<PAGE>
 
Exhibit 10.50

                AURORA FOODS INC. 1998 LONG TERM INCENTIVE PLAN


                               TABLE OF CONTENTS
                               -----------------

<TABLE> 
<S>                                                                                   <C> 
SECTION 1.  GENERAL PROVISIONS RELATING
             TO PLAN GOVERNANCE, COVERAGE AND BENEFITS..............................   1
            1.1.  PURPOSE...........................................................   1
            1.2.  DEFINITIONS.......................................................   1
            1.3.  ADMINISTRATION....................................................   4
            1.4.  SHARES OF COMMON STOCK SUBJECT TO THE PLAN........................   5
            1.5.  PARTICIPATION.....................................................   6
            1.6.  INCENTIVE AWARDS..................................................   6
            1.7.  MAXIMUM INDIVIDUAL RIGHTS.........................................   6
                                                                                    
SECTION 2.  STOCK OPTIONS...........................................................   6
            2.1.  GRANT OF OPTIONS..................................................   6
            2.2.  OPTION TERMS......................................................   7
            2.3.  OPTION EXERCISES..................................................   7
                                                                                    
SECTION 3.  PROVISIONS RELATING TO PLAN PARTICIPATION...............................   8
            3.1.  PLAN CONDITIONS...................................................   8
            3.2.  TRANSFERABILITY...................................................   9
            3.3.  RIGHTS AS A STOCKHOLDER...........................................   9
            3.4.  LISTING AND REGISTRATION OF SHARES OF COMMON STOCK................  10
            3.5.  CHANGE IN STOCK AND ADJUSTMENTS...................................  10
            3.6.  TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT.......  11
            3.7.  CHANGES OF CONTROL................................................  12
            3.8.  AMENDMENTS TO INCENTIVE AWARDS....................................  14
            3.9.  EXCHANGE OF INCENTIVE AWARDS......................................  14
            3.10. FINANCING.........................................................  14
                                                                                    
SECTION 4.  MISCELLANEOUS...........................................................  14
            4.1.  EFFECTIVE DATE AND GRANT PERIOD...................................  14
            4.2.  FUNDING...........................................................  15
            4.3.  WITHHOLDING TAXES.................................................  15
            4.4.  CONFLICTS WITH PLAN...............................................  15
            4.5.  NO GUARANTEE OF TAX CONSEQUENCES..................................  15
</TABLE>
<PAGE>
 
<TABLE> 
<S>                                                                                   <C> 
            4.6.  SEVERABILITY......................................................  16
            4.7.  GENDER, TENSE AND HEADINGS........................................  16
            4.8.  AMENDMENT AND TERMINATION.........................................  16
            4.9.  SECTION 280G PAYMENTS.............................................  16
            4.10. GOVERNING LAW.....................................................  17
            4.11. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND 
                  PERFORMANCE-BASED COMPENSATION....................................  17
</TABLE>

                                     (ii)
<PAGE>
 
                AURORA FOODS INC. 1998 LONG TERM INCENTIVE PLAN



                    SECTION 1.  GENERAL PROVISIONS RELATING
                   TO PLAN GOVERNANCE, COVERAGE AND BENEFITS


          1.1. PURPOSE
               -------
 
          The purpose of the Aurora Foods Inc. 1998 Long Term Incentive Plan
(the "Plan") is to foster and promote the long-term financial success of Aurora
Foods Inc. (the "Company") and materially increase the value of the equity
interests in the Company by: (a) encouraging the long-term commitment of
selected key employees (defined in Section 1.2(h) below), (b) motivating
superior performance of key employees by means of long-term performance related
incentives, (c) encouraging and providing key employees with a formal program
for obtaining an ownership interest in the Company, (d) attracting and retaining
outstanding key employees by providing incentive compensation opportunities
competitive with other major companies and (e) enabling participation by key
employees in the long-term growth and financial success of the Company. The Plan
provides for payment of various forms of incentive compensation and,
accordingly, is not intended to be a plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended, and shall be administered
accordingly.

          1.2. DEFINITIONS
               -----------
 
          The following terms shall have the meanings set forth below:

          (a) BOARD.  The Board of Directors (or equivalent governing authority)
of the Company.

          (b) CHANGE OF CONTROL.  Any of the events described in and subject to
SECTION 3.7.

          (c) CODE.  The Internal Revenue Code of 1986, as amended.

          (d) COMMITTEE.  The Committee, which shall be comprised of two or more
members of the Board, each of whom is both a "non-employee director" as defined
by Rule 16b-3 of the Exchange Act and an "outside director" for purposes of
Section 162(m) of the Code, who shall be appointed by the Board to administer
the Plan, which Board shall have the power to fill vacancies on the Committee
arising by resignation, death, removal or otherwise.  In the absence of a
Committee, reference thereto shall be to the Board.

          (e) COMMON STOCK.  Company Common Stock, par value $.01 per share,
which the Company is authorized to issue or may in the future be authorized to
issue.

                                      -1-
<PAGE>
 
          (f) COMPANY.  Aurora Foods Inc. and any successor corporation.

          (g) DISABILITY.  Any complete and permanent disability as defined in
Section 22(e)(3) of the Code and determined in accordance with the procedures
set forth in the regulations, thereunder.

          (h) EMPLOYEE.  Any common-law employee of the Company, Parent or
Subsidiary, who, in the opinion of the Committee, is one of a select group of
executive officers, other officers or other key management personnel of the
Company, Parent or Subsidiary who is in a position to contribute materially to
the continued growth and development and to the continued financial success of
the Company, Parent or Subsidiary, including executive officers and officers who
are members of the Board and including consultants and advisors.

          (i) EXCHANGE ACT.  The Securities and Exchange Act of 1934, as
amended.

          (j) FAIR MARKET VALUE.  The closing sales price of Common Stock as
reported or listed on a national securities exchange on any relevant date for
valuation, or, if there is no such sale on such date, the applicable prices as
so reported on the nearest preceding date upon which such sale took place.  In
the event the shares of Common Stock are not listed on a national securities
exchange, the Fair Market Value of such shares shall be determined by the
Committee in its sole discretion.

          (k) GRANTEE.  Any Employee who in the opinion of the Committee
performs significant services for the benefit of the Company and who is granted
an Incentive Award under the Plan.

          (l) INCENTIVE AWARD.  Any incentive award, individually or
collectively, as the case may be, including any Non-Qualified Stock Option or
Incentive Stock Option granted under the Plan.

          (m) INCENTIVE AWARD AGREEMENT.  The written agreement entered into
between the Company and the Grantee pursuant to which an Incentive Award shall
be made under the Plan.

          (n) INCENTIVE STOCK OPTION.  A stock option which is intended to
qualify as an Incentive Stock Option under Section 422 of the Code and which
shall be granted by the Committee to a Grantee under the Plan.

          (o) INVOLUNTARY TERMINATION.  The termination of a Grantee's
employment by the Company other than for death, Disability, Retirement,
Terminated for Cause, Termination for Good Reason, or in the event of a Change
of Control (as defined in SECTION 3.7(a) below).

                                      -2-
<PAGE>
 
          (p) NON-QUALIFIED STOCK OPTION.  A stock option granted by the
Committee to a Grantee under the Plan, which shall not qualify as an Incentive
Stock Option.

          (q) OPTION.  A Non-Qualified Stock Option or Incentive Stock Option
granted by the Committee to a Grantee under the Plan.

          (r) PARENT.  Any corporation (whether now or hereafter existing) which
constitutes a "parent" of the Company, as defined in Section 424(e) of the Code.

          (s) PLAN.  The Aurora Foods Inc. 1998 Long Term Incentive Plan, as
hereinafter amended from time to time.

          (t) RETIREMENT.  The termination of employment by the Company, Parent
or Subsidiary constituting retirement as determined by the Committee.

          (u) SECTION 162(m) PARTICIPANT.  Any Employee designated by the
Committee as an Employee whose compensation for the fiscal year in which the
Employee is so designated or a future fiscal year may be subject to the limit on
deductible compensation imposed by Section 162(m) of the Code.

          (v) SUBSIDIARY.  Any corporation (whether now or hereafter existing)
which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of
the Code.

          (w) TERMINATED FOR CAUSE.  An Employee may be terminated for cause.
For purposes of this Plan, "Cause" shall mean (A) proven dishonesty of the
Employee detrimental to the best interests of the Company or any of its
subsidiaries or conviction of the Employee of a crime which constitutes a
felony, (B) any material act or omission by the Employee during the term of his
or her employment involving willful malfeasance or gross negligence in the
performance of his or her duties under the terms of his or her employment, (C)
repeated failure of the Employee to follow the reasonable instructions of the
Board of Directors of the Company (the "Board") (other than inattention or
neglect resulting from illness or disability of the Employee) which inattention
and neglect does not cease within 15 days after written notice thereof
specifying the details of such conduct is given by the Board to the Employee or
(D) material breach by the Employee of any material provision of his or her
employment agreement (or consulting or advisory contract), in the event one
exists (provided, however, that if such breach is curable and is remedied to the
reasonable satisfaction of the Board within 15 days after written notice thereof
specifying the details of such breach is given by the Board to the Executive,
such breach shall not fall within the definition of "Cause" for purposes of this
Subsection (D)). During the term of his or her employment, the Employee shall be
entitled to only one such notice and right to cure for any single act or event.

          (x) TERMINATION FOR GOOD REASON.  The resignation of an Employee shall
be deemed to be a Termination for Good Reason if Employee's resignation is

                                      -3-
<PAGE>
 
within two years of a Change of Control as defined in SECTION 3.7, caused by and
within 90 days of the following: (i) the Employee is moved to a new work
location that is more than 50 miles from the Employee's principal work location
prior to such Change of Control; (ii) the amount of the base annual salary of
the Employee and the bonus opportunities of the Employee is reduced; (iii) the
Employee's, title, duties and responsibilities are materially diminished; (iv)
the Employee's reasonable, documented business expenses are not reimbursed in a
manner consistent with the Company's reimbursement practice prior to a Change of
Control; or (v) without limiting the generality or effect of the foregoing, the
Company fails to comply with any of its material obligations hereunder.


          1.3. ADMINISTRATION
               --------------

          (a)  COMMITTEE POWERS.  The Plan shall be administered by the
Committee, which shall have full power and authority to:  (i) designate
Grantees; (ii) determine the Incentive Awards to be granted to a Grantee and
whether such Incentive Awards are to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code; (iii) subject to SECTION 1.4
of the Plan, determine the Common Stock (or securities convertible into Common
Stock) to be covered by Incentive Awards and in connection therewith, to reserve
shares of Common Stock as needed in order to cover grants of Incentive Awards;
(iv) determine the terms and conditions of any Incentive Award; provided
                                                                --------
however, that the terms and conditions of Incentive Awards intended to qualify
-------                                                                       
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code shall include, but not limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m)(4)(C) of the Code;
(v) determine whether, to what extent, and under what circumstances Incentive
Awards may be settled or exercised in cash, Common Stock, other securities, or
other property, or cancelled, substituted, forfeited or suspended, and the
method or methods by which Incentive Awards may be settled, exercised,
cancelled, substituted, forfeited or suspended; (vi) interpret and administer
the Plan and any instrument or agreement relating to, or Incentive Award made
under, the Plan; (vii) establish, amend, suspend or waive such rules and
guidelines as the Committee shall deem necessary or appropriate for
administration of the Plan; (viii) appoint such agents as it shall deem
appropriate for the administration of the Plan; provided however, that the
                                                -------- -------          
Committee shall not delegate any of the power or authority set forth in (i)
through (vii) above; and (ix) make any other determination and take any other
action that it deems necessary or desirable for such administration.  No member
of the Committee shall vote or act upon any matter relating solely to himself.
All designations, determinations, interpretations and other decisions with
respect to the Plan or any Incentive Award shall be within the sole discretion
of the Committee and shall be final, conclusive and binding upon all persons,
including the Company, Parent or Subsidiary, any Grantee, any holder or
beneficiary of any Incentive Award, any owner of an equity interest in the
Company and any Employee.


          (b)  NO LIABILITY.  No member of the Committee shall be liable for any
action or determination made in good faith by the Committee with respect to this
Plan or any Incentive Award under this Plan, and, to the fullest extent
permitted by the Company's Articles

                                      -4-
<PAGE>
 
of Incorporation and Bylaws, the Company shall indemnify each member of the
Committee.

          (c)  MEETINGS. The Committee shall designate a chairman from among its
members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee. The Committee may
take any action otherwise proper under the Plan by the affirmative vote, taken
with or without a meeting, of a majority of its members.


          1.4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
               ------------------------------------------
 
          (a)  COMMON STOCK AUTHORIZED. Subject to adjustment under SECTION 3.5,
the aggregate number of shares of Common Stock available for granting Incentive
Awards under the Plan shall be equal to 3,500,000 shares of Common Stock. If any
Incentive Award shall expire or terminate for any reason, without being
exercised or paid, shares of Common Stock subject to such Incentive Award shall
again be available for grant in connection with grants of subsequent Incentive
Awards, subject to the limitations of SECTION 1.7.


          (b)  COMMON STOCK AVAILABLE. The Common Stock available for issuance
or transfer under the Plan shall be made available from such shares reserved
under the Plan, from such shares now or hereafter held by the Company or from
such shares to be purchased or acquired by the Company. The Common Stock
available for issuance or transfer under the Plan, if applicable, shall be made
available from shares now or hereafter held by the Company or from such shares
to be purchased or acquired by the Company. No fractional shares shall be issued
under the Plan; payment for fractional shares shall be made in cash.

          (c)  INCENTIVE AWARD ADJUSTMENTS. Subject to the limitations set forth
in SECTIONS 1.7, 3.6 and 4.8, the Committee may make any adjustment in the
exercise price or the number of shares subject to any Incentive Award, or any
other terms of any Incentive Award. Such adjustment shall be made by amending,
substituting or canceling and re-granting such Incentive Award with the
inclusion of terms and conditions that may differ from the terms and conditions
of the original Incentive Award. If such action is effected by amendment, the
effective date of such amendment shall be the date of the original grant.

                                      -5-
<PAGE>
 
          1.5. PARTICIPATION
               -------------

          (a)  ELIGIBILITY.  The Committee shall from time to time designate
those Employees, if any, to be granted Incentive Awards under the Plan, the type
of awards granted, the number of shares, options, rights or units, as the case
may be, which shall be granted to each such Employee and any other terms or
conditions relating to the awards as it may deem appropriate, consistent with
the provisions of the Plan. An Employee who has been granted an Incentive Award
may, if otherwise eligible, be granted additional Incentive Awards at any time.


          (b)  NO NON-EMPLOYEE BOARD PARTICIPATION.  In no event may any member
of the Board who is not an Employee be granted an Incentive Award under the
Plan.

          1.6. INCENTIVE AWARDS
               ----------------
 
          The forms of Incentive Awards under this Plan are Non-Qualified Stock
Options and Incentive Stock Options as described in SECTION 2.


          1.7. MAXIMUM INDIVIDUAL RIGHTS
               -------------------------
 
          No grantee may receive during any fiscal year of the Company Incentive
Awards covering an aggregate of more than two hundred thousand (200,000) shares
of Common Stock. To the extent required by Section 162(m) of the Code, shares
subject to Options which are canceled continue to be counted against the maximum
number of shares an individual may receive and if, after grant of an Option, the
price of shares subject to such Option is reduced, the transaction will be
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be canceled and the Option deemed to be granted will be counted
against the maximum number of shares an individual may receive.


                           SECTION 2.  STOCK OPTIONS

          2.1. GRANT OF OPTIONS
               ----------------
 
          The Committee is authorized to grant Options to Grantees in accordance
with the terms and conditions required pursuant to this Plan and with such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine.

                                      -6-
<PAGE>
 
          2.2. OPTION TERMS
               ------------
 
          (a)  EXERCISE PRICE.  The exercise price per share of Common Stock
under each Option shall be determined by the Committee; provided however, that,
                                                        -------- -------       
in the case of an Option intended to qualify as an Incentive Stock Option or as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
such exercise price shall not be less than 100% of the Fair Market Value per
share of such stock on the date the Option is granted, as determined by the
Committee (110% in the case of an Incentive Stock Option granted to a Ten-
Percent Stockholder).  For purposes of this SECTION 2.2, Ten-Percent Stockholder
shall mean an individual owning more than 10% of the total combined voting power
of all classes of stock of the Company, Parent or Subsidiary.

          (b)  TERM.  The Committee shall fix the term of each Option which, in
the case of an Incentive Stock Option, shall be not more than ten years from the
date of grant.  In the event no term is fixed, such term shall be ten years from
the date of grant.  The term shall be five years in the case of an Incentive
Stock Option granted to a Ten-Percent Stockholder.

          (c)  EXERCISE.  The Committee shall determine the time or times at
which an Option may be exercised in whole or in part.  The Committee may
accelerate the exercisability of any Option or a portion thereof at any time.


          2.3. OPTION EXERCISES
               ----------------
 
          (a)  METHOD OF EXERCISE. To purchase shares under any Option granted
under the Plan, Grantees must give notice in writing to the Company of their
intention to purchase and specify the number of shares of Common Stock as to
which they intend to exercise their Option. Upon the date or dates specified for
the completion of the purchase of the shares, the purchase price will be payable
in full. The purchase price may be paid in cash or an equivalent acceptable to
the Committee. At the discretion of the Committee, the exercise price per share
of Common Stock may be paid by the assignment and delivery to the Company of
shares of Common Stock owned by the Grantee or a combination of cash and such
shares equal in value to the exercise price. However, if the Grantee acquired
the stock to be surrendered directly or indirectly from the Company, he must
have owned the stock to be surrendered for at least six months prior to
tendering such stock for the exercise of an Option. Any shares so assigned and
delivered to the Company in payment or partial payment of the purchase price
shall be valued at the Fair Market Value on the exercise date. In addition, at
the request of the Grantee and to the extent permitted by applicable law, the
Company in its discretion may selectively approve a "cashless exercise"
arrangement with a brokerage firm under which such brokerage firm, on behalf of
the Grantee, shall pay to the Company the exercise price of the Options being
exercised, and the Company, pursuant to an irrevocable notice from the Grantee,
shall promptly deliver the shares being purchased to such firm.


          (b)  In the case of Incentive Stock Options, the terms and conditions
of such

                                      -7-
<PAGE>
 
grants shall be subject to and comply with Section 422 of the Code and any rules
or regulations promulgated thereunder, including the requirement that the
aggregate Fair Market Value (determined as of date the date of grant) of the
Common Stock with respect to which Incentive Stock Options granted under this
Plan and all other option plans of the Company, the Parent and Subsidiary become
exercisable by a Grantee during any calendar year shall not exceed $100,000. To
the extent that the limitation set forth in the preceding sentence is exceeded
for any reason (including the acceleration of the time for exercise of an
Option), the Options with respect to such excess amount shall be treated as Non-
Qualified Stock Options.

          (c)   PROCEEDS.  The proceeds received by the Company from the sale of
shares of Common Stock pursuant to Options exercised under the Plan will be used
for general purposes of the Company.

             SECTION 3.  PROVISIONS RELATING TO PLAN PARTICIPATION
 
          3.1. PLAN CONDITIONS
               ---------------
 
          (a)   INCENTIVE AWARD AGREEMENT.  Each Grantee to whom an Incentive
Award is granted under the Plan shall be required to enter into an Incentive
Award Agreement with the Company in a form provided by the Committee, which
shall contain certain specific terms, as determined by the Committee, with
respect to the Incentive Award and shall include provisions that the Grantee (i)
shall not disclose any trade or secret data or any other confidential
information of the Company acquired during employment by the Company or a
Subsidiary, or after the termination of employment or Retirement, (ii) shall
abide by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, and (iii) shall not interfere
with the employment of any other Company employee. An Incentive Award may
include a noncompetition agreement with respect to the Grantee and/or such other
terms and conditions, including, without limitation, rights of repurchase or
first refusal, not inconsistent with the Plan, as shall be determined from time
to time by the Committee. Incentive Award Agreements evidencing Incentive Awards
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.

          (b)   NO RIGHT TO EMPLOYMENT. Nothing in the Plan, Incentive Award
Agreement or any instrument executed pursuant to the Plan shall create any
employment rights (including without limitation, rights to continued employment)
in any Grantee or affect the right of the Company to terminate the employment of
any Grantee at any time for any reason.

          (c)   SECURITIES REQUIREMENTS. No shares of Common Stock will be
issued or transferred pursuant to an Incentive Award unless and until all then-
applicable requirements imposed by federal and state securities and other laws,
rules and regulations and

                                      -8-
<PAGE>
 
by any regulatory agencies having jurisdiction and by any stock market or
exchange upon which the Common Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares pursuant to the grant or exercise
of an Incentive Award, the Company may require the Grantee to take any
reasonable action to meet such requirements. The Company shall not be obligated
to take any affirmative action in order to cause the issuance or transfer of
shares pursuant to an Incentive Award to comply with any law or regulation
described in the second preceding sentence.


          3.2. TRANSFERABILITY
               ---------------
 
          (a)  NON-TRANSFERABLE AWARD. Unless otherwise provided in an
Incentive Award Agreement, no Incentive Award and no right under the Plan,
contingent or otherwise, shall be (i) assignable, saleable, or otherwise
transferable by a Grantee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, or (ii)
subject to any encumbrance, pledge or charge of any nature. No transfer by will
or by the laws of descent and distribution shall be effective to bind the
Company unless the Committee shall have been furnished with a copy of the
deceased Grantee's will or such other evidence as the Committee may deem
necessary to establish the validity of the transfer. Any attempted transfer in
violation of this SECTION 3.2 shall be void and ineffective for all purposes.


          (b)  ABILITY TO EXERCISE RIGHTS. Only the Grantee or his guardian (if
the Grantee becomes Disabled), or in the event of his death, his legal
representative or beneficiary, may exercise Options, receive cash payments and
deliveries of shares, or otherwise exercise rights under the Plan. The executor
or administrator of the Grantee's estate, or the person or persons to whom the
Grantee's rights under any Incentive Award will pass by will or the laws of
descent and distribution, shall be deemed to be the Grantee's beneficiary or
beneficiaries of the rights of the Grantee hereunder and shall be entitled to
exercise such rights as are provided hereunder.

          3.3. RIGHTS AS A STOCKHOLDER
               -----------------------
 
          Except as otherwise provided in any Incentive Award Agreement, a
Grantee of an Incentive Award or a transferee of such Grantee shall have no
rights as a stockholder with respect to any shares of Common Stock until such
person becomes a holder of record of such Common Stock. Except as otherwise
provided in SECTION 3.5, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities, or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued.

                                      -9-
<PAGE>
 
          3.4.  LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
                --------------------------------------------------
 
          Prior to issuance and/or delivery of shares of Common Stock, the
Company shall consult with representatives of the Company, as appropriate,
regarding compliance with laws, rules and regulations that apply to such shares.
If necessary, the Company shall postpone the issuance and/or delivery of the
affected shares of Common Stock upon any exercise of an Incentive Award until
completion of such stock exchange listing, registration, or other qualification
of such shares under any state and/or federal law, rule or regulation as the
Company may consider appropriate, and may require any Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations.  The Company shall not be obligated to
take any affirmative action in order to cause the issuance or transfer of shares
pursuant to an Incentive Award to comply with any law, rule or regulation
described in the immediately preceding sentence.


          3.5.  CHANGE IN STOCK AND ADJUSTMENTS
                -------------------------------
 
          (a)  CHANGES IN CAPITALIZATION.  In the event the outstanding shares
of the Common Stock, as constituted from time to time, shall be changed as a
result of a change in capitalization of the Company or a combination, merger, or
reorganization of the Company into or with any other corporation or any other
transaction with similar effects, then, for all purposes, references herein to
Common Stock shall mean and include all securities or other property (other than
cash) that holders of Common Stock are entitled to receive in respect of Common
Stock by reason of each successive aforementioned event, which securities or
other property (other than cash) shall be treated in the same manner and shall
be subject to the same restrictions as the underlying Common Stock.

          (b)  CHANGES IN LAW OR CIRCUMSTANCE.  In the event of any change in
applicable laws or any change in circumstances which results in or would result
in any dilution of the rights granted under the Plan, or which otherwise
warrants equitable adjustment because it interferes with the intended operation
of the Plan, then if the Committee shall, in its sole discretion, determine that
such change equitably requires an adjustment in the number or kind of shares of
stock or other securities or property theretofore subject, or which may become
subject, to issuance or transfer under the Plan or in the terms and conditions
of outstanding Incentive Awards, such adjustment shall be made in accordance
with such determination.  Such adjustments may include without limitation
changes with respect to (i) the aggregate number of shares that may be issued
under the Plan, (ii) the number of shares subject to Incentive Awards and (iii)
the price per share for outstanding Incentive Awards.  The Committee shall give
notice to each Grantee, and upon notice such adjustment shall be effective and
binding for all purposes of the Plan.

          (c)  PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS.  With
respect to any Incentive Award granted to any Section 162(m) Participant that is
intended 

                                      -10-
<PAGE>
 
to qualify as performance-based compensation under Section 162(m)(4)(C), no
adjustment or action described in this SECTION 3.5 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause such Incentive Award to fail to so qualify under Section 162(m)(4)(C) or
any successor provision thereto. Furthermore, no such adjustment or action shall
be authorized to the extent such adjustment or action would result in short-
swing profits liability under Section 16 of the Exchange Act or violate the
exemptive conditions of Rule 16b-3 of the Exchange Act unless the Committee
determines that the Option or other award is not to comply with such exemptive
conditions.


          3.6.  TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
                -----------------------------------------------------------
 
          (a)  TERMINATION OF EMPLOYMENT.  If an Employee's employment with the
Company, Parent or Subsidiary is terminated for any reason whatsoever other than
death, Disability, Retirement, Involuntary Termination or Termination for Good
Reason, any Incentive Award granted pursuant to the Plan outstanding at the time
and all rights thereunder shall wholly and completely terminate, and unless
otherwise established by the Committee, no further vesting shall occur and the
Employee shall be entitled to exercise his or her rights with respect to the
portion of the Incentive Award vested as of the date of termination for a period
of 30 calendar days after such termination date; provided however, that if an
                                                 -------- -------            
Employee is Terminated for Cause, such Employee's right to exercise the vested
portion of his or her Incentive Award shall terminate as of the date of
termination of employment.  In the event of termination for death, Disability,
Retirement, or Change of Control, an Incentive Award may only be exercised as
determined by the Committee and provided in the Incentive Award Agreement.
However, the following shall be used as a general guideline.

          (b)  RETIREMENT.  Unless otherwise approved by the Committee, upon
Retirement of an Employee:

               (i)    any nonvested portion of any outstanding Incentive Award
shall continue to vest after Retirement; and

               (ii)   any vested Incentive Award shall expire on the earlier of
(A) the expiration date set forth in the Incentive Award Agreement with respect
to such Incentive Awards; or (B) the expiration of 6 months after the date of
Retirement.

          (c)  DISABILITY OR DEATH.  Unless otherwise approved by the Committee,
upon termination of employment from the Company, Parent or Subsidiary as a
result of Disability or death:

               (i)    any nonvested portion of any outstanding Incentive Award
shall continue to vest after Disability or death; and

               (ii)   any vested Incentive Award shall expire upon the earlier
of 

                                      -11-
<PAGE>
 
(A) the expiration date set forth in the Incentive Award Agreement with respect
to such Incentive Awards; or (B) the first anniversary of such termination of
such employment as a result of Disability or death.

          (d)  INVOLUNTARY TERMINATION.  Unless otherwise approved by the
Committee, upon termination of employment from the Company, Parent or Subsidiary
as a result of Involuntary Termination (not Change of Control):

               (i)    any nonvested portion or any outstanding Incentive Award
shall vest on a pro-rated basis based upon the number of months the terminated
Employee has been employed within the applicable term; and

               (ii)   any vested Incentive Award shall expire upon the earlier
of (A) the expiration date set forth in the Incentive Award Agreement with
respect to such Incentive Awards or (B) the expiration of 30 days after the date
of Termination.

          (e)  CONTINUATION.  Subject to the express provisions of the Plan and
the terms of any applicable Incentive Award Agreement, the Committee, in its
discretion, may provide for the continuation of any Incentive Award for such
period and upon such terms and conditions as are determined by the Committee in
the event that a Grantee ceases to be an employee.

          3.7.  CHANGES OF CONTROL
                ------------------
 
          (a)  CHANGES OF CONTROL.  In the event of Involuntary Termination or
Termination for Good Reason within two years after a Change of Control, all
Options then outstanding shall become vested and immediately exercisable,
notwithstanding any provision therein for the exercise in installments.

          For the purposes of this SECTION 3.7, a "Change of Control" shall mean
a change of control of a nature that would be required to be reported in
response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act as such Schedule, Regulation and Act were in effect on the date of
adoption of this Plan by the Board, assuming that such Schedule, Regulation and
Act applied to the Company, provided that such change of control shall be deemed
to have occurred at such time as:

               (i)    any "person" (as that term is used in SECTION 13(d) and
14(d)(2) of the Exchange Act) (other than the Company or an affiliate of the
Company) becomes, directly or indirectly, the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of securities representing 30% or more of the
combined voting power for election of members of the Board of the then
outstanding voting securities of the Company or any successor of the Company;

               (ii)   during any period of 2 consecutive years or less, 

                                      -12-
<PAGE>
 
individuals who at the beginning of such period constituted the Board of the
Company cease, for any reason, to constitute at least a majority of the Board,
unless the election or nomination for election of each new member of the Board
was approved by a vote of at least two-thirds of the members of the Board then
still in office who were members of the Board at the beginning of the period;

               (iii)  the equity holders of the Company approve any merger or
consolidation to which the Company is a party as a result of which the persons
who were equity holders of the Company immediately prior to the effective date
of the merger or consolidation (and excluding, however, any shares held by any
party to such merger or consolidation and their affiliates) shall have
beneficial ownership of less than 50% of the combined voting power for election
of members of the Board (or equivalent) of the surviving entity following the
effective date of such merger or consolidation; or

               (iv)   the equity holders of the Company approve any merger or
consolidation as a result of which the equity interests in the Company shall be
changed, converted or exchanged (other than a merger with a wholly owned
subsidiary of the Company) or any liquidation of the Company or any sale or
other disposition of 50% or more of the assets or earnings power of the Company;
provided however, that no Change of Control shall be deemed to have occurred if,
-------- -------                                                                
prior to such time as a Change of Control would otherwise be deemed to have
occurred, the Board determines otherwise.

          Notwithstanding the foregoing (A) the merger or consolidation of
Aurora Foods Holdings, Inc., Aurora Foods, Inc., a wholly owned subsidiary of
Aurora Foods Holdings, Inc., VDK Holdings, Inc., and Van de Kamp's, Inc., a
wholly owned subsidiary of VDK Holdings, Inc., with and into the Company, (B)
the Public Offering of the Common Stock of the Company, and (C) the liquidation
or dissolution of Aurora/VDK LLC, MBW Investors LLC or VDK LLC shall not
constitute a Change of Control for purposes of this Plan.

          (b) RIGHT OF CASH-OUT.  If approved by the Board prior to or within 30
days after such time as a Change of Control shall be deemed to have occurred,
the Board shall have the right for a 45 day period immediately following the
date that the Change of Control is deemed to have occurred to require all, but
not less than all, Grantees to transfer and deliver to the Company all Incentive
Awards previously granted to Grantees in exchange for an amount equal to the
"cash value" (defined below) of the Incentive Awards.  Such right shall be
exercised by written notice to all Grantees.  For purposes of this SECTION
3.7(b), the cash value of an Incentive Award shall equal the sum of (i) all cash
to which the Grantee would be entitled upon settlement or exercise of such
Incentive Award and (ii) the excess of the "market value" (defined below) per
share over the option price, if any, multiplied by the number of shares subject
to such Incentive Award.  For purposes of the preceding sentence, "market value"
per share shall mean the higher of (i) the average of the Fair Market Value per
share on each of the five trading days immediately following the date a Change
of Control is deemed to have occurred or (ii) the highest price, if any, offered
in connection with a Change of Control.  The amount payable to each Grantee by
the Company pursuant to this SECTION 3.7(b) shall 

                                      -13-
<PAGE>
 
be in cash or by certified check and shall be reduced by any taxes required to
be withheld.

          3.8.  AMENDMENTS TO INCENTIVE AWARDS
                ------------------------------
 
          The Committee may waive any conditions or rights with respect to, or
amend, alter, suspend, discontinue, or terminate, any unexercised Incentive
Award theretofore granted, prospectively or retroactively, with the consent of
any relevant Grantee, subject to the limitations of SECTION 1.7.

          3.9.  EXCHANGE OF INCENTIVE AWARDS
                ----------------------------
 
          The Committee may, in its discretion, permit Grantees under the Plan
to surrender outstanding Incentive Awards in order to exercise or realize the
rights under other Incentive Awards, or in exchange for the grant of new
Incentive Awards or require holders of Incentive Awards to surrender outstanding
Incentive Awards as a condition precedent to the grant of new Incentive Awards.

          3.10.  FINANCING
                 ---------

          The Company may extend and maintain, or arrange for the extension and
maintenance of, financing to any Grantee (including a Grantee who is a Director
of the Company) to purchase shares pursuant to exercise of an Incentive Award on
such terms as may be approved by the Committee in its sole discretion.  In
considering the terms for extension or maintenance of credit by the Company, the
Committee shall, among other factors, consider the cost to the Company of any
financing extended by the Company.


                           SECTION 4.  MISCELLANEOUS

          4.1.   EFFECTIVE DATE AND GRANT PERIOD
                 -------------------------------
 
          This Plan shall become effective as of the date of Board approval (the
"Effective Date").  Unless sooner terminated by the Board, the Plan shall
terminate on June 24, 2008, unless extended.  After the termination of the Plan,
no Incentive Awards may be granted under the Plan, but previously granted awards
shall remain outstanding in accordance with their applicable terms and
conditions.

                                      -14-
<PAGE>
 
          4.2.   FUNDING
                 -------
 
          No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets in a manner that would provide any Grantee any rights
that are greater than those of a general creditor of the Company, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund if such
action would provide any Grantee with any rights that are greater than those of
a general creditor of the Company.  Grantees shall have no rights under the Plan
other than as unsecured general creditors of the Company except that insofar as
they may have become entitled to payment of additional compensation by
performance of services, they shall have the same rights as other employees
under applicable law.  However, the Company may establish a "Rabbi Trust" for
purposes of securing the payment pursuant to a Change of Control.

          4.3.   WITHHOLDING TAXES
                 -----------------
 
          The Company shall have the right to (i) make deductions from any
settlement of an Incentive Award made under the Plan, including the delivery of
shares, or require shares or cash or both be withheld from any Incentive Award,
in each case in an amount sufficient to satisfy withholding of any federal,
state or local taxes required by law, or (ii) take such other action as may be
necessary or appropriate to satisfy any such withholding obligations.  The
Committee may determine the manner in which such tax withholding may be
satisfied, and may permit shares of Common Stock (rounded up to the next whole
number) to be used to satisfy required tax withholding based on the Fair Market
Value of any such shares of Common Stock, as of the delivery of shares or
payment of cash in satisfaction of the applicable Incentive Award.

          4.4.   CONFLICTS WITH PLAN
                 -------------------
 
          In the event of any inconsistency or conflict between the terms of the
Plan and an Incentive Award Agreement, the terms of the Plan shall govern.

          4.5.   NO GUARANTEE OF TAX CONSEQUENCES
                 --------------------------------
 
          Neither the Company nor the Committee makes any commitment or
guarantee that any federal, state or local tax treatment will apply or be
available to any person participating or eligible to participate hereunder.

                                      -15-
<PAGE>
 
          4.6.   SEVERABILITY
                 ------------
 
          In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provision of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

          4.7.   GENDER, TENSE AND HEADINGS
                 --------------------------
 
          Whenever the context requires such, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural.  Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the Plan.

          4.8.   AMENDMENT AND TERMINATION
                 -------------------------
 
          The Plan may be amended or terminated at any time by the Board by the
affirmative vote of a majority of the members in office.  The Plan, however,
shall not be amended, without prior written consent of each affected Grantee if
such amendment or termination of the Plan would adversely affect any material
vested benefits or rights of such person.

                                      -16-
<PAGE>
 
          4.9.   SECTION 280G PAYMENTS
                 ---------------------

          In the event that the aggregate present value of the payments to a
Grantee under the Plan, and any other plan, program, or arrangement maintained
by the Company constitutes an "excess parachute payment" (within the meaning of
Code Section 280G(b)(1)) and the excise tax on such payment would cause the net
parachute payments (after taking into account federal, state and local income
and excise taxes) to which the Grantee otherwise would be entitled to be less
than what the Grantee would have netted (after taking into account federal,
state and local income taxes) had the present value of his total parachute
payments equaled $1.00 less than three times his "base amount" (within the
meaning of Code Section 280G(b)(3)(A)), the Grantee's total "parachute payments"
(within the meaning of Code Section 280G(b)(2)(A) shall be reduced (by the
minimum possible amount) so that their aggregate present value equals $1.00 less
than three times such base amount.  For purposes of this calculation, it shall
be assumed that the Grantee's tax rate will be the maximum marginal federal,
state and local income tax rate on earned income, with such maximum federal rate
to be computed with regard to Code Section 1(g), if applicable.  In the event
that the Grantee and the Company are unable to agree as to the amount of the
reduction described above, if any, the Grantee shall select a law firm or
accounting firm from among those regularly consulted (during the twelve-month
period immediately prior to the change of control that resulted in the
characterization of the payments as parachute payments) by the Company regarding
federal income tax or employee benefit matters and such law firm or accounting
firm shall determine the amount of such reduction and such determination shall
be final and binding upon the Grantee and the Company.

                                      -17-
<PAGE>
 
          4.10.   GOVERNING LAW
                  -------------
 
          The Plan shall be construed in accordance with the laws of the State
of New York, except as superseded by federal law, and in accordance with
applicable provisions of the Code and regulations or other authority issued
thereunder by the appropriate governmental authority.

          4.11.  LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND PERFORMANCE-
                 ------------------------------------------------------------
BASED COMPENSATION
------------------
 
          Notwithstanding any other provision of this Plan, this Plan, and any
Incentive Award granted to any individual who is then subject to Section 16 of
the Exchange Act, shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule.  To the extent permitted by applicable law,
the Plan, and Incentive Awards granted hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.  Furthermore,
notwithstanding any other provision of this Plan, any Option, which is granted
to a Section 162(m) Participant and is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to any additional limitations set forth in Section 162(m) of the Code (including
any amendment to Section 162(m) of the Code) or any regulations or rulings
issued thereunder that are requirements for qualification as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and this Plan
shall be deemed amended to the extent necessary to conform to such requirements.

          IN WITNESS WHEREOF, this Plan has been executed this 9th day of
October, 1998, to be effective as of July 1, 1998.



                                    AURORA FOODS INC.



                                    By:______________________________

                                      -18-