(..continued)




- 4 -

                                         8.8% DEBENTURES SUPPLEMENTAL INDENTURE
                                             CONTAINING THE PROPOSED AMENDMENTS



                             SUPPLEMENTAL INDENTURE

     THIS SUPPLEMENTAL  INDENTURE (the  "Supplemental  Indenture") is made as of
the 17th day of December, 1999, between Kansas City Southern Industries, Inc., a
corporation  duly organized and existing under the laws of the State of Delaware
(the  "Company"),  and The Chase  Manhattan  Bank, a New York bank organized and
existing  under  the  laws  of  the  United  States  of  America,  trustee  (the
"Trustee").

                             RECITALS OF THE COMPANY

     WHEREAS,  the Company and the Trustee heretofore  executed and delivered an
Indenture, dated as of July 1, 1992, (the "Indenture"); and

     WHEREAS,  the  Company's  8.8%  Debentures  Due  July 1,  2022  (the  "8.8%
Debentures") are Outstanding Securities issued pursuant to the Indenture; and

     WHEREAS, Section 902 of the Indenture provides that with the consent of the
Holders  of not less than a  majority  in  principal  amount of all  Outstanding
Securities of any series affected by such Supplemental Indenture (the "Requisite
Consents"), by Act of said Holders delivered to the Company and the Trustee, the
Company,  when authorized by or pursuant to a Board Resolution,  and the Trustee
may enter into an indenture or indentures  supplemental to the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the  provisions  of the Indenture or of modifying in any manner the rights of
the  Holders  of such  series  of  Securities,  subject  to  certain  exceptions
specified in Section 902 of the Indenture; and

     WHEREAS,  the Company has obtained the  Requisite  Consents from Holders of
the 8.8% Debentures  series of Outstanding  Securities to amend the Indenture as
set forth below,  as well as the Requisite  Consents from Holders of each of the
other  outstanding  series of  Outstanding  Securities  to  similarly  amend the
Indenture with respect to those series;

     WHEREAS,  the Board of Directors  has, as evidenced by a Board  Resolution,
authorized  the  amendment  of  the  Indenture  pursuant  to  this  Supplemental
Indenture; and

     WHEREAS,  all things necessary to make this Supplemental  Indenture a valid
supplement to the Indenture according to its terms have been done;

     NOW, THEREFORE, the parties hereto hereby agree as follows:


                                   ARTICLE ONE
                 WAIVERS OF CERTAIN PROVISIONS OF THE INDENTURE

     SECTION 101. Waiver of Applicability of Certain Provisions of the Indenture
to the  Separation  of the  Company's  Financial  Services  Businesses  from its
Transportation  Businesses.  Applicability  of  Sections  801  and  802  of  the
Indenture to a separation (the "Separation") of the Company's financial services
businesses from its transportation businesses,  effected through a spin-off (the
"Spin-Off") of the Company's  financial services  businesses by the distribution
by the Company as a dividend to its stockholders  all of the outstanding  common
stock of Stilwell Financial,  Inc.  ("Stilwell"),  a wholly-owned  subsidiary to
which the  Company  transferred  the  capital  stock of its  financial  services
subsidiaries  and other related assets,  or effected through any other method of
Separation,  is hereby waived. For purposes of this Supplemental Indenture,  the
term  "Separation"  refers  to the  separation  and sale or  transfer  of KCSI's
financial services  businesses,  whether in the form of a Spin-Off or otherwise.
As a result of such waiver,  any such Separation  shall not be deemed a transfer
by the Company of its properties and assets  substantially  as an entirety under
Section 801 and, no successor  Person shall succeed to or be substituted for, or
be allowed to exercise the rights and powers of, the Company  under  Section 802
of the Indenture as a result of the Separation.

                                                      ARTICLE TWO
                                                ELIMINATION OF COVENANT

     SECTION 201. Elimination of Section 1006. Section 1006 (Limitation on Liens
on Stock or Indebtedness of Significant Subsidiaries) of the Indenture is hereby
eliminated in its entirety from the Indenture,  and shall be of no further force
or effect.


                                  ARTICLE THREE
                            MISCELLANEOUS PROVISIONS

     SECTION 301.  Effectiveness of Supplemental  Indenture.  Upon the execution
and delivery of this Supplemental  Indenture by the Company and the Trustee, the
Indenture shall be supplemented in accordance  herewith,  and this  Supplemental
Indenture shall form a part of the Indenture for all purposes,  and every Holder
of Securities  heretofore  or hereafter  authenticated  and delivered  under the
Indenture  and of any  coupon  appertaining  thereto  shall  be  bound  thereby;
provided,  however, that this Supplemental Indenture shall become operative only
upon  acceptance  by the Company of the 8.8%  Debentures  validly  tendered  for
purchase,  as set  forth  in the  Offer to  Purchase  and  Consent  Solicitation
Statement,  dated December 6, 1999, as amended or supplemented  through the date
hereof.

     SECTION  302.  Indenture  Remains  in Full  Force  and  Effect.  Except  as
supplemented  hereby,  all provisions in the Indenture and the Securities issued
thereunder shall remain in full force and effect.

     SECTION 303. Indenture and Supplemental Indenture Construed Together.  This
Supplemental  Indenture is an indenture  supplemental to the Indenture,  and the
Indenture and this Supplemental Indenture shall henceforth be read and construed
together.

     SECTION 304. Confirmation  and Ratification of Indenture.  The Indenture as
supplemented by this Supplemental Indenture and all Securities issued thereunder
are in all respect confirmed and ratified.

     SECTION 305. No Issuance of New Securities Required.  The Company shall not
be  required to prepare and  execute,  and the Trustee  shall not be required to
authenticate  and  deliver  in  exchange  for  outstanding  Securities,  any new
Securities to conform to this Supplemental Indenture.

     SECTION  306.   Separability   Clause.   In  case  any  provision  of  this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining  provisions shall not in any way be
affected or impaired thereby.

     SECTION 307. Terms Defined in the Indenture.  All  capitalized  terms not
otherwise  defined  herein  shall  have  the  meanings  ascribed  to them in the
Indenture.

     SECTION 308. Effect of Headings.  The Article and Section  headings herein
are for convenience only and shall not affect the construction hereof.

     SECTION 309. No Effect on Other Series. This Supplemental Indenture relates
solely to the 8.8%  Debentures and shall have no force or effect with respect to
any other series of Outstanding Securities under the Indenture.

     SECTION 310. Successors  and Assigns.  All covenants  and  agreements  in
this  Supplemental  Indenture  by the  Company  shall  bind its  successors  and
assigns, whether so expressed or not.

     SECTION  311.  Certain  Duties  and  Responsibilities  of the  Trustee.  In
entering into this Supplemental Indenture,  the Trustee shall be entitled to the
benefit of every provision of the Indenture relating to the conduct or affecting
the  liability  of or  affording  protection  to  the  Trustee,  whether  or not
elsewhere herein so provided.

     SECTION 312.  Governing Law. This Supplemental  Indenture shall be governed
by and  construed  in  accordance  with the laws of the State of New York.  This
Supplemental  Indenture is subject to the provisions of the Trust  Indenture Act
that are required to be part of this  Supplemental  Indenture and shall,  to the
extent applicable, be governed by such provisions.

     SECTION 313.  Counterparts.  This Supplemental Indenture may be executed in
any number of counterparts,  each of which, when so executed, shall be deemed an
original,  but all such counterparts  shall together  constitute but one and the
same Supplemental Indenture.

     SECTION 214.  Trustee Not  Responsible  for Recitals.  The recitals  herein
contained  are  made by the  Company  and not by the  Trustee,  and the  Trustee
assumes no responsibility for the correctness  thereof. The Trustee shall not be
responsible  in any  manner  whatsoever  for or in respect  of the  validity  or
sufficiency of this Supplemental Indenture.


IN WITNESS WHEREOF,  the parties hereto have caused this Supplemental  Indenture
to be duly  executed  and  attested,  all as of the date and  year  first  above
written.


                             KANSAS CITY SOUTHERN INDUSTRIES, INC.


                           By: /s/ Anthony P. McCarthy
                             Title:  Vice President & Treasurer
Attest:


/s/ Sherry K. Cooper
Title:  Asst. Secretary




<PAGE>


                                   THE CHASE MANHATTAN BANK
                          Trustee


                                   By:  /s/ R. Lorenzen
                                   Title:  Assistant Vice President

Attest:


/s/ N. Rodriquez
Title:  Trust Officer