EMPLOYMENT AGREEMENT



               AGREEMENT by and between CSX Corporation,  a Virginia corporation
(the  "Company") and Alvin R. Carpenter (the  "Executive")  dated as of the 15th
day of June, 1999.

               WHEREAS,  Section  11  of  the  CSX  Corporation  1987  Long-Term
Performance Stock Plan ("1987 Plan") provides that the Compensation Committee of
the Board of Directors of CSX Corporation  ("Committee") may, in its discretion,
set forth in a written  agreement with  Executive  conditions,  restrictions  or
limitations upon the grant of a Restricted Stock Award ("RSA") which differ from
the terms set forth in the 1987 Plan;

               WHEREAS, the RSA grant hereunder is made pursuant to the 1987
Plan and this Agreement;

               NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.      Effective Date.  The "Effective Date" shall mean June 30, 1999.
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2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive  hereby agrees to enter into the employ of the Company  subject to the
terms and conditions of this Agreement,  for up to 3 years, as determined by the
Board of Directors,  commencing on the Effective  Date and ending not later than
the third anniversary thereof ("Employment Period").

3.      Terms of Employment.  (a)  Position and Duties.  (i) During the
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Employment Period, the Executive shall serve as a senior executive officer of
the Company with such authority, duties and responsibilities as are
commensurate with such position and as may be consistent with such position,
including the smooth transition of leadership at CSX Transportation, Inc.

(ii)During the Employment Period, and excluding any periods of vacation and sick
leave to which  the  Executive  is  entitled,  the  Executive  agrees  to devote
substantially  all of his attention and time during normal business hours to the
business  and affairs of the Company  and CSXT and, to the extent  necessary  to
discharge the responsibilities  assigned to the Executive hereunder,  to use the
Executive's  reasonable best efforts to perform  faithfully and efficiently such
responsibilities.  During the  Employment  Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate,  civic or charitable
boards or committees,  (B) deliver  lectures,  fulfill  speaking  engagements or
teach at educational  institutions and (C) manage personal investments,  so long
as such  activities do not  significantly  interfere with the performance of the
Executive's  responsibilities  as an employee of the Company in accordance  with
this Agreement.

(b) Compensation.  (i) Base Salary.  During the Employment Period, the Executive
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shall  receive an annual base salary  ("Annual Base Salary") of no less than the
base salary  paid to the  Executive  immediately  prior to the  Effective  Date.
During the  Employment  Period,  the Annual  Base  Salary  shall be  reviewed in
accordance  with the  Company's  current  practice.  Any increase in Annual Base
Salary shall not serve to limit or reduce any other  obligation to the Executive
under this  Agreement.  Annual Base Salary  shall not be reduced  after any such
increase  and the term Annual Base  Salary as utilized in this  Agreement  shall
refer to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated  companies" shall include any company  controlled by, controlling or
under common control with the Company.

(ii)   Annual Bonus.  During the Employment Period, the Executive shall be
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eligible to receive an annual cash bonus  ("Annual  Bonus") on the same basis as
immediately prior to the Effective Date.

(iii) Incentive  Awards.  In addition to the Executive's  participation in stock
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and other  long-term  incentive  programs of the Company,  the  Executive  shall
receive a grant of 150,000 shares of restricted  Company common stock subject to
the conditions described below (the "Restricted Shares").  The Restricted Shares
shall be granted to the Executive  upon his  certification  that he has acquired
since April 27, 1999,  150,000 shares of the Company's  common stock.  Except as
otherwise  provided herein,  the Restricted  Shares shall vest at the end of the
Employment  Period,  or at such  earlier  time  as  provided  by the  Committee,
provided  that the Company's  average free  cash-flow per share on an annualized
basis, as adjusted for any  extraordinary  events,  during such period is higher
than its free cash-flow per share, as adjusted for any extraordinary events, for
the four  consecutive  quarters  ending  March  26,  1999.  Notwithstanding  the
foregoing,  the  Restricted  Shares  shall  vest upon a Change of Control of the
Company, as defined in the Company's 1987 Plan.

(iv)  Retirement.  The Executive  shall be provided with pension  benefits as in
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effect immediately prior to the Effective Date, but in addition he shall receive
for  pension  purposes  only,  credit for 1/36th of the value of the  Restricted
Shares as of the date of grant for each month actually  worked  pursuant to this
Agreement  after the  Effective  Date.  Such amount shall be treated as if being
paid as a cash bonus, for the purpose of pension  computation only, ratably over
a period equal to the period actually worked pursuant to this Agreement.

(v) Other  Employee  Benefit  Plans.  During the  Employment  Period,  except as
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otherwise  expressly  provided  herein,  the  Executive  shall  be  entitled  to
participate in all employee benefit, welfare, vacation, fringe benefit and other
plans, practices,  policies and programs as provided to him immediately prior to
the Effective Date.

4.  Termination  of  Employment.   (a)  Death  or  Disability.  The  Executive's
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employment shall terminate  automatically  upon the Executive's death during the
Employment  Period. If the Company  determines in good faith that the Disability
of the  Executive has occurred  during the  Employment  Period  (pursuant to the
definition  of  "Disability"  set  forth in the 1987  Plan),  it may give to the
Executive  written notice in accordance  with Section 10(b) of this Agreement of
its  intention to  terminate  the  Executive's  employment.  In such event,  the
Executive's  employment with the Company shall  terminate  effective on the 30th
day after receipt of such notice by the  Executive  (the  "Disability  Effective
Date"),  provided  that,  within the 30 days after such  receipt,  the Executive
shall not have returned to full-time performance of the Executive's duties.

(b)    Cause.  The Company may terminate the Executive's employment during the
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Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:

(i)  the  continued  failure  of the  Executive  to  perform  substantially  the
Executive's  duties  with the Company or one of its  affiliates  (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written  demand for  substantial  performance is delivered to the Executive by
the Board which  specifically  identifies the manner in which the Board believes
that the Executive has not substantially performed the Executive's duties, or

(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company, or

(iii)  conviction of a felony or guilty or nolo contendere plea by the Executive
with respect thereto.

For  purposes  of this  provision,  no act or failure to act, on the part of the
Executive,  shall be  considered  "willful"  unless it is done, or omitted to be
done,  by the  Executive  in bad faith or  without  reasonable  belief  that the
Executive's  action or omission was in the best  interests  of the Company.  Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the  Company  shall
be conclusively  presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.

(c) Good Reason.  The Executive's  employment may be terminated by the Executive
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for Good Reason. For purposes of this Agreement, "Good Reason" shall mean in the
absence of a written consent of the Executive,  a material breach by the Company
of a material term of this Agreement,  after the Executive has given the Company
notice thereof and a reasonable opportunity to cure.

(d) Notice of  Termination.  Any termination by the Company for Cause, or by the
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Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 10(b) of this Agreement. For
purposes of this  Agreement,  a "Notice of  Termination"  means a written notice
which (i) indicates the specific termination  provision in this Agreement relied
upon, (ii) to the extent  applicable,  sets forth in reasonable detail the facts
and circumstances  claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined  below) is other than the date of receipt of such notice,  specifies
the  termination  date  (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination  any fact or  circumstance  which  contributes to a
showing of Good  Reason or Cause shall not waive any right of the  Executive  or
the Company,  respectively,  hereunder or preclude the Executive or the Company,
respectively,  from  asserting  such  fact  or  circumstance  in  enforcing  the
Executive's or the Company's rights hereunder.

(e) Date of  Termination.  "Date of  Termination"  means (i) if the  Executive's
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employment is terminated by the Company for Cause,  or by the Executive for Good
Reason,  the date of  receipt  of the  Notice of  Termination  or any later date
specified therein within 30 days of such notice, as the case may be, (ii) if the
Executive's  employment  is  terminated  by the Company  other than for Cause or
Disability,  the Date of  Termination  shall be the  date on which  the  Company
notifies  the  Executive  of  such  termination  and  (iii)  if the  Executive's
employment  is  terminated  by  reason  of  death  or  Disability,  the  Date of
Termination  shall  be the  date of death  of the  Executive  or the  Disability
Effective Date, as the case may be.

5.      Obligations of the Company upon Termination.  (a) Good Reason; Other
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Than for Cause, Death or Disability.  If, during the Employment Period, the
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Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive's employment is terminated by reason of his death,
or the Executive shall terminate employment for Good Reason:

(i) the Company  shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the sum of (1) the Executive's  Annual Base Salary
through the Date of Termination to the extent not theretofore  paid, and (2) the
product of (x) the highest  annual  bonus paid to the  Executive  for any of the
three years prior to the Effective  Date (the "Recent  Annual  Bonus") and (y) a
fraction,  the  numerator  of which is the number of days in the fiscal  year in
which the Date of Termination  occurs through the Date of  Termination,  and the
denominator  of which is 365,  in each case to the extent not  theretofore  paid
(the sum of the amounts  described in clauses (1) and (2),  shall be hereinafter
referred to as the "Accrued Obligations"); and

(ii) until June 30,  2002,  the Company  shall  continue to provide  medical and
dental  benefits to the Executive,  his spouse and dependents on a basis as such
benefits  are  provided  to the  Executive's  successor  (collectively  "Medical
Benefits");

(iii)the Restricted Shares shall vest immediately; and

(iv) to the extent not  theretofore  paid or provided by the Company or deferred
by  Executive,  the  Company  shall  pay on a  timely  basis or  provide  to the
Executive any other amounts or benefits required to be paid or provided or which
the Executive is eligible to receive under any plan, program, policy or practice
or contract or agreement of the Company and its affiliated companies through the
Date of  Termination  (such other  amounts  and  benefits  shall be  hereinafter
referred to as the "Other Benefits").

(b)  Death.  If the  Executive's  employment  is  terminated  by  reason  of the
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Executive's death during the Employment  Period,  this Agreement shall terminate
without further obligations to the Executive's legal  representatives under this
Agreement,  other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits.  In addition,  the Restricted  Shares shall vest
immediately. Accrued Obligations, Other Benefits and the Restricted Shares shall
be paid or distributed to the Executive's estate or beneficiary,  as applicable,
within 30 days of the Date of Termination. The Accrued Obligations shall be paid
in a lump sum. With respect to the provision of Other  Benefits,  the term Other
Benefits as utilized in this Section  5(b) shall  include  death  benefits as in
effect on the date of the  Executive's  death  and the  continued  provision  of
Medical Benefits to the Executive's current spouse and dependents (as defined in
the CSX Medical Plan).

(c)  Disability.  If the  Executive's  employment is terminated by reason of the
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Executive's  Disability  during the  Employment  Period,  this  Agreement  shall
terminate without further  obligations to the Executive,  other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits. In
addition,  the Restricted  Shares shall vest immediately.  Accrued  Obligations,
Other  Benefits and the  Restricted  Shares shall be paid or  distributed to the
Executive  within 30 days of the Date of  Termination.  The Accrued  Obligations
shall be paid in a lump sum.  With respect to the  provision of Other  Benefits,
the term Other Benefits as utilized in this Section 5(c) shall include,  and the
Executive  shall be entitled  after the  Disability  Effective  Date to receive,
disability  and  other  benefits  as in effect  at any time  thereafter  and the
continued  provision of Medical Benefits to the Executive and his current spouse
and dependents (as defined in the CSX Medical Plan).

(d) Cause;  Other than for Good Reason.  If the Executive's  employment shall be
    ----------------------------------
terminated for Cause or the Executive  terminates  his  employment  without Good
Reason during the Employment  Period,  this Agreement  shall  terminate  without
further  obligations  to the Executive  other than the  obligation to pay to the
Executive (x) his Annual Base Salary  through the Date of  Termination,  and (y)
Other Benefits, in each case to the extent theretofore unpaid.

6. Non-exclusivity of Rights. Except as specifically  provided,  nothing in this
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Agreement  shall  prevent  or  limit  the   Executive's   continuing  or  future
participation in any plan,  program,  policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 10(f),  shall anything herein limit or otherwise  affect such
rights as the  Executive  may have  under any  contract  or  agreement  with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the  Executive is otherwise  entitled to receive  under any plan,  policy,
practice or program of or any contract or  agreement  with the Company or any of
its affiliated  companies at or subsequent to the Date of  Termination  shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

7. Full Settlement.  The Company's  obligation to make the payments provided for
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in this Agreement and otherwise to perform its  obligations  hereunder shall not
be affected by any set-off,  counterclaim,  recoupment,  defense or other claim,
right or action which the Company may have against the  Executive or others.  In
no event shall the  Executive be obligated to seek other  employment or take any
other action by way of mitigation of the amounts  payable to the Executive under
any of the  provisions of this  Agreement and, such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
as  incurred,  to the full extent  permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest  (regardless
of the outcome thereof) by the Company,  the Executive or others of the validity
or enforceability of, or liability under, any provision of this Agreement or any
guarantee of  performance  thereof  (including as a result of any contest by the
Executive about the amount of any payment pursuant to this  Agreement),  plus in
each case  interest  on any  delayed  payment  at the  applicable  Federal  rate
provided for in Section  7872(f)(2)(A)  of the Internal Revenue Code of 1986, as
amended (the "Code").

8.  Confidential  Information.  (a) The  Executive  shall  hold  in a  fiduciary
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capacity for the benefit of the Company all secret or confidential  information,
knowledge or data  relating to the Company or any of its  affiliated  companies,
and their respective businesses, which shall have been obtained by the Executive
during  the  Executive's  employment  by the  Company  or any of its  affiliated
companies and which shall not be or become public  knowledge (other than by acts
by the  Executive  or  representatives  of the  Executive  in  violation of this
Agreement).  After  termination of the Executive's  employment with the Company,
the Executive shall not,  without the prior written consent of the Company or as
may otherwise be required by law or legal  process,  communicate  or divulge any
such  information,  knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted  violation of the  provisions of
this  Section 8  constitute a basis for  deferring  or  withholding  any amounts
otherwise payable to the Executive under this Agreement.

               (b) In the event of a breach or threatened breach of this Section
8, the Executive agrees that the Company shall be entitled to injunctive  relief
in a court of appropriate  jurisdiction  to remedy any such breach or threatened
breach,  the  Executive  acknowledges  that  damages  would  be  inadequate  and
insufficient.

(c) Any  termination of the  Executive's  employment or of this Agreement  shall
have no effect on the continuing operation of this Section 8.

9.      Successors.  (a) This Agreement is personal to the Executive and without
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the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

               (b) This  Agreement  shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

(c) The Company  will require any  successor  (whether  direct or  indirect,  by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business  and/or assets of the Company to assume  expressly and agree to perform
this  Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement,  "Company"  shall mean the  Company as  hereinbefore  defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

10.     Miscellaneous.  (a)  This Agreement shall be governed by and construed
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in accordance with the laws of the Commonwealth of Virginia, without reference
to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

               (b) All notices and other  communications  hereunder  shall be in
writing and shall be given by hand  delivery to the other party or by registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:

               If to the Executive:

               Alvin R. Carpenter
               home address

               If to the Company:

               CSX Corporation
               901 E. Cary Street
               Richmond, VA  23219
               Attention:  Corporate Secretary

or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

(c) The invalidity or  unenforceability of any provision of this Agreement shall
not  affect  the  validity  or  enforceability  of any other  provision  of this
Agreement.

(d) The Company may withhold from any amounts  payable under this Agreement such
Federal,  state,  local or foreign  taxes as shall be  required  to be  withheld
pursuant to any applicable law or regulation.

(e) The  Executive's or the Company's  failure to insist upon strict  compliance
with any  provision  of this  Agreement  or the  failure to assert any right the
Executive or the Company may have  hereunder  shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.

(f) This  Agreement  does not supersede  the  Employment  Agreement  between the
parties dated February 1, 1995 (the "Existing Agreement"),  except to the extent
that  this  Agreement  and the  Existing  Agreement  would  provide  duplicative
benefits.

(g) The  provisions  of the 1987 Plan  shall  apply to the  extent  they are not
inconsistent  with the terms of this Agreement,  in which case the terms of this
Agreement shall be controlling.


               IN  WITNESS   WHEREOF,   the   Executive  has  hereunto  set  the
Executive's hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these  presents to be executed in its name on its behalf,
all as of the day and year first above written.


                                                   /s/ALVIN R. CARPENTER
                                                   -----------------------------
                                                   ALVIN R. CARPENTER


                                                   CSX CORPORATION


                                                   By:/s/JOHN W. SNOW
                                                      ---------------