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Unassociated Document

    SEPARATION
AGREEMENT AND GENERAL RELEASE

     

    This
Separation Agreement and General Release (this  “Agreement”)
is made as of May 3, 2010, by and between Smart Balance, Inc., a Delaware
corporation (the “Company”)
and Robert S. Gluck (the “Executive”)
to acknowledge and set forth the terms and conditions regarding the termination
of Executive’s employment and positions with the Company.

     

    1.  Separation
Date. The
Executive hereby resigns, effective as of June 30, 2010 (the “Separation
Date”), from any and all positions the Executive holds with the Company
and its Affiliates (as defined below), including without limitation:
(a) his position as Chief Operating Officer of the Company, (b) his
position as an officer of any Affiliate of the Company; (c) his position as a
director of the Company and of any Affiliate of the Company, (d) any
position he holds in any fiduciary capacity with respect to any benefit or other
plan sponsored by the Company or its Affiliates, and (e) any position he
holds as a member of any committee established by the Company. The Executive’s
last day of employment with the Company will be the Separation Date. The
Executive also agrees to withdraw his name from consideration for reelection to
the Board of Directors of the Company prior to the annual meeting of the
shareholders of the Company to be held on May 12, 2010.  The Executive
will take all actions and provide the Executive’s full cooperation, whether
before or after the Separation Date, to the extent the Company reasonably
believes such assistance is necessary, to effectuate the foregoing resignations.
For purposes of this Agreement, the term “Affiliate”
means, with respect to any person, any other person that controls, is controlled
by, or is under common control with that person.

     

    2.  Separation
Payments and Benefits. In consideration of the
Release (defined below) and the other promises, acknowledgements,
representations, and obligations of the Executive under this Agreement, the
Company will pay the following amounts to the Executive (collectively, the
“Separation
Compensation”), in each case minus any applicable payroll taxes and other
deductions and withholdings required by federal, state, or local law or as
requested by the Executive:

     

    (a)          The
Company will pay to the Executive his salary from the Effective Date (as defined
below) through the Separation Date, to be paid in the time and in the manner the
Executive currently receives his salary payments from the Company;
and

     

    (b)          The
Company will pay to the Executive the aggregate amount of One Million Eight
Hundred Seven Thousand Five Hundred US Dollars ($1,807,500.00), in semi-monthly
installments over a twenty four (24) period beginning on July 1, 2010 (the
“Severance
Period”), to be paid at the time and in the manner the Executive
currently receives his salary payments from the Company, with each of such
installments to be treated as a “separate payment” within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treas.
Reg. § 1.409A-2(b)(2)(iii); and

    

    (c)          The
Company will pay to the Executive the bonus that would have been payable to the
Executive, if any, for the semi-annual period ending June 30, 2010, pursuant to
the Company’s 2010 Bonus Program under the Company Financial Incentive Program
in effect as of the date of this Agreement, the determination of such bonus to
be made by the Board of Directors of the Company in its sole and absolute
discretion and the payment of such bonus, if any, to be made to the Executive in
a lump sum at the same time as similar bonuses are paid to senior executives of
the Company, but in any event no later than March 15, 2011; and

    

    (d)          In
the event of the Executive’s death, all payments to be made by the Company to
the Executive under this Section 2 will be made to the estate of the
Executive.

     

    3.  General
Release and Waiver. In consideration of the
Company’s promise to pay the Separation Compensation, the Executive agrees to
the following General Release and Waiver (the “Release”):

     

    3.1.  Release.  For
good and valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged, the Executive, individually and on behalf of his heirs, executors,
administrators, representatives, agents, attorneys, and assigns of every kind,
hereby irrevocably, fully, unconditionally, and forever releases, discharges,
and holds harmless, to the fullest extent permitted by applicable law, the
Company and its affiliated companies, parents, subsidiaries, predecessors,
successors, assigns, divisions, related entities, and all of their respective
past and present employees, officers, directors, trustees, shareholders,
members, partners (as applicable), 

     

    
      
        
        

      

      
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    agents,
investors, attorneys, and representatives (collectively, the “Company Released
Parties”), from and against any and all manner of actions and causes of
action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements,
judgments, charges, claims, demands, and losses of any kind or nature whatsoever
(based on any legal or equitable theory, whether contractual, common law,
statutory, federal, state, local, or otherwise, including any claims for
attorneys’ fees or costs), whether known or unknown, that the Executive has or
may hereafter have against the Company Released Parties or any of them arising
out of or by reason of any cause, matter, or thing whatsoever from the beginning
of the world until and through the Effective Date, including without limitation
any and all matters arising out of the Executive’s employment and cessation of
employment with the Company and with  its Affiliates, any and all
matters arising out of the Executive’s service and cessation of service as a
director of the Company and of any Affiliate, any and all matters arising out of
any benefit plan, program, policy, contract, agreement, or other arrangement
applicable between the Company and the Executive, and any and all matters
arising under any federal, state, or local statute, rule, or regulation or
principle of contract law or common law, including but not limited to the Age
Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq., the Civil Rights Act
of 1866, as amended, 42 U.S.C. § 1981 et seq., Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq., the Americans with
Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., the Fair Labor
Standards Act, 29 U.S.C. § 201 et seq., the Family and
Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq., the Older Workers
Benefits Protection Act, 29 U.S.C. § 626 et seq.,  the New
Jersey Law Against Discrimination, N.J.S.A. 10:5-1, et seq., The New Jersey
Conscientious Employee Protection Act,  N.J.S.A. 34:19-1 et seq., and any other
applicable labor and employment laws of the State of New Jersey (collectively
“Claims”).
Notwithstanding the foregoing, (a) this Release will not apply to any
actions to enforce any rights that the Executive may have under this Agreement
and the Indemnification Agreement (as defined below), and (b) the Executive
does not release and will retain any claim (i) for indemnification and
defense pursuant to the charter documents and bylaws of the Company or any
Company Released Party, and (ii) under any insurance coverage available to
the Executive under any director’s and officer’s insurance policy or similar
policy maintained by the Company, its Affiliates, or any Company Released
Party.

     

    3.2.  Acknowledgements.  Without limiting
the foregoing, and for avoidance of doubt, the Executive understands and agrees
that by giving the Release:

     

    (a)          The
Executive is specifically and voluntarily waiving, releasing, and forever giving
up any and all Claims the Executive may have against the Company Released
Parties for illegal discrimination or retaliation of any kind or nature,
including without limitation those based on his age, sex, race, color, religion,
national origin, citizenship, veteran status, sexual orientation, disability,
and/or handicap, whether for tort, breach of express or implied employment
contract, wrongful discharge, intentional infliction of emotional distress,
defamation, or injuries incurred on the job or as a result of his loss of
employment or otherwise;

     

    (b)          The
Executive is specifically and voluntarily waiving, releasing, and forever giving
up any and all Claims that the Executive may have against the Company Released
Parties for breach of contract, severance pay, or separation pay, vacation pay,
holiday pay, breach of promise, wrongful discharge, unjust dismissal,
whistle-blowing, breach of fiduciary duty, breach of the implied covenant of
good faith and fair dealing, defamation, wrongful denial of benefits,
intentional and/or negligent infliction of emotional distress, negligence,
and/or any other intentional torts;

     

    (c)          The
Executive is specifically and voluntarily waiving, releasing, and forever giving
up all Claims released by the Executive pursuant to Section 3.1 of this
Agreement through and including the Effective Date, including without limitation
any alleged injuries or damages suffered at any time after the date the
Executive signs this Release by reason of the continued effects of alleged
discriminatory acts or other conduct which occurred on or before the date of
this Agreement; and

     

    (d)          The
Executive is specifically and voluntarily waiving, releasing, and forever giving
up all Claims that the Executive may have with respect to all Option Shares
covered by the Amended Stock Option Agreement between the Company and the
Executive dated as of May 21, 2007 (the “2007 Option Agreement”) and the Amended
Stock Option Agreement between the Company and the Executive dated as of June 5,
2008 (the “2008 Option Agreement”), including without limitation any and all
rights he might have to the vested and unvested portions of both the Time Vested
Awards and the Price Vested Awards under both agreements, as those terms are
defined in such agreements.

    
       

      
        
          
          

        

        
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    3.3.  Non-Participation.  The Executive promises and agrees that,
from and after the date of this Agreement, the Executive will not, either
individually or with any other person or entity, commence, maintain, prosecute,
participate as a party, or permit to be filed by any other person or entity on
his behalf, any action, charge, lawsuit, complaint, or any administrative,
arbitral, judicial, or other proceeding with any governmental agency, or against
any Company Released Party with respect to any of the Claims released by the
Executive pursuant to Section 3.1 above. The Executive understands that
this Section 3.3 bars the Executive from initiating legal action only to
the fullest extent such a prohibition is valid under law. In addition, the
Executive agrees that, from and after the date of this Agreement, and to the
fullest extent permitted under applicable law, the Executive will not
voluntarily participate or assist in any judicial, administrative, arbitral, or
other proceedings of any nature or description against any Company Released
Party brought by or on behalf of any administrative agency or any executives or
former executives of the Company other than pursuant to a valid judicial
subpoena or court order. If any person or entity brings a Claim released under
the Release on the Executive’s behalf, the Executive will waive any right to
recovery under such Claim and will use commercially reasonable efforts to
cooperate with Company Released Parties to have such claim
dismissed.

     

    3.4. Voluntary
Act.  The
Executive is giving the Release knowingly, voluntarily, and with full
understanding of its terms and effects. The Executive is giving the Release of
his own free will without any duress, being fully informed, and after due
deliberation. The Executive voluntarily accepts the Company’s promise to pay the
Separation Compensation to him in consideration of the
Release.

     

    3.5.  Third
Party Beneficiaries.  The Executive
understands and agrees that each of the individuals and entities identified as
Company Released Parties in Section 3.1 of this Agreement are intended
third party beneficiaries of the releases and undertakings conveyed by Executive
hereunder, and that each such beneficiary will have the right to enforce the
terms and conditions of the Release directly, in its own name and its own right,
to the fullest extent that such rights are afforded to the Company
hereunder.

     

    4.  Transition
Period. During
the period from the date hereof through the Separation Date, the Executive will
devote such time and attention to the business of the Company, and will provide
the Company with such advice, information, assistance, and counsel, as the Chief
Executive Officer of the Company may request in order to promote the Company’s
business and operations and to transition the Executive’s responsibilities to
others.

     

    5.   Cooperation. The Executive hereby agrees
that at all times during the Severance Period, and at all times thereafter
solely with respect to any Proceeding, he will make himself reasonably available
to, and will as reasonably requested by the Company cooperate with, the Company
and its Affiliates, at the Company’s sole cost and expense, with respect to any
matter about which Executive has knowledge arising out of the Executive’s
employment with the Company, or any roles or positions the Executive had with
the Company or any of its Affiliates, including without limitation in connection
with any Proceeding. For purposes of this Agreement, “Proceeding”
means any and all past, present and future actions, causes of action, suits,
litigation, complaints, controversies, threats, demands, inquiries,
investigations, or other proceedings, whether formal or informal, and whether
pending or threatened or otherwise, involving the Company or its
Affiliates.  The Company and the Executive agree that if the Executive
is required to provide in excess of one hundred (100) hours of his time pursuant
to this Section 5, including travel time, the Company will compensate the
Executive at the rate of $300 per hour for all such excess time.  The
Company agrees that the Executive will not be required to provide any merger and
acquisition advice or services under this Section 5, and further agrees that
nothing in this Section shall be interpreted to create an obligation in the
event of the Executive’s death or disability.

     

    6.  Non-Solicitation
and Non-Competition.  During the Severance Period, the
Executive agrees that he will not, directly or indirectly, (a) solicit any
employee of the Company for employment, or (b) enter into, organize,
control, engage in, be employed by, serve as a consultant to, be an officer or
director of, participate in any effort to purchase all or substantially all of
the assets of or any of the shares of any corporation or other entity owning, or
have any direct or indirect investment in, any spread, specialty milk, soymilk,
half and half, cooking oil, or peanut butter business in competition with the
spread, specialty milk, soymilk, half and half, cooking oil, or peanut butter
business of the Company and its Affiliates in any geographic areas in which the
Company and/or any of its Affiliates is then currently conducting such
business.  Nothing contained in this Agreement shall be construed to
prevent the Executive from owning at any time, directly or indirectly, as much
as 5% of any class of equity securities issued by any corporation or other
entity which are publicly traded and registered under the Securities and
Exchange Act of 1934, as amended.

    
       

      
        
          
          

        

        
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    7.  Confidentiality.  The Company and
the Executive are parties to an Employee Invention Assignment and
Confidentiality Agreement dated as of May 21, 2008 (the “Confidentiality
Agreement”).  The Company and the Executive agree that the
Confidentiality Agreement shall remain in full force and effect according to its
terms notwithstanding the execution and entry into effect of this
Agreement.  In addition to the understandings and agreements contained
in the Confidentiality Agreement, the Executive agrees that he will not use any
Confidential Information and Trade Secrets of the Company, as those terms are
defined in the Confidentiality Agreement, in any manner adverse to the interests
of the Company.  The Executive agrees that, without limiting the
generality of the foregoing, his direct or indirect participation in any effort
to purchase all or substantially all of the assets of any business of the
Company, or shares of the Company sufficient to constitute control of the
Company, would constitute a use by the Executive of Confidential Information and
Trade Secrets of the Company in a manner adverse to the interests of the
Company.

     

    8.  Change of
Control Agreement.  The Company and the
Executive are parties to a Change of Control Agreement dated as of May 21, 2007
(the “Change of Control Agreement”).  The Company and the Executive
agree that as of the Effective Date the Change of Control Agreement shall be
null and void and no longer of any force and effect.

     

    9.  Indemnification
Agreement.  The Company and
the Executive are parties to an Indemnification Agreement dated as of March 10,
2010 (the “Indemnification Agreement”).  The Company and the Executive
agree that notwithstanding this Agreement and the granting by the Executive of
the Release, the Indemnification Agreement remains in full force and
effect.

     

    10.  2007
Option Agreement and 2008 Option Agreement.  The Company and
the Executive agree that as of the Effective Date the 2007 Option Agreement and
the 2008 Option Agreement shall each be null and void and no longer of any force
and effect.  Specifically, and without limiting the generality of the
foregoing, the Executive acknowledges and agrees that, in consideration of the
Company’s promise to pay the Separation Compensation, he is forfeiting all of
his rights under the 2007 Option Agreement and the 2008 Option Agreement,
including any rights he might have to the vested and unvested portions of both
the Time Vested Awards and the Price Vested Awards under both agreements, as
those terms as defined in such agreements.

     

    11.  Press
Release.  The Company and
the Executive will agree on appropriate language to be provided to the
Securities and Exchange Commission regarding the Executive’s separation from
service with the Company, and his decision to withdraw his name from
consideration for reelection to the Board of Directors of the Company, which is
both acceptable to the Executive and which meets all of the Company’s legal and
ethical obligations to report.  Such report to the Securities and
Exchange Commission will also include a copy of a press release which will be
released by the Company.  The substance of press release will be that
the Executive has decided to leave his employment with the Company to pursue
other interests.

     

    12.  Records,
Documents and Property. On or before the Separation Date, the Executive
agrees to return to the Company all of its property including but not limited to
its records, correspondence, and documents, in both digital and hard copy form,
as well as all keys, pagers, computers, access cards, and corporate charge
cards.

     

    13.  Additional
Acknowledgements, Representations, and Affirmations.

     

    13.1  No
Consideration Absent Execution of Separation Agreement. The Executive
acknowledges and agrees that he is not presently entitled to any portion of the
Severance Compensation other than by reason of the Executive’s execution and
delivery of this Agreement, and that delivery of the Severance Compensation
constitutes additional consideration for the Executive’s execution and delivery
of this Agreement and his fulfillment of the promises and undertakings contained
in this Agreement.

     

    13.2  Full
Satisfaction.
The Executive acknowledges and agrees that, except for the payments and benefits
set forth in Sections 2, 3.1(a), 3.1(b), and 9 above, the Executive will neither
receive, nor be entitled to receive, any other compensation, payments, or
benefits of any kind or nature from the Company or its Affiliates, including
without limitation any salary, commission, compensation, bonus, incentive
payment, severance, expense reimbursement, or other payment of any kind or
nature whatsoever pursuant to the any agreement, understanding, or instrument,
whether verbal or written, between the Executive and the Company or its
Affiliates.

    
       

      
        
          
          

        

        
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      13.3  Absence
of Potential Claims.

    

     

    (a)          The
Executive hereby affirms that he has not filed, caused to be filed, or presently
is a party to any pending or threatened claim or action against the Company or
any of the Company Released Parties, and agrees that he will not file or cause
to be filed any such claim between the date hereof and the Effective
Date.

     

    (b)          The
Executive hereby affirms that he has been paid and/or has received from the
Company all compensation, wages, bonuses, commissions, and/or benefits to which
he may be entitled in connection with his employment with the Company (other
than his base salary and bonus for the period from the date hereof through the
Separation Date to be paid to the Executive pursuant to Section 2 hereof in
consideration of the Executive’s service through the Separation Date). The
Executive further affirms that he has been granted any leave to which he was
entitled under the Family and Medical Leave Act or related state or local leave
or disability accommodation laws and has not been subjected to retaliation by
the Company for taking such leave.

     

    (c)          The
Executive affirms that he has not suffered any known workplace injuries or
occupational diseases.

     

    (d)          The
Executive affirms that he has not been retaliated against for reporting any
allegations of wrongdoing by the Company or its Affiliates, or their respective
officers or board members, including any allegations of corporate
fraud.

     

    13.4.  Acknowledgements.

     

    (a)          The
Executive acknowledges that he has been advised to consult with an attorney
prior to signing this Agreement, and that he has done so.

     

    (b)          The
Executive acknowledges that he has not relied on any representations or
statements not set forth in this Agreement. The Executive will not disclose the
contents or substance of this Agreement to any third parties, other than his
attorneys, accountants, or as required by law, and the Executive will instruct
each of the foregoing not to disclose the same.

     

    14.  No Duty
to Mitigate.  The Executive will not be required to mitigate
the amount of any payment or benefit contemplated by this Agreement, nor will
any earnings that the Executive may receive from any other source reduce any
such payment or benefit.

    

    15.  Non-Admission.  The
Company and the Executive agree that this Agreement shall not be deemed or
construed at any time for any purpose as an admission by either party of any
liability or unlawful or wrongful conduct of any kind.  Specifically,
and without limiting the generality of the foregoing, the Executive further
agrees that nothing contained in this Agreement shall be deemed or construed at
any time for any purpose as an admission by the Company that the Executive is at
the date hereof or was at any time during his employment with the Company
anything other than an At-Will employee of the Company.

     

    16.  Breach.  The
Executive acknowledges and agrees that any material breach of this Agreement
will entitle the Company immediately to cease providing the Separation
Compensation to Employee under this Agreement, except as provided by
law.

     

    17.  Indemnification.  Except
as provided by law, the Executive agrees to indemnify and hold the Company
Released Parties harmless from and against any suit, claim, loss, liability,
cost, expense, damage, or deficiency (including without limitation, attorneys’
fees) resulting from or relating to any material breach by the Executive of any
promise, acknowledgement, representation, or obligation of the Executive under
this Agreement.

     

    18.  Governing
Law and Venue.
This Agreement has been negotiated and executed in the State of New Jersey and
is to be performed in New Jersey.  This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New Jersey,
including all matters of construction, validity, performance, and enforcement,
without giving effect to principles of conflict of laws.  Any dispute,
action, litigation, or other proceeding concerning this Agreement shall be
instituted, maintained, heard, and decided in the State of New
Jersey. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES WAIVE THEIR RIGHT TO A TRIAL
BY JURY IN ANY LITIGATION RELATED TO OR ARISING OUT OF THIS
AGREEMENT.

    
       

      
        
          
          

        

        
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    19.  Successors
and Assigns.  This Agreement is
binding on the Company and its successors and assigns and inures to the benefit
of the Executive and the Executive’s heirs, executors, and personal
representatives.

     

    20.  Miscellaneous. This Agreement contains the
complete agreement between the Company and the Executive with respect to its
subject matter, and supersedes all prior agreements, arrangements, or
understandings with respect to the subject matter of this Agreement, except as
expressly set forth in Section 7 or elsewhere in this Agreement. This Agreement
may only be modified in a writing signed by the Company and the Executive. The
provisions of this Agreement are severable and the unenforceability or
invalidity of any provision of this Agreement will not render any other
provision unenforceable or invalid. If any provision of Section 6 is determined
by a court of competent jurisdiction to be invalid in whole or in part, it shall
be deemed to have been amended, whether as to time, area covered, or otherwise,
as and to the extent required for its validity under applicable law, and as so
amended, shall be enforceable. The parties further agree to execute all
documents necessary to evidence such amendment. This Agreement may be executed
simultaneously in one or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.

    

    21.  Tax
Matters and Section 409A.  This Agreement
shall be interpreted, operated, and administered in a manner so that any amount
or benefit payable hereunder shall be paid or provided in a manner that is
either exempt from or compliant with the requirements under Section 409A of
the Code and any guidance issued thereunder. Any reference in this Agreement to
termination of employment shall mean “separation from service” within the
meaning of Section 409A of the Code and Treas. Reg.
1.409A-1(h).  Notwithstanding anything in this Agreement to the
contrary, any amount or benefit that would constitute non-exempt deferred
compensation (and would be payable by reason of the Executive’s separation from
service during a period in which he is a “specified employee” within the meaning
of Section 409A of the Code and Treas. Reg. § 1.409A-1(i)) will be accumulated
and paid no earlier than the first day of the seventh month following the
Executive’s separation from service (or if earlier upon the Executive’s death),
if and to the extent such delay is required under Section 409A of the Code. If
the Executive is entitled to be paid or reimbursed for any taxable expenses
under this Agreement, the amount of such expenses reimbursable in any one
calendar year shall not affect the amount reimbursable in any other calendar
year, and the reimbursement of an eligible expense must be made no later than
December 31 of the year after the year in which the expense was
incurred.  Notwithstanding the foregoing, the Company does not
guarantee the tax treatment of any compensation or benefits hereunder, whether
pursuant to the Code, state, or local tax laws and regulations.

     

     

    22.  Right
to Review and Revoke.  The Executive acknowledges that he has
been given the opportunity to review and consider this Agreement for twenty-one
(21) days from the date he received a copy. If he elects to sign this Agreement
before the expiration of the twenty-one (21) days, the Executive acknowledges
that he has chosen, of his own free will and without any duress, to waive his
right to the full twenty-one (21) day review period. The Executive may revoke this
Agreement after signing it by delivering written notice to the Secretary of the
Company within seven (7) days after signing it. This Agreement, provided it
is not revoked, will be effective on the eighth day after execution (the
“Effective Date”), provided that if the last day of the revocation period is a
weekend or legal holiday, then the revocation period will not expire, and the
Effective Date will not occur, until the next following day that is not a
weekend or legal holiday.  To be effective any revocation within the
seven (7) day period must be in writing and state “I hereby revoke my acceptance
of the Separation Agreement and General Release between Smart Balance, Inc., and
the undersigned.”   If the Executive timely revokes this Agreement,
then the Company and the Executive will automatically return to the status quo existing
immediately prior to such revocation, this Agreement will be null and void, and
there will be no obligation on the part of the Company to pay the Separation
Compensation.

    
       

      
        
          
          

        

        
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    IN WITNESS WHEREOF, the
parties have knowingly and voluntarily executed this Agreement as of the date
and year first above written.

     

    

    
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              EXECUTIVE

            	 
      	 
      	 
      	
              SMART
      BALANCE, INC.

            
	 
      	 
      	 
      	 
      
	
              
                /s/
      Robert S.
      Gluck

              

            	 
      	 
      	 
      	
              By:

            	 
      	
              
                /s/
      Stephen B.
      Hughes

              

            
	
              Robert
      S. Gluck

            	 
      	 
      	 
      	 
      	 
      	
              Stephen
      B. Hughes

            
	 
      	 
      	 
      	 
      	 
      	 
      	
              Chairman
      and Chief Executive Officer

            
	 
      	 
      	 
      

    

    

    
       

      
        
          
          

        

        
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      STATE OF
NEW JERSEY

    

    

    COUNTY OF
Bergen

    

    I, the
undersigned Notary Public, do hereby certify that Robert S. Gluck personally
known to me to be the same person whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
signed and delivered the said instrument as his free and voluntary act, for the
uses and purposes therein set forth.

    

    Given
under my hand and official seal this 3rd day of May, 2010.

    
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              /s/
      Patricia A Rooney

            	 
      
	 
      	
              Notary
      Public 

            	 
      
	
              Patricia
      Ann Rooney

              Notary
      Public, State of New Jersey

              My
      Commission Expires

              April
      14, 2013

            	 
      	 
      
	 
      

    

     

    STATE OF
NEW
JERSEY

    

    COUNTY OF
_________

    

    The
foregoing instrument was acknowledged before me this 3rd day of May, 2010 by
Stephen B. Hughes, Chairman and Chief Executive Officer of Smart Balance, Inc.,
a Delaware corporation, on behalf of such corporation.

    

    Given
under my hand and official seal this 3rd day of May, 2010.

    
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              /s/
      Ariel L. Reid

            	 
      
	 
      	
              Notary
      Public 

                                     For
      Stephen Hughes

            	 
      

    

    

    April L
Reid

    Notary
Public

    State of
Colorado

    Commission
expires 6/22/2013

    
       

      
        
          
          

        

        
          8 of
8Exhibit
10.29

    

     

    
      PERFORMANCE
INCENTIVE COMPENSATION PLAN

    

     

    FIRST
FINANCIAL HOLDINGS, INC. AND ITS SUBSIDIARIES

     

    PERFORMANCE
INCENTIVE COMPENSATION PLAN

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    FIRST
FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

     

    PERFORMANCE
INCENTIVE COMPENSATION PLAN

    

    TABLE OF
CONTENTS

    

    
      
        
          	
                  I.

                	
                  Plan
      Purpose

                	
                  3

                
	
                  II.

                	
                  General
      Description

                	
                  3

                
	
                  III.

                	
                  Plan
      Year and Effective Date

                	
                  4

                
	
                  IV.

                	
                  Definitions

                	
                  4

                
	
                  V.

                	
                  Performance
      Thresholds

                	
                  4

                
	
                  VI.

                	
                  Participants

                	
                  4

                
	
                  VII.

                	
                  Performance
      Thresholds and Participant Performance Criteria

                	
                  5

                
	
                  VIII.

                	
                  Compensation

                	
                  5

                
	 
      	
                  A.

                	
                  Base
      Salary

                	
                  5

                
	 
      	
                  B.

                	
                  Performance
      Incentive Compensation Plan

                	
                  5

                
	 
      	
                  C.

                	
                  Other
      Commission Plans, If Applicable

                	
                  6

                
	
                  IX.

                	
                  Administration

                	
                  6

                
	 
      	
                  A.

                	
                  Plan
      Responsibility Controls

                	
                  6

                
	 
      	
                  B.

                	
                  Tracking

                	
                  6

                
	 
      	
                  C.

                	
                  The
      Formula

                	
                  7

                
	 
      	
                  D.

                	
                  Initial
      Calculation, Verifications and Approvals

                	
                  7

                
	 
      	
                  E.

                	
                  Processing
      Payouts

                	
                  8

                
	 
      	
                  F.

                	
                  Dispute
      Resolution for Goal Calculation or Incentive

                	
                  8

                
	
                  X.

                	
                  Termination
      of Plan

                	
                  8

                
	
                  XI.

                	
                  Termination
      of Employment

                	
                  8

                
	 
      	
                  A.

                	
                  Post-Separation
      Obligations

                	
                  8

                
	 
      	
                  B.

                	
                  General
      Company Policies and Procedures

                	
                  9

                
	
                  XII.

                	
                  Severability

                	
                  9

                
	 
      	 
      	 
      
	
                  OTHER
      INFORMATION

                	 
      
	 
      	 
      	 
      
	
                  Important
      Notice

                	
                  9

                
	
                  Exhibit
      A.

                	
                  Definitions

                	
                  10

                
	
                  Exhibit
      B.

                	
                  Performance
      Criteria/Measurement Importance

                	
                  13

                

        

      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    FIRST
FINANCIAL HOLDINGS, INC.

     

    PERFORMANCE
INCENTIVE COMPENSATION PLAN

     

    Fiscal
Year 2009

    

    I.      PLAN
PURPOSE

    

    The
purpose of First Financial Holdings, Inc.’s (“the Company’s”) Performance
Incentive Compensation Plan (“the Plan”) is to share the rewards of excellent
performance with those officers who provide the leadership, knowledge, and
direction to accomplish superior operating results for the
Company.  Performance thresholds, which coincide with the objectives
of the Company’s strategic business plan, are the standard of measurements used
to determine the achievement of individual officer performance
criteria.

    

    PLEASE
NOTE:  No language or provision of this plan is intended to guarantee
the establishment of future plans.  Executive Management with the
approval of the Compensation/Benefits Committee (“the Committee”) reserves the
right to alter this plan at its discretion at any time.

     

    
      	
              II.

            	
              GENERAL
      DESCRIPTION

            

    

    

    The key
component of the Plan is Return on Equity (ROE), which is defined as “net income
after applicable income taxes, net of securities gains or losses, and net of
unusual or extraordinary items, divided by average equity.”  Each
fiscal year, Executive Management determines the appropriate ROE objective,
establishes performance threshold levels of measurable criteria, and identifies
individual officer performance criteria.  This information is
presented to the Committee for their review and
approval/disapproval.

    

    Soon
after the close of a fiscal year, the Company’s achievement of performance
thresholds is determined and reviewed by Executive Management.  The
ROE objective must be achieved at least to its minimum level before any
incentive payout is awarded to Executive and Senior Management.  If
the minimum ROE objective is not achieved, there will be no incentive payouts to
Executive and Senior Management even if all other Company and individual officer
performance criteria are achieved.  Vice President’s individual
performance criteria are closely aligned to the Company’s overall strategic
objectives.  These officers significantly influence, manage and
achieve those key objectives identified in their respective regions and
departments.  The timely execution and implementation of these
objectives allows the Company to maintain or increase competitive advantage in
its specific markets and in its business lines.  Individual criteria
and objectives established for all participants must be clearly definable,
attainable, add measurably to the profitability of the Company and will be
subject to timely and frequent measurement and communication throughout the
performance period.  Effective with the fiscal 2008 plan year, the
requirement for a minimum ROE objective to be met is removed for Vice
Presidents.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    Results
for each fiscal year are presented to and approved by the
Committee.  Executive Management communicates the final operating
results to the members of the management team at their October meeting and
results on the attainment of specific criteria as soon as
available.

    

    The stake
of the shareholders is improved as the Company’s performance threshold levels
are achieved.  Performance above threshold levels will largely accrue
to shareholders through improved financial performance of the Company. Only a
moderate percentage of these improved results will be used for performance
incentive compensation for Management.

    

    Incentive
awards are supplements to annual compensation and benefits.  The Plan
assumes that an equitable salary administration program is in place and will not
be used to adjust inequities in base compensation.  It is the intent
of the Board of Directors that incentive compensation be a meaningful and
therefore motivating factor for management’s performance.

    

    The
Committee will review and may approve or disapprove of any award based solely on
their discretion.

    

    
      
        	
                III.

              	
                PLAN
      YEAR AND EFFECTIVE DATE

              

      

    

    

    The plan
year is identified as the Company’s fiscal year.  The effective date
begins October 1st and
ends on September 30th.

    

    
      
        	
                IV.

              	
                DEFINITIONS

              

      

    

    

    Exhibit A contains definitions
of the various examples of factors used in determining the achievement of the
Company’s and individual officer performance thresholds and
criteria.

    

    
      
        	
                V.

              	
                PERFORMANCE
      THRESHOLDS

              

      

    

    

    Exhibit B reflects a listing
of the Company’s performance criteria and the measurement of
importance.

    

    
      
        	
                VI.

              	
                PARTICIPANTS

              

      

    

    

    Named
participants in the Plan shall be limited to the officers of First Financial and
its affiliates, who are responsible for directing functions, which have a
significant impact on the growth and profitability of the
Company.  Prior to the beginning of each fiscal year, which coincides
with the beginning of the Plan year, Executive Management reviews and revises,
if necessary, the current list of participants.  A recommendation is
made to the Committee for approval/disapproval of the
list.     Participants will be notified of their
eligibility as soon as possible thereafter.

    

    Named
participants may be added during the fiscal year at the discretion of the
Committee.  Incentive awards for new participants may be pro-rated or
may begin at the beginning of a new fiscal year.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      	
              VII.

            	
              PERFORMANCE
      THRESHOLDS AND PARTICIPANT PERFORMANCE
CRITERIA

            

    

    

    Participant
Performance Criteria and illustrative examples of participant performance
measurements, participant weighting factor and the incentive computation are
available in the company’s Human Resources Department.

    

    
      
        	
                VIII.

              	
                COMPENSATION

              

      

    

    

    Total
cash compensation is a result of the following:

    

    
      	
               
      

            	
              Ø

            	
              Base
      Salary

            

    

    
      	
               
      

            	
              Ø

            	
              Other
      commission plans, if applicable

            

    

    
      	
               
      

            	
              Ø

            	
              Performance
      Incentive Compensation Plan

            

    

    

    
      	
               
      

            	
              A.

            	
              Base
      Salary

            

    

    

    The base
salary on January 1st of the
respective fiscal year is used to determine the amount of compensation at risk,
which is then used in calculating the incentive compensation.  See
Section C.

    

    In 1985,
the Company adopted a competitive salary administration program to attract and
retain the best-qualified individuals and to motivate them to perform their
responsibilities in a most effective and efficient manner.  Through
the process of job evaluations and comparing similar position responsibilities
in similar industries, a salary structure and ranges were established at the
average of the appropriate market.

    

    Base
salaries for new employees are determined by verifying proven and related
experience, appropriate levels of education, and other specified position
requirements.  Periodically, salary studies are conducted to insure
the continued competitiveness of the ranges.  Annually, Executive
Management recommends the appropriate adjustment of salary ranges to the
Committee for their approval/disapproval.  The recommendation is
consistent with the average range adjustments on a national basis.

    

    
      	
               
      

            	
              B.

            	
              Performance
      Incentive Compensation Plan

            

    

    

    The Plan
in its entirety is described in this document.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              C.

            	
              Other
      Commission plans, if applicable

            

    

    

    At the
present time, 3 officers of the management team are paid commissions through out
the fiscal year on the production of their departments.  The positions
are:

    

    
      	
               
      

            	
              Ø

            	
              Vice
      President Correspondent Lending

            

    

    
      	
               
      

            	
              Ø

            	
              Vice
      President Sales/Lending

            

    

    
      	
               
      

            	
              Ø

            	
              President
      FSE Investors

            

    

    

    Current
copies of these commission plans are on file in the Company’s Human Resources
department.

     

    
      	
              IX.

            	
              ADMINISTRATION

            

    

    

    A.           PLAN
RESPONSIBILITY AND CONTROLS

    

    The
administration of the Plan is the responsibility of Executive Management along
with the Company’s Executive Vice President of Human Resources.  The
Plan’s day-to-day operations are generally resolved at this
level.  Amendments to the Plan or any major operational issues are
reviewed and discussed by Executive Management with a recommendation of
appropriate resolution presented to the Committee for review and
approval/disapproval.  Decisions are subject to final ratification by
the Company’s Board of Directors.

    

    Officers
who are members of the Company’s Board of Directors have no voting authority on
matters relating to the performance incentive compensation program.

    

    Prior to
the beginning of each fiscal year, Executive Management will review and revise,
as appropriate, the Plan and its operating rules. The revised plan will be
presented to the Committee for their review and
approval/disapproval.

    

    B.           TRACKING

    

    Vice
President/Controller has been designated by Executive Management and approved by
the Committee to track the achievements of performance thresholds on a monthly
basis and communicate the progress to the management team and Board of Directors
quarterly.

    

    At the
close of the fiscal year, Executive Management reviews the overall operating
results of the Company.  VP/Controller calculates the Company’s ROE
and presents the EVP/Chief Financial Officer (CFO) with the
results.  The CFO verifies the calculations and reviews the results
with Executive Management.  After a thorough review and discussion by
Executive Management, the ROE and the results are presented to the Committee for
their review and approval/disapproval.  There will be no incentive
payouts for Executive and Senior Management if the minimum ROE objective is not
achieved.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    Upon the
approval of the ROE achievement by the Committee, individual officer performance
criteria is determined and reviewed by Executive Management.  Upon the
completion of this process, the individual officer performance criteria
achievements are reviewed and verified by the CFO.

    

    C.           THE
FORMULA

    

    The key
component of the incentive computation for Executive and Senior Management is
the successful achievement of the ROE objective.  Once achieved and
approved, the following is used for calculating the incentive
payout:

    

    
      	
               
      

            	
              Ø

            	
              The
      percentage at risk (PAR) is 65% of the officer’s base salary on January
      1st
      of the Plan’s fiscal year.

            

    

    

    a)      The
general formula is stated as follows:

    

    
      	
               
      

            	
              §

            	
              The
      product results from the Company’s achievement of each performance
      measurement threshold times the participant
      weighting factor of the specific performance measurements assigned to the
      officer;

            

    

    
      	
               
      

            	
              §

            	
              Times
      the base compensation at risk; (or determined by ROE threshold
      achieved)

            

    

    
      	
               
      

            	
              §

            	
              Equals
      the participant payout.

            

    

    

    Effective
with fiscal 2008, the key component of the incentive compensation for Vice
Presidents is the successful completion of individual criteria.  The
percentage of base pay at risk is 50%, subject to further reduction for officers
already subject to sales incentives.

    

    If a VP
is promoted to a higher corporate officer position, such as EVP or SVP, the pay
out for bonus compensation will be pro-rated by the number of months the officer
spends in each position.  For example:  If a VP is promoted
to SVP on April 1st, the
pay out would be 6 months at 50% and 6 months at 65% of base
compensation.

    

    At the
beginning of the next fiscal year the percentage of pay out would remain at the
appropriate level unless otherwise changed by Executive Management.

    

    
      	
               
      

            	
              D.

            	
              INITIAL
      CALCULATION, VERIFICATIONS, AND
APPROVALS

            

    

    

    The
incentive compensation plan payout calculations are calculated by the EVP Human
Resources. The calculations are then reviewed, verified, and approved by the
EVP/CFO and reviewed and approved by Executive Management. The payout
calculations are returned to the EVP Human Resources for appropriate payroll
processing.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    The
President’s performance incentive compensation is based on an average of all
objectives achieved by the management team officers participating in the
Plan.  The calculation of the President’s payout is completed by the
EVP Human Resources.  It is then reviewed and verified by the EVP/CFO,
with final approval by the Committee.

    

    E.           PROCESSING
PAYOUTS

    

    Bonuses
are paid in the calendar year in which the fiscal year
ends.  Deferrals to the next year are not permitted.

    

    
      	
               
      

            	
              F.

            	
              DISPUTE
      RESOLUTION FOR GOAL CALCULATION OR INCENTIVE COMPENSATION
      CALCULATION

            

    

    

    If
participants feel their incentive payout is calculated incorrectly or not paid
in accordance to the guidelines outlined in this plan document, the following
steps in the dispute process must be taken:

    

    
      	
               
      

            	
              a.

            	
              Notify
      EVP HR in writing within 30 days explaining
      dispute.  Information or error/s in calculation must be
      attached.

            

    

    

    
      	
               
      

            	
              b.

            	
              EVP/CFO
      will review dispute and recertify calculation/s.  A detailed
      explanation of findings will be
prepared.

            

    

    

    
      	
               
      

            	
              c.

            	
              EVP/CAO
      will verify final determination of EVP/CFO’s
  findings.

            

    

    

    
      	
              X.

            	
              TERMINATION
      OF THE PLAN

            

    

    

    The
Company’s Board of Directors may terminate, amend, or modify the Plan at any
time.  The termination, amendment, or modification of the Plan may not
affect a participant’s right to the Board of Directors approved and unpaid
incentive payouts for the period prior to termination or modification of the
Plan.

    

    
      
        	
                XI.

              	
                TERMINATION
      OF EMPLOYMENT

              

      

    

    

    Officers
participating in the Plan must be actively at work on the day the payout is
made.  If an officer terminates employment for other than retirement
or health related purposes prior to this day, the incentive payout is
forfeited.

    

    A.           POST-SEPARATION
OBLIGATIONS

    

    Upon
separation of employment, the participant hereby covenants and agrees that such
participant shall not take, and does not have in his/her possession, a copy of
the Performance Incentive Compensation Plan, any notes, reports, proposals,
computer disks, customer lists, marketing or business plans, or copies of them
or other documents or materials, or any other property belonging to the
Company.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              B.

            	
              GENERAL
      COMPANY POLICIES AND PROCEDURES

            

    

    

    The
Company’s policies and procedures are conditions of continued
employment.  Participants must certify that they have read within
sixty (60) days of the date hereof the Company’s Corporate Code of Business
Conduct and Ethics, employment guidelines or any other pertinent guidelines
relevant to their position.  In addition, each participant must
conform to all applicable legal and compliance obligations relating to their
employment.

    

    
      	
              XII.

            	
              SEVERABILITY

            

    

    

    Should
any provision of this Plan be deemed legally unenforceable, no other provision
of the plan may be affected.  The Plan may be construed as if it had
never included the unenforceable provision.

    

    The
officer signature requirement on the next page hereby acknowledges and certifies
that he/she has read the plan, been provided an opportunity to discuss any
concerns he/she may have with the Plan, and agrees to its terms.

     

    IMPORTANT
NOTICE

    

    THE
COMPANY HAS THE RIGHT TO CHANGE THIS PLAN AND THE POLICIES AND PROCEDURES WHEN
NECESSARY.  THE CONTENTS OF THIS PLAN ARE NOT A CONTRACT BETWEEN THE
COMPANY AND ANY OFFICER.  NOTHING IN THIS PLAN BINDS THE COMPANY OR
ANY OFFICER TO A SPECIFIC OR DEFINITE PERIOD OF EMPLOYMENT.  AS AN
OFFICER, YOU ARE COMPLETELY FREE TO LEAVE THE COMPANY AT ANY TIME YOU CHOOSE,
AND THE COMPANY HAS THE SAME RIGHT TO END THE EMPLOYMENT
RELATIONSHIP.

    

    EMPLOYEE
NAME (PRINT) _________________________ DATE: ___________________

    

    EMPLOYEE
SIGNATURE ___________________________ DATE: ___________________

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

     

    DEFINITIONS

    

    Performance
Measurement Factors - Those key operating ratios and other pertinent
measures of total companys
performance on which the participants will be evaluated.  Definitions
will expand as individual performance measurement factors are
added.  They include:

    

    
      	
               
      

            	
              *

            	
              Return
      on Equity - Net income after applicable income taxes, net of
      securities gains or losses, and net of unusual or extraordinary items,
      divided by average equity.

            

    

    

    
      	
               
      

            	
              *

            	
              Return
      on Assets - Net income after applicable income taxes, net of gains
      and losses on sales of securities, and net of unusual or extraordinary
      items, divided by average assets.

            

    

    

    
      	
               
      

            	
              *

            	
              Efficiency
      Ratio- General and administrative expenses divided by the sum of
      net interest income plus other income, net of gains and losses on sales of
      securities and real estate operations.  Unusual or extraordinary
      items should be deducted from both general and administrative expenses and
      from other income.

            

    

    

    
      	
               
      

            	
              *

            	
              Non-Interest
      Income - All fees, commissions, and revenues generated from
      servicing or origination of deposits and loan accounts, sales of insurance
      and revenues earned on sales of other various services (excludes real
      estate owned income and expense and net gains or losses of sales of
      securities).

            

    

    

    
      	
               
      

            	
              *

            	
              Mortgage
      Loan Production - Dollar volume origination of total retail
      mortgage loans for the respective plan year.   Loans
      purchased during the plan year.

            

    

    

    
      	
               
      

            	
              *

            	
              Non-Mortgage
      Loan Production - Dollar volume origination of total company
      consumer loans for the respective years.  Depending on the
      category may also be comprised of dollar volume origination of other types
      of loans, such as commercial loans.

            

    

    

    
      	
               
      

            	
              *

            	
              Problem
      Assets - Non-accrual loans, loans 90 days or more delinquent,
      restructured loans, loans carried at fair value and real estate and other
      assets acquired in settlement of
loans.

            

    

    

    
      *       
    Average
Problem Assets to Assets – Total of month-end balances of problem
assets
for each month of the current fiscal year as well as the end of month
balance
from the most recent fiscal year-end as reported by the Accounting Department
divided by the total of assets from the month-end assets on the Statement of
Condition for the current fiscal year as well as the end of month asset balance
from the most recent fiscal year-end.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              *

            	
              Transaction
      Accounts - Demand Accounts (NOW Accounts and regular checking
      account products, both interest bearing and non-interest
      bearing).

            

    

    
      	
               
      

            	
              *

            	
              Households
      - The total number of family units with which the Financial Institution
      has one or more product relationships.  This measurement may be
      sub-divided by a business unit (ie banking, trust, insurance) region or
      area based on zip code, street address, county, city or other reliable
      factor.  Households are measured based on the summarization of
      all account service and product data in the Marketing Customer Information
      File.

            

    

    

    
      	
               
      

            	
              *

            	
              Price
      Earnings Ratio - Ratio calculated by dividing the average daily
      price of the stock for each month by the earnings reported for the last
      twelve months.  Annual price/earnings ratio will be the average
      of the twelve monthly ratios.

            

    

    

    
      	
               
      

            	
              *

            	
              Cost
      Per Loans Serviced - Total operating cost of Loan Service less the
      identified cost of credit card service divided by the average number of
      consumer and real estate loans (exclude loans on deposit
      accounts).

            

    

    

    
      	
               
      

            	
              *

            	
              Call
      Center Efficiency - Threshold levels for calls answered in 30
      seconds or less and average calls per day per agent are established at 85%
      (monthly average) and 95 calls per day.  Target levels are set
      at 50% (85%/95 calls) and l00% (90%/100
calls).

            

    

    

    
      	
               
      

            	
              *

            	
              Interest
      Rate Risk for the Holding Company- Average of the consolidated
      dynamic gap/assets ratio for First Financial as measured on the last day
      of each fiscal quarter.

            

    

    

    
      	
               
      

            	
              *

            	
              Cost
      of Benefits- Cost of all benefits in the cafeteria plan per
      full-time equivalent employee of First Financial Holdings,
      Inc.

            

    

    

    
      	
               
      

            	
              *

            	
              Quality
      of Benefits/Satisfaction- The results of a survey distributed in
      the third quarter of the fiscal year to all Company employees to indicate
      an overall level of satisfaction in response to questions regarding
      quality and level of satisfaction with specific employment
      benefits.

            

    

    

    
      	
               
      

            	
              *

            	
              Quality
      of Office Service- A survey distributed in the fourth quarter of
      the fiscal year to all Company employees to measure the satisfaction of
      office services in response to questions regarding overall satisfaction
      with services delivered by Office
Services.

            

    

    

    
      	
               
      

            	
              *

            	
              Quality/Satisfaction
      with Facilities- A survey distributed in the fourth quarter of
      fiscal year to all Company employees to measure the level of satisfaction
      of facilities in response to questions regarding overall satisfaction with
      office space, parking, etc.

            

    

    

    
      	
               
      

            	
              *

            	
              Results
      of Annual Information Systems Quality Survey- A survey conducted in
      the fourth quarter of the fiscal year of all Company employees to indicate
      an average level of more than a satisfactory response to a question
      regarding overall satisfaction of
service.

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
                *

            	
              Completion
      of Projects- Individually assigned projects that must be completed
      by a specific time or by the end of the fiscal year to insure that
      specific results of the Company’s strategic business plan are
      achieved.

            

    

    

    
      	
               
      

            	
              *

            	
              Performance
      Threshold - The minimum performance level for each factor below
      which no reward will be given; also, the minimum overall performance level
      for return on equity.

            

    

    

    
      	
               
      

            	
              *

            	
              Incentive
      Factor Weighting - A percentage for each of the incentive factors
      for each participant, which is used to modify the basic incentive
      percentage to reflect the relative importance of the factor to that
      position.

            

    

    

    
      	
               
      

            	
              *

            	
              CRA
      Compliance Rating - a rating received from the Office of Thrift
      Supervision following the completion of their examination of our
      compliance with the Community Reinvestment
Act.

            

    

    

    
      	
               
      

            	
              *

            	
              Average
      Equity – Total of month-end equity balances on the Statement of
      Condition for all months of the current fiscal year plus the end of month
      balance from the most recent fiscal year-end divided by
  13.

            

    

    

    
      	
               
      

            	
              *

            	
              Average
      Assets – Total of month-end asset balances on the Statement of
      Condition for all months of the current fiscal year plus the end of month
      balance from the most recent fiscal year-end divided by
  13.

            

    

    

    
      
        
          	 	
                  *

                	
                  Net
      Interest Margin – Total of net interest income for the respective
      unit being measured
      divided by the aggregate of all average annual balances of interest
      earning
      assets as computed from the core processing system or from average month
      end balances should automated systems not be used at some
      units.

                

        

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

    

    
      
        	
                Performance Criteria

              	 
      	
                Measurement Importance*

              
	
                Return
      on Equity

              	 
      	
                Profitability

              
	
                Return
      on Assets

              	 
      	
                Profitability

              
	
                Efficiency
      Ratio

              	 
      	
                Expense
      Control

              
	
                Non-Interest
      Income

              	 
      	
                Profitability

              
	
                Mortgage
      Loan Production

              	 
      	
                Customer
      Base

              
	
                Non-Mortgage
      Loan Production

              	 
      	
                Customer
      Base

              
	
                Problem
      Assets

              	 
      	
                Asset
      Quality

              
	
                Transaction
      Accounts

              	 
      	
                Customer
      Base

              
	
                Households

              	 
      	
                Customer
      Base

              
	
                Price
      Earnings Ratio

              	 
      	
                Stockholders
      Return

              
	
                Cost
      Per Loan Service

              	 
      	
                Expense
      Control

              
	
                Call
      Center Efficiency

              	 
      	
                Customer
      Service

              
	
                Interest
      Rate Risk for Holding Company

              	 
      	
                Profitability

              
	
                Cost
      of Benefits

              	 
      	
                Expense
      Control

              
	
                Satisfaction
      of Quality of Benefits

              	 
      	
                Employee
      Retention

              
	
                Quality
      of Office Service to Staff

              	 
      	
                Employee
      Service

              
	
                Quality
      of Satisfaction of Facilities

              	 
      	
                Employee
      Service

              
	
                Results
      of Annual IS Quality Survey

              	 
      	
                Internal
      Customer Service

              
	
                Completion
      of Projects

              	 
      	
                Customer
      Service

              
	
                CRA
      Compliance Rating

              	 
      	
                Customer
      Base

              
	
                Net
      Interest Margin

              	 
      	
                Profitability

              

      

    

    

    * For each of the above performance
criteria, target levels and minimum target levels will be determined by
management and reviewed and
approved by the Committee.  Incentive payouts for Executive and Senior
Management will not be awarded if the Return on Equity (ROE) objective is not
achieved or if performance falls below the minimum target
level.

    
      
         

      

      
        13

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