Kansas City Southern · 10-Q · For 6/30/95 · EX-10.2

Filed On 8/10/95   ·   SEC File 1-04717   ·   Accession Number 54480-95-11

Quarterly Report   ·   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      19±    90K 
 2: EX-27     · Financial Data Schedule                                1      8K 
 3: EX-10.1     Material Contract                                     51±   215K 
 4: EX-10.2     Material Contract                                      9±    48K 

EX-10.2   ·   Material Contract

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EMPLOYMENT AGREEMENT              

    THIS AGREEMENT, made and entered into as of this 15th day of May, 1995, by
and among Kansas City Southern Industries, Inc. ("KCSI"), a Delaware            
corporation, The Kansas City Southern Railway Company, a Missouri corporation   
("Railway") and Michael R. Haverty, an individual ("Executive").                
     WHEREAS, KCSI, Railway and Executive desire for Railway to employ Executive
for the period and on the terms and conditions set forth in this Agreement and  
to provide an incentive to Executive to remain in the employ of Railway         
hereafter, particularly in the event of any Change in Control of KCSI (as       
herein defined), thereby establishing and preserving continuity of management of
Railway.                                                                        
 NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Railway and Executive as follows: 
 1.   Employment.  Railway hereby employs Executive as its President and
Chief Executive Officer, to have general supervision over, responsibility for   
and control of the day-to-day business and affairs of Railway, subject to the   
powers vested in the Board of Directors of Railway (the "Board") and in the     
stockholder of Railway.  The Executive shall have such other powers, duties and 
responsibilities consistent with his position as President and Chief Executive  
Officer of Railway as may be prescribed from time to time by the Board.         
Executive shall faithfully perform his duties under this Agreement to the best  
of his ability in accordance with the reasonable directions of the Board and    
shall devote all of his working time and efforts to the business and affairs    
of Railway and its affiliates; provided, however, that to an extent             
consistent with the needs of Railway and its affiliates, Executive shall be     
entitled to expend a reasonable amount of time on civic and philanthropic       
activities and the management of personal and family investments.               
2.   Compensation.                                                    
        (a)  Base Compensation.  Railway shall pay Executive as compensation
for his services hereunder an annual base salary at the rate of Five Hundred    
Thousand Dollars ($500,000.00), to be paid in equal installments on Railway's   
normal payroll dates.                                                           
    (b)  Incentive Compensation.  During the term of this Agreement,
Executive shall not be entitled to participate in the KCSI or Railway Incentive 
Compensation Plan.  In lieu thereof:                                            
        (I) Executive may receive a cash bonus up to $500,000 for the period
    from the date of this Agreement through December 31, 1995 as determined in
  the sole discretion of the KCSI Board of Directors.  Such bonus shall be
payable within 60 days after December 31, 1995.                       
  (ii) For the period January 1, 1996 through December 31, 1998,
  Executive shall have the right to earn Performance Shares under the KCSI
   Restated and Amended 1991 Stock Option and Performance Award Plan up to a
  total of 42,000 shares of KCSI common stock ("Performance Shares").  The
   right to earn such Performance Shares shall be based on performance goals
    which are established in part (60%) on the three year cumulative return on
Annual Average Capital Employed and in part (40%, annually awarded) on
growth in Net Income during each Annual Period commencing January 1,  
   1996.  The performance goals are to (A) exceed KCSR actual experience and
 (B) move toward meeting and exceeding industry average, with the actual
  targets to be approved by the KCSI Board of Directors in connection with
approval of a 1996-8 business plan to be developed by Executive.  For 
purposes of the performance goals to be established by the Board of   
Directors, the following definitions shall apply:                     
      Net Income shall mean after-tax net income as reported by the KCSI
  Transportation Division in accordance with generally accepted accounting
  principles, in effect for the applicable period, applied on a consistent
basis prior to financial statement classifications for discontinued   
operations, cumulative effect of changes in accounting principles,    
extraordinary items and prior period adjustments.                     
        Capital Employed shall mean the total of the Transportation Division
short term debt, long term debt and stockholder equity as reported in 
KCSI's quarterly financial statements.                                
       Average Annual Capital Employed shall mean the total of the Capital
Employed as of the end of each quarter in an Annual Period and the end
of the prior Annual Period, divided by five (5).                      
         Annual Period shall mean each period of January 1 through December 31
during the term of this Agreement, commencing January 1, 1996, or the 
  period of January 1, 1995 through December 31, 1995, as the case may be.
              (iii) In the event of termination of employment by reason of the
  death or disability of Executive or termination of Executive's
        employment by Railway or KCSI under Paragraph 4(C) of this Agreement
   other than at year-end, Executive shall be entitled to receive:
                (A)  A pro rata number of the Performance Shares awarded
           on the basis of growth in Net Income which could be earned in
         the Annual Period in which the termination occurs.  The Net
              Income during the portion of the Annual Period employed shall be
              annualized in computing annual Net Income growth, and the number
           of shares awarded shall be based on the portion of the Annual
        Period employed.  Growth in Net Income for a portion of an
          Annual Period shall be based on growth through the month-end
        which is closest to the date of termination of employment.
                (B)  A pro rata number of the Performance Shares awarded
             on the basis of Annual Average Capital Employed, computed using
           the cumulative return on Average Annual Capital Employed from
         January 1, 1996 through the date of termination.  Return on
            Average Annual Capital Employed for less than an Annual Period
          shall be based on the return through the end of the calendar
    quarter which is closest to the date of termination of
employment.                                       
    (C)  Stock Options.  As additional compensation for his services
hereunder, Executive has been granted an option to purchase a total of One      
Hundred Thousand (100,000) shares of common stock of KCSI on the terms and      
conditions set forth in the standard Stock Option Agreement approved by the     
Compensation Committee of KCSI, subject to the further provisions of this       
Paragraph 2(c).  The said option shall become exercisable on January 1, 1999,   
provided Executive remains employed by Railway through December 31, 1998.       
However, the option shall become exercisable early, subject to Executive's      
continued employment by Railway, in accordance with the following schedule if   
the common stock of KCSI shall have had a fair market value per share (based    
on closing price on the New York Stock Exchange) for at least thirty (30)       
consecutive trading days at or above the threshold prices set forth below:      

                                                                · Download Table
                                             
                         Number of Shares For
                         Which Option Becomes
Threshold Price           Exercisable Early  
                                             
     $50.00              33,333              
      60.00              33,333              
      70.00              33,334              

Provided Executive remains employed by Railway through December 31, 1998, the   
option shall become exercisable on January 1, 1999, but only for a period of    
thirty (30) days, with respect to any shares as to which the option shall not   
have previously become exercisable.  With respect to any shares as to which     
the option becomes exercisable prior to July 1, 1998, such exercisability       
shall continue for a period of ten (10) years from the date of grant of the     
option.                                                                         
    3.   Benefits.  During the term of his employment hereunder, Railway shall
provide Executive with coverage under such benefit plans and programs as are    
made generally available to executive employees of Railway, provided (a)        
Railway shall have no obligation with respect to any plan or program if         
Executive is not eligible for coverage thereunder, and (b) Executive            
acknowledges that stock options and other stock and equity participation        
awards are granted in the discretion of the KCSI Board of Directors or Compensa-
tion Committee 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.  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 and that Railway is under no obligation to continue 
in effect or to fund any such plan or program, except as provided in Paragraph 7
hereof.  Railway also shall reimburse Executive for ordinary and necessary      
travel and other business expenses in accordance with policies and procedures   
established by Railway.                                                         
4.   Term.                                                            
   (a)  Basic Term.  This Agreement shall continue in effect until
December 31, 1998, except that this Agreement and Executive's employment        
hereunder shall terminate automatically on the death or disability of Executive 
and may be terminated at an earlier time in accordance with Paragraph 4(b) or   
4(C) below.  For purposes of this Agreement, Executive shall be deemed to be    
disabled if he is unable to engage in a significant portion of his normal       
duties for Railway by reason of any physical or mental impairment which can     
be expected to result in death or which has lasted or can be expected to last   
for a continuous period of not less than six (6) months.                        
  (b)  Early Termination.  Prior to June 30, 1998, Executive may
terminate his employment upon any material breach of this Agreement by Railway  
or KCSI, and Railway or KCSI may terminate Executive's employment               
"for cause".  For purposes of this Agreement, termination "for cause" shall     
mean termination based upon any one or more of the following:                   
      (I)  Any material breach of this Agreement by Executive;
      (ii) Executive's dishonesty involving Railway or KCSI or
any subsidiary of Railway or KCSI;                                    
 (iii) Gross negligence or willful misconduct in the
performance of Executive's duties as determined in good faith by the  
Board;                                                                
    (iv) Willful failure by Executive to follow reasonable
instructions of the Board concerning the operations or business of    
Railway or any subsidiary of Railway;                                 
(v)  Executive's fraud or criminal activity; or   
 (vi) Embezzlement or misappropriation by Executive.
     (C)  Railway or KCSI may terminate this Agreement and Executive's
employment other than for cause immediately upon notice to Executive and in such
event, Railway shall provide severance benefits to Executive in accordance with 
Paragraph 5 below.                                                              
5.   Severance Payment.  In the event of termination of Executive's   
employment under Paragraph 4(C) of this Agreement, Railway shall continue, for a
period of twenty-four (24)months following such termination, (I) to pay to      
Executive as severance pay a monthly amount equal to one-twelfth (1/12th) of the
annual base salary provided for in Section 2(a) of this Agreement, and, (ii) to 
reimburse Executive for the cost (including state and federal income taxes      
payable with respect to this reimbursement) of obtaining comparable coverage to 
the health and life insurance provided under this Agreement, unless Executive is
provided comparable coverage in connection with other employment.  The foregoing
obligations of Railway shall continue until the end of the said twenty-four (24)
month 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).  After termination of           
employment, Executive shall not be entitled to accrue or receive benefits under 
the KCSI Executive Plan or the KCSI Incentive Compensation Plan with respect    
to the severance pay provided herein, notwithstanding that benefits under       
such plans then are still generally available to executive employees of         
Railway; contributions and benefits under such plans, if any, with respect to   
the year of termination shall be based solely upon compensation paid to         
Executive for periods prior to termination.  In the year of termination,        
Executive shall be entitled to participate in the KCSI Profit Sharing Plan and  
the KCSI Employee Stock Ownership Plan (if Railway employees then still         
participate in such plans) only if the Executive meets all requirements of such 
plans for participation in such year.                                           
6.   Non-Disclosure; Duties; Survival.                                
      (a)  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 or Railway 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 6 by Executive, Railway shall be entitled to terminate any and all    
remaining severance benefits under Paragraph 5 above and shall be entitled to   
pursue such other legal and equitable remedies as may be available.             
        (b)  Duties.  Upon termination of this Agreement by KCSI, Railway or
Executive for any reason, Executive shall immediately return to KCSI or Railway 
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 required by KCSI or Railway and shall sign such    
other documents and papers relating to Executive's employment, benefits and     
benefit plans as KCSI or Railway may reasonably request.                        
     (C)  Survival.  The provisions of Paragraphs 6(a) and (b) of this
Agreement shall survive any termination of this Agreement by KCSI, Railway or   
Executive, and the provisions of Paragraph 5 shall survive any termination of   
this Agreement as to which Paragraph 5 is applicable.                           
7.   Continuation of Employment Upon Change in Control.               
         (a)  Continuation of Employment.  Subject to the terms and conditions
of this Agreement, in the event of a Change in Control of KCSI (as defined in   
Paragraph 7(d)) at any time during the term of this Agreement, Executive will   
remain in the employ of Railway for a period of an additional three years from  
the date of such Change in Control (the "Control Change Date").  In the event of
a Change in Control of KCSI, subject to the terms and conditions of this        
Agreement, Railway shall, for the three year period (the "Three-Year Period")   
immediately following the Control Change Date, continue to employ Executive at  
not less than the executive capacity Executive held immediately prior to the    
Change in Control of KCSI.  During the Three-Year Period, Railway shall continue
to pay Executive salary on the same basis, at the same intervals, and at a rate 
not less than that, paid to Executive at 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 plans (together, the "Specified Benefits") in existence, and in       
accordance with the terms thereof, at the Control Change Date:                  
(I)  any incentive compensation plan;             
(ii) any benefit plan, and trust fund associated  
therewith, related to (A) life, health, dental, disability, or        
accidental death and dismemberment insurance, (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 (E) tax favored employee stock ownership (such as 
under ESOP, TRASOP, TCESO or PAYSOP programs); and                    
    (iii) any other benefit plans hereafter made generally
available to executives of Executive's level or to the employees of   
Railway generally.                                                    
In addition, on the Control Change Date, all 42,000 Performance Shares shall    
become fully vested without regard to any performance goals yet to be achieved  
and all outstanding options held by Executive under any stock option plan of    
KCSI or its affiliates shall become immediately exercisable, except that no     
option may be exercised earlier than permitted by the governing stock option    
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 as a general obligation of Railway which has not been separately funded
(including specifically, but not limited to, those referred to under Paragraphs 
7(b)(I) and 7(b)(ii)(D) above), Executive shall receive within five (5) days    
after such date full payment in cash (discounted to then present value on the   
basis of a rate of 7.5 percent per annum) of all amounts to which he is then    
entitled thereunder.                                                            
      (d)  Change in Control of KCSI.  For purposes of this Agreement, a
"Change in Control of KCSI" shall be deemed to have occurred if (a) for any     
reason at any time less than seventy-five percent (75%) of the members of the   
Board of Directors of KCSI (the "KCSI Board") shall be individuals who were     
members of the KCSI Board on the date of this Agreement or 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 this     
Agreement, or (b) 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")) shall have     
become, according to a public announcement or filing, without the prior approval
of the KCSI Board, the "beneficial owner" (as defined in Rule 13d-3 under the   
Exchange Act), directly or indirectly, of securities of KCSI representing       
thirty percent (30%) (forty percent (40%) with respect to Paragraph 7(C)        
hereof) or more (calculated in accordance with Rule 13d-3) of the combined      
voting power of KCSI's then outstanding voting securities (such "person"        
hereafter referred to as a "Major Stockholder"); or (C) the stockholders of KCSI
shall have approved a merger, consolidation or dissolution of KCSI or a sale,   
lease, exchange or disposition of all or substantially all of KCSI's assets, or 
a Major Stockholder shall have proposed any such transaction, unless any such   
merger, consolidation, dissolution, sale, lease, exchange or disposition shall  
have been approved by a least seventy-five percent (75%) of the members of the  
KCSI Board who were either (I) members of the KCSI Board on the date of this    
Agreement or (ii) elected or nominated by 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 this Agreement.                                            
         (e)  Termination After Control Change Date. Notwithstanding any other
provision of this Agreement, at any time after the Control Change Date, Railway 
may, through its Board, terminate the employment of Executive (the              
"Termination"), but within five (5) days of the Termination it 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 then present value on the basis of a rate of      
7.5% per annum) of his annual base salary in effect at Termination multiplied   
by the number of years and any portion thereof remaining in the Three-Year      
Period (or if the balance of the Three-Year Period after Termination is less    
than one year, for one year, [hereinafter called the "Extended Period"]).       
Specified Benefits to which Executive was entitled immediately prior to         
Termination shall continue until the end of the Three-Year Period (or the       
Extended Period, if applicable); provided that:  (a) if any plan pursuant to    
which Specified Benefits are provided immediately prior to Termination would not
permit continued participation by Executive after Termination, then Railway     
shall pay to Executive within five (5) days after Termination a lump sum payment
equal to the amount of Specified Benefits Executive would have received if      
Executive had been fully vested and a continuing participant in such plan to    
the end of the Three-Year Period or the Extended Period, if applicable; and     
(b) if Executive obtains new employment following Termination, then following   
any waiting period applicable to participation in any plan of the new           
employer, Executive shall continue to be entitled to receive benefits           
pursuant to this sentence only to the extent such benefits would exceed those   
available to Executive under comparable plans of the Executive's new employer   
(but Executive shall not be required to repay any amounts then already received 
by him).                                                                        
         (f)  Resignation After Control Change Date.  In the event of a Change
in Control of KCSI, thereafter, upon good reason (as defined below), Executive  
may, at any time during the Three-Year Period or the Extended Period, in his    
sole discretion, on not less than thirty (30) days' written notice to the       
Secretary of Railway and effective at the end of such notice period, resign his 
employment with Railway (the "Resignation").  Within five (5) days of such a    
Resignation, Railway shall pay to Executive his full base salary through the    
effective date of such Resignation, to the extent not theretofore paid, plus a  
lump sum amount equal to the Special Severance Payment (computed as provided in 
the first sentence of Paragraph 7(e), except that for purposes of such          
computation all references to "Termination" shall be deemed to be references to 
"Resignation").  Upon Resignation of Executive, Specified Benefits to which     
Executive was entitled immediately prior to Resignation shall continue on the   
same terms and conditions as provided in Paragraph 7(e) in the case of          
Termination (including equivalent payments provided for therein). For           
purposes of this Agreement, Executive shall have "good reason" if there occurs  
without his consent (a) a reduction in the character of the duties assigned to  
Executive or in Executive's level of work responsibility or conditions; (b) a   
reduction in Executive's base salary as in effect immediately prior to the      
Control Change Date or as the same may have been increased thereafter; (c) a    
failure by Railway or its successor to (I) continue any of the plans of the     
type referred to in Paragraph 7(b) which shall have been in effect at the       
Control Change Date (including those providing for Specified Benefits) or to    
continue Executive as a participant in any of such plans on at least the basis  
in effect immediately prior to the Control Change Date; or (ii) provide other   
plans under which at least equivalent compensation and benefits are available   
and in which Executive continues to participate on a basis at least equivalent  
to his participation in the Railway plans in effect immediately prior to the    
Control Change Date; or (iii) to make the payment required under Paragraph 7(c);
(d) the relocation of the principal executive offices of Railway or its         
successor to a location outside the metropolitan area of Kansas City,           
Missouri or requiring Executive to be based anywhere other than Railway's       
principal executive office except for required travel on Railway's business     
to an extent substantially consistent with Executive's obligations              
immediately prior to the Control Change Date; or (e) any breach by Railway of   
this Agreement to the extent not previously specified.                          
          (g)  Termination for Cause After Control Change Date.  Notwithstanding
any other provision of this Agreement, at any time after the Control Change     
Date, Executive may be terminated by Railway "for cause" without notice and     
without any payment hereunder only if such termination is for an act of         
dishonesty by Executive constituting a felony under the laws of the State of    
Missouri which resulted or was intended to result in gain or personal enrichment
of Executive at Railway's expense.                                              
        (h)  Gross-Up Provision.  If any portion of any payments received by
Executive from Railway on or after the Control Change Date (whether payable     
pursuant to the terms of this Agreement or any other plan, agreement or         
arrangement with KCSI, its successors or any person whose actions result in a   
Change of Control), shall be subject to the tax imposed by Section 4999 of the  
Internal Revenue Code of 1986, as amended, or any successor statutory provision 
("Parachute Payments"), Railway shall pay to Executive, within five (5) days of 
Executive's Termination or Resignation such additional amounts as are necessary 
so that, after taking into account any tax imposed by such Section 4999 or any  
successor statutory provision on any such Parachute Payments (as well as any    
income tax or Section 4999 tax on payments made pursuant to this sentence),     
Executive is in the same after-tax position that Executive would have been in   
if such Section 4999 or any successor statutory provision did not apply and no  
payments were made pursuant to this sentence.                                   
(I)  Mitigation and Expenses.                               
    (a)  Other Employment.  After the Control Change Date,
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 expressly set forth herein 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.                                                            
    (b)  Expenses.  If any dispute should arise under this
Agreement after the Control Change Date involving an effort by        
Executive to protect, enforce or secure rights or benefits claimed by 
Executive hereunder, Railway shall pay (promptly upon demand by       
Executive accompanied by reasonable evidence of incurrence) all       
reasonable expenses (including attorneys' fees) incurred by Executive 
in connection with such dispute, without regard to whether Executive  
prevails in such dispute except that Executive shall repay Railway any
amounts so received if a court having jurisdiction shall make a final,
nonappealable determination that Executive acted frivolously or in bad
faith by such dispute.  To assure Executive that adequate funds will  
be made available to discharge Railway's obligations set forth in the 
preceding sentence, Railway has established a trust and upon the      
 occurrence of a Change in Control of KCSI shall promptly deliver to the
trustee of such trust to hold in accordance with the terms and        
conditions thereof that sum which the Board shall have determined is  
reasonably sufficient for such purpose.                               
          (j)  Successors in Interest.  The rights and obligations of Executive,
Railway and KCSI under this Paragraph 7 shall inure to the benefit of and be    
binding in each and every respect upon the direct and indirect successors and   
assigns of Railway, KCSI and Executive, regardless of the manner in which such  
successors of assigns shall succeed to the interest of Railway, KCSI or         
Executive hereunder, and this Paragraph 7 shall not be terminated by the        
voluntary or involuntary dissolution of Railway or KCSI or by any merger or     
consolidation or acquisition involving Railway or KCSI, or upon any transfer    
of all or substantially all of Railway's or KCSI'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 Paragraph 7      
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.                                                                    
          (k)  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.   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 telecopy or deposited in the United     
States mail by certified or registered mail, postage prepaid, addressed, in the 
case of Railway, to Railway, 114 West 11th Street, Kansas City, Missouri 64105, 
Attention: Secretary, or, in the case of the Executive, to him at 1188 Hobson   
Mill Drive, Naperville, Illinois 60540 and a copy to Robert H. Wheeler,         
Oppenheimer, Wolff and Donnelly, 180 N. Stetson, Two Prudential Plaza, Suite    
4500, Chicago, Illinois 60601, or to such other address as a party shall        
designate by notice to the other party.                                         
   9.   Amendment.  No provision of this Agreement may be amended, modified,
waived or discharged unless such amendment, waiver, modification or discharge is
approved by the Board and agreed to in a writing signed by Executive and such   
officer as may be specifically authorized by the Board.  No waiver by either    
party hereto at any time of any breach by the other 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.        
10.  Successors and Assigns; Assignment by Executive Prohibited.  The 
rights and obligations of Railway under this Agreement shall inure to the       
benefit of and shall be binding upon the successors and assigns of Railway.     
Except as provided in Paragraph 7(j), neither this Agreement nor any of the     
payments or benefits hereunder may be pledged, assigned or transferred by       
Executive either in whole or in part in any manner, without the prior written   
consent of Railway.                                                             
  11.  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.                                          
  12.  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.
 13.  Entire Agreement.  This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior and contemporaneous agreements and understandings, both written and 
oral, between the parties with respect to the subject matter hereof.            
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.                                                   

          THE KANSAS CITY SOUTHERN RAILWAY COMPANY

            By________________________________________
              Landon H. Rowland, Chairman of the Board

       KANSAS CITY SOUTHERN INDUSTRIES, INC.

            By________________________________________
  Landon H. Rowland, President

            __________________________________________
Michael R. Haverty            

Dates Referenced Herein   and   Documents Incorporated By Reference

This 10-Q Filing		Date		Other Filings
		1/1/95
For The Period Ended		6/30/95		10-Q/A
Filed On / Filed As Of		8/10/95
		12/31/95		10-K/A, 10-K405
		1/1/96
		6/30/98		10-Q
		7/1/98		DEFA14A
		12/31/98		10-K/A, 10-K
		1/1/99
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