, illness or congenital defect or as a loss due to surgery. Speech therapy services must be performed by a therapist with a Clinical Competence Certification or Equivalency Statement from either the American Speech and Hearing Association or the Peer Review Board of the State Speech and Hearing Association.
57.: Services for voluntary sterilization : tubal ligations or vasectomies for employees and dependent spouses. Reversals are covered for employees only to a lifetime maximum of $1,000 for male employees and $2,000 for female employees.
58.: A surgical procedure performed by a physician, nurse practitioner working within the scope of his/her license, or licensed or registered midwife. There will be a reduction for secondary surgeries/procedures performed in the same operative session.

59.

Medical or surgical services for the diagnosis, testing and treatment of temporomandibular joint (TMJ) disorders , regardless of the reason(s) such services are necessary. Benefits are limited to a maximum paid per person of $2,000 per lifetime.

60.

Transplant and replacement procedures , including but not limited to the following, are covered as any other illness:

a.: artery or vein transplants;
b.: bone marrow transplants, including a bone marrow transplant for breast cancer;
c.: cornea transplants;
d.: heart valve replacements;
e.: implantable prosthetic lenses in connection with cataracts;
f.: joint replacements;
g.: kidney transplants;
h.: prosthetic bypass or replacement vessels;
i.: human heart transplants (mechanical, artificial or other than human heart transplants are not covered);
j.: heart and lung transplants;
k.: lung transplants;
l.: liver transplants;
m.: pancreas transplants;
n.: peripheral stem cell transplants; and

any human organ transplant not considered to be experimental or investigational in nature under standards set by the Health Care Financing Administration (HCFA) and/or the National Institute of Health (NIH). Procedures that are considered experimental or investigational in nature may be covered subject to review by three licensed physicians who are board certified in the appropriate transplant specialty.

In addition, the following limitations apply:

a.: Donor and search and procurement expenses: If a covered person receives a transplant, the donor's expenses and the search and procurement expenses will be considered to be the covered person's even if the donor is covered under the same family plan as the covered person. Benefits will be paid for the donor's covered expenses to the extent an actual charge is made that is not paid or payable by any other plan covering the donor. The maximum benefit that will be paid is limited to $10,000. The maximum amount may be increased to cover expenses over $10,000 subject to medical review for determination of coverage.
b.: Charges for transportation, lodging and meals: If the recipient is a minor, this will include both parents, otherwise just the recipient and one (1) other adult.
c.: Second Surgical Opinion. This should ensure that the patient has no alternative procedure, service, or course of treatment that would be effective in the treatment of the patient's condition.

61.: Expenses for a covered illness or injury incurred while traveling outside the United States on business or pleasure. If the covered person traveled to such a location for the primary purpose of obtaining medical services, drugs, or supplies, expenses incurred are not covered.
62.: Weight control for employees only, as described later in this section of the Plan.
63.: Expenses for wellness , including routine medical checkups pap smears, mammograms, prostate examinations and other routine diagnostic x-ray and lab tests; well-baby care; routine immunizations , vaccinations, and preventive shots recommended or required by the American Academy of Pediatrics and Department of Education, for eligible dependent children; immunizations, flu shots and pneumovax injections for adults; or any charge for checkup purposes not incident to or necessary to diagnose an Injury or Illness, to a maximum paid of $350 per person, per calendar year.
64.: Wigs and artificial hairpieces will be covered to a maximum paid of $150 per person, per lifetime, upon receipt of a physician's prescription that indicates a medical condition for the hair loss.

ACCIDENT BENEFIT

Expenses for an accidental bodily injury will be paid at 100% for the first $500 for covered services provided within ninety (90) days from the accident. Thereafter, the deductible and coinsurance provisions apply. Expenses paid at 100% do not count toward the deductible nor do they count toward the out-of-pocket maximum.

This benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents. This benefit shall not include eye refractions, eyeglasses, hearing aids, prosthetic devices or their fitting.

CHILDBIRTH CENTERS

Charges made by a childbirth center are covered for services and supplies furnished for:

1.: prenatal care; and
2.: delivery of child(ren).

A birthing center is a licensed facility which:

1.: provides: (a) prenatal care; (b) delivery and immediate postpartum care; and (c) care of a child born at the birthing center; and
2.: is directed by a physician specializing in obstetrics and gynecology; and
3.: has a physician or licensed or registered midwife present at all births and during the immediate postpartum period; and
4.: extends staff privileges to physicians who practice obstetrics and gynecology in the area; and
5.: has at least two (2) beds or birthing rooms for use by patients during labor and delivery; and
6.: provides full-time skilled nursing services (directed by an R.N. or licensed or registered midwife) in the delivery and recovery rooms; and
7.: provides diagnostic x-ray and lab services for the mother and newborn; and
8.: has the capacity to administer a local anesthetic and perform minor surgery (including episiotomy and repair of perineal tear); and

9.: is equipped and staffed to handle medical emergencies and provide immediate life support measures; and
10.: accepts only patients with low risk pregnancies if a stand-alone facility, not part of a hospital; and
11.: has a written agreement with an area hospital for emergency transfer of patients and ensures its staff is aware of such procedures; and
12.: provides an on-going quality assurance program; and
13.: keeps a medical record on each patient.

CLEFT PALATE AND CLEFT LIP

The Plan will provide benefits for cleft palate and cleft lip. Cleft palate is defined as a birth deformity in which the palate (the roof of the mouth) fails to close, and cleft lip is defined as a birth deformity in which the lip fails to close.

The Plan will cover expenses incurred for the following services when provided by a physician, other professional provider, and facilities necessary for treatment of cleft lip and cleft palate.

1.: Oral and facial surgery, surgical management and follow up care by plastic surgeons and oral surgeons.
2.: Habilitative speech therapy.
3.: Otolaryngology treatment.
4.: Audiological assessments and treatment.
5.: Orthodontic treatment.
6.: Prosthodontic treatment.
7.: Prosthetic treatment such as obturators, speech appliances, and feeding appliances.

DENTAL BENEFITS (Under the Medical Plan)

The Plan will provide benefits for expenses incurred for the following dental services only:

1.: Excision of exostosis of the jaw (removal of bony growth).
2.: Surgical correction of accidental injuries of the jaws, cheeks, lips, tongue, floor of the mouth, and soft palate (provided the procedure is not done in preparation for dentures or dental prosthesis).
3.: Treatment of fracture of facial bones.
4.: Incision and drainage of cellulitis (inflammation of soft tissue).
5.: Incision of accessory sinuses, salivary glands or ducts.
6.: Extraction of impacted teeth partially or totally covered by bone.
7.: Dental Implants.

The Plan will pay for the charges for a semiprivate room and covered hospital ancillary services in a hospital if the covered person has a hazardous medical condition (such as heart disease) which requires that an otherwise non-covered dental procedure be performed in the hospital. The Plan will not pay for the services of the physician, dentist, or oral surgeon in relation to that non-covered dental procedure even if the hospital charges are paid.

The Plan will allow benefits for accident-related dental expenses not otherwise covered under any other provision of the Plan when all of the following criteria have been met.

1.: The covered person is in need of dental services, supplies, and appliances because of an accident in which he/she sustained injuries of the mouth or oral cavity.
2.: Treatment must be for injuries to sound natural teeth.
3.: Treatment must be necessary to restore the teeth to the condition they were in immediately before the accident.
4.: All services must be performed while the covered person's coverage is in effect.

The Plan will not pay for restoring the mouth, teeth, or jaws because of injuries from biting or chewing.

Limitations and Exclusions

1.: Restorations—benefits for restorations are limited to those services, supplies, and appliances determined to be appropriate in restoring the mouth, teeth, or jaws to the condition they were in immediately before the accident.

No benefits will be paid for duplicate, or spare dental appliances, personalized restorations, cosmetic replacement of serviceable restorations, and materials (such as precious metals) that are more expensive than necessary to restore damaged teeth.

2.: Surgical preparations for dentures—artificial implanted devices and bone grafts for denture wear are not covered under the medical portion of the Plan.

HOME HEALTH CARE

Home health care benefits will include covered expenses which meet all of the following requirements:

1.

They are medically necessary for the care of a covered individual who is totally disabled and who would otherwise have been confined as a bed patient in a hospital or skilled nursing facility, provided:

a.: the covered person is under the direct care of a doctor;
b.: the home health care plan of treatment for the home health care agency is established in writing by the attending doctor prior to the start of such treatment; and
c.: services must begin within seven (7) days following discharge from an inpatient hospital confinement of at least three (3) days, and be for the same or related condition.

Periodic assessment visits by either a physician or a licensed nurse will be required to determine the patient's condition, progress and level of care needs. After the period of time specified on the prescribed treatment plan, continuation of care depends on a reevaluation of the patient's status.

2.: Review of treatment—The Plan reserves the right to review home health care plans of treatment at periodic intervals.

4.

They are for services provided by a home health agency. A "home health agency" means an agency which meets the following requirements:

a.: its primary services are those listed in 4. below; and
b.: it is federally certified as a home health agency; and
c.: it is licensed, if licensing is required.

5.

Home health care benefits will include charges by a home health care agency to a maximum of sixty (60) visits per calendar year. A visit by a representative of a home health care provider, other than an aide, will be one (1) home health care visit. A visit by a home health care aide will be counted as one (1) visit for any four (4) hours or portion thereof.

6.

Home health care benefits will be allowed for the following services:

a.

Professional nursing services performed by a registered nurse (R.N.), or under the supervision of an R.N.

b.

Physical therapy performed by a registered physical therapist.

c.

Occupational therapy performed by a properly accredited registered occupational therapist (OTR) or a certified occupational therapy assistant (COTA).

d.

Respiratory and inhalation therapy performed by a therapist trained or licensed to provide these services.

e.

Speech therapy and audiology given for speech disorders caused by a primary or secondary muscular or structural abnormality. Services must be provided by a properly accredited speech therapist who has received a Clinical Competence Certification or Equivalency Statement from either the American Speech and Hearing Association or the Peer Review Board of the State Speech and Hearing Association.

f.

Medical social services ordered by the attending physician and provided by a qualified medical or psychiatric social worker to assist you or your family in dealing with a specific medical condition. The individual providing such services must possess a degree in social work, psychology or counseling, or the documented equivalent in a combination of education, training and experience.

g.

Home health aide services required and supervised by a registered nurse or a physical, speech or occupational therapist.

h.

Medical supplies furnished to the covered person by the home health agency during visits for services.

i.

Nutrition counseling by a nutritionist or dietitian.

j.

The following additional items and services are eligible expenses under a home health care program. However, some of these expenses may also be covered under benefits otherwise provided by the Plan:

i): Prostheses and orthopedic appliances.
ii): Rental or purchase of durable medical equipment.
iii): Expenses for prescription drugs, medicines, or insulin.

Limitations and Exclusions for Home Health Care

No home health care benefits will be paid for:

1.: Custodial Care. The Plan will pay for one-time training for a family member, household resident, or non-professional person employed by the patient or family. This training covers the services necessary for the custodial or maintenance levels of care.
2.: Non-Covered Services. The following list of services are not home health care benefits.

However, some of these expenses may be covered under benefits otherwise provided by the Plan:

a.: Blood, blood plasma, or blood derivatives.
b.: Services provided by a hospital.
c.: Services provided by a physician.
d.: Services related to non-covered conditions and surgeries, as excluded in the Plan.
e.: Services or supplies for personal comfort or convenience, including homemaker services.
f.: Services related to well-baby care.
g.: Food or meal services other than dietary counseling.

3.: Psychiatric Social Worker Services. The services of a psychiatric social worker which are not related to a home health program prescribed by a physician may be covered and paid as outpatient benefits as described in Mental Health Disorders, Alcoholism or Substance Abuse.

HOSPICE CARE

Definition

An alternative way of caring for terminally ill individuals which stresses palliative care as opposed to curative or restorative care. Hospice care focuses upon the patient/family as the unit of care. Supportive services are offered to the family before and after the death of the patient. Hospice care addresses physical, social, psychological, and spiritual needs of the patient.

All Hospice Benefits

Benefits are allowed for hospice care provided under active physician and nursing management through a licensed hospice agency which is responsible for coordinating all hospice care services, regardless of the location or facility in which such services are furnished. Hospice care is provided in the covered person's home or on an inpatient basis in a licensed health care facility. Benefits are allowed only for a terminally ill covered person with a life expectancy of six (6) months or less, who, alone or in conjunction with a family member or members, has voluntarily requested admission and been accepted into a hospice program.

All claims must include a physician's certification of the covered person's illness, including a prognosis for life expectancy and a statement that hospice care is medically necessary and a copy of the hospice agency's treatment plan.

Review of treatment—the Plan reserves the right to review treatment plans at periodic intervals.

Benefit Period

The benefit period for hospice care is limited to six (6) months from the date the terminally ill person entered hospice care or until death if the covered person continues to live beyond the prognosis

for life expectancy. The maximum paid for hospice care is $25,000 per person, per lifetime. Coverage may be extended until the death of the covered person if he or she exceeds the $25,000 lifetime maximum.

The following services are covered:

1.

Inpatient hospice care provided on a regularly scheduled basis in a hospice facility governed by the hospice board of directors to ensure the overall continuum of patient care.

2.

Home hospice care services provided in the covered person's home to meet the covered person's physical requirements and/or to accommodate a covered person's maintenance or supportive needs. This benefit is payable for any combination of the following:

a.: Professional nursing services provided by or under the supervision of a registered nurse, R.N.
b.: Home health aide services under the supervision of a registered nurse or specialized rehabilitative therapist.
c.: Physical therapy performed by a registered physical therapist.
d.: Occupational therapy performed by a properly accredited registered occupational therapist (OTR) or a certified occupational therapy assistant (COTA).
e.: Speech therapy and audiology provided by a properly accredited speech therapist who has received a Clinical Competence Certification or Equivalency Statement from either the American Speech and Hearing Association or the Peer Review Board of the State Speech and Hearing Association.
f.: Respiratory and inhalation therapy performed by a therapist trained or licensed to provide these services.
g.: Nutrition counseling by a nutritionist or dietitian.
h.: Respite care which provides temporary relief for the covered person's family or other care giver for unforeseen emergencies and from the daily demands of care for the patient.
i.: Short-term inpatient care or continuous home care which may be required during a period of crisis, for pain control or for acute intervention alternatives and chronic symptom management. Benefits are limited to a separate thirty (30) day period for such care.
j.: Medical supplies, including prescription drugs and biological drugs.
k.: Prostheses and orthopedic appliances.
l.: Rental or purchase of durable medical equipment.

Limitations and Exclusions for Hospice Care

1.

Non-Covered Services. The following items and services are not covered expenses under this hospice care program. However, some of these expenses may be covered under benefits otherwise provided by the Plan:

a.: Blood, blood plasma, or blood derivatives.
b.: Services provided by a hospital.
c.: Services related to non-covered conditions and surgeries, as excluded in the Plan.

d.: Services related to well-baby care.
e.: Food services or meals other than dietary counseling.
f.: Services or supplies for personal comfort or convenience, including homemaker services, except in crisis periods or in association with respite care.
g.: Estate planning, drafting of wills, or other legal services.
h.: Funeral arrangements or services.

2.: Any covered expense paid under hospice benefits will not be considered a covered expense under any other benefit in the Plan.

HOSPITAL AUDIT SAVINGS

If you discover an overcharge or mistake on an inpatient or outpatient hospital bill, (excluding double billings and very obvious mistakes which would be caught during claims processing) you will receive (by check) 50% of the error to a $500 maximum per confinement if the following procedures are followed. This reimbursement is considered to be taxable income.

1.: Within five (5) days of receiving your hospital bill, call Mountain States Administration at 303-360-9600 or 1-800-828-8847 to inform them that you have found an error(s) in the bill. This must be done before the hospital bill has been processed by Mountain States Administration.
2.: Next, within the same five (5) day period, you must follow up with a letter to Mountain States Administration explaining how or why the bill is in error.
3.: Once the error is confirmed with the hospital by Mountain States Administration and a corrected bill is received, you will receive your audit savings.

MATERNITY

This Plan complies with the requirements of the Newborns' and Mothers' Health Protection Act (NMHPA) of 1996. This Plan may not, under federal law, restrict benefits for any length of hospital stay in connection with childbirth for the mother or newborn child to less than forty-eight (48) hours following a normal vaginal delivery, or less than ninety-six (96) hours following a caesarean section, or require that a provider obtain authorization from the Plan for prescribing a length of stay not in excess of the above periods. The Plan may not penalize individuals nor provide incentives for earlier discharge, although the Plan may allow earlier discharge if the mother and physician agree. The 48/96 hours begin following delivery of the last newborn in the case of multiple births. When delivery takes place outside a hospital, the 48/96 hours begin at the time of inpatient admission.

Maternity expenses are covered as any other medical illness, including expenses for the diagnosis and care of a pregnancy and for the delivery services. Benefits are limited to covered employees and covered spouses as follows:

1.: Maternity benefits will be subject to all Plan provisions.
2.: Delivery must occur while the individual is a covered person under the Plan in order for delivery expenses to be a covered expense.
3.: Fetal surgery will be considered as part of the mother's care.
4.: Expenses incurred as a result of elective induced abortions are covered for employees or spouses only, limited to one (1) procedure every three (3) years to a maximum of $300 per procedure.

Dependent children are not covered for maternity benefits unless due to a complication of pregnancy as defined below.

Complications of Pregnancy

Complications of pregnancy mean conditions with diagnoses that are distinct from pregnancy, but which are adversely affected by or are caused by a pregnancy. These expenses are covered as any other illness.

Complications of pregnancy include: acute nephritis, nephrosis, cardiac decompression, puerperal infection, toxemia, missed abortion, ectopic pregnancy that is terminated, spontaneous termination of pregnancy occurring during a term of gestation in which there is not a viable birth (this does not include voluntary or elective abortion), or other similar medical and surgical conditions of comparable severity.

Complications of pregnancy do not include: Cesarean section delivery, false or premature labor, occasional spotting, physician prescribed rest during pregnancy, morning sickness, hyperemesis gravidarum, pre-eclampsia, or other similar conditions associated with management of a difficult pregnancy but which do not constitute a diagnostically distinct complication of pregnancy.

MENTAL HEALTH DISORDERS, ALCOHOLISM OR SUBSTANCE ABUSE

Outpatient Treatment: Eligible charges are covered and payable per the Schedule of Medical Benefits.

Inpatient Treatment: Eligible charges are covered and payable per the Schedule of Medical Benefits. Each two (2) days of partial hospitalization will count as one (1) day inpatient care.

"Partial Hospitalization" means continuous treatment at a hospital or treatment facility for at least three (3) hours but not more than twelve (12) hours in any twenty-four (24) hour period.

Expenses for outpatient treatment do not apply toward medical out-of-pocket maximums.

Eligible expenses for services of medical social services provided by a qualified individual who possesses a degree in social work, psychology, or counseling or the documented equivalent in a combination of education, training and experience provided at the recommendation of a physician for the purpose of assisting the covered person or immediate family in dealing with a specified terminal medical condition. Included is family counseling related to the covered person's terminal condition. Eligible charges are covered and payable per the Schedule of Medical Benefits.

Expenses for the testing to determine the diagnosis, medication and medical management of the medication for attention deficit disorder will be covered as any other illness under the Plan. All other expenses for treatment of attention deficit disorder will be covered under this mental health disorders provision of the Plan.

Special Limitations for Alcoholism or Substance Abuse Treatment

1.: When the purpose of admission is for convalescent or custodial care, no benefits are available. In those instances where the type of care rendered during a continuous period of confinement develops into convalescent or custodial care, that portion of the stay beginning on the day of such development is excluded from benefit.
2.: If a covered person shall remain in a hospital or treatment center after being advised by appropriate authority at said hospital or center that further inpatient care is unnecessary, benefits under this section will not be furnished for the remainder of that inpatient admission.
3.: Benefits for inpatient care for alcoholism or substance abuse are available only when facility or physician discharging the covered person certifies that the covered person completed the full continuum of care.
4.: Admissions solely for detoxification, which do not include rehabilitation, are not covered.

MOTORIZED VEHICLE ACCIDENTS

Eligible expenses are paid, subject to the Separate Motorized Vehicle Accident Deductible and coinsurance provisions per covered person per accident, to a maximum of $35,000 per covered person per accident where a motorized vehicle is involved. This includes owner-operators of, non-owner operators of, passengers in or on, and pedestrians struck by or injured because of any motorized vehicle. Expenses in excess of $35,000 per covered person per accident are not covered under this Plan.

This benefit does not apply to motor vehicle accidents where no-fault motor vehicle coverage exists. Injuries sustained due to motor vehicle accidents, when no-fault automobile coverage exists or should have existed had there been compliance with any applicable no-fault regulations, are excluded from coverage under this Plan. Eligible expenses in excess of applicable no-fault reimbursements are covered expenses.

All eligible expenses incurred as a result of any motorized vehicle accident are subject to the subrogation provisions of the Plan where other coverage exists (i.e., the covered person's other coverage or a third party's coverage) and/or a third party is involved in the accident. Any Eligible Expenses under the Plan are subject to all Plan provisions, limitations and exclusions.

The Supplemental Accident Benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents.

NEWBORN CARE

Hospital Confined —Surgical and birthing centers, hospital and doctor's charges for a newborn, "well-baby" including circumcision, shall be considered a covered expense from birth until initial discharge from the hospital. Newborn well-baby care is subject to the newborn's own deductible and out-of-pocket maximum.

Non-Hospital Confined —Routine examination and checkup charges, including immunizations, are covered expenses and payable according to the Schedule of Medical Benefits. Doctor visits for treatment of sickness or injury shall be treated as an illness, subject to the newborn's own deductible and out-of-pocket maximum.

In order for newborn care to be covered the employee must follow the enrollment requirements. Please refer to page 24. Failure to properly enroll the newborn child will result in a denial of benefits.

PRE-ADMISSION TESTING (Deductible Waived)

The Plan will pay for covered expenses for pre-admission testing on an outpatient basis performed within seven (7) days prior to a hospitalization for surgery. The charges must be related to the illness or injury that ultimately causes confinement. Pre-admission testing that is repeated in the hospital will not be paid unless medically necessary.

REHABILITATION FACILITY BENEFIT

The Plan will pay for covered expenses the employee or his/her eligible dependent incur for a sickness or injury that results in the need for rehabilitation services as provided or offered in a rehabilitation hospital or facility. The employee or his/her eligible dependent must be under the care of a physician for any benefits to be payable.

"Rehabilitation services" means a formal program of treatment that:

1.: is provided to those individuals who have severe disabling impairments or persons who have not had prior exposure to these services and who require an identifiable intensity of services; and

2.: is performed in a rehabilitation hospital or facility either as an inpatient or an outpatient; and
3.: is prescribed by a physician as medically necessary and is periodically reviewed; and
4.: is prescribed in place of a stay in the acute setting of a hospital or is an extension of a hospital stay; and
5.: is provided in a hospital or facility that is licensed and qualified to render rehabilitation services.

The primary emphasis of the program is providing, in a coordinated manner, those comprehensive services deemed appropriate to the needs of a person with a disability, in a program designed to achieve objectives of improved health, welfare and the realization of one's maximum physical, social, psychological and vocational potential for useful and productive activity.

Services must be of such a level of complexity or the condition of the patient must be such that services can be safely performed only by the qualified therapist or pathologist.

The Plan will not pay benefits for any alcoholism and/or substance abuse rehabilitation expenses under this provision.

SECOND SURGICAL OPINIONS (Deductible Waived)

Second surgical opinions will be paid at 100% for exams, x-rays and lab work incurred on an outpatient basis by a qualified physician, in the approved specialty, to substantiate medical necessity of the procedure to be performed. The physician giving the second opinion must not be professionally affiliated with the treating physician. A final opinion will be paid for in case of a conflict between the first two (2) opinions.

SKILLED NURSING CARE FACILITY BENEFIT

Expenses incurred for daily room and board and general nursing services for each day of confinement in a skilled nursing care facility are payable for no more than sixty (60) days per illness or injury. The daily rate allowed cannot exceed one-half ( ¹ / 2 ) of the semiprivate room charges made by the hospital in which the covered person was confined before transfer to the facility.

To be paid under this benefit the confinement in a skilled nursing care facility must:

1.

begin while covered under this benefit; and

2.

start within fourteen (14) days after discharge from:

a.: a hospital confinement of at least three (3) consecutive days; or
b.: a prior covered skilled nursing care facility confinement; and

3.

be necessary for care or treatment of the same bodily injury or sickness which caused the hospital confinement; and

4.

occur while the covered person is under the regular care of a physician who certified the required confinement.

Expenses for private duty nursing or special nursery services are not covered under this benefit.

SMOKING CESSATION

Charges related to any generally recognized program specifically established to aid in the cessation of cigarette smoking are covered provided such services are performed at a facility which is under the direct supervision of a physician. This benefit will be paid at an amount not to exceed $200 per person

in any three (3) year period, for covered employees and/or covered spouses who have been covered by the Plan at least eighteen (18) months.

SURGICAL BENEFITS

Surgical benefits are provided for surgeries resulting from illness or accidental bodily injury. The maximum amount of payment for a particular surgery is based upon the usual, customary, and reasonable surgical charge (UCR). The definition of UCR is on page 86.

More than one (1) surgery performed by one (1) or more physicians during the course of only one (1) operative period is called a "multiple surgery." Because allowances for surgery include benefits for pre- and post-surgical care, total benefits for multiple surgeries are reduced so that pre- and post-surgery allowances of the major surgery are not duplicated. The reduced benefits vary, depending upon the circumstances of the multiple surgery. Variables include the number of incisions required, the location of the incision and the complexity of each surgical procedure.

Multiple surgery benefits for procedures performed on the same day, under the same anesthesia, will be allowed as follows:

1.: For surgeries performed through the same incision, the Plan will allow 100% of the usual, customary, and reasonable allowance for the procedure with the greatest value, plus 50% of the usual, customary, and reasonable allowance for each additional procedure.
2.: For surgeries performed through different incisions, the Plan will allow 100% of the usual, customary, and reasonable allowance for the procedure with the greatest value, plus 80% of the UCR allowance for the other procedure(s).
3.: For similar procedures performed on the same day on opposite sides of the body, the Plan will allow 100% of the usual, customary, and reasonable allowance for the first procedure plus 80% of the UCR allowance for the other procedure(s).
4.: Multiple surgeries performed on the same foot: The Plan will allow 100% of the UCR allowance for the procedure of greatest value. For the procedure of the second greatest value, the Plan will allow 50% of the UCR allowance, and for all other surgeries the Plan will allow 25% of the usual, customary, and reasonable allowance.
5.: For similar surgical procedures performed on both feet on the same day, the Plan will allow 100% of the UCR allowance for the procedure with the greatest value plus 80% of the UCR allowance for the procedure of the second greatest value and 50% of the UCR allowance for the procedure with the third greatest value. For each additional surgery, the Plan will allow 25% of the UCR allowance.

Surgical benefits are payable whether the operation is performed in the hospital or in the doctor's office. The physician's assistant expenses will be calculated at 15% and the assistant surgeon's expense will be calculated at 20% of the covered surgeon's fees.

WEIGHT REDUCTION BENEFIT

Charges related to weight reduction, weight control, and/or physical fitness, are covered provided such services are performed at a facility which is under the direct supervision of a physician. This coverage is restricted in that such charges may not exceed $1,000 in any five (5) year period and is a benefit for covered employees only who have been covered by the Plan at least twenty-four (24) months.

GENERAL PLAN EXCLUSIONS AND LIMITATIONS

The Plan will not provide benefits for any of the items listed in this section regardless of medical necessity or recommendation of a physician. This list is intended to give you a general description of expenses for services and supplies not covered by the Plan, and is not all inclusive:

1.: Ambulance expense for convenience is not covered. Any expense for commercial transport, private aviation, or air taxi services are not covered regardless of the circumstances or their Federal Aviation Authority Certification. Any expenses for transportation by private automobile, commercial, or public transportation are not covered. The Plan will not pay for any of these services even if other means of transportation were not available.
2.: Any expenses for artificial insemination , including but not limited to, in vitro fertilization, GIFT procedure, surrogate parents, or expenses related to other direct attempts to induce pregnancy including drug and hormone therapy.
3.: Services and treatment, including drugs related to behavioral disorders , communication delays, conduct problems, learning disabilities, and developmental delays, special education, counseling, therapy, or training. Expenses incurred for initial diagnostic testing to determine the diagnosis will be covered. (However, expenses for the medication and medical management of the medication for attention deficit disorders will be covered.)
4.: Expenses for birthing classes .
5.: Expenses for breast pumps and infant formula .
6.: Any expenses which are reimbursed or which are repaid through any charitable or governmental public program .
7.: Expenses required only for the convenience of the covered person or the covered person's physician.
8.: Expenses for removal of corns, calluses, or trimming of toenails , except when necessary in the treatment of a metabolic or peripheral vascular disease. (Prescription orthotics and arch supports are covered when medically necessary for treatment of a covered illness or injury.)
9.: Any expenses for cosmetic surgery , or the revision of a previous procedure performed for cosmetic purposes, including, but not limited to, breast augmentation. Cosmetic surgery is beautification or aesthetic surgery to improve an individual's appearance by surgical alteration of a physical characteristic. Cosmetic surgery for psychiatric or psychological reasons, or to change family characteristics or conditions due to aging is not covered. For Plan covered persons who elect reconstruction after mastectomy the following reconstructive surgery is covered : 1) reconstruction of the breast on which the mastectomy has been performed; 2) surgery and reconstruction of the other breast to produce a symmetrical appearance; and 3) coverage for prostheses and physical complications of all stages of mastectomy in a manner determined in consultation with the attending physician and the patient. Such coverage may be subject to annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the Plan.

Benefits for cosmetic surgery and related expenses are allowed only when such surgery is required as the result of a congenital anomaly or an accidental injury.

10.: Any expense as a result of a court order will only be paid if it would ordinarily be a covered expense under the plan.
11.: Expenses incurred for injuries and/or illnesses sustained during the commission or attempted commission of any criminal or illegal act involving: (1) The use of drugs or alcohol, including

but not limited to driving while under the influence of an illegal substance or alcohol; (2) Involving violence or the threat of violence to another person including but not limited to assault or other felonious behavior; or by participating in a riot or public disturbance; (3) The use of a firearm, explosive or other weapon likely to cause physical harm or death if used by a covered person. This exclusion for criminal or illegal acts does NOT apply to injuries and/or illnesses sustained due to a medical condition (e.g., depression, alcoholism, etc), or injuries and/or illnesses sustained as a result of domestic violence. Determination that this exclusion applies shall not be affected by any subsequent official action or determination with respect to prosecution of the covered person including, without limitation, acquittal or failure to prosecute in connection with the acts involved.

12.: Any expenses related to custodial care , sanitarium care, or rest care.
13.: Expenses for deluxe or luxury items : examples are motorized equipment when manually operated equipment can be used. The Plan will cover deluxe equipment only when additional features are required for effective medical treatment, or to allow the covered person to operate the equipment without assistance. Air conditioners, purifiers, humidifiers, corrective shoes, heating pads, hot water bottles, exercise equipment, whirlpools, waterbeds or other floatation mattresses, self-help devices, and other clothing and equipment which is not medical in nature are not covered, regardless of the relief they provide for a medical condition.
14.: Any expenses for dental services or dental supplies , except where specifically indicated as a covered expense.
15.: Expenses incurred for diagnostic admissions . If the covered person is admitted as an inpatient to a hospital for diagnostic procedures, and could have received these services as an outpatient without endangering his/her health then the Plan will not pay for hospital room and board charges or other charges that would not have been incurred if the covered person had received the services as an outpatient.
16.: Expenses incurred for domiciliary care . Care provided in a residential institution, treatment center, half-way house, or school because a covered person's own home arrangements are not appropriate, and consisting chiefly of room and board, is not covered, even if therapy is included.
17.: Expenses for examinations for employment, licensing, insurance or adoption purposes.
18.: Expenses which are deemed experimental or investigational or are considered an unproven health practice as determined by a medical review organization, The Health Care Financing Administration (HCFA) and/or the consensus of the medical industry or community.
19.: Expenses for any eye surgery in connection with radial keratotomy or any procedure designed to correct farsightedness, nearsightedness or astigmatism. This includes any related charges for medical or hospital services and/or supplies.
20.: Hair transplants , implants or drugs even if there is a physician's prescription and medical reason for the hair loss.
21.: Expenses for health club membership .
22.: Hearing aids and supplies, hearing examinations , evaluation for hearing aids, and hearing therapy. This exclusion shall not apply to the initial purchase of a hearing aid if the loss of hearing is a result of a surgical procedure performed while coverage is in effect.
23.: Expenses related to hypnosis whether for medical or anesthesia purposes, except where approved for smoking cessation.

24.: Any expenses for testing or treatment of an illness or injury which is not recommended by, or for which a covered person is not under the regular care of, a physician .
25.: Inpatient admissions before coverage becomes effective. When inpatient services begin before coverage under the Plan becomes effective, the portion of eligible charges incurred prior to the effective date of coverage will not be eligible. Eligible charges after the effective date of coverage will be covered subject to all applicable Plan limitations and/or exclusions.
26.: Any expenses for late claims filing . Expenses submitted for coverage more than fifteen (15) months after the date of service are late.
27.: Services or supplies for which there is no legal obligation to pay, or charges which would not be made but for the availability of benefits under the Plan.
28.: Expenses for lifestyle and personal growth counseling .
29.: Expenses for mailing or sales tax .
30.: Marital counseling or related services.
31.: Any expenses incurred by a masseur, physical culturist, or physical education instructor are not covered. Eligible expenses for massage therapy performed by a provider licensed by the state for medically necessary, non-palliative therapy shall be covered as listed in the Covered Medical Expenses section under "Massage Therapy." Please see that section for more details and limitations.
32.: Any expenses for preparing medical reports , including preparation and presentation, or itemized bills , unless requested by Mountain States Administration, to a maximum of $50.
33.: Expenses for examinations and treatment conducted for the purpose of medical research .
34.: Charges for the first $500 per covered person per accident as well as for charges in excess of $35,000 per covered person per accident for injuries sustained due to accidents involving any motorized vehicles .
35.: Any expenses not medically necessary for diagnosis or treatment, except as specifically indicated as a covered medical expense.
36.: Expenses for missed appointments in a provider's office and/or charges incurred when scheduled services are canceled by the covered person.
37.: Injuries sustained due to motor vehicle accidents when no-fault automobile coverage exists or should have existed had there been compliance with any applicable no-fault regulations. Expenses in excess of applicable no-fault reimbursements are covered expenses.
38.: Any services, supplies or drugs related to non-covered services or complications arising from such non-covered services are not a benefit (such as non-covered artificial conception, cosmetic surgery, sex change operations, and experimental/ investigational procedures).
39.: Non-medical expenses such as training, education instructions, educational materials, or studies, modifications to home, vehicle, or work place to accommodate medical conditions, even if they are performed or prescribed by a physician.
40.: Expenses for services or supplies not included as a covered expense under the Plan , even though provided, ordered or referred by a recognized provider of the Plan, unless authorized as a part of Medical Case Management.

41.: The Plan will not pay for occupational, physical, or speech therapy or chiropractic services to maintain function at a level to which it has been restored, or when no further significant practical improvement can be expected.
42.: Orthognathic (Jaw) Surgery . The only circumstances under which benefits will be allowed for upper or lower jaw augmentation or reduction procedures are when restoration is required as the result of an accidental injury or congenital defect.
43.: Any expenses for professional services performed by a person who ordinarily resides in the covered person's household or who is related to the covered person , such as a spouse, parent, child, brother or sister, whether such relationship is by blood or exists in law.
44.: Services or supplies used primarily for personal comfort or convenience that are not related to the treatment of the covered person's condition. Examples: guest trays, beauty and barber shop services, gift shop purchase, telephone, television, more than one (1) admission kit per hospitalization, and personal laundry services.
45.: Services related to post-mortem testing .
46.: Expenses that are subject to the pre-existing condition exclusion provision.
47.: Expenses for prescription drugs or substances not approved for general use by the Food and Drug Administration (FDA) and drugs which have been labeled "Caution, Limited by Federal Law for Experimental Use".
48.: Benefits for prescription drugs and medicines will not be provided when a written prescription is not required in order to purchase a certain drug or medicine, even when a prescription number has been assigned.
49.: Expenses incurred prior to the covered person's effective date of coverage and expenses after the date the employee ceases to be covered under the Plan.
50.: Care in any private institution, or any institution owned or operated by the federal, state, or local government , which would be provided to the covered person without charge were it not for the fact that benefits were available to such covered person under the Plan. This exclusion will not apply if the claim is made by the Veterans Administration under Title 38 of the U.S. Code for treatment of a veteran not having a service connected disability.
51.: Psychoanalysis or psychotherapy that can be credited towards earning a degree or furtherance of the education or training of a covered person regardless of diagnosis or symptoms that may be present.
52.: Any treatment or service furnished by: a physician or other health care provider who is a resident or intern of a general hospital , a physician or health care provider who is reimbursed for his or her services by a general hospital, or a physician or health care provider who is a resident of a covered person's household or member of the immediate family.
53.: Benefits for restoration or reconstructive surgery and related expenses are allowed only when such surgery is required as a result of a congenital anomaly, accidental injury, disease process or its treatment. Please see information regarding mastectomy reconstruction benefits on page 41.
54.: Any expenses for rhinoplasty, blepharoplasty or brow lift except expenses for rhinoplasties and blepharoplasties to correct a functional condition, or expenses for rhinoplasty to correct a condition as a result of an accidental injury.

55.

Expenses incurred for treatment, testing, procedures, devices, drugs, therapy and training and self-help programs include but are not limited to:

a.: Any type of goal-oriented or behavior modification therapy.
b.: Educational programs such as diabetic instruction, cardiac class or arthritis class.
c.: Holistic medicine, environmental medicine, and naturopathic medicine.
d.: Megavitamin therapy.
e.: Myotherapy or massage therapy (except when medically necessary, non-palliative and performed by a licensed provider. See the Covered Medical Expenses section under "Massage Therapy" for more details and limitations.)
f.: Recreational, sex addiction, primal scream, and Z therapies.
g.: Religious or marital counseling.
h.: Rolfing.
i.: Self-help, stress management.
j.: Sensitivity or assertiveness training.
k.: Transactional analysis, encounter groups, and transcendental meditation (TM).

56.

Any services, care or treatment for transsexualism, gender dysphoria, sexual reassignment or change procedures, including drugs, medication, implants, hormone therapy, surgery, medical or psychiatric care or treatment.

57.

Travel expenses of a physician attending a covered person or travel expenses of a covered person, although recommended by a physician, except as specifically indicated as a covered medical expense.

58.

Any expenses which exceed the usual , customary, and reasonable expenses for the care rendered.

59.

Vision therapy , orthoptic training (eye muscle exercise).

60.

Vitamins , minerals, nutritional supplements, appetite suppressants, dietary supplements, and formulas whether or not prescribed by a physician. Please see the Prescription Drug Plan portion of the Plan for certain covered allowances.

61.

Any charges for any condition, disability or expense resulting from or sustained as a result of war or act of war, declared or undeclared, civil war, insurrection, rebellion or revolution , or to any act or condition incident to any of the foregoing, unless as a result of a random act.

62.

Weekend hospital admission unless due to an emergency or unless surgery is scheduled within twenty-four (24) hours.

Admissions prior to surgery. If the employee or his/her dependent is admitted to the hospital prior to the day of surgery, no benefits will be paid for expenses incurred during that period prior to surgery unless the admission is medically necessary due to: (a) an emergency situation; or (b) complications which require admission prior to the day of surgery.

63.: Expenses for treatment, supplies, instruction or activities for weight reduction , weight control, weight loss programs or physical fitness even if the services are performed or prescribed by a physician except where specifically indicated as a covered expense. Obesity in itself is not considered an illness or disease and benefits are not allowed solely for its evaluation and treatment.

64.

Charges incurred by the covered person for all services and supplies resulting from any illness or injury which occurs in the course of employment for wage or profit, or in the course of any volunteer work when the covered person's employer has elected or is required by law to obtain coverage for such volunteer work under state or federal Workers' Compensation laws or other legislation, including employees' compensation or liability laws of the United States (collectively called "Workers' Compensation"). This exclusion applies to all such services and supplies resulting from a work-related illness or injury even though:

a.: coverage for the covered person under Workers' Compensation provides benefits for only a portion of the charges incurred;
b.: the covered person's employer has failed to obtain such coverage required by law;
c.: the covered person waived his/her rights to such coverage or benefits;
d.: the covered person fails to file a claim within the filing period allowed by law for such benefits;
e.: the covered person fails to comply with any other provision of the law to obtain such coverage or benefits;
f.: the covered person is permitted to elect not to be covered by Workers' Compensation, but failed to properly make such an election effective; or
g.: the covered person is permitted to elect not to be covered by Workers' Compensation and has affirmatively made that election.

DEFINITIONS

The terms as used herein shall be deemed to define terms that may be used in the wording of the Plan Document. These definitions shall not be construed to provide coverage under any benefit unless specifically provided.

" Accident " means a sudden and unforeseen event, definite as to time and place.

" Administrator " means, as defined by federal law, the Plan Administrator.

" Affiliated Companies " means all wholly owned subsidiaries of Scott's Liquid Gold-Inc.

" Alcoholism " means a morbid state caused by excessive or compulsive consumption of alcohol.

" Alcoholism and Substance Abuse Treatment Facility " means an institution which meets all of the following:

1.: Provides a program for diagnosis, evaluation, and effective treatment of alcoholism and/or substance abuse;
2.: Provides detoxification services needed with its effective treatment program;
3.: Provides infirmary level medical services or arrangements with a hospital in the area for any other medical services that may be required;
4.: Is at all times supervised by a staff of physicians;
5.: Provides at all times skilled nursing care by licensed nurses who are directed by a full-time registered nurse (R.N.);
6.: Prepares and maintains a written plan of treatment for each patient based on medical, psychological and social needs which is supervised by a physician; and
7.: Meets licensing standards.

" Alternate Payee Provision " means the Plan must make payments to your separated/ divorced spouse, state child support agencies or Medicaid agencies if required by a qualified medical child support order (QMCSO) or state Medicaid law.

" Ambulance " means a specially designed or equipped vehicle which is licensed for transferring the sick or injured. It must have customary patient care, safety, and life-saving equipment, and must utilize trained personnel.

" Ambulatory Surgical Center " means an institution or facility, licensed by the jurisdiction in which it is located, either freestanding or as part of a hospital with permanent facilities, equipped and operated for the primary purpose of performing surgical procedures and which a patient is admitted to and discharged from within a twenty-four (24) hour period. An office maintained by a physician for the practice of medicine or dentistry, or for the primary purpose of performing terminations of pregnancy, shall not be considered to be an ambulatory surgical center.

" Anesthesia " means general anesthesia which produces unconsciousness in varying degrees with muscular relaxation and a reduction or absence of pain. Regional or local anesthesia produces similar effects to a limited region of the body without causing loss of consciousness. Anesthesia is administered by a physician or certified registered nurse anesthetist (CRNA).

" Assignment of Benefits " means payments will also be made in accordance with any assignment of rights required by a state Medicaid plan.

" Benefit Percentage " means that portion of eligible expenses to be paid by the Plan in accordance with the coverage provisions as stated in the Plan. It is the basis used to determine any out-of-pocket expenses which are to be paid by the covered person.

" Calendar Year " means a period of time commencing on January 1 and ending on December 31 of the same year.

" Child "—Refer to "Dependents Eligible for Coverage," #2, page 18.

" Chiropractic services " means the detection and correction by manual or mechanical means of a structural imbalance, distortion or subluxation in the human body or for the removal of nerve interference, where such interference is the result of or related to distortion, misalignment, or subluxation of or in the vertebral column.

" Claims Administrator " means Mountain States Administration (MSA). MSA has been hired as the third party contract administrator by the Plan Administrator to perform claims processing and other specified administrative services in relation to the Plan. The contract administrator is not an insurer of health benefits under this plan, is not a fiduciary of the plan, and does not exercise any of the discretionary authority and responsibility granted to the Plan Administrator. The contract administrator is not responsible for plan financing and does not guarantee the availability of benefits under this plan.

" Cleft Lip " means a birth deformity in which the lip fails to close.

" Cleft Palate " means a birth deformity in which the palate (the roof of the mouth) fails to close.

" Close Relative " means the spouse, parent, brother, sister, child, (to include step-relations), or spouse's parent, brother, sister or child (to include step relations).

" COBRA " refers to the Consolidated Omnibus Budget Reconciliation Act of 1985 signed into law (Pub. L. 99-272) April 7, 1986, which amends the Internal Revenue Code, the Public Health Service Act, and Title I of the Employee Retirement Income Security Act of 1974 to require certain group health plans of covered employers to give employees and certain family members the opportunity to continue their health care coverage at group rates in certain instances where the coverage would otherwise end. Exhaustion of COBRA continuation coverage means that an individual's COBRA continuation coverage ceases for any reason other than either failure of the individual to pay premiums on a timely basis, or for cause (such as making a fraudulent claim or an intentional misrepresentation of a material fact in connection with the plan).

" Coinsurance " means the percentage portions of covered expenses paid by the covered person and by the Plan after satisfaction of any applicable deductible. These percentages apply only to covered expenses which do not exceed usual, customary and reasonable charges. The covered person is responsible for all non-covered expenses and any amount which exceeds the usual and customary charge for covered expenses. The coinsurance percentages are shown on the Schedule of Medical Benefits.

" College "—See definition of University.

" Common-Law Marriage " means a marriage in which the covered person resides as common-law and files both federal and state taxes as married, provides evidence of cohabitation as husband and wife, and by general reputation the two (2) individuals are living together as husband and wife and claiming to be such, and submits a notarized affidavit verifying common-law marriage status. By general reputation is meant the understanding among the neighbors and acquaintances with whom the parties associate in their daily lives, that they are living together as husband and wife, and not that they are merely living together.

" Company " means Scott's Liquid Gold-Inc. & Affiliated Companies, and any subsidiary or affiliate which adopts the Plan and becomes a party to the Plan.

" Condition " means a medical condition. Refer to page 77 for the definition of "Medical Condition."

" Consultation " means a service provided by another physician at the request of the physician in charge of your case. The consulting physician often has specialized skills that are helpful in diagnosing or treating the illness or injury.

" Contribution " means the amount payable by the employer or the amount payable by the employer/employee jointly for participation in the benefits of the Plan.

" Convalescent Nursing Facility "—See definition of "Skilled Nursing Care Facility".

" Cosmetic Procedure/Surgery " means a procedure performed solely for the improvement of a covered person's appearance rather than for the improvement or restoration of bodily function. Cosmetic procedures performed for psychiatric or psychological reasons or to change family characteristics or conditions due to aging are not covered under the Plan. "Covered Expense/Covered Service" means any necessary usual, customary, and reasonable item of expense at least a portion of which is covered under the Plan.

" Covered Person " means any employee or dependents of an employee and/or a person and his/her dependents who are included in a class or group of persons to which the Plan has been extended, meeting the eligibility requirements for coverage as specified in the Plan, and are properly enrolled in the Plan.

" Creditable Coverage " means coverage of an individual under any of the following:

1.: A group health plan (see definition below);
2.: Health insurance coverage as defined below (without regard to whether the coverage is offered in the group market, the individual market, or otherwise);
3.: Part A or Part B of Medicare;
4.: Medicaid, other than coverage consisting solely of benefits under the program for distribution of pediatric vaccines;
5.: Medical and dental care for members and certain former members of the uniformed services, and for their dependents.
6.: A medical care program of the Indian Health Service or of a tribal organization;
7.: A State health benefits risk pool;
8.: A health plan offered under the Federal Employees Health Benefits Program;
9.: A public health plan, which means any plan established or maintained by a State, county, or other political subdivision of a State that provides health insurance coverage to an individuals who are enrolled in the plan; and
10.: A health benefit plan under the Peace Corps Act.

Creditable coverage does not include:

1.: Accident only coverage including accidental death and dismemberment;
2.: Disability income insurance;
3.: Liability insurance, including general liability insurance and automobile liability insurance;
4.: Coverage issued as a supplement to liability insurance;
5.: Workers' compensation or similar insurance;

6.: Automobile medical payment insurance;
7.: Credit-only insurance (for example, mortgage insurance); and
8.: Coverage for on-site medical clinics.
9.: Limited Scope Benefits. Refer to page 77 for the definition of "Limited Scope Benefits."
10.: Long-term care benefits.
11.: Supplemental benefits. Refer to page 84 for the definition of "Supplemental Benefits."
12.: Non-coordinated benefits such as: (a) coverage for only a specific disease or illness (for example, cancer only policies) or hospital indemnity or other fixed dollar indemnity insurance (for example, $100/day) which are provided under a separate policy, certificate, or contract of insurance; (b) there is no coordination between the provision of benefits and an exclusion of benefits under any group health plan maintained by the same Plan Administrator; and (c) the benefits are paid with respect to an event without regard to whether benefits are provided under any group health plan maintained by the same Plan Administrator.

" Custodial Care " means that type of care or service, wherever furnished and by whatever name called, which is designed primarily to assist in meeting the needs of daily living of a covered person, whether or not totally disabled, in the activities included, but not limited to: bathing, dressing, feeding, preparation of special diets, assistance in walking or in getting in and out of bed, and supervision over medication which can normally be self-administered.

" Deductible " is the amount of covered expense that the covered person or combined family covered persons must incur within each calendar year before benefits become payable under the Plan.

" Dentist " means a person duly licensed to practice dentistry by the governmental authority having jurisdiction over the licensing and practice of dentistry in the locality where the service is rendered.

" Dependent " is any one of the following persons:

1.

2.

A child from birth to age nineteen (19), or to age twenty-three (23) if attending an accredited high school, college, university or vocational school on a full-time basis, provided:

a.: they are not married; and
b.: they are primarily dependent upon the employee for support and maintenance; and
c.: they are not covered, as an employee, by another employer group health plan.

3.

The term "child" as used herein shall mean an employee's natural child, stepchild, legally adopted child, or a child placed under the legal guardianship of the employee or the covered spouse of the employee who resides in the employee's home in a parent-child relationship, or a child for whose medical care an employee or the covered spouse of the employee is legally responsible through a divorce decree or other court order. In each case, the child must satisfy the requirements in #2 above.

Any child covered by a Qualified Medical Child Support Order (QMCSO) is required to be covered under the Plan as of the date of the QMCSO or coinciding with the effective date of coverage, whichever is later. If the covered person does not carry dependent coverage, the

Plan will enroll the child(ren) named in the QMCSO, and the covered person must pay any required contribution for family coverage. If the coverage is for a stepchild and the parent named in the QMCSO is covered under the stepparent's health plan, the Plan must enroll that stepchild. All Plan provisions for late entrants will apply.

4.

A dependent child's coverage may be extended beyond age nineteen (19) or twenty-three (23), if the child is:

a.: incapable of self-sustaining employment by reason of mental retardation or physical disability; and
b.: primarily dependent upon the employee for support and maintenance; and
c.: not covered, as an employee, by another employer group health

" Durable Medical Equipment " means equipment which is able to withstand repeated use, used to serve a medical purpose, and not generally useful to a person in the absence of illness or injury.

" Effective Date " means the date as of which the employer and any subsidiary or affiliate adopts the Plan; or the date the employee and his/her eligible dependent are properly enrolled in the Plan as specified in the eligibility requirements for coverage.

" Eligible Expenses " means any medically necessary treatments, services or supplies that are not specifically excluded from coverage elsewhere in this Plan.

" Emergency Services " means treatment for an illness or injury which develops suddenly and unexpectedly and which in the absence of immediate medical treatment would result in the condition becoming significantly worse, or result in the death of the covered person.

" Employee " means a person employed by the company and/or who is included in a class or group of persons to which the Plan has been and continues to be extended, and who is properly enrolled in the Plan.

" Employer " as defined by ERISA Section 3(5), is "any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity." Specific to this Plan, "employer" means Scott's Liquid Gold-Inc. & Affiliated Companies, and any subsidiary or affiliate which adopts the Plan and becomes a party to the Plan.

" Enrollment Date " (enrollment date and first day of coverage) means the following:

1.: Enrollment date means the first day of coverage or, if there is a waiting period, the first day of the waiting period (typically the date employment begins).
2.: First day of coverage means, in the case of an individual covered for benefits under a group health plan in the group market, the first day of coverage under the plan and, in the case of an individual covered by health insurance coverage in the individual market, the first day of coverage under the policy.

" ERISA " refers to the Employee Retirement Income Security Act of 1974 or any provision or section thereof which is herein specifically referred to as such act, provision or section which may be amended from time to time.

" Exclusion " means any provision of the Plan whereby coverage for a specific service or condition is entirely eliminated regardless of medical necessity.

" Experimental or Investigational Services " means services, supplies, care and treatment which does not constitute accepted medical practice properly within the range of appropriate medical practice under the standards of the case and by the standards of a reasonably substantial, qualified, responsible,

relevant segment of the medical and dental community or government oversight agencies at the time services were rendered. The Plan Administrator must make an independent evaluation of the experimental/nonexperimental standings of specific technologies.

The Plan Administrator shall be guided by a reasonable interpretation of Plan provisions and may employ the services of such medical peer review service organizations as the Medical Review Institute or UMAC and utilize data obtained from such national assessment organizations as HCFA, the Office of Health Technology Assessment and Institutes of the Department of Health and Human Services to aid in its determination. The decisions shall be made in good faith and rendered following a detailed factual investigation of the claim and the proposed treatment. The decision of the Plan Administrator will be final and binding on the Plan. The Plan Administrator will be guided by the following principles:

1.: if the drug or device cannot be lawfully marketed without approval of the US Food and Drug Administration and approval for marketing has not been given at the time the drug or device is furnished; or
2.: if the drug or test is approved for a specific medical condition but which is used for another condition; or
3.: if the drug, device, medical treatment or procedure, or the patient informed consent document utilized with the drug, device, treatment or procedure, was reviewed and approved by the treating facility's Institutional Review Board or other body serving a similar function, or if federal law requires such review or approval; or
4.: if Reliable Evidence shows that the drug, device, medical treatment or procedure is the subject of on-going phase I or phase II clinical trails, is the research, experimental, study or investigational arm of on-going phase III clinical trials, or is otherwise under study to determine its maximum tolerated dose, its toxicity, its safety, its efficacy or its efficacy as compared with a standard means of treatment or diagnosis; or
5.: if Reliable Evidence shows that the prevailing opinion among experts regarding the drug, device, medical treatment or procedure is that further studies or clinical trials are necessary to determine its maximum tolerated doses, its toxicity, its safety, or its efficacy as compared with a standard means of treatment or diagnosis.

Reliable Evidence means only published reports and articles in the authoritative, peer reviewed medical and scientific literature; the written protocol or protocols used by the treating facility or the protocol(s) of another facility studying substantially the same drug, device, medical treatment or procedure; or the written informed consent used by the treating facility or by another facility studying substantially the same drug, device, medical treatment or procedure.

Drugs are considered Experimental if they are not commercially available for purchase and/or they are not approved by the Food and Drug Administration for general use.

" Family " means a covered employee and his/her covered dependents.

" FMLA " means the Family and Medical Leave Act of 1993.

" Full-Time Employment " means a basis whereby a regular employee is employed by the company and scheduled to work at least thirty (30) hours per week. Such work may occur either at the usual, customary, and reasonable place of business of the company or at a location to which the business of the company requires the employee to travel, and for which he or she receives regular earnings from the company.

" Full-Time Student " means an employee's dependent child who is enrolled in and regularly attending an accredited college or university, high school or vocational school for the minimum number

of credit hours required by that school, college or university in order to maintain full-time student status.

" Genetic Information " means information about genes, gene products, and inherited characteristics that may derive from the individual or a family member. This includes information regarding carrier status and information derived from laboratory tests that identify mutations in specific genes or chromosomes, physical medical examinations, family histories, and direct analysis of genes or chromosomes.

" Group Health Insurance Coverage " means health insurance coverage offered in connection with a group health plan.

" Group Health Plan " means a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.

" Health Insurance Coverage " means benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract offered by a health insurance issuer.

" Health Insurance Issuer " means an insurance company, insurance service, or insurance organization (including an HMO) that is required to be licensed to engage in the business of insurance in a State and that is subject to State law that regulates insurance (within the meaning of Section 514(b)(2) of ERISA). Such term does not include a group health plan.

" Hemodialysis " means the treatment of an acute or chronic kidney ailment during which impurities are removed from the blood with dialysis equipment.

" HIPAA " means The Health Insurance Portability and Accountability Act of 1996, enacted on August 21, 1996. HIPAA amends the Public Health Service Act (PHS Act), the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986 (CODE), significantly expanding employee access to health care coverage.

" Home Health Care Agency " means a public or private agency or organization that specializes in providing medical care and treatment in the home. Such a provider must meet all of the following conditions:

1.: It is primarily engaged in and duly licensed, if such licensing is required, by the appropriate licensing authority to provide skilled nursing services and other therapeutic services.
2.: It has policies established by a professional group associated with the agency or organization. This professional group must have at least one (1) physician and at least one (1) graduate registered nurse (R.N.) to govern the services provided and it must provide full-time supervision of such services by a physician or graduate registered nurse (R.N.).
3.: It maintains a complete medical record on each patient.
4.: It has a full-time administrator.
5.: It is a provider of services under Medicare.

In rural areas where there are no agencies which meet the above requirements or areas in which the available agencies do not meet the needs of the community, the services of visiting nurses may be substituted for the services of an agency.

" Home Health Care Plan " means a program for continued care and treatment of the covered person established and approved in writing by the covered person's attending physician. Home health

care must be either: (a) an alternate form of treatment which is cost effective or reasonable compared to other options, or (b) must begin within seven (7) days following discharge from an inpatient hospital confinement of at least three (3) days, be for the same or related condition, and the attending physician must certify that the proper treatment of the illness or injury would require continued confinement in a hospital in the absence of home health care.

" Hospice " means a health care program providing a coordinated set of services rendered at home, in outpatient settings or in institutional settings for covered persons suffering from a condition that has a terminal prognosis. A hospice must have an interdisciplinary group of personnel which includes at least one (1) physician and one (1) graduate registered nurse (R.N.), and it must maintain central clinical records on all patients. A hospice must meet the standards of the National Hospice Organization (NHO) and applicable state licensing requirements.

" Hospice Benefit Care Period " means a specified amount of time during which the covered person undergoes treatment by a hospice. Such time period begins on the date the attending physician of a covered person certifies a diagnosis of terminally ill, and the covered person is accepted into a hospice program.

" Hospital " means an institution which meets all of the following conditions:

1.: It is licensed and operated in accordance with the laws of jurisdiction in which it is located which pertain to hospitals; is engaged primarily in providing medical care and treatment to ill and injured persons on an inpatient basis at the patient's expense; maintains on its premises all the facilities necessary to provide for diagnosis and medical and surgical treatment of an illness or an injury; and such treatment is provided by or under the supervision of physicians with continuous twenty-four (24) hour nursing services by graduate registered nurses (R.N.s).
2.: It qualifies as a hospital, a psychiatric hospital, or a tuberculosis hospital and is accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO).
3.: It is a provider of services under Medicare. This condition is waived for otherwise covered expenses incurred outside the United States.
4.: It is not, other than incidentally, a place for rest, a place for the aged or a nursing home.
5.: A free-standing facility which is licensed to treat alcohol and substance abuse will meet the definition of a hospital.

" Hospital Miscellaneous Expenses " means the actual charges made by a hospital in its own behalf for services and supplies rendered to the covered person which are medically necessary for the treatment of such covered person. Hospital miscellaneous expenses do not include charges for room and board or for professional services of a physician and drugs or supplies not consumed or used in the hospital. "Illness/Sickness" means any bodily sickness, disease or mental/nervous disorder. For purposes of this plan, pregnancy will be considered as any other illness.

" Incurred Expenses/Services " means those treatments, services and supplies rendered to a covered person. Such expenses shall be considered to have occurred at the time or on the date the treatment, service is actually provided or purchase is made and not when the service or purchase is formally billed, charged or paid.

" Injury " means sudden and instant damage to the body, which is unintended and undesigned by the individual and which results directly from and independently of all other causes of loss covered by the Plan.

" Inpatient " refers to the classification of a covered person when that person is admitted to a hospital, hospice, or convalescent facility for treatment, and charges are made for room and board to the covered person as a result of such treatment, upon the recommendation of a physician.

" Intensive Care Unit " means a section, ward, single room or coronary care unit within the hospital which is separated from other facilities and:

1.: is operated exclusively for the purpose of providing professional medical treatment for critically ill patients; and
2.: has special supplies and equipment necessary for such medical treatment available on a standby basis for immediate use; and
3.: provides constant observation and treatment by registered nurses (R.N.s) or other highly trained hospital personnel.

" Laboratory, Pathology Services, X-Ray and Radiology Services " means: Laboratory and pathology services—testing procedures required for the diagnosis or treatment of a condition. Generally, these services involve the analysis of a specimen of tissue or other material which has been removed from the body. Diagnostic medical procedures requiring the use of technical equipment for evaluation of body systems are also considered laboratory services. Examples: electrocardiograms (EKGs) and electroencephalograms (EEGs). X-ray and radiology services—services including the use of radiology, nuclear medicine, and ultrasound equipment to obtain a visual image of internal body organs and structures, and the interpretation of these images.

" Late Entrant " means an employee or dependent who does not enroll during the initial period in which he or she is eligible to enroll, or during a special enrollment period when there is a change in family status or loss of coverage under another plan. Medical coverage for a late entrant will begin the date the former coverage ended as long as the application is made within thirty (30) days. Dental coverage starts later. See Dental Eligibility on page 10.

" Life-Threatening Emergency " shall mean the sudden and unexpected onset of a condition which threatens life, limb, or organ system and requires immediate medical or surgical intervention, but in no case later than twenty-four (24) hours after onset.

" Lifetime " is a word that appears in the Plan and when used, in reference to benefit maximums and limitations, is understood to mean "while covered under this Plan." Under no circumstances does lifetime mean "during the lifetime of the covered person."

" Limitation " means any provision other than an exclusion, which restricts coverage under the Plan, regardless of medical necessity.

" Limited Scope Benefits " are dental, vision or other types of benefits which are not deemed an integral part of the Plan and the covered person has the right to elect to receive such coverage and pay an additional contribution for such coverage; or a benefit provided under a separate plan or policy. They are limited in scope to a narrow range or type of benefits that are generally excluded from hospital/medical/surgical benefit packages.

" Maternity " means that physical state which results in childbirth, abortion, or miscarriage, and any medical complications arising out of or resulting from such state.

" Medicaid "—Title XIX (Grants to states for Medical Assistance Programs) of the United States Social Security Act as amended.

" Medical Condition " means any condition, whether physical or mental, including, but not limited to, any condition resulting from illness, injury (whether or not the injury is accidental), pregnancy, or congenital malformation. However, genetic information is not a condition.

" Medically Necessary / Medical Necessity " means any health care treatment, service or supply that is required to identify or treat an injury or illness that a physician or dentist has diagnosed or reasonably suspects. To be medically necessary the services, supplies or treatment must:

1.: be consistent with the diagnosis and treatment of the patient's condition or accepted standards of good medical and dental practice; and
2.: be the prevailing opinion within the appropriate specialty of the United States medical profession is that it is safe and effective for its intended use, and that omission would adversely affect the person's medical condition; and
3.: not be performed mainly for the convenience of the patient or provider of medical and dental services; and
4.: not be conducted for research purposes; and
5.: be the most appropriate level of services which can be safely provided to the patient; and
6.: be furnished by a provider with appropriate training, experience, staff and facilities to furnish that particular service or supply.

Diagnostic x-ray and laboratory services are medically necessary when:

1.: Performed due to definite symptoms of sickness or injury; or
2.: They reveal the need for treatment.

All of these criteria must be met; merely because a physician recommends or approves certain care does not mean that it is medically necessary.

The Plan Administrator has the discretionary authority to decide whether care or treatment is medically necessary, and the Plan Administrator will determine whether these requirements have been met based on:

1.: published reports in authoritative medical and scientific literature;
2.: regulations, reports, publications or evaluations issued by government agencies such as the Agency for Health Care Policy and Research, the National Institute of Health, and the Food and Drug Administration (FDA);
3.: listings in the following compendia: The American Medical Association Drug Evaluations, The American Hospital Formulary Service Drug Information and the United States Pharmacopoeia Dispensing Information; and
4.: other authoritative medical sources to the extent that the Plan Administrator determines them to be necessary.

" Medicare " means the programs established by Title I of Public Law 89-98 (79 Statute 291) as amended entitled "Health Insurance for the Aged Act," and which includes Parts A and B and Title XVIII of the Social Security Act (as amended by Public Law 89-97, 79) as amended from time to time.

" Mental Health Disorder " means neurosis, psychoneurosis, psychopathy, personality disorder, psychosis, or mental or emotional diagnosed disease or disorder of any kind. Anorexia nervosa, bulimia nervosa, and eating disorders are classified as manifest mental disorders.

" Mental Retardation and/or Physical Disability " means the inability of a person to be self-sufficient as a result of a condition such as mental retardation, cerebral palsy, epilepsy or another neurological disorder and diagnosed by the physician as permanent and continuing.

" Midwife " means a person licensed or certified to practice as a midwife who has completed the academic and clinical requirements set forth by specific states who provide this license or certification. It is issued upon passing a state board exam and a practical exam, and by meeting a set number of supervised experiences and births.

" Minor Emergency Medical Clinic " means a freestanding facility which is engaged primarily in providing minor emergency and episodic medical care to a covered person. A board-certified physician, a registered nurse (R.N.) and a registered x-ray technician must be in attendance at all times that the clinic is open. The clinic's facilities must include x-ray and laboratory equipment and a life support system. For the purposes of the Plan, a clinic meeting these requirements will be considered to be a minor emergency medical clinic, by whatever actual name it may be called. However, a clinic located on or in conjunction with or in any way made a part of a regular hospital shall be excluded from the terms of this definition.

" Motorized Vehicle " means any vehicle of a type that is designed to be propelled by an engine or motor. This includes, but is not limited to, automobiles, minibikes, snowmobiles, bicycles with motor or engine attached, any vehicle designed primarily for use off the road or on rails, motorcycles, motorscooters, motorized boats, and go-carts.

" Named Fiduciary " means Scott's Liquid Gold-Inc. & Affiliated Companies, which has the authority to control and manage the operation and administration of the Plan. "Newborn" refers to an infant from the date of his/her birth until initial discharge from the hospital.

" No-Fault Auto Insurance " is the basic reparations provision of a law providing for payments without determining fault in connection with automobile accidents.

" Non-PPO Provider " means a legally licensed health care provider which provides services and supplies within the scope of its authority, but which has not entered into a contract with the Preferred Provider Organization (PPO).

" Nurse " means a graduate registered nurse (R.N.), a licensed practical nurse (L.P.N.) who is licensed in the state in which the services are performed.

" Nurse Practitioner " means a registered nurse (other than an immediate family member or employee of the employer) who: (1) completes a program of study affiliated with a college or university; (2) passes a nurse practitioner certification examination given by the American Nurses Association; (3) acts within the scope of that certification in treating the injury or sickness; and (4) who is licensed by the law of the state in which services are rendered. "Office Visit" means a face to face meeting between a physician and a patient for the purpose of medical treatment or service.

" Orthopedic Appliance " means any rigid, or semi-rigid support used to restrict, eliminate, or support motion in a part of the body that is diseased, injured, weak or deformed.

" Out-of-Pocket Maximum " is the maximum amount of covered expenses each covered person or family unit must pay during a year, after the deductible, before the coinsurance percentage of the plan increases. When a covered person or family unit reaches the annual out-of-pocket maximum, the Plan will pay 100% of additional covered expenses for that individual during the remainder of the calendar year. The calendar year out-of-pocket maximum amounts are shown in the Schedule of Medical Benefits. Out-of-pocket maximums do NOT apply to medical expenses associated with outpatient care of mental health treatment charges and substance abuse treatment charges. These services and/or supplies will NOT be payable at 100% even if a covered person has reached the out-of-pocket maximum.

" Outpatient " refers to treatment either outside of a hospital setting or at a hospital when room and board charges are not incurred. "Physician" means a legally licensed physician who is acting within the scope of his/her license and any other professional provider required to be recognized for benefit

payment purposes under the law of the state in which the employee receives treatment and is acting within the scope of his/her license, but is not a close relative of the employee.

" Placement for Adoption " is defined under ERISA Sec. 609(c)(3)(B) as follows: The term "placement," or being "placed," for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child." For group health plan purposes, these provisions override state laws requiring the legal guardianship of a child placed for adoption to remain with the appropriate agency until the adoption is finalized.

" Plan " means without qualification the Plan Document.

" Plan Administrator/Plan Sponsor " means Scott's Liquid Gold-Inc. & Affiliated Companies which is responsible for the day-to-day functions and management of the Plan. The Plan Administrator/Plan Sponsor may employ persons or firms to process claims and perform other Plan related services.

" Plan Year " -The 12-month fiscal period beginning June 1 and ending May 31.

" Pre-Existing Condition " must relate to a condition (whether physical or mental), regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the six (6) month period ending on the enrollment date.

" Preferred Provider Organization (PPO) " is an organization that has contracted with the Plan to provide certain health care services to covered persons at specific rates. See the Schedule of Medical Benefits for the special benefit level that applies to services obtained from contracted providers.

" Pregnancy " means that physical state which results in childbirth, abortion, or miscarriage.

" Private-Duty Nursing Services " means services that require the training, judgment, and technical skills of an actively practicing registered nurse (R.N.) or licensed practical nurse (L.P.N.), other than one who ordinarily resides in the patient's home or who is a member of the patient's immediate family. Such services must be prescribed by the attending physician for the continuous medical treatment of a condition.

" Prosthesis " means any device that replaces all or part of a missing body organ or body member.

" Provider " means a person or facility that is recognized by the Plan as a health care provider, and fits one (1) or more of the following descriptions:

1.: Professional Provider. A physician or other professional provider who is recognized by the Plan.
2.: Other Professional Provider. A professional provider (except a physician) who is recognized by the Plan and licensed, certified, or registered by the state or jurisdiction where services are provided to perform designated health care services. Services of such a provider must be among those covered by the Plan and are subject to review by a medical authority appointed by the Plan. A professional supplier of medical supplies and equipment is considered an other professional provider.
3.: Facility Provider. An alcoholism or substance abuse treatment center, home health agency, hospice agency, hospital, or other facility which the Plan recognizes as a health care provider.
4.: Other Facility. A facility provider (except a hospital, alcoholism or substance abuse treatment center, home health agency, or hospice agency) that the Plan recognizes as a provider and that is licensed or certified to perform designated health care services by the state or jurisdiction where services are provided. Services of such a provider must be among those covered by the Plan and are subject to review by a medical authority appointed by the Plan.

Examples: ambulatory surgery center, dialysis center, Veteran's Administration, or Department of Defense hospital.

" Psychiatric Care " also known as psychoanalytic care, means treatment for a mental illness or disorder, or a functional nervous disorder.

" Psychiatric Hospital " means an institution which meets the following requirements:

1.: maintains diagnostic and medical facilities on its premises or in facilities under its control; and
2.: primarily provides care and treatment to registered inpatients for mental illness, emotional or nervous disorder, psychosis, neurosis, character or personality disorder or other mental or emotional disease or disorder; and
3.: is supervised by a staff of one (1) or more physicians; and
4.: has twenty-four (24) hour nursing service by registered nurses (R.N.s) on duty or call; and
5.: complies with all licensing or legal requirements; and
6.: is not primarily a nursing, convalescent or rest home or a place for the aged or custodial care. A part of an institution operated as a nursing, convalescent, rehabilitation or geriatric unit primarily for nursing care is not considered a psychiatric hospital.

" Psychologist " means an individual holding the degree of Ph.D., Ed.D and Psy.D. acting within the scope of his/her license.

" Qualified Medical Child Support Order (QMCSO) " means a court judgment, decree, or order, or a state administrative order that has the force and effect of law, that is typically issued as part of a divorce or as part of a state child support order proceeding, and that requires health plan coverage for an "alternate recipient." An alternate recipient is either the child of an eligible employee or a state or political subdivision acting on behalf of such child. Federal law requires a group health plan to pay benefits in accordance with such an order, if is deemed "qualified." A QMCSO may apply to a health plan, dental plan, vision plan and/or health care spending account. It requires that the child(ren) named in the order have the right to receive benefits from the eligible employee through any group medical plan under which the eligible Employee is enrolled, whether or not the eligible employee has family coverage. The QMCSO must contain:

1.: the name and last known mailing address of the eligible Employee;
2.: the name and last known mailing address of each child (alternate recipient) covered under the order;
3.: a reasonable description of the type of coverage to be provided by the group health plan to each alternate recipient or the manner in which coverage will be determined;
4.: the period of time to which the order applies; and
5.: the identification of each plan to which the order applies.

" Qualified Beneficiary (under COBRA) " means an employee or dependent of an employee who, on the date before a qualifying event occurred, is covered under this Plan and subsequently eligible to continue coverage under this Plan in accordance with applicable provisions of Title X of COBRA or Section 609(a) of the ERISA in relation to QMCSOs.

" Qualified beneficiary " shall also include a child born to, adopted by or placed for adoption with an employee or former employee at any time during COBRA continuation coverage.

" Qualifying Event " is an event that occurs resulting in the termination of health coverage of an employee and/or spouse or dependent child of an employee. Any one of the following is a "qualifying event:"

1.: The death of a covered employee.
2.: The voluntary or involuntary termination (other than by reason of the employee's gross misconduct) of the covered employee's employment.
3.: The reduction of hours of a covered employee's employment.
4.: The divorce or legal separation of a covered employee from his/her spouse.
5.: A covered employee's entitlement to the Medicare program.
6.: A dependent child's ceasing to satisfy the Plan's requirements for a dependent child (e.g., attainment of the maximum age for dependency under the Plan)

" Rehabilitation Facility " means a distinct organizational entity, either separate or within a larger institution or agency which meets the following requirements:

1.: provides individualized, goal-oriented, comprehensive and coordinated services designed to minimize the effects of physical, mental, social and vocational disadvantages and to effect a realization of the individual's potential; and
2.: is accredited for its stated purpose by the Joint Commission on Accreditation of Health Care Organizations (JCAHO) or the Commission on Accreditation of Rehabilitation Facilities (CARF); and
3.: is certified for its stated purpose by Medicare for Medicare reimbursement; and
4.: is licensed and complies with its stated purpose under all relevant state and local laws.

" Rehabilitation Services " means the process of providing, in a coordinated manner, those comprehensive services deemed appropriate to the needs of a person with a disability, in a program designed to achieve objectives of improved health, welfare and the realization of one's maximum physical, social, psychological and vocational potential for useful and productive activity.

" Restorative or Reconstructive Surgery " means surgery to restore or improve bodily function to the level experienced before the event which necessitated the surgery or, in the case of a congenital defect, to a level considered normal. Such surgery may have a coincidental cosmetic effect.

" Room and Board " refers to all charges by whatever name called which are made by a hospital, hospice, skilled nursing care facility or convalescent nursing facility as a condition of occupancy. Such charges do not include the professional services of physicians or intensive nursing care by whatever name called.

" Schedule of Medical Benefits " and "Schedule of Dental Benefits" mean the outlines of benefits.

" Second Surgical Opinion " means examination, x-ray, and lab performed by a qualified physician in the approved specialty to substantiate medical necessity of the procedure to be performed. A third opinion will be paid in case of a conflict between the first two (2) opinions.

" Semiprivate " refers to a class of accommodations in a hospital, skilled nursing care facility or convalescent nursing facility in which at least two (2) patient beds are available per room.

" Significant Break in Coverage " means a period of sixty-three (63) consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage.

" Skilled Nursing Care Facility " means an institution, or distinct part thereof, operated pursuant to law and one which meets all of the following conditions:

1.: It is licensed to provide, and is engaged in providing professional nursing services on an inpatient basis, for persons convalescing from injury or illness. Services are rendered by a graduate registered nurse (R.N.) or by a licensed practical nurse (L.P.N.). In addition they provide physical self-care in essential daily living activities. restoration service to assist patients to reach a degree of body functioning to permit
2.: Its services are provided for compensation from its patients and under the full-time supervision of a physician or graduate registered nurse (R.N.).
3.: It provides twenty-four (24) hour per day nursing service by licensed nurses, under the direction of a full-time graduate registered nurse (R.N.).
4.: It maintains a complete original record on each patient.
5.: It has an effective organization review plan.
6.: It is not, other than incidentally, a place for rest, the aged, drug addicts, alcoholics, mentally handicapped, custodial or educational care, or care of mental disorders.
7.: It is approved and licensed by Medicare.

This term shall also apply to an institution referring to itself as a convalescent nursing facility, extended care facility, convalescent nursing home, or any such other similar nomenclature.

" Sound Natural Teeth " means teeth which are whole or properly restored, are without impairment or periodontal disease, and are not in need of the treatment provided for reasons other than dental injury.

" Special Enrollment Period " is any period of time allowed under this Plan, other than the eligible person's enrollment date, during which an eligible person can be enrolled for coverage under this Plan as a result of loss of other coverage or the employee's marriage, or the birth of a child to, adoption of, or placement for adoption of a child with such employee. An eligible person who enrolls during any such applicable special enrollment period shall not be considered a late entrant.

" Subrogation/Third Party Liability " means the transfer of one's liabilities for another; in this case the temporary assumption of the claimant's liabilities by the Plan prior to repayment by the party of primary liability. The Plan contains a subrogation clause and the claimant is obligated to obtain any monies available from third parties to reduce the Plan's losses.

" Substance Abuse " means addiction or abuse of alcohol, legal or illegal drugs, or any other substance used in a way which results in producing abnormal behavior and/or a mind-altered state.

" Supplemental Benefits " means benefits that are provided under a separate policy, certificate, or contract of insurance, such as: (1) Medicare supplemental health insurance, also known as Medigap or MedSupp insurance; (2) coverage supplemental to that provided under the Civilian Health & Medical Program of the Uniformed Services (also known as CHAMPUS supplemental programs); and (3) similar supplemental coverage provided to coverage under a group health plan. Refer to Creditable Coverage on page 94.

" Surgery " means any operative or diagnostic procedures performed for the treatment of illnesses or injuries by an instrument or cutting procedure through any natural body opening or incision, including the necessary treatment of fractures and dislocations, severe sprains and casting thereof, but not including simple sprains or bruises.

" TEFRA " refers to the Tax Equity and Fiscal Responsibility Act of 1982, as amended from time to time.

" Temporomandibular Joint Syndrome (TMJ) " is the treatment of jaw joint disorders including conditions of structures linking the jaw bone and skull and the complex of muscles, nerves and the tissues related to the temporomandibular joint.

" Therapies: Chemotherapy, Radiation, Occupational, Physical and Speech " mean:

Chemotherapy—drug therapy administered as treatment for malignant conditions and diseases of certain body systems.

Radiation therapy—x-ray, radon, cobalt, betatron, telocobalt, and radioactive isotope treatment for malignant diseases and other medical conditions.

Occupational therapy—the use of educational, vocational, and rehabilitative techniques to improve a patient's functional ability to live independently.

Physical therapy—the use of physical agents to treat disability resulting from disease or injury. Physical agents used include heat, cold, electrical currents, ultrasound, ultraviolet radiation, massage, and therapeutic exercise.

Speech therapy (also called speech pathology)—services used for diagnosis and treatment of speech and language disorders.

" Total Disability (Totally Disabled) " means the physical state of a covered person resulting from an illness or injury which wholly prevents that individual from performing the duties pertaining to his/her customary employment. Individuals must be under the continuous care of a physician.

All determinations of a final definition of a disability are the decision of the Plan Administrator. In the case of a dependent, "total disability (totally disabled)" means unable to perform the normal activities of a person of same age and sex in good health.

" University " means an accredited institution of higher education.

" Urgent Care/Extended Care Facility " means a freestanding facility which is engaged primarily in providing minor emergency and episodic medical care to a covered person. A physician and registered nurse (RN) must be in attendance at all times. The facility may or may not have an x-ray technician and x-ray and laboratory equipment. The facility must have a life support system available.

" Usual, Customary, and Reasonable (UCR) " refers to the designation of a charge as being the usual charge made by a physician or other provider of services, supplies, medications, or equipment that is deemed medically necessary, is not experimental, and does not exceed the general level of charges made by other providers rendering or furnishing such care or treatment within the same area. The term "area" in this definition means a county or such other area as is necessary to obtain a representative cross section of such charges.

Due consideration will be given to the nature and severity of the condition being treated and any medical complications or unusual circumstances which require additional time, skill or expertise.

The Plan Administrator has the discretionary authority to decide whether a charge is Usual, Customary and Reasonable.

" Waiting Period " means the period of time that must pass before an employee or dependent is eligible to enroll under the terms of a group health plan. If an employee or dependent enrolls as a late entrant or on a special enrollment date, any period before such late or special enrollment is not a waiting period.

" Well-Baby Care " means medical treatment, services or supplies rendered to a child or newborn solely for the purpose of health maintenance and not for the treatment of an illness or injury.

COBRA CONTINUATION OPTIONS

A federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), requires that most employers sponsoring a group health plan ("Plan") offer employees and their families covered under their health plan the opportunity for a temporary extension of health coverage (called "COBRA continuation coverage") in certain instances where coverage under the Plan would otherwise end. This notice is intended to inform covered persons and beneficiaries, in summary fashion, of the rights and obligations under the continuation coverage provisions of COBRA, as amended and reflected in final and proposed regulations published by the Department of the Treasury. This notice is intended to reflect the law and does not grant or take away any rights under the law. Complete instructions on COBRA, as well as election forms and other information, will be provided by the Plan Administrator to covered persons who become qualified beneficiaries under COBRA.

COBRA CONTINUATION COVERAGE

COBRA continuation coverage is group health insurance coverage that an employer must offer to certain covered persons and their eligible family members (called "qualified beneficiaries") at group rates for up to a statutory-mandated maximum period of time or until they become ineligible for COBRA continuation coverage, whichever occurs first. The right to COBRA continuation coverage is triggered by the occurrence of one of certain enumerated events that result in the loss of coverage under the terms of the employer's Plan (the "qualifying Event"). The coverage must be identical to the Plan coverage that the qualified beneficiary had immediately before the qualifying Event, or if the coverage has been changed, the coverage must be identical to the coverage provided to similarly situated active employees who have not experienced a qualifying event (in other words, similarly situated non-COBRA beneficiaries).

QUALIFIED BENEFICIARY

In general, a qualified beneficiary is:

1.: Any individual who, on the day before the qualifying event, is covered under the Plan by virtue of being on that day either a covered employee, the spouse of a covered employee, or a dependent child of a covered employee. If, however, an individual is denied or not offered coverage under the Plan under circumstances in which the denial or failure to offer constitutes a violation of applicable law, then the individual will be considered to have had the Plan coverage and will be considered a qualified beneficiary if that individual experiences a qualifying event.
2.: Any child who is born to or placed for adoption with a covered employee during a period of COBRA continuation coverage. If, however, an individual is denied or not offered coverage under the Plan under circumstances in which the denial or failure to offer constitutes a violation of applicable law, then the individual will be considered to have had the Plan coverage and will be considered a qualified beneficiary if that individual experiences a qualifying event.
3.: A covered employee who retired on or before the date of substantial elimination of Plan coverage which is the result of a bankruptcy proceeding under Title 11 of the U.S. Code with respect to the employer, is the spouse, surviving spouse or dependent child of such a covered employee if, on the day before the bankruptcy qualifying event, the spouse, surviving spouse or dependent child was a beneficiary under the Plan.

The term "covered employee" includes not only common-law employees (whether part-time or full-time) but also any individual who is provided coverage under the Plan due to his or her

performance of services for the employer sponsoring the Plan (e.g., self-employed individuals, independent contractor, or corporate director).

An individual is not a qualified beneficiary if the individual's status as a covered employee is attributable to a period in which the individual was a nonresident alien who received from the individual's employer no earned income that constituted income from sources within the United States. If, on account of the preceding reason, an individual is not a qualified beneficiary, then a spouse or dependent child of the individual is not considered a qualified beneficiary by virtue of the relationship to the individual.

Each qualified beneficiary (including a child who is born to or placed for adoption with a covered employee during a period of COBRA continuation coverage) must be offered the opportunity to make an independent election to receive COBRA continuation coverage.

QUALIFYING EVENT

A qualifying event is any of the following if the Plan provides that the covered person would lose coverage (i.e., cease to be covered under the same terms and conditions as in effect immediately before the qualifying event) in the absence of COBRA continuation coverage:

1.: The death of a covered employee.
2.: The voluntary or involuntary termination (other than by reason of the employee's gross misconduct) of the covered employee's employment.
3.: The reduction of hours of a covered employee's employment.
4.: The divorce or legal separation of a covered employee from the employee's spouse.
5.: A covered employee's entitlement to the Medicare program.
6.: A dependent child's ceasing to satisfy the Plan's requirements for a dependent child (e.g., attainment of the maximum age for dependency under the Plan)
7.: A proceeding in bankruptcy under Title 11 of the U.S. Code with respect to an employer from whose employment a covered employee retired at any time.

If the qualifying event causes the covered employee, or the spouse or a dependent child of the covered employee, to cease to be covered under the Plan under the same terms and conditions as in effect immediately before the qualifying event (or in the case of the bankruptcy of the employer, any substantial elimination of coverage under the Plan occurring within twelve (12) months before or after the date the bankruptcy proceeding commences), the persons losing such coverage become qualified beneficiaries under COBRA if all other conditions of the COBRA law are also met.

The taking of leave under the Family and Medical Leave Act of 1993 ("FMLA") does not constitute a qualifying event. A qualifying event occurs, however, if an employee does not return to employment at the end of the FMLA leave and all other COBRA continuation coverage conditions are present. If a qualifying event occurs, it occurs on the earlier of: a) the last day of FMLA leave if the employee is not returning to employment; or b) the date the employee gives notice to the employer that he/she will not be returning to employment. The applicable maximum coverage period is measured from this date (unless coverage is lost at a later date and the Plan provides for the extension of the required periods, in which case the maximum coverage period is measured from the date when the coverage is lost). Note that the covered employee and family members will be entitled to COBRA continuation coverage even if they fail to pay the employee portion of premiums for coverage under the Plan during the FMLA leave as long as they were covered on the day before the first day of the leave or become covered during the FMLA leave.

COBRA ELECTION PERIOD

An election period is the time period within which the qualified beneficiary can elect COBRA continuation coverage under the employer's Plan. A Plan can condition availability of COBRA continuation coverage upon the timely election of such coverage. An election of COBRA continuation coverage is a timely election if it is made during the election period. The election period must begin not later than the date the qualified beneficiary would lose coverage on account of the qualifying event and must not end before the date that is sixty (60) days after the later of: the date the qualified beneficiary would lose coverage on account of the qualifying event, or the date notice is provided to the qualified beneficiary of her or his rights to elect COBRA continuation coverage.

NOTIFICATION OF QUALIFYING EVENT

In general, the employer or Plan Administrator must determine when a qualifying event has occurred. However, each covered employee or qualified Beneficiary is responsible for notifying the Plan Administrator of the occurrence of a qualifying event that is:

1.: A dependent child's ceasing to be a dependent child under the generally applicable requirements of the Plan.
2.: he divorce or legal separation of the covered employee.

The Plan is not required to offer the qualified beneficiary an opportunity to elect COBRA continuation coverage if the notice is not provided to the Plan Administrator within sixty (60) days after the later of: the date of the qualifying event, or the date the qualified Beneficiary would lose coverage on account of the qualifying event.

WAIVER OF COBRA CONTINUATION COVERAGE

If, during the sixty (60) day election period, a qualified beneficiary waives COBRA continuation coverage, the waiver can be revoked at any time before the end of the election period. Revocation of the waiver is an election of COBRA continuation coverage. However, if a waiver is revoked during the election period, coverage will not be provided retroactively (i.e., back to the date of the loss of coverage until the waiver is revoked). Coverage will only be provided beginning on the date the waiver is revoked. Waivers and revocations of waivers are considered made on the date they are sent to the employer or Plan Administrator, as applicable.

TERMINATION OF COBRA CONTINUATION COVERAGE

During the election period, a qualified beneficiary may waive COBRA continuation coverage. Except for an interruption of coverage in connection with a waiver, COBRA continuation coverage that has been elected for a qualified beneficiary must extend for at least the period beginning the date of the qualifying event or the date coverage is lost, whichever is later, and ending not before the earliest of the following dates:

1.: The last day of the applicable maximum coverage period.
2.: The first day for which Timely Payment is not made to the Plan with respect to the qualified beneficiary.
3.: The date upon which the employer ceases to provide any group health plan (including successor plans) to any employee.
4.: The date, after the date of the election, that the qualified beneficiary first becomes covered under any other plan that does not contain any exclusion or limitation with respect to any

pre-existing condition, other than such an exclusion or limitation that does not apply to, or is satisfied by, the qualified Beneficiary.

5.

The date, after the date of the election, that the qualified beneficiary first becomes entitled to the Medicare program (either Part A or Part B, whichever occurs earlier).

6.

In the case of a qualified beneficiary entitled to a disability extension, the later of:

a.: (i) Twenty-nine (29) months after the date of the qualifying event or the date coverage is lost, whichever is later, or (ii) the first (1st) day of the month that is more than thirty (30) days after the date of a final determination under Title II or XVI of the Social Security Act that the disabled qualified beneficiary whose disability resulted in the qualified beneficiary's entitlement to the disability extension is no longer disabled, whichever is earlier; or
b.: the end of the maximum coverage period that applies to the qualified beneficiary without regard to the disability extension.

The Plan can terminate for cause the coverage of a qualified beneficiary on the same basis that the Plan terminates for cause the coverage of similarly situated non-COBRA beneficiaries, for example, for the submission of a fraudulent claim. In the case of an individual who is not a qualified beneficiary and who is receiving coverage under the Plan solely because of the individual's relationship to a qualified beneficiary, if the Plan's obligation to make COBRA continuation coverage available to the qualified beneficiary ceases, the Plan is not obligated to make coverage available to the individual who is not a qualified beneficiary.

MAXIMUM COVERAGE PERIODS FOR COBRA CONTINUATION COVERAGE

The maximum coverage periods are based on the type of the qualifying event and the status of the qualified beneficiary, as shown below.

1.

In the case of a qualifying event that is a termination of employment or reduction of hours of employment and there is not a disability extension, the maximum coverage period ends eighteen (18) months after the qualifying event or the loss of coverage, whichever is later, and twenty-nine (29) months after the qualifying event or the loss of coverage, whichever is later, if there is a disability extension.

2.

In the case of a covered employee's entitlement to the Medicare program before experiencing a qualifying event that is a termination of employment or reduction of hours of employment, the maximum coverage period for qualified beneficiaries other than the covered employee ends on the later of:

a.: Thirty-six (36) months after the date the covered employee becomes entitled to the Medicare program; or
b.: Eighteen (18) months (or twenty-nine [29] months if there is a disability extension) after the date of the covered employee's termination of employment or reduction of hours of employment, or loss of coverage, whichever is later.

3.

In the case of a bankruptcy qualifying event, the maximum coverage period for a qualified beneficiary who is the retired covered employee ends on the date of the retired covered employee's death. The maximum coverage period for a qualified beneficiary who is the spouse, surviving spouse or dependent child of the retired covered employee ends on the earlier of the date of the qualified beneficiary's death or the date that is thirty-six (36) months after the death of the retired covered employee.

4.: In the case of a qualified beneficiary who is a child born to or placed for adoption with a covered employee during a period of COBRA continuation coverage, the maximum coverage period is the remainder of the maximum coverage period applicable to the qualifying event giving rise to the period of COBRA continuation coverage during which the child was born or placed for adoption. (e.g., if a child is born during the fifth [5th] month of the employee's eighteen [18] month COBRA coverage due to termination of employment, then that child's COBRA coverage would continue for thirteen [13] months only).
5.: In the case of any other qualifying event than that described above, the maximum coverage period ends thirty-six (36) months after the qualifying event.

EXPANDED COBRA COVERAGE

If a qualifying event that gives rise to an eighteen (18) month or twenty-nine (29) month maximum coverage period is followed, within that eighteen (18) or twenty-nine (29) month period, by a second qualifying event that gives rise to a thirty-six (36) month maximum coverage period, the original period is expanded to thirty-six (36) months, but only for individuals who are qualified beneficiaries at the time of both qualifying events. Under no circumstances can the COBRA maximum coverage period be expanded to more than thirty-six (36) months after the date of the determination and before the end of the original eighteen (18)- month maximum coverage.

COBRA DISABILITY EXTENSION

A disability extension will be granted if an individual (whether or not the covered employee) who is a qualified beneficiary in connection with the qualifying event that is a termination or reduction of hours of a covered employee's employment, is determined under Title II or XVI of the Social Security Act to have been disabled at any time during the first sixty (60) days of the COBRA continuation coverage. To qualify for the disability extension, the qualified beneficiary must also provide the Plan Administrator with notice of the disability determination on a date that is both within sixty (60) days after the date of the determination and before the end of the original eighteen (18) month maximum coverage.

PAYMENT FOR COBRA CONTINUATION COVERAGE

For any period of COBRA continuation coverage, a Plan can require the payment of an amount that does not exceed 102% of the applicable premium except the Plan may require the payment of an amount that does not exceed 150% of the applicable premium for any period of COBRA continuation coverage covering a disabled qualified beneficiary that would not be required to be made available in the absence of a disability extension. A group health plan can terminate a qualified beneficiary's COBRA continuation coverage as of the first day of any period for which timely payment is not paid to the Plan with respect to that qualified beneficiary.

PAYMENT FOR COBRA CONTINUATION COVERAGE IN MONTHLY INSTALLMENTS

The Plan is also permitted to allow for payments at other intervals.

TIMELY PAYMENT FOR PAYMENT OF COBRA CONTINUATION COVERAGE

Timely Payment means payment that is made to the Plan by the date that is thirty (30) days after the first day of that period. Payment that is made to the Plan by a later date is also considered Timely Payment if either under the terms of the Plan, covered employees or Qualified Beneficiaries are allowed: 1) until that later date to pay for their coverage for the period, or 2) under the terms of an arrangement between the employer and the entity that provides Plan benefits on the employer's behalf,

the employer is allowed until that later date to pay for coverage of similarly situated non-COBRA beneficiaries for the period.

Notwithstanding the above paragraph, a Plan cannot require payment for any period of COBRA continuation coverage for a qualified beneficiary earlier than forty-five (45) days after the date on which the election of COBRA continuation coverage is made for that Qualified Beneficiary. However, if the qualified beneficiary fails to make the initial payment premium payment within the forty-five (45) day period, then the Plan Administrator may terminate COBRA coverage retroactive to the beginning of the maximum coverage period.

If you submit an insignificant underpayment, you will be notified and have a thirty (30) day grace period to submit the difference. Failure to remit payments within the grace period will cause coverage to be cancelled. This coverage CANNOT be reinstated.

THE RIGHT TO ENROLL IN A CONVERSION HEALTH PLAN AT THE END OF THE MAXIMUM COVERAGE FOR COBRA CONTINUATION COVERAGE

If a qualified beneficiary's COBRA continuation coverage under a group health plan ends as a result of the expiration of the applicable maximum coverage period, the Plan must, during the 180-day period that ends on that expiration date, provide the qualified beneficiary with the option of enrolling under a conversion health plan if such an option is otherwise generally available to similarly situated non-COBRA beneficiaries under the Plan. If such a conversion option is not otherwise generally available, it need not be made available to qualified beneficiaries. This Plan does not have a conversion benefit for medical or dental coverage when COBRA participation ends.

CERTIFICATION AND REVIEW OF CREDITABLE COVERAGE

CERTIFICATION OF CREDITABLE COVERAGE

As required by The Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Plan shall provide Certification of Creditable Coverage under this Plan, in the form then in effect and required by the United States Department of Labor, to any covered person or the covered person's designated and authorized agent, guardian, conservator, health care plan or health insurance as follows:

1.: At the time the covered person ceases to be covered under this Plan; and,
2.: At the time a covered person ceases to be covered by the COBRA Continuation Coverage provided by this Plan, if any; and
3.: At any other time that a request is made on behalf of the covered person for such certification, but not later than twenty-four (24) months after the cessation of coverage as set out in subparagraphs 1 and 2 above, whichever is later.

CREDITABLE COVERAGE

An eligible employee or dependent under this plan may submit to the Plan Administrator, Certification of Creditable Coverage from any prior health insurance or health care plan under which said employee or dependent had coverage, for the purpose of reducing, on a day-for-day basis, any exclusion imposed by this Plan for any pre-existing condition for which the eligible employee or dependent had applicable creditable coverage under any prior insurance or health care coverage.

An eligible employee or dependent has a right to request and receive a Certification of Creditable Coverage from a prior insurance carrier or health care plan under which he/she had coverage on or after July 1, 1996.

In the event that the eligible employee or dependent is unable to obtain a Certification of Creditable Coverage from a prior insurance carrier or health care plan, the Plan Administrator may provide assistance to obtain the same.

"Creditable coverage" shall mean health or medical coverage under which a covered person was covered, prior to that covered person's enrollment date under this Plan, which prior coverage was under any of the following:

1.: A group health plan.
2.: Health insurance coverage.
3.: Part A, Part B or Part C of Title XVIII of the Social Security Act (Medicare).
4.: Title XIX of the Social Security Act, other than coverage consisting solely of benefits under Section 1928 (Medicaid).
5.: Chapter 55 of Title 10, United States Code (active military and CHAMPUS).
6.: A medical care program of the Indian Health Service or a tribal organization.
7.: A state health benefits risk pool.
8.: A health plan offered under Chapter 89 of Title 5, United States Code (Federal Employee Health Benefits).
9.: A public health plan.
10.: A health benefit plan under section 5 (e) of the Peace Corps Act.

Creditable coverage for which there has not been a break exceeding sixty-three (63) days prior to a covered person's enrollment date under this Plan, shall be credited on a day-for-day basis against any pre-existing condition exclusion imposed by the terms of this Plan provided that the prior creditable coverage included coverage for the excluded condition.

CREDITABLE COVERAGE REVIEW

Upon submission of a Certificate of Creditable Coverage regarding prior coverage by any enrollee for coverage under this Plan, the Plan, acting on its own or through a firm contracted to provide services to the Plan, shall send to such enrollee a written confirmation of the amount of prior creditable coverage, if any, to which the enrollee will be entitled against any pre-existing condition exclusionary period under this Plan. Such written confirmation shall be provided to the enrollee within thirty (30) days of the receipt of the Certification by the Plan.

In the event that an enrollee disagrees with the Plan's calculation of any prior creditable coverage, the enrollee shall send written notice of said disagreement to the Plan, together with a written request for review of the calculation, within fifteen (15) days of receipt of the Plan's written confirmation. Failure to submit a written notice of disagreement and request for review of the calculation within the time limit required in this section shall be deemed a waiver of any further review.

Upon receipt by the Plan of a notice of disagreement and request for review, the Plan shall review the calculations, and shall either affirm those calculations or revise its calculation and determination of prior creditable coverage. The Plan Administrator shall notify the enrollee, in writing, of its decision after review within thirty (30) days after receipt of the notice of disagreement and request for review. The Plan Administrator's decision regarding prior creditable coverage shall be final and binding upon the Plan and any covered person under the Plan.

DETERMINATION OF PRIOR CREDITABLE COVERAGE WHEN A CERTIFICATE IS UNAVAILABLE

If an enrollee is unable to obtain a Certification of Creditable Coverage, for prior coverage, after having exhausted all reasonable efforts to obtain the same, such an enrollee may request in writing that the Plan make a determination whether he/she is entitled to prior creditable coverage based upon other evidence and information. Said request must be submitted to and received by the Plan within sixty (60) days of the effective date of coverage of the person for whom the request is made.

Upon receipt by the Plan of a request to determine prior creditable coverage in the absence of a Certification, the Plan shall require that the person for whom the request is made provide to the Plan all evidence in support of such request within thirty (30) days of the initial request. A longer period of time, up to an additional thirty (30) days, may be granted, to submit evidence, upon written request and good cause for the same. Evidence submitted shall include in every case, a sworn affidavit by the person for whom the determination is to be made, or by that person's parent or guardian, if the person is a minor, or is incompetent or unable to execute such an affidavit. The affidavit shall contain the following information:

1.: The name of the prior insurance carrier(s), benefit plan(s) or other payor(s) of medical benefits under which prior creditable coverage is asserted to exist.
2.: The date(s) that coverage commenced and ended under any such prior insurance, benefit plan, or other payor.
3.: The address, if known, of the insurance carrier(s), benefit plan(s) or other payor(s).
4.: The nature of the coverage under the prior insurance, benefit plan(s) or other benefit payor(s).

5.: A description of the efforts undertaken to obtain Certifications of prior creditable coverage, and the results of those efforts.
6.: The names, and addresses or telephone numbers, of former employers, insurance agents, human resource personnel, third party administrators, HMOs or medical providers that may have knowledge of the asserted prior coverage.
1.: Any other information that the affiant deems relevant.

The affidavit, together with any other documentation submitted, including, but not limited to Summary Plan Descriptions or policies indicating prior coverage, pay stubs indicating deduction of premium amounts, Explanation of Benefits from prior coverage, written statements from persons with knowledge of prior coverage, and medical bills indicating payment by insurance or benefit plans, shall be reviewed and considered by the Plan Administrator. Subsequent to such review, the Plan Administrator shall provide a written determination of prior creditable coverage, if any, within thirty (30) days after the submission of the last item of evidence on behalf of the enrollee, or ninety (90) days from the enrollee's initial request for determination under this section, which ever occurs first. The Plan Administrator's determination shall be final and binding upon the Plan and all covered persons under the Plan.

Please note: It is the intent of the Plan to comply with all existing HIPAA regulations. If for some reason the information presented in the Plan differs from actual HIPAA regulations, the Plan reserves the right to administer claims involving HIPAA in accordance with such actual regulations.

COORDINATION OF BENEFITS (COB)

The coordination of benefits provision is intended to prevent the payment of benefits which exceed expenses. It applies when the employee or any eligible dependent who are covered by the Plan are also covered by any other plan or plans, excluding an individual insurance policy. When more than one (1) coverage exists, one (1) plan normally pays its benefits in full and the other plan pays a reduced benefit. Only the amount paid by the Plan will be charged against the Plan maximums.

In the event of a motor vehicle or premises accident, this Plan is not the primary coverage. This includes, but is not limited to auto, medical, no-fault, homeowners' insurance or medical payment coverage.

The Plan will always pay either its benefits in full or a reduced amount which, when added to the benefits payable by the other plan or plans, will not exceed 100% of total allowable expenses.

Allowable expense means a necessary, reasonable and customary item of expense for health care when the item of expense is covered, at least in part, by one (1) or more plans covering the individual for whom the claim is made. When a Plan provides benefits in the form of services rather than cash payments, then the reasonable cash value of each service rendered will be deemed to be both an allowable expense and a benefit paid.

The coordination of benefits provision applies whether or not a claim is filed under the other plan or plans. If needed, authorization must be given to this Plan to obtain information as to benefits or services available from the other plan or plans, or to recover overpayments.

DEFINITIONS

The term "Plan" as used in this section of Coordination of Benefits will mean any plan providing benefits or services for or by reason of medical, vision, or dental treatment, and such benefits or services are provided by:

1.

Group insurance or any other arrangement for coverage for covered persons in a group whether on insured or uninsured basis, including but not limited to:

a.: hospital indemnity benefits; and
b.: hospital reimbursement-type plans which permit the covered person to elect indemnity at the time of claims.

2.

Hospital or medical service organizations on a group basis, group practice and other group prepayment plans.

3.

Hospital or medical service organizations on an individual basis having a provision similar in effect to this provision.

4.

Any coverage for students which is sponsored by, or provided through a school or other educational institution.

5.

Any licensed health maintenance organization (HMO).

6.

Any coverage under a governmental program, and coverage required or provided by any statute.

7.

Group automobile insurance.

8.

Group, blanket or franchise insurance coverage.

9.

Individual automobile insurance coverage on an automobile leased or owned by the company.

10.

Individual auto insurance based upon the principles of "No-Fault" coverage,

11.: Individual no-fault auto insurance, by whatever name called.

	Note:		The Plan is always a secondary plan to benefits provided under any mandatory no-fault auto insurance act in the state in which the covered individual resides.
			If a no-fault policy provides coverage in excess of the minimum required by state law, the Plan will coordinate benefits with those coverages in effect.
			The benefits of the Plan will not be available to you to the extent of minimum benefits required by the no-fault law for injuries suffered by a covered person while operating or riding in a motor vehicle owned by that covered person if said vehicle is not covered by no-fault automobile insurance as required by law.

12.: Homeowner or premises liability insurance, individual or commercial.

The term "Plan" will be construed separately with respect to each policy, contract, or other arrangement for benefits or services, and separately with respect to that portion of any such policy, contract, or other arrangement which reserves the right to take the benefits or services of other Plans into consideration in determining its benefits and that portion which does not.

The term "Claim Determination Period" means a calendar year during which the covered person for whom claim is made has been covered under the Plan.

COORDINATION PROCEDURES

If a covered person is covered under more than one (1) plan, this coordination of benefits section will apply. This section will be used to determine the amount of benefits payable under the Plan for a covered person.

One plan is the primary plan, and all the other plans are secondary, in the order described below. The primary plan pays its benefits first, without taking the other plans into consideration. The secondary plans then pay benefits up to the extent of their liability after taking into consideration the benefits provided by the other plans. Benefits under other plans include benefits which a covered person could have received if such benefits had been claimed.

1.

If a plan has no coordination of benefits provision (or similar provision), it is automatically the primary plan.

2.

If all the plans have coordination of benefits provisions, a plan is primary if it covers the person as an employee, and secondary if it covers the person as a dependent.

3.

If a person is covered as a dependent child under more than one (1) plan:

a.

the plan of the parent whose birthday falls earlier in the year is the primary plan (month and day only);

b.

if the father and mother have the same birthday, the plan covering the parent longer is the primary plan; or

c.

if the parents are separated or divorced, the rules below will apply:

1): The plan covering the child as a dependent of the parent with legal custody of the child would be the primary plan; unless
2): A court decree sets the obligation for medical expenses of such child. The plan which covers the child as a dependent of the parent with such obligation will be the primary plan.

3): If the specific terms of a court decree state that the parents shall share joint custody, without stating that one (1) of the parents is responsible for the health care expenses of the child, the plan covering the child shall follow the order of benefits determination rules for dependent children of parents who are not separated or divorced.
4): If a plan is "no-fault" auto insurance, it is the primary plan.

If the primary plan is still not established by 1, 2, or 3 above then the plan that covers such person for the longest, continuous period of time will be the primary plan. Regardless of 1 through 3, a plan which covers the person as an employee (or a dependent of an employee) will be primary to the plan which covers the person as:

1.: a laid-off or retired employee;
2.: the dependent of a laid-off, retired or deceased employee; or
3.: a COBRA beneficiary who is continuing coverage in accord with federal law.

COORDINATION WITH MEDICARE FOR WORKING AGED

If the covered person is an active employee age sixty-five (65) and over, the covered person must elect either:

1.: The Plan as the covered person's primary medical coverage, and Medicare as the covered person's secondary coverage, or
2.: Medicare for the covered person's primary coverage.

The covered dependent spouse, age sixty-five (65) and over, of any active employee must also make an election.

If the covered person elects Medicare as his/her medical coverage, his/her covered dependent spouse will also have Medicare as his/her medical coverage. If the covered person elects the Plan as his/her primary medical coverage, his/her dependent spouse may elect Medicare as his/her medical coverage or he/she may continue coverage under the Plan.

Unless an election is made by a covered employee or dependent to choose Medicare as primary, coverage will automatically continue under the Plan, and the benefits of this Plan will be primary. If Medicare is elected, coverage under this Plan will terminate.

COORDINATION WITH MEDICARE FOR DISABLED COVERED PERSONS UNDER AGE 65

For employers with fewer than one hundred (100) employees, the Plan is secondary and Medicare will be primary for the covered employee and his/her covered dependent spouse or child who is under age sixty-five (65) and eligible for Medicare for reason of disability.

For employers with more than one hundred (100) employees, the Plan is primary and Medicare will be secondary for the covered employee and his/her covered dependent spouse or child who is under age sixty-five (65) and eligible for Medicare by reason of disability.

Medicare will be considered a plan for the purpose of coordination of benefits. This Plan will coordinate benefits with Medicare whether or not the covered person or his/her dependent spouse or child is/are actually receiving Medicare benefits.

COORDINATION WITH MEDICARE FOR PERSONS WITH END STAGE RENAL DISEASE (ESRD)

For employees or dependents under age sixty-five (65), if Medicare eligibility is due solely to End Stage Renal Disease (ESRD), the Plan will be primary only during the first thirty (30) months (or

thirty-three [33] months, depending on whether a transplant or self-dialysis is involved) of Medicare coverage. Thereafter, this Plan will be secondary with respect to Medicare coverage.

If an employee or dependent is under age sixty-five (65) when Medicare eligibility is due solely to ESRD, and the individual attains age sixty-five (65), the Plan will be primary for a full thirty (30) months (or thirty-three [33] months, depending on whether a transplant or self-dialysis is involved) from the date of ESRD eligibility. Thereafter, Medicare will be primary and the Plan will be secondary.

If an employee or dependent is age sixty-five (65) and over, working and develops or is undergoing treatment of ESRD, the Plan will be primary for a full thirty (30) (or thirty-three [33] months from the date of ESRD eligibility. Thereafter, Medicare will be primary and the Plan will be secondary. Covered persons should be certain to enroll in Medicare Part A & B in a timely manner to assure maximum coverage. Contact the Social Security Administration office to enroll for Medicare.

If this Plan is secondary, benefits under this Plan will be coordinated with the dollar amount that Medicare will pay, subject to the rules and regulations specified by federal law. A covered person who is eligible for Medicare will be considered to be covered for all benefits available under Medicare (Part A and Part B), regardless of whether or not the person has actually applied for Medicare coverage.

Please note: It is the intent of the Plan to comply with all existing Medicare regulations. If for some reason the information presented in the Plan differs from actual Medicare regulations, the Plan reserves the right to administer claims involving Medicare in accordance with such actual regulations.

CLAIMS DETERMINATION PERIOD

Benefits will be coordinated on a calendar year basis. This is called the claims determination period.

RIGHT TO RECEIVE OR RELEASE NECESSARY INFORMATION

For the purposes of determining the applicability of and implementing the terms of this coordination of benefits provision of this Plan or any provision of similar purpose of any other plan, the Plan may, without consent of or notice to any person, release to or obtain from any insurance company or other organization or person any information, with respect to any person, which the Plan deems to be necessary for such purposes. Any person claiming benefits under this Plan shall furnish to the Plan such information as may be necessary to implement this provision. A covered person, by receipt of benefits under this Plan, agrees to cooperate fully with the Plan and shall provide any information requested by the Plan within five (5) days of request.

PAYMENTS

A payment made under another Plan may have included an amount that should have been paid under this Plan. If it does, the Plan Administrator may pay that amount to the organization that made the payment. That amount will then be treated as though it was a benefit paid under this Plan. The Plan Administrator will not pay that amount again. The term "payment made" includes providing benefits in the form of services. In this case "payment made" means the reasonable cash value of the benefits provided in the form of services.

RIGHTS OF RECOVERY

Whenever payments have been made by the Plan, with respect to allowable expenses, in a total amount, at any time, in excess of the maximum amount of payment necessary at this time to satisfy the intent of this provision, the Plan shall have the right, exercisable alone and at its own discretion, to recover such excess payments to the extent of such excess from among one or more of the following, as

the Plan shall determine: any persons, companies or other organizations to, or for, or with respect to whom payments have been made.

If a covered person has been paid benefits under this Plan that are in excess of the benefits that should have been paid, or which should not, under the provisions of the Plan, have been paid, the Plan or the Plan Administrator may cause the deduction of the amount of such excess or improper payment from any subsequent benefits payable to such covered person or other present or future amounts payable to such person, or recover such amount by any other appropriate method that the Plan or the Plan Administrator, at its soles discretion, shall determine. Each covered person hereby authorizes the deduction of such excess payment from such benefits or other present or future compensation payments.

Further, this Plan may pay benefits that are later found to be greater than the allowable charge. In this case, this Plan may recover the amount of the overpayment from the source to which it was paid.

THIRD PARTY RECOVERY PROVISION
(Applicable to ALL benefits available under this Plan)

RIGHT OF SUBROGATION AND REIMBURSEMENT

WHEN THIS PROVISION APPLIES

In the event a covered person, his/her dependents and/or the covered person's guardian or estate (herein referred to as "Plan beneficiary") is eligible for benefits under this Plan for medical, dental or vision care costs as a result of any injury or illness and such Plan Beneficiary initiates a claim with regard to ANY potentially liable third party, insurance carrier or additional entity (other than the Plan) which is or becomes obligated to reimburse to the Plan beneficiary the costs of treatment for such injury or illness, the Plan shall have a right of subrogation with respect to any full or partial amounts recovered from any and all third parties and shall have a first priority lien on the amount of the benefits paid under this Plan with regard to such injury or illness even if the Plan beneficiary has not received compensation for all of his or her damages or is not made whole by any such settlement or recovery. This lien shall remain in effect until the Plan is repaid in full.

As a condition to participating in and receiving benefits under this Plan, the Plan beneficiary agrees:

1.: To reimburse the Plan for any such benefits paid to, or on the behalf of, the Plan beneficiary when said benefits are recovered, in part or in full, in any form, regardless of how classified or characterized, from any person, corporation, entity, no-fault carrier, uninsured motorists carrier, underinsured motorist carrier, other insurance policies or funds; and
2.: To reimburse the Plan for any such benefits paid to or on the Plan beneficiary's behalf, is first priority, regardless of whether the settlement or judgment specifically designates the recovery, or a portion thereof, as including medical, disability or other expenses or damages; and
3.: To refrain from releasing, without obtaining the Plan's written prior approval, any party, person, corporation, entity, insurance company, insurance policies or funds that may be potentially liable for or obligated to the Plan beneficiary for the injury or illness; and
4.: Without limiting the preceding, to subrogate the Plan to any and all claims, causes of action or rights that the Plan beneficiary has or that may arise against any person, corporation and/or other entity and to any coverage, no-fault coverage, uninsured motorist coverage, underinsured motorist coverage, homeowner's insurance coverage, renter's insurance coverage, medical malpractice insurance coverage, any liability plan coverage, other insurance policies or funds (herein referred to as "coverage") who has or may have caused, contributed to or aggravated the injury or condition for which the Plan beneficiary claims an entitlement to benefits under this Plan, regardless of how classified or characterized.
5.: To cooperate fully with the Plan Administrator, its agents, attorneys and assigns, regarding the recovery of any monies paid by the Plan for which a third party, their representative or their insurer, or the Plan beneficiary's representative or insurer may be liable including, but not limited to, providing full and complete disclosure and information to the Plan Administrator, upon request and in a timely manner, of all efforts by any person to recover any such monies; providing the Plan Administrator with any and all documents, papers, reports and the like regarding demands, litigation, or settlements concerning recovery of monies paid by the Plan; notifying the Plan Administrator of the amount and source of any monies received from third parties from which the Plan may be entitled to repayment.
6.: Not to engage in any act directly, indirectly, personally or through third persons to interfere with the Plan's rights to recover hereunder, nor conceal or attempt to conceal the fact that recovery has or will occur.

AMOUNT SUBJECT TO SUBROGATION OR REIMBURSEMENT

The Plan beneficiary agrees to recognize the Plan's right to subrogation and reimbursement. These rights provide the Plan with a first priority over any funds, full or partial, that the Plan beneficiary settles for, recovers or is reimbursed by a third party or coverage to a covered person relative to the injury or illness, including a first priority over any claim for non-medical or dental charges, attorney fees, or other costs and expenses. The Plan beneficiary agrees to hold any such funds received, regardless if it is a full or partial recovery amount, in trust for the benefit of the Plan, and to reimburse the Plan for all benefits paid or that will be paid as a result of said injury or illness, regardless of whether the Plan beneficiary has not received compensation for all of his or her damages or is not made whole. If the Plan beneficiary fails to reimburse the Plan for all benefits paid or to be paid, as a result of said injury or illness, out of any and all recovery or reimbursement received, the Plan beneficiary will be liable for any and all expenses (whether fees or costs) associated with the Plan's attempt to recover such money from the Plan beneficiary.

PURSUIT OF LEGAL ACTION

If the Plan beneficiary decides to pursue a third party or any Coverage available to him/her as a result of said injury or illness, the Plan beneficiary agrees to include the Plan's subrogation claim in that action and if there is a failure to do so the Plan will be legally presumed to be included in such action or recovery. The Plan shall not be liable for any expenses in connection with the recovery (whether fees or costs) of monies unless the Plan shall have agreed in advance in writing to bear a portion or all of the expense thereof. Should a Plan beneficiary undertake negotiations or file a lawsuit to recover any kind of damages from any third party or Coverage who may be liable for the expenses paid by the Plan, then the Plan beneficiary shall, first, notify the Plan Administrator and, second, notify his or her attorney of the Plan's rights and the subrogation trust and lien created by this provision.

In the event the Plan beneficiary fails to pursue his or her remedy or claim against any potentially liable third party or Coverage, then the Plan shall be subrogated to all rights of such Plan beneficiary so that such rights or claims may be prosecuted, compromised, or settled by the Plan in the Plan beneficiary's name at the Plan's sole discretion. If any such action is taken by the Plan, then the Plan beneficiary authorizes the Plan to execute any and all documents necessary to pursue said claims in the Plan beneficiary's name, and the Plan beneficiary agrees to fully cooperate with the Plan in the prosecution of any such claims.

The Plan beneficiary agrees to take no prejudicial actions against the subrogation rights of the Plan or to in any way impede the action taken by the Plan to recover its subrogation claim.

The cooperation of the Plan beneficiary shall include a duty to provide information, execute and deliver any acknowledgement and other legal instruments documenting the Plan's subrogation rights and take such action as requested by the Plan to secure the subrogation rights of the Plan. The Plan beneficiary agrees and acknowledges that they will respond within ten (10) days to all inquiries of the Plan regarding the status of any claim that they may have against any third parties or Coverage including, but not limited to, no-fault, uninsured and underinsured. Inquiries by the Plan may include, but are not limited to, requests for accident reports, names and addresses of other parties involved in the accident or occurrence and potential witnesses, information regarding other insurance policies that may apply, including the name and address of agents and adjusters for those insurance policies, information regarding offers of settlement from third parties or their insurers and information regarding any legal proceedings related to the accident or occurrence. The Plan beneficiary shall notify the Plan immediately of the name and address of any attorney whom the Plan beneficiary engages to pursue any personal injury claim on their behalf.

The Plan beneficiary acknowledges that the Plan's subrogation rights shall be considered a first priority claim against ANY potentially liable third party and/or coverage and is to be paid before any

other claims for the Plan beneficiary as the result of such injury or illness, regardless if the Plan beneficiary has not received compensation for all of his or her damages or is not made whole.

If the Plan or its representative independently pursues and obtains a recovery in the Plan beneficiary's name, any amounts recovered shall be used as follows: first, to pay the expenses of collection; second, to reimburse the Plan for any amounts that it has paid or may be required to pay in the future for such injury or illness of the Plan Beneficiary; and, third, any amounts then remaining shall be distributed to the Plan Beneficiary. The Plan will not pay or be responsible, without its written consent, for any fees or costs associated with a Plan beneficiary pursuing a claim against any third party or coverage. Monies or benefits paid by the Plan shall be repaid in full, notwithstanding any "made whole" or "common fund" or similar law unless a reduction or compromise is agreed to in writing or required pursuant to court order.

SUBROGATION AGREEMENT

Before the Plan shall pay any benefits to or on behalf of a Plan beneficiary, the Plan beneficiary must execute and return a Subrogation Agreement to the Plan Administrator and supply other reasonable information and assistance as may be requested by the Plan Administrator regarding the claim or potential claim. If the Subrogation Agreement is not executed and returned or if information and assistance is not provided to the Plan Administrator, no benefits will be payable under the Plan with respect to costs incurred in connection with such injury or illness unless and until claims for such costs have been submitted to and paid by any potentially liable third party and/or coverage to the Plan beneficiary for such injury or illness. In that regard, the Plan beneficiary must provide the Plan Administrator with proof of payment by such other party before any non-reimbursed costs relating to the injury or illness will be considered for coverage by the Plan.

PLAN ADMINISTRATOR'S AUTHORITY

The Plan Administrator retains sole and final discretionary authority to interpret all Plan provisions and their final effect.

CLAIMS PROCEDURES

The following information sets forth the claims procedures for this Plan including the requirements for filing a claim for benefits as well as the remedies available under the Plan for review of claims which are denied in whole or in part (i.e., appeals process). These procedures are as specified by the Department of Labor (DOL) Claims Regulations and required by Section 102(b) of the Employee Retirement Income Security Act (ERISA).

Per the DOL Claims Regulations, all ERISA plans must establish and maintain reasonable claims procedures. The basic structure of any claims procedure involves: 1) a claim for benefits by a plan covered person or beneficiary or by an authorized representative; 2) a benefit determination by the plan; 3) any appeal by the claimant or authorized representative of an adverse determination; and 4) the determination on review by the plan.

Please note: The Claims Administrator does NOT exercise final authority over benefit determinations. The Plan Administrator for the Plan has the final authority over all benefit determinations under this Plan.

DEFINITIONS

" Adverse Benefit Determination "—An "adverse benefit determination" means a denial, reduction or termination of, or a failure to provide or make payment (in whole or in part) for a benefit including any such denial, reduction, termination or failure to provide or make payment that is based on a determination of a covered person's or beneficiary's eligibility to participate in the Plan including claims based on utilization review, experimental and investigational exclusions and/or medical necessity.

" Claimant "—A "claimant" is 1) any Plan covered person or beneficiary making a claim for benefits; 2) a health care provider and health care facility that received a proper assignment of benefits from the covered individual if consistent with Plan provisions; or 3) an authorized representative acting on behalf of a claimant.

" Claim for Benefits "—A "claim for benefits" is a request for a Plan benefit(s) made by a claimant in accordance with the Plan's reasonable procedures for filing benefit claims as specified in this Plan.

" Concurrent Care Decision "—A "concurrent care decision" is a benefit determination that occurs when a group health plan has approved an ongoing course of treatment to be provided over a period of time or for a specified number of treatments, and the plan is requesting a reduction or termination of such course of treatment (other than by plan amendment or plan termination) before the end of such period of time or number of treatments has been completed. These types of "decisions" shall be treated as an adverse benefit determination subject to appeal by the claimant within special timelines.

" Group Health Plan "—A "group health plan" is an employee welfare benefit plan within the meaning of ERISA §3 to the extent that such plan provides "medical care," within the meaning of the HIPAA provisions of ERISA §733(a), to employees or their dependents (as defined under the terms of this Plan) directly or through insurance or otherwise. Group health plans include: health insurance plans, HMOs, self-funded health plans, dental plans, vision plans, mental or behavioral health treatment programs, drug or alcohol treatment programs, health clinics, prescription drug plans, health FSAs (under a cafeteria plan), executive medical reimbursement plans, and employee assistance plans (if they provide medical care.)

" Health Care Professional "—A "health care professional" means a physician or other health care professional licensed, accredited or certified to perform specified health services consistent with State law.

" Medical Care "—"Medical Care" for the purposes under the definition of "group health plan" means amounts paid for: a) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body; b) transportation

primarily for and essential to medical care referred to in subparagraph (a); and c) insurance covering medical care referred to in subparagraphs (a) and (b).

" Post-Service Claim "—Post-service claims are claims that involve only the payment or reimbursement of the cost for medical care that has already been provided.

" Relevant Information "—"Relevant information" means any information if it:

1.: was relied upon in making the benefit determination;
2.: was submitted, considered or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in the making the benefit determination;
3.: demonstrates compliance with the plan's administrative processes and consistency safeguards required in making the benefit determination; or
4.: constitutes a statement of policy or guidance with respect to the plan concerning the denied treatment option or benefit for the claimant's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

AUTHORIZED REPRESENTATIVE

An authorized representative may act on behalf of a claimant in pursuing or appealing a benefit claim. For post-service claims, a written authorization, which is signed by the Plan covered person or beneficiary, must be completed on a form provided by the Plan that designates the authorized representative of the claimant. Any communication by a health care professional evidencing knowledge of the claimant's medical condition will have to be accepted as sufficient to establish authorized representative status.

CLAIMS PROCEDURES NOT TRIGGERED

The following are examples of instances in which the DOL Claims Regulation requirements, as set forth herein, are not triggered:

1.: An inquiry as to eligibility, which does not request benefits;
2.: A request for prior approval of a benefit, provided that prior approval is not normally required by the Plan; and
3.: Casual inquiries about benefits under the Plan.

HOW TO FILE A CLAIM

PLEASE NOTE: A Claim for Benefit review does not guarantee benefits or payment on behalf of the Plan. Benefits are subject to the Plan limitations, Plan pre-existing exclusions, Plan provisions and eligibility requirements in effect at the time the services are rendered.

A claim for benefits by a Plan covered person or beneficiary or by an authorized representative (referred to as a "claimant" in the regulations) must provide the following necessary information for the Plan to provide a benefit determination:

The type of Claim for Benefit:

•: Post-service Claim
•: Concurrent Care Claim

The Claim for Benefit should clearly identify the following information:

•: Plan Covered person

•: Plan Name
•: Dependent Name (if applicable)
•: Plan Number
•: Social Security Number or Identification Number
•: A detailed description of the service(s) or proposed service(s), product(s) or procedure(s). If necessary, medical history or chart information to demonstrate medical necessity.
•: Date of service(s) or anticipated date of service(s).
•: Any and all corresponding identifying CPT or HCPCS code(s) and description(s).
•: Any and all corresponding identifying ICD-9 diagnosis code(s).
•: Complete name, address, telephone number, facsimile number, contact name, tax identification number of the provider requesting a claim for benefit. If the service(s), product(s) or procedure(s) is being rendered at or by a different provider, the same information is needed.
•: Anticipated charges or fees.
•: Assignment of benefits, signed (if payment is to be made to the provider).
•: Release of information statement.

PLEASE NOTE: THE DATE THAT A CLAIM IS CONSIDERED "FILED" IS THE DATE THAT IT IS STAMPED "RECEIVED" BY MOUNTAIN STATES ADMINISTRATION CO., INC.

The information may be submitted via regular mail or facsimile to the address and/or facsimile number below:

For all dental claims:

Claim for Benefits Department
Mountain States Administration Co., Inc.
13901 E. Exposition Avenue
Aurora, CO 80012

Monday - Friday, 8:00 a.m. - 4:30 p.m. MST

Telephone: (303) 360-9600 Local
(800) 828-8847 Toll Free
(800) 828-8012 Toll Free

Facsimile: (303) 360-7100

For medical claims inside Colorado:

Sloans Lake Managed Care
PO Box 241322
Denver, CO 80224-9322

Telephone: (800) 850-2249
Facsimile: (303) 504-5344

For medical claims outside Colorado:

MultiPlan
PO Box 241234
Denver, CO 80224

Telephone: (800) 546-3887

CLAIMS FILING DEADLINE

The covered person is encouraged to submit the bill as directed above as soon as the expense is incurred. Benefits are based on the Plan's provisions at the time the charges are incurred. Charges are considered incurred when treatment or care is given or a procedure performed. All claims must be filed within ninety (90) days from the date the expense is incurred. Expenses for claims filed more than fifteen (15) months from the date the expenses are incurred may be denied.

BENEFIT DETERMINATIONS

The time period for benefit determinations begins running when a claim is filed, even if the claim is incomplete. However, if a claimant files an incomplete post-service claim, the Plan may extend the time to make its determination if it gives the claimant prior notice. When the time is extended because of the claimant's failure to submit information necessary to decide the claim, the time for the benefit determination is "tolled" (i.e., suspended) from the date the extension notice is sent until the date the claimant responds to the request for additional information. The claimant shall be given forty-five (45) calendar days from receipt of the notice to supply the additional information. If the claimant never responds, the time for determination never restarts. However, in the interests of finality, if the additional information is not received within the forty-five (45) days, the claimant shall be notified that the claim is denied.

Post-Service Claims —Once a post-service claim is received by the Plan, an initial adverse benefit determination, if applicable, must be made within a reasonable period of time, but no more than thirty (30) calendar days.

A 15-calendar-day extension may be made if "matters beyond control of the Plan" require it (e.g., filing of an incomplete claim or failing to provide a required authorization form for a claim filed by an authorized representative) if proper notice is given to the claimant. The extension notice shall indicate the matters beyond the control of the Plan that give rise to the need for the extension and the date by which a determination is expected to be made.

If the post-service claim that is filed is incomplete, the benefit determination period is suspended ("tolled") from the date the extension notice is sent until the date the claimant responds to the request for additional information up to at least forty-five (45) calendar days. If the claimant never responds, the time for determination never restarts. However, in the interests of finality, if the additional information is not received within the forty-five (45) days, the claimant shall be notified that the claim is denied.

Concurrent Care Decision—When the Plan has approved an ongoing course of treatment to be provided over a period of time or number of treatments, any decision to reduce or terminate the course of treatment (other than by Plan amendment or Plan termination) before the end of the period of number of treatments shall be treated as an adverse benefit determination. Notification of such a concurrent care decision must be given to the affected Plan covered person or beneficiary in sufficient time to allow an appeal and determination on review before the treatment is terminated or reduced.

ADVERSE BENEFIT DETERMINATION AND APPEALS

The Plan has established and maintains an appeals procedure for adverse benefit determinations under which claimants receive full and fair review of the claim and the adverse benefit determination. The purpose of the "full and fair review" requirement is to provide claimants with enough information to prepare adequately for further administrative review or an appeal to the federal courts.

The following sets forth the requirements under this Plan regarding filing an appeal of an adverse benefit determination.

PLEASE NOTE: THE DATE THAT AN APPEAL IS CONSIDERED "FILED" IS THE DATE THAT IT IS STAMPED "RECEIVED" BY MOUNTAIN STATES ADMINISTRATION CO., INC.

General Information

Time limit to file an Appeal: The claimant shall have 180 calendar days from receipt of the adverse benefit determination notification to file an initial appeal. Any second level appeals must be filed within 60 days of the initial appeal's decision.

HOW TO FILE AN APPEAL

1.: Request from the Claims Administrator a review of any claim for benefits. When requesting a review, you should state the reason you feel the claim is valid, and submit any information, questions, or comments you feel would be appropriate in reconsidering the claim. Additionally, such request must include: the name of the Employee, his or her Social Security number, the name of the patient and the Group Identification Number, if any.
2.: File the request for review in writing, stating in clear and concise terms the reason or reasons for this disagreement with the handling of the claim.

The information may be submitted via regular mail or facsimile to the address and/or facsimile number below:

Claim for Benefits Department
Mountain States Administration Co., Inc.
13901 E. Exposition Avenue
Aurora, CO 80012

Telephone: (303) 360-9600 Local	Facsimile: (303) 360-7100
(800) 828-8847 Toll Free
(800) 828-8012 Toll Free

Monday - Friday, 8:00 a.m. - 4:30 p.m. MST

Appeal decisions shall be made by Plan Fiduciary: Benefit determinations on review (i.e., an appeal of an adverse benefit determination) shall be made by a fiduciary of the Plan. The final decision shall be reviewed fully and independently by the Plan Administrator or other fiduciary in the event of an appeal.

Appeal decisions will not be decided by the same person who reviewed the initial claim : The named fiduciary (i.e., Plan Administrator or other fiduciary) may not afford deference to (i.e., take into consideration or give weight to) the initial adverse benefit determination by the Claims Administrator and shall be neither the individual who made the initial adverse benefit determination nor the subordinate of that individual.

Claimant access to copies of information relevant to the Claim: A claimant shall, upon request and free of charge, be given reasonable access to and copies of all documents, records and other information relevant to the claimant's claim for benefits. A document, record or other information will be considered "relevant" to a group health claim if it:

1.: was relied upon in making the benefit determination;
2.: was submitted, considered or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in the making the benefit determination;
3.: demonstrates compliance with the Plan's administrative processes and consistency safeguards required in making the benefit determination; or

4.: constitutes a statement of policy or guidance with respect to the Plan concerning the denied treatment option or benefit for the claimant's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

Claimant shall have opportunity for submission of comments: The claimant shall have the opportunity to submit written comments, documents, records and other information relating to the claim for benefits. Such submissions should be made to the Claims Administrator as soon as possible once the adverse benefit determination notification to the claimant has been received.

Consideration of all claimant's submissions: The appeals procedures shall require the named fiduciary, as named above, to take into account all comments, documents, records and other information from the claimant or the claimant's authorized representative, regardless of whether the information was considered in the initial benefit determination.

Consultation with "Independent" Medical Expert: Where the appeal of an adverse group health determination is based (in whole or in part) on a medical judgment including determinations with regard to whether a particular treatment, drug or other item is experimental, investigational or not medically necessary or appropriate, the appeals procedures shall require the named fiduciary, as named above, deciding the appeal to consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment. The health care professional retained for consultation must be an individual who is neither an individual who was consulted in connection with the adverse benefit determination that is the subject of appeal, nor the subordinate of any such individual. The Plan shall have in place an arrangement for obtaining medical expertise, as necessary, either internally or through third parties. Those arrangements must be able to provide enough different doctors and experts, so that a Plan can consult with an individual at the appeals level different than one consulted on the claims level.

Identification of Medical/Vocational Experts: If a Plan obtains advice from a medical or vocational expert in connection with a benefit determination, the Plan must provide for identification of the expert, even if the Plan did not rely on the advice in making the benefit determination. The identity of the expert will be provided to the claimant upon request.

TIME FRAMES FOR APPEAL DECISIONS

Post-Service Claim Appeals: An appeal of a post-service claim shall be decided upon within a reasonable period but not later than sixty (60) calendar days after the receipt of the appeal with no extensions allowed. If two appeals are provided under the Plan, each shall have a thirty (30) calendar day time limit.

Concurrent Review Appeals: An appeal of a concurrent review reduction/ termination shall be decided upon before treatment ends or is reduced.

RULES AND LIMITATIONS ON APPEALS

Any claimant who is dissatisfied with an initial benefit determination may file an appeal. The Plan will allow for a second, final appeal if the claimant is still dissatisfied with the claim decision.

The time period for the notification of the decision on each appeal shall be provided to the claimant no later than thirty (30) calendar days after the receipt by the Plan of the appeal. Any second level appeals must be filed by the claimant within sixty (60) days of the initial appeal's decision.

EXPLANATION OF BENEFITS (EOBs)

An EOB, which indicates that benefits are denied, reduced or terminated for reasons of ineligibility, application of any utilization review, exclusion or limitation due to treatments being experimental or investigational in nature, or a service or treatment is found to not be medically

necessary, constitutes a denial of benefits and requires a response from the Claims Administrator as if it were making an adverse benefit determination.

Other reasons for denials (e.g., deductibles, visits or day limits, annual maximum, lifetime maximums, excluded services or supplies, etc.) do not necessarily trigger the claims procedures, as specified herein, since all benefits were paid in accordance with the Plan's specified terms.

CONSISTENCY SAFEGUARDS

The Plan's claims procedures include administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with governing Plan documents and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly-situated claimants.

Examples of consistency safeguards —1) a written record of past benefit determinations organized in a way that Plan representatives (including new employees or new outside administrators having no institutional memory) are able to research prior determinations by Plan provision and with reference to fact situations commonly occurring under the Plan; 2) retaining copies of all written notifications of benefit determinations including the reasons for adverse determinations, the reasons for reversing benefit denials on appeal and the Plan provisions implicated; 3) keep an index of decisions by medical procedure (e.g., medical necessity, experimental/investigational exclusions, fertility exclusion, etc.); and 4) assigning an internal case or control number for each appealed claim and claim file.

PROHIBITED LANGUAGE

Claims procedures language may NOT contain any provision or be administered in any way that "unduly inhibits or hampers the initiation or processing of claims for benefits." For example, the Plan cannot require a payment of a fee or impose a cost as a condition for processing claims or appeals. Additionally, if a plan makes arbitration a part of its claims procedures, the claimant cannot be required to share in the cost of the arbitration. Also, benefit denial for failure to obtain prior approval before incurring cost to the plan cannot be enforced where obtaining prior approval is impossible or if the process of obtaining prior approval could seriously jeopardize the life or health of the claimant (e.g., claimant is unconscious and needs immediate care).

IMMEDIATE RIGHT TO FILE A SUIT IF CLAIMS PROCEDURES ARE INADEQUATE

The claimant has the right to go immediately to court and file suit under § 502(a) of ERISA, without exhausting administrative procedures as is typically required, if the claims procedures of this Plan are inadequate. "Substantial compliance" of claims procedures is NOT acceptable.

If the claims procedures are deemed adequate, the covered person must exhaust all of the claims appeal procedures before filing a lawsuit for benefits.

LIMIT ON FILING A SUIT AFTER FINAL BENEFIT DETERMINATION ON AN APPEAL

The claimant shall have six (6) months after the final benefit determination of an appeal is made by the Plan in order to file a lawsuit in court. Any lawsuits filed after this time as specified shall be impermissible.

RESPONSIBILITIES FOR PLAN ADMINISTRATION

PLAN ADMINISTRATOR

Scott's Liquid Gold & Affiliated Companies Employee Benefit Health and Welfare Plan is the benefit plan of Scott's Liquid Gold-Inc. & Affiliated Companies, the Plan Administrator, also called the Plan Sponsor. It is to be administered by the Plan Administrator in accordance with the provisions of ERISA. An individual may be appointed by Scott's Liquid Gold-Inc. & Affiliated Companies to be Plan Administrator and serve at the convenience of the employer. If the Plan Administrator resigns, dies or is otherwise removed from the position, Scott's Liquid Gold-Inc. & Affiliated Companies shall appoint a new Plan Administrator as soon as reasonably possible.

The Plan Administrator shall administer this Plan in accordance with its terms and establish its policies, interpretations, practices, and procedures. It is the express intent of this Plan that the Plan Administrator shall have maximum legal discretionary authority to construe and interpret the terms and provisions of the Plan, to make determinations regarding issues which relate to eligibility for benefits, to decide disputes which may arise relative to a covered person's rights, and to decide questions of Plan interpretation and those of fact relating to the Plan. The decisions of the Plan Administrator are final and binding on all interested parties.

Service of legal process may be made upon the Plan Administrator.

DUTIES OF THE PLAN ADMINISTRATOR

1.: To administer the Plan in accordance with its terms.
2.: To interpret the Plan, including the right to remedy possible ambiguities, inconsistencies or omissions.
3.: To decide disputes which may arise relative to a covered person's rights.
4.: To prescribe procedures for filing a claim for benefits and to review claim denials.
5.: To keep and maintain the Plan documents and all other records pertaining to the Plan.
6.: To appoint a Claims Administrator to pay claims.
7.: To perform all necessary reporting as required by ERISA.
8.: To establish and communicate procedures to determine whether a medical child support order is qualified under ERISA Sec. 609.
9.: To delegate to any person or entity such powers, duties and responsibilities as it deems appropriate.

PLAN ADMINISTRATOR COMPENSATION

The Plan Administrator serves without compensation; however, all expenses for plan administration, including compensation for hired services, will be paid by the Plan.

FIDUCIARY

A fiduciary exercises discretionary authority or control over management of the Plan or the disposition of its assets, renders investment advice to the Plan or has discretionary authority or responsibility in the administration of the Plan.

FIDUCIARY DUTIES

A fiduciary must carry out his or her duties and responsibilities for the purpose of providing benefits to the employees and their dependent(s), and defraying reasonable expenses of administering the Plan. These are duties which must be carried out:

1.: with care, skill, prudence and diligence under the given circumstances that a prudent person, acting in a like capacity and familiar with such matters, would use in a similar situation;
2.: by diversifying the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
3.: in accordance with the Plan documents to the extent that they agree with ERISA.

THE NAMED FIDUCIARY

A "named fiduciary" is named as such in the Plan. A named fiduciary can appoint others to carry out fiduciary responsibilities (other than as a trustee) under the Plan. These other persons become fiduciaries themselves and are responsible for their acts under the Plan. To the extent that the named fiduciary allocates its responsibility to other persons, the named fiduciary shall not be liable for any act or omission of such person unless either:

1.: the named fiduciary has violated its stated duties under ERISA in appointing the fiduciary, establishing the procedures to appoint the fiduciary or continuing either the appointment of the procedures; or
2.: the named fiduciary breached its fiduciary responsibility under Section 405(a) of ERISA.

CLAIMS ADMINISTRATOR IS NOT A FIDUCIARY

A Claims Administrator is not a fiduciary under the Plan by virtue of paying claims in accordance with the Plan's rules as established by the Plan Administrator.

GENERAL PLAN PROVISIONS

PURPOSE

The purpose of this Plan Document and Summary Plan Description is to set forth the provisions of the Plan which provide for the payment or reimbursement of all or a portion of eligible medical and dental expenses. The terms of this Plan are legally enforceable, and the Plan is maintained for the exclusive benefit of eligible employees and their covered dependents.

ENTIRE PLAN DOCUMENT

This document constitutes the entire Plan. The Plan shall not be deemed to constitute a contract of employment or to give any employee of the employer the right to be retained in the service of the employer or to interfere with the right of the employer to discharge any employee.

CONTRIBUTIONS TO THE PLAN

The amount of contributions to the Plan are to be made on the following basis:

The employer shall from time to time evaluate the costs of the Plan and determine the amount to be contributed by the employer and the amount to be contributed (if any) by each employee.

Participation is this Plan is entirely voluntary. The employer reserves the right to modify the amount of any employee contributions. If the fund resulting from employee contributions is insufficient to pay benefits provided by this Plan, the employer will make the necessary contributions to enable benefits to be paid.

Any employee contributions to this Plan will be initially applied to insurance premiums and then to administrative fees. Any employee contributions in excess of funds needed for premiums and fees will be used to pay claims.

FUNDING POLICY

Notwithstanding any other provision of the Plan, the employer's obligation to pay claims otherwise allowable under the terms of the Plan shall be limited to its obligation to make contributions to the Plan as set forth in the preceding paragraph entitled "Contributions To The Plan." Payment of said claims in accordance with these procedures shall discharge completely the employer's obligation with respect to such payments.

In the event that the employer terminates the Plan, then as of the effective date of termination, the employer (and covered employee and dependents and COBRA participants) shall have no further obligation to make additional contributions to the Plan. In addition, coverage for allowable claims filed after such Plan termination date shall be limited to those remaining assets of the fund (if any) not required to pay claims filed before the effective Plan termination date. If the fund's assets are not sufficient to fund the benefits otherwise payable under this Plan, then such benefits shall not be payable under this Plan and neither the Plan Sponsor, named fiduciary, Plan Administrator, or trustee shall be liable for such benefits.

THE TRUST AGREEMENT

If this Plan is established under a trust agreement, that agreement is made a part of the Plan. A copy of the appropriate agreement is available for examination by employees and their dependent(s) at the office of the Plan Administrator during normal business hours. Also, upon written request, the following items will be furnished to an employee or dependent:

1.: A copy of the trust agreement.
2.: A complete list of employers and employee organizations sponsoring the Plan.

Service of legal process may be made upon a Plan trustee.

PLAN AMENDMENTS/MODIFICATION/TERMINATION

If the Plan is terminated, the rights of the covered persons are limited to expenses incurred before termination. All previous contributions by the employer shall continue to be issued for the purpose of paying benefits under the provisions of this Plan with respect to claims arising before such termination, or shall be used for the purpose of providing similar health benefits to covered persons, until all contributions are exhausted.

The employer intends to maintain this Plan indefinitely; however, it reserves the right, at any time, to amend, suspend or terminate the Plan in whole or in part. This includes amending the benefits under the Plan or the trust agreement (if any). The authority to make any such amendments to the Plan is that of the Plan Administrator or to whom the Plan Administrator delegates authority. Any such amendment, modification, revocation or termination of the Plan shall be authorized and signed by the Plan Administrator or his/her delegate of the employer. Written evidence of such delegation of authority shall be provided to the Claims Administrator.

The Plan Administrator shall notify all covered persons of any amendment modifying the substantive terms of the Plan as soon as administratively feasible after its adoption, but in no event later than 120 days of such decision. If there is a material reduction in covered services or benefits, the Plan must give covered persons and beneficiaries a summary of the change within sixty (60) days after the effective date of the change. As an alternative, the Plan can meet this requirement if it gives a summary of benefits every 90 days. Such notification shall be in the form of a Summary of Material Modifications (within the meaning of ERISA section 102(a) (1) and Labor Reg. Section 2520.104 b 3) unless incorporated in an updated Summary Plan Description (as described in ERISA Section 102(b)).

PLAN IS NOT AN EMPLOYMENT CONTRACT

The Plan Document and Summary Plan Description constitute the primary authority for administration of the Plan. The establishment, administration and maintenance of this Plan will not be deemed to constitute a contract of employment, give any employee of the employer the right to be retained in the service of the employer, or to interfere with the right of the employer to discharge or otherwise terminate the employment of any employee.

CONSISTENCY WITH POLICIES OF INSURANCE AND CONTRACTS FOR MEDICAL REVIEW SERVICES

The Plan is intended to be consistent with any contracts for policies of insurance under which the employer makes contributions, and with any contracts for medical review services. To the extent the terms of this Plan are inconsistent with such contracts, the terms of such contracts shall prevail.

CLERICAL ERROR

Any clerical error by the Plan Administrator or an agent of the Plan Administrator in keeping pertinent records or a delay in making any changes will not invalidate coverage otherwise validly in force or continue coverage validly terminated. An equitable adjustment of contributions will be made when the error or delay is discovered.

If, due to a clerical error, an overpayment occurs in a Plan reimbursement amount, the Plan retains a contractual right to the overpayment. The person or institution receiving the overpayment will be required to return the incorrect amount of money. In the case of a covered person, if it is requested, the amount of overpayment will be deducted from future benefits payable.

ALTERNATE RECIPIENT PROVISION

The Plan must make payments to the employee's separated/divorced spouse, state child support agencies or Medicaid agencies if required by a qualified medical child support order (QMCSO) or state Medicaid law.

ASSIGNMENT OF BENEFITS

Payments will also be made in accordance with any assignment of rights required by a state Medicaid plan.

LEGAL PROCEEDINGS

No action at law or in equity shall be brought to recover on the Plan prior to the expiration of six (6) months after the final benefit determination of an appeal is made by the Plan in order to file a lawsuit in court. Any lawsuits filed after this time as specified shall be impermissible.

HEALTH STATEMENTS

In the absence of fraud or material misrepresentation, all statements, including oral statements, made to or by a covered person or provider regarding coverages, eligibility and or benefits under the Plan will be deemed representations and not warranties. No such representation will void or alter the Plan benefits, except in the case of fraud or material misrepresentation, or be used in defense of a claim or prosecution of a claim hereunder unless a written copy of an instrument containing such representation is or has been furnished to the covered person or provider.

FREE CHOICE OF PHYSICIAN

The covered person shall have free choice of any legally qualified physician or surgeon, and the physician-patient relationship shall be maintained.

WORKERS' COMPENSATION NOT AFFECTED

This Plan is not in lieu of, and does not affect any requirement for coverage by Workers' Compensation Insurance.

MISCELLANEOUS

Section titles are for convenience of reference only and are not to be considered in interpreting this Plan.

No failure to enforce any provision of this Plan shall affect the right thereafter to enforce such provision, nor shall such failure affect its right to enforce any other provision of the Plan.

RIGHT TO OFF-SET

The Plan has a right of off-set to satisfy reimbursement claims against covered persons for money received by the covered person from a third party, including any insurer. If the covered person fails or refuses to reimburse the Plan for funds paid for any claims, the Plan may deny payment of any future claims of the covered person, up to the full amount paid by the Plan and subject to reimbursement for such claims. This right of off-set applies to all reimbursement claims owing to the Plan whether or not formal demand is made by the Plan, and notwithstanding any anti-subrogation, "common fund," made whole" or similar statutes, regulations, or common law theories.

PROTECTION AGAINST CREDITORS

No benefit payment under this Plan shall be subject in any way to alienation, sale, transfer, pledge, attachment, garnishment, execution or encumbrance of any kind, and any attempt to accomplish the same shall be void. If the employer shall find that such an attempt has been made with respect to any payment due or to become due to any covered person, the employer in its sole discretion may terminate the interest of such covered person or former covered person in such payment. In such case, the employer shall apply the amount of such payment to or for the benefit of such employee, his spouse, parent, adult child, guardian of a minor child, brother or sister, or other relative of a dependent of such covered person or former covered person, as the employer may determine. Any such application shall be a complete discharge of all liability with respect to such benefit payment.

The employer is not responsible for any portion of a claim submitted by or on behalf of a covered person or a covered dependent:

1.: which is disallowed by the Plan;
2.: which is not provided as a benefit under this Plan;
3.: which is either not paid or delayed in payment because of financial inability of the employer to make the payment; or
4.: for any unpaid claim arising or incurred after the employer, or covered person, terminated participation in the Plan.

INTENT TO COMPLY WITH FEDERAL GOVERNMENT REGULATIONS

This Plan intends to be in compliance with all federal regulations applicable to employee benefit plans. This includes but is not limited to COBRA, HIPAA, and ERISA. If however, the federal regulation provisions in this document differ from current federal regulation requirements, the Plan is deemed to have been in compliance by intent.

GROUP LIFE INSURANCE

All eligible employees of Scott's Liquid Gold-Inc. & Affiliated Companies receive a life insurance policy in the amount listed below:

EMPLOYEE

Life Insurance:
Per eligible employee		An amount equal to his/her annual earnings exclusive of bonuses and overtime, rounded to the next highest $1,000 to a maximum of $190,000.
Accidental Death & Dismemberment (AD&D):
Per eligible employee		Refer to the schedule in the life insurance policy.

Life insurance is not administered by Mountain States Administration. To obtain benefits and a certification of coverage, you must contact the Benefits Department of Scott's Liquid Gold-Inc. & Affiliated Companies.

GROUP LIFE INSURANCE

The following is a general outline of the life insurance contract and its benefits. It is not the contract itself. Copies of the life insurance contract are required to be distributed to all covered employees. Such contracts may change from time to time, depending upon the carrier chosen by the companies.

ELIGIBILITY

All regular full-time employees (as defined in the medical plan) are eligible for term life insurance on the day following thirty (30) calendar days of uninterrupted employment.

ENROLLMENT

To be covered by the Plan, employees must complete an enrollment card.

COVERAGE

Each employee will be insured for an amount equal to his/her annual earnings (rounded to the next higher $1,000), to a maximum of $190,000, exclusive of bonuses and overtime pay. Upon attaining age seventy (70), coverage will be reduced to 50%. Life and Accidental Death and Dismemberment Insurance Benefits cancels at the time of the employees retirement.

BENEFITS/PAYMENT OPTIONS

Upon written proof of death, the proceeds of insurance will be paid to beneficiaries designated by the insured; and if not so designated, to the insured's estate. The insured employee may name his/her own beneficiary or beneficiaries and elect the manner in which the proceeds are to be paid. Available payment options include payment in one lump sum or part in cash and the balance in monthly installments. In the absence of an election by the insured employee, any beneficiary may elect any of the foregoing payment options.

DISABILITY

Should an insured person become totally disabled prior to age sixty (60), life insurance will be continued, upon application by the disabled employee, with waiver of premium, to age sixty-five (65) and the face amount of insurance will be based upon the employee's last compensation rate. Such insurance shall terminate upon the attainment of age sixty-five (65), with conversion privilege.

ACCIDENTAL DEATH

Should death occur prior to age seventy (70) through accidental means, an amount equal to that provided for life insurance shall be paid to a covered employee's beneficiaries or estate in addition to the standard life insurance benefits. Under this provision of the Plan, death must occur within ninety (90) days of the accident, be the direct result of such accident and not the result from suicide or intentional self-inflicted injury or any attempt threat, while sane or insane. Accidental death benefits are not provided if death occurs while totally disabled, or if coverage is through a conversion policy.

DISMEMBERMENT

Should a loss of limbs or eyesight occur through accidental means, but not as the result of an occupational accident, benefits as set forth below are payable under this Plan to the covered employee, provided such loss is not the result of risks not covered (see "Risks Not Covered" below).

For the loss of both hands, both feet, sight of both eyes, one hand and one foot, one hand and sight of one eye, or one foot and sight of one eye, an amount equal to the face value of life insurance will be paid.

One-half of the face value of life insurance will be paid for the loss of one hand, one foot, or sight of one eye.

Payments for dismemberment shall not reduce the amount of life insurance payments provided elsewhere in this benefit.

RISKS NOT COVERED

No benefit under the accidental death or dismemberment provisions of the Plan shall be paid for any loss resulting from or contributed to by any of the following: (1) disease, or bodily or mental infirmity; (2) infection of any nature not resulting from accidental bodily injury; (3) suicide or intentionally self-inflicted injury, or attempt thereat, while sane or insane; (4) war, declared or undeclared, any act of war, or any type of military conflict; (5) travel in or descent from any kind of aircraft while the covered person was participating in training or had duties aboard such aircraft, or if such aircraft was operated by or for the armed forces of any country; (6) injuries sustained while the insured person was driving a vehicle and the insured person's blood contained in excess of eighty (80) milligrams of alcohol per one hundred (100) milliliters of blood.

CONVERSION RIGHTS

Upon termination of the employee's eligibility for life insurance coverage or at the time coverage is reduced, the employee may be eligible to convert all or part of the life insurance to an individual policy. If the employee is interested in converting the life insurance coverage, the employee must consult with the benefits department concerning the requirements necessary and submit the application, along with the required initial premium, within thirty (30) days after the date the life insurance coverage ceases.

Life insurance is not administered by Mountain States Administration. To obtain benefits and a certificate of coverage, the employee must contact the Benefits Department of Scott's Liquid Gold-Inc. & Affiliated Companies.

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SUMMARY PLAN DESCRIPTION

Type of Administration:

The partially self-funded Plan is administered directly by the Plan Administrator. The Plan Administrator has appointed a Third Party Administrator (TPA) to handle the day-to-day operation of the Plan. The TPA does not serve as an insurer, but just as a claims (processor) administrator.

The TPA processes the claims, then requests and receives funds from the Plan Administrator to pay the claims, and makes payment on the claims to hospitals and other providers. The Plan Administrator, Scott's Liquid Gold-Inc. is ultimately responsible for providing Plan benefits, and not the reinsurance carrier, from whom the Plan Administrator has purchased coverage for catastrophic claims.

Plan Name:

Scott's Liquid Gold & Affiliated Companies Employee Benefit Health and Welfare Plan

Employer's Name, Address and Phone Number:

Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239-0019
(303) 373-4860

Employer's Tax ID Number:

84-0762527

Plan Number:

501 Medical and Dental (This is not the group number)
502 Life & AD&D (This is not the group number)

Plan Fiscal Year:

June 1 - May 31

Plan Administrator:

Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239-0019
(303) 373-4860

The Plan Administrator is responsible for the administration of the Plan and is the designated agent for service of legal process for the Plan. Functions performed by the Plan Administrator include the receipt and deposit of contributions, maintenance of records of Plan participants, authorization and payment of Plan administration expenses.

Plan Sponsor:

Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239-0019

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Named Fiduciary:

Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239-0019

Agent for Service of Legal Process:

Scott's Liquid Gold-Inc.
4880 Havana Street
Denver, Colorado 80239-0019

The Plan Administrator has authority to control and manage the operation and administration of the Plan and is the agent for service of legal process.

Claims Administrator:

Mountain States Administration Co., Inc.
13901 E. Exposition Avenue
Aurora, CO 80012
Denver Metro Area (303) 360-9600
Toll free inside Colorado (800) 828-8847
Toll free outside Colorado (800) 828-8012

The Claims Administrator has been hired by the Plan Administrator to perform claims processing and other specified administrative services in relation to the Plan. The Claims Administrator is not an insurer of benefits under this Plan, is not a fiduciary of the Plan, and does not exercise any of the discretionary authority and responsibility granted to the Plan Administrator. The Claims Administrator is not responsible for Plan financing and does not guarantee the availability of benefits under this Plan.

Type of Plan:

Medical and Dental

All employees are given a Plan Document/Summary Plan Description which contains a detailed description of these benefits. If your Plan Document/Summary Plan Description has been misplaced, you may obtain a copy from the Plan Administrator.

Source of Contributions:

Employees and the employer contribute to the cost of coverage. Claims Procedures: Claims may be submitted and appealed as set forth herein.

Eligibility:

Employees and dependents may participate in the Plan (or be denied coverage) based on eligibility requirements set forth herein.

Description of circumstance(s) that may result in disqualification, ineligibility, denial or loss of benefits:

Please see the sections of this document entitled: "Eligibility" and "Continuation of Coverage (COBRA)".

102

Plan Amendment/Termination:

The employer intends to maintain this Plan indefinitely, however, it reserves the right, at any time, to amend, suspend or terminate the Plan in whole or in part. This includes amending the benefits under the Plan or the Trust agreement (if any). Any such amendment or termination shall be adopted by formal action of the Plan Administrator, who is authorized to act on behalf of the employer.

The Plan Administrator shall notify all covered persons of any amendment modifying the substantive terms of the Plan as soon as administratively feasible after its adoption, but in no event later than 210 days after the close of the Plan year in which the amendment has been adopted. If there is a material reduction in covered services or benefits, the Plan must give covered persons and beneficiaries a summary of the change within sixty (60) days after the effective date of the change. As an alternative, the Plan can meet this requirement if it gives a summary of benefits every ninety (99) days. Such notification shall be in the form of a Summary of Material Modifications (within the meaning of ERISA section 102(a) (1) and Labor Reg. Section 2520.104 b 3) unless incorporated in an updated Summary Plan Description (as described in ERISA Section 102(b)).

Name(s), Title(s) and Address(s) of any Plan Trustees:

None

Name and Section of any Relevant Collective Bargaining Agreements:

None.

Schedule Of Medical Benefits

The Plan has entered into arrangements with Sloans Lake Managed Care for covered persons in Colorado and MultiPlan for covered persons living or traveling outside Colorado. The preferred provider organizations (PPOs) negotiate hospital, doctor and other provider fees with contracting health care providers.

LIFETIME MAXIMUM (While covered under this Plan)

$5,000,000 per Covered person
       $2,000 for Temporomandibular Joint Disorders
     $30,000 for Alcoholism or Substance Abuse Treatment
     $25,000 for Hospice Benefits

ANNUAL OVERALL MAXIMUM

$2,000,000 per Covered person

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PRESCRIPTION DRUG BENEFIT

DEDUCTIBLE

CALENDAR YEAR DEDUCTIBLE (Combined Medical and Dental)

Single Coverage Maximum: $200
Family Coverage Maximum: $400

DEDUCTIBLE CARRYOVER

SEPARATE MOTORIZED VEHICLE ACCIDENT DEDUCTIBLE

Per Covered Person per Accident $500

This separate deductible does not accrue towards meeting any portion of the Calendar Year Deductible and is not eligible for the Deductible Carryover under this Plan. Once the Separate Motorized Vehicle Accident Deductible is met per Accident, the Calendar Year Deductible does not have to be met before eligible medical expenses for the injuries sustained due to a motorized vehicle accident are paid by the Plan. Please see the Covered Medical Expenses section beginning on page 38 for more details regarding this benefit. The Supplemental Accident Benefit is not available for injuries sustained due to motorized vehicle accidents. Please note : The exclusion of coverage under this Plan still applies for any applicable no-fault motor vehicle coverage that a Covered Person has.

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COINSURANCE FOR ELIGIBLE MEDICAL EXPENSES

The term "coinsurance" means the amount payable by the Plan for a covered expense. The covered person is required to pay the amount not paid by the Plan.

For Single Coverage under the Plan		After the single coverage deductible, eligible expenses (other than outpatient mental health disorders, alcoholism or substance abuse or as otherwise noted) are paid at 80% of the next $5,500, then 100% for the balance of the calendar year.
For Family Coverage under the Plan		After the family coverage deductible, eligible expenses (other than outpatient mental health disorders, alcoholism or substance abuse, or as otherwise noted) are paid at 80% of the next $11,000 (individual or family), then 100% for the balance of the calendar year.

See Covered Medical Expenses on page 38 for important information.

AIDS BENEFIT		Eligible expenses for treatment of Acquired Immune Deficiency Syndrome (AIDS), AIDS-related Complex, or HIV-positive are paid as for any other illness, subject to deductible and coinsurance provisions.
ALCOHOLISM AND SUBSTANCE ABUSE BENEFITS (See specific restrictions on page 54.)
Inpatient		Covered as any other illness, subject to deductible and coinsurance provisions, to a maximum of thirty (30) days per calendar year.
Outpatient		Eligible expenses are subject to the deductible provision and are then paid at 50% to fifty (50) visits per calendar year. Alcoholism and substance abuse inpatient, partial, and outpatient treatment combined:
		Calendar year maximum, per person: $15,000 Lifetime maximum, per person: $30,000
CHIROPRACTIC SERVICES		Eligible expenses are limited to twenty (20) visits in six (6) consecutive months for vertebral column problems only, and are subject to deductible and coinsurance provisions. (See #15, page 39).
HOME HEALTH CARE		Eligible expenses are paid, subject to deductible and coinsurance provisions, to a maximum of sixty (60) visits per calendar year. (See specific restrictions on page 49.)

105

HOSPICE BENEFIT		100% of eligible expenses not to exceed a maximum of six (6) months from the time a covered person is certified terminally ill and subject to a $25,000 lifetime maximum. (See specific restrictions on page 51.)
HOSPITAL ROOM LIMIT		Semiprivate rate, paid subject to deductible and coinsurance provisions.
INTENSIVE CARE UNIT & SPECIAL CARE UNIT		Usual, customary, and reasonable, subject to deductible and coinsurance provisions.
MENTAL HEALTH DISORDER BENEFITS (See page 53.)
Inpatient		Covered as any other illness, subject to deductible and coinsurance provisions, to a maximum of forty-five (45) days per calendar year.
Outpatient		Eligible expenses are subject to the deductible provision and then paid at 50% to 100 visits per calendar year.
MOTORIZED VEHICLE ACCIDENT BENEFIT		Eligible expenses are paid, subject to the separate motorized vehicle accident deductible and coinsurance provisions per covered person per accident, to a maximum of $35,000 per covered person per accident where a motorized vehicle is involved. This includes owner- operators of, non-owner operators of, passengers in or on, and pedestrians struck by or injured because of any motorized vehicle. Charges in excess of $35,000 per covered person per accident are not covered. This benefit does not apply to motor vehicle accidents where no-fault motor vehicle coverage exists. The Supplemental Accident Benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents.
NEWBORN WELL-BABY CARE		Usual, customary, and reasonable hospital nursery expenses, subject to deductible and coinsurance provisions. Eligible physician charges are paid under the Wellness Benefit. (See Covered Medical Expenses, page 55 for additional information.)
OUTPATIENT DIAGNOSTIC LAB AND X-RAY BENEFIT		Eligible expenses are subject to the deductible provision and then paid at 80% for outpatient expenses incurred for illness or injury.
OUTPATIENT SURGICAL BENEFIT		100% of eligible expenses incurred in conjunction with a surgical procedure performed on an outpatient basis, and incurred on the date of surgery, with the deductible waived.

106

PRE-ADMISSION TESTING		100% of eligible expenses incurred for outpatient tests within seven (7) days of a scheduled hospital admission, with the deductible waived. (See page 55)
SECOND SURGICAL OPINION		100% of the amount charged by physician rendering a second opinion, with the deductible waived. (See page 56)
SKILLED NURSING CARE FACILITY		One-half ( ¹ / 2 ) of hospital semiprivate rate where previously confined, to a maximum of sixty (60) days per illness or injury, subject to deductible and coinsurance provisions. (See page 56)
SMOKING CESSATION BENEFIT		Charges for generally recognized programs to stop smoking are eligible to a $200 maximum per person, subject to deductible and coinsurance provisions, in any three (3) year period for employees and spouses who have been covered by the Plan at least eighteen (18) months. (See page 57)
SUPPLEMENTAL ACCIDENT BENEFIT		100% of the first $500 of eligible expenses incurred within ninety (90) days of the accident, due to a non-work related accident, with the deductible waived. Eligible expenses in excess of $500 or ninety (90) day period are subject to the deductible and coinsurance provisions. This benefit is not available for expenses incurred for injuries sustained due to motorized vehicle accidents.
TMJ BENEFIT		Eligible expenses incurred for the diagnosis and treatment of temporomandibular joint dysfunction are paid, subject to deductible and coinsurance provisions, to the $2,000 lifetime maximum. (See #59, page 44.)
TRANSPLANT BENEFIT		Covered transplants are paid as any other illness, subject to deductible and coinsurance provisions. (See #60 page 44).
VISION BENEFITS		Eye exams by an ophthalmologist or optometrist are covered, subject to deductible and coinsurance provisions. Prescription lenses and frames are covered at 100% to a $50 maximum per calendar year, with the deductible waived. (See #23, page 40.)

107

WEIGHT REDUCTION BENEFIT		Charges for weight reduction programs under direct physician supervision are eligible to a $1,000 maximum, subject to deductible and coinsurance provisions, in any five (5) year period for employees only, who have been covered by the Plan at least twenty four (24) months. (See page 58)
WELLNESS BENEFIT		100% of the first $350 per calendar year, with the deductible waived for examinations and diagnostic tests related to routine wellness care, including flu shots, routine immunizations, vaccinations and pneumovax injections for adults, and well baby/child checkups. (See Covered Medical Expenses, #63, page 45 for additional information).
MEDICAL CASE MANAGEMENT		Medical Case Management optimizes the treatment and recovery phase of major illness or injury. Services otherwise not covered under the Plan will be eligible for reimbursement if recommended by the medical case management coordinator.
		(See page 37 for notification information).
See Covered Medical Expenses section on page 38 for more information.
Schedule of Dental Benefits
CALENDAR YEAR MAXIMUM		$2,000 per covered person
CALENDAR YEAR DEDUCTIBLE (Combined medical and dental)		Single Coverage Maximum: $200 Family Coverage Maximum: $400
PREVENTIVE AND BASIC SERVICES		After the deductible, eligible expenses are paid at 100% to the calendar year maximum.
MAJOR RESTORATIVE AND PROSTHODONTIC SERVICES		After the deductible, eligible expenses are paid at 50% to the calendar year maximum.
TMJ BENEFITS		See under medical benefits.
ORTHODONTIC SERVICES		Eligible expenses are paid at 50% to a $1,000 per calendar year and $2,000 per lifetime maximum, only for dependent children under 19 years old.
PRE-TREATMENT ESTIMATE*		Please pre-notify the Plan of any non-emergency course of treatment exceeding $250.

See Dental Care Program section on page 10 for more information.

108

Prescription Drug Plan

PHARMACY OPTION		NETWORK
Copayment, per Prescription
	For name brands	20% of the total cost of the prescription*
	For Generic drugs	10% of the total cost of the prescription*
MAIL ORDER
Copayment, per Prescription
	For name brands or brand equivalent	20% of the total cost of the prescription*
	For Generic drugs	10% of the total cost of the prescription*

*: no minimum copayment amount

Participating pharmacies have contracted with Express Scripts, the administrator of the Prescription Drug Plan to charge Plan covered persons reduced fees for covered prescription drugs. Express Scripts is the administrator of the Prescription Drug Plan. The telephone number for Express Scripts is (888)-201-5863.

If a drug is purchased from a non-participating provider, or not through Express Scripts, the covered person will pay for his/her prescription in full, and submit the paid receipt, with a claim form, to Mountain States Administration for reimbursement. Reimbursement will be subject to the deductible and coinsurance provisions as described in the Medical portion of the Plan.

MAIL ORDER BENEFIT OPTION

Your ERISA Rights:

As a participant in this Plan, you are entitled to certain rights under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all persons eligible to participate in the Plan shall be entitled to:

Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites and union halls, all documents governing the Plan, including insurance contracts and collective bargaining agreements, and a copy of the latest annual report (Form 5500) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500) and updated Summary Plan Description. The administrator may make a reasonable charge for the copies.

Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this Summary Annual Report.

109

Continue health care coverage for yourself, your spouse, or dependents if there is a loss of coverage under the Plan as a result of a qualifying event. You or your dependents may have to pay for such coverage. Review this Summary Plan Description and the documents governing the Plan on the rules governing your COBRA continuation coverage rights.

Reduction or elimination of exclusionary periods of coverage for pre-existing conditions under your group health plan, if you have creditable coverage from another plan. You should be provided a certificate of creditable coverage, free of charge, from your group health coverage issuer when you lose coverage under the Plan, when you become entitled to elect COBRA continuation coverage, when your COBRA continuation coverage ceases, if you request it before losing coverage, or if you request it up to twenty-four (24) months after losing coverage. Without evidence of creditable coverage, you may be subject to a pre-existing condition exclusion for twelve (12) months (or eighteen (18) months for late enrollees) after your enrollment date in your coverage.

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your Employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA. If your claim for a welfare benefit is denied or ignored, in whole or in part, you must receive a written explanation for the denial, including copies of documents relating to the decision, without charge. You have the right to appeal any denial and to have the Plan review and reconsider your claim all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within thirty (30) days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the Plan's decision or lack thereof concerning the qualified status of a medical child support order, you may file suit in Federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

110

U.S. Department of Labor

Directory of Field Offices
Employee Benefits Security Administration

Atlanta Regional Office 61 Forsyth St., SW Suite 7854 Atlanta, GA 30303 Phone: 404/562-2156	Tennessee, North Carolina, South Carolina, Georgia, Alabama, Mississippi, Northern Florida	Miami District Office 8040 Peters Road Bldg. H, Suite 104 Plantation, FL 33324 Phone: 954/424-4022	Southern Florida, Puerto Rico
Boston Regional Office JFK Building Room 575 Boston, MA 02203 Phone: 617/565-9600	Rhode Island, Vermont, Maine, New Hampshire, Connecticut, Massachusetts, Central and Western New York	Chicago Regional Office 200 West Adams Street Suite 1600 Chicago, IL 60606 Phone: 312/353-0900	Northern Illinois, Northern Indiana, Wisconsin
Cincinnati Regional Office 1885 Dixie Highway Suite 210 Ft. Wright, KY 41011-2664 Phone: 859/578-4680	Kentucky, Ohio, Southern Indiana	Detroit District Office 211 West Fort Street Suite 1310 Detroit, MI 48226-3211 Phone: 313/226-7450	Michigan
Kansas City Regional Office City Center Square 1100 Main, Suite 1200 Kansas City, MO 64105-5148 Phone: 816/426-5131	Colorado, Southern Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Wyoming	St. Louis District Office Young Federal Bldg. 1222 Spruce St., Room 6310 St. Louis, MO 63103 Phone: 314/539-2693
Dallas Regional Office 525 Griffin Street, Rm. 900 Dallas, TX 75202-5025 Phone: 214/767-6831	Arkansas, Louisiana, New Mexico, Oklahoma, Texas	Los Angeles Regional Office 1055 E. Colorado Blvd. Suite 200 Pasadena, CA 91106-2341 Phone: 626/229-1000	American Samoa, Arizona, Guam, Hawaii, Southern California, Wake Island
Philadelphia Regional Office Curtis Center 170 S Independence Mall West, Suite 870 West Philadelphia, PA 19106-3317 Phone: 215/861-5300	Delaware, Southern New Jersey, Pennsylvania	Washington District Office S1335 East-West Highway, Suite 200 Silver Spring, MD 20910 Phone: 301/713.2000	Maryland, Virginia, DC, West Virginia
San Francisco Regional Office 71 Stevenson St., Suite 915 San Francisco, CA 94105 Phone: 415/975-4600	Alaska, Northern California, Nevada, Utah	Seattle District Office 1111 Third Avenue Suite 860 Seattle, WA 98101-3212 Phone: 206/553-4244	Idaho, Oregon, Washington
New York Regional Office 33 Whitehall Street, Suite 1200 New York, NY 10004 Phone: 212/337-2228	Eastern New York, Northern New Jersey	Office of Enforcement 200 Constitution Ave., NW Room N5702 Washington, D.C. 20210 Phone: 202/219-8840

111

BENEFIT PLAN ADOPTION

Sponsor:		Scott's Liquid Gold-Inc. and Affiliated Companies
Plan Document/SPD:		Self-funded Medical, Dental and Prescription Drugs and Group Life Insurance
Effective Date:		October 1, 2003 Amended and Restated
Legal Compliance:		This Plan is intended to comply with all applicable federal laws and findings of their regulatory authorities and by this provision is automatically amended to be in minimal compliance as necessary.
Claims Filing Deadline:		If, due to provider error or administrative delay, claims are not filed by the Plan's claim filing deadline, the Plan Administrator may, at his sole discretion and without setting any precedent, accept and process such claims as covered by the Plan, provided such claims are submitted no later than 12 months after the end of the calendar year in which services are provided.
Each provision, each benefit, each page in this Plan Document/Summary Plan Description (SPD) has been reviewed and approved by the undersigned.
Date Signed:		9/12/03
Signature:		/s/ Jeffry B. Johnson
Name (please print):		Jeffry B. Johnson
Title:		CFO
Witness:		/s/ Patty Yunker

112

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Exhibit 10.2

SCOTT'S LIQUID GOLD & AFFILIATED COMPANIES
EMPLOYEE BENEFIT HEALTH AND WELFARE PLAN
AMENDMENT #1-2004

Effective April 14, 2004 Scott's Liquid Gold & Affiliated Companies Employee Benefit Health and Welfare Plan is hereby amended.

1): Table of Contents page, a section entitled HIPAA Privacy Information is hereby ADDED .
2): The following definitions are hereby ADDED to the Definitions section beginning on page 66.

"Covered Entity" means (1) health plans; (2) health care clearinghouses; and (3) health care providers that conduct certain types of transactions in electronic form in relation to HIPAA's administrative simplification rules.

"Health Information" means any information, whether oral or recorded in any form or medium, that:

1.: is created or received by a health care provider, health plan; public health authority, employer, life insurer, school or university, or health care clearinghouse; and
2.: relates to the past, present or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual.

"Health Plan" means any individual or group plan that provides or pays the cost of medical care (as defined in Section 2791 (a)(2)of the PHS Act, 42 U.S.C. § 300gg-91(a)(2).

"Individually Identifiable Health Information" means a subset of health information, including demographic information collected from an individual, and:

1.

is created or received by a health care provider, health plan, employer, or health care clearinghouse; and

2.

relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual; and

a.: that identifies the individual; or
b.: with respect to which there is a reasonable basis to believe the information can be used to identify the individual.

"Protected Health Information (PHI)" means individually identifiable health information:

1.

Except as provided in paragraph (2) of this definition, that is:

a.: transmitted by electronic media;
b.: maintained in any media described in the definition of electronic media at 42 CFR § 162.103; or
c.: transmitted or maintained in any other form or medium.

2.

Protected health information excludes individually identifiable health Information in:

a.: education records covered by the Family Educational Rights and Privacy Act, as amended, 20 U.S.C., § 1232g;

b.: records described at 20 U.S.C. § 1232g(a)(4)(B)(iv); and
c.: employment records held by a covered entity in its role as employer.

"Summary Health Information" means information that summarizes the claims history, claims expenses or the type of claims experienced by individuals in the Plan, but it excludes all identifiers that must be removed for the information to be de-identified, except that it may contain geographic information to the extent that it is aggregated by five-digit zip code.

"Transaction" means the transmission of information between two parties to carry out financial or administrative activities related to health care.

3): Page 74, Definitions section, "HIPAA" IS CURRENTLY:

"HIPAA" means The Health Insurance Portability and Accountability Act of 1996, enacted on August 21, 1996. HIPAA amends the Public Health Service Act (PHS Act), the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986 (CODE), significantly expanding employee access to health care coverage.

IS AMENDED TO:

"HIPAA" means The Health Insurance Portability and Accountability Act of 1996, enacted on August 21, 1996, including Title II, the Administrative Simplification Compliance Act. HIPAA amends the Public Health Service Act (PHS Act), the Employee Retirement Income Security Act of 1974 (ERISA), and the Internal Revenue Code of 1986 (CODE), significantly expanding employee access to health care coverage.

4): The following section entitled HIPAA Privacy Information is hereby ADDED to the Plan:

HIPAA PRIVACY INFORMATION

DISCLOSURE OF SUMMARY HEALTH INFORMATION TO THE PLAN SPONSOR

In accordance with the Privacy Standards, the Plan may disclose summary health information to the Plan Sponsor, if the Plan Sponsor requests the summary health information for the purpose of (a) obtaining premium bids from stop loss carriers, excess loss carriers or managing general underwriters (MGUs) for providing health coverage under this Plan or (b) modifying, amending or terminating the Plan.

"Summary health information" may be individually identifiable health information and it summarizes the claims history, claims expenses or the type of claims experienced by individuals in the plan, but it excludes all identifiers that must be removed for the information to be de-identified, except that it may contain geographic information to the extent that it is aggregated by five-digit zip code.

DISCLOSURE OF PROTECTED HEALTH INFORMATION ("PHI") TO THE PLAN SPONSOR FOR PLAN ADMINISTRATION PURPOSES

In order that the Plan Sponsor may receive and use PHI for Plan Administration purposes, the Plan Sponsor agrees to:

1.: Not use or further disclose PHI other than as permitted or required by the Plan Documents or as Required by Law (as defined in the Privacy Standards);
2.: Ensure that any agents, including a subcontractor, to whom the Plan Sponsor provides PHI received from the Plan agree to the same restrictions and conditions that apply to the Plan Sponsor with respect to such PHI;

3.

Not use or disclose PHI for employment-related actions and decisions or in connection with any other benefit or employee benefit plan of the Plan Sponsor, except pursuant to an authorization which meets the requirements of the Privacy Standards;

4.

Report to the Plan any PHI use or disclosure that is inconsistent with the uses or disclosures provided for of which the Plan Sponsor becomes aware;

5.

Make available PHI in accordance with Section "164.524 of the Privacy Standards (45 CFR 164.524);

6.

Make available PHI for amendment and incorporate any amendments to PHI in accordance with Section 164.526 of the Privacy Standards (45 CFR 164.526);

7.

Make available the information required to provide an accounting of disclosures in accordance with Section 164.528 of the Privacy Standards (45 CFR 164.528);

8.

Make its internal practices, books end records relating to the use and disclosure of PHI received from the Plan available to the Secretary of the U.S. Department of Health and Human Services ("HHS"), or any other officer or employee of HHS to whom the authority involved has been delegated, for purposes of determining compliance by the Plan with Part 164, Subpart E, of the Privacy Standards (45 CFR 164.500 etseq);

9.

If feasible, return or destroy all PHI received from the Plan that the Plan Sponsor still maintains in any form and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made, except that, if such return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction of the PHI infeasible; and

10.

Ensure that adequate separation between the Plan and the Plan Sponsor, as required in Section "164.504(f)(2)(iii) of the Privacy Standards (45 CFR 164.504(f)(2)(iii)), is established as follows:

a.

The following employees, or classes of employees, or other persons under control of the Plan Sponsor, shall be given access to the PHI to be disclosed:

i.: The Health Benefit Committee
ii.: Chief Financial Officer
iii.: Controller
iv.: Benefits Manager
v.: Health Plan Financial Clerk
vi.: Accounts Payable Clerk
vii.: Human Resource Manager

b.

The access to and use of PHI by the individuals described in subsection 10(a) above shall be restricted to the Plan Administration functions that the Plan Sponsor performs for the Plan.

c.

In the event any of the individuals described in subsection 10(a) above do not comply with the provisions of the Plan Documents relating to use and disclosure of PHI, the Plan Administrator shall impose reasonable sanctions as necessary, in its discretion, to ensure that no further non-compliance occurs. Such sanctions shall be imposed progressively (for example, an oral warning, a written warning, time off without pay and termination), if

appropriate, and shall be imposed so that they are commensurate with the severity of the violation.

"Plan Administration" activities are limited to activities that would meet the definition of payment or health care operations, but do not include functions to modify, amend or terminate the Plan or solicit bids from prospective issuers. "Plan Administration" functions include quality assurance, claims processing, auditing, monitoring and management of carve-out plans, such as prescription drugs. It does not include any employment-related functions or functions in connection with any other benefit or benefit plans.

The Plan shall disclose PHI to the Plan Sponsor only upon receipt of a certification by the Plan Sponsor that (a) the Plan Documents have been amended to incorporate the above provisions and (b) the Plan Sponsor agrees to comply with such provisions.

DISCLOSURE OF CERTAIN ENROLLMENT INFORMATION TO THE PLAN SPONSOR

Pursuant to Section 164.504(f)(1)(iii) of the Privacy Standards (45 CFR 164.504(f)(1)(iii)), the Plan may disclose to the Plan Sponsor information on whether an individual is participating in the Plan or is enrolled in or has disenrolled from coverage under the Plan to the Plan Sponsor.

DISCLOSURE OF PHI TO OBTAIN STOP-LOSS OR EXCESS LOSS COVERAGE

The Plan Sponsor hereby authorizes and directs the Plan, through the Plan Administrator or Mountain States Administration Company Inc. to disclose PHI to stop-loss carriers, excess loss carriers or managing general underwriters (MGUs) for underwriting and other purposes in order to obtain and maintain stop-loss or excess loss coverage related to benefit claims under the Plan. Such disclosures shall be made in accordance with the Privacy Standards.

OTHER DISCLOSURES AND USES OF PHI

With respect to all other uses and disclosures of PHI, the Plan shall comply with the Privacy Standards.

4): Page 101, Coordination of Benefits section, Right to Receive or Release Necessary Information IS CURRENTLY:

RIGHT TO RECEIVE OR RELEASE NECESSARY INFORMATION

IS AMENDED TO:

RIGHT TO RECEIVE OR RELEASE NECESSARY INFORMATION

For the purposes of determining the applicability of and implementing the terms Of this coordination of benefits provision of this Plan or any provision of similar purpose of any other plan, the Plan may, without consent of or notice to any person, release to or obtain from any insurance company or other organization or person any information, with respect to any person, which the Plan deems to be necessary for such purposes. Any person claiming benefits under this Plan shall furnish to the Plan such information as may be necessary to implement this provision. A

covered person, by receipt of benefits under this Plan, agrees to cooperate fully with the Plan and shall provide any information requested by the Plan within five (5) days of request. The release and handling of any Protected Health Information (PHI) and/or Transactions will be administered in compliance with the Plan's HIPAA Privacy information provisions.

REVIEWED AND ACCEPTED: SCOTT'S LIQUID GOLD-INC.		/s/ JEFFRY B. JOHNSON SIGNATURE
		Jeffry B. Johnson NAME (please print)
		Chief Financial Officer TITLE
		6/3/04 DATE

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Exhibit 10.2

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EXHIBIT 10.4

2005
KEY EXECUTIVE INCENTIVE BONUS PLAN
SCOTT'S LIQUID GOLD-INC.

Purpose of the Plan

The purpose of the Key Executive Incentive Bonus Plan (the "Plan") is to provide incentive to the Company's key executives to maximize corporate earnings for 2005 and to reward such executives based upon performance.

Structure of the Plan

This Plan is constructed to reserve exclusively to the shareholders the first $1 million in pre-tax earnings. Thereafter, a bonus equal to 10% of pre-tax earnings in excess of $1 million will be paid as an incentive bonus to key executives.

This Plan is also constructed so as to encourage Management to expend every effort possible to increase pre-tax earnings in excess of $1 million. The more pre-tax profit the Company makes, the greater the bonus and the greater the return to the Company's shareholders. Further, by not capping bonuses to be paid under this Plan, the Board of Directors believes that the incentives to the Company's executives to make larger and larger profits will not be limited.

Plan Provisions

1.: For 2005, a bonus pool equal to 10% of pre-tax earnings in excess of $1 million will be set aside for distribution to the Company's key executives who are employed by the Company at December 31, 2005.
2.: Partial distributions of the bonus pool may be made in December of 2005, but the final distribution is only to be made after the close of the year, based upon audited pre-tax profits, during the quarter following the close of the fiscal year.
3.: Bonuses, if any, for 2005, will be divided among the Company's four executive officers as follows: President and Chief Executive Officer, 31%; Vice President-Marketing and Sales, 25%; Treasurer and Chief Financial Officer, 22%; and Vice President-Operations and Corporate Secretary, 22%.
4.: For purposes of this Plan, net pre-tax earnings and pre-tax profits shall be determined without the deduction or addition of gains or losses from infrequent or unusual events or transactions or from extraordinary items. The exclusion of any such event, transaction or item shall be determined by action of the Compensation Committee of the Board of Directors of the Company after reviewing the proposed or final statements of income of the Company for the relevant period and reviewing the accounting treatment of any such event, transaction or item by the Company's independent accountants.

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EXHIBIT 10.4

2005 KEY EXECUTIVE INCENTIVE BONUS PLAN SCOTT'S LIQUID GOLD-INC.
Purpose of the Plan
Structure of the Plan
Plan Provisions

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EXHIBIT 10.6

6 January 2005

Neoteric Cosmetics, Inc.
Attention: Mark E. Goldstein, President
4880 Havana St.
Denver, CO 80239

Ladies and Gentlemen:

This letter agreement concerns the Sales Distribution Rights Agreement (the "Agreement") dated as of December 1, 2000 between you and us. We and you wish to waive mutually the provision in clause 8 dealing with the minimum net sales in calendar year 2004. Accordingly, we and you agree that the following phrase in clause 8(1)(v) of the Agreement is hereby deleted and that there is no replacement minimum sales level for the calendar year 2004: "calendar year four (2004) to be 17 million USD." In all other respects, the Agreement remains in full force and effect.

			Very truly yours,
			MONTAGNE JEUNESSE, a trading division of Medical Express (UK) Ltd.
			By:	/s/ BRIAN STEVENDALE
			Name:	Brian Stevendale
			Title:	Director of Sales & Marketing
			Date:	January 27, 2005
AGREED:
NEOTERIC COSMETICS, INC.
By:	/s/ MARK E. GOLDSTEIN
	Name:	Mark E. Goldstein
	Title:	President
	Date:	January 27, 2005

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EXHIBIT 10.6

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EXHIBIT 21

LIST OF SUBSIDIARIES

SCOTT'S LIQUID GOLD-INC. (the "Company") wholly owns seven subsidiaries:

Advertising Promotions Incorporated

Aquafilter Corporation (inactive)

Colorado Product Concepts, Inc.

Neoteric Cosmetics, Inc.

SLG Chemicals, Inc.

SLG Plastics, Inc.

SLG Touch-A-Lite, Inc. (inactive)

All of the foregoing subsidiaries are incorporated in the State of Colorado.

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EXHIBIT 21

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EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Scott's Liquid Gold-Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 33-63254, 333-48213, 333-67141, and 333-51710) on Form S-8 of Scott's Liquid Gold-Inc. and subsidiaries of our report dated February 11, 2005, with respect to the consolidated balance sheets of Scott's Liquid Gold-Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of operations, shareholders' equity and comprehensive income (loss), and cash flows, for the year then ended, which report appears in the December 31, 2004, annual report on Form 10-K of Scott's Liquid Gold-Inc. and subsidiaries.

		/s/ EHRHARDT, KEEFE, STEINER & HOTTMAN PC
Denver, Colorado February 11, 2005

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EXHIBIT 23

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EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Scott's Liquid Gold-Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 33-63254, 333-48213, 333-67141, and 333-51710) on Form S-8 of Scott's Liquid Gold-Inc. and subsidiaries of our report dated April 3, 2003, with respect to the consolidated statements of operations, shareholders' equity and comprehensive income (loss), and cash flows of Scott's Liquid Gold-Inc. and subsidiaries, for the year ended December 31, 2002, which report appears in the December 31, 2004, annual report on Form 10-K of Scott's Liquid Gold-Inc. and subsidiaries.

KPMG LLP

Denver, Colorado
March 16, 2005

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EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

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EXHIBIT 24

Power of Attorney

Each of the undersigned directors and/or officers of Scott's Liquid Gold-Inc. (the "Company") hereby authorizes Mark E. Goldstein, Jeffrey R. Hinkle, Jeffry B. Johnson, and Dennis P. Passantino, and each of them, as their true and lawful attorneys-in-fact and agents (1) to sign in the name of the undersigned and file with the Securities and Exchange Commission the Company's annual report on Form 10-K, for the fiscal year ended December 31, 2004, and any amendments to such annual report; and (2) to take any and all actions necessary or required in connection with such annual report to comply with the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Signature	Title	Date

/s/ MARK E. GOLDSTEIN Mark E. Goldstein	Director, Chairman of the Board, Chief Executive Officer and President	February 10, 2005
/s/ JEFFREY R. HINKLE Jeffrey R. Hinkle	Director, Vice President—Marketing and Sales	February 4, 2005
/s/ JEFFRY B. JOHNSON Jeffry B. Johnson	Director, Treasurer, Chief Financial Officer and Assistant Corporate Secretary	February 18, 2005
/s/ DENNIS P. PASSANTINO Dennis P. Passantino	Director, Vice President—Operations and Corporate Secretary	February 2, 2005
/s/ CARL A. BELLINI Carl A. Bellini	Director	February 7, 2005
/s/ DENNIS H. FIELD Dennis H. Field	Director	February 22, 2005
/s/ GERALD J. LABER Gerald J. Laber	Director	February 9, 2005

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EXHIBIT 24

Power of Attorney

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EXHIBIT 31.1

CERTIFICATION

I, Mark E. Goldstein, certify that:

1.

I have reviewed this 10-K Report of Scott's Liquid Gold-Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Dated: March 16, 2005
		/s/ MARK E. GOLDSTEIN Mark E. Goldstein President, Chief Executive Officer and Chairman of the Board Principal Executive Officer

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EXHIBIT 31.1

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EXHIBIT 31.2

CERTIFICATION

I, Jeffry B. Johnson, certify that:

1.

I have reviewed this 10-K Report of Scott's Liquid Gold-Inc.;

2.

3.

4.

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Dated: March 16, 2005
		/s/ JEFFRY B. JOHNSON Jeffry B. Johnson Treasurer and Chief Financial Officer Principal Financial Officer

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EXHIBIT 31.2

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EXHIBIT 32.1

CERTIFICATION OF 10-K REPORT
OF
SCOTT'S LIQUID GOLD-INC.
FOR THE YEAR ENDED DECEMBER 31, 2004

1.: The undersigned are the Chief Executive Officer and the Chief Financial Officer of Scott's Liquid Gold-Inc. ("Scott's Liquid Gold"). This Certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This Certification accompanies the 10-K Report of Scott's Liquid Gold for the year ended December 31, 2004.
2.: We certify that such 10-K Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such 10-K Report fairly presents, in all material respects, the financial condition and results of operations of Scott's Liquid Gold.

This Certification is executed as of March 16, 2005.

		/s/ MARK E. GOLDSTEIN Mark E. Goldstein President, Chief Executive Officer and Chairman of the Board
		/s/ JEFFRY B. JOHNSON Jeffry B. Johnson Treasurer and Chief Financial Officer

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EXHIBIT 32.1

CERTIFICATION OF 10-K REPORT OF SCOTT'S LIQUID GOLD-INC. FOR THE YEAR ENDED DECEMBER 31, 2004