Document:

tib8k020408ex10_1.htm

    
      

      

    

    TIB
      BANK OF THE KEYS

    SALARY
      CONTINUATION AGREEMENT

    

    This
      Salary Continuation Agreement
      (this “Agreement”) is adopted this ____ day of _______________, 200____, by and
      between TIB Bank of the Keys, a state-chartered commercial bank located in
      Monroe County, Florida (the “Company”), and _______________ (the
“Executive”).

    

    The
      purpose of this Agreement is to provide specified benefits to the Executive,
      a
      member of a select group of management or highly compensated employees who
      contribute materially to the continued growth, development and future business
      success of the Company.  This Agreement shall be unfunded for tax
      purposes and for purposes of Title I of the Employee Retirement Income Security
      Act of 1974 (“ERISA”), as amended from time to time.

    

    Article
      1

    Definitions

    

    Whenever
      used in this Agreement, the
      following words and phrases shall have the meanings specified:

    

    
      	
              1.1  

            	
              “Accrual
                Balance” means the liability that should be accrued by the Company,
                under Generally Accepted Accounting Principles (“GAAP”), for the Company’s
                obligation to the Executive under this Agreement, by applying Accounting
                Principles Board Opinion Number 12 as amended by Statement of Financial
                Accounting Standards Number 106 and the Discount Rate.  Any one
                of a variety of amortization methods may be used to determine the
                Accrual
                Balance.  However, once chosen, the method must be consistently
                applied.

            

    

      

    
      	
              1.2  

            	
              “Beneficiary”
                means each designated person or entity, or the estate of the deceased
                Executive, entitled to any benefits upon the death of the Executive
                pursuant to Article 4.

            

    

    

    
      	
              1.3  

            	
              “Beneficiary
                Designation Form” means the form established from time to time by
                the Plan Administrator that the Executive completes, signs and returns
                to
                the Plan Administrator to designate one or more
                Beneficiaries.

            

    

    

    
      	
              1.4  

            	
              “Benefit
                Basis”
                means the Executive's highest annualized Compensation from the three
                (3)
                years prior to Separation from Service, including the year such Separation
                from Service occurs.

            

    

    

    
      	
              1.5  

            	
              “Board”
means
                the Board of Directors of the Company as from time to time
                constituted.

            

    

    

    
      	
              1.6  

            	
              “Change
                in
                Control” means the acquisition by any person, or persons acting as
                a group within the meaning of Section 13(d) of the Securities Exchange
                Act
                of 1934, of fifty one percent (51%) or more of the voting securities
                of
                the Company or its parent, TIB Financial Corp., a Florida corporation.
                The
                term “person” as used herein includes an individual, corporation, bank
                holding company or other legal
                entity.

            

    

    

    
      	
              1.7  

            	
              “Code”
means
                the
                Internal Revenue Code of 1986, as amended, and all regulations and
                guidance thereunder, including such regulations and guidance as may
                be
                promulgated after the Effective
                Date.

            

    

    

    
      	
              1.8  

            	
              “Compensation”
                means the annual cash compensation relating to services performed
                during
                any calendar year, excluding distributions from nonqualified deferred
                compensation plans, bonuses, commissions, overtime, fringe benefits,
                stock
                options, relocation expenses, incentive payments, non-monetary awards,
                and
                other fees, and automobile and other allowances paid to the Executive
                for
                employment rendered (whether or not such allowances are included
                in the
                Executive’s gross income).  Compensation shall be calculated
                before reduction for compensation voluntarily deferred or contributed
                by
                the Executive pursuant to all qualified or non-qualified plans of
                the
                Company and shall be calculated to include amounts not otherwise
                included
                in the Executive's gross income under Code Sections 125, 402(e)(3),
                402(h), or 403(b) pursuant to plans established by the Company; provided,
                however, that all such amounts will be included in compensation only
                to
                the extent that had there been no such plan, the amount would have
                been
                payable in cash to the Executive.

            

    

    

    
      	
              1.9  

            	
              “Disability”
                means the Executive: (i) is unable to engage in any substantial gainful
                activity by reason of any medically determinable physical or mental
                impairment which can be expected to result in death or can be expected
                to
                last for a continuous period of not less than twelve (12) months;
                or (ii)
                is, by reason of any medically determinable physical or mental impairment
                which can be expected to result in death or can be expected to last
                for a
                continuous period of not less than twelve (12) months, receiving
                income
                replacement benefits for a period of not less than three (3) months
                under
                an accident and health plan covering employees or directors of the
                Company.  Medical determination of Disability may be made by
                either the Social Security Administration or by the provider of disability
                insurance covering employees or directors of the Company provided
                that the
                definition of “disability” applied under such insurance program complies
                with the requirements of the preceding sentence.  Upon the
                request of the Plan Administrator, the Executive must submit proof
                to the
                Plan Administrator of the Social Security Administration’s or the
                provider’s determination.

            

    

    

    
      	
              1.10  

            	
              “Discount
                Rate”
                means the rate used by the Plan Administrator for determining the
                Accrual
                Balance.  The initial Discount Rate is seven percent
                (7%).  However, the Plan Administrator, in its discretion, may
                adjust the Discount Rate to maintain the rate within reasonable standards
                according to GAAP and/or applicable bank regulatory
                guidance.

            

    

    

    
      	
              1.11  

            	
              “Early
                Termination” means Separation from Service before attainment of
                Normal Retirement Age except
                when such Separation from Service occurs following a Change in Control
                or
                due to death, Disability or Termination for
                Cause.

            

    

    

    
      	
              1.12  

            	
              “Effective
                Date”
                means January 2,
                2008.

            

    

    

    
      	
              1.13  

            	
              “Inflated
                Compensation” means Benefit Basis increased by four percent (4%)
                annually from Separation from Service to Normal Retirement
                Age.

            

    

    

    
      	
              1.14  

            	
              “Normal
                Retirement
                Age” means the Executive’s age sixty-five
                (65).

            

    

    

    
      	
              1.15  

            	
              “Normal
                Retirement
                Date” means the later of Normal Retirement Age or Separation from
                Service.

            

    

    

    
      	
              1.16  

            	
              “Plan
                Administrator” means the Board or such committee or person as the
                Board shall appoint.

            

    

    

    
      	
              1.17  

            	
              “Plan
                Year”
                means each twelve (12) month period commencing on January 1 and ending
                on
                December 31 of each year.  The initial Plan Year shall commence
                on the Effective Date of this Plan and end on the following December
                31.

            

    

    

    
      	
              1.18  

            	
              “Projected
                Benefit” means forty percent (40%) of Inflated
                Compensation.

            

    

    

    
      	
              1.19  

            	
              “Separation
                from Service” means
                termination of the Executive’s employment with
                the Company for reasons
                other than death.  Whether a Separation from Service has
                occurred is determined in
                accordance with the requirements of Code Section 409A based
                on whether the facts and
                circumstances indicate that the Company and Executive reasonably
                anticipated that no further services would be performed after a certain
                date or that the level of bona fide services the Executive would
                perform
                after such date (whether as an employee or as an independent contractor)
                would permanently decrease to no more than twenty percent (20%) of
                the
                average level of bona fide services performed (whether as an employee
                or
                an independent contractor) over the immediately preceding thirty-six
                (36)
                month period (or the full period of services to the Company if the
                Executive has been providing services to the Company less than thirty-six
                (36) months).

            

    

    

    
      	
              1.20  

            	
              “Specified
                Employee” means an employee who at the time of Separation from
                Service is a key employee of the Company, if any stock of the Company
                is
                publicly traded on an established securities market or
                otherwise.  For purposes of this Agreement, an employee is a key
                employee if the employee meets the requirements of Code Section
                416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the
                regulations thereunder and disregarding section 416(i)(5)) at any
                time
                during the twelve (12) month period ending on December 31 (the
                “identification period”).  If the employee is a key employee
                during an identification period, the employee is treated as a key
                employee
                for purposes of this Agreement during the twelve (12) month period
                that
                begins on the first day of April following the close of the identification
                period.

            

    

    

    
      	
              1.21  

            	
              “Termination
                for
                Cause” means Separation from Service
                for:

            

    

    

    
      	
              (a)  

            	
              Gross
                negligence or gross neglect of duties to the
                Company;

            

    

    
      	
              (b)  

            	
              Conviction
                of a felony or of a gross misdemeanor involving moral
                turpitude;

            

    

    
      	
              (c)  

            	
              Fraud,
                disloyalty, dishonesty or willful violation of any law or significant
                Company policy committed in connection with the Executive’s employment and
                resulting in a material adverse effect on the Company;
                or

            

    

    
      	
              (d)  

            	
              Any
                termination of employment for “cause” pursuant to any employment agreement
                between the Executive and the
                Company.

            

    

    

    Article
      2

    Distributions
      During Lifetime

    

    
      	
              2.1
                 

            	
              Normal
                Retirement
                Benefit.  Upon Separation from Service after attaining
                Normal Retirement Age, the Company shall distribute to the Executive
                the
                benefit described in this Section 2.1 in lieu of any other benefit
                under
                this Article. 

            

    

    

    
      	
              2.1.1

            	
              Amount
                of
                Benefit.  The annual benefit under this Section 2.1 is
                forty percent (40%) of Benefit Basis.

            

    

    

    
      	
              2.1.2

            	
              Distribution
                of
                Benefit.  The Company shall distribute the annual benefit
                to the Executive in twelve (12) equal monthly installments commencing
                on
                the first day of the month following the Normal Retirement
                Date.  The annual benefit shall be distributed to the Executive
                for ten (10) years. 

            

    

    

    
      	
              2.2

            	
              Early
                Termination
                Benefit.  If Early Termination occurs, the Company shall
                distribute to the Executive the benefit described in this Section
                2.2 in
                lieu of any other benefit under this Article.

            

    

    

    
      	
              2.2.1

            	
              Amount
                of
                Benefit.  The benefit under this Section 2.2 is the
                vested Accrual Balance determined as of the end of the Plan Year
                preceding
                Separation from Service subject to the Vesting Percentage. Interest
                shall
                be credited from Separation from Service to Normal Retirement Age
                at a
                rate equal to the Discount Rate in effect at the time of Separation
                from
                Service. 

            

    

    

    
      	
              Date
                in Which Separation from Service Occurs

            	
              Vesting
                Percentage

            
	
              01/01/08
                - 12/30/08

            	
              0%

            
	
              12/31/08
                - 12/30/09

            	
              10%

            
	
              12/31/09
                - 12/30/10

            	
              20%

            
	
              12/31/10
                - 12/30/11

            	
              30%

            
	
              12/31/11
                - 12/30/12

            	
              40%

            
	
              12/31/12
                - 12/30/13

            	
              50%

            
	
              12/31/13
                - 12/30/14

            	
              60%

            
	
              12/31/14
                - 12/30/15

            	
              70%

            
	
              12/31/15
                - 12/30/16

            	
              80%

            
	
              12/31/16
                - 12/30/17

            	
              90%

            
	
              On
                or After 12/31/17

            	
              100%

            

    

    

    
      	
              2.2.2

            	
              Distribution
                of
                Benefit.  The Company shall distribute the benefit to the
                Executive in one hundred twenty (120) equal monthly installments
                commencing on the first day of the month Normal Retirement
                Age.  Interest shall be credited from during the installment
                period at a rate equal to the Discount Rate in effect at the time
                of
                Separation from Service. 

            

    

    

    
      	
              2.3

            	
              Disability
                Benefit.  If
                the
                Executive experiences a Disability prior to Normal Retirement Age
                which
                results in Separation from Service, the Company shall distribute
                to the
                Executive the benefit described in this Section 2.3 in lieu of any
                other
                benefit under this Article. 

            

    

    

    
      	
              2.3.1

            	
              Amount
                of
                Benefit.  The benefit under this Section 2.3 is one
                hundred percent (100%) of the Accrual Balance determined as of the
                end of
                the Plan Year preceding Separation from Service. Interest shall be
                credited from Separation from Service to Normal Retirement Age at
                a rate
                equal to the Discount Rate in effect at the time of Separation from
                Service. 

            

    

    

    
      	
              2.3.2

            	
              Distribution
                of
                Benefit.  The Company shall distribute the benefit to the
                Executive in one hundred twenty (120) equal monthly installments
                commencing on the first day of the month Normal Retirement
                Age.  Interest shall be credited from during the installment
                period at a rate equal to the Discount Rate in effect at the time
                of
                Separation from Service. 

            

    

    

    
      	
              2.4

            	
              Change
                in Control
                Benefit.  If a Change in Control occurs, followed by
                Separation from Service prior to Normal Retirement Age, the Company
                shall
                distribute to the Executive the benefit described in this Section
                2.4 in
                lieu of any other benefit under this Article.

            

    

    

    
      	
              2.4.1

            	
              Amount
                of
                Benefit.  The
                annual
                benefit under this Section 2.4 is one hundred percent (100%) of the
                Projected Benefit. 

            

    

    

    
      	
              2.4.2

            	
              Distribution
                of
                Benefit. 
                The Company shall
                distribute the benefit to the Executive in twelve (12) equal monthly
                installments commencing on the first day of the month following Normal
                Retirement Age. The annual benefit shall be distributed to the Executive
                for ten (10) years. 

            

    

    

    
      	
              2.5

            	
              Restriction
                on
                Commencement of Distributions.  Notwithstanding any provision
                of this Agreement to the contrary, if the Executive is considered
                a
                Specified Employee, the provisions of this Section 2.5 shall govern
                all
                distributions hereunder.  If benefit distributions which would
                otherwise be made to the Executive due to Separation from Service
                are
                limited because the Executive is a Specified Employee, then such
                distributions shall not be made during the first six (6) months following
                Separation from Service.  Rather, any distribution which would
                otherwise be paid to the Executive during such period shall be accumulated
                and paid to the Executive in a lump sum on the first day of the seventh
                month following Separation from Service.  All subsequent
                distributions shall be paid in the manner specified.
                

            

    

    

    
      	
              2.6

            	
              Distributions
                Upon
                Taxation of Amounts Deferred. If, pursuant to Code Section 409A,
                the Federal Insurance Contributions Act or other state, local or
                foreign
                tax, the Executive becomes subject to tax on the amounts deferred
                hereunder, then the Company may make a limited distribution to the
                Executive in a manner that conforms to the requirements of Code section
                409A.  Any such distribution will decrease the Executive’s
                benefits distributable under this Agreement.

            

    

    

    
      	
              2.7

            	
              Change
                in Form or
                Timing of Distributions.  For distribution of benefits under
                this Article 2, the Executive and the Company may, subject to the
                terms of
                Section 8.1, amend this Agreement to delay the timing or change the
                form
                of distributions.  Any such amendment:

            

    

    
      	
               

            	
               
                

            

    

    
      	
              (a)  

            	
              may
                not accelerate the time or schedule of any distribution, except as
                provided in Code Section 409A;

            

    

    
      	
              (b)  

            	
              must,
                for benefits distributable under Sections 2.2, 2.3 and 2.4 , be made
                at
                least twelve (12) months prior to the first scheduled
                distribution;

            

    

    
      	
              (c)  

            	
              must,
                for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4,
                delay the
                commencement of distributions for a minimum of five (5) years from
                the
                date the first distribution was originally scheduled to be made;
and

            

    

    
      	
              (d)  

            	
              must
                take effect not less than twelve (12) months after the amendment
                is
                made.

            

    

    

    Article
      3

    Distribution
      at Death

    

    
      	
              3.1

            	
              Death
                During Active
                Service.  If the Executive dies prior to Separation from
                Service, the Company shall distribute to the Beneficiary the benefit
                described in this Section 3.1.  This benefit shall be
                distributed in lieu of any benefit under Article 2.
                

            

    

    

    
      	
              3.1.1

            	
              Amount
                of
                Benefit.  The benefit under this Section 3.1 is one
                hundred percent (100%) of the Accrual Balance determined as of the
                end of
                the Plan Year prior to the Executive’s death.

            

    

    

    
      	
              3.1.2

            	
              Distribution
                of
                Benefit.  The Company shall distribute the benefit to the
                Beneficiary in one hundred twenty (120) equal monthly installments
                commencing on the first day of the fourth month following the Executive’s
                death. Interest shall be credited from the date of death and during
                the
                installment period at a rate equal to the Discount Rate in effect
                at the
                time of the Executive’s death. The Beneficiary shall be required to
                provide to the Company the Executive’s death certificate.
                

            

    

     

    
      	
              3.2

            	
              Death
                During
                Distribution of a Benefit.  If the Executive dies after
                any benefit distributions have commenced under this Agreement but
                before
                receiving all such distributions, the Company shall distribute to
                the
                Beneficiary the remaining benefits at the same time and in the same
                amounts they would have been distributed to the Executive had the
                Executive survived. 

            

    

     

    
      	
              3.3

            	
              Death
                Before Benefit
                Distributions Commence. If
                the Executive
                is entitled to benefit distributions under this Agreement but dies
                prior
                to the date that commencement of said benefit distributions are scheduled
                to be made under this Agreement, the Company shall distribute to
                the
                Beneficiary the same benefits to which the Executive was entitled
                prior to
                death, except that the benefit distributions shall commence on the
                first
                day of the fourth month following the Executive’s death. The Beneficiary
                shall be required to provide to the Company the Executive’s death
                certificate. 

            

    

    

    Article
      4

    Beneficiaries

    

    
      	
              4.1

            	
              In
                General.  The Executive shall have the right, at any
                time, to designate a Beneficiary to receive any benefit distributions
                under this Agreement upon the death of the Executive.  The
                Beneficiary designated under this Agreement may be the same as or
                different from the beneficiary designated under any other plan of
                the
                Company in which the Executive participates.

            

    

    

    
      	
              4.2

            	
              Designation.  The
                Executive shall designate a Beneficiary by completing and signing
                the
                Beneficiary Designation Form and delivering it to the Plan Administrator
                or its designated agent.  If the Executive names someone other
                than the Executive’s spouse as a Beneficiary, the Plan Administrator may,
                in its sole discretion, determine that spousal consent is required
                to be
                provided in a form designated by the Plan Administrator, executed
                by the
                Executive’s spouse and returned to the Plan Administrator.  The
                Executive's beneficiary designation shall be deemed automatically
                revoked
                if the Beneficiary predeceases the Executive or if the Executive
                names a
                spouse as Beneficiary and the marriage is subsequently
                dissolved.  The Executive shall have the right to change a
                Beneficiary by completing, signing and otherwise complying with the
                terms
                of the Beneficiary Designation Form and the Plan Administrator’s rules and
                procedures.  Upon the acceptance by the Plan Administrator of a
                new Beneficiary Designation Form, all Beneficiary designations previously
                filed shall be cancelled.  The Plan Administrator shall be
                entitled to rely on the last Beneficiary Designation Form filed by
                the
                Executive and accepted by the Plan Administrator prior to the Executive’s
                death. 

            

    

    

    
      	
              4.3

            	
              Acknowledgment.  No
                designation or change in designation of a Beneficiary shall be effective
                until received, accepted and acknowledged in writing by the Plan
                Administrator or its designated agent.

            

    

    

    
      	
              4.4

            	
              No
                Beneficiary
                Designation.  If the Executive dies without a valid
                beneficiary designation, or if all designated Beneficiaries predecease
                the
                Executive, then the Executive’s spouse shall be the designated
                Beneficiary.  If the Executive has no surviving spouse, any
                benefit shall be paid to the Executive's estate.
                

            

    

    

    
      	
              4.5

            	
              Facility
                of
                Distribution.  If the Plan Administrator determines in
                its discretion that a benefit is to be distributed to a minor, to
                a person
                declared incompetent or to a person incapable of handling the disposition
                of that person’s property, the Plan Administrator may direct distribution
                of such benefit to the guardian, legal representative or person having
                the
                care or custody of such minor, incompetent person or incapable
                person.  The Plan Administrator may require proof of
                incompetence, minority or guardianship as it may deem appropriate
                prior to
                distribution of the benefit.  Any distribution of a benefit
                shall be a distribution for the account of the Executive and the
                Beneficiary, as the case may be, and shall completely discharge any
                liability under this Agreement for such distribution amount.
                

            

    

    

    Article
      5

    General
      Limitations

    

    
      	
              5.1

            	
              Termination
                for
                Cause.  Notwithstanding any provision of this Agreement
                to the contrary, the Company shall not distribute any benefit under
                this
                Agreement if the Executive’s employment with the Company is terminated by
                the Company or an applicable regulator due to a Termination for Cause.
                

            

    

    

    
      	
              5.2

            	
              Suicide
                or
                Misstatement.  No benefit shall be distributed if the
                Executive commits suicide within two (2) years after the Effective
                Date,
                or if an insurance company which issued a life insurance policy covering
                the Executive and owned by the Company denies coverage (i) for material
                misstatements of fact made by the Executive on an application for
                such
                life insurance, or (ii) for any other reason.

            

    

    

    
      	
              5.3  

            	
              Removal. Notwithstanding
                any provision of this Agreement to the contrary, the Company shall
                not
                distribute any benefit under this Agreement if the Executive is subject
                to
                a final removal or prohibition order issued by an appropriate federal
                banking agency pursuant to Section 8(e) of the Federal Deposit Insurance
                Act.

            

    

    

    
      	
              5.4  

            	
              Regulatory
                Restrictions.  Notwithstanding anything herein to the
                contrary, any payments made to the Executive pursuant to this Agreement,
                or otherwise, shall be subject upon compliance with 12 U.S.C. 1828
                and
                FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification
                Payments
                and any other regulations or guidance promulgated
                thereunder.

            

    

    

    
      	
              5.5  

            	
              Forfeiture
                Provision.  The Company shall not pay any benefit under
                this Agreement if the Executive, without the prior written consent
                of the
                Company, engages in, becomes interested in, directly or indirectly,
                as a
                sole proprietor, as a partner in a partnership, or as a substantial
                shareholder in a corporation, or becomes associated with, in the
                capacity
                of employee, director, officer, principal, agent, trustee or in any
                other
                capacity whatsoever, any enterprise conducted in the trading area
                (a fifty
                (50) mile radius) of the business of the Company, which enterprise
                is, or
                may deemed to be, competitive with any business carried on by the
                Company
                for a period of two (2) years following Separation from
                Service.

            

    

    

    
      	
              5.6

            	
              Change
                in
                Control.  The forfeiture provision detailed in Section
                5.5 hereof shall not be enforceable following a Change in Control.
                

            

    

    

    Article
      6

    Administration
      of Agreement

    

    
      	
              6.1

            	
              Plan
                Administrator
                Duties.  The Plan Administrator shall administer this
                Agreement according to its express terms and shall also have the
                discretion and authority to (i) make, amend, interpret and enforce
                all
                appropriate rules and regulations for the administra­tion of this
                Agreement and (ii) decide or resolve any and all ques­tions, including
                interpretations of this Agreement, as may arise in connection with
                this
                Agreement to the extent the exercise of such discretion and authority
                does
                not conflict with Code Section 409A.

            

    

    

    
      	
              6.2

            	
              Agents.  In
                the administration of this Agreement, the Plan Administrator may
                employ
                agents and delegate to them such administrative duties as the Plan
                Administrator sees fit, including acting through a duly appointed
                representative, and may from time to time consult with counsel who
                may be
                counsel to the Company. 

            

    

    

    
      	
              6.3

            	
              Binding
                Effect of
                Decisions.  Any decision or action of the Plan
                Administrator with respect to any question arising out of or in connection
                with the administration, interpretation or application of this Agreement
                and the rules and regulations promulgated hereunder shall be final
                and
                conclusive and binding upon all persons having any interest in this
                Agreement. 

            

    

    

    
      	
              6.4

            	
              Indemnity
                of Plan
                Administrator.  The Company shall indemnify and hold
                harmless the Plan Administrator against any and all claims, losses,
                damages, expenses or liabilities arising from any action or failure
                to act
                with respect to this Agreement, except in the case of willful misconduct
                by the Plan Administrator. 

            

    

    

    
      	
              6.5

            	
              Company
                Information.  To enable the Plan Administrator to perform
                its functions, the Company shall supply full and timely information
                to the
                Plan Administrator on all matters relating to the date and
                circum­stances of the Executive’s death, Disability or Separation from
                Service, and such other pertinent information as the Plan Administrator
                may reasonably require. 

            

    

    

    
      	
              6.6

            	
              Annual
                Statement. The Plan Administrator shall provide to the Executive,
                within one hundred twenty (120) days after the end of each Plan Year,
                a
                statement setting forth the benefits to be distributed under this
                Agreement. 

            

    

     

    Article
      7

    Claims
      And Review Procedures

    

    
      	
              7.1

            	
              Claims
                Procedure.  An Executive or Beneficiary (“claimant”) who
                has not received benefits under this Agreement that he or she believes
                should be distributed shall make a claim for such benefits as follows:
                

            

    

    

    
      	
              7.1.1

            	
              Initiation
–
Written
                Claim.  The claimant initiates a claim by submitting to
                the Plan Administrator a written claim for the benefits.  If
                such a claim relates to the contents of a notice received by the
                claimant,
                the claim must be made within sixty (60) days after such notice was
                received by the claimant.  All other claims must be made within
                one hundred eighty (180) days of the date on which the event that
                caused the claim to arise occurred.  The claim must state with
                particularity the determination desired by the claimant.
                

            

    

     

    
      	
              7.1.2

            	
              Timing
                of Plan
                Administrator Response.  The
                Plan
                Administrator shall respond to such claimant within ninety (90) days
                after
                receiving the claim.  If the Plan Administrator determines that
                special circumstances require additional time for processing the
                claim,
                the Plan Administrator can extend the response period by an additional
                ninety (90) days by notifying the claimant in writing, prior to the
                end of
                the initial ninety (90) day period that an additional period is
                required.  The notice of extension must set forth the special
                circumstances and the date by which the Plan Administrator expects
                to
                render its decision. 

            

    

    

    
      	
              7.1.3

            	
              Notice
                of
                Decision.  If the Plan Administrator denies part or the
                entire claim, the Plan Administrator shall notify the claimant in
                writing
                of such denial.  The Plan Administrator shall write the
                notification in a manner calculated to be understood by the
                claimant.  The notification shall set forth:
                

            

    

    

    
      	
               

            	
              (a)

            	
              The
                specific reasons for the denial; 

            

    

    
      	
               

            	
              (b)

            	
              A
                reference to the specific provisions of this Agreement on which the
                denial
                is based; 

            

    

    
      	
               

            	
              (c)

            	
              A
                description of any additional information or material necessary for
                the
                claimant to perfect the claim and an explanation of why it is needed;
                

            

    

    
      	
               

            	
              (d)

            	
              An
                explanation of this Agreement’s review procedures and the time limits
                applicable to such procedures; and 

            

    

    
      	
               

            	
              (e)

            	
              A
                statement of the claimant’s right to bring a civil action under ERISA
                Section 502(a) following an adverse benefit determination on review.
                

            

    

    

    
      	
              7.2

            	
              Review
                Procedure.  If the Plan Administrator denies part or the
                entire claim, the claimant shall have the opportunity for a full
                and fair
                review by the Plan Administrator of the denial as follows:
                

            

    

    

    
      	
              7.2.1

            	
              Initiation
–
Written
                Request.  To initiate the review, the claimant, within
                sixty (60) days after receiving the Plan Administrator’s notice of denial,
                must file with the Plan Administrator a written request for review.
                

            

    

    

    
      	
              7.2.2

            	
              Additional
                Submissions
                – Information Access.  The claimant shall then have the
                opportunity to submit written comments, documents, records and other
                information relating to the claim.  The Plan Administrator shall
                also provide the claimant, upon request and free of charge, reasonable
                access to, and copies of, all documents, records and other information
                relevant (as defined in applicable ERISA regulations) to the claimant’s
                claim for benefits. 

            

    

    

    
      	
              7.2.3

            	
              Considerations
                on
                Review.  In considering the review, the Plan
                Administrator shall take into account all materials and information
                the
                claimant submits relating to the claim, without regard to whether
                such
                information was submitted or considered in the initial benefit
                determination. 

            

    

    

    
      	
              7.2.4

            	
              Timing
                of Plan
                Administrator Response.  The Plan Administrator shall
                respond in writing to such claimant within sixty (60) days after
                receiving
                the request for review.  If the Plan Administrator determines
                that special circumstances require additional time for processing
                the
                claim, the Plan Administrator can extend the response period by an
                additional sixty (60) days by notifying the claimant in writing,
                prior to
                the end of the initial sixty (60) day period that an additional period
                is
                required.  The notice of extension must set forth the special
                circumstances and the date by which the Plan Administrator expects
                to
                render its decision. 

            

    

    

    
      	
              7.2.5

            	
              Notice
                of
                Decision.  The Plan Administrator shall notify the
                claimant in writing of its decision on review.  The Plan
                Administrator shall write the notification in a manner calculated
                to be
                understood by the claimant.  The notification shall set forth:
                

            

    

    

    
      	
               

            	
              (a)

            	
              The
                specific reasons for the denial; 

            

    

    
      	
               

            	
              (b)

            	
              A
                reference to the specific provisions of this Agreement on which the
                denial
                is based; 

            

    

    
      	
               

            	
              (c)

            	
              A
                statement that the claimant is entitled to receive, upon request
                and free
                of charge, reasonable access to, and copies of, all documents, records
                and
                other information relevant (as defined in applicable ERISA regulations)
                to
                the claimant’s claim for benefits; and

            

    

    
      	
               

            	
              (d)

            	
              A
                statement of the claimant’s right to bring a civil action under ERISA
                Section 502(a). 

            

    

     

    Article
      8

    Amendments
      and Termination

    

    
      	
              8.1  

            	
              Amendments.  This
                Agreement may be amended only by a written agreement signed by the
                Company
                and the Executive.  However, the Company may unilaterally amend
                this Agreement to conform to written directives to the Company from
                its
                auditors or banking regulators or to comply with legislative changes
                or
                tax law, including without limitation Code Section
                409A.

            

    

    

    
      	
              8.2  

            	
              Plan
                Termination
                Generally.  This Agreement may be terminated only by a
                written agreement signed by the Company and the Executive.  The
                benefit shall be the Accrual Balance as of the date this Agreement
                is
                terminated.  Except as provided in Section 8.3, the termination
                of this Agreement shall not cause a distribution of benefits under
                this
                Agreement.  Rather, upon such termination benefit distributions
                will be made at the earliest distribution event permitted under Article
                2
                or Article 3.

            

    

    

    
      	
              8.3  

            	
              Plan
                Terminations
                Under Code Section 409A.  Notwithstanding anything to the
                contrary in Section 8.2, if the Company terminates this Agreement
                in the
                following circumstances:

            

    

    

    
      	
               

            	
              (a)

            	
              Within
                thirty (30) days before or twelve (12) months after a change in the
                ownership or effective control of the Company, or in the ownership
                of a
                substantial portion of the assets of the Company as described in
                Code
                Section 409A(a)(2)(A)(v), provided that all distributions are made
                no
                later than twelve (12) months following such termination of this
                Agreement
                and further provided that all the Company's arrangements which
                are substantially similar to this Agreement are
                terminated so the Executive and all participants in the
                similar arrangements are required to receive all amounts of
                compensation deferred under the terminated arrangements within twelve
                (12)
                months of such termination; 

            

    

    
      	
               

            	
              (b)

            	
              Upon
                the Company’s dissolution or with the approval of a bankruptcy court
                provided that the amounts deferred under this Agreement are included
                in
                the Executive's gross income in the latest of (i) the calendar year
                in
                which this Agreement terminates; (ii) the calendar year in which
                the
                amount is no longer subject to a substantial risk of forfeiture;
                or (iii)
                the first calendar year in which the distribution is administratively
                practical; or 

            

    

    
      	
               

            	
              (c)

            	
              Upon
                the Company’s termination of this and all other arrangements that would be
                aggregated with this Agreement pursuant to Treasury Regulations Section
                1.409A-1(c) if the Executive participated in such arrangements (“Similar
                Arrangements”), provided that (i) the termination and liquidation does not
                occur proximate to a downturn in the financial health of the Company,
                (ii)
                all termination distributions are made no earlier than twelve (12)
                months
                and no later than twenty-four (24) months following such termination,
                and
                (iii) the Company does not adopt any new arrangement that would be
                a
                Similar Arrangement for a minimum of three (3) years following the
                date
                the Company takes all necessary action to irrevocably terminate and
                liquidate the Agreement; the Company may distribute the Accrual Balance,
                determined as of the date of the termination of this Agreement, to
                the
                Executive in a lump sum subject to the above
                terms.

            

    

     

    Article
      9

    Miscellaneous

    

    
      	
              9.1

            	
              Binding
                Effect.  This Agreement shall bind the Executive and the
                Company and their beneficiaries, survivors, executors, administrators
                and
                transferees. 

            

    

    

    
      	
              9.2

            	
              No
                Guarantee of
                Employment.  This Agreement is not a contract for
                employment.  It does not give the Executive the right to remain
                as an employee of the Company nor interfere with the Company's right
                to
                discharge the Executive.  It does not require the Executive to
                remain an employee nor interfere with the Executive's right to terminate
                employment at any time. 

            

    

    

    
      	
              9.3

            	
              Non-Transferability.  Benefits
                under this Agreement cannot be sold, transferred, assigned, pledged,
                attached or encumbered in any manner.

            

    

    

    
      	
              9.4

            	
              Tax
                Withholding and
                Reporting.  The Company shall withhold any taxes that are
                required to be withheld, including but not limited to taxes owed
                under
                Code Section 409A from the benefits provided under this
                Agreement.  The Executive acknowledges that the Company’s sole
                liability regarding taxes is to forward any amounts withheld to the
                appropriate taxing authorities.  The Company shall satisfy all
                applicable reporting requirements, including those under Code Section
                409A. 

            

    

    

    
      	
              9.5

            	
              Applicable
                Law.  This Agreement and all rights hereunder shall be
                governed by the laws of the State of Florida, except to the extent
                preempted by the laws of the United States of America.
                

            

    

    

    
      	
              9.6

            	
              Unfunded
                Arrangement.  The Executive and the Beneficiary are
                general unsecured creditors of the Company for the distribution of
                benefits under this Agreement.  The benefits represent the mere
                promise by the Company to distribute such benefits.  The rights
                to benefits are not subject in any manner to anticipation, alienation,
                sale, transfer, assignment, pledge, encumbrance, attachment or garnishment
                by creditors.  Any insurance on the Executive's life or other
                informal funding asset is a general asset of the Company to which
                the
                Executive and Beneficiary have no preferred or secured claim.
                

            

    

    

    
      	
              9.7

            	
              Reorganization. The
                Company shall
                not merge or consolidate into or with another bank, or reorganize,
                or sell
                substantially all of its assets to another bank, firm or person unless
                such succeeding or continuing bank, firm or person agrees to assume
                and
                discharge the obligations of the Company under this
                Agreement.  Upon the occurrence of such an event, the term
                “Company” as used in this Agreement shall be deemed to refer to the
                successor or survivor entity. 

            

    

    

    
      	
              9.8

            	
              Entire
                Agreement. This
                Agreement
                constitutes the entire agreement between the Company and the Executive
                as
                to the subject matter hereof.  No rights are granted to the
                Executive by virtue of this Agreement other than those specifically
                set
                forth herein. 

            

    

    

    
      	
              9.9

            	
              Interpretation.  Wherever
                the fulfillment of the intent and purpose of this Agreement requires
                and
                the context will permit, the use of the masculine gender includes
                the
                feminine and use of the singular includes the plural.
                

            

    

    

    
      	
              9.10

            	
              Alternative
                Action.  In the event it shall become impossible for the
                Company or the Plan Administrator to perform any act required by
                this
                Agreement due to regulatory or other constraints, the Company or
                Plan
                Administrator may perform such alternative act as most nearly carries
                out
                the intent and purpose of this Agreement and is in the best interests
                of
                the Company, provided that such alternative act does not violate
                Code
                Section 409A. 

            

    

    

    
      	
              9.11

            	
              Headings.  Article
                and section headings are for convenient reference only and shall
                not
                control or affect the meaning or construction of any provision herein.
                

            

    

    

    
      	
              9.12

            	
              Validity.  If
                any provision of this Agreement shall be illegal or invalid for any
                reason, said illegality or invalidity shall not affect the remaining
                parts
                hereof, but this Agreement shall be construed and enforced as if
                such
                illegal or invalid provision had never been included herein.
                

            

    

    

    
      	
              9.13

            	
              Notice.  Any
                notice or filing required or permitted to be given to the Company
                or Plan
                Administrator under this Agreement shall be sufficient if in writing
                and
                hand-delivered or sent by registered or certified mail to the address
                below: 

            

    

     

    
      	 
	 
	 

    

     

    Such
      notice shall be deemed given as of the date of delivery or, if delivery is
      made
      by mail, as of the date shown on the postmark on the receipt for registration
      or
      certification.

    

    Any
      notice or filing required or permitted to be given to the Executive under this
      Agreement shall be sufficient if in writing and hand-delivered or sent by mail
      to the last known address of the Executive.

    

    
      	
              9.14

            	
              Compliance
                with
                Section 409A.  This Agreement shall be interpreted and
                administered consistent with Code Section 409A.

            

    

    

     

    IN
      WITNESS WHEREOF, the Executive and a duly authorized representative of the
      Company have signed this Agreement.

     

    

    
      	 EXECUTIVE 	 	 COMPANY	 
	 	 	 	 
	 	
               By: 
                

            	 	 
	 	
               Title: 
                

            	 	 
	 	 	 	 

    

                                                                                        
      

    

    {
      }            New
      Designation

    {
      }            Change in
      Designation

    

    I,
      ________________, designate the following as Beneficiary under this
      Agreement:

     

    
    

    
      	 Primary:	 	 	 	 
	 	 	 	 	 %
	
               

            	 	 	 	 %
	 	 	 	 	 
	Contingent: 	 	 	 	 
	 	 	 	 	 %
	 	 	 	 	 %
	 	 	 	 	 

    

     

    
      	
               

            	
              Notes:
                

            

    

    
      	
              ·  

            	
              Please
                PRINT CLEARLY or TYPE the names of the
                beneficiaries.

            

    

    
      	
              ·  

            	
              To
                name a trust as Beneficiary, please provide the name of the trustee(s)
                and
                the exact
                name and date of the trust
                agreement.

            

    

    
      	
              ·  

            	
              To
                name your estate as Beneficiary, please write “Estate of [your
                name]”.

            

    

    
      	
              ·  

            	
              Be
                aware that none of the contingent beneficiaries will receive anything
                unless ALL of the primary beneficiaries predecease
                you.

            

    

    

    I
      understand that I may change these beneficiary designations by delivering a
      new
      written designation to the Plan Administrator, which shall be effective only
      upon receipt and acknowledgment by the Plan Administrator prior to my
      death.  I further understand that the designations will be
      automatically revoked if the Beneficiary predeceases me, or, if I have named
      my
      spouse as Beneficiary and our marriage is subsequently dissolved.

    

    Name: 
      ___________________________________________  

    

    Signature: 
      _______________________________________  Date:  
__________________________

    

    Received
      by the Plan Administrator this __________ day of _____________________,
      200___________

    

    By:         _________________________________

    

    Title:      _________________________________<PAGE>

EXHIBIT 10.1

                                LOUIS J. GIRAUDO
================================================================================

                                                                February 4, 2008

To the Board of Directors
  of Overhill Farms, Inc.
C/o Mr. James Rudis
Chairman, Chief Executive Officer and President
2727 East Vernon Avenue
Vernon, California 90058

         I have decided to resign from the Board of Directors of Overhill Farms,
Inc. (the "Company"), effective as of the date of this letter.

         I take this action as a result of my disagreement with the failure of
the Company and its Board of Directors to respond appropriately to indications
of interest from GESD Capital Partners ("GESD") and a financial partner, in the
acquisition of all of the outstanding stock of the Company for a cash price of
$4.40 per share (copies of which indications of interest are attached). The
failure of the Company's Board of Directors to timely pursue this opportunity
which would provide to the Company's shareholders immediate liquidity at a
significant premium to the current market price is conduct with which I
disagree. I submit this letter in respect of my capacity as a director, and not
as a partner in GESD.

         I remain hopeful that the Company and its Board of Directors will
proceed with the negotiation and pursuit of the possible transaction to provide
Company shareholders with the opportunity for immediate cash at a premium
valuation. I wish you well.

                                                          Respectfully,

                                                          /s/ Louis J. Giraudo
                                                          ----------------------

                                                          Louis J. Giraudo

         Attachments

================================================================================
              221 Main Street, Suite 1450, San Francisco, CA 94122

<PAGE>

                         Citicorp Venture Capital       GESD Capital Partners
                         399 Park Avenue                221 Main Street
                         14th Floor                     Suite 1450
                         New York, NY 10022             San Francisco, CA 94105

                                                                 January 9, 2008

STRICTLY CONFIDENTIAL
---------------------

Board of Directors of Overhill Farms, Inc.
c/o Mr. James Rudis
Chairman, Chief Executive Officer and President
Overhill Farms Inc.
2727 East Vernon Avenue
Vernon, California 90058

Dear Ladies and Gentlemen:

         On behalf of Citicorp Venture Capital ("CVC") and GESD Capital Partners
("GESD", and together with CVC and each party's assigns, the "Purchasers"), we
are pleased to inform you we are interested in exploring the acquisition of all
of the outstanding common stock of Overhill Farms Inc. (the "Company") for a
cash price of $4.00 per share, representing more than a 40% premium above the
current trading price. We believe this price is very attractive to public
shareholders and allows them to recognize immediate and significant cash value
upon consummation of a transaction as compared to remaining holders of the
Company's public stock.

         In order to complete our evaluation, the Purchasers and our advisors
will require access to the Company's senior management, internal financial
information and business information. We are prepared to commence our due
diligence investigations immediately and work together towards consummation of a
definitive transaction as quickly as possible. Furthermore, our extensive
knowledge of the Company and its industry will allow us to promptly assess the
Company's business, operations and strategies and to make and complete an
acquisition proposal within 45 days after the date the Company executes and
returns this letter.

         Should we consummate a transaction, we anticipate the current workforce
will stay intact and the Company's senior management will be retained and
offered the opportunity to participate in the transaction through direct
investment on an equal basis with the Purchasers. Additionally, it is the
practice of the Purchasers to install equity related incentive plans in their
portfolio companies that enable management to earn additional ownership in the
Company over time.

         Our acquisition of the Company requires financing in the form of bank
debt and equity. We have spoken with several financing sources who have
expressed significant interest in underwriting the debt financing for us. The
balance of the required funding will be in the form of equity and other
securities which will be purchased by Purchasers and other participants in the
transaction.

         We believe premature public disclosure of our interest would severely
disrupt the Company's business and its relationships with customers and
employees and would possibly require significant disclosure of confidential
information to actual and potential competitors without any assurance of
achieving a satisfactory result for the Company's shareholders. As a result, we
would request the opportunity to negotiate with the Company on an exclusive and

<PAGE>

Overhill Farms Inc.                                   Thursday, January 10, 2008
Indication of Interest

confidential basis for the next 45 days. By dealing exclusively with CVC and
GESD, the Company can determine whether it can obtain a fair and attractive
price for the Company without such disruptions. Consequently, by signing below
and returning this letter to either of the undersigned on or before January 15,
2008, you agree that any negotiations regarding a potential transaction
involving the Company will be conducted with the Purchasers on an exclusive and
confidential basis for forty-five (45) days after the date that you execute and
return this letter. You should understand, however, that disclosure of this
letter or of its contents would be in violation of Purchasers' Non-Disclosure
Agreement with the Company and would, in all likelihood, cause Purchasers to
terminate their interest in consummating a transaction with the Company.

         In addition, to assure the board that negotiating an acquisition
agreement with us will not foreclose the possibility of achieving even greater
value for the Company's shareholders, we are amenable to having the acquisition
agreement permit the Company to consider more attractive alternative
transactions and to terminate our agreement to accept a superior proposal,
subject to the payment of a customary break-up fee and the reimbursement of our
expenses. We realize that the board will need to consider with its advisors how
the Company should proceed. After that discussion, if you are interested in
exploring a potential transaction with CVC and GESD, we and our advisers are
prepared to immediately commence due diligence and work speedily towards the
consummation of a definitive agreement.

         It is expressly understood that (1) this letter is not intended to, and
does not, create or constitute a decision or an agreement to consummate an
acquisition or to enter into a definitive agreement for such purpose, and (2)
the parties will have no rights or obligations of any kind whatsoever in
respect of the proposed acquisition by virtue of this letter or any other
written or oral expression by our respective representatives unless and until
definitive agreements are executed and delivered in relation thereto; provided
that the respective obligations of the parties relating to exclusivity and
confidentiality will be binding upon the parties where the Company has signed
and returned a copy of this letter in the manner provided below.

         We are excited about the prospect of a transaction with the Company and
look forward to hearing from you. If you are in agreement with the foregoing,
please so indicate by signing this letter in the space set forth below and
returning a signed copy to either of the undersigned on or before January 15,
2008. Should you have any questions or comments concerning this letter, please
feel free, at your convenience, to contact Alex Coleman (212-559-0103), Lou
Giraudo (415-477-8204), Martin McNulty (212-559-0326) or Dan Stromberg
(415-477-8211).

Sincerely,

Citicorp Venture Capital,                      GESD Capital Partners
A unit of Citigroup Alternative
Investments LLC

By: /s/ Alexander P. Coleman                   By: /s/ Louis J. Giraudo
    ----------------------------                   ----------------------------
    Alexander P. Coleman                           Louis J. Giraudo
    Managing Partner                               Co-Founder & Partner

                                     2 of 3

<PAGE>

Overhill Farms Inc.                                   Thursday, January 10, 2008
Indication of Interest

Accepted and agreed to as of the date of   ________
Overhill Farms Inc.

By:  ____________________

Name:
Title:

                                     3 of 3

<PAGE>

                         Citicorp Venture Capital       GESD Capital Partners
                         399 Park Avenue                221 Main Street
                         14th Floor                     Suite 1450
                         New York, NY 10022             San Francisco, CA 94105

                                                                February 1, 2008

Special Committee of the Board of Directors of
  Overhill Farms, Inc.
c/o Mr. Alexander Rodetis, Jr.
Chairman of the Special Committee
c/o Overhill Farms, Inc.
2727 East Vernon Avenue
Vernon, California 90058

                Re:   PROPOSED ACQUISITION OF OVERHILL FARMS, INC.
                      --------------------------------------------

Dear Gentlemen:

         Thank you for your response letter dated January 22, 2008. On behalf of
Citicorp Venture Capital ("CVC") and GESD Capital Partners ("GESD", and together
with CVC and each party's assigns, the "Purchasers"), we submit the following
revised proposal regarding the acquisition (the "Acquisition") of all of the
outstanding common stock of Overhill Farms, Inc. (the "Company").

         Our proposal is as follows:

1. PURCHASE PRICE. Based upon the publicly available financial and other
information we have reviewed to date and our understanding of the Company's
business and industry, we propose to acquire all of the outstanding common stock
of the Company at a price of $4.40 per share, representing more than a 65%
premium above the current trading price.

2. FINANCING. CVC, founded in 1968, has successfully completed hundreds of
transactions in a variety of industries utilizing billions of dollars in capital
market financing. CVC is focused on small and middle market transactions and is
a wholly owned affiliate of Citi, the largest financial institution in the world
with over $1.5 trillion in assets. Furthermore, GESD Capital Partners, founded
in 1998, has been highly acquisitive, particularly in the food space, having
partnered with numerous financing sources. The Purchasers have consulted with
multiple financing sources who have expressed significant interest in

<PAGE>

Overhill Farms, Inc.
February 1, 2008

underwriting the debt financing for this transaction and who are ready to move
forward should we be provided the opportunity to do so. As such, consummation of
the Acquisition would not be subject to any financing condition.

3. MANAGEMENT PARTICIPATION. We look forward to working with management, and
intend to employ compensation mechanisms for employees that include salary and
cash bonuses consistent with industry practices. We would expect that the
members of the Company's senior management would co-invest along side the
Purchasers in connection with the Acquisition on the same relative economic
basis as CVC and GESD. We would also anticipate that management would
participate in an equity incentive plan that would comprise up to 10% of the
common equity of the buyer entity or its parent, subject to vesting parameters
to be agreed. We do not anticipate that negotiations with management would delay
or prevent the execution of a definitive merger agreement or affect the value
that our proposal offers to the Company's shareholders.

4. DEFINITIVE AGREEMENTS. We are prepared to immediately begin negotiations with
respect to a definitive merger agreement with the Company and, subject to our
satisfaction with our confirmatory due diligence, wish to enter into such an
agreement as expeditiously as possible (and in any event within thirty (30) days
of your acceptance of this letter). The definitive merger agreement would
include a standard fiduciary out provision, which would be applicable if the
Company is presented with an unsolicited superior proposal from a third party
bidder. Subject to our satisfaction with our confirmatory due diligence, the
definitive merger agreement would include standard conditions for a public
company acquisition, such as (i) shareholder approval of the merger, (ii)
receipt of clearance under the Hart-Scott-Rodino Antitrust Improvements Act and
other material regulatory approvals, (iii) the absence of any injunctions or
other legal restraints that would restrict or prohibit consummation of the
Acquisition, (iv) a bring down of the Company's representations and warranties
(generally qualified by an aggregate material adverse effect standard), (v)
covenant compliance (qualified by materiality) and (vi) customary closing
certificates regarding the bring down of the Company's representations and
warranties, covenant compliance and the absence of a material adverse effect.

5. CONFIRMATORY DUE DILIGENCE REQUIREMENTS. This Letter of Intent is based on
our review of public information to date. The Purchasers must complete
confirmatory due diligence, including but not limited to: (i) completing an
accounting review by Ernst & Young LLP; (ii) completing environmental
engineering and operations reviews; (iii) legal due diligence including (but not
limited to) contracts, regulatory, litigation, tax, employee benefits and
intellectual property reviews; (iv) interviews with certain major customers, and
(v) insurance and benefits reviews. The Purchasers' primary areas of
confirmatory due diligence are set forth on EXHIBIT A to our letter.

                                      -2-

<PAGE>

Overhill Farms, Inc.
February 1, 2008

6. TIMING. We anticipate that we would be in a position to complete our due
diligence and finalize a definitive merger agreement within thirty (30) days
from your acceptance of this letter. Other than clearance under the
Hart-Scott-Rodino Antitrust Improvements Act, and subject to obtaining SEC
clearance for the proxy relating to the shareholder vote on the merger, we are
not aware of any material governmental approvals required in connection with the
consummation of the Acquisition.

7. EXCLUSIVE DEALINGS. Unless this letter has been terminated by mutual
agreement of the parties hereto, from and after the date of your acceptance
hereof, and for a period of thirty (30) days after such date, or, if later,
until such time as negotiations between the parties are terminated (the
"Exclusivity Period"), the Company will not, and will not permit its, its
subsidiaries' or its affiliates' officers, directors, employees, members, agents
or representatives (the "Company Representatives") to, directly or indirectly
solicit or encourage in any manner, or discuss or otherwise communicate with any
other party regarding, or agree to, a sale or other disposition of any or all of
the assets or stock of, or a merger, consolidation or recapitalization of, the
Company (or any of its subsidiaries) (an "Alternative Transaction") or provide
any information to any other party in connection with any such Alternative
Transaction. The Company will promptly communicate to us the terms of any
inquiries, communications or proposals that it may receive in respect of any
such Alternative Transaction and the Company will be responsible for the breach
of the provisions of this paragraph 7 by any of the Company Representatives. If
the Company or any of the Company Representatives receives a proposal from a
third party bidder during the Exclusivity Period regarding an Alternative
Transaction, and the Company subsequently enters into or announces an
Alternative Transaction during the period beginning on the date of your
acceptance of this letter and ending on the ninetieth (90th) day following the
termination of the Exclusivity Period, the Company agrees to reimburse the
Purchasers and their respective affiliates for all of their reasonable
out-of-pocket costs and expenses incurred in connection with pursuing a
potential transaction with the Company.

8. ACCESS TO INFORMATION. From and after the date hereof and until the later of
the expiration of the Exclusivity Period or the termination of negotiations
relating to the Acquisition between us and the Company, upon reasonable notice
and during normal business hours, the Company will grant us, our financing
sources and our respective agents, employees and designees full and complete
access to the books and records and personnel of the Company and its
subsidiaries.

9. GOVERNING LAW. This letter shall be governed by, construed and enforced in
accordance with the laws of the State of New York, without giving effect to its
conflicts of laws provisions to the extent that such provisions would cause the
application of the laws of any other jurisdiction.

                                      -3-

<PAGE>

Overhill Farms, Inc.
February 1, 2008

10. LETTER NON-BINDING. Except for the matters contained in paragraphs 7 through
9 above and this paragraph 10, this letter does not create an agreement,
agreement to agree or negotiate or other binding legal obligation or commitment
on any party but merely represents the present intentions of the parties. A
binding commitment with respect to the Acquisition will result only from the
execution of a definitive merger agreement, subject to any conditions expressed
therein.

11. EXPIRATION. This proposal will expire at 5:00 p.m., New York City time, on
Monday, February 4, 2008 unless an executed copy of this letter is returned to
either or both of us (including by facsimile or PDF transmission) prior to such
time.

                  [Remainder of Page Intentionally Left Blank]

                                      -4-

<PAGE>

Overhill Farms, Inc.
February 1, 2008

         We appreciate your attention given to this proposal. We are
enthusiastic about this opportunity and look forward to proceeding to the next
step in the acquisition process.

         We are excited about the prospect of a transaction with the Company and
look forward to hearing from you. If you are in agreement with the foregoing,
please so indicate by signing this letter in the space set forth below and
returning a signed copy to either or both of the undersigned before 5:00 p.m.,
New York City time, on Monday, February 4, 2008. Should you have any questions
or comments concerning this letter, please feel free, at your convenience, to
contact Alex Coleman (212-559-0103), Lou Giraudo (415-477-8204), Martin McNulty
(212-559-0326) or Dan Stromberg (415-477-8211).

                                         Very truly yours,

Citicorp Venture Capital,                               GESD Capital Partners
A unit of Citigroup Alternative
Investments LLC

By: /s/ Alexander P. Coleman                   By: /s/ Louis J. Giraudo
    ----------------------------                   ----------------------------
    Alexander P. Coleman                           Louis J. Giraudo
    Managing Partner                               Partner
    E-mail: alexander.coleman@citi.com             E-mail: loug@gesd.net
    Facsimile: (212) 793-5529                      Facsimile. (415) 495-8211

Acknowledged and agreed:

Overhill Farms, Inc.

By: ______________________
Name:
Title:

                                      -5-

<PAGE>

Overhill Farms, Inc.
February 1, 2008

EXHIBIT A
---------
AREAS OF DUE DILIGENCE FOCUS

FINANCIAL AND TAX (ERNST & YOUNG LLP)
-------------------------------------
         o    Quality of Earnings Review
         o    Review of customer margins
         o    Review of cost structure including manufacturing and SG&A
         o    Review of plant utilization and capital investment
         o    Walkthrough of management's 2008 budget
         o    Review of audit work papers
         o    Review of tax filings and compliance
         o    Customer interviews

LEGAL REVIEW (ROPES & GREY)
---------------------------
         o    General commercial contract review including review of customer
              contracts
         o    Review of compliance status with applicable regulatory agencies
              (including health and safety and environmental, among others)
         o    Litigation review
         o    Review of intellectual property
         o    Merger agreement drafting

INSURANCE (AON)
---------------
         o    Review of current insurance policies and exposures

EMPLOYEE BENEFITS (AON)
-----------------------
         o    Review of current benefits plans
         o    Review of collective bargaining agreement
         o    Review of current employee matters

ENVIRONMENTAL TBD
-----------------
         o    Review of current environmental compliance and potential exposures

                                      -6-

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