Document:

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                                                                 Exhibit 10.10

                              KANSAS CITY SOUTHERN
                          DIRECTORS' DEFERRED FEE PLAN
                             ADOPTED AUGUST 20, 1982
                 AS AMENDED AND RESTATED EFFECTIVE JUNE 1, 2002

                            Section 1. Establishment

     1.1 Establishment. Kansas City Southern (formerly Kansas City Southern
Industries, Inc. hereinafter called "Company") established, pursuant to
resolution adopted by the Board of Directors of the Company, at a meeting held
on August 20, 1982, a deferred fee plan for members of its Board of Directors,
which was known as "KANSAS CITY SOUTHERN INDUSTRIES, INC. DIRECTORS' DEFERRED
FEE PLAN" (the "Plan").

     1.2 Transition and Name Change.  The Plan  originally  became  effective on
January 1, 1983. This amended and restated Plan is hereby made effective June 1,
2002.  Also  effective  June 1,  2002,  the name of the Plan is  changed  to the
"Kansas City Southern Directors' Deferred Fee Plan." Section 2. Definitions

     2.1 Definitions.  Whenever used in the Plan the following terms shall have
the meaning set forth below:

     a. The term "Board" means the Board of Directors of the Company.

     b. The term  "Director"  means a member  of the Board of  Directors  of the
Company.

     c. The term  "Participant"  means a Director or former  Director who has an
account under the Plan.

     d. The term "Fees" means direct monetary remuneration from the Company due
to the Directors for the discharge of their duties as directors.

     2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology used herein shall also include the feminine gender, and
the definition of any term herein in the singular shall also include the plural.

                    Section 3. Eligibility for Participation

     A Director shall be eligible for participation in the Plan and may elect to
defer Fees to be earned as a Director of the Company in accordance with the
provisions of this Plan for a period consisting of any calendar year or years
during which he is a member of the Board. In the case of a newly elected
Director who was not a Director on the preceding December 31st, he shall become
eligible for participation for a period consisting of the balance of the
calendar year following such election, and for succeeding calendar years.

                        Section 4. Election to Defer Fees

     4.1 Procedure for Election to Defer Fees. On or before December 31st of any
calendar year, a Director may elect to become a Participant beginning the
following calendar year. Any person elected to fill a vacancy on the Board of a

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newly created Directorship who was not a Director on the preceding December 31st
may elect within 10 days of becoming a Director to become a Participant for the
balance of the calendar year during which he was elected to the Board. An
election to participate in the Plan shall be effected by the Director submitting
a letter so stating to the administrator of the Plan.

     4.2 Effect of Election or Failure to Elect to Participate. Failure to
effect a timely election in accordance with the foregoing provisions shall
preclude a Director's participation during the calendar year or portion of the
calendar year in question, but shall not preclude the Director from becoming
eligible for participation in any subsequent calendar year.

     An election to commence participation, made in accordance with the
foregoing provision, shall be irrevocable for the immediately ensuing calendar
year, or the balance of the current year in the case of a newly elected
Director. Such election shall continue in effect with respect to each calendar
year thereafter until modified in accordance with subsection 4.4.

     4.3 Amount Deferred. A Director may defer any amount up to 100% of the Fees
for the calendar year. If less than 100% of the Fees are deferred, then the
amount deferred will be prorated over the payment periods anticipated to be
served by the Director during the calendar year, or until the directorship is
terminated.

     4.4 Modification of Election. On or before December 31st of each year a
Participant may elect, within the limits of subsection 4.3, to increase or
decrease the amount of his Fees to be deferred during the ensuing calendar
years, and this election shall include the right to terminate the deferral of
Fees earned in such ensuing calendar years.

                          Section 5. Crediting of Fees

     5.1 Participants' Accounts. The Company shall establish a bookkeeping
account ("account") for each Participant to be credited as of the date the Fee
is deferred.

     5.2 Earnings on Accounts.

     a. Prior to June 1, 2002. Earnings for time periods prior to June 1, 2002,
shall accrue on deferred Fees from the date the Fees are credited to the
Participant's account, and on the earnings on deferred Fees from the date the
earnings are credited to the account. The rate of earnings shall be determined
annually and shall be at a rate one percentage point less than the prime rate in
effect at Chemical Bank, a New York banking corporation, on the last day of the
calendar year (accrued interest shall be credited to the account at the end of
each year). PROVIDED, a Participant shall have the right to request in writing
directed to the plan administrator that the rate of earnings shall be determined
by reference to the gains and losses on the following hypothetical investments
as if an amount equal to the Participant's account had been invested as follows:

         Prior to February 6, 1997
         50 percent of the account in Janus Venture Fund and
         50 percent of the account in Janus Twenty Fund

         On and after February 6, 1997, but prior to June 1, 2002
         33 1/3 percent of the account in Janus Venture Fund and
         33 1/3 percent of the account in Janus Twenty Fund
         33 1/3 percent of the account in Janus Worldwide Fund

PROVIDED, HOWEVER; the plan administrator shall not be obligated to follow such
Participant's request, and shall at its sole discretion be able to decide to

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continue to determine earnings by reference to the aforementioned prime rate in
effect at Chemical Bank.

     b. On and After June 1, 2002. Earnings on the amount credited to a
Participant's account as of May 31, 2002, and earnings on deferred Fees and
earnings credited to the Participant's account on and after June 1, 2002, will
be determined by the hypothetical "investment" of deferred Fees. The
"investment" will based on the Director's election among investment options
designated by the Company from time to time for the Plan. An Underlying
Investment Rate determined form time to time by the Board (currently the ten
year treasury bond rate plus one percent) is used to monthly credit with
interest, any part of a Director's account for which a mutual fund has not been
designated as the "investment". The Company has arranged for participants to
receive quarterly statements from the funds, and the Company sends participants
semi-annual statements.

     c. A Director may change investment allocation percentages by giving at
least ten (10) days written notice to the Company prior to the beginning of a
calendar month. In the written change in election, the Director must indicate
whether the election is to apply (i) to all amounts credited to the Director's
account as of the effective date of the written change in election, and/or (ii)
to Fees deferred after the effective date of the written change in election.

        Section 6. Distribution Upon Cessation as Director of the Company

     Whenever a Participant ceases to be a Director of the Company, the Board
shall exercise its sole discretion in electing one of the following methods of
distributing the value of the Participant's account:

     a. Installment Method. The value of the Participant's account as of the end
of the calendar year in which a Participant ceases to be a Director shall be
distributed to the Participant in annual installments over a ten-year period
beginning with the first day of the year immediately following the year in which
the Participant ceases to be a Director. The amount of the Participant's account
shall be reduced by the amount of each payment to the Participant as of the date
of each payment. Earnings shall be credited to the Participant's account
pursuant to subsection 5.2 (after taking into account reductions in the account
under the preceding sentence) until the Participant (or his beneficiary) has
received full payment of his account. The amount of the initial payment to the
Participant shall be a fraction of the value of the Participant's account as of
the end of the calendar year in which the Participant ceases to be a Director,
the numerator of which fraction is 1 and the denominator of which fraction is
10. Subject to the provisions of subsection 7.1, for each annual payment the
denominator of the fraction shall be reduced by 1 until the value of the
Participant's account has been fully paid at which time the Participant's
account shall be closed.

     b. Single Payment Method.  The value of the Participant's  account shall be
distributed to the Participant in a lump sum within one year after the date upon
which the Participant ceases to be a Director. The earnings on the Participant's
account pursuant to subsection 5.2 shall be included in the calculation of the
value of the Participant's account for distribution purposes. Upon delivery of
the lump sum payment provided for above, the Participant's account shall be
closed.

     7.1 Death of Director or Former Director. Each Participant may designate
one or more beneficiaries on a form provided by the plan administrator and
delivered to the plan administrator before his death. Any such beneficiary
thereafter may be changed without the consent of any prior beneficiary by
similar written designation delivered to the plan administrator before the
Participant's death. If no such beneficiary shall have been designated or if no
designated beneficiary shall survive the Participant's death, any part or all of
the balance of the Participant's account may be paid to the Participant's

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estate. Any remaining installment payments due a Participant at the time of his
death may be paid at such time or times as directed by the Board in its sole
discretion to the Participant's beneficiary or beneficiaries, if the Participant
has designated one or more beneficiaries on the form described in this Section
7.1, or, if no beneficiary has been designated, or if no designated beneficiary
shall survive the Participant, to the Participant's estate.

     7.2 Financial Hardship of a Participant Caused by a Medical Emergency or
Disability. Upon the determination by the Board that a Participant, or a member
of the Participant's immediate family, has suffered a medical emergency or
disability which has resulted in a financial hardship for the Participant, then
the Board may, at its sole discretion, direct that some or all of the
Participant's account be paid to the Participant; PROVIDED, that the amount paid
to the Participant shall not exceed the amount determined by the Board to be
necessary to relieve the financial hardship caused by the medical emergency or
disability. The Board may require the Participant to provide any expert medical
or financial information or opinions that the Board deems necessary to arrive at
a determination.

     7.3 Loss of Principal Residence of a Participant. Upon the determination by
the Board that a Participant's principal residence, that being the personal
residence at which he spends a majority of his time, has been damaged or
destroyed by accident or natural causes, then the Board may, at its sole
discretion, direct that some or all of the Participant's account be paid to the
Participant; PROVIDED, that the amount paid to the Participant shall not exceed
the amount determined by the Board to be necessary to relieve the financial
hardship caused by the loss of the principal residence. The Board may require
the Participant to provide any expert opinion or financial information that the
Board deems necessary to arrive at a determination.

     7.4 Financial Hardship of a Participant Caused By Other Unanticipated
Events. Upon the determination by the Board that a Participant has suffered or
will suffer a severe financial hardship because of unanticipated circumstances
caused by an event beyond the reasonable control of such Participant, the Board
may, at its sole discretion, direct that some or all of the Participant's
account be paid to the Participant; PROVIDED, that the amount paid to the
Participant shall not exceed the amount determined by the Board to be necessary
to relieve the financial hardship. The Board may require the Participant to
provide any expert opinion or financial information that the Board deems
necessary to arrive at an opinion.

     7.5 Special Provisions. Payments made pursuant to these Sections 7.2
through 7.4 during a Section 6(a) ten-year distribution shall be deemed to have
been made from the last principal installment or installments to be made and the
earnings credited to such installment or installments.

     For purposes of Sections 7.3 and 7.4 the Board shall not include the
Participant if the Participant is a Director.

                    Section 8. Transfers From Retirement Plan

     8.1 Transferred Amounts. On May 2, 1996, this Plan shall accept a transfer
of accrued benefits from the Kansas City Southern Industries, Inc. Retirement
Plan for Directors (the "Retirement Plan") with respect to Directors continuing
as Directors after such date. For each Participant with an account balance in
the Retirement Plan to be transferred to this Plan, the Company shall establish
a bookkeeping account ("retirement plan account") separate from the accounts
established pursuant to Section 5.1 above. The amount in each Participant's
retirement plan account shall earn a return determined by reference to the gains
and losses on a hypothetical investment as if an amount equal to the
Participant's retirement plan account had been invested in Company common stock,
with a starting value for such common stock equal to the mean between the high
and low for such common stock as reported on the New York Stock Exchange for May

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2, 1996. When the Participant ceases to be a Director due to retirement or for
any other reason, the balance in the Participant's retirement plan account as of
the Director's last day of service as a Director shall be paid to the Director
within 30 days. The Director, or his designated beneficiary or estate, as the
case may be, shall have the election to receive the retirement plan account
balance in either Company common stock, valued at the mean between the high and
low prices reported by the New York Stock Exchange for such stock on the
Participant's last day as a Director, or in cash.

     8.2 Other Provisions. The provisions of this Plan other than Sections 3, 4,
5 and 6 shall be applicable to amounts transferred to this Plan in accordance
with Section 8.1.

  Section 9. Dissolution. Liquidation. Merger. Consolidation and Sale of Assets

     9.1 Dissolution or Liquidation of Company. Notwithstanding anything to the
contrary, upon the dissolution or liquidation of the Company, each Participant
who is a Director of the Company on the day preceding the date of the
dissolution or liquidation shall be deemed to have ceased to be a Director of
the Company on the date preceding such dissolution or liquidation. The accounts
of all Participants shall be valued and distributed in lump sums at the time of
such liquidation.

     9.2 Merger, Consolidation, and Sale of Assets. Notwithstanding anything
herein to the contrary, in the event that the Company consolidates with, merges
into, or transfers all or substantially all of its assets to another corporation
(hereinafter referred to as "Successor Corporation"), such Successor Corporation
shall assume all obligations under this Plan. Upon such assumption, the Board of
Directors of the Successor Corporation shall be substituted for the Board in
this Plan.

                       Section 10. Rights of Participants

     No Participant nor any Participant's estate or heirs shall have any
interest in any fund or in any specific asset or assets of the Company by reason
of any payments made under the Plan, or by reason of any account maintained for
the Participant under the Plan. The Company shall have merely a contractual
obligation to make payments when due hereunder and the Company shall not hold
any funds in reserve or trust to secure payments hereunder. No Participant nor
any Participant's estate or heirs may assign, pledge or in any way encumber his
interest under the Plan, or any part thereof.

                    Section 11. Administration and Amendment

     11.1 Administration. The Board may designate an administrator of the Plan.
Absent designation of an administrator by the Board, the Secretary of the
Company shall administer the Plan. The Board may, from time to time, establish
rules for the administration of the Plan that are not inconsistent with the
provisions of the Plan.

     11.2 Amendment. This Plan may be amended by a favorable vote of two-thirds
of the members of the Board who are not Participants in the Plan or, in the
event all Directors are Participants, by a favorable vote of a majority of the
stockholders present or represented and voting at an annual or special meeting
of the stockholders.

     IN WITNESS WHEREOF, this restated Plan has been duly executed as of this
31st day of May, 2002. Kansas City Southern

                                  By /s/ Michael R. Haverty
                                     -----------------------------
                                      Michael R. Haverty<PAGE>

                                                              Exhibit 10.17

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made and entered into as of the 1st day of June, 2002, by
and between The Kansas City Southern Railway Company, a Missouri corporation
("Railway"), Kansas City Southern, a Delaware corporation ("KCS") and Ronald G.
Russ, an individual ("Executive").

     WHEREAS, Railway, KCS and Executive desire for Railway to employ Executive
on the terms and conditions set forth in this Agreement, and to provide an
incentive to Executive to remain in the employ of Railway hereafter,
particularly in the event of any change in control (as herein defined) of
Railway or KCS, thereby establishing and preserving continuity of management of
Railway.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Railway, KCS and Executive as
follows:

     1. Employment. Railway hereby employs Executive as its Senior Vice
President and Chief Financial Officer to serve at the pleasure of the Board of
Directors of Railway (the "Railway Board") and to have such duties, powers and
responsibilities as may be prescribed or delegated from time to time by the
President or other officer to whom Executive reports, subject to the powers
vested in the Railway Board and in the stockholder of Railway. Executive shall
faithfully perform his duties under this Agreement to the best of his ability
and shall devote substantially all of his working time and efforts to the
business and affairs of Railway and its affiliates.

     2. Compensation.

          (a) Base Compensation. Railway shall pay Executive as compensation for
     his services hereunder an annual base salary at the rate approved by the
     KCS Compensation Committee. Such rate shall not be increased prior to
     January 1, 2003 and shall not be reduced except as agreed by the parties or
     except as part of a general salary reduction program imposed by Railway for
     non-union employees and applicable to all officers of Railway.

          (b) Incentive Compensation. For the year 2002, Executive shall not be
     entitled to participate in the Railway Incentive Compensation Plan.

     3. Benefits. During the period of his employment hereunder, Railway shall
provide Executive with coverage under such benefit plans and programs as are
made generally available to similarly situated employees of Railway, provided
(a) Railway shall have no obligation with respect to any plan or program if
Executive is not eligible for coverage thereunder, and (b) Executive
acknowledges that stock options and other stock and equity participation awards
are granted in the discretion of the Board of Directors of KCS (the "KCS Board")
or the Compensation Committee of the KCS Board and that Executive has no right
to receive stock options or other equity participation awards or any particular
number or level of stock options or other awards. In determining contributions,
coverage and benefits under any disability insurance policy and under any cash
compensation-based plan provided to Executive by Railway, it shall be assumed
that the value of Executive's annual compensation, pursuant to this Agreement,
is 175% of Executive's annual base salary. Executive acknowledges that all

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rights and benefits under benefit plans and programs shall be governed by the
official text of each plan or program and not by any summary or description
thereof or any provision of this Agreement (except to the extent that this
Agreement expressly modifies such benefit plans or programs) and that neither
Railway nor KCS is under any obligation to continue in effect or to fund any
such plan or program, except as provided in Paragraph 7 hereof.

     4. Termination.

          (a) Termination by Executive. Executive may terminate this Agreement
     and his employment hereunder by at least thirty (30) days advance written
     notice to Railway, except that in the event of any material breach of this
     Agreement by Railway, Executive may terminate this Agreement and his
     employment hereunder immediately upon notice to Railway.

          (b) Death or Disability. This Agreement and Executive's employment
     hereunder shall terminate automatically on the death or disability of
     Executive, except to the extent employment is continued under Railway's
     disability plan. For purposes of this Agreement, Executive shall be deemed
     to be disabled if he qualifies for disability benefits under Railway's
     long-term disability plan.

          (c) Termination by Railway For Cause. Railway may terminate this
     Agreement and Executive's employment "for cause" immediately upon notice to
     Executive. For purposes of this Agreement (except for Paragraph 7),
     termination "for cause" shall mean termination based upon any one or more
     of the following:

               (i)   Any material breach of this Agreement by Executive;

               (ii)  Executive's dishonesty involving Railway, KCS or any
          subsidiary of Railway or KCS;

               (iii) Gross negligence or willful misconduct in the performance
          of Executive's duties as determined in good faith by the Railway
          Board;

               (iv)  Willful failure by Executive to follow reasonable
          instructions of the President or other officer to whom Executive
          reports;

               (v)   Executive's fraud or criminal activity; or

               (vi)  Embezzlement or misappropriation by Executive.

          (d) Termination by Railway Other Than For Cause.

               (i)   Railway may terminate this Agreement and Executive's
          employment other than for cause immediately upon notice to Executive,
          and in such event, Railway shall provide severance benefits to
          Executive in accordance with Paragraph 4(d)(ii) below.

               (ii)  Unless the provisions of Paragraph 7 of this Agreement are
          applicable, if Executive's employment is terminated under Paragraph
          4(d)(i), Railway shall continue, for a period of one (1) year
          following such termination, (a) to pay to Executive as severance pay a
          monthly amount equal to one-twelfth (1/12th) of the annual base salary
          referenced in Paragraph 2(a) above, at the rate in effect immediately
          prior to termination, and, (b) to reimburse Executive for the cost
          (including state and federal income taxes payable with respect to this
          reimbursement) of continuing the health insurance coverage provided
          pursuant to this Agreement or obtaining health insurance coverage
          comparable to the health insurance provided pursuant to this

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          Agreement, and obtaining coverage comparable to the life insurance
          provided pursuant to this Agreement, unless Executive is provided
          comparable health or life insurance coverage in connection with other
          employment. The foregoing obligations of Railway shall continue until
          the end of such one (1) year period notwithstanding the death or
          disability of Executive during said period (except, in the event of
          death, the obligation to reimburse Executive for the cost of life
          insurance shall not continue). In the year in which termination of
          employment occurs, Executive shall be eligible to receive benefits
          under the Railway Incentive Compensation Plan and any Executive Plan
          in which Executive participates (the "Executive Plan") (if such Plans
          then are in existence and Executive was entitled to participate
          immediately prior to termination) in accordance with the provisions of
          such plans then applicable, and severance pay received in such year
          shall be taken into account for the purpose of determining benefits,
          if any, under the Railway Incentive Compensation Plan but not under
          the Executive Plan. After the year in which termination occurs,
          Executive shall not be entitled to accrue or receive benefits under
          the Railway Incentive Compensation Plan or the Executive Plan with
          respect to the severance pay provided herein, notwithstanding that
          benefits under such plan then are still generally available to
          executive employees of Railway. After termination of employment,
          Executive shall not be entitled to accrue or receive benefits under
          any other employee benefit plan or program, except that Executive
          shall be entitled to participate in the KCS Employee Stock Ownership
          Plan and the KCS 401(k) and Profit Sharing Plan (if Railway employees
          then still participate in such plans) in the year of termination of
          employment only if Executive meets all requirements of such plans for
          participation in such year.

     5. Non-Disclosure. During the term of this Agreement and at all times after
any termination of this Agreement, Executive shall not, either directly or
indirectly, use or disclose any Railway trade secret, except to the extent
necessary for Executive to perform his duties for Railway while an employee. For
purposes of this Agreement, the term "Railway trade secret" shall mean any
information regarding the business or activities of Railway or any subsidiary or
affiliate, including any formula, pattern, compilation, program, device, method,
technique, process, customer list, technical information or other confidential
or proprietary information, that (a) derives independent economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (b) is the subject of efforts of Railway or its
subsidiary or affiliate that are reasonable under the circumstance to maintain
its secrecy. In the event of any breach of this Paragraph 5 by Executive,
Railway shall be entitled to terminate any and all remaining severance benefits
under Paragraph 4(d)(ii) and shall be entitled to pursue such other legal and
equitable remedies as may be available.

     6. Duties Upon Termination; Survival.

          (a) Duties. Upon termination of this Agreement by Railway or Executive
     for any reason, Executive shall immediately return to Railway all Railway
     trade secrets which exist in tangible form and shall sign such written
     resignations from all positions as an officer, director or member of any
     committee or board of Railway and all direct and indirect subsidiaries and
     affiliates of Railway as may be requested by Railway and shall sign such
     other documents and papers relating to Executive's employment, benefits and
     benefit plans as Railway may reasonably request.

          (b) Survival. The provisions of Paragraphs 5, 6(a) and 7 of this
     Agreement shall survive any termination of this Agreement by Railway or
     Executive, and the provisions of Paragraph 4(d)(ii) shall survive any

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     termination of this Agreement by Railway under Paragraph 4(d)(i).

     7. Continuation of Employment Upon Change in Control.

          (a) Continuation of Employment. Subject to the terms and conditions of
     this Paragraph 7, in the event of a Change in Control (as defined in
     Paragraph 7(d)) at any time during the term of this Agreement, Executive
     agrees to remain in the employ of Railway for a period of three years (the
     "Three-Year Period") from the date of such Change in Control (the "Control
     Change Date"). Railway agrees to continue to employ Executive for the
     Three-Year Period. During the Three-Year Period, (i) the Executive's
     position (including offices, titles, reporting requirements and
     responsibilities), authority and duties shall be at least commensurate in
     all material respects with the most significant of those held, exercised
     and assigned at any time during the 12 month period immediately before the
     Control Change Date and (ii) the Executive's services shall be performed at
     the location where Executive was employed immediately before the Control
     Change Date or at any other location less than 40 miles from such former
     location. During the Three-Year Period, Railway shall continue to pay to
     Executive an annual base salary on the same basis and at the same intervals
     as in effect prior to the Control Change Date at a rate not less than 12
     times the highest monthly base salary paid or payable to the Executive by
     Railway in respect of the 12-month period immediately before the Control
     Change Date.

          (b) Benefits. During the Three-Year Period, Executive shall be
     entitled to participate, on the basis of his executive position, in each of
     the following Railway or KCS plans (together, the "Specified Benefits") in
     existence, and in accordance with the terms thereof, at the Control Change
     Date:

               (i)  any benefit plan, and trust fund associated therewith,
          related to (a) life, health, dental, disability, accidental death and
          dismemberment insurance or accrued but unpaid vacation time, (b)
          profit sharing, thrift or deferred savings (including deferred
          compensation, such as under Sec. 401(k) plans), (c) retirement or
          pension benefits, (d) ERISA excess benefits and similar plans and (e)
          tax favored employee stock ownership (such as under ESOP, and Employee
          Stock Purchase programs); and

               (ii) any other benefit plans hereafter made generally available
          to executives of Executive's level or to the employees of Railway
          generally.

     In addition, Railway and KCS shall use their best efforts to cause all
outstanding options held by Executive under any stock option plan of KCS or its
affiliates to become immediately exercisable on the Control Change Date and to
the extent that such options are not vested and are subsequently forfeited, the
Executive shall receive a lump-sum cash payment within 5 days after the options
are forfeited equal to the difference between the fair market value of the
shares of stock subject to the non-vested, forfeited options determined as of
the date such options are forfeited and the exercise price for such options.
During the Three-Year Period Executive shall be entitled to participate, on the
basis of his executive position, in any incentive compensation plan of Railway
or KCS in accordance with the terms thereof at the Control Change Date; provided
that if under Railway or KCS programs or Executive's Employment Agreement in
existence immediately prior to the Control Change Date, there are written
limitations on participation for a designated time period in any incentive
compensation plan, such limitations shall continue after the Control Change Date
to the extent so provided for prior to the Control Change Date.

     If the amount of contributions or benefits with respect to the Specified

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Benefits or any incentive compensation is determined on a discretionary basis
under the terms of the Specified Benefits or any incentive compensation plan
immediately prior to the Control Change Date, the amount of such contributions
or benefits during the Three-Year Period for each of the Specified Benefits
shall not be less than the average annual contributions or benefits for each
Specified Benefit for the three plan years ending prior to the Control Change
Date and, in the case of any incentive compensation plan, the amount of the
incentive compensation during the Three-Year Period shall not be less than 75%
of the maximum that could have been paid to the Executive under the terms of the
incentive compensation plan.

          (c) Payment. With respect to any plan or agreement under which
     Executive would be entitled at the Control Change Date to receive Specified
     Benefits or incentive compensation as a general obligation of Railway which
     has not been separately funded (including specifically, but not limited to,
     those referred to under Paragraph 7(b)(i)(d) above), Executive shall
     receive within five (5) days after such date full payment in cash
     (discounted to the then present value on the basis of a rate of seven
     percent (7%) per annum) of all amounts to which he is then entitled
     thereunder.

          (d) Change in Control. For purposes of this Agreement, a "Change in
     Control" shall be deemed to have occurred if:

               (i) for any reason at any time less than seventy-five percent
          (75%) of the members of the KCS Board shall be individuals who fall
          into any of the following categories: (a) individuals who were members
          of the KCS Board on the date of the Agreement; or (b) individuals
          whose election, or nomination for election by KCS's stockholders, was
          approved by a vote of at least seventy-five percent (75%) of the
          members of the KCS Board then still in office who were members of the
          KCS Board on the date of the Agreement; or (c) individuals whose
          election, or nomination for election, by KCS's stockholders, was
          approved by a vote of at least seventy-five percent (75%) of the
          members of the KCS Board then still in office who were elected in the
          manner described in (a) or (b) above, or

               (ii) any "person" (as such term is used in Sections 13(d) and
          14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"))
          other than KCS shall have become after September 18, 1997, according
          to a public announcement or filing, the "beneficial owner" (as defined
          in Rule 13d-3 under the Exchange Act), directly or indirectly, of
          securities of Railway or KCS representing thirty percent (30%) (or,
          with respect to Paragraph 7(c) hereof, 40%) or more (calculated in
          accordance with Rule 13d-3) of the combined voting power of Railway's
          or KCS's then outstanding voting securities; or

               (iii) the stockholders of Railway or KCS shall have approved a
          merger, consolidation or dissolution of Railway or KCS or a sale,
          lease, exchange or disposition of all or substantially all of
          Railway's or KCS's assets, if persons who were the beneficial owners
          of the combined voting power of Railway's or KCS's voting securities
          immediately before any such merger, consolidation, dissolution, sale,
          lease, exchange or disposition do not immediately thereafter,
          beneficially own, directly or indirectly, in substantially the same
          proportions, more than 60% of the combined voting power of any
          corporation or other entity resulting from any such transaction.

          (e) Termination After Control Change Date. Notwithstanding any other
     provision of this Paragraph 7, at any time after the Control Change Date,
     Railway may terminate the employment of Executive (the "Termination"), but
     unless such Termination is for Cause as defined in subparagraph (g) or for
     disability, within five (5) days of the Termination Railway shall pay to

<PAGE>

     Executive his full base salary through the Termination, to the extent not
     theretofore paid, plus a lump sum amount (the "Special Severance Payment")
     equal to the product (discounted to the then present value on the basis of
     a rate of seven percent (7%) per annum) of (i) 175% of his annual base
     salary specified in Paragraph 7(a) multiplied by (ii) Three; and Specified
     Benefits (excluding any incentive compensation) to which Executive was
     entitled immediately prior to Termination shall continue until the end of
     the 3-year period ("Benefits Period") beginning on the date of Termination.
     If any plan pursuant to which Specified Benefits are provided immediately
     prior to Termination would not permit continued participation by Executive
     after Termination, then Railway shall pay to Executive within five (5) days
     after Termination a lump sum payment equal to the amount of Specified
     Benefits Executive would have received under such plan if Executive had
     been fully vested in the average annual contributions or benefits in effect
     for the three plan years ending prior to the Control Change Date
     (regardless of any limitations based on the earnings or performance of
     Railway or KCS) and a continuing participant in such plan to the end of the
     Benefits Period. Following the end of the Benefits Period, Railway shall
     continue to provide to the Executive and the Executive's family the
     following benefits ("Post-Period Benefits"): (1) prior to the Executive's
     attainment of age sixty (60), health, prescription and dental benefits
     equivalent to those then applicable to active peer executives of Railway)
     and their families, as the same may be modified from time to time, and (2)
     following the Executive's attainment of age sixty (60) (and without regard
     to the Executive's period of service with Railway) health and prescription
     benefits equivalent to those then applicable to retired peer executives of
     Railway and their families, as the same may be modified from time to time.
     The cost to the Executive of such Post-Period Benefits shall not exceed the
     cost of such benefits to active or retired (as applicable) peer executives,
     as the same may be modified from time to time. Notwithstanding the
     preceding two sentences of this Paragraph 7(e), if the Executive is covered
     under any health, prescription or dental plan provided by a subsequent
     employer, then the corresponding type of plan coverage (i.e., health,
     prescription or dental), required to be provided as Post-Period Benefits
     under this Paragraph 7(e) shall cease. The Executive's rights under this
     Paragraph 7(e) shall be in addition to, and not in lieu of, any
     post-termination continuation coverage or conversion rights the Executive
     may have pursuant to applicable law, including without limitation
     continuation coverage required by Section 4980 of the Code. Nothing in this
     Paragraph 7(e) shall be deemed to limit in any manner the reserved right of
     Railway, in its sole and absolute discretion, to at any time amend, modify
     or terminate health, prescription or dental benefits for active or retired
     employees generally.

          (f) Resignation After Control Change Date. In the event of a Change in
     Control as defined in Paragraph 7(d), thereafter, upon good reason (as
     defined below), Executive may, at any time during the 3-year period
     following the Change in Control, in his sole discretion, on not less than
     thirty (30) days' written notice (the "Notice of Resignation") to the
     Secretary of Railway and effective at the end of such notice period, resign
     his employment with Railway (the "Resignation"). Within five (5) days of
     such a Resignation, Railway shall pay to Executive his full base salary
     through the effective date of such Resignation, to the extent not
     theretofore paid, plus a lump sum amount equal to the Special Severance
     Payment (computed as provided in the first sentence of Paragraph 7(e),
     except that for purposes of such computation all references to
     "Termination" shall be deemed to be references to "Resignation"). Upon
     Resignation of Executive, Specified Benefits to which Executive was
     entitled immediately prior to Resignation shall continue on the same terms
     and conditions as provided in Paragraph 7(e) in the case of Termination
     (including equivalent payments provided for therein), and Post-Period
     Benefits shall be provided on the same terms and conditions as provided in

<PAGE>

     Paragraph 7(e) in the case of Termination. For purposes of this Agreement,
     "good reason" means any of the following:

               (i) the assignment to the Executive of any duties inconsistent in
          any respect with the Executive's position (including offices, titles,
          reporting requirements or responsibilities), authority or duties as
          contemplated by Section 7(a)(i), or any other action by Railway which
          results in a diminution or other material adverse change in such
          position, authority or duties;

               (ii) any failure by Railway to comply with any of the  provisions
          of Paragraph 7;

               (iii) Railway's requiring the Executive to be based at any office
          or location other than the location described in Section 7(a)(ii);

               (iv)  any other material adverse change to the terms and
          conditions of the Executive's employment; or

               (v) any purported termination by Railway of the Executive's
          employment other than as expressly permitted by this Agreement (any
          such purported termination shall not be effective for any other
          purpose under this Agreement).

A passage of time prior to delivery of the Notice of Resignation or a failure by
the Executive to include in the Notice of Resignation any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive under this Agreement or preclude the Executive from asserting such
fact or circumstance in enforcing rights under this Agreement.

          (g) Termination for Cause After Control Change Date. Notwithstanding
     any other provision of this Paragraph 7, at any time after the Control
     Change Date, Executive may be terminated by Railway "for cause." Cause
     means commission by the Executive of any felony or willful breach of duty
     by the Executive in the course of the Executive's employment; except that
     Cause shall not mean:

               (i) bad judgment or negligence;

               (ii) any act or omission believed by the Executive in good faith
          to have been in or not opposed to the interest of Railway (without
          intent of the Executive to gain, directly or indirectly, a profit to
          which the Executive was not legally entitled);

               (iii) any act or omission with respect to which a determination
          could properly have been made by the Railway Board that the Executive
          met the applicable standard of conduct for indemnification or
          reimbursement under Railway's by-laws, any applicable indemnification
          agreement, or applicable law, in each case in effect at the time of
          such act or omission; or

               (iv) any act or omission with respect to which Notice of
          Termination of the Executive is given more than 12 months after the
          earliest date on which any member of the Railway Board, not a party to
          the act or omission, knew or should have known of such act or
          omission.

Any Termination of the Executive's employment by Railway for Cause shall be
communicated to the Executive by Notice of Termination.

          (h) Gross-up for Certain Taxes. If it is determined (by the reasonable
     computation of Railway's independent auditors, which determinations shall
     be certified to by such auditors and set forth in a written certificate

<PAGE>

     ("Certificate") delivered to the Executive) that any benefit received or
     deemed received by the Executive from Railway or KCS pursuant to this
     Agreement or otherwise (collectively, the "Payments") is or will become
     subject to any excise tax under Section 4999 of the Code or any similar tax
     payable under any United States federal, state, local or other law (such
     excise tax and all such similar taxes collectively, "Excise Taxes"), then
     Railway shall, immediately after such determination, pay the Executive an
     amount (the "Gross-up Payment") equal to the product of:

               (i) the amount of such Excise Taxes; multiplied by

               (ii) the Gross-up Multiple (as defined in Paragraph 7(k)).

               The Gross-up Payment is intended to compensate the Executive for
          the Excise Taxes and any federal, state, local or other income or
          excise taxes or other taxes payable by the Executive with respect to
          the Gross-up Payment.

               Railway shall cause the preparation and delivery to the Executive
          of a Certificate upon request at any time. Railway shall, in addition
          to complying with this Paragraph 7(h), cause all determinations and
          certifications under Paragraphs 7(h)-(o) to be made as soon as
          reasonably possible and in adequate time to permit the Executive to
          prepare and file the Executive's individual tax returns on a timely
          basis.

          (i) Determination by the Executive.

               (i) If Railway shall fail (a) to deliver a Certificate to the
          Executive or (B) to pay to the Executive the amount of the Gross-up
          Payment, if any, within 14 days after receipt from the Executive of a
          written request for a Certificate, or if at any time following receipt
          of a Certificate the Executive disputes the amount of the Gross-up
          Payment set forth therein, the Executive may elect to demand the
          payment of the amount which the Executive, in accordance with an
          opinion of counsel to the Executive ("Executive Counsel Opinion"),
          determines to be the Gross-up Payment. Any such demand by the
          Executive shall be made by delivery to Railway of a written notice
          which specifies the Gross-up Payment determined by the Executive and
          an Executive Counsel Opinion regarding such Gross-up Payment (such
          written notice and opinion collectively, the "Executive's
          Determination"). Within 14 days after delivery of the Executive's
          Determination to Railway, Railway shall either (a) pay the Executive
          the Gross-up Payment set forth in the Executive's Determination (less
          the portion of such amount, if any, previously paid to the Executive
          by Railway) or (b) deliver to the Executive a Certificate specifying
          the Gross-up Payment determined by Railway's independent auditors,
          together with an opinion of Railway's counsel ("Railway Counsel
          Opinion"), and pay the Executive the Gross-up Payment specified in
          such Certificate. If for any reason Railway fails to comply with
          clause (b) of the preceding sentence, the Gross-up Payment specified
          in the Executive's Determination shall be controlling for all
          purposes.

               (ii) If the Executive does not make a request for, and Railway
          does not deliver to the Executive, a Certificate, Railway shall, for
          purposes of Paragraph 7(j), be deemed to have determined that no
          Gross-up Payment is due.

          (j) Additional Gross-up Amounts. If, despite the initial conclusion of
     Railway and/or the Executive that certain Payments are neither subject to
     Excise Taxes nor to be counted in determining whether other Payments are
     subject to Excise Taxes (any such item, a "Non-Parachute Item"), it is

<PAGE>

     later determined (pursuant to subsequently-enacted provisions of the Code,
     final regulations or published rulings of the IRS, final IRS determination
     or judgment of a court of competent jurisdiction or Railway's independent
     auditors) that any of the Non-Parachute Items are subject to Excise Taxes,
     or are to be counted in determining whether any Payments are subject to
     Excise Taxes, with the result that the amount of Excise Taxes payable by
     the Executive is greater than the amount determined by Railway or the
     Executive pursuant to Paragraph 7(h) or Paragraph 7(i), as applicable, then
     Railway shall pay the Executive an amount (which shall also be deemed a
     Gross-up Payment) equal to the product of:

               (i) the sum of (a) such additional Excise Taxes and (b) any
          interest, fines, penalties, expenses or other costs incurred by the
          Executive as a result of having taken a position in accordance with a
          determination made pursuant to Paragraph 7(h); multiplied by

               (ii) the Gross-up Multiple.

          (k) Gross-up Multiple. The Gross-up Multiple shall equal a fraction,
     the numerator of which is one (1.0), and the denominator of which is one
     (1.0) minus the sum, expressed as a decimal fraction, of the rates of all
     federal, state, local and other income and other taxes and any Excise Taxes
     applicable to the Gross-up Payment; provided that, if such sum exceeds 0.8,
     it shall be deemed equal to 0.8 for purposes of this computation. (If
     different rates of tax are applicable to various portions of a Gross-up
     Payment, the weighted average of such rates shall be used.)

          (l) Opinion of Counsel. "Executive Counsel Opinion" means a legal
     opinion of nationally recognized executive compensation counsel that there
     is a reasonable basis to support a conclusion that the Gross-up Payment
     determined by the Executive has been calculated in accord with this
     Paragraph 7 and applicable law. "Company Counsel Opinion" means a legal
     opinion of nationally recognized executive compensation counsel that (i)
     there is a reasonable basis to support a conclusion that the Gross-up
     Payment set forth in the Certificate of Railway's independent auditors has
     been calculated in accord with this Paragraph 7 and applicable law, and
     (ii) there is no reasonable basis for the calculation of the Gross-up
     Payment determined by the Executive.

          (m) Amount Increased or Contested. The Executive shall notify Railway
     in writing of any claim by the IRS or other taxing authority that, if
     successful, would require the payment by Railway of a Gross-up Payment.
     Such notice shall include the nature of such claim and the date on which
     such claim is due to be paid. The Executive shall give such notice as soon
     as practicable, but no later than 10 business days, after the Executive
     first obtains actual knowledge of such claim; provided, however, that any
     failure to give or delay in giving such notice shall affect Railway's
     obligations under this Paragraph 7 only if and to the extent that such
     failure results in actual prejudice to Railway. The Executive shall not pay
     such claim less than 30 days after the Executive gives such notice to
     Railway (or, if sooner, the date on which payment of such claim is due). If
     Railway notifies the Executive in writing before the expiration of such
     period that it desires to contest such claim, the Executive shall:

               (i) give Railway any information that it reasonably requests
          relating to such claim;

               (ii) take such action in connection with contesting such claim as
          Railway reasonably requests in writing from time to time, including,
          without limitation, accepting legal representation with respect to
          such claim by an attorney reasonably selected by Railway;

               (iii) cooperate with Railway in good faith to contest such claim;

<PAGE>

          and

               (iv) permit Railway to participate in any proceedings relating to
          such claim; provided, however, that Railway 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 related interest and
          penalties, imposed as a result of such representation and payment of
          costs and expenses. Without limiting the foregoing, Railway shall
          control all proceedings in connection with such contest and, at its
          sole option, may pursue or forego 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. 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 Railway shall determine; provided, however, that if Railway directs
          the Executive to pay such claim and sue for a refund, Railway shall
          advance the amount of such payment to the Executive, on an
          interest-free basis and shall indemnify the Executive, on an after-tax
          basis, for any Excise Tax or income tax, including related interest or
          penalties, imposed 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. The Railway's control of the contest shall be
          limited to issues with respect to which a Gross-up Payment would be
          payable. The Executive shall be entitled to settle or contest, as the
          case may be, any other issue raised by the IRS or other taxing
          authority.

          (n) Refunds. If, after the receipt by the Executive of an amount
     advanced by Railway pursuant to Paragraph 7(m), the Executive receives any
     refund with respect to such claim, the Executive shall (subject to
     Railway's complying with the requirements of Paragraph 7(m)) promptly pay
     Railway 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 Railway pursuant to Paragraph 7(m),
     a determination is made that the Executive shall not be entitled to a full
     refund with respect to such claim and Railway does not notify the Executive
     in writing of its intent to contest such determination before the
     expiration of 30 days after such determination, then the applicable part of
     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. Any contest of a denial of refund
     shall be controlled by Paragraph 7(m).

          (o) Expenses. If any dispute should arise under this Agreement after
     the Control Change Date involving an effort by Executive to protect,
     enforce or secure rights or benefits claimed by Executive hereunder,
     Railway shall pay (promptly upon demand by Executive accompanied by
     reasonable evidence of incurrence) all reasonable expenses (including
     attorneys' fees) incurred by Executive in connection with such dispute,
     without regard to whether Executive prevails in such dispute except that
     Executive shall repay Railway any amounts so received if a court having
     jurisdiction shall make a final, nonappealable determination that Executive
     acted frivolously or in bad faith by such dispute. To assure Executive that
     adequate funds will be made available to discharge Railway's obligations
     set forth in the preceding sentence, Railway has established a trust and
     upon the occurrence of a Change in Control shall promptly deliver to the
     trustee of such trust to hold in accordance with the terms and conditions

<PAGE>

     thereof that sum which the Railway Board shall have determined is
     reasonably sufficient for such purpose.

          (p) Prevailing Provisions. On and after the Control Change Date, the
     provisions of this Paragraph 7 shall control and take precedence over any
     other provisions of this Agreement which are in conflict with or address
     the same or a similar subject matter as the provisions of this Paragraph 7.

     8. Mitigation and Other Employment. After a termination of Executive's
employment pursuant to Paragraph 4(d)(i) or a Change in Control as defined in
Paragraph 7(d), Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and except as otherwise specifically provided in Paragraph 4(d)(ii) with respect
to health and life insurance and in Paragraph 7(e) with respect to health,
prescription and dental benefits, no such other employment, if obtained, or
compensation or benefits payable in connection therewith shall reduce any
amounts or benefits to which Executive is entitled hereunder. Such amounts or
benefits payable to Executive under this Agreement shall not be treated as
damages but as severance compensation to which Executive is entitled because
Executive's employment has been terminated.

     9. KCS Not an Obligor. Notwithstanding that KCS has executed this
Agreement, it shall have no obligation for the payment of salary, benefits, or
other compensation hereunder, and all such obligations shall be the sole
responsibility of Railway.

     10. Notice. Notices and all other communications to either party pursuant
to this Agreement shall be in writing and shall be deemed to have been given
when personally delivered, delivered by facsimile or deposited in the United
States mail by certified or registered mail, postage prepaid, addressed, in the
case of Railway or KCS, to Railway or KCS at 114 West 11th Street, Kansas City,
Missouri 64105, Attention: Secretary, or, in the case of the Executive, to him
at 114 West 11th Street, Kansas City, Missouri 64105, or to such other address
as a party shall designate by notice to the other party.

     11. Amendment. No provision of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge is
agreed to in writing signed by Executive and the President of Railway and the
President of KCS. No waiver by any party hereto at any time of any breach by
another party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the time or at any prior or
subsequent time.

     12. Successors in Interest. The rights and obligations of Railway and KCS
under this Agreement shall inure to the benefit of and be binding in each and
every respect upon the direct and indirect successors and assigns of Railway and
KCS, regardless of the manner in which such successors or assigns shall succeed
to the interest of Railway and KCS hereunder, and this Agreement shall not be
terminated by the voluntary or involuntary dissolution of Railway or KCS or by
any merger or consolidation or acquisition involving Railway or KCS, or upon any
transfer of all or substantially all of Railway's or KCS's assets, or terminated
otherwise than in accordance with its terms. In the event of any such merger or
consolidation or transfer of assets, the provisions of this Agreement shall be
binding upon and shall inure to the benefit of the surviving corporation or the
corporation or other person to which such assets shall be transferred. Neither
this Agreement nor any of the payments or benefits hereunder may be pledged,
assigned or transferred by Executive either in whole or in part in any manner,
without the prior written consent of Railway.

     13. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.

     14. Controlling Law and Jurisdiction. The validity, interpretation and
performance of this Agreement shall be subject to and construed under the laws
of the State of Missouri, without regard to principles of conflicts of law.

     15. Entire Agreement. This Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and terminates and
supersedes all other prior agreements and understandings both written and oral,
between the parties with respect to the terms of Executive's employment or
severance arrangements.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 1st day of June, 2002.

                               THE KANSAS CITY SOUTHERN RAILWAY COMPANY

                               By /s/ Michael R. Haverty
                                  ---------------------------------------------
                                  Michael R. Haverty, Chairman, President & CEO

                               KANSAS CITY SOUTHERN

                               By /s/ Michael R. Haverty
                                  ---------------------------------------------
                                  Michael R. Haverty, Chairman, President & CEO

                               EXECUTIVE

                                 /s/ Ronald G. Russ
                                 ----------------------------------------------
                                 Ronald G. Russ

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