Exhibit
10.9




FINANCIAL
PERFORMANCE INCENTIVE PROGRAM





This document outlines the terms and
conditions of the Smart Balance, Inc. Financial Performance Incentive Program
(“the Program”).  This Program applies to all employees of, and third
party consultants to, Smart Balance, Inc. and its wholly-owned subsidiary GFA
Brands, Inc. (collectively referred to as “Smart Balance” or the “Company”) who
are designated as Eligible Participants by the Compensation Committee of the
Board of Directors, or any subcommittee thereof to which such authority is
delegated (“Compensation Committee”), from time to time pursuant to Section III
hereof.





SECTION
I


PROGRAM
OBJECTIVES





This Program has been established by
the Compensation Committee to promote the following purposes and
objectives:





·
            Align
      a significant portion of the compensation of Eligible Participants to key
      financial drivers of the Company’s
business.





·
            Stress
      the importance of the growth of the Company’s Net Revenue (or equivalent
      measure) as the key factor that is most closely associated with value
      creation for the Company’s
stockholders.





·
            Establish
      other criteria (financial or otherwise) to unify and focus all Eligible
      Participants on the Company’s critical success
  factors.


1





To ensure
that the Program continues to meet these objectives, the Company has the sole
discretion and right, through the Compensation Committee, to waive, modify,
amend any portion of this Program or terminate the Program at any
time.





SECTION
II


EFFECTIVE
DATE





The
Program as set forth herein shall be effective for calendar year 2008 and all
subsequent calendar years (each a Performance Period) until the Program is
modified, amended, or terminated by the Compensation Committee.





SECTION
III


PARTICIPATION





The
Compensation Committee has complete and sole discretion to determine which of
the Company’s employees or consultants (“Eligible Participants”) shall
participate in the Program with respect to a Performance Period and the amount
of the Individual Bonus Target (“Individual Bonus Target”) of, and Actual Bonus
Amount (“Actual Bonus Amount”), if any, payable to, an Eligible Participant with
respect to such Performance Period.  This list of Eligible
Participants with respect to a Performance Period shall be determined each year
by the Compensation Committee and only Eligible Participants so designated shall
be eligible to participate in the Program for such Performance
Period.  Designation of an employee or consultant as an Eligible
Participant with respect to a Performance Period shall not entitle such employee
or consultant to designation as an Eligible Participant for any other
Performance Period.


2





Except
to the extent the Compensation Committee may otherwise determine, each Eligible
Participant’s Individual Bonus Target shall be the product of the Target Bonus
Percentage for such Eligible Participant’s Tier Grade and his or her base salary
as of the first day of the Performance Period or in the case of third party
consultants such other amount as determined by the Compensation
Committee.




For each
Performance Period there shall be established a bonus Pool (“Bonus Pool”) and
supplemental bonus pool (“Supplemental Bonus Pool”) which in each case shall be
equal to the sum of the Individual Bonus Targets of all Eligible Participants
for such Performance Period.




The
following chart reflects the Tier Grades and Target Bonus Percentages for each
such tier under the Program.




Tier
      Grade
              Composition/Members
              Target
      Bonus Percentage1A
              CEO
              100%
      of Base Salary1B
              Vice
      Chair, COO
              80%
      of Base Salary2
              EVPs
      and Marketing Coordinator
              50%
      of Base Salary3
              VPs
      and Regional Bus. Managers
              35%
      of Base Salary4
              Directors
              30%
      of Base Salary5
              Managers
              25%
      of Base Salary6
              Other
      Non-Administrative Staff
              20%
      of Base Salary or Pay7
              Administrative
      Staff
              10%
      of Base Salary or Pay





The Target Bonus Percentage for a tier
grade may be revised by the Compensation Committee from time to
time.  Individual Bonus Targets do not represent guaranteed bonus
amounts, but rather merely serve as guidelines which will be used by the
Compensation Committee as a starting point in determining an Eligible
Participant’s Actual Bonus Amount, if any.  The Compensation Committee
reserves the right, in its sole discretion, to establish a different Individual
Bonus Target for any Eligible Participant.


3





SECTION
IV


BONUS
BENCHMARKS





Each year the Board of Directors will
(i) identify key financial or business criteria to be considered by the
Compensation Committee in determining the Actual Bonus Amount for each Eligible
Participant (“Bonus Criteria”); (ii) establish for each financial or business
Bonus Criteria a threshold, target and maximum benchmark (“Performance Level”);
and (iii) establish any other rules or guidelines to be considered by the
Compensation Committee in determining Actual Bonus Amounts.  The
actual Bonus Criteria for a Performance Period and the percentage of the
Individual Target Bonus to be attributed to each Bonus Criteria will be
communicated to the Eligible Participants in writing.  Currently, the
Board of Directors has identified two Bonus Criteria:  Net Sales
Revenue and EBITDA.  The Board of Directors reserves the right from
year to year to change the Bonus Criteria, to add or eliminate Bonus Criteria,
to change the percentage of the Individual Target Bonus allocated to each Bonus
Criteria and to establish rules governing interpolation between Performance
Levels for each Bonus Criteria.  In the absence of any special
designation by the Board of Directors, there shall be straight line
interpolation between Performance Levels.  In the event the Clawback
provisions of Section VII apply to any Supplemental Bonus and the Board of
Directors modifies the Bonus Criteria for the next Performance Period, an
Eligible Participant’s right to receive such Supplemental Bonus shall be
determined using the Bonus Criteria used to determine the amount of the
Supplemental Bonus, with such modifications as the Compensation Committee deems,
in its discretion, to be reasonable and equitable.


4


SECTION
V


BONUS
CALCULATION





The Committee shall compute a pro forma
Actual Bonus Amount for each Eligible Participant for each Performance Period as
soon as possible after the completion of a Performance Period based on the
Company’s audited financial statements in accordance with this Section
V.   To the extent that achievement of financial Bonus Criteria
cannot be ascertained by reference to the Company’s audited financial
statements, the Committee may refer to the definitions and method of calculating
financial Bonus Criteria as contained in the Company’s first lien credit
facility or by reference to other Company books and
records.  Achievement of any non-financial Bonus Criteria shall be
determined in such manner as the Compensation Committee determines, in its sole
discretion.  The Compensation Committee’s determination of the extent
that Bonus Criteria have been achieved (“Actual Bonus Criteria Results”) and the
pro forma Actual Bonus Amount for each Eligible Participant shall be final and
binding on all parties.




Each Eligible Participant’s share of
the Bonus Pool and the Supplemental Bonus Pool shall be allocated among the
various Bonus Criteria based upon the Individual Bonus Target percentage
allocation determined by the Board of Directors (“Individual Bonus Pool” and
“Individual Supplemental Bonus Pool”).  Actual Bonus Criteria Results
shall then be compared to the Performance Levels established for each Bonus
Criteria for each Eligible Participant.  If Actual Bonus Criteria
Results are less than the Threshold established for that Bonus Criteria, then
the Individual Bonus Pool for that Bonus Criteria shall be zero.  If
Actual Bonus Criteria Results are equal to or greater than the Threshold but
equal to or less than the Target established for that Bonus Criteria, then the
Individual Bonus Pool amount available for distribution to such Eligible
Participant shall be a percentage of the Individual Bonus Pool for that Bonus
Criteria determined by using straight line interpolation between the Threshold
percentage amount established by the Board of Directors and the Target with the
Target being 100%.  The amount so determined for any Bonus Criteria is
referred to as the “Target Bonus Pool” and the sum of all such pools is referred
to as the “Target Bonus Pools.”  If Actual Bonus Criteria Results
exceed the Target for any Bonus Criteria, then the Individual Supplemental Bonus
Pool amount available for distribution to Eligible Participants shall be a
percentage of the Individual Supplemental Bonus Pool for that Bonus Criteria
determined by using straight line interpolation between the Target and the
Maximum with the Target at 0% and the Maximum at 100%.  The amount so
determined for any Bonus Criteria is referred to as the “Supplemental Bonus
Pool” and the sum of all such pools is referred to as the “Supplemental Bonus
Pools.”


5





The following Table demonstrates Bonus
Pool calculations:





Performance
      Level
                                
                                Interpolation
                                  Percentage Range
                                
                                Interpolation
      CalculationBelow
      Threshold
                                
                                
                                0%
                                
                                The
      Interpolation Percentage will be determined byThreshold
      to Target
                                
                                
                                0%-100%*
                                
                                adding
      or subtracting the percentage (from 100%)Target
                                
                                
                                100%
                                
                                by
      which the Actual Bonus CriteriaTarget
      to Maximum
                                
                                
                                100%-200%
                                
                                Results
      exceeds or falls short of the respectiveMaximum
                                
                                
                                200%
                                
                                Target,
      relative to the Maximum or
Threshold


*
              The
      Board of Directors may establish a Threshold percentage greater than
      0%.


*
                  Performance
      results will be rounded up or down to the nearest whole percentage
      point.  For example, if the calculated interpolation percentage
      is 89.1%, it will be rounded down to
89%.


The Compensation Committee will look to
such pro forma calculation in determining the Actual Bonus Amount, if any,
payable to an Eligible Participant with respect to a Performance
Period.  However, the final Actual Bonus Amount shall be determined by
the Compensation Committee in its sole discretion and may take into
consideration such additional factors as the Compensation Committee deems
reasonable and appropriate.


6





All bonus payments under the Program
are completely discretionary and no Eligible Participant shall be deemed to have
a vested interest in any bonus payment based solely on Actual Bonus Criteria
Results or any other facts or circumstances.  Subject to Section X, an
Eligible Participant shall have a right to a bonus under the Program only when
such bonus is finally approved by the Compensation Committee.  The
Compensation Committee may delegate the authority to determine final individual
Bonus amounts to the CEO, COO or EVPs.





SECTION
VI


CONDITIONS





Financial
Covenants.  Under no circumstances will any Bonus be paid or
accrued under this Program if the accrual or payment of any bonus under this
Program would cause an event of default under any credit agreement or loan
document of the Company.




Maximum
Payments.  In no event may the aggregate Actual Bonus Amounts
awarded by the Compensation Committee under the Program for a Performance Period
exceed the sum of the Bonus Pool and Supplemental Bonus Pool for such
Performance Period.  In addition, in no event may the Actual Bonus
Amount for a Performance Period awarded to any Eligible Participant who is a
"covered employee" (within the meaning of Section 162(m)(3) of the Internal
Revenue Code of 1986, as amended) for such Performance Period exceed such
Eligible Participant's pro forma Actual Bonus Amount.




7




SECTION
VII


PRO
FORMA BONUS CALCULATION EXAMPLES





The
following examples illustrate the application of the preceding rules (as applied
to the 2008 fiscal year):





Net
      Sales
                        
                        Interpolation
                          Percentage
                          (Step
      1)
                        
                        
                        EBITDA
                        
                        
                        Interpolation
                          Percentage
                          (Step
      2)
                        
                        
                        Scaling
      of
                          Net
      Sales
                          Percentage
                          (Step
      3)
                        
                        
                        Scaling
      of
                          EBIDTA
                          Percentage
                          (Step
      4)
                        
                        
                        Bonus
                          Multiplier
                          (Step
      5)
                        
                        
                        Target
                          Bonus
                          Paid*$
                        179M
                        
                        
                        100
                        %
                        
                        $
                        33.7M
                        
                        
                        
                        100
                        %
                        
                        
                        .60
                        
                        
                        
                        .40
                        
                        
                        
                        1.0
                        
                        
                        
                        100
                        %$
                        177.5M
                        
                        
                        86
                        %
                        
                        $
                        33.7M
                        
                        
                        
                        100
                        %
                        
                        
                        .52
                        
                        
                        
                        .40
                        
                        
                        
                        .92
                        
                        
                        
                        92
                        %$
                        174.5M
                        
                        
                        59
                        %
                        
                        $
                        32.9M
                        
                        
                        
                        0
                        %
                        
                        
                        .35
                        
                        
                        
                        0.0
                        
                        
                        
                        .35
                        
                        
                        
                        0
                        %$
                        183.5M
                        
                        
                        130
                        %
                        
                        $
                        34.2M
                        
                        
                        
                        117
                        %
                        
                        
                        .78
                        
                        
                        
                        .47
                        
                        
                        
                        1.25
                        
                        
                        
                        125
                        %$
                        192.5M
                        
                        
                        200
                        %
                        
                        $
                        36.7M
                        
                        
                        
                        200
                        %
                        
                        
                        1.20
                        
                        
                        
                        .80
                        
                        
                        
                        2.00
                        
                        
                        
                        200
                        %


*
              The “Actual Bonus Amount” paid
      would be subject to final determination by the Compensation Committee and
      the provisions of the Program as set forth
  herein.





SECTION
VIII


CLAWBACK
PROVISION





Payment
of any Supplemental Bonus Pool amount awarded to an Eligible Participant in Tier
1 (including both Tier 1A and 1B), Tier 2 or Tier 3 shall be deferred until the
second calendar year following the Performance Period and shall be subject to
forfeiture if the applicable Actual Bonus Criteria Results for the Performance
Period immediately following the Performance Period to which the award relates
(“Bonus Performance Period”) does not equal or exceed the applicable Actual
Bonus Criteria Results for the Bonus Performance Period.


8





SECTION
IX


BONUS
PAYMENTS





Subject
to Section X below, and except as provided in Section VIII above, Actual Bonus
Amount awards shall be paid during the calendar year immediately following the
Performance Period to which they relate and in all events on or before March 15
of such calendar year.  Supplemental Bonus Pool Award subject to
Section VIII above, shall be paid, to the extent not forfeited, in the second
calendar year following the Performance Period to which they relate and in all
events on or before March 15 of such calendar year.





SECTION
X


EMPLOYMENT
REQUIREMENT





As a
condition to receiving payment of an Actual Bonus Amount award for a Performance
Period, an Eligible Participant must be employed by, or with respect to
consultants actively engaged in providing services to, the Company on the date
when the Bonuses under the Program for such Performance Period are
paid.  An Eligible Participant who is not employed by, or actively
providing services to, the Company on such date will forfeit all right to such
award.


9





SECTION
XI


MISCELLANEOUS





Not Deferred
Compensation.  Except with respect to Supplemental Bonuses
subject to Section IX, it is intended that the Bonus payments made under this
Program shall be considered a form of “short-term deferral” under Treasury
Regulation Section 1.409A-1(b)(4) such that the Program is exempt from the
general application of Internal Revenue Code (“Code”) Section
409A.  The Compensation Committee and the Company shall interpret and
administer the Program in a manner which ensures such exemption.




Administrative
Discretion.  The Compensation Committee shall have the sole and
exclusive power and authority to resolve all ambiguities under the Program, to
determine participation rights and Bonus amounts, and to otherwise take such
action as it deems necessary or appropriate to operate this
Program.




Change of
Control.  In the event that the Company experiences a Change of
Control (as defined in the Smart Balance, Inc. Stock and Awards Plan), then all
Eligible Participants with respect to the Performance Period in which such
Change of Control occurs shall be entitled to receive, in lieu of any other
payment under this Program for such Performance Period, the greater
of:  (1) his or her Individual Bonus Target for the Performance Period
in which the Change of Control occurs; (2) his or her actual Bonus (including
any Supplemental Bonus) awarded with respect to the prior Performance Period; or
(3) the pro forma Actual Bonus Amount for the Performance Period in which the
Change of Control occurs determined in accordance with Section V based on the
Actual Bonus Criteria Results for the period from January 1 of the current
Performance Period through the date of the Change of Control (whichever is
greater, the “Change of Control Bonus”).   Each Eligible
Participant’s Change of Control Bonus shall be paid in a lump sum on the earlier
of (i) thirty (30) days following the date of the Eligible Participant’s
Separation from Service (as defined in the Smart Balance, Inc. Stock and Awards
Plan) or March 15 of the calendar year immediately following the Performance
Period in which the Change of Control occurs.  In addition, any
Supplemental Bonus from a prior Performance Period which was not paid due to the
application of Section IX of the Program shall be deemed earned as of the Change
of Control and shall be paid to the Eligible Participant entitled to such
Supplemental Bonus at the same time as the Change of Control Bonus is
paid.  Finally, for purposes of administering Bonus payments related
to any Performance Period which ends prior to the Change of Control, the
Compensation Committee shall consist solely of those individuals who were
members of the Compensation Committee on the day before such Change of
Control.


10