Employment Agreement - CSX Corp. and Ronald J. Conway



June 19, 1998



                            PERSONAL AND CONFIDENTIAL


Mr. Donald D. Davis
Senior Vice President-Employee Relations
CSX Transportation
500 Water Street
Jacksonville, FL 32202

Dear Don:

Thank you for the many courtesies  during my recent visit to CSX and your letter
of June 11, 1998.

I am most anxious to begin my employment with CSX and look forward to seeing you
on  Monday,  June  22,  1998,  to  begin  what  I am  confident  will  be a very
challenging and rewarding experience with CSX.

This letter  will  confirm my  understanding  of your oral offer and your letter
dated June 11, 1998. I understand that effective June 22, 1998, I shall join CSX
as Executive Vice President of Operations.  I understand  that CSX is committing
to and will be compensating me on an annual basis for 1998,  1999, and 2000 with
a compensation  package totaling  $1,000,000 which includes base salary,  annual
bonus, and annual performance share awards as detailed below.

        ANNUAL BASE SALARY                  $300,000.00 paid yearly at the rate
                                            of $25,000.00 per month

        ANNUAL BONUS OPPORTUNITY            80% of annual earnings
                                            ($240,000.00);   may   be  increased
                                            by an  additional  25% if  CSX
                                            exceeds  its  annual  financial
                                            objectives.

                                            If  deferred,  at my option,  in CSX
                                            stock until  retirement/termination,
                                            a 25%  premium  will  be paid in the
                                            form  of CSX  stock  on any  portion
                                            deferred.


Donald D. Davis
June 19, 1998
Page 2



        ANNUAL PERFORMANCE AND              8,000 to 10,000 Shares of CSX
        SHARE AWARD                         stock to be awarded annually (actual
                                            award will depend on  stock price at
                                            time of award to produce annual
                                            compensation of $1,000,000.00)

        ANNUAL                              STOCK OPTION GRANT 20,000  Shares of
                                            CSX  stock  options  to  be  awarded
                                            annually.

I also understand that other perquisites will include:

        Executive  Automobile  Program  ($600.00 per month plus  insurance) Mayo
        Clinic  Annual  Executive   Physical  Program  Country  Club  Membership
        (initiation  fees and annual  dues at club of my choice)  Executive  Tax
        Preparation  Program  through my  current  provider  CSX Hotel  Discount
        Program (The Greenbrier and Grand Teton Lodge) Estate Planning  Services
        through my current provider.

In  addition  to the above,  as an  employee  of CSX, I  understand  that I will
receive all other  employment  benefits  and be eligible to  participate  in all
employment  benefit  plans  ordinarily  and  customarily   provided  for  senior
executives of CSX at a comparable level in the organization.

For purposes of my  participation  in the CSX Pension  Plan,  the three years of
pension  credit that I am entitled to receive  pursuant to my Conrail  Change of
Control Agreement shall be credited to me.

If my employment is terminated by CSX at any time prior to January 1, 2001,  CSX
shall provide me with  severance  pay and  continuation  of employment  benefits
until  January  1,  2001 at the  same  level of total  annual  compensation  and
employment  benefits as I was receiving  immediately prior to the termination of
my employment.


Donald D. Davis
June 19, 1998
Page 3


If I have accurately summarized the employment terms being offered to me by CSX,
please sign a copy of this letter and return it to me.

Very truly yours,


/s/RONALD J. CONWAY
-------------------
Ronald J. Conway



Understood and Agreed
by CSX Transportation


/s/DONALD D. DAVIS
------------------
Donald D. Davis
Senior Vice President-
Employee Relations
CSX Transportation