1997 STOCK INCENTIVE PLAN OF MICHAEL FOODS, INC. AND
                              AFFILIATED COMPANIES
                           (AS AMENDED APRIL 29, 1999)



I.       PURPOSE

         The purpose of the 1997 Stock Incentive Plan (the "Plan") is to afford
an incentive to key employees of Michael Foods, Inc. (the "Company") and its
affiliates to acquire an equity interest in the Company, to encourage such
employees to increase their efforts on behalf of the Company and remain in its
employ, and to more closely align the interests of such key employees with those
of the Company's shareholders.

II.      DEFINITIONS

         As used in the Plan, the following terms shall have the meanings set
forth below:

         A. "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by the Company.

         B. "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award or other stock-based award
granted under the Plan.

         C. "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.

         D. "Board of Directors" shall mean the board of directors of the
Company.

         E. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

         F. "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan pursuant to Section III. If the Board fails to
appoint a committee, the Committee shall be the Board of Directors.


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         G. "Common Stock" shall mean common stock, par value $.01, of the
Company.

         H. "Eligible Employee" shall be any key employee, officer, consultant
or independent contractor providing services to the Company or an Affiliate as
determined by the Committee.

         I. "Fair Market Value" of Common Stock on any day shall mean the fair
market value of the Common Stock determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding the
foregoing, for purposes of the Plan, the fair market value of the Common Stock
on a given date, if there shall be a public market for the Common Stock, shall
be the closing price of the Common Stock as reported by any exchange on which
the Common Stock is then traded or the closing price on such date as reported by
any generally recognized inter-dealer quotation system.

         J. "Incentive Stock Option" shall mean a stock option granted under
Section VI.A. of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision. 

         K. "Non-Qualified Stock Option" shall mean a stock option granted under
Section VI.A. which is not intended to be an Incentive Stock Option.

         L. "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
 
         M. "Optionee" shall mean a Participant who is granted an Option.

         N. "Participant" shall mean an Eligible Employee who has been granted
an Option or other Award under the Plan.

         O. "Performance Award" shall mean any right granted under Section VI.D.
of the Plan.

         P. "Restricted Stock" shall mean any Share granted under Section VI.C.
of the Plan.
 


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         Q. "Restricted Stock Unit" shall mean any unit granted under Section
VI.C. of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.

         R. "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934.

         S. "Shares" shall mean shares of Common Stock.

         T. "Stock Appreciation Right" shall mean any right granted under
Section VI.B. of the Plan.

III.     ADMINISTRATION

         The Plan shall be administered by the Committee. Subject to the terms
of the Plan and applicable law, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to each Participant under the Plan; (iii) determine the
number of Shares to be covered by (or with respect to which payments, rights or
other matters are to be calculated in connection with) each Award; (iv)
determine the terms and conditions of any Award or Award Agreement; (v) amend
the terms and conditions of any Award or Award Agreement and accelerate the
exercisability of Options or the lapse of restrictions relating to Restricted
Stock or Restricted Stock Units; (vi) determine whether, to what extent and
under what circumstances Awards may be exercised in cash or Shares, or canceled,
forfeited or suspended; (vii) determine whether, to what extent, and under what
circumstances cash, Shares or other Awards or amounts payable with respect to an
Award under the Plan shall be deferred either automatically or at the election
of the holder thereof or the Committee; (viii) interpret and administer the Plan
and any instrument or agreement relating to, an Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it 



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shall deem proper for the administration of the Plan; and (x) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee whose determination
shall be final, conclusive and binding upon any Participant, beneficiary of any
Award and any employee of the Company or any Affiliate. 

IV. SHARES AVAILABLE FOR AWARDS

         A. SHARES AVAILABLE. Subject to adjustment as provided in Section
VII.C., 2,000,000 shares shall be available for granting Awards under the Plan.
If any Shares covered by an Award or to which an Award relates are not purchased
or are forfeited, or if an Award otherwise terminates without delivery of any
Shares, then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award, to the extent of any such
forfeiture or termination, shall again be available for granting Awards under
the Plan. In addition, any Shares that are used by a Participant as full or
partial payment to the Company of the purchase price relating to an Award, or in
connection with the satisfaction of tax obligations relating to an Award in
accordance with the provisions of Section VIII of the Plan, shall again be
available for granting Awards under the Plan.

         B. ACCOUNTING FOR AWARDS. For purposes of this Section IV, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available to
granting Awards under the Plan.

V. ELIGIBILITY




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         Employees eligible to participate in the Plan and receive Options and
Awards under the Plan shall consist of key employees of the Company and
Affiliates as determined by the Committee.

VI. AWARD

         A. OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

                  1. EXERCISE PRICE. The exercise price per Share purchasable
         under an Option shall be determined by the Committee; provided,
         however, that such purchase price shall not be less than one hundred
         percent (100%) of the Fair Market Value of a Share on the date of grant
         of such Option.

                  2. OPTION TERM. The term of each Option shall be fixed by the
         Committee, but in no event shall the term exceed ten (10) years from
         the date the Option is granted.

                  3. TIME AND METHOD OF EXERCISE. The Committee shall determine
         the time or times at which an Option may be exercised in whole or in
         part and the method or methods by which, and the form or forms
         (including, without limitation, cash, Shares, other awards or other
         property, or any combination thereof, having a Fair Market Value on the
         exercise date equal to the exercise price) in which, payment of the
         exercise price with respect thereto may be made or deemed to have been
         made, but in no event shall any Option be exercisable earlier than one
         year from the date the Option is granted.



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                  4. TRANSFERABILITY OF OPTIONS. Except as provided below, an
         Option may not be sold, assigned, transferred, pledged, hypothecated or
         otherwise disposed of, except by will or the laws of descent and
         distribution and, during the lifetime of the Optionee, may be exercised
         only by such Optionee. Notwithstanding the foregoing, the Committee may
         determine that an Option may be transferred by the Optionee to one or
         more members of the Optionee's immediate family, to a partnership of
         which the only partners are members of the Optionee's immediate family,
         or to a trust established by the Optionee for the benefit of one or
         more members of the Optionee's immediate family. The Optionee's
         immediate family shall be limited to the Optionee's spouse, parents,
         children, grandchildren and the spouses of such persons. No further
         transfers of an Option may be made beyond the transfers permitted above
         and a transferred Option shall remain subject to the provisions of the
         Plan and any Award Agreement evidencing any Award granted under the
         Plan.

                  5. RELOAD OPTIONS. The Committee may grant "reload" options
         separately or together with another Option, pursuant to which, subject
         to the terms and conditions established by the Committee and any
         applicable requirements of Rule 16b-3 or any other applicable law, the
         Participant would be granted a new Option when the payment of the
         exercise price of a previously granted Option is made by the delivery
         of Shares of the Company's Common Stock owned by the Participant; or
         when Shares are tendered or forfeited as payment of the amount to be
         withheld under applicable income tax laws in connection with the
         exercise of an Option, which new Option would be an Option to purchase
         the number of Shares 



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         not exceeding the sum of (a) the number of Shares provided as
         consideration upon the exercise of the previously granted Option to
         which such "reload" Option relates; and (b) the number of Shares
         tendered or forfeited as payment of the amount to be withheld under
         applicable income tax laws in connection with the exercise of the
         Option to-which such "reload" Option relates. Such "reload" Options
         shall have a per share exercise price equal to the Fair Market Value as
         of the date of grant of the new Option.

         B. STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of: (i) the Fair Market Value of one (1) Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as specified by the Committee, which price shall
be not less than one hundred percent (100%) of the Fair Market Value of one (1)
Share on the date of the grant of the Stock Appreciation Right. Subject to the
terms of the Plan and any applicable Award Agreement, the grant price, term,
methods of exercise, dates of exercise, methods of settlement and any other
terms and conditions of any Stock Appreciation Rights shall be as determined by
the Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.

         C. RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to
Participants with the 





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following terms and conditions and with such additional terms and conditions not
inconsistent with the provisions of the Plan as the Committee shall determine:

                  1. RESTRICTIONS. Shares of Restricted Stock and Restricted
         Stock Units shall be subject to such restrictions as the Committee may
         impose (including, without limitation, any limitation on the right to
         vote a share of Restricted Stock or the right to receive any dividend
         or other right or property with respect thereto), which restrictions
         may lapse separately or in combination at such time or times, in such
         installments or otherwise as the Committee may deem appropriate.

                  2. STOCK CERTIFICATES. Any Restricted Stock granted under the
         Plan shall be evidenced by the issuance of a stock certificate or
         certificates, which certificate or certificates shall be held by the
         Company. Such certificate or certificates shall be registered in the
         name of the Participant and shall bear the appropriate legend referring
         to the restrictions applicable to such Restricted Stock. In the case of
         Restricted Stock Units, no certificates shall be issued at the time
         such Awards are granted.

                  3. FORFEITURES; DELIVERY OF SHARES. Except as otherwise
         determined by the Committee, upon termination of employment (as
         determined under criteria established by the Committee), during the
         applicable restriction period, all shares of Restricted Stock and all
         Restricted Stock Units at such time subject to restriction, shall be
         forfeited and reacquired by the Company; provided, however, that the
         Company may, when it finds that waiver would be in the best interest of
         the Company, waive in whole or in part any or all remaining
         restrictions with respect to Shares of Restricted Stock or Restricted
         Stock Units. Certificates representing 



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         Shares of Restricted Stock that are no longer subject to restriction
         shall be delivered to the holder thereof promptly after the applicable
         restrictions lapse or are waived. Upon the lapse or waiver of
         restrictions and the restricted stock period relating to Restricted
         Stock Units evidencing the right to receive Shares, certificates for
         such Shares shall be issued and delivered to the holders of the
         Restricted Stock Units.

         D. PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan: (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities or Awards or other property; and (ii) shall
confer upon the holder the right to receive payments, in whole or in part, upon
the achievement of such performance goals during such performance period as the
Committee may establish.

         E. OTHER STOCK BASED AWARDS. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based upon or related
to, Shares (including without limitation, securities convertible into Shares),
as are deemed by the Committee to be consistent with the purpose of the Plan;
provided, that if at the time of such grant the Company has a class of
securities registered under the Securities Exchange Act of 1934, such grants
must comply with Rule 16b-3 and applicable laws. The Committee shall determine
the terms and conditions of such Awards. In no event shall the purchase price
for any Shares purchasable in connection with any such Award be less than one
hundred percent (100%) of the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.

         F.       GENERAL PROVISIONS.




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                  1. AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may,
         in the discretion of the Committee, be granted alone or in addition to,
         in tandem with or in substitution for any other Award.

                  2. FORM OF PAYMENT UNDER AWARD. Subject to the terms of the
         Plan and of any applicable Award Agreement, payments or transfers to be
         made by the Company or an Affiliate upon the grant, exercise or payment
         of an Award may be made in such form or forms as the Committee may
         determine (including, without limitation, cash, Shares, other
         securities, other Awards or other property or any combination thereof).

                  3. RESTRICTIONS. All certificates for Shares or other
         securities delivered under the Plan pursuant to any Award or the
         exercise thereof shall be subject to such transfer restrictions as the
         Committee may deem advisable under the Plan and any applicable federal
         or state securities laws, and the Committee may cause a legend or
         legends to be placed on any such certificates to make appropriate
         reference to such restrictions.

VII. AMENDMENT AND TERMINATION; ADJUSTMENT

         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an award agreement or in the Plan:

         A. AMENDMENTS TO THE PLAN. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan at any time; provided,
however, that without the approval of the shareholders of the Company, no such
amendment, alteration, suspension, discontinuation or termination shall be made
that, absent such approval: (i) would cause Rule 16b-3 



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to become unavailable with respect to the Plan; or (ii) would cause the Company
to be unable, under the Code, to grant Incentive Stock Options under the Plan.

         B. AMENDMENTS TO AWARDS. The Committee may waive any condition of, or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not alter, suspend, discontinue or terminate
any outstanding Award, prospectively or retroactively, without the consent of
the Participant or holder or beneficiary thereof, except as otherwise provided
herein.

         C. ADJUSTMENTS. In the event that any dividend or other distribution,
whether in the form of cash, Shares, other securities or other property,
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-off, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company or other similar corporate transaction
or event affecting the Shares would be reasonably likely to result in the
diminution or enlargement or any of the benefits or potential benefits intended
to be made available under the Plan or under an Award, the Committee shall, in
such manner as it shall deem equitable or appropriate in order to prevent such
diminution or enlargement of any such benefits or potential benefits, adjust any
or all of: (i) the number and type of Shares (or other securities or other
property) which thereafter may be made the subject of Awards; (ii) the number
and type of Shares (or other securities or other property) subject to
outstanding awards; and (iii) the purchase or exercise price with respect to any
Award; provided, however, that the number of Shares covered by any Award or to
which such Award relates shall always be a whole number.

         D. CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent it shall deem desirable
to carry the Plan into effect.



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VIII.    INCOME TAX WITHHOLDING

         In order to comply with applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure
that all applicable federal or state payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of a Participant, are
withheld or collected from such Participant. In order to assist the Participant
in paying all federal and state taxes to be withheld or collected upon exercise
or receipt of (or the lapse of restrictions relating to) an Award, the Committee
in its discretion and subject to such additional terms and conditions as it may
adopt, may permit the Participant to satisfy such tax obligation by: (i)
electing to have the Company withhold a portion of Shares otherwise to be
delivered upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes; or (ii)
delivering to the Company Shares other than Shares issuable upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.

IX. GENERAL PROVISIONS

         A. NO RIGHT TO AWARD. No employee, Participant, or other person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Employees, Participants or
holders or beneficiaries of Awards under the Plan.

         B. DELEGATION. The Committee may delegate to one or more officers of
the Company or a committee of such officers the authority, subject to such terms
and limitations as the Committee shall determine, to grant awards to key
employees who are not officers or directors of the Company for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended.



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         C. AWARD AGREEMENTS. No Participant shall have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.

         D. NO LIMIT ON OTHER COMPENSATION AGREEMENTS. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other or
additional compensation arrangements and such arrangements may be either
generally applicable or applicable only in specific cases.

         E. NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving the Participant the right to be retained in the employ of the Company
or its Affiliates. In addition, the Company or its Affiliates may, at any time,
dismiss a Participant from employment.

         F. GOVERNING LAW. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the internal laws of the State of Minnesota without consideration of any
conflict of law rules.

         G. NO TRUST FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other person. To the
extent that any person acquires a right to receive payment from the Company
pursuant to an Award, such right shall be no greater than the right of any
unsecured creditor of the Company.

         H. NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award.

X. EFFECTIVE DATE AND TERM

         Subject to approval by the shareholders of the Company at the regular
meeting of shareholders next following approval of the Plan by the Board of
Directors of the Company, the 




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Plan shall be effective as of the date of its adoption by the Board of Directors
of the Company and shall continue in effect for a period of ten (10) years
thereafter unless earlier terminated as provided herein.



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