AURORA FOODS INC /DE/
EX. 10.1
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<TYPE>EX-10
<SEQUENCE>3
<FILENAME>s781480.txt
<DESCRIPTION>EX. 10.1
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                                                                  CONFIDENTIAL



                                                   July 1, 2003


Aurora Foods Inc.
11432 Lackland Road
St. Louis, Missouri  63146

                 Re:  Agreement in Principle

Dear Sirs and Madams:

         This letter, upon your execution and return, will confirm our
Agreement in Principle for an investment (the "Investment") in Aurora Foods
Inc., a Delaware corporation (the "Company"), by J.W. Childs Equity Partners
III, L.P. (the "Investor") on the terms and conditions set forth herein.

         The Investor understands and acknowledges that the Investment will be
made in the context of the Company's restructuring (the "Restructuring") of
its current capital structure to, among other things, reduce its outstanding
indebtedness and resolve liquidity issues that it currently faces.

         1. Investment. The Company shall issue and sell to the Investor, and
the Investor shall purchase from the Company, shares of common stock, par
value $0.01 per share ("Common Stock"), of the Company substantially on the
terms set forth herein and on the Term Sheet attached hereto as Annex A ("Term
Sheet").

         2. Definitive Agreement. The Company and the Investor shall negotiate
in good faith and use reasonable best efforts to enter into, on or before July
9, 2003, a definitive stock purchase agreement ("Definitive Agreement") in
form and substance reasonably acceptable to the Company and the Investor,
which Definitive Agreement shall contain reasonable and customary
representations and warranties (none of which will survive closing),
agreements, covenants and conditions providing for consummation of the
Investment.

         3. Exclusivity. The Company shall not, and the Company shall require
each of its affiliates and their respective officers, directors, employees,
representatives and agents not to, directly or indirectly, (i) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than the Investor) concerning any merger,
reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale or license of
material assets or similar business transaction involving the Company, (ii)
furnish any non-public information concerning the business, properties or
assets of the Company to any party (other than the Investor) or (iii) engage
in discussions or negotiations (other than the Investor) with respect to, or
consummate, any such transaction. The Company shall immediately notify any
party with which discussions or negotiations of the nature described in this
paragraph 3 are pending that the Company is terminating such discussions or
negotiations. If the Company receives any inquiry, proposal or offer of the
nature described in this paragraph 3, the Company shall, within one business
day after such receipt, notify the Investor of such inquiry, proposal or
offer, including the identity of the other party and the terms of such
inquiry, proposal or offer. Notwithstanding the provisions of paragraph 7
hereof, the exclusivity provisions set forth in this paragraph 3 shall
automatically terminate on the sooner of (i) the execution and delivery of the
Definitive Agreement or (ii) 5:00 p.m. New York City time on July 9, 2003.

         4. Access to Information. The Company shall continue to provide the
Investor and its accountants, attorneys and other representatives and agents
with access to its offices, facilities, properties, documents, records, and
other information (including legal, financial and operating data), and shall
make its officers, employees, agents, accountants, and representatives
available to answer the Investor's (or its representatives or agents)
inquiries concerning the Company's business, operations, financial condition,
assets, liabilities, and all other matters relevant to the Investment .

         5. Public Announcements. The Company shall disclose the contents of
any public statement relating to this Agreement in Principle to the Investor,
and give the Investor the opportunity to comment thereon, prior to public
disclosure thereof, and shall incorporate the Investor's reasonable comments
to the same.

         6. Confidentiality. The Company and the Investor acknowledge and
agree that (i) the Confidentiality Agreement, dated October 2, 2002, between
the Merrill Lynch & Co., as agent for the Company and its affiliates, has been
terminated and is no longer in force or effect and (ii) the transactions
contemplated by this Agreement in Principle are subject to the
Confidentiality, Secrecy and Non-Disclosure Agreement dated March 25, 2003
("Confidentiality Agreement") between the Company and the Investor; provided,
however that notwithstanding anything in the Confidentiality Agreement, the
parties (and each employee, representative, or other agent of the parties) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
Restructuring beginning on the earliest of (i) the date of the public
announcement of discussions relating to the Restructuring, (ii) the date of
public announcement of the Restructuring, or (iii) the date of the execution
of an agreement (with or without conditions) to enter into the Restructuring,
provided, however, that neither party (nor any employee, representative or
other agent thereof) may disclose any other information that is not relevant
to understanding the tax treatment and tax structure of the Restructuring
(including the identity of any party and any information that could lead
another to determine the identity of any party), or any other information to
the extent that such disclosure could result in a violation of any federal or
state securities law.

         7. Termination. This agreement in principle (i) shall terminate
automatically upon the execution of the Definitive Agreement and (ii) may be
terminated by either party, on or after July 9, 2003, by providing written
notice of such termination to the other party, if the Definitive Agreement has
not been executed prior to that date.

         8. Amendments and Waivers. This Agreement in Principle may be amended
or modified and the observance of any term of this Agreement in Principle may
be waived only with the mutual written consent of the Company and the
Investor.

         9. Cost and Expenses. Except as may be otherwise provided in the
Definitive Agreement, the Investor, on the one hand, and the Company, on the
other hand, shall each bear all of its own costs and expenses incurred in
connection with this Agreement in Principle and the transactions contemplated
hereby, including the fees and expenses of any financial advisor, counsel,
accountants or other representative retained by it or them.

         10. Agreement in Principle. The parties hereto understand and agree
that, except as set forth in the last sentence of this paragraph, this
Agreement in Principle constitutes only a statement of mutual intentions with
respect to the Investment, does not constitute an obligation binding on each
side and does not contain all matters upon which agreement must be reached for
the Investment to be consummated. A binding commitment with respect to the
Investment will result only from the execution of the Definitive Agreement,
subject to the conditions expressed therein. Notwithstanding the two preceding
sentences of this paragraph, the provisions of paragraphs 2 through 9
(inclusive) and paragraph 11 are agreed to be binding on the parties hereto.

         11. Governing Law. This agreement in principle and any claim related
directly or indirectly to this agreement in principle shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws principles thereof.

         Each of the Company and the Investor represent and warrant that it is
duly authorized to execute and deliver and perform its obligations under this
Agreement in Principle.

         If the foregoing accurately reflects the agreement between us, kindly
so indicate by causing a copy hereof to be signed below and returned to the
undersigned.

                                       Very truly yours,

                                       J.W. Childs Equity Partners III, L.P.

                                       By:  J.W. Childs Advisors III, L.P.,
                                            its general partner

                                            By: J.W. Childs Associates, L.P.,
                                                its general partner

                                            By: J.W. Childs Associates, Inc.,
                                                its general partner

                                            By:  /s/ Adam L. Suttin
                                                 ------------------------
                                                 Adam L. Suttin
                                                 Vice President


Accepted and agreed to
As of the date first written above:

Aurora Foods Inc.


By:  /s/ Dale F. Morrison
     ------------------------------
     Dale F. Morrison
     Chairman and Interim
     Chief Executive Officer


<page>

                                                                       ANNEX A


                               AURORA FOODS INC.
                             SALE OF COMMON STOCK
                                  TERM SHEET


  Capitalized terms used but not defined herein have the meanings ascribed to
    them in the Agreement in Principle to which this Term Sheet is annexed.


Issuer:                         Aurora Foods Inc. (the "Company")

Type of Security:               Common Stock

Amount:                         $200 million (the "Investment")

Investor:                       J.W. Childs Equity Partners III, L.P.
                                (the "Investor")

Transaction Value:              Approximately $925 million

New Capital Structure (Debt):   The parties intend to effect the Restructuring
                                in a bankruptcy reorganization case, and, in
                                connection therewith, to propose a plan of
                                reorganization that provides the following new
                                debt structure on the effective date of the
                                Restructuring (the "Effective Date"):

                                Secured Credit Facility: The existing $655.7
                                million senior secured credit facility shall
                                be reduced in principal amount by
                                approximately $67.3 million, with the
                                remaining balance being refinanced via a new
                                approximately $391 million senior secured
                                credit facility and approximately $197.4
                                million in new senior unsecured notes. The
                                Company will also seek to raise a new
                                approximately $50 million revolving credit
                                facility, which shall be undrawn at closing

                                A/R Securitization Facility: The existing A/R
                                securitization facility with $16.3 million
                                outstanding shall be terminated.

                                Senior Unsecured Notes: The 12% senior
                                unsecured notes and warrants due 2006 in the
                                aggregate principal amount of $29.1 million
                                shall be refinanced via approximately $29.1
                                million in new senior unsecured notes.

                                Subordinated Notes: Holders of the
                                subordinated debt shall receive approximately
                                $110 million in cash and approximately 29.5%
                                (approximately $90 million) of the
                                post-restructuring common shares outstanding

New Capital Structure           The parties intend to implement the following
(Equity):                       new equity structure on the Effective Date:

                                Investor: The Investor shall receive 65.6%
                                (approximately $200 million) of the
                                post-restructuring common shares outstanding

                                Existing Subordinated Notes: The holders of
                                the existing senior subordinated notes will
                                receive approximately 29.5% (approximately $90
                                million) of the post-restructuring common
                                shares outstanding

                                Existing Common and Preferred Equity: The
                                holders of the existing common and preferred
                                stock shall be entitled to receive
                                approximately 4.9% (approximately $15 million)
                                of the post-restructuring common shares
                                outstanding

Cash Sources and Uses:          Cash Sources:                        $MM
                                ------------                         ---
                                New Senior Term Loan                 $391.0
                                JWC Equity Investment                 200.0
                                Net Cash at Closing                     4.6
                                                                     ------
                                      Total                          $595.6
                                                                     ======

                                Cash Uses:                           $MM
                                ---------                            ---
                                Repay A/R Securitization Facility    $16.3
                                Cash to Senior Secured Debt          458.3
                                Cash to Senior Sub Note Holders      110.0
                                Transaction Expenses                  11.0
                                                                    ------
                                      Total                         $595.6
                                                                    ======

Management:                     Lawrence K. Hathaway would be named CEO
                                following the Closing

Management Options:             Management shall be eligible to purchase
                                common equity through a management option
                                plan. Options will vest based on time and
                                achievement of certain agreed upon performance
                                targets

Board Representation:           The Investor shall be entitled to designate a
                                majority of the Board members

Break-Up Fee:                   A break-up fee and expense reimbursement in
                                the aggregate amount of $10 million shall be
                                payable to the Investor upon circumstances to
                                be mutually agreed



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