Document:

EMPLOYMENT AGREEMENT
                     Amended and Restated January 1, 1999

         THIS  AGREEMENT,  made and entered  into as of this 1st day of January,
1999,  by  and  between  Kansas  City  Southern  Industries,  Inc.,  a  Delaware
corporation ("KCSI") and Danny R. Carpenter, an individual ("Executive").

         WHEREAS,  Executive  is now  employed by KCSI,  and KCSI and  Executive
desire for KCSI 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 KCSI hereafter, particularly in the event of any change in control
(as herein defined) of KCSI,  Kansas City Southern Lines,  Inc.  ("KCSL") or The
Kansas City Southern  Railway  Company  ("Railway"),  thereby  establishing  and
preserving continuity of management of KCSI.

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

         1. Employment. KCSI hereby continues the employment of Executive as its
Vice  President  Finance to serve at the  pleasure of the Board of  Directors of
KCSI (the "KCSI 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 KCSI
Board and in the stockholders of KCSI.  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
KCSI and its affiliates.

         2.       Compensation.

                  (a)  Base   Compensation.   KCSI   shall  pay   Executive   as
compensation  for his  services  hereunder  an  annual  base  salary at the rate
approved by the KCSI  Compensation  Committee on November  17,  1998.  Such rate
shall not be increased  prior to January 1, 2000 and shall not be reduced except
as agreed by the parties or except as part of a general salary reduction program
imposed by KCSI and applicable to all officers of KCSI.

                  (b)      Incentive  Compensation.  For  the  year  1999,
Executive  shall  not  be  entitled  to participate in any KCSI incentive
compensation plan.

         3. Benefits.  During the period of his employment hereunder, KCSI shall
provide  Executive  with  coverage  under such benefit plans and programs as are
made generally  available to similarly situated employees of KCSI,  provided (a)
KCSI 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 KCSI Board or the Compensation Committee of the KCSI 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 KCSI, it shall be assumed that the value of Executive's  annual
compensation, pursuant to this Agreement, is 175% of Executive's annual base
salary.  Executive acknowledges that all 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 KCSI is not under any  obligation to continue in effect or to
fund any such plan or program,  except as provided in  Paragraph 7 hereof.  KCSI
also shall  reimburse  Executive  for  ordinary and  necessary  travel and other
business  expenses in accordance  with policies and  procedures  established  by
KCSI.

<PAGE>

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

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

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

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

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

                         (vi)     Embezzlement or misappropriation by Executive.

<PAGE>

                  (d)      Termination by KCSI Other Than For Cause.

                           (i)   KCSI   may   terminate   this   Agreement   and
         Executive's employment other than for cause immediately upon notice
         to Executive,  and in such event, KCSI 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),  KCSI shall continue,  for a period of one (1)
         year following such  termination,  (a) to pay to Executive as severance
         pay a monthly amount equal to  one-twelfth  (1/12th) of the annual base
         salary  referenced  in  Paragraph  2(a)  above,  at the rate in  effect
         immediately prior to termination,  and, (b) to reimburse  Executive for
         the cost (including state and federal income taxes payable with respect
         to this  reimbursement)  of continuing  the health  insurance  coverage
         provided  pursuant to this  Agreement  or  obtaining  health  insurance
         coverage  comparable to the health insurance  provided pursuant to this
         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 KCSI 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  KCSI
         Incentive  Compensation Plan and the KCSI 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 KCSI Incentive  Compensation Plan but not under the KCSI
         Executive Plan. After the year in which termination  occurs,  Executive
         shall not be  entitled  to accrue or  receive  benefits  under the KCSI
         Incentive  Compensation Plan or the KCSI 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
         KCSI. 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
         KCSI Profit Sharing Plan,  the KCSI Employee  Stock  Ownership Plan and
         the KCSI Section  401(k) Plan 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 KCSI trade secret,  except to the extent necessary for
         Executive to perform his duties for KCSI while an employee.  For
         purposes of this  Agreement, the term "KCSI trade secret" shall mean
         any  information  regarding the business or  activities of KCSI 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 KCSI 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, KCSI 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.

<PAGE>

         6.       Duties Upon Termination; Survival.

                  (a) Duties.  Upon  termination  of this  Agreement  by KCSI or
Executive for any reason,  Executive shall  immediately  return to KCSI all KCSI
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 KCSI  and all  direct  and  indirect  subsidiaries  and
affiliates  of KCSI as may be  requested  by KCSI  and  shall  sign  such  other
documents and papers  relating to Executive's  employment,  benefits and benefit
plans as KCSI 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 KCSI or
Executive,   and  the  provisions  of  Paragraph   4(d)(ii)  shall  survive  any
termination of this Agreement by KCSI under Paragraph 4(d)(i).

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

                  (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 KCSI for a period  of  three  years  (the
"Three-Year  Period")  from the date of such  Change in  Control  (the  "Control
Change  Date").  KCSI 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, KCSI
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 KCSI 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 KCSI plans (together,  the "Specified Benefits") in existence,  and in
accordance with the terms thereof, at the Control Change Date:

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

                           (ii) any other benefit plans hereafter made generally
         available to  executives  of  Executive's  level or to the employees of
         KCSI generally.  In addition,  KCSI shall use its best efforts to cause
         all outstanding options held by Executive under any  stock option  plan
         of  KCSI  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 KCSI in  accordance with the terms thereof at the
         Control Change Date; provided that if under KCSI 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  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 KCSI which has not
been  separately  funded  (including  specifically,  but not limited  to,  those
referred to under Paragraph  7(b)(i)(d)  above),  Executive shall receive within
five (5) days  after  such date full  payment  in cash  (discounted  to the then
present  value on the basis of a rate of seven  percent  (7%) per  annum) of all
amounts to which he is then entitled thereunder.

                  (d) Change in Control. Except as provided in the last sentence
of this Paragraph  7(d), for purposes of this  Agreement,  a "Change in Control"
shall be deemed to have occurred if:

<PAGE>

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

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

                           (iii) the stockholders of KCSI, KCSL or Railway shall
         have approved a merger,  consolidation  or dissolution of KCSI, KCSL or
         Railway  or  a  sale,   lease,   exchange  or  disposition  of  all  or
         substantially all of KCSI's, KCSL's or Railway's assets, if persons who
         were the beneficial  owners of the combined voting power of KCSI's,
         KCSL's or Railway's voting securities  immediately before  any  such
         merger, consolidation, dissolution, sale, lease, exchange or
         disposition do not immediately thereafter, beneficially own,  directly
         or indirectly,  in substantially  the same  proportions, more than 60%
         of the combined  voting power of any corporation or other entity
         resulting from any such transaction. Notwithstanding the foregoing
         provisions of this Paragraph 7(d) to the contrary, the sale of  shares
         of stock of  Kansas  City  Southern  Lines,  Inc.  ("KCSL") pursuant
         to an  initial  public  offering  of shares of stock of KCSL 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,
KCSI 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  KCSI 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 3-year period ("Benefits  Period") beginning
on the date of Termination. If any plan pursuant to which Specified Benefits are
provided   immediately   prior  to  Termination   would  not  permit   continued
participation by Executive after  Termination,  then KCSI 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 KCSI) and a continuing
participant in such plan to the end of the Benefits Period. Following the end of
the Benefits  Period,  KCSI 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 KCSI
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 KCSI),  health and prescription  benefits
equivalent to those then applicable to retired peer executives of KCSI 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 KCSI,  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 KCSI
and effective at the end of such notice period,  resign his employment with KCSI
(the "Resignation").  Within five (5) days of such a Resignation, KCSI 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 of the
following:
                           (i) the  assignment  to the  Executive  of any duties
         inconsistent   in  any  respect  with  the   Executive's   position
         (including    offices,     titles,     reporting     requirements    or
         responsibilities),  authority  or duties  as  contemplated  by  Section
         7(a)(i),  or any other action by KCSI which  results in a diminution or
         other material adverse change in such position, authority or duties;

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

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

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

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

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

                  (g)   Termination   for  Cause  After  Control   Change  Date.
Notwithstanding  any other  provision of this Paragraph 7, at any time after the
Control  Change Date,  Executive  may be  terminated  by KCSI "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 KCSI
         (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 KCSI Board that the
         Executive met the applicable standard of conduct for indemnification or
         reimbursement under KCSI'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 KCSI 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 KCSI 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 KCSI'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 KCSI  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  KCSI  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.

                           KCSI shall cause the  preparation and delivery to the
         Executive of a  Certificate  upon request at any time.  KCSI 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 KCSI 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 KCSI 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
         KCSI, KCSI 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  KCSI)  or (b)
         deliver to the Executive a Certificate  specifying the Gross-up Payment
         determined by KCSI's independent auditors, together with an opinion
         of KCSI's counsel ("KCSI Counsel  Opinion"),  and pay the Executive
         the Gross-up Payment specified in such  Certificate.  If for any reason
         KCSI 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 KCSI does not deliver to the Executive, a Certificate,  KCSI 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 KCSI  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 KCSI'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 KCSI  or the  Executive  pursuant  to  Paragraph  7(h) or
Paragraph  7(i),  as  applicable,  then KCSI shall pay the  Executive  an amount
(which shall also be deemed a Gross-up Payment) equal to the product of:

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

                           (ii)     the Gross-up Multiple.

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

                  (l) Opinion of Counsel.  "Executive  Counsel  Opinion" means a
legal opinion of nationally recognized executive compensation counsel that there
is a  reasonable  basis  to  support  a  conclusion  that the  Gross-up  Payment
determined by the Executive has been  calculated in accord with this Paragraph 7
and  applicable  law.  "Company  Counsel  Opinion"  means  a  legal  opinion  of
nationally  recognized  executive  compensation  counsel  that  (i)  there  is a
reasonable  basis to support a conclusion that the Gross-up Payment set forth in
the Certificate of KCSI'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
KCSI in  writing  of any claim by the IRS or other  taxing  authority  that,  if
successful, would require the payment by KCSI 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  KCSI's  obligations under this Paragraph 7 only if
and to the extent that such failure  results in actual  prejudice  to KCSI.  The
Executive  shall not pay such claim less than 30 days after the Executive  gives
such notice to KCSI (or, if sooner,  the date on which  payment of such claim is
due). If KCSI notifies the  Executive in writing  before the  expiration of such
period that it desires to contest such claim, the Executive shall:

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

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

                           (iii)  cooperate  with KCSI in good  faith to contest
                           such claim;  and (iv) permit KCSI to  participate  in
                           any proceedings relating to such claim;
         provided,  however, that KCSI 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,  KCSI 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 KCSI shall determine;  provided,  however, that if
         KCSI directs the Executive to pay such claim and sue for a refund, KCSI
         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  KCSI'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 KCSI pursuant to Paragraph  7(m), the Executive  receives any
refund with respect to such claim,  the Executive  shall  (subject to KCSI's
complying with the  requirements of Paragraph 7(m)) promptly pay KCSI 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 KCSI 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
KCSI 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,  KCSI 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 KCSI 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
KCSI's obligations set forth in the preceding sentence, KCSI 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 KCSI  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,  delivered  by  facsimile or deposited in the
United States mail by certified or registered mail, postage prepaid,  addressed,
in the case of KCSI,  to KCSI at 114 West 11th  Street,  Kansas  City,  Missouri
64105,  Attention:  Secretary,  or, in the case of the Executive, to him at 5639
High Drive,  Shawnee Mission,  Kansas 66208, 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 KCSI. 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.

<PAGE>

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

         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.

<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have executed this Amended and
Restated Agreement as of the 1st day of January, 1999.
                                          KANSAS CITY SOUTHERN INDUSTRIES, INC.

                                            By    /s/ Landon H. Rowland
                                              ---------------------------------
                                               Landon H. Rowland, President

                                            EXECUTIVE
                                                  /s/ Danny R. Carpenter
                                            -----------------------------------
                                                     Danny R. CarpenterKANSAS CITY SOUTHERN INDUSTRIES, INC.
                                                  EXECUTIVE PLAN
                                           (Restated November 17, 1998)
                                    -------------------------------------------
         THIS RESTATED  EXECUTIVE PLAN (the "Plan") is executed this 17th day of
November, 1998, by Kansas City Southern Industries, Inc. ("KCSI"), a corporation
organized under the laws of the State of Delaware.

         WITNESSETH:

         WHEREAS,  KCSI and certain of its subsidiaries maintain qualified plans
subject to Sections 401(a)(17) and 415 of the Internal Revenue Code, which limit
the annual contributions permitted to certain participants in such plans; and

         WHEREAS,  KCSI prefers to provide a benefit to certain  participants in
addition to the annual  contributions  permitted  under the qualified  plans and
therefore established this Executive Plan on January 18, 1985; and

         WHEREAS,  KCSI now  wishes to amend the Plan to change  the  method and
timing for the payment of benefits hereunder.

         NOW, THEREFORE, KCSI hereby amends and restates the Plan to provide as
follows:

         1.1      Definitions.

         1.2      "Account" shall mean the separate account which the Company
has maintained for a Participant under the Plan through the date of this
restatement of the Plan.

         1.3  "Annual  Benefit"  shall  mean the  amount of a  Participant's
annual  benefit  under the Plan,  which  shall be the  amount by which (a) below
exceeds (b) below:

         (a)  The  amount  of the  annual  contributions  (other  than  elective
deferrals) and  forfeitures  which the  Participant  would have been entitled to
receive  under  one  or  more  of the  Qualified  Plans,  except  that  (1)  any
limitations imposed on such contributions under Section 401(a)(17) or 415 of the
Internal  Revenue Code shall be disregarded,  (2) in computing such amount,  the
definition  of  "Compensation"  contained  in Section  1.4 herein  shall be used
instead of the definition of  "Compensation"  contained in such Qualified Plans,
if  different,  (3) the amount of matching  contributions  that the  Participant
would have been entitled to receive  under the Kansas City Southern  Industries,
Inc.  401(k)  Plan  ("401(k)  Plan")  shall be  deemed  to be equal to 3% of the
Participant's   Compensation,  and  (4)  any  eligibility  requirements  for
participation in the Qualified Plans shall be disregarded; and

         (b)  The  amount  of the  annual  contributions  (other  than  elective
deferrals) and  forfeitures  which the  Participant is entitled to receive under
the Qualified  Plans as limited by Sections  401(a)(17)  and 415 of the Internal
Revenue Code and any eligibility requirements for participation in the Qualified
Plans,  and with respect to the 401(k) Plan,  treating the Participant as having
received the maximum matching contributions  available under Section 3.01 of the
401(k)  Plan,  as if the  Participant  had made the maximum  elective  deferrals
permitted by Section 402(g) of the Code, disregarding the limitations of Article
XII of the 401(k) Plan.

         1.4  "Compensation"  shall  mean  actual  cash  compensation  paid to a
Participant as base compensation and incentive  compensation for a taxable year,
but not  including any amount paid as severance  pay. If a  Participant  and the
Company have entered into an agreement  fixing the value of a  Participant's
annual  compensation  for purposes of this Plan for a particular year, then that
value shall be deemed to be such  Participant's  annual  base and  incentive
compensation  for that year,  and such  annual base and  incentive  compensation
shall be deemed to be paid ratably throughout that year.

         1.5 "Company"  shall mean Kansas City Southern  Industries,  Inc.,  and
each of its subsidiary companies which is at least eighty percent (80%) owned.

         1.6   "Compensation   Committee"   shall  mean  the   Compensation  and
Organization  Committee  of the  Board of  Directors  of  Kansas  City  Southern
Industries, Inc.

         1.7  "Participant"  is an  employee  of the  Company who is eligible to
participate in the Plan under Section 2 and whose  participation  in the Plan is
approved by the Chief  Executive  Officer  and the  Chairman of the Board of the
Company (or upon the approval of the Chief Executive  Officer alone, if there is
no Chairman of the Board then in office).

         1.8      "Plan" shall mean the deferred compensation plan established
and continued by the Company in the form of this Plan, designated as the
"Kansas City Southern Industries, Inc. Executive Plan (Restated November 17,
1998)."

         1.9 "Qualified  Plans" shall mean the Kansas City Southern  Industries,
Inc. Profit Sharing Plan, The Employee Stock Ownership Plan, and the Kansas City
Southern Industries, Inc. 401(k) Plan or any successor plans.

         1.10 "Vesting  Schedule" shall mean the vesting schedule  applicable to
each Participant under the terms and provisions of the KCSI Profit Sharing Plan.

         2.  Eligibility.  Eligibility  in the  Plan  shall  be  limited  to any
employee of the  Company who is a corporate  officer of the Company for whom the
Company's  contributions to the Qualified Plans are limited or prohibited as
provided under (1) Section  401(a)(17) of the Internal Revenue Code, (2) Section
415 of the Internal Revenue Code, and/or (3) the eligibility requirements of one
or more of the Qualified Plans.

         3. Election of Form of Benefits.  Each Participant may elect to receive
the Annual Benefit available under the Plan either in cash or through a grant of
non-qualified  stock  options to purchase  shares of common stock of the Company
("Stock  Options").  Such  election  shall be made with respect to each calendar
year  covered by the Plan,  but will be an on-going  election  which  remains in
effect  until  changed,  unless  the  Participant  otherwise  specifies  in  the
election.  The election for calendar  year 1997 shall be made not later than the
later of November 15, 1997 or at least fifteen (15) days before the actual grant
of the  Participant's  benefits for 1997, and elections for subsequent  calendar
years must be made not later than  October  31 of that  year,  or, for 1998,  at
least fifteen (15) days before the actual grant of benefits for the  Participant
for 1998. An on-going election may be changed at any time by a Participant,  but
any such  change  shall  not be  effective  for the  calendar  year in which the
election  is made  unless  such change is made prior to October 31 of such year,
except for 1998,  such change must be made at least fifteen (15) days before the
actual grant of benefits for the Participant for 1998. If no election is made by
a Participant  for a calendar  year, the  Participant's  Annual Benefit for that
year shall be in the form of a grant of Stock  Options.  Elections  of part cash
and part Stock Options will not be permitted.  Notwithstanding  the foregoing or
any  election  made by a  Participant  to  receive  an Annual  Benefit  in Stock
Options,  no Stock  Options will be issued unless the  Participant  is an active
employee of the Company on the date of grant of the Stock  Options,  but instead
the Annual Benefit will be paid in cash.

         4.1 Payment of Annual Benefit.  Annual Benefits under the Plan shall be
paid as Stock Options,  unless the Participant  shall have elected in accordance
with Section 3 hereof to receive cash.

         4.2 Time of Payment. Annual Benefits shall be paid by no later than the
end of the year following the calendar year to which the Annual Benefits relate.

         4.3 Stock Option Grants. If a Participant has elected to receive his or
her benefit in the form of Stock Options, the Compensation Committee shall grant
the Participant Stock Options which the Compensation Committee determines have a
value equal to 125% of the Annual  Benefit,  rounded to the nearest whole share.
The Compensation Committee shall value the Stock Options as of the time of grant
using the  Black-Scholes  method in the manner  determined  by the  Compensation
Committee applied on a consistent basis.

         4.4  Termination  During  a  Calendar  Year.  If  a   Participant's
employment is terminated during a calendar year for any reason,  the Participant
shall be entitled to an Annual Benefit for the year of  termination  only if the
Participant is entitled to a contribution  under one or more Qualified  Plans in
such year.  Following the date of  termination of  employment,  the  Participant
shall not be entitled to any further benefits under the Plan (except for payment
of Annual Benefits, if any, through the date of termination of employment).

         4.5  Vesting  Schedule.  Stock  Options  granted  under this Plan shall
become exercisable in accordance with the Vesting Schedule.  Notwithstanding any
other  provision of this Plan to the contrary,  no cash  distributions  shall be
made from the Plan except to the extent that the amount distributed is vested in
accordance with the Vesting Schedule,  and any undistributed cash balance of any
Account  shall  earn  a  return  based  on a  hypothetical  investment  of  such
undistributed cash balance in the following investments: 33 1/3 percent in Janus
Venture  Fund,  33 1/3 percent in Janus  Twenty Fund and 33 1/3 percent in Janus
Worldwide Fund, and shall be distributed as it vests under the Vesting Schedule.

         5. Distribution of Existing Balances. Each Participant with an existing
balance held in an Account as of November 17, 1998 shall be given an election to
receive his existing balance either in cash or through a grant of Stock Options.
Such election shall be made not later than at least fifteen (15) days before the
actual  distribution of the existing balances from Accounts,  which distribution
shall take place promptly following the restatement of this Plan on November 17,
1998.

         6. No  Trust.  Nothing  contained  in this  Plan  and no  action  taken
pursuant to the  provisions of the Plan shall create or be construed to create a
trust  of any kind or a  fiduciary  relationship  between  the  Company  and the
Participant or any other person.

         7. Source of Payments.  The Participant and any other person or persons
having or claiming a right to benefits  hereunder or to any interest in the Plan
shall rely solely on the  unsecured  promise of the Company set forth herein and
nothing  in the Plan shall be  construed  to give the  Participant  or any other
person or persons  any right,  title,  interest  or claim in or to any  specific
asset,  fund,  reserve,  account or property of any kind whatsoever owned by the
Company  or in  which it may have any  right,  title or  interest  now or in the
future,  but the  Participant  shall have the right to enforce his claim against
the Company in the same manner as any unsecured creditor.

         8.       No Assignment.  The right of the Participant or any other
person to the payment of benefits under the Plan shall not be assigned,
transferred, pledged or encumbered in any way.

         9.  Incapacity  of  Participant  or  Beneficiary.  If the  Compensation
Committee  shall find that any person to whom any  payment is payable  under the
Plan is unable to care for his  affairs  because of illness or  accident or is a
minor,  any payment due (unless a prior claim  therefor  shall have been made by
duly appointed guardian, committee or other legal representative) may be paid to
the spouse, a child, a parent or a brother or sister, or to any person deemed by
the  Compensation  Committee to have incurred  expense for such person otherwise
entitled to payment in accordance  with the  applicable  provisions of Section 4
above. Any such payment shall be a complete  discharge of the liabilities of the
Company under the Plan.

         10.  Compensation  Committee Powers and  Liabilities.  The Compensation
Committee in its absolute  discretion shall have the full power and authority to
interpret, construe and administer the Plan and the Compensation Committee's
interpretations and construction  thereof, and action thereunder,  including the
determination  of the amount or recipient  of the payment to be made  therefrom,
shall be binding and  conclusive on all persons for all  purposes.  No member of
the Compensation Committee shall be liable to any person for any action taken or
omitted in connection with the interpretation and administration of the Plan.

         11. Benefits Not Treated as  Compensation.  Any benefits  payable under
the Plan shall not be deemed salary or other compensation to the Participant for
the purpose of computing  benefits to which he may be entitled under the Plan or
any profit  sharing plan,  pension plan or any other  arrangement of the Company
for the benefit of its employees.

         12.      Governing Law.  This Plan shall be construed in accordance
with and governed by the law of the State of Missouri, excluding its choice of
laws.

         13.  Merger.  The Company  agrees it will not be a party to any merger,
consolidation  or  reorganization,  unless and until its  obligations  hereunder
shall be expressly assumed by its successor or successors.

         14.      Amendment.  This Plan may be amended at any time and from time
to time by the Compensation Committee.

<PAGE>

         15.  Binding  Effect.  This Plan shall be binding upon and inure to the
benefit of the Company,  its  successors  and assigns and the  Participants  and
their heirs, executors, administrators and legal representatives.

         IN WITNESS WHEREOF,  this Restated Plan  has been duly executed as of
the day and year first above stated.

                                         Kansas City Southern Industries, Inc.

                                            By   /s/ Landon H. Rowland
                                              -------------------------------
                                              Landon H. Rowland, President

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