Exhibit 10.1 
 
                           EMPLOYMENT AGREEMENT 
 
          THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the  
1st day of November, 1996, by and between International Multifoods  
Corporation, a Delaware corporation (the "Company"), and Gary E.  
Costley, a resident of Winston-Salem, North Carolina (the "Executive").   
 
          WHEREAS, the Executive is experienced in managing significant  
business enterprises; and 
 
          WHEREAS, the Company wishes to secure the Executive's services  
as Chairman of the Board, President and Chief Executive Officer under  
the terms and conditions hereof; and 
 
          WHEREAS, the Executive wishes to provide such services to the  
Company; 
 
          NOW THEREFORE, in consideration of the premises and of the  
mutual covenants and undertakings stated herein, the Executive and the  
Company hereby agree as follows: 
 
          1.   Period of Employment 
 
          Subject to all terms and conditions hereof, the Company shall  
employ the Executive as, and the Executive shall serve the Company as,  
Chairman of the Board, President and Chief Executive Officer during the  
period commencing on January 1, 1997 and ending on December 31, 1999  
(the "Employment Period"), unless the Executive's employment hereunder  
terminates earlier in accordance with Section 5 hereof.  Commencing on  
January 1, 1998, and on each January 1 thereafter, the Employment Period  
shall be extended automatically for one additional year, unless not  
later than the September 30th preceding any such automatic extension,  
the Company shall give the Executive written notice that it elects not  
to so extend the Employment Period. 
 
          2.   Duties and Responsibilities of the Executive 
 
          Subject to all terms and conditions hereof, the Company  
shall employ the Executive as, and the Executive shall serve the Company  
as, Chairman of the Board, President and Chief Executive Officer.  The  
Board of Directors of the Company (the "Board") has, effective as of  
January 1, 1997, appointed the Executive as, and the Executive shall  
serve the Company as, Chairman of the Board, President and Chief  
Executive Officer.  As Chairman of the Board, President and Chief  
Executive Officer, the Executive shall have all duties and  
responsibilities customarily associated with the offices of chairman,  
president and chief executive officer of a significant business  
enterprise, shall have primary management responsibility for the  
Company, shall chair the Board, and shall perform such other duties  
consistent with the offices of Chairman of the Board, President and  
Chief Executive Officer of the Company as may be specified from time to  
time by the Board, to whom the Executive shall report.  During the  
Employment Period, the Executive shall devote full time to the  
Executive's duties and responsibilities hereunder, and he shall not  
engage in other employment or in other material business activities;  
provided, however, that the Executive may make appropriate and  
reasonable personal investments, may continue as an inactive employee of  
Kellogg Company on leave-of-absence through October 31, 1998, and, with  
the approval of the Board or the Chair of the Nominating and Corporate  
Governance Committee of the Board, may continue to serve on the boards  
of directors of the business corporations on which he currently serves  
and may serve on the boards of directors of other business corporations  
and engage in community activities in the locations in which the Company  
has offices. 
 
          3.  Compensation 
 
              (a)  Base Salary.  While the Executive is employed  
by the Company hereunder, the Company shall pay to the Executive a base  
salary ("Base Salary"), which shall be established by the Compensation  
Committee of the Board (the "Compensation Committee").  Every 15 to 18  
months during the Employment Period, the Compensation Committee in its  
discretion may grant increases in the Executive's Base Salary on the  
basis of merit.  The Compensation Committee has established the  
Executive's Base Salary as of January 1, 1997 at $600,000.00 per year.   
The Company shall pay the Executive's Base Salary to him in accordance  
with the Company's standard payroll practices as in effect from time to  
time. 
 
              (b)  Annual Bonus Awards.  While the Executive is  
employed by the Company hereunder, the Executive shall be eligible to  
participate in the Company's Management Incentive Plan (the "Incentive  
Plan").  Beginning with the fiscal year that commences on March 1, 1997  
and for each fiscal year thereafter during which the Executive is  
eligible to participate in the Incentive Plan, the Company shall pay to  
the Executive as an annual bonus (the "Bonus Award"), if approved by the  
Compensation Committee in its discretion, a minimum of 15 percent of the  
Executive's Base Salary and a maximum of 100 percent of his Base Salary  
(or such higher maximum established by the Compensation Committee), with  
65 percent of the Executive's Base Salary being his target annual Bonus  
Award.  The amount of the Executive's annual Bonus Award as determined  
by the Compensation Committee in its discretion shall be based on the  
financial performance achieved by the Company during the applicable  
fiscal year as measured by either the Company's attainment of its  
business plan goals or other standards as established by the  
Compensation Committee in its discretion from time to time.  The  
Compensation Committee shall make its determination of the amount of the  
Executive's annual Bonus Award, if any, within 60 days following the end  
of each fiscal year, which Bonus Award shall be paid to the Executive  
within 90 days following the end of such fiscal year.  Except as  
modified by the provisions of this Section 3(b) and of Section 6(b),  
Section 6(c), and Section 6(d) hereof, payments of annual Bonus Awards  
to the Executive by the Company shall be governed by the terms of the  
Company's Incentive Plan as it is in effect from time to time. 
 
              (c)  Stock Options.  Pursuant to the provisions of  
the Company's Amended and Restated 1989 Stock-Based Incentive Plan (the  
"Stock Plan"), the Compensation Committee shall, effective as of the  
first day of his actual employment with the Company, grant to the  
Executive an option to purchase 100,000 shares of common stock of the  
Company at a price per share equal to the mean of the high and low sales  
prices of a share of common stock of the Company on the New York Stock  
Exchange on the trading day immediately preceding the first day of the  
Executive's actual employment with the Company.  Such option shall be  
fully exercisable on the first day of the Executive's actual employment  
with the Company.  The term of the grant of such option shall be ten  
years.  In addition, pursuant to the provisions of the Stock Plan or a  
similar stock option plan to be adopted, the Compensation Committee  
shall grant to the Executive an option to purchase an additional 100,000  
shares of common stock of the Company at a price per share equal to the  
mean of the high and low sales prices of a share of common stock of the  
Company on the New York Stock Exchange on the trading day immediately  
preceding the first day of the Executive's actual employment with the  
Company, which grant shall be null and void if the stock option plan  
pursuant to which such grant is made is not approved by the Company's  
stockholders at the next annual meeting of stockholders.  Such  
additional option shall become exercisable either (i) cumulatively at  
the rate of 25,000 shares annually at the end of each of the four  
consecutive fiscal years of the Company following such stockholder  
approval, beginning with the fiscal year that ends on February 28, 1998,  
if the Company's net pre-tax earnings for each such fiscal year exceed  
the Company's net pre-tax earnings for the immediately preceding fiscal  
year by at least 15 percent (or, alternatively, at the end of any such  
fiscal year if the Company's net pre-tax earnings for the period of  
consecutive fiscal years following such stockholder approval, beginning  
with the fiscal year that ends on February 28, 1998, exceed the  
Company's net pre-tax earnings for the fiscal year immediately preceding  
such period of consecutive fiscal years by an average of at least 15%  
annually), or (ii) based on other standards as established by the  
Compensation Committee in its discretion from time to time; provided,  
however, that such option shall become fully exercisable to the extent  
not previously exercisable after the Executive has been continuously  
employed by the Company for a period of years to be determined by the  
Compensation Committee in its discretion, which period shall not be less  
than seven years nor greater than nine years.  For purposes of the  
preceding sentence, the phrase "the Company's net pre-tax earnings"  
shall mean the operating profit of the Company and its subsidiaries on a  
consolidated basis, before income taxes and extraordinary items, as  
determined according to generally accepted accounting principles.  The  
term of the grant of such option shall be ten years.  Further, pursuant  
to the provisions of the Stock Plan, the Compensation Committee in its  
discretion may grant to the Executive additional stock options beginning  
with the Company's fiscal year that commences on March 1, 1998.  Except  
as modified by the provisions of this Section 3(c) and Section 6(b),  
Section 6(c), and Section 6(d) hereof, the stock options granted to the  
Executive by the Company shall be governed by the terms of the Company's  
Stock Plan or a similar stock option plan to be adopted in accordance  
with the provisions of this Section 3(c) as they are in effect from time  
to time. 
 
         4.   Employee Benefits 
 
              (a)  While the Executive is employed by the Company  
hereunder, the Executive shall be entitled to participate in the  
Company's Voluntary Investment and Savings Plan ("VISA") and the  
Company's Pension Equity Plan ("PEP") in accordance with the provisions  
of such plans.  The Compensation Committee shall approve, effective as  
of the first day of the Executive's actual employment with the Company,  
the Executive's participation in the Company's Management Benefit Plan  
("MBP"), and shall authorize that the Executive's participation in the  
MBP shall commence immediately upon the first day of his actual  
employment with the Company notwithstanding the provisions of the MBP. 
 
              (b)  While the Executive is employed by the Company  
hereunder, the Executive shall be entitled to participate in such group  
insurance plans, including health insurance, dental insurance, vision  
insurance, life and accidental death and dismemberment insurance, and  
disability insurance, and such other employee benefits as are provided  
from time to time by the Company to its senior executives, in accordance  
with the provisions of the Company's general employee benefits plans and  
programs then in effect, to the extent that such provisions are not  
expressly modified in this Agreement.  All eligibility standards or  
waiting periods that the Executive would otherwise be required to  
satisfy or complete in order to participate in such employee benefit  
plans and programs, including any pre-existing condition restrictions or  
limitations that may be waived by the Company, shall be expressly waived  
by the Company as of the first day of the Executive's actual employment  
with the Company, with the exception of the length-of-service  
requirements specified in the VISA and the PEP. 
 
              (c)  While the Executive is employed by the Company  
hereunder, the Company promptly shall reimburse the Executive for his  
reasonable and necessary business, entertainment, and travel expenses in  
accordance with the Company's general expense reimbursement policies and  
practices in effect from time to time for its senior executives.   
 
              (d)  While the Executive is employed by the Company  
hereunder, the Company promptly shall reimburse the Executive for: 
 
                      (i)  the membership fees and monthly dues  
                           charged by the Minneapolis Club and a  
                           country club located in the Twin Cities  
                           metropolitan area that has been approved  
                           in advance by the Chair of the Compensation  
                           Committee; 
 
                     (ii)  the cost of an annual executive physical 
                           examination to be performed at the Mayo  
                           Clinic in Rochester, Minnesota; and 
 
                    (iii)  the costs that the Executive incurs  
                           each year for financial planning advice  
                           and tax preparation services. 
 
              (e)  After the Executive and the Company execute this Agreement
and this Agreement is thereafter approved by the Compensation Committee and
the Board, the Company promptly shall reimburse the Executive for his  
expenses associated with his search for a principal residence in and his  
move to the Twin Cities metropolitan area in accordance with the  
provisions of the Company's relocation policies and practices for senior  
executives and also promptly shall: 
 
                      (i)  reimburse the Executive for the actual  
                           cost of temporary housing for him and his  
                           wife in the Twin Cities metropolitan area  
                           for a period of up to six months; 
 
                     (ii)  pay him or cause to be paid to him as  
                           the purchase price of the current  
                           principal residence of the Executive and  
                           his wife in Winston-Salem, North Carolina,  
                           an amount equal to the appraised fair  
                           market value of such residence, which  
                           appraised fair market value shall be  
                           determined by calculating the average of  
                           two appraised fair market values of such  
                           residence established by two qualified  
                           appraisers selected by the Executive (or,  
                           if the initial two appraisals result in  
                           fair market values that differ from each  
                           other by more than five percent, then a  
                           third appraisal shall be obtained and the  
                           average shall be calculated by using the  
                           two highest fair market values), and which  
                           appraisal process may commence promptly  
                           after the execution of this Agreement by  
                           the parties, notwithstanding any other  
                           provision of this Section 4(e); 
 
                   (iii)   pay him an amount equal to 140 percent  
                           multiplied by the excess, if any, of (A)  
                           an amount to be agreed upon by the Company  
                           and the Executive (based on documentation  
                           to be furnished by the Executive) that is  
                           equal to the Executive's and his wife's  
                           cost basis for such residence, including  
                           the cost of the improvements they have  
                           made to such residence (which amount is  
                           currently estimated to be approximately  
                           $965,000.00), over (B) the amount  
                           determined as the appraised fair market of  
                           such residence under Section 4(e)(ii)  
                           hereof; 
 
                    (iv)   pay directly to the provider or  
                           providers of such services an amount, not  
                           to exceed $10,000.00, for career  
                           counseling and related services to be  
                           provided to his wife in connection with  
                           her relocation to the Twin Cities  
                           metropolitan area; and 
 
                     (v)   pay directly to the Executive's legal  
                           counsel an amount, not to exceed  
                           $10,000.00, for the attorneys' fees and  
                           costs that the Executive has incurred in  
                           connection with the negotiation and  
                           preparation of this Agreement.   
 
              (f)  In the event that the Executive does not  
commence active employment with the Company by reason of his death or  
Disability (as defined below) after he executes this Agreement, the  
Company promptly shall reimburse the Executive or his wife,   
as the case may be, for the expenses associated with a search for a principal
residence in and a move to North Carolina in accordance with the provisions
of the Company's relocation policies and practices for senior executives,
as if the Executive were a senior executive of the Company actively employed  
at that time. 
 
         5.     Termination 
 
               The Executive's employment with the Company hereunder  
shall terminate immediately upon: 
 
              (a)  receipt by the Company of the Executive's  
written resignation from the Company, 
 
              (b)  the Executive's receipt of written notice from  
the Company of the termination of the Executive's employment, 
 
              (c)  the Executive's death or Disability (as  
defined below), or 
 
              (d)  expiration of the Employment Period, 
and the date on which the Executive's employment termination occurs  
shall be the "Termination Date" hereunder. 
 
         6.     Payments Upon Termination 
 
              (a)  If the Executive's employment hereunder  
terminates by reason of: 
 
                     (i)   resignation by the Executive without  
                           Good Reason (as defined below) or  
                           abandonment by the Executive of his  
                           employment, 
 
                    (ii)   Termination by the Company For Cause  
                           (as defined below), or 
 
                   (iii)   the Executive's death or Disability  
                           (as defined below), 
 
then the Company shall pay to the Executive or his beneficiary or his  
estate, as the case may be, his Base Salary through the Termination  
Date.   
 
              (b)  If the Executive's employment hereunder  
terminates on or before the expiration of the Initial Employment Period  
(the "Initial Employment Period" hereunder being the period from January  
1, 1997 through December 31, 1999) by reason of: 
 
                     (i)   termination by the Company other than  
                           Termination by the Company For Cause, or 
 
                    (ii)   resignation by the Executive for Good  
                           Reason, 
 
then the Company shall pay to the Executive in 24 equal monthly  
installments after the Termination Date an amount equal to the sum of  
(1) two multiplied by the Executive's Base Salary as of the Termination  
Date, plus (2) two multiplied by the average of the annual Bonus Awards  
paid to the Executive for the two fiscal years immediately preceding the  
Termination Date (or, if an annual Bonus Award has been paid to the  
Executive for only the fiscal year ending on February 28, 1998, then the  
amount of such award shall be used in lieu of calculating an average),  
plus (3) an amount equal to (A) the greater of (I) 65 percent of the  
Executive's Base Salary as of the Termination Date, or (II) the amount  
of the Executive's actual annual Bonus Award for the fiscal year  
immediately preceding the Termination Date, (B) multiplied by a  
fraction, (I) the numerator of which shall be the actual number of full  
weeks between the start of such fiscal year and the Termination Date,  
and (II) the denominator of which shall be 52.  For purposes of  
calculating the average of such annual Bonus Awards under this Section  
6(b) only, the amount included for the fiscal year ending on February  
28, 1998 shall be the greater of 65 percent of the Executive's Base  
Salary at the end of such fiscal year or the actual annual Bonus Award  
paid to him for such fiscal year. 
 
              (c)  If the Executive's employment hereunder  
terminates after the expiration of the Initial Employment Period by  
reason of: 
 
                     (i)   termination by the Company other than  
                           Termination by the Company For Cause, 
 
                    (ii)   resignation by the Executive for Good  
                           Reason, or 
 
                   (iii)   expiration of the Employment Period, 
 
then the Company shall pay to the Executive in 18 equal monthly  
installments after the Termination Date an amount equal to the sum of  
(1) one and one-half multiplied by the Executive's Base Salary as of the  
Termination Date, plus (2) one and one-half multiplied by the average of  
the annual Bonus Awards paid to the Executive for the three fiscal years  
immediately preceding the Termination Date (or, if annual Bonus Awards  
have been paid to the Executive for only two fiscal years, then such  
average shall be calculated using the annual Bonus Awards for such two  
fiscal years), plus (3) an amount equal to (A) the greater of (I) 65  
percent of the Executive's Base Salary as of the Termination Date, or  
(II) the amount of the Executive's actual annual Bonus Award for the  
fiscal year immediately preceding the Termination Date, (B) multiplied  
by a fraction, (I) the numerator of which shall be the actual number of  
full weeks between the start of such fiscal year and the Termination  
Date, and (II) the denominator of which shall be 52.   
 
              (d)  Notwithstanding the foregoing provisions of  
this Section 6, if the Executive's employment hereunder is terminated by  
the Company following a Change of Control (as defined below), or if the  
Executive elects to resign his employment with the Company for any  
reason within 180 days after the effective date of a Change of Control,  
then the Company shall pay to the Executive in 36 equal monthly  
installments after the Termination Date an amount equal to the sum of  
(1) three multiplied by the Executive's Base Salary as of the  
Termination Date, plus (2) three multiplied by the average of the annual  
Bonus Awards paid to the Executive for the three fiscal years  
immediately preceding the effective date of the Change of Control (or,  
if annual Bonus Awards have been paid to the Executive for only two  
fiscal years, then such average shall be calculated using the annual  
Bonus Awards for such two fiscal years, or if an annual Bonus Award has  
been paid to the Executive for only the fiscal year ending on February  
28, 1998, then the amount of such award shall be used in lieu of  
calculating an average), plus (3) an amount equal to the greater of (A)  
65 percent of the Executive's Base Salary as of the Termination Date, or  
(B) the amount of the Executive's actual annual Bonus Award for the  
fiscal year immediately preceding the Termination Date.  For purposes of  
calculating the average of such annual Bonus Awards under this Section  
6(d) only, the amount included for the fiscal year ending on February  
28, 1998 shall be the greater of 65 percent of the Executive's Base  
Salary at the end of such fiscal year or the actual annual Bonus Award  
paid to him for such fiscal year.   
 
              (e)  "Termination by the Company For Cause" shall  
mean the Executive's employment termination for: 
 
                     (i)   a persistent failure by the Executive to  
                           perform the duties and responsibilities of  
                           his employment hereunder, which failure is  
                           willful and deliberate on the Executive's  
                           part and is not remedied by him in a  
                           reasonable period of time after the  
                           Executive's receipt of written notice from  
                           the Company of such failure; 
 
                    (ii)   an act or acts of dishonesty undertaken  
                           by the Executive and intended to result in  
                           substantial gain or personal enrichment of  
                           the Executive at the expense of the  
                           Company; 
 
                   (iii)   unlawful conduct or gross misconduct  
                           that is willful and deliberate on the  
                           Executive's part and that, in either  
                           event, is materially injurious to the  
                           Company; or 
 
                    (iv)   the conviction of the Executive of a  
                           felony.   
 
              (f)  "Good Reason" for resignation by the Executive  
shall mean his resignation because of: 
 
                     (i)   the removal of the Executive as Chairman  
                           of the Board, President, or Chief  
                           Executive Officer of the Company by action  
                           of the Company's Board; 
 
                    (ii)   the assignment to the Executive of any  
                           duties and responsibilities that are  
                           substantially inconsistent with or  
                           materially diminish the Executive's  
                           position as Chairman of the Board,  
                           President and Chief Executive Officer of  
                           the Company; 
 
                   (iii)   a material reduction of the  
                           Executive's Base Salary, or material  
                           modifications to the Incentive Plan, the  
                           Stock Plan (or any similar stock option  
                           plan), or the MBP that amount to a  
                           material reduction in the Executive's  
                           total compensation hereunder; 
 
                    (iv)   a requirement that the Executive be  
                           based at any office or location more than  
                           50 miles from downtown Minneapolis,  
                           Minnesota; or 
 
                     (v)   any purported termination of the  
                           Executive's employment by the Company  
                           except as expressly permitted by the  
                           provisions of this Agreement.   
 
              (g)     "Change of Control" shall mean: 
 
                     (i)   The acquisition by any individual,  
                           entity, or group (within the meaning of  
                           Section 13 (d) (3) or 14 (d) (2) of the  
                           Securities Exchange Act of 1934, as  
                           amended (the "Exchange Act")) (a "Person")  
                           of beneficial ownership (within the  
                           meaning of Rule 13d-3 promulgated under  
                           the Exchange Act) of 20 percent or more of  
                           either (A) the then outstanding shares of  
                           common stock of the Company (the  
                           "Outstanding Company Common Stock") or (B)  
                           the combined voting power of the then  
                           outstanding voting securities of the  
                           Company entitled to vote generally in the  
                           election of directors (the "Outstanding  
                           Company Voting Securities"); provided,  
                           however, that for purposes of this Section  
                           6 (g)(i), the following acquisitions shall  
                           not constitute a Change of Control:   
 
                             (A) any acquisition directly from the  
                             Company, (B) any acquisition by the  
                             Company, (C) any acquisition by any  
                             employee benefit plan (or related trust)  
                             sponsored or maintained by the Company or  
                             any corporation controlled by the Company,  
                             or (D) any acquisition by any corporation  
                             pursuant to a transaction which complies  
                             with clauses (A), (B), and (C) of Section  
                             6 (g)(iii) hereof; or 
 
                     (ii)  Individuals who, as of the date hereof,  
                           constitute the Board (the "Incumbent  
                           Board") cease for any reason to constitute  
                           at least a majority of the Board;  
                           provided, however, that any individual  
                           becoming a director subsequent to the date  
                           hereof whose election, or nomination for  
                           election by the Company's stockholders,  
                           was approved by a vote of at least a  
                           majority of the directors then comprising  
                           the Incumbent Board shall be considered as  
                           though such individual were a member of  
                           the Incumbent Board, but excluding, for  
                           this purpose, any such individual whose  
                           initial assumption of office occurs as a  
                           result of an actual or threatened election  
                           contest with respect to the election or  
                           removal of directors or other actual or  
                           threatened solicitation of proxies or  
                           consents by or on behalf of a Person other  
                           than the Board; or 
 
                    (iii)  Consummation of a reorganization,  
                           merger or consolidation, or sale or other  
                           disposition of all or substantially all of  
                           the assets of the Company (a "Business  
                           Combination"), in each case, unless,  
                           following such Business Combination, (A)  
                           all or substantially all of the  
                           individuals and entities who were the  
                           beneficial owners, respectively, of the  
                           Outstanding Company Common Stock and  
                           Outstanding Company Voting Securities  
                           immediately prior to such Business  
                           Combination beneficially own, directly or  
                           indirectly, more than 60 percent of,  
                           respectively, the then outstanding shares  
                           of common stock and the combined voting  
                           power of the then outstanding voting  
                           securities entitled to vote generally in  
                           the election of directors, as the case may  
                           be, of the corporation resulting from such  
                           Business Combination (including, without  
                           limitation, a corporation which as a  
                           result of such transaction owns the  
                           Company or all or substantially all of the  
                           Company's assets either directly or  
                           through one or more subsidiaries) in  
                           substantially the same proportions as  
                           their ownership, immediately prior to such  
                           Business Combination of the Outstanding  
                           Company Common Stock and Outstanding  
                           Company Voting Securities, as the case may  
                           be, (B) no Person (excluding any employee  
                           benefit plan (or related trust) of the  
                           Company or such corporation resulting from  
                           such Business Combination) beneficially  
                           owns, directly or indirectly, 20 percent  
                           or more of, respectively, the then  
                           outstanding shares of common stock of the  
                           corporation resulting from such Business  
                           Combination or the combined voting power  
                           of the then outstanding voting securities  
                           of such corporation except to the extent  
                           that such ownership existed prior to the  
                           Business Combination, and (C) at least a  
                           majority of the members of the board of  
                           directors of the corporation resulting  
                           from such Business Combination were  
                           members of the Incumbent Board at the time  
                           of the execution of the initial agreement,  
                           or of the action of the Board, providing  
                           for such Business Combination; or 
 
                     (iv)  Approval by the stockholders of the  
                           Company of a complete liquidation or  
                           dissolution of the Company. 
 
              (h)  "Disability" shall mean the inability of the  
Executive to perform the duties and responsibilities of his employment  
hereunder by reason of his illness or other physical or mental  
impairment or condition, if such inability continues for an  
uninterrupted period of 90 days or more.  A period of inability shall be  
"uninterrupted" unless and until the Executive returns to full-time work  
for a continuous period of at least 30 days. 
 
              (i)  In the event of termination of the Executive's  
employment hereunder, the sole obligation of the Company shall be its  
obligation to make the payments called for by Section 6(a), Section  
6(b), Section 6(c), or Section 6(d) hereof, as the case may be, and the  
Company shall have no other obligation to the Executive or to his wife,  
his beneficiary, or his estate, except as otherwise provided by law,  
under any applicable stock option agreement between the Executive and  
the Company, or, in the event of the Executive's employment termination  
by reason of the Executive's death or Disability, under any insurance  
policies then in effect covering the Executive.  Without limiting the  
generality of the foregoing, the Company shall not be required to pay  
any annual Bonus Awards to the Executive under the Incentive Plan except  
to the extent provided in the Incentive Plan (as modified by Section  
3(b) hereof) with respect to any fiscal years that have not been  
completed as of the Termination Date. 
 
              (j)  Notwithstanding the foregoing provisions of  
this Section 6, the Company shall not be obligated to make any payments  
to the Executive under Section 6(b), Section 6(c), or Section 6(d)  
hereof unless the Executive shall have signed a release of claims in  
favor of the Company in a form to be prescribed by the Company, all  
applicable consideration and rescission periods provided by law shall  
have expired, and the Executive is in strict compliance with the terms  
of Section 8(b), Section 8(c), and Section 8(d) hereof.   
 
         7.     Certain Additional Payments and Acts by the Company 
 
              (a)  Notwithstanding the provisions of either this  
Agreement or any other agreement or plan of the Company, in the event  
that it shall be determined that any payment or distribution by the  
Company to or for the benefit of the Executive (whether paid or payable  
or distributed or distributable pursuant to the terms of this Agreement  
or otherwise, but determined without regard to any additional payments  
required under this Section 7) (a "Payment") would be subject to the  
excise tax imposed by Section 4999 of the Internal Revenue Code or any  
interest or penalties are incurred by the Executive with respect to such  
excise tax (such excise tax, together with any such interest and  
penalties, are hereinafter collectively referred to as the "Excise  
Tax"), then the Executive shall be entitled to receive an additional  
payment (a "Gross-Up Payment") in an amount such that after payment by  
the Executive of all taxes (including any interest or penalties imposed  
with respect to such taxes), including, without limitation, any income  
taxes (and any interest and penalties imposed with respect thereto) and  
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an  
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the  
Payments.  If any other agreement between the Executive and the Company  
provides for payments by the Company similar in nature to the Gross-Up  
Payment provided for in this Section 7(a), and the Executive receives  
such similar payments under such other agreement, then the Gross-Up  
Payment otherwise required hereunder shall be reduced to the extent  
necessary to avoid duplication of the benefit intended to be conferred  
upon the Executive by the making of a Gross-Up Payment pursuant to this  
Agreement.   
 
              (b)  Subject to the provisions of Section 7(c)  
hereof, all determinations required to be made under this Section 7,  
including whether and when a Gross-Up Payment is required and the amount  
of such Gross-Up Payment and the assumptions to be utilized in arriving  
at such determination, shall be made by KPMG Peat Marwick or such other  
certified public accounting firm as may be designed by the Executive  
(the "Accounting Firm"), which shall provide detailed supporting  
calculations both to the Company and the Executive within 15 business  
days of the receipt of notice from the Executive that there has been a  
Payment, or such earlier time as is requested by the Company.  In the  
event that the Accounting Firm is serving as accountant or auditor for  
the individual, entity, or group effecting the Change of Control, the  
Executive shall appoint another nationally recognized accounting firm to  
make the determinations required hereunder (which accounting firm shall  
then be referred to as the Accounting Firm hereunder).  All fees and  
expenses of the Accounting Firm shall be borne solely by the Company.   
Any Gross-Up Payments, as determined pursuant to this Section 7, shall  
be paid by the Company to the Executive with five days of the receipt of  
the Accounting Firm's determination.  Any determination by the  
Accounting Firm shall be binding upon the Company and the Executive.  As  
a result of the uncertainty in the application of Section 4999 of the  
Internal Revenue Code at the time of the initial determination by the  
Accounting Firm hereunder, it is possible that Gross-Up Payments which  
will not have been made by the Company should have been made  
("Underpayment"), consistent with the calculations required to be made  
hereunder.  In the event that the Company exhausts its remedies pursuant  
to Section 7(c) hereof and the Executive thereafter is required to make  
a payment of any Excise Tax, the Accounting Firm shall determine the  
amount of the Underpayment that has occurred and any such Underpayment  
shall be promptly paid by the Company to or for the benefit of the  
Executive. 
 
              (c)  The Executive shall notify the Company in  
writing of any claim by the Internal Revenue Service that, if  
successful, would require the payment by the Company of the Gross-Up  
Payment.  Such notification shall be given as soon as practicable but no  
later than 20 business days after the Executive is informed in writing  
of such claim and shall apprise the Company of the nature of such claim  
and the date on which such claim is requested to be paid.  The Executive  
shall not pay such claim prior to the expiration of the 30-day period  
following the date on which the Executive gives such notice to the  
Company (or such shorter period ending on the date that any payment of  
taxes with respect to such claim is due).  If the Company notifies the  
Executive in writing prior to the expiration of such period that it  
desires to contest such claim, the Executive shall: 
 
                     (i)   give the Company any information  
                           reasonably requested by the Company  
                           relating to such claim; 
 
                     (ii)  take such action in connection with  
                           contesting such claim as the Company shall  
                           reasonably request in writing from time to  
                           time, including, without limitation,  
                           accepting legal representation with  
                           respect to such claim by an attorney  
                           reasonably selected by the Company; 
 
                    (iii)  cooperate with the Company in good  
                           faith in order effectively to contest such  
                           claim; and 
 
                     (iv)  permit the Company to participate in  
                           any proceedings relating to such claim; 
 
provided, however, that the Company shall bear and pay  
directly all costs and expenses (including additional interest and  
penalties) incurred in connection with such contest and shall indemnify  
and hold the Executive harmless, on an after-tax basis, for any Excise  
Tax or income tax (including interest and penalties with respect  
thereto) imposed as a result of such representation and payment of costs  
and expenses.  Without limitation on the foregoing provisions of this  
Section 7(c), the Company shall control all proceedings taken in  
connection with such contest and, at its sole option, may pursue or  
forgo any and all administrative appeals, proceedings, hearings, and  
conferences with the taxing authority in respect of such claim and may,  
at its sole option, either direct the Executive to pay the tax claimed  
and sue for a refund or contest the claim in any permissible manner, and  
the Executive agrees to prosecute such contest to a determination before  
any administrative tribunal, in a court of initial jurisdiction, and in  
one or more appellate courts as the Company shall determine; provided,  
however, that if the Company directs the Executive to pay such claim and  
sue for a refund, the Company shall advance the amount of such payment  
to the Executive, on an interest-free basis, and shall indemnify and  
hold the Executive harmless, on an after-tax basis, from any Excise Tax  
or income tax (including interest or penalties with respect thereto)  
imposed with respect to such advance or with respect to any imputed  
income with respect to such advance; and further provided that any  
extension of the statute of limitations relating to payment of taxes for  
the taxable year of the Executive with respect to which such contested  
amount is claimed to be due is limited solely to such contested amount.   
Furthermore, the Company's control of the contest shall be limited to  
issues with respect to which a Gross-Up Payment would be payable  
hereunder and the Executive shall be entitled to settle or contest, as  
the case may be, any other issue raised by the Internal Revenue Service  
or any other taxing authority. 
 
              (d)  If, after the receipt by the Executive of an  
amount advanced by the Company pursuant to Section 7(c) hereof, the  
Executive becomes entitled to receive any refund with respect to such  
claim the Executive shall (subject to the Company's complying with the  
requirements of Section 7(c) hereof) promptly pay to the Company the  
amount of such refund (together with any interest paid or credited  
thereon after taxes applicable thereto).  If, after the receipt by the  
Executive of an amount advanced by the Company pursuant to Section 7(c)  
hereof, a determination is made that the Executive shall not be entitled  
to any refund with respect to such claim and the Company does not notify  
the Executive in writing of its intent to contest such denial of refund  
prior to the expiration of 30 days after such determination, then such  
advance shall be forgiven and shall not be required to be repaid and the  
amount of such advance shall offset, to the extent thereof, the amount  
of Gross-Up Payment required to be paid.   
 
         8.   Certain Covenants of the Executive 
 
              (a)  As used in this Section 8, "Company" shall  
include the Company and each corporation, partnership, and other entity  
that controls the Company, is controlled by the Company, or is under  
common control with the Company (in each case "control" meaning the  
direct or indirect ownership of 50 percent or more of all outstanding  
equity interests). 
 
              (b)  The Executive shall not, directly or  
indirectly, while the Executive is employed by the Company, for a period  
of two years after his Termination Date if the Executive's employment  
hereunder terminates as a result of one of the reasons set forth in  
Section 6(a), Section 6(b), or Section 6(d) hereof, or for a period of  
18 months after his Termination Date if the Executive's employment  
hereunder terminates as a result of one of the reasons set forth in  
Section 6(c) hereof, own, operate, invest in, lend money to, be employed  
by, consult with, render services to, act as agent, officer, or director  
for, or acquire or hold any interest in any business enterprise that  
competes with any business owned or operated by the Company as described  
in the Company's Form 10-K filed with the Securities and Exchange  
Commission immediately preceding the Executive's Termination Date, other  
than a business that contributes less than three percent of the gross  
revenues of the Company; provided, however, that nothing herein shall  
prohibit the Executive from owning not more than one percent of the  
outstanding shares of any class of stock of a corporation if such class  
of stock is regularly traded on a recognized national securities  
exchange, including the NASDAQ national market system. 
 
              (c)  The Executive shall not, directly or  
indirectly, while the Executive is employed by the Company, or for a  
period of three years after the Executive's Termination Date: 
 
                      (i)  employ or attempt to employ any  
                           director, officer, or employee of the  
                           Company, or otherwise interfere with or  
                           disrupt any employment relationship  
                           (contractual or otherwise) between the  
                           Company and any director, officer, or  
                           employee of the Company; 
 
                     (ii)  solicit, request, advise, or induce any  
                           individual or business enterprise that,  
                           prior to the Termination Date, was a  
                           customer, was actively solicited to become  
                           a customer, or actively sought to become a  
                           customer, or was a supplier or other  
                           material business contact of the Company  
                           to cancel, curtail, or otherwise change  
                           its relationship with the Company; or 
 
                    (iii)  publicly criticize or disparage in any  
                           manner or by any means the Company, its  
                           personnel, or any aspect of its  
                           management, policies, operations,  
                           products, services, or practices. 
 
              (d)  The Executive hereby acknowledges that all  
non-public and/or proprietary information and data of the Company,  
including without limitation such information and data that is related  
to product and service formulation, customers, pricing, sales, and  
financial results (collectively "Trade Secrets"), are of substantial  
value to the Company, provide it with a substantial competitive  
advantage in its business, and are and have been maintained in the  
strictest confidence as trade secrets.  Except as otherwise approved in  
writing in advance by the Board, the Executive shall not at any time  
divulge, furnish, or make accessible any Trade Secrets to anyone (other  
than the Company and its directors and officers). 
 
              (e)  The Executive hereby specifically acknowledges  
that this Section 8 and each provision hereof are reasonable and  
necessary to ensure that the Company receives the expected benefits of  
this Agreement and that any violation of this Section 8 by the Executive  
shall harm the Company to such an extent that monetary damages alone  
would be an inadequate remedy.  Therefore, in the event of any violation  
by the Executive of any provision of this Section 8, the Company shall  
be entitled to an injunction (in addition to all other remedies it may  
have) restraining the Executive from committing or continuing to commit  
such violation.  If any provision or application of this Section 8 is  
held unlawful or unenforceable in any respect, then this Section 8 shall  
be revised or applied in a manner that renders it lawful and enforceable  
to the fullest extent possible. 
 
         9.   No Violation of Other Agreements 
 
              The Executive hereby represents that neither (a) the  
Executive's entering into this Agreement nor (b) the Executive's  
carrying out the provisions of this Agreement shall violate any other  
agreement (oral or written) to which the Executive is a party or by  
which the Executive is bound. 
 
         10.   Successors and Assigns 
 
               This Agreement is binding on the Executive and on the  
Company and its successors and assigns.  The rights and obligations of  
the Company under this Agreement may be assigned to a successor.  No  
rights or obligations of the Executive hereunder may be assigned by the  
Executive to any other person or entity. 
 
         11.   Separate Representation 
 
               The Executive hereby acknowledges that the Executive has  
sought and received independent advice from counsel of the Executive's  
own selection in connection with this Agreement and has not relied to  
any extent on any officer, director, or stockholder of, or counsel to,  
the Company in deciding to enter into this Agreement.   
 
         12.   Governing Law 
 
               This Agreement shall be construed under and governed by  
the laws of the State of Minnesota. 
 
         13.   Severability 
 
               Each section and provision of this Agreement shall be  
considered severable and any invalidity of any section or provision  
shall not render invalid or impair to any extent any other section or  
provision hereof. 
 
         14.   Withholding of Taxes 
 
               All payments made by the Company to the Executive  
hereunder are subject to withholding of income and employment taxes and  
all other amounts required by law.   
 
         15.   Fees and Expenses after Change of Control 
 
               If the Executive's employment hereunder terminates  
following a Change of Control, then the Company shall pay or reimburse  
the Executive for all costs, including reasonable attorneys' fees and  
expenses of litigation, incurred by the Executive in contesting or  
disputing any such termination of his employment, or in seeking to  
obtain or enforce any right or benefit provided by this Agreement.   
 
         16.   Notices 
 
               Any notice hereunder shall be in writing and shall be  
deemed to have been duly given if delivered by hand or sent by  
registered or certified mail, return receipt requested, postage prepaid,  
to the party to receive such notice at the address set forth with the  
signature of such party below or at such other address as may have been  
furnished to the sender by notice hereunder.  All notices shall be  
deemed given on the date on which delivered or, if mailed, on the date  
postmarked.   
 
          17.   Miscellaneous 
 
               This Agreement contains the entire understandings of the  
parties with respect to the employment of the Executive by the Company,  
and no provision hereof may be altered, amended, modified, waived, or  
discharged in any way whatsoever except by written agreement executed by  
both parties.  No delay or failure of either party to insist, in any one  
or more instances, upon performance of any of the terms and conditions  
of this Agreement or to exercise any rights or remedies hereunder shall  
constitute a waiver or a  relinquishment of such rights or remedies or  
any other rights or remedies hereunder.   
 
          IN WITNESS WHEREOF, the parties hereto have caused this  
Agreement to be duly executed on the date and year first above written. 
 
 
GARY E. COSTLEY                   INTERNATIONAL MULTIFOODS 
                                  CORPORATION 
2840 Reynolds Drive               33 South Sixth Street 
Winston-Salem, NC  27104          P. O. Box 2942 
                                  Minneapolis, MN  55402 
                                  Attention:  General Counsel 
 
 
/s/ Gary E. Costley                   /s/ Robert M. Price 
--------------------------        By: ----------------------- 
Gary E. Costley                        Robert M. Price 
                                  Chairman of the Board and 
                                  Chief Executive Officer