Document:

EMPLOYMENT AGREEMENT

     THIS AGREEMENT,  made and entered into as of this 1st day of June, 2001, by
and between  Stilwell  Financial Inc., a Delaware  corporation  ("Stilwell") and
Daniel P. Connealy, an individual ("Executive").

     WHEREAS,  Stilwell and Executive desire for Stilwell 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 Stilwell hereafter,  particularly in the
event  of  any  Change  in  Control  (as  herein  defined)  of  Stilwell  or any
Significant Subsidiary (as herein defined),  thereby establishing and preserving
continuity of management of Stilwell.

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

     1. Employment.  Stilwell hereby employs Executive as its Vice President and
Chief  Financial  Officer to serve at the  pleasure of the Board of Directors of
Stilwell  (the   "Stilwell   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 Stilwell  Board and in the  stockholders  of  Stilwell.  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 Stilwell and its affiliates.

     2. Compensation.

        (a)  Base Compensation. Stilwell shall pay Executive as compensation for
his services  hereunder an annual base salary at the rate  of $300,000.00.  Such
rate shall not be

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increased  prior to December 31, 2002 and shall not be reduced  except as agreed
by the parties or except as part of a general salary  reduction  program imposed
by Stilwell and applicable to all officers of Stilwell.

        (b)  Incentive  Compensation.  For the  years ending  December 31, 2002,
Executive  shall  not be  entitled  to  participate  in any  Stilwell  incentive
compensation plan.

     3. Benefits and Stock Ownership.

        (a)  Benefits.  During  the period of his employment hereunder, Stilwell
shall provide  Executive  with coverage under such benefit plans and programs as
are made  generally  available  to  similarly  situated  employees  of Stilwell,
provided  (a)  Stilwell  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  Stilwell  Board  or the  Compensation
Committee of the Stilwell 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 Stilwell,  it shall be assumed
that the value of Executive's annual  compensation,  pursuant to this Agreement,
is the lower of 175% of Executive's annual base salary or $1,000,000.  Executive
acknowledges that all rights and benefits under benefit plans and programs shall
be  governed  by the  official  text of each such plan or program and not by any
summary or description thereof or any provision of this Agreement (except to the
extent this  Agreement  expressly  modifies  such benefit plans or programs) and
that  Stilwell is not under any  obligation to continue in effect or to fund any
such plan or program, except as provided in

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Paragraph 7 hereof.  Stilwell  also shall  reimburse  Executive for ordinary and
necessary  travel and other  business  expenses in accordance  with policies and
procedures established by Stilwell.

        (b)  Stock  Ownership. During the period  of his  employment  hereunder,
Executive  shall  retain  ownership  in himself  or in members of his  immediate
family of at least a majority of the number of shares of Stilwell stock acquired
upon the exercise of stock options, but excluding from such number of shares any
such shares  transferred  to Stilwell or sold to pay the purchase price upon the
exercise of stock options or to pay or satisfy tax  obligations  resulting  from
such exercise.

     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 Stilwell,  except that in the event of any material  breach of this Agreement
by Stilwell, Executive may terminate this Agreement and his employment hereunder
immediately upon notice to Stilwell.

        (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 Stilwell's  disability plan.
For purposes of this  Agreement,  Executive shall be deemed to be disabled if he
qualifies for disability benefits under Stilwell's long-term disability plan.

        (c)  Termination by Stilwell  For Cause.  Stilwell  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;

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             (ii)  Executive's dishonesty involving Stilwell or  any  subsidiary
     of Stilwell;

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

             (iv) Willful failure by Executive to follow reasonable instructions
     of the President or other officer to whom Executive reports  concerning the
     operations or business of Stilwell or any subsidiary of Stilwell;

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

             (vi)  Embezzlement or misappropriation by Executive.

        (d)  Termination by Stilwell Other Than For Cause.

             (i)   Stilwell  may   terminate  this  Agreement  and   Executive's
     employment other than for cause  immediately upon notice to Executive,  and
     in such event,  Stilwell 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),  Stilwell shall continue,  for a period of two (2) years 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  Agreement,  and  obtaining  coverage
     comparable  to the life  insurance  provided  pursuant  to this  Agreement,
     unless Executive is

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     provided  comparable  health or life insurance  coverage in connection with
     other  employment.  The foregoing  obligations  of Stilwell  shall continue
     until  the end of such two (2) 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  Stilwell
     Incentive  Compensation Plan and the Stilwell 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 Stilwell
     Incentive  Compensation  Plan but not under the  Stilwell  Executive  Plan.
     After the year in which termination occurs, Executive shall not be entitled
     to accrue or receive  benefits  under the Stilwell  Incentive  Compensation
     Plan or the  Stilwell  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  Stilwell.  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 Stilwell  Employee
     Stock  Ownership  Plan and the  Stilwell  Section  401(k)  Plan with Profit
     Sharing  Plan  Portion 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  Stilwell  trade  secret,  except to the extent
necessary  for  Executive to perform his duties for Stilwell

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while an employee.  For purposes of this  Agreement,  the term  "Stilwell  trade
secret"  shall mean any  information  regarding  the business or  activities  of
Stilwell  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 Stilwell 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, Stilwell 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 Stilwell or Executive
for any reason,  Executive  shall  immediately  return to Stilwell  all Stilwell
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 Stilwell  and all direct and  indirect  subsidiaries  and
affiliates of Stilwell as may be requested by Stilwell and shall sign such other
documents and papers  relating to Executive's  employment,  benefits and benefit
plans as Stilwell 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  Stilwell or
Executive,   and  the  provisions  of  Paragraph   4(d)(ii)  shall  survive  any
termination of this Agreement by Stilwell under Paragraph 4(d)(i).

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     7. Continuation of Employment Upon Change in Control of Stilwell.

        (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 Stilwell for a period of three years (the "Three-Year  Period")
from the date of such Change in Control (the "Control  Change  Date").  Stilwell
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,  Stilwell  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 Stilwell 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
Stilwell  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

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     but unpaid  vacation time, (b) profit sharing,  thrift or deferred  savings
     (including deferred compensation,  such as under Section 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  Stilwell
     generally.

     In addition,  Stilwell shall use its best efforts to cause all  outstanding
options  held by  Executive  under  any stock  option  plan of  Stilwell  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 Stilwell
in accordance  with the terms thereof at the Control Change Date;  provided that
if under  Stilwell  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
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

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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 Stilwell which has
not been separately  funded (including  specifically,  but not limited to, those
referred to under  Paragraph  7(b)(i) and (ii) 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. Except as provided in the last  sentence of this
Paragraph 7(d), for purposes of this Agreement,  a "Change in Control" means any
one or more of the following:

             (i)   the acquisition  or  holding by  any person,  entity or group
     (within  the meaning of Section  13(d)(3)  or  14(d)(2)  of the  Securities
     Exchange Act of 1934 (the  "Exchange  Act"),  other than by Stilwell or any
     Subsidiary (as defined below),  or any employee benefit plan of Stilwell or
     a  Subsidiary,  of beneficial  ownership  (within the meaning of Rule 13d-3
     under the Exchange Act) of 20% or more of the then-outstanding common stock
     or the combined  voting  power of the  then-outstanding  voting  securities
     ("Voting Power") of Stilwell;  provided, however, that no Change in Control
     shall occur solely by reason of any such  acquisition by a corporation with
     respect  to  which,  after  such

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     acquisition,  more than 60% of both the then-outstanding  common shares and
     the then-outstanding Voting Power of such corporation are then beneficially
     owned,  directly or  indirectly,  by the  persons  who were the  beneficial
     owners of the  then-outstanding  common  stock and Voting Power of Stilwell
     immediately before such acquisition,  in substantially the same proportions
     as their respective ownership,  immediately before such acquisition, of the
     then-outstanding common stock and Voting Power of Stilwell; or

             (ii)  individuals who, as of the date of this Agreement, constitute
     the  Stilwell  Board  (the  "Incumbent  Board")  cease  for any  reason  to
     constitute at least 75% of the Stilwell Board; provided that any individual
     who becomes a director  whose  election or  nomination  for election by the
     stockholders  of Stilwell  was  approved  by at least 75% of the  Incumbent
     Board (other than an election or nomination of an individual  whose initial
     assumption  of  office  is in  connection  with  an  actual  or  threatened
     "election  contest"  relating to the election of the  directors of Stilwell
     (as such terms are used in Rule 14a-11 under the  Exchange  Act) or "tender
     offer" (as such term is used in  Section  14(d) of the  Exchange  Act) or a
     proposed  Extraordinary  Transaction (as defined below)) shall be deemed to
     be a member of the Incumbent Board; or

             (iii) approval by the  stockholders  of Stilwell of any one or more
     of the following:

                   (A)  a  merger,  reorganization,   consolidation  or  similar
     transaction (any of the foregoing,  an  "Extraordinary  Transaction")  with
     respect to which persons who were the respective  beneficial  owners of the
     then-outstanding  common  stock and Voting  Power of  Stilwell  immediately
     before such  Extraordinary  Transaction  would not,  if such  Extraordinary
     Transaction  were to be  consummated  immediately  after  such

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     stockholder  approval (but otherwise in accordance with the terms presented
     in  writing  to  the   stockholders   of  Stilwell  for  their   approval),
     beneficially  own,  directly  or  indirectly,  more  than  60% of both  the
     then-outstanding common shares and the then-outstanding Voting Power of the
     corporation resulting from such Extraordinary Transaction, in substantially
     the same proportions as their respective ownership, immediately before such
     Extraordinary Transaction,  of the then-outstanding common stock and Voting
     Power of Stilwell,

                   (B)  a liquidation or dissolution of Stilwell, or

                   (C)  the  sale  or  other disposition of all or substantially
     all of the assets of  Stilwell  in one  transaction  or a series of related
     transactions; or

             (iv)  the  sale  or  other   disposition  by  Stilwell, directly or
     indirectly, whether by merger, consolidation, combination, lease, exchange,
     spin-off,  split-off,  or other means, of any Significant Subsidiary or any
     reduction  in  Stilwell's  direct or indirect  beneficial  ownership of any
     Significant Subsidiary to less than 50% of the Voting Power of such entity.

For purposes of this Agreement,  "Subsidiary"  shall mean any entity of which at
least 50% of the Voting Power is beneficially owned, directly or indirectly,  by
Stilwell  and  "Significant  Subsidiary"  shall  mean (A) any  Subsidiary  which
contributed  30% or more of the total  combined  revenues  of  Stilwell  and all
Subsidiaries  for the prior  calendar  year,  and (B) any one or more  entities,
businesses  or groups of assets  directly or  indirectly  sold or disposed of by
Stilwell  (within the meaning of paragraph  7(d)(iv)) within any two year period
that  contributed  30% of more of such  total  combined  revenues  or would have
contributed such 30% based on revenues of such entities, businesses or groups of
assets for the calendar year prior to their sale or disposition.

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        (e)  Termination After Control Change Date.  Notwithstanding  any  other
provision  of this  Paragraph  7, at any time  after the  Control  Change  Date,
Stilwell 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  Stilwell  shall  pay to
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  Three-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 Stilwell
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  Stilwell)  and a  continuing  participant  in  such  plan  to the end of the
Benefits  Period.  Following  the end of the  Benefits  Period,  Stilwell  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 Stilwell 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

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Executive's period of service with Stilwell),  health and prescription  benefits
equivalent to those then  applicable to retired peer  executives of Stilwell 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  Stilwell,  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 Stilwell and effective
at the end of such notice  period,  resign his  employment  with  Stilwell  (the
"Resignation").  Within five (5) days of such a Resignation,  Stilwell 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

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

             (i)   the assignment to the Executive of any duties which result in
     a material adverse change in the Executive's  position  (including  status,
     offices, titles, and reporting requirements),  authority,  duties, or other
     responsibilities  with  Stilwell,  or any other  action of  Stilwell  which
     results in a material adverse change in such position,  authority,  duties,
     or  responsibilities,  other than an insubstantial  and inadvertent  action
     which is remedied  by Stilwell  promptly  after  receipt of notice  thereof
     given by the Executive,

             (ii)  any  relocation  of the Executive of more than 40 miles from
     the place  where the  Executive  was  located  at the time of the Change in
     Control;

             (iii) a material reduction or elimination of any  component of  the
     Executive's  rate of  compensation,  including  (x)  base  salary,  (y) any
     incentive payment or (z) benefits or prerequisites  which the Executive was
     receiving immediately prior to a Change in Control, or;

             (iv)  any failure by Stilwell to comply with any of the provisions
     of  Paragraph  7;

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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  Stilwell  "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 Stilwell  (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 Stilwell Board that the Executive met
     the applicable  standard of conduct for  indemnification  or  reimbursement
     under Stilwell'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 Stilwell Board, not a party to the
     act or  omission,  knew or should have known of such act or  omission.

                                       15
<PAGE>

Any  Termination  of the  Executive's  employment by Stilwell 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 Stilwell's  independent  auditors,  which determinations shall be
certified  to  by  such  auditors  and  set  forth  in  a  written   certificate
("Certificate")  delivered to the Executive) that any benefit received or deemed
received by the Executive from Stilwell  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 Stilwell  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.

             Stilwell shall cause the  preparation and delivery to the Executive
     of a Certificate  upon request at any time.  Stilwell 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.

                                       16
<PAGE>

        (i)  Determination  by the Executive.

             (i)   If Stilwell 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
     Stilwell  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 Stilwell,  Stilwell 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 Stilwell) or (b) deliver to the Executive a Certificate  specifying  the
     Gross-up Payment determined by Stilwell's  independent  auditors,  together
     with an opinion of Stilwell's counsel ("Stilwell Counsel Opinion"), and pay
     the Executive the Gross-up Payment  specified in such  Certificate.  If for
     any  reason  Stilwell  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 Stilwell
     does not deliver to the  Executive,  a  Certificate,  Stilwell  shall,  for
     purposes of Paragraph  7(j), be deemed to have  determined that no Gross-up
     Payment is due.

                                       17
<PAGE>

        (j)  Additional Gross-up Amounts. If, despite the initial conclusion  of
Stilwell  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 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  Stilwell'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 Stilwell or the Executive  pursuant to Paragraph  7(h) or
Paragraph  7(i), as applicable,  then Stilwell 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.)

                                       18
<PAGE>

        (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 Stilwell'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  Stilwell
in  writing  of any  claim  by the  IRS  or  other  taxing  authority  that,  if
successful,  would require the payment by Stilwell 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  Stilwell's  obligations  under this Paragraph 7
only if and to the  extent  that such  failure  results in actual  prejudice  to
Stilwell.  The  Executive  shall not pay such  claim less than 30 days after the
Executive  gives such  notice to  Stilwell  (or,  if  sooner,  the date on which
payment of such claim is due).  If Stilwell  notifies  the  Executive in writing
before the expiration of such period that it desires to contest such claim,  the
Executive shall:

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

                                       19
<PAGE>

             (ii)  take such action in connection with  contesting such claim as
     Stilwell  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 Stilwell;

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

             (iv)  permit Stilwell to participate in any   proceedings  relating
     to such claim; provided, however, that Stilwell 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,  Stilwell 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 Stilwell shall determine;  provided,  however,  that if Stilwell
     directs  the  Executive  to pay such  claim and sue for a refund,  Stilwell
     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

                                       20
<PAGE>

     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
     Stilwell'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 Stilwell  pursuant to Paragraph  7(m),  the  Executive  receives any
refund with respect to such claim,  the Executive  shall  (subject to Stilwell's
complying  with the  requirements  of Paragraph  7(m)) promptly pay Stilwell 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 Stilwell  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 Stilwell  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,  Stilwell  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 Stilwell any amounts

                                       21
<PAGE>

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
Stilwell's  obligations  set  forth  in the  preceding  sentence,  Stilwell  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  thereof  that sum which the  Stilwell  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. 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,

                                       22
<PAGE>

delivered by  facsimile  or deposited in the United  States mail by certified or
registered  mail,  postage  prepaid,  addressed,  in the  case of  Stilwell,  to
Stilwell at 920 Main Street, 21st Floor, Kansas City, Missouri 64105, Attention:
Secretary,  or,  in the  case  of the  Executive,  to  him at  [Connealy's  home
address],  or to such other address as a party shall  designate by notice to the
other party.

     10. Amendment. No provision of this  Agreement  may  be  amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge is
agreed to in a writing  signed by Executive  and the  President of Stilwell.  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.

     11. Successors in Interest. The rights and obligations  of  Stilwell  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  Stilwell,
regardless  of the manner in which such  successors  or assigns shall succeed to
the interest of Stilwell  hereunder,  and this Agreement shall not be terminated
by the  voluntary  or  involuntary  dissolution  of Stilwell or by any merger or
consolidation or acquisition  involving  Stilwell or upon any transfer of all or
substantially  all  of  Stilwell'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 Stilwell.

                                       23
<PAGE>

     12. 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.

     13. 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.

     14. Entire  Agreement. This  Agreement  constitutes  the  entire  agreement
between 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 day and year first above stated.

                                            STILWELL FINANCIAL INC.

                                            By       /s/ Landon H. Rowland
                                               ----------------------------
                                              Name: Landon H. Rowland
                                              Title:      President

                                            EXECUTIVE

                                                   /s/ Daniel P. Connealy
                                            -----------------------------------
                                                     Daniel P. Connealy

                                       24EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made and entered into as of this 12th day of June, 2000, by
and between Stilwell Financial,  Inc., a Delaware  corporation  ("Stilwell") and
Douglas E. Nickerson, an individual ("Executive") to be effective on the date of
the Spin-off Distribution (as defined below).

     WHEREAS, the parties expect that all of the issued and outstanding stock of
Stilwell will be distributed (the "Spin-off  Distribution")  to the shareholders
of Kansas City Southern  Industries,  Inc. ("KCSI") which has been the parent of
Stilwell since its formation on January 23, 1998; and

     WHEREAS,  Executive  previously was employed by KCSI with duties  primarily
relating to Stilwell  since its  formation in 1998,  and Stilwell and  Executive
desire for Stilwell to continue 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 Stilwell hereafter,  particularly in the event of any Change in
Control (as herein defined) of Stilwell or any Significant Subsidiary (as herein
defined),  thereby  establishing  and  preserving  continuity  of  management of
Stilwell.

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

     1. Employment.  Stilwell hereby employs Executive as its Vice President and
Controller  to serve at the pleasure of the Board of Directors of Stilwell  (the
"Stilwell 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 Stilwell Board and
in the stockholders of Stilwell.  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 Stilwell and
its affiliates.

<PAGE>

     2. Compensation.

        (a)  Base  Compensation.  Stilwell shall  pay Executive as  compensation
for his services  hereunder an annual base salary at the rate of $165,000.  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 Stilwell and applicable to all officers of Stilwell.

        (b)  Incentive   Compensation.  For  the  years  2000,  2001  and  2002,
Executive  shall  not be  entitled  to  participate  in any  Stilwell  incentive
compensation  plan,  except that  Stilwell  shall pay  Executive a cash bonus of
$150,000 within ten days after the spin-off Distribution.

     3. Benefits and Stock Ownership.

        (a)  Benefits. During the period of his employment  hereunder,  Stilwell
shall provide  Executive  with coverage under such benefit plans and programs as
are made  generally  available  to  similarly  situated  employees  of Stilwell,
provided  (a)  Stilwell  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  Stilwell  Board  or the  Compensation
Committee of the Stilwell 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 Stilwell,  it shall be assumed
that the value of Executive's annual  compensation,  pursuant to this Agreement,
is the lower of 175% of Executive's annual base salary or $1,000,000.  Executive
acknowledges that all rights and benefits under benefit plans and programs shall
be  governed  by the  official  text of each such plan or program and not by any

                                       2
<PAGE>

summary or description thereof or any provision of this Agreement (except to the
extent this  Agreement  expressly  modifies  such benefit plans or programs) and
that  Stilwell is not under any  obligation to continue in effect or to fund any
such plan or program,  except as provided in Paragraph 7 hereof.  Stilwell  also
shall reimburse  Executive for ordinary and necessary  travel and other business
expenses in accordance with policies and procedures established by Stilwell.

        (b)  Stock  Ownership.  During the period of his employment  hereunder,
Executive  shall  retain  ownership  in himself  or in members of his  immediate
family of at least a  majority  of the  number of shares of (i)  Stilwell  stock
received by Executive or members of his  immediate  family in the  Distribution,
and (ii)  Stilwell  stock  acquired  upon the  exercise  of stock  options,  but
excluding from such number of shares any such shares  transferred to Stilwell or
sold to pay the purchase  price upon the exercise of stock  options or to pay or
satisfy tax obligations resulting from such exercise.

     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 Stilwell,  except that in the event of any material  breach of this Agreement
by Stilwell, Executive may terminate this Agreement and his employment hereunder
immediately upon notice to Stilwell.

        (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 Stilwell's  disability plan.
For purposes of this  Agreement,  Executive shall be deemed to be disabled if he
qualifies for disability benefits under Stilwell's long-term disability plan.

                                       3
<PAGE>

        (c)  Termination  by Stilwell For Cause.  Stilwell  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 Stilwell or any subsidiary
     of Stilwell;

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

             (iv)  Willful   failure   by   Executive   to   follow   reasonable
     instructions  of the President or other officer to whom  Executive  reports
     concerning  the  operations  or business of Stilwell or any  subsidiary  of
     Stilwell;

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

             (vi)  Embezzlement or misappropriation by Executive.

        (d)  Termination by Stilwell Other Than For Cause.

             (i)   Stilwell  may   terminate   this  Agreement  and  Executive's
     employment other than for cause  immediately upon notice to Executive,  and
     in such event,  Stilwell 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),  Stilwell 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,

                                       4
<PAGE>

     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 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 Stilwell 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 Stilwell Incentive Compensation Plan
     and the Stilwell  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 Stilwell  Incentive  Compensation
     Plan but not under the  Stilwell  Executive  Plan.  After the year in which
     termination  occurs,  Executive  shall not be entitled to accrue or receive
     benefits  under the Stilwell  Incentive  Compensation  Plan or the Stilwell
     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  Stilwell.   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 Stilwell  Employee Stock  Ownership
     Plan and the Stilwell  Section 401(k) Plan with Profit Sharing

                                       5
<PAGE>

     Plan Portion 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  Stilwell  trade  secret,  except to the extent
necessary  for  Executive to perform his duties for Stilwell  while an employee.
For purposes of this Agreement,  the term "Stilwell trade secret" shall mean any
information  regarding the business or activities of Stilwell 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 Stilwell
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,  Stilwell  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  Stilwell  or
Executive for any reason,  Executive  shall  immediately  return to Stilwell all
Stilwell  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 Stilwell  and all direct and  indirect  subsidiaries  and
affiliates of Stilwell as may be requested by Stilwell and shall sign such other
documents and papers  relating to Executive's  employment,  benefits and benefit
plans as Stilwell may reasonably request.

                                       6
<PAGE>

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

     7. Continuation of Employment Upon Change in Control of Stilwell.

        (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 Stilwell for a period of three years (the "Three-Year  Period")
from the date of such Change in Control (the "Control  Change  Date").  Stilwell
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,  Stilwell  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 Stilwell 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 Stilwell plans

                                       7
<PAGE>

(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 Section 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 Stilwell  generally.

     In addition,  Stilwell shall use its best efforts to cause all  outstanding
options  held by  Executive  under  any stock  option  plan of  Stilwell  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 Stilwell
in accordance  with the terms thereof at the Control Change Date;  provided that
if under  Stilwell  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.

                                       8
<PAGE>

     If the amount of  contributions  or benefits  with respect to the Specified
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 Stilwell which has
not been separately  funded (including  specifically,  but not limited to, those
referred to under  Paragraph  7(b)(i) and (ii) 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.  Except as provided in the last sentence of this
Paragraph 7(d), for purposes of this Agreement,  a "Change in Control" means any
one or more of the following:

             (i)   the acquisition  or  holding  by any person,  entity or group
     (within  the meaning of Section  13(d)(3)  or  14(d)(2)  of the  Securities
     Exchange Act of 1934 (the  "Exchange  Act"),  other than by Stilwell or any
     Subsidiary (as defined below),  or any employee benefit plan of Stilwell or
     a Subsidiary  (and other than by KCSI prior to the

                                       9
<PAGE>

     Spin-off Distribution), of beneficial ownership (within the meaning of Rule
     13d-3 under the Exchange Act) of 20% or more of the then-outstanding common
     stock  or  the  combined  voting  power  of  the  then-outstanding   voting
     securities ("Voting Power") of Stilwell;  provided, however, that no Change
     in  Control  shall  occur  solely by reason  of any such  acquisition  by a
     corporation with respect to which, after such acquisition, more than 60% of
     both the  then-outstanding  common shares and the  then-outstanding  Voting
     Power  of  such  corporation  are  then  beneficially  owned,  directly  or
     indirectly,   by  the  persons  who  were  the  beneficial  owners  of  the
     then-outstanding  common  stock and Voting  Power of  Stilwell  immediately
     before such  acquisition,  in  substantially  the same proportions as their
     respective   ownership,   immediately  before  such  acquisition,   of  the
     then-outstanding common stock and Voting Power of Stilwell; or

             (ii)  individuals who, as of the date of the Spin-off Distribution,
     constitute the Stilwell Board (the "Incumbent  Board") cease for any reason
     to  constitute  at  least  75% of the  Stilwell  Board;  provided  that any
     individual  who becomes a director  after the Spin-off  Distribution  whose
     election or  nomination  for election by the  stockholders  of Stilwell was
     approved by at least 75% of the Incumbent  Board (other than an election or
     nomination  of an  individual  whose  initial  assumption  of  office is in
     connection with an actual or threatened  "election contest" relating to the
     election  of the  directors  of  Stilwell  (as such  terms are used in Rule
     14a-11 under the Exchange  Act) or "tender  offer" (as such term is used in
     Section 14(d) of the Exchange Act) or a proposed Extraordinary  Transaction
     (as defined below)) shall be deemed to be a member of the Incumbent  Board;
     or

                                       10
<PAGE>

             (iii) approval by the stockholders of  Stilwell of any one or  more
     of the following:

                   (A)  a  merger,  reorganization,  consolidation   or  similar
     transaction (any of the foregoing,  an  "Extraordinary  Transaction")  with
     respect to which persons who were the respective  beneficial  owners of the
     then-outstanding  common  stock and Voting  Power of  Stilwell  immediately
     before such  Extraordinary  Transaction  would not,  if such  Extraordinary
     Transaction  were to be  consummated  immediately  after  such  stockholder
     approval (but otherwise in accordance  with the terms  presented in writing
     to the  stockholders  of Stilwell for their  approval),  beneficially  own,
     directly or indirectly,  more than 60% of both the then-outstanding  common
     shares and the then-outstanding  Voting Power of the corporation  resulting
     from such Extraordinary Transaction,  in substantially the same proportions
     as  their  respective  ownership,  immediately  before  such  Extraordinary
     Transaction,  of the  then-outstanding  common  stock and  Voting  Power of
     Stilwell,

                   (B)  a liquidation  or  dissolution  of Stilwell,  or

                   (C)  the sale or other  disposition of all  or  substantially
     all of the assets of  Stilwell  in one  transaction  or a series of related
     transactions;  or

             (iv)  the  sale or  other  disposition  by  Stilwell,  directly  or
     indirectly, whether by merger, consolidation, combination, lease, exchange,
     spin-off,  split-off,  or other means, of any Significant Subsidiary or any
     reduction  in  Stilwell's  direct or indirect  beneficial  ownership of any
     Significant Subsidiary to less than 50% of the Voting Power of such entity.

                                       11
<PAGE>

For purposes of this Agreement,  "Subsidiary"  shall mean any entity of which at
least 50% of the Voting Power is beneficially owned, directly or indirectly,  by
Stilwell  and  "Significant  Subsidiary"  shall  mean (A) any  Subsidiary  which
contributed  30% or more of the total  combined  revenues  of  Stilwell  and all
Subsidiaries  for the prior  calendar  year,  and (B) any one or more  entities,
businesses  or groups of assets  directly or  indirectly  sold or disposed of by
Stilwell  (within the meaning of paragraph  7(d)(iv)) within any two year period
that  contributed  30% of more of such  total  combined  revenues  or would have
contributed such 30% based on revenues of such entities, businesses or groups of
assets for the calendar year prior to their sale or disposition.

Notwithstanding the foregoing provisions of this Paragraph 7(d) to the contrary,
the Spin-off Distribution shall not constitute a Change in Control.

        (e)  Termination After Control Change Date.  Notwithstanding  any  other
provision  of this  Paragraph  7, at any time  after the  Control  Change  Date,
Stilwell 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  Stilwell  shall  pay to
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) two, 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

                                       12
<PAGE>

Executive after  Termination,  then Stilwell 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 Stilwell) and a continuing
participant in such plan to the end of the Benefits Period. Following the end of
the Benefits Period, Stilwell 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
Stilwell 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 Stilwell),  health and  prescription
benefits  equivalent  to those then  applicable  to retired peer  executives  of
Stilwell 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

                                       13
<PAGE>

right of Stilwell,  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 Stilwell and effective
at the end of such notice  period,  resign his  employment  with  Stilwell  (the
"Resignation").  Within five (5) days of such a Resignation,  Stilwell 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  Paragraph  7(e) in the case of
Termination. For purposes of this Agreement, "good reason" means any one or more
of the following:

             (i)   the assignment to the Executive of any duties which result in
     a material adverse change in the Executive's  position  (including  status,
     offices, titles, and reporting requirements),  authority,  duties, or other
     responsibilities  with  Stilwell,  or any other  action of  Stilwell  which
     results in a material adverse change in such position,  authority,  duties,
     or  responsibilities,  other than an insubstantial  and inadvertent  action

                                       14
<PAGE>

     which is remedied  by Stilwell  promptly  after  receipt of notice  thereof
     given by the  Executive,

             (ii)  any  relocation  of the  Executive of more than 40 miles from
     the place  where the  Executive  was  located  at the time of the Change in
     Control;

             (iii) a material reduction  or  elimination of any component of the
     Executive's  rate of  compensation,  including  (x)  base  salary,  (y) any
     incentive payment or (z) benefits or prerequisites  which the Executive was
     receiving immediately prior to a Change in Control, or;

             (iv) any failure by Stilwell to comply with any of  the  provisions
     of  Paragraph  7;

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  Stilwell  "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 Stilwell  (without intent
     of the  Executive to gain,  directly or  indirectly,  a profit to which the
     Executive was not legally entitled);

                                       15
<PAGE>

             (iii) any act or omission  with respect  to  which a  determination
     could  properly have been made by the Stilwell Board that the Executive met
     the applicable  standard of conduct for  indemnification  or  reimbursement
     under Stilwell'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 Stilwell 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 Stilwell 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 Stilwell's  independent  auditors,  which determinations shall be
certified  to  by  such  auditors  and  set  forth  in  a  written   certificate
("Certificate")  delivered to the Executive) that any benefit received or deemed
received by the Executive from Stilwell  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 Stilwell  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).

                                       16
<PAGE>

     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.

     Stilwell  shall cause the  preparation  and delivery to the  Executive of a
Certificate  upon request at any time.  Stilwell 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 Stilwell 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
     Stilwell  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 Stilwell,  Stilwell 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 Stilwell) or (b) deliver to the Executive a

                                       17
<PAGE>

     Certificate  specifying  the  Gross-up  Payment  determined  by  Stilwell's
     independent  auditors,  together  with an  opinion  of  Stilwell's  counsel
     ("Stilwell  Counsel  Opinion"),  and pay the Executive the Gross-up Payment
     specified in such  Certificate.  If for any reason Stilwell 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  Stilwell
     does not deliver to the  Executive,  a  Certificate,  Stilwell  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
Stilwell  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 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  Stilwell'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 Stilwell or the Executive  pursuant to Paragraph  7(h) or
Paragraph  7(i), as applicable,  then Stilwell 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

                                       18
<PAGE>

             (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 Stilwell'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 Stilwell
in  writing  of any  claim  by the  IRS  or  other  taxing  authority  that,  if
successful,  would require the payment by Stilwell 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

                                       19
<PAGE>

notice shall affect Stilwell's obligations under this Paragraph 7 only if and to
the extent  that such  failure  results in actual  prejudice  to  Stilwell.  The
Executive  shall not pay such claim less than 30 days after the Executive  gives
such notice to Stilwell (or, if sooner,  the date on which payment of such claim
is due). If Stilwell  notifies the Executive in writing before the expiration of
such period that it desires to contest such claim, the Executive shall:

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

             (ii)  take such  action in  connection  with  contesting such claim
     as Stilwell  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 Stilwell;

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

             (iv)  permit  Stilwell to  participate in any  proceedings relating
     to such claim; provided, however, that Stilwell 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,  Stilwell 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

                                       20
<PAGE>

     determination  before any  administrative  tribunal,  in a court of initial
     jurisdiction  and  in one or  more  appellate  courts,  as  Stilwell  shall
     determine; provided, however, that if Stilwell directs the Executive to pay
     such claim and sue for a refund,  Stilwell 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 Stilwell'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 Stilwell  pursuant to Paragraph  7(m),  the  Executive  receives any
refund with respect to such claim,  the Executive  shall  (subject to Stilwell's
complying  with the  requirements  of Paragraph  7(m)) promptly pay Stilwell 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 Stilwell  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 Stilwell  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

                                       21
<PAGE>

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,  Stilwell  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 Stilwell 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
Stilwell's  obligations  set  forth  in the  preceding  sentence,  Stilwell  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  thereof  that sum which the  Stilwell  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

                                       22
<PAGE>

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. 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
Stilwell,  to Stilwell at 114 West 11th  Street,  Kansas City,  Missouri  64105,
Attention: Secretary, or, in the case of the Executive, to him at 14124 Fontana,
Leawood, KS 66224, or to such other address as a party shall designate by notice
to the other party.

     10. Amendment.  No  provision  of this  Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge is
agreed to in a writing  signed by Executive  and the  President of Stilwell.  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.

     11. Successors in Interest.  The rights and  obligations of Stilwell  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  Stilwell,
regardless  of the manner in which such  successors  or assigns shall succeed to
the interest of Stilwell  hereunder,  and this Agreement shall not be terminated
by the  voluntary  or  involuntary  dissolution  of Stilwell or by any merger or
consolidation or acquisition

                                       23
<PAGE>

involving  Stilwell  or  upon  any  transfer  of  all  or  substantially  all of
Stilwell'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
Stilwell.

     12. 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.

     13. 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.

     14. Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
between 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.

                                       24
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement  as  of
the day and year first above stated.

                                            STILWELL FINANCIAL, INC.

                                            By      /s/ Landon H. Rowland
                                                ------------------------------
                                                Name: Landon H. Rowland
                                                Title:      President

                                            EXECUTIVE

                                                  /s/ Douglas E. Nickerson
                                            -----------------------------------
                                                    Douglas E. Nickerson

                                       25

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