Filed Pursuant to Rule 424(b)(5)
Registration No. 333-60134
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 17, 2001)
$400,000,000
[LOGO]
CSX CORPORATION
6.30% Notes due 2012
_______________
The Notes will bear interest at the rate of 6.30% per year. Interest on the
Notes is payable on March 15 and September 15 of each year, beginning on
September 15, 2002. The Notes will mature on March 15, 2012. We may redeem some
or all of the Notes at any time. The redemption prices are discussed under the
caption "Description of the Notes -- Optional Redemption."
The Notes will be senior obligations of our company and will rank equally
with all of our other unsecured senior indebtedness.
CSX will not make application to list the Notes on any securities exchange
or to include them in any automated quotation system.
_______________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the related prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
_______________
Per Note Total
- -------- ------------
Public Offering Price 99.690% $398,760,000
Underwriting Discount 0.650% $ 2,600,000
Proceeds to CSX (before expenses) 99.040% $396,160,000
Interest on the Notes will accrue from March 8, 2002 to the date of delivery.
_______________
The underwriters expect to deliver the Notes to purchasers on or about March
8, 2002.
_______________
Salomon Smith Barney
Credit Suisse First Boston
JPMorgan
Mizuho International plc
Scotia Capital
Banc One Capital Markets, Inc.
BNY Capital Markets, Inc.
PNC Capital Markets, Inc.
Tokyo-Mitsubishi International plc
Wachovia Securities
March 5, 2002
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should not
assume that the information contained in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the
front cover of this prospectus supplement.
-----------------
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Special Note Regarding Forward-Looking Statements.................................................... S-3
Where You Can Find More Information.................................................................. S-3
CSX Corporation...................................................................................... S-4
Use of Proceeds...................................................................................... S-5
Ratio of Earnings to Fixed Charges................................................................... S-5
Description of Notes................................................................................. S-6
Underwriting......................................................................................... S-11
Legal Matters........................................................................................ S-12
Prospectus
About This Prospectus................................................................................ 2
Where You Can Find More Information.................................................................. 3
CSX Corporation...................................................................................... 4
CSX Capital Trust I.................................................................................. 5
Forward-Looking Statements........................................................................... 6
Ratio of Earnings to Fixed Charges................................................................... 6
Use of Proceeds...................................................................................... 7
Description of Debt Securities....................................................................... 8
Additional Terms of Subordinated Debt Securities..................................................... 21
Description of Trust Preferred Securities............................................................ 23
Description of the Guarantee......................................................................... 32
Relationship Among the Trust Preferred Securities, the Guarantee and the Subordinated Debt Securities
Held by the Trust.................................................................................. 35
Accounting Treatment................................................................................. 35
Description of Capital Stock......................................................................... 36
Description of Depositary Shares..................................................................... 40
Description of Securities Warrants................................................................... 41
Plan of Distribution................................................................................. 42
Legal Opinions....................................................................................... 43
Experts.............................................................................................. 43
This document consists of two parts. The first part is the prospectus
supplement, which describes the specific terms of the Notes we are offering and
certain other matters relating to CSX Corporation. The second part, the base
prospectus, gives more general information about securities we may offer from
time to time, some of which does not apply to the Notes we are offering.
Generally, when we refer to the prospectus, we are referring to both parts of
this document combined. If the description of the Notes in the prospectus
supplement differs from the description in the base prospectus, the description
in the prospectus supplement supersedes the description in the base prospectus.
S-2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including documents incorporated by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Estimates,
forecasts and other forward-looking statements included, or incorporated by
reference, in this prospectus are based on many assumptions about complex
economic and operating factors with respect to industry performance, general
business and economic conditions and other matters that cannot be predicted
accurately and that are subject to contingencies over which CSX Corporation has
no control. Forward-looking statements are subject to uncertainties and other
factors that may cause actual results to differ materially from the views,
beliefs, and projections expressed in those statements. The words "believe,"
"expect," "anticipate," "project," and similar expressions signify
forward-looking statements.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
. general economic or business conditions, either nationally or
internationally, an increase in fuel prices, a tightening of the labor
market or changes in demands of organized labor resulting in higher
wages, or increased benefits or other costs or disruption of operations
may adversely affect our businesses;
. legislative or regulatory changes, including possible enactment of
initiatives to re-regulate the rail industry, may adversely affect our
businesses;
. possible additional consolidation of the rail industry in the near
future may adversely affect our operations and business; and
. changes may occur in the securities and capital markets.
You are cautioned not to place undue reliance on any forward-looking
statements made by or on behalf of CSX. Forward-looking statements speak only
as of the date the statement was made. We undertake no obligation to update or
revise any forward-looking statement.
WHERE YOU CAN FIND MORE INFORMATION
CSX files annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at http://www.sec.gov. You may also read and copy any document we file
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. You may also read and copy these
documents at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The SEC allows CSX to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. CSX
incorporates by reference the document listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act
until CSX sells all of the Notes.
. Annual Report on Form 10-K for the fiscal year ended December 28, 2001
filed with the SEC on March 4, 2002.
You may request a copy of any filings referred to above, at no cost, by
contacting CSX at the following address: Stephen R. Larson, Vice
President--General Counsel and Corporate Secretary, CSX Corporation, One James
Center, 901 East Cary Street, Richmond, Virginia 23219, telephone number
1-804-782-1400.
S-3
CSX CORPORATION
CSX, incorporated in Virginia in 1978 and headquartered in Richmond,
Virginia, operates the largest rail network in the eastern United States and
also provides intermodal transportation services across the United States and
into key markets in Canada and Mexico. Our marine operations include a domestic
container shipping company and an international terminal services company.
CSX's goal, advanced at each of our business units, is to provide efficient,
competitive transportation and related services for our customers and to
deliver superior value to our shareholders. Unless the context indicates
otherwise, references in this prospectus to CSX are to CSX Corporation and our
consolidated subsidiaries.
CSX Transportation Inc. ("CSXT")
CSXT is the largest rail network in the eastern United States, providing
rail freight transportation over a network of more than 23,300 route miles in
23 states, the District of Columbia and two Canadian provinces. Headquartered
in Jacksonville, Florida, CSXT accounted for 75% of CSX's operating revenue and
78% of operating income in 2001.
CSX Intermodal Inc. ("CSXI")
CSXI is the nation's only transcontinental intermodal transportation service
provider, operating a network of dedicated intermodal facilities across North
America. The CSXI network runs approximately 500 dedicated trains between our
49 terminals every week. CSXI accounted for 14% of CSX's operating revenue and
11% of operating income in 2001. CSXI's headquarters are located in
Jacksonville, Florida.
CSX Lines LLC
CSX Lines operates a domestic liner business consisting of a fleet of 16
vessels and 27,000 containers serving the trade between ports on the United
States mainland and Alaska, Guam, Hawaii and Puerto Rico. CSX Lines accounted
for 8% of CSX's operating revenue and 3% of operating income in 2001. CSX Lines
is headquartered in Charlotte, North Carolina.
CSX World Terminals LLC
CSX World Terminals operates container-freight terminal facilities in Hong
Kong, China, Australia, Europe and Latin America. CSX World Terminals accounted
for 3% of CSX's operating revenue and 7% of operating income in 2001. CSX World
Terminals is headquartered in Charlotte, North Carolina.
Non-Transportation
Our non-transportation holdings include: the AAA Five-Diamond hotel, The
Greenbrier, in White Sulphur Springs, West Virginia; CSX Real Property Inc.,
which is responsible for sales, leasing and development of CSX-owned
properties; and a majority interest in Yukon Pacific Corporation, which is
promoting construction of the Trans-Alaska Gas System to transport Alaska's
North Slope natural gas to Valdez for export to Asian markets.
S-4
USE OF PROCEEDS
CSX expects to use substantially all of the net proceeds from the sale of
the Notes to reduce the amount of our outstanding commercial paper and to repay
our outstanding 7.05% Debentures due 2002. At March 5, 2002, CSX had
approximately $238.5 million of commercial paper outstanding, the weighted
average maturity of our outstanding commercial paper was approximately 22.6
days and the weighted average interest rate was approximately 2.03%. The $350
million aggregate principal outstanding of our 7.05% Debentures due 2002 will
mature May 1, 2002. The balance, if any, of the net proceeds will be used for
general corporate purposes, which may include capital expenditures, working
capital requirements, implementation of work force reductions, improvements in
productivity and other cost reductions at our major transportation units.
RATIO OF EARNINGS TO FIXED CHARGES
CSX's consolidated ratio of earnings to fixed charges for each of the fiscal
periods indicated is as follows:
For the Fiscal Years Ended
--------------------------------------------
Dec. 28, Dec. 29, Dec. 31, Dec. 25, Dec. 26,
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges
(a)(b).......................... 1.7x 1.4x 1.1x 1.7x 2.5x
- --------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings from operations before income taxes plus interest
expense related to indebtedness, amortization of debt discount and the
interest portion of fixed rent expense, less undistributed earnings of
affiliates accounted for using the equity method. Fixed charges include
interest on indebtedness (whether expensed or capitalized), amortization of
debt discount and the interest portion of fixed rent expense.
(b) Pretax earnings for certain periods include the effects of various
non-recurring gains and charges. These items are summarized as follows:
(1) A pretax loss of $60 million for the proposed settlement of the
Company's New Orleans Tank Car Fire litigation.
(2) A pretax loss of $360 million related to an impairment charge related to
the sale of assets comprised of the international liner business of
Sea-Land and certain container terminal facilities is included in the
year ended December 31, 1999.
(3) A pretax gain of $27 million from the sale of CSX's investment in Grand
Teton Lodge Company, a wholly-owned subsidiary located in Jackson Hole,
Wyoming, is included in the year ended December 31, 1999.
(4) A pretax gain of $154 million primarily from the conveyance of CSX's
barge subsidiary to a joint venture is included for the year ended
December 25, 1998.
(5) A restructuring credit of $30 million to reverse a charge taken in 1995
related to a restructuring plan is included for the year ended December
25, 1998.
Excluding these items, the ratio of earnings to fixed charges for each of
the periods indicated below would have been:
Fiscal year ended December 29, 2001 1.8x
Fiscal year ended December 31, 1999 1.5x
Fiscal year ended December 25, 1998 1.4x
S-5
DESCRIPTION OF NOTES
Set forth below is a description of the specific terms of the Notes. This
description supplements, and should be read together with, the description of
the general terms and provisions of the debt securities set forth in the
accompanying base prospectus under the caption "Description of Debt
Securities". The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the description
in the base prospectus and the senior indenture. If the description of the
Notes in this prospectus supplement differs from the description of the debt
securities in the base prospectus, the description in this prospectus
supplement supersedes the description in the base prospectus. Capitalized terms
used in this Description of Notes that are not defined in this prospectus
supplement have the meanings given to them in the base prospectus or the senior
indenture.
General
The Notes will initially be limited to $400,000,000 in aggregate principal
amount. The Notes will be issued in fully registered form only, in
denominations of $1,000 and integral multiples of $1,000, and will mature on
March 15, 2012. The Notes will be issued as a series of senior debt securities
under the senior indenture referred to in the accompanying base prospectus. The
senior indenture does not limit the amount of other debt that CSX may incur.
CSX may, from time to time, without the consent of the holders of Notes, issue
other debt securities under the senior indenture in addition to the
$400,000,000 aggregate principal amount of the Notes. CSX may also, from time
to time, without the consent of the holders, issue additional debt securities
having the same ranking and the same interest rate, maturity and other terms as
the Notes. Any additional debt securities having those similar terms, together
with the Notes, will constitute a single series of debt securities under the
senior indenture.
The Notes will bear interest from March 8, 2002, at the annual rate set
forth on the cover page of this prospectus supplement, payable semiannually on
March 15 and September 15 each year, commencing September 15, 2002, to the
persons in whose names the Notes are registered at the close of business on the
immediately preceding March 1 and September 1, respectively, whether or not
that day is a business day.
The Notes will be unsecured obligations of CSX and will rank pari passu with
all other unsecured and unsubordinated indebtedness of CSX.
The Notes do not provide for any sinking fund.
For a description of the rights attaching to each series of debt securities
under the senior indenture, see "Description of Debt Securities" in the
accompanying prospectus.
The provisions of the senior indenture described under "Description of Debt
Securities--Discharge, Defeasance and Covenant Defeasance" in the accompanying
base prospectus apply to the Notes.
Limitation on Liens on Stock of CSXT
The senior indenture provides that neither CSX nor any of our subsidiaries
may create or permit any lien of any kind upon any stock or indebtedness,
whether owned on the date of the senior indenture or acquired later, of any
principal subsidiary, to secure any obligation (other than the senior debt
securities) of CSX, any subsidiary or any other person, unless all of the
outstanding senior debt securities (and other outstanding debt securities
issued from time to time pursuant to the senior indenture) will be directly
secured equally and ratably with that obligation. This provision does not
restrict any other property of CSX or our subsidiaries. The senior indenture
defines "obligation" as indebtedness for money borrowed or indebtedness
evidenced by a bond, note, debenture or other evidence of indebtedness;
"principal subsidiary" as CSXT; and "subsidiary" as a corporation a majority of
the outstanding voting stock of which is owned, directly or indirectly, by CSX
or one or more subsidiaries, or by CSX and one or more subsidiaries. The senior
indenture does not prohibit the sale by CSX or any subsidiary of any stock or
indebtedness of any subsidiary, including any principal subsidiary.
S-6
Optional Redemption
The Notes will be redeemable, in whole or in part, at our option at any
time. The redemption price for the Notes to be redeemed will equal the greater
of the following amounts, plus, in each case, accrued interest thereon to the
redemption date:
. 100% of the principal amount of such Notes; or
. as determined by the Independent Investment Banker (as defined below),
the sum of the present values of the remaining scheduled payments of
principal and interest on the Notes (not including any portion of any
payments of interest accrued as of the redemption date) discounted to
the redemption date on a semiannual basis at the Adjusted Treasury Rate
(as defined below) plus 20 basis points.
The redemption price will be calculated assuming a 360-day year consisting
of twelve 30-day months.
"Adjusted Treasury Rate" means, with respect to any redemption date:
. the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months
before or after the remaining term of the Notes, yields for the two
published maturities most closely corresponding to the Comparable
Treasury Issue will be determined and the Adjusted Treasury Rate will be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month); or
. if that release (or any successor release) is not published during the
week preceding the calculation date or does not contain those yields,
the rate per annum equal to the semiannual equivalent yield to maturity
of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of the principal amount) equal
to the Comparable Treasury Price for that redemption date.
The Adjusted Treasury Rate will be calculated on the third business day
preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of those Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of five Reference Treasury Dealer Quotations for that redemption
date, after excluding the highest and lowest of those Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains fewer than five
such Reference Treasury Dealer Quotations, the average of all of those
quotations.
"Independent Investment Banker" means Salomon Smith Barney Inc. and its
successors, or if that firm is unwilling or unable to serve in that capacity,
an independent investment and banking institution of national standing
appointed by us.
"Reference Treasury Dealer" means:
. Salomon Smith Barney Inc. and its successors; provided that, if Salomon
Smith Barney Inc. ceases to be a primary U.S. Government securities
dealer in New York City ("Primary Treasury Dealer"), we will substitute
another Primary Treasury Dealer; and
. up to four other Primary Treasury Dealers selected by us.
S-7
"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker by such Reference
Treasury Dealer at 5:00 p.m. (New York City time) on the third business day
preceding that redemption date.
We will mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each holder of the Notes to be redeemed. If
we elect to partially redeem the Notes, the trustee will select in a fair and
appropriate manner the Notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the Notes or portions of the
Notes called for redemption.
Book-Entry Notes
The Notes will be represented by one or more permanent global Notes in
definitive, fully registered form without interest coupons. Each beneficial
interest in a global Note is referred to as a book-entry Note. Each global Note
representing book-entry Notes will be deposited with the trustee, as custodian
for, and registered in the name of, a nominee of The Depository Trust Company,
as depositary, located in the Borough of Manhattan, The City of New York.
Ownership of beneficial interests in book-entry Notes will be limited to
persons who have accounts with the depositary ("participants") or persons who
hold interests through participants. Ownership of beneficial interests in
book-entry Notes will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the depositary or its nominee
(with respect to interests of participants) and the records of participants
(with respect to persons other than participants). The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of those securities in definitive form. Those laws may impair the
ability to transfer book-entry Notes.
So long as the depositary, or its nominee, is the registered owner or holder
of a global Note, the depositary or the nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by that global
Note for all purposes under the senior indenture and the Notes. No beneficial
owner of an interest in a global Note will be able to transfer that interest
except in accordance with the depositary's applicable procedures, in addition
to those provided for under the senior indenture.
CSX has been advised by the depositary that upon the issuance of global
Notes representing book-entry Notes, and the deposit of those global Notes with
the depositary, the depositary will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts of the
book-entry Notes represented by those global Notes to the accounts of
participants. The accounts to be credited shall be designated by the
underwriters.
Payments of principal of and any premium and interest on book-entry Notes
will be made to the depositary or its nominee, as the case may be, as the
registered owner of those Notes. Those payments to the depositary or its
nominee, as the case may be, will be made in immediately available funds at the
offices of JPMorgan Chase Bank, as paying agent, in the Borough of Manhattan,
The City of New York, provided that, in the case of payments of principal and
any premium, the global Notes are presented to the paying agent in time for the
paying agent to make those payments in immediately available funds in
accordance with its normal procedures. None of CSX, the underwriters, the
trustee or any agent of CSX, the underwriters or the trustee will have any
responsibility or liability for any aspect of the depositary's records or any
participant's records relating to or payments made on account of book-entry
Notes or for maintaining, supervising or reviewing any of the depositary's
records or any participant's records relating to book-entry Notes.
S-8
Payments of principal of and any premium and interest on book-entry Notes
will be made to the depositary or its nominee, as the case may be, as the
registered owner of those Notes. Those payments to the depositary or its
nominee, as the case may be, will be made in immediately available funds at the
offices of JPMorgan Chase Bank, as paying agent, in the Borough of Manhattan,
The City of New York, provided that, in the case of payments of principal and
any premium, the global Notes are presented to the paying agent in time for the
paying agent to make those payments in immediately available funds in
accordance with its normal procedures. None of CSX, the underwriters, the
trustee or any agent of CSX, the underwriters or the trustee will have any
responsibility or liability for any aspect of the depositary's records or any
participant's records relating to or payments made on account of book-entry
Notes or for maintaining, supervising or reviewing any of the depositary's
records or any participant's records relating to book-entry Notes.
CSX expects that the depositary or its nominee upon receipt of any payment
of principal of or any premium or interest in respect of a global Note, will
immediately credit, on its book-entry registration and transfer system,
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global Notes as
shown on the records of the depositary or its nominee. CSX also expects that
payments by participants to owners of beneficial interests in book-entry Notes
held through those participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in "street name," and will be the responsibility of
those participants.
Transfers between participants in the depositary will be effected in the
ordinary way in accordance with the depositary's rules and will be settled in
same-day funds.
CSX expects that the depositary will take any action permitted to be taken
by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account or accounts the depositary interests in a global Note are credited and
only in respect of the portion of the aggregate principal amount of the Notes
as to which that participant or participants has or have given that direction.
However, if there is an event of default under the Notes, the depositary will
exchange the applicable global Note for definitive Notes in registered form,
which it will distribute to its participants.
CSX understands that the depositary is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code, and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The depositary was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among participants through electronic book-entry changes in
accounts of its participants and certain other organizations, thereby
eliminating the need for physical movement of securities certificates. The
depositary's participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (or their representatives) own interests in the
depositary. Indirect access to the depositary's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly ("indirect participants").
Although the depositary is expected to follow the foregoing procedures in
order to facilitate transfers of interests in a global Note among participants
of the depositary, it is under no obligation to perform or continue to perform
those procedures and those procedures may be discontinued at any time. Neither
CSX, the underwriters nor the trustee will have any responsibility for the
performance by the depositary or its respective participants or indirect
participants of its respective obligations under the rules and procedures
governing their operations.
The global Notes representing book-entry Notes may not be transferred except
as a whole by a nominee of the depositary to the depositary or to another
nominee of the depository, or by the depository or the nominee to a successor
of the depositary or a nominee of the successor.
S-9
The global Notes representing book-entry Notes are exchangeable for
definitive Notes in registered form, of like tenor and of an equal aggregate
principal amount, only if (x) the depositary notifies CSX that it is unwilling
or unable to continue as depositary for the global Note or if at any time the
depositary ceases to be a Clearing Agency registered under the Exchange Act and
a successor depositary is not appointed by CSX within 90 days, (y) CSX in its
sole discretion determines that the book-entry Notes will be exchangeable for
definitive Notes in registered form or (z) any event has happened and is
continuing which, after notice or lapse of time, or both, would become an event
of default with respect to the Notes. Any global Note representing book-entry
Notes that is exchangeable pursuant to the preceding sentence will be
exchangeable in whole for definitive Notes in registered form, of like tenor
and of an equal aggregate principal amount, in denominations of U.S. $1,000 and
integral multiples of U.S. $1,000. Upon the exchange of a global Note for
definitive Notes, that global Note will be canceled by the trustee and the
definitive Notes will be registered in the names and in the authorized
denominations as the depositary, pursuant to instructions from its
participants, any indirect participants or otherwise, instruct the trustee. The
trustee will deliver those Notes to the persons in whose names those Notes are
registered and will recognize those persons as the holders of those Notes.
Except as provided above, owners of book-entry Notes will not be entitled to
receive physical delivery of Notes in definitive form and will not be
considered the holders of those Notes for any purpose under the senior
indenture, and no global Note representing book-entry Notes will be
exchangeable, except for another global Note of like denomination and tenor to
be registered in the name of the depositary or its nominee. Accordingly, each
person owning a book-entry Note must rely on the procedures of the depositary
and, if that person is not a participant, on the procedures of the participant
through which that person owns its interest, to exercise any rights of a holder
under that global Note or the senior indenture. The senior indenture provides
that the depositary, as a holder, may appoint agents and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which a holder is entitled to give or
take under the senior indenture. CSX understands that under existing industry
practices, if CSX requests any action of holders or an owner of a book-entry
Note desires to give or take any action a holder is entitled to give or take
under the senior indenture, the depositary would authorize the participants
owning the relevant book-entry Notes to give or take that action, and those
participants would authorize beneficial owners owning through those
participants to give or take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
S-10
UNDERWRITING
Salomon Smith Barney Inc. is acting as representative of the underwriters
named below.
Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, each underwriter named below has
agreed to purchase, and we have agreed to sell to that underwriter, the
principal amount of Notes set forth opposite the underwriter's name.
Principal Amount
Underwriter of Notes
----------- ----------------
Salomon Smith Barney Inc................. $200,000,000
Credit Suisse First Boston Corporation... 28,000,000
J.P. Morgan Securities Inc............... 28,000,000
Mizuho International plc................. 28,000,000
Scotia Capital (USA) Inc................. 28,000,000
Banc One Capital Markets, Inc............ 24,000,000
BNY Capital Markets, Inc................. 16,000,000
PNC Capital Markets, Inc................. 16,000,000
Tokyo-Mitsubishi International plc....... 16,000,000
First Union Securities, Inc.............. 16,000,000
------------
Total................................. $400,000,000
============
First Union Securities, Inc., one of the underwriters, is an indirect,
wholly-owned subsidiary of Wachovia Corporation. Wachovia Corporation conducts
its investment banking, institutional, and capital markets businesses through
its various bank broker-dealer and nonbank subsidiaries (including First Union
Securities, Inc.) under the trade name of Wachovia Securities. Any references
to Wachovia Securities in this prospectus, however, do not include Wachovia
Securities, Inc., member NASD/SIPC and a separate broker-dealer subsidiary of
Wachovia Corporation and an affiliate of First Union Securities, Inc., which
may or may not be participating as a selling dealer in the distribution of the
securities offered by this prospectus.
The underwriting agreement provides that the obligations of the underwriters
to purchase the Notes included in this offering are subject to approval of
legal matters by counsel and to other conditions. The underwriters are
obligated to purchase all of the Notes if they purchase any of the Notes.
The underwriters propose to offer some of the Notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the Notes to dealers at the public offering price less a
concession not to exceed 0.40% of the principal amount of the Notes. The
underwriters may allow, and dealers may reallow, a concession not to exceed
0.25% of the principal amount of the Notes on sales to other dealers. After the
initial offering of the Notes to the public, the representative may change the
public offering price and concessions.
The following table shows the underwriting discounts and commissions that we
are to pay to the underwriters in connection with this offering (expressed as a
percentage of the principal amount of the Notes).
Paid by CSX
----------
Per Note......................................... 0.650%
In connection with the offering, Salomon Smith Barney Inc., on behalf of the
underwriters, may purchase and sell Notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of Notes in
excess of the
S-11
principal amount of Notes to be purchased by the underwriters in the offering,
which creates a syndicate short position. Syndicate covering transactions
involve purchases of the Notes in the open market after the distribution has
been completed in order to cover syndicate short positions. Stabilizing
transactions consist of certain bids or purchases of Notes made for the purpose
of preventing or retarding a decline in the market price of the Notes while the
offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases Notes originally sold by that syndicate
member.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the Notes. They may also cause the price of the
Notes to be higher than the price that otherwise would exist in the open market
in the absence of these transactions. The underwriters may conduct these
transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
We estimate that our total expenses (excluding underwriting discounts and
commissions) for this offering will be approximately $250,000.
The underwriters have performed investment banking and advisory services for
us from time to time for which they have received customary fees and expenses.
The underwriters may, from time to time, engage in transactions with and
perform services for us in the ordinary course of their business. Certain of
the underwriters or their affiliates engage in commercial lending activities
with us and are lenders under CSX's bank credit facilities. J.P. Morgan
Securities Inc. is an affiliate of the trustee.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make because of any of those
liabilities.
LEGAL MATTERS
Certain legal matters in connection with the offering of the Notes will be
passed upon for CSX by McGuireWoods LLP, Richmond, Virginia, and for the
underwriters by Shearman & Sterling, New York, New York. Robert L. Burrus, Jr.,
a partner of McGuireWoods LLP, is a director of CSX. As of March 5, 2002,
lawyers of McGuireWoods LLP owned approximately 20,000 shares of CSX common
stock.
S-12
PROSPECTUS
$1,000,000,000
[LOGO]
CSX
CORPORATION
One James Center
901 East Cary Street
Richmond, Virginia 23219
(804) 782-1400
DEBT SECURITIES, TRUST PREFERRED SECURITIES (AND RELATED GUARANTEE AND
AGREEMENT AS TO EXPENSES AND LIABILITIES), COMMON STOCK, PREFERRED STOCK,
DEPOSITARY SHARES AND SECURITIES WARRANTS
-----------------
We may sell from time to time, in one or more offerings:
. debt securities
. trust preferred securities, related guarantee and agreement as to
expenses and liabilities
. common stock
. preferred stock
. depositary shares
. warrants for debt securities, common stock or preferred stock
-----------------
The total offering price of these securities, in the aggregate, will not
exceed $1,000,000,000. We will provide specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated May 17, 2001.
TABLE OF CONTENTS
About This Prospectus..................................................................... 2
Where You Can Find More Information....................................................... 3
CSX Corporation........................................................................... 4
CSX Capital Trust I....................................................................... 5
Forward-Looking Statements................................................................ 6
Ratio of Earnings to Fixed Charges........................................................ 6
Use of Proceeds........................................................................... 7
Description of the Debt Securities........................................................ 8
Additional Terms of Subordinated Debt Securities.......................................... 21
Description of Trust Preferred Securities................................................. 23
Description of the Guarantee.............................................................. 32
Relationship Among the Trust Preferred Securities, the Guarantee and the Subordinated Debt
Securities Held by the Trust............................................................ 35
Accounting Treatment...................................................................... 35
Description of Capital Stock.............................................................. 36
Description of Depositary Shares.......................................................... 40
Description of Securities Warrants........................................................ 41
Plan of Distribution...................................................................... 42
Legal Opinions............................................................................ 43
Experts................................................................................... 43
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement that CSX
Corporation filed with the Securities and Exchange Commission. Under the shelf
registration statement, CSX may sell any combination of the securities
described in this prospectus in one or more offerings up to a total dollar
amount of $1,000,000,000. For further information about our business and the
securities, you should refer to the registration statement and its exhibits.
The exhibits to the registration statement and the documents we incorporate by
reference contain the full text of certain contracts and other important
documents summarized in this prospectus. Since these summaries may not contain
all the information that you may find important in deciding whether to purchase
the securities CSX may offer, you should review the full text of those
documents. The registration statement can be obtained from the SEC as indicated
under the heading "Where You Can Find More Information."
This prospectus provides you with a general description of the securities
CSX may offer. Each time CSX sells securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. Material United States federal income tax considerations will also be
discussed in the applicable prospectus supplement. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described under the heading "Where You Can Find More
Information".
2
WHERE YOU CAN FIND MORE INFORMATION
CSX files annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
also read and copy these documents at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows CSX to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. CSX
incorporates by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), until CSX sells all of
the securities.
. Annual Report on Form 10-K for the fiscal year ended December 29, 2000;
. Quarterly Report on Form 10-Q and Form 10-Q/A for the fiscal quarter
ended March 30, 2001;
. Current Reports on Form 8-K filed with the SEC on January 31, 2001,
March 12, 2001 and May 4, 2001; and
. The description of CSX common stock contained in our Registration
Statement on Form 8-B (File No. 1-8022) filed with the SEC on September
25, 1980; and the description of the Rights (described below) contained
in our Registration Statement on Form 8-A (File No.1-8022) filed with
the SEC on May 29, 1998 and Form 8-A/A (File No. 1-8022) filed with the
SEC on June 28, 2000.
You may request a copy of any filings referred to above, at no cost, by
contacting CSX at the following address: Alan A. Rudnick, Vice
President--General Counsel and Corporate Secretary, CSX Corporation, One James
Center, 901 East Cary Street, Richmond, Virginia 23219, telephone number (804)
782-1400.
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. CSX has not
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. CSX
will not make an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information
appearing in this prospectus, as well as information CSX previously filed with
the SEC and incorporated by reference in this prospectus, is accurate only as
of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date.
3
CSX CORPORATION
CSX, incorporated in Virginia in 1978 and headquartered in Richmond,
Virginia, operates the largest rail network in the eastern United States and
also provides intermodal, domestic container shipping and international
terminal services. CSX's goal, advanced at each of our business units, is to
provide efficient, competitive transportation and related services for our
customers and to deliver superior value to our shareholders. Unless the context
indicates otherwise, references in this prospectus to CSX are to CSX
Corporation and our consolidated subsidiaries.
CSX Transportation Inc. ("CSXT")
CSXT is the largest rail network in the eastern United States, providing
rail freight transportation over a network of more than 23,400 route miles in
23 states, the District of Columbia and two Canadian provinces. Headquartered
in Jacksonville, Florida, CSXT accounted for 74% of CSX's operating revenue and
76% of operating income in 2000.
CSX Intermodal Inc. ("CSXI")
CSXI is the nation's only transcontinental intermodal transportation service
provider, operating a network of dedicated intermodal facilities across North
America. The CSXI network runs approximately 500 dedicated trains between our
48 terminals every week. CSXI accounted for 14% of CSX's operating revenue and
12% of operating income in 2000. CSXI's headquarters are located in
Jacksonville, Florida.
CSX Lines LLC
CSX Lines was formed in 1999 to operate the domestic liner business of
Sea-Land Service, Inc. ("Sea-Land"), consisting of a fleet of 16 vessels and
27,000 containers serving the trade between ports on the United States mainland
and Alaska, Guam, Hawaii and Puerto Rico. The domestic container-shipping
business was retained by CSX when Sea-Land's international container-shipping
operations were sold to A.P. Moller-Maersk Line ("Maersk") in December 1999.
CSX Lines accounted for 8% of CSX's operating revenue and broke even on
operating income in 2000. CSX Lines is headquartered in Charlotte, North
Carolina.
CSX World Terminals LLC
CSX World Terminals, formed in 1999, operates container-freight terminal
facilities at 12 locations in Hong Kong, China, Australia, Europe and the
Dominican Republic. These operations also were retained by CSX when Sea-Land's
international liner business was sold to Maersk. CSX World Terminals accounted
for 4% of CSX's operating revenue and 9% of operating income in 2000. CSX World
Terminals is headquartered in Charlotte, North Carolina.
Non-Transportation
Our non-transportation holdings include: the AAA Five-Diamond hotel, The
Greenbrier, in White Sulphur Springs, West Virginia; CSX Real Property Inc.,
which is responsible for sales, leasing and development of CSX-owned
properties; and a majority interest in Yukon Pacific Corporation, which is
promoting construction of the Trans-Alaska Gas System to transport Alaska's
North Slope natural gas to Valdez for export to Asian markets.
4
CSX CAPITAL TRUST I
CSX Capital Trust I (the "Trust") is a statutory business trust newly formed
under Delaware law by us, as sponsor for the Trust, and Chase Manhattan Bank
USA, National Association, who will serve as trustee in the State of Delaware
for the purpose of complying with the provisions of the Delaware Business Trust
Act. The trust agreement for the Trust will be amended and restated
substantially in the form filed as an exhibit to the registration statement,
effective when securities of the Trust are initially issued. The amended trust
agreement will be qualified as an indenture under the Trust Indenture Act of
1939. The Trust exists for the exclusive purposes of:
. issuing two classes of trust securities, trust preferred securities and
trust common securities, which together represent undivided beneficial
interests in the assets of the Trust;
. investing the gross proceeds of the trust securities in our subordinated
debt securities;
. making distributions; and
. engaging in only those other activities necessary, advisable or
incidental to the purposes listed above.
Subordinated debt securities of CSX will be the sole assets of the Trust,
and our payments under those subordinated debt securities and the agreement as
to expenses and liabilities will be the sole revenue of the Trust. No separate
financial statements of the Trust are included in this prospectus. CSX
considers that those financial statements would not be material to holders of
the trust preferred securities because the Trust has no independent operations
and the purpose of the Trust is as described above. The Trust is not required
to file annual, quarterly or special reports with the SEC.
The principal place of business of the Trust will be c/o CSX Corporation,
One James Center, 901 East Cary Street, Richmond, Virginia 23219, telephone
number (804) 782-1400.
5
FORWARD-LOOKING STATEMENTS
This prospectus, including documents incorporated by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange
Act. Estimates, forecasts and other forward-looking statements included, or
incorporated by reference, in this prospectus are based on many assumptions
about complex economic and operating factors with respect to industry
performance, general business and economic conditions and other matters that
cannot be predicted accurately and that are subject to contingencies over which
CSX has no control. Forward-looking statements are subject to uncertainties and
other factors that may cause actual results to differ materially from the
views, beliefs, and projections expressed in those statements. The words
"believe," "expect," "anticipate," "project," and similar expressions signify
forward-looking statements.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
. costs and operating difficulties related to the integration of the
Conrail rail system may not be eliminated or resolved within the time
frame currently anticipated and revenue and cost synergies expected from
the integration of Conrail may not be fully realized or realized within
the time frame anticipated;
. general economic or business conditions, either nationally or
internationally, an increase in fuel prices, a tightening of the labor
market or changes in demands of organized labor resulting in higher
wages, or increased benefits or other costs or disruption of operations
may adversely affect our businesses;
. legislative or regulatory changes, including possible enactment of
initiatives to re-regulate the rail industry, may adversely affect our
businesses;
. possible additional consolidation of the rail industry in the near
future may adversely affect our operations and business; and
. changes may occur in the securities and capital markets.
You are cautioned not to place undue reliance on any forward-looking
statements made by or on behalf of CSX. Forward-looking statements speak only
as of the date the statement was made. We undertake no obligation to update or
revise any forward-looking statement.
RATIO OF EARNINGS TO FIXED CHARGES
CSX's consolidated ratio of earnings to fixed charges for each of the fiscal
periods indicated is as follows:
For the Three
Months Ended For the Fiscal Years Ended
----------------- --------------------------------------------
Mar. 30, Mar. 31, Dec. 29, Dec. 31, Dec. 25, Dec. 26, Dec. 27,
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
Ratio of earnings to fixed charges
(a)(b)(c)(d).................... 1.2x 1.1x 1.4x 1.1x 1.7x 2.5x 3.9x
- --------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings from operations before income taxes plus interest
expense related to indebtedness, amortization of debt discount, the
interest portion of fixed rent expense, and undistributed earnings of
affiliates accounted for using the equity method. Fixed charges include
interest on indebtedness (whether expensed or capitalized), amortization of
debt discount and the interest portion of fixed rent expense.
6
(b) The year ended December 27, 1996 was prior to the acquisition of CSX's
interests in Conrail Inc. and therefore does not include the increased
interest expense incurred by CSX subsequent to that transaction.
(c) All periods' calculations have been restated to exclude from earnings the
activities of CSX's contract logistics segment which was sold in September
2000.
(d) Pretax earnings for certain periods include the effects of various
non-recurring gains and charges. These items are summarized as follows:
(1) A pretax loss of $360 million related to an impairment charge related to
the sale of assets comprised of the international liner business of
Sea-Land and certain container terminal facilities is included in the
year ended December 31, 1999.
(2) A pretax gain of $27 million from the sale of CSX's investment in Grand
Teton Lodge Company, a wholly-owned subsidiary located in Jackson Hole,
Wyoming is included in the year ended December 31, 1999.
(3) A pretax gain of $154 million primarily from the conveyance of CSX's
barge subsidiary to a joint venture is included for the year ended
December 25, 1998.
(4) A restructuring credit of $30 million to reverse a charge taken in 1995
related to a restructuring plan is included for the year ended December
25, 1998.
Excluding these items, the ratio of earnings to fixed charges for each of
the periods indicated below would have been:
Fiscal year ended December 31, 1999 1.5x
Fiscal year ended December 25, 1998 1.4x
USE OF PROCEEDS
CSX will use the net proceeds from the sale of the securities for general
corporate purposes, which may include reduction or refinancing of outstanding
indebtedness, capital expenditures, working capital requirements,
implementation of work force reductions, improvements in productivity and other
cost reductions at our major transportation units, and redemptions and
repurchases of certain outstanding securities. CSX has not specifically
allocated the proceeds to those purposes as of the date of this prospectus. The
precise amount and timing of the application of proceeds from the sale of
securities will depend upon the funding requirements of CSX and the
availability and cost of other funds at the time of the sale. Allocation of the
proceeds of a particular series of securities, or the principal reasons for the
offering if no allocation has been made, will be described in the applicable
prospectus supplement.
7
DESCRIPTION OF DEBT SECURITIES
CSX may issue debt securities either separately, or together with, or upon
the conversion of or in exchange for, other securities. The debt securities
will be either senior unsecured obligations or subordinated unsecured
obligations of CSX. Senior debt securities will be issued under a senior
indenture dated as of August 1, 1990 between CSX and The Chase Manhattan Bank,
as trustee, as supplemented by a First Supplemental Indenture dated as of June
15, 1991, a Second Supplemental Indenture dated as of May 6, 1997 and a Third
Supplemental Indenture dated as of April 22, 1998, as further supplemented and
amended from time to time. Subordinated debt securities will be issued under a
subordinated indenture to be entered into between CSX and The Chase Manhattan
Bank, as trustee, as further supplemented and amended from time to time. Copies
of the senior indenture and a form of the subordinated indenture have been
incorporated by reference in, or filed as exhibits to, the registration
statement of which this prospectus is a part. The senior indenture and the
subordinated indenture are sometimes referred to collectively as the
"indentures". The trustee under the senior indenture and the trustee under the
subordinated indenture are sometimes referred to collectively as the "trustees".
The summary of certain provisions of the indentures and the debt securities
set forth below and the summary of certain terms of a particular series of debt
securities set forth in the applicable prospectus supplement do not purport to
be complete and are subject to and are qualified in their entirety by reference
to all of the provisions of the indentures, which provisions of the indentures
(including defined terms) are incorporated in this description of debt
securities by reference.
The debt securities may be issued from time to time in one or more series of
senior debt securities and one or more series of subordinated debt securities.
Neither indenture limits the aggregate principal amount of debt securities that
may be issued under it and provides that debt securities of any series may be
issued under that indenture up to an aggregate principal amount that may be
authorized from time to time by CSX. The terms of each series of debt
securities will be established by or pursuant to a resolution of our Board of
Directors and set forth or determined in the manner provided in an officer's
certificate or by a supplemental indenture. The following description of debt
securities summarizes certain general terms and provisions of the series of
debt securities to which any prospectus supplement may relate. The particular
terms of each series of debt securities offered by a prospectus supplement or
prospectus supplements will be described in the prospectus supplement or
prospectus supplements relating to that series.
Unless otherwise indicated, currency amounts in this prospectus and any
prospectus supplement are stated in United States dollars.
General
The prospectus supplement for a particular series of debt securities will
describe the specific terms of that series, including (where applicable):
. the title of the debt securities;
. any limit on the aggregate principal amount of the debt securities;
. whether the debt securities are to be issuable as registered debt
securities or bearer debt securities or both, whether any of the debt
securities are to be issuable initially in temporary global form and
whether any of the debt securities are to be issuable in permanent
global form;
. the price or prices (expressed as a percentage of the aggregate
principal amount of the debt securities) at which the debt securities
will be issued;
. the date or dates on which the debt securities will mature;
8
. the rate or rates per annum at which the debt securities will bear
interest, if any, or the formula pursuant to which the rate or rates
will be determined, and the date or dates from which interest will
accrue;
. the interest payment dates on which interest on the debt securities will
be payable and the regular record date for any interest payable on any
registered debt securities on any interest payment date;
. the person to whom any interest on any registered debt securities of the
series will be payable, if other than the person in whose name that debt
security (or one or more predecessor debt securities) is registered at
the close of business on the regular record date for that interest, the
manner in which, or the person to whom, any interest on any bearer debt
security of the series will be payable, if otherwise than upon
presentation and surrender of the applicable coupons, and the extent to
which, or the manner in which, any interest payable on a temporary
global debt security on an interest payment date will be paid if other
than in the manner provided in the relevant indenture and the extent to
which, or the manner in which, any interest payable on a permanent
global debt security on an interest payment date will be paid;
. each office or agency where, subject to the terms of the indenture as
described below under "Payment and Paying Agents," the principal of and
any premium and interest on the debt securities will be payable and each
office or agency where, subject to the terms of the indenture as
described below under "Form, Exchange, Registration and Transfer," the
debt securities may be presented for registration of transfer or
exchange;
. the period or periods within which and the price or prices at which the
debt securities may, pursuant to any optional redemption provisions, be
redeemed, in whole or in part, at our option and the other detailed
terms and conditions of any optional redemption provisions;
. the obligation, if any, of CSX to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option of
the holder of the debt securities and the period or periods within which
and the price or prices at which the debt securities will be redeemed or
purchased, in whole or in part, pursuant to that obligation, and the
other detailed terms and conditions of that obligation;
. the denominations in which any registered debt securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which bearer
debt securities will be issuable, if other than denominations of $5,000;
. the currency or currencies, including currency units, in which payment
of principal of and any premium and interest on the debt securities will
be payable if other than U.S. dollars and the ability, if any, of CSX or
the holders of the debt securities to have payments made in any currency
other than those in which the debt securities are stated to be payable;
. whether the amount of payments of principal of, premium, if any, and
interest, if any, on the debt securities may be determined with
reference to an index and the manner in which those amounts will be
determined;
. the portion of the principal amount of the debt securities which shall
be payable upon acceleration if other than the full principal amount;
. any limitation on the application of the terms of the indenture
described below under "Discharge, Defeasance and Covenant Defeasance";
. the terms, if any, upon which the debt securities may be convertible
into or exchangeable for other securities;
9
. whether the debt securities will be senior debt securities or
subordinated debt securities; and
. any other terms of the debt securities not inconsistent with the
provisions of the relevant indenture.
The prospectus supplement will also describe any special provisions for the
payment of additional amounts relating to specified taxes, assessments or other
governmental charges in respect of the debt securities of that series and
whether CSX has the option to redeem the affected debt securities rather than
pay those additional amounts.
As used in this prospectus and any prospectus supplement relating to the
offering of any debt securities, references to the principal of and premium, if
any, and interest, if any, on the debt securities will be deemed to include
mention of the payment of additional amounts, if any, required by the terms of
the debt securities.
If the purchase price of any debt securities is payable in a currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the debt securities is payable in any currency other than U.S.
dollars, the specific terms and other information with respect to those debt
securities and that currency will be specified in the related prospectus
supplement.
Debt securities of a series may also be issued under the indenture upon the
exercise of debt warrants issued by CSX. See "Description of Debt Warrants."
The indentures do not contain any provisions that may afford the holders of
debt securities of any series protection in the event of a highly leveraged
transaction or other transaction that may occur in connection with a takeover
attempt resulting in a decline in the credit rating of the debt securities.
Those provisions, if applicable to the debt securities of any series, will be
described in the related prospectus supplement.
Form, Exchange, Registration and Transfer
Unless otherwise indicated in the applicable prospectus supplement, each
series of debt securities will be issued in registered form only, without
coupons. The indentures, however, provide that CSX may also issue debt
securities in bearer form only, or in both registered and bearer form. Bearer
debt securities shall not be offered, sold, resold or delivered in connection
with their original issuance in the United States or to any United States
person other than offices located outside the United States of certain United
States financial institutions. Purchasers of bearer debt securities will be
subject to certification procedures and may be affected by certain limitations
under United States tax laws. Those procedures and limitations will be
described in the prospectus supplement relating to the offering of the bearer
debt securities. Unless otherwise indicated in an applicable prospectus
supplement or prospectus supplements, bearer debt securities will have interest
coupons attached. The indentures also will provide that debt securities of a
series may be issuable in temporary or permanent global form. See "Global Debt
Securities."
At the option of the holder, subject to the terms of the relevant indenture,
registered debt securities of any series will be exchangeable for other
registered debt securities of the same series of any authorized denominations
and of a like aggregate principal amount and tenor. In addition, if debt
securities of any series are issuable as both registered debt securities and
bearer debt securities, at the option of the holder, subject to the terms of
the relevant indenture, bearer debt securities (with all unmatured coupons,
except as provided below, and with all matured coupons in default) of that
series will be exchangeable for registered debt securities of the same series
of any authorized denominations and of a like aggregate principal amount and
tenor. Bearer debt securities surrendered in exchange for registered debt
securities between a regular record date or a special record date and the
relevant date for payment of interest shall be surrendered without the coupon
relating to that date for payment of
10
interest and interest will not be payable in respect of the registered debt
security issued in exchange for that bearer debt security, but will be payable
only to the holder of the coupon when due in accordance with the terms of the
indenture. Registered debt securities, including registered debt securities
received in exchange for bearer debt securities, may not be exchanged for
bearer debt securities. Each bearer debt security and coupon will bear a legend
to the following effect:
"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue
Code."
Debt securities may be presented for exchange as provided above, and
registered debt securities may be presented for registration of transfer (with
the form of transfer duly executed), at the office of the security registrar or
at the office of any transfer agent designated by CSX for that purpose with
respect to any series of debt securities and referred to in an applicable
prospectus supplement, without a service charge and upon payment of any taxes
and other governmental charges as described in the relevant indenture. The
transfer or exchange will be effected upon the records of the security
registrar or the transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. CSX has
appointed the trustee as security registrar. If a prospectus supplement refers
to any transfer agent (in addition to the security registrar) initially
designated by CSX with respect to any series of debt securities, CSX may at any
time rescind the designation of that transfer agent or approve a change in the
location through which that transfer agent acts, except that, if debt
securities of a series are issuable solely as registered debt securities, CSX
will be required to maintain a transfer agent in each place of payment for that
series and, if debt securities of a series are issuable as bearer debt
securities, CSX will be required to maintain (in addition to the security
registrar) a transfer agent in a place of payment for that series located
outside the United States and its possessions. CSX may at any time designate
additional transfer agents with respect to any series of debt securities.
In the event of any partial redemption, CSX will not be required to
. issue, register the transfer of or exchange any debt security during a
period beginning at the opening of business 15 days before any selection
for redemption of debt securities of like tenor and of the series of
which that debt security is a part, and ending at the close of business
on the earliest date on which the relevant notice of redemption is
deemed to have been given to all holders of debt securities of like
tenor and of the series to be redeemed;
. register the transfer of or exchange any registered debt security so
selected for redemption, in whole or in part, except the unredeemed
portion of any debt security being redeemed in part; or
. exchange any bearer debt security so selected for redemption, except to
exchange that bearer debt security for a registered debt security of
that series and like tenor which is immediately surrendered for
redemption.
Payment and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement, principal
of and any premium and interest on bearer debt securities will be payable,
subject to any applicable laws and regulations, at the offices of paying agents
outside the United States and its possessions that CSX may designate from time
to time or, at the option of the holder, by check or by transfer to an account
maintained by the payee with a financial institution located outside the United
States and its possessions. Unless otherwise indicated in an applicable
prospectus supplement, payment of interest on a bearer debt security on any
interest payment date will be made only against surrender to the paying agent
of the coupon relating to that interest payment date. No payment with respect
to any bearer debt security will
11
be made at any office or agency of CSX in the United States or its possessions
or by check mailed to any address in the United States or its possessions or by
transfer to any account maintained with a financial institution located in the
United States or its possessions. However, payments of principal of and any
premium and interest on bearer debt securities denominated and payable in U.S.
dollars will be made at the office of the paying agent in the Borough of
Manhattan, The City of New York, if (but only if) payment of the full amount in
U.S. dollars at all offices or agencies outside the United States and its
possessions is illegal or effectively precluded by exchange controls or other
similar restrictions.
Unless otherwise indicated in an applicable prospectus supplement, principal
of and any premium and interest on registered debt securities will be payable,
subject to any applicable laws and regulations, at the office of the paying
agent or paying agents that CSX may designate from time to time, except that at
our option payment of any interest may be made by check mailed to the address
of the person entitled to that payment as that address appears in the security
register. Unless otherwise indicated in an applicable prospectus supplement,
payment of interest on a registered debt security on any interest payment date
will be made to the person in whose name that registered debt security (or
predecessor debt security) is registered at the close of business on the
regular record date for that interest.
Unless otherwise indicated in an applicable prospectus supplement, the
corporate trust office of the trustee in The City of New York will be
designated as a paying agent for CSX for payments with respect to debt
securities of each series which are issuable solely as registered debt
securities and as a paying agent for payments with respect to debt securities
of each series (subject to the limitations described above in the case of
bearer debt securities) which are issuable solely as bearer debt securities or
as both registered debt securities and bearer debt securities. Any paying
agents outside the United States and its possessions and any other paying
agents in the United States or its possessions initially designated by CSX for
the debt securities of each series will be named in the applicable prospectus
supplement. CSX may at any time designate additional paying agents or rescind
the designation of any paying agent or approve a change in the office through
which any paying agent acts, except that if debt securities of a series are
issuable solely as registered debt securities, CSX will be required to maintain
a paying agent in each place of payment for that series and, if debt securities
of a series are issuable as bearer debt securities, CSX will be required to
maintain
. a paying agent in the Borough of Manhattan, The City of New York for
payments with respect to any registered debt securities of the series
(and for payments with respect to bearer debt securities of the series
in the circumstances described above, but not otherwise), and
. a paying agent in a place of payment located outside the United States
and its possessions where debt securities of that series and any related
coupons may be presented and surrendered for payment;
provided, however, that if the debt securities of that series are listed on The
International Stock Exchange of the United Kingdom and the Republic of Ireland
Limited, the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and its possessions and that stock exchange requires
CSX to do so, CSX will maintain a paying agent in London, Luxembourg or any
other required city located outside the United States and its possessions, as
the case may be, for the debt securities of that series.
All moneys paid by CSX to a paying agent for the payment of the principal of
and any premium or interest on any debt security of any series which remain
unclaimed at the end of two years after that principal, premium or interest has
become due and payable will be repaid to CSX and the holder of that debt
security or any related coupon will after that time look only to CSX for
payment of that principal, premium or interest.
12
Ranking of Debt Securities; Holding Company Structure
The senior debt securities will be unsecured unsubordinated obligations of
CSX and will rank on a parity in right of payment with all other unsecured and
unsubordinated indebtedness of CSX. The subordinated debt securities will be
unsecured obligations of CSX and will be subordinated in right of payment to
all existing and future senior indebtedness (as defined below) of CSX. See
"Additional Terms of Subordinated Debt Securities--Subordination."
The debt securities are obligations exclusively of CSX. CSX is a holding
company, substantially all of whose consolidated assets are held by our
subsidiaries. Accordingly, the cash flow of CSX and the consequent ability to
service our debt, including the debt securities, are largely dependent upon the
earnings of those subsidiaries.
Because CSX is a holding company, the debt securities will be effectively
subordinated to all existing and future indebtedness, trade payables,
guarantees, lease obligations and letter of credit obligations of CSX's
subsidiaries. Therefore, CSX's rights and the rights of our creditors,
including the holders of the debt securities, to participate in the assets of
any subsidiary upon the latter's liquidation or reorganization will be subject
to the prior claims of that subsidiary's creditors, except to the extent that
CSX may itself be a creditor with recognized claims against the subsidiary, in
which case the claims of CSX would still be effectively subordinate to any
security interest in, or mortgages or other liens on, the assets of that
subsidiary and would be subordinate to any indebtedness of that subsidiary
senior to that held by CSX. Although certain debt instruments to which CSX and
our subsidiaries are parties impose limitations on the incurrence of additional
indebtedness, both CSX and our subsidiaries retain the ability to incur
substantial additional indebtedness and lease and letter of credit obligations.
Global Debt Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the prospectus supplement relating to that
series. Global debt securities may be issued in either registered or bearer
form and in either temporary or permanent form. Unless and until it is
exchanged in whole or in part for individual certificates evidencing debt
securities in definitive form, a global debt security may not be transferred
except as a whole by the depositary for that global debt security to a nominee
of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or by the depositary or any nominee to a
successor of the depositary or a nominee of the successor.
The specific terms of the depositary arrangement with respect to a series of
global debt securities and certain limitations and restrictions relating to a
series of global bearer debt securities will be described in the prospectus
supplement relating to that series.
Redemption and Repurchase
The debt securities of any series may be redeemable at our option, may be
subject to mandatory redemption pursuant to a sinking fund or otherwise, or may
be subject to repurchase by us at the option of the holders, in each case upon
the terms, at the times and at the prices set forth in the applicable
prospectus supplement.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for our common stock, preferred stock, depositary shares
or other debt securities will be set forth in the applicable prospectus
supplement. Those terms may include provisions for conversion or exchange,
either mandatory, at the option of the holders or at our option.
13
Certain Covenants and Agreements of CSX
The indentures do not limit the amount of indebtedness or lease obligations
that may be incurred by CSX and our subsidiaries. The indentures do not contain
provisions that would give holders of the debt securities the right to require
CSX to repurchase their debt securities in the event of a decline in the credit
rating of our debt securities resulting from a takeover, recapitalization or
similar restructuring.
Covenant in the Senior Indenture--Limitation on Liens on Stock of Our
Principal Subsidiaries.
The following covenant will be applicable to senior debt securities but not
to subordinated debt securities. The senior indenture provides that CSX may
not, nor may it permit any subsidiary to, create, assume, incur or suffer to
exist any mortgage, pledge, lien, encumbrance, charge or security interest of
any kind upon any stock or indebtedness, whether owned on the date of the
senior indenture or acquired later, of any principal subsidiary, to secure any
obligation (other than the senior debt securities) of CSX, any subsidiary or
any other person, unless all of the outstanding senior debt securities (and
other outstanding debt securities issued from time to time pursuant to the
senior indenture) will be directly secured equally and ratably with that
obligation. This provision does not restrict any other property of CSX or our
subsidiaries. The senior indenture defines "obligation" as indebtedness for
money borrowed or indebtedness evidenced by a bond, note, debenture or other
evidence of indebtedness; "principal subsidiary" as CSXT and SL Service, Inc.;
and "subsidiary" as a corporation a majority of the outstanding voting stock of
which is owned, directly or indirectly, by CSX or one or more subsidiaries, or
by CSX and one or more subsidiaries. The indentures do not prohibit the sale by
CSX or any subsidiary of any stock or indebtedness of any subsidiary, including
any principal subsidiary.
Provision in Both Indentures--Consolidation, Merger and Sale of Assets.
The following provision will be applicable to both senior debt securities
and subordinated debt securities. Each indenture provides that CSX may, without
the consent of the holders of any of the outstanding debt securities of a
series, consolidate with, merge into or transfer our assets substantially as an
entirety to any corporation organized under the laws of any domestic or foreign
jurisdiction, provided that
. the successor corporation assumes, by a supplemental indenture, CSX's
obligations on the debt securities of each series and under the
indenture,
. after giving effect to the transaction, no event of default, and no
event which, after notice or lapse of time, or both, would become an
event of default will have occurred and be continuing, and
. CSX delivers to the relevant trustee an officer's certificate and an
opinion of counsel each stating that the transaction and supplemental
indenture, if any, comply with the applicable article of the indenture
and that all conditions precedent in the indenture relating to the
transaction have been complied with.
Events of Default
An "event of default" with respect to the debt securities of any series is
defined in the relevant indenture as being a:
. failure to pay principal of or any premium on any of the debt securities
of that series when due;
. failure to pay any interest on any debt security of that series when
due, continued for 30 days;
. failure to deposit any sinking fund payment, when due, in respect of any
debt security of that series;
. failure to perform any other covenant of CSX in the relevant indenture
(other than a covenant included in that indenture solely for the benefit
of series of debt securities other than that series) continued for 90
days after written notice as provided in the indenture;
14
. certain events of bankruptcy, insolvency or reorganization of CSX; or
. any other event of default provided with respect to debt securities of
that series.
No event of default with respect to any particular series of debt securities
necessarily constitutes an event of default with respect to any other series of
debt securities. Each indenture provides that the trustee may withhold notice
to the holders of the debt securities of any series of the occurrence of a
default with respect to the debt securities of that series (except a default in
payment of principal, premium, if any, interest, if any, or sinking fund
payments, if any) if the trustee considers it in the interest of the holders to
do so.
Subject to the provisions of the Trust Indenture Act requiring each trustee,
during an event of default under the relevant indenture, to act with the
requisite standard of care, and to the provisions of the relevant indenture
relating to the duties of the trustee in case an event of default occurs and is
continuing, a trustee will be under no obligation to exercise any of its rights
or powers under the indenture at the request or direction of any of the holders
of debt securities of any series or any related coupons unless those holders
offer to the trustee reasonable indemnity. Subject to the provisions for the
indemnification of the relevant trustee, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the relevant trustee, or exercising any trust or power
conferred on the trustee, with respect to debt securities of that series.
If an event of default with respect to debt securities of any series at the
time outstanding occurs and is continuing, either the relevant trustee or the
holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series may declare the principal of all those outstanding
debt securities to be due and payable immediately. At any time after a
declaration of acceleration with respect to debt securities of any series has
been made but before a judgment or decree for payment of money due has been
obtained by the relevant trustee, the holders of a majority in aggregate
principal amount of outstanding debt securities of that series may rescind any
declaration of acceleration and its consequences, if all payments due (other
than those due as a result of acceleration) have been made and all events of
default have been cured or waived.
No holder of any debt securities of any series or any related coupons will
have any right to institute any proceeding with respect to the relevant
indenture or for any remedy under the indenture, unless that holder has
previously given to the relevant trustee written notice of a continuing event
of default with respect to debt securities of that series, the holders of at
least 25% in aggregate principal amount of the outstanding debt securities of
that series have made written request, and offered reasonable indemnity, to the
relevant trustee to institute the proceeding as trustee, and the trustee has
not received from the holders of a majority in aggregate principal amount of
the outstanding debt securities of that series a direction inconsistent with
that request and has failed to institute the proceeding within 60 days.
However, these limitations do not apply to a suit instituted by a holder of an
outstanding debt security of that series for enforcement of payment of the
principal of, or any premium or interest on, that debt security on or after the
respective due dates expressed in that debt security.
CSX is required to furnish to the relevant trustee annually a statement as
to performance or fulfillment of covenants, agreements or conditions in the
relevant indenture and as to the absence of default.
Meetings, Modification and Waiver
Each indenture contains provisions permitting CSX and the relevant trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each series issued under
that indenture and affected by a modification or amendment (voting as one
15
class), to modify or amend any of the provisions of that indenture or of those
debt securities or the rights of the holders of those debt securities under
that indenture, provided that no modification or amendment will, without the
consent of each holder of each outstanding debt security affected by that
modification or amendment:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security, or reduce the principal
amount of or the rate of interest on or any premium payable upon the
redemption of any debt security, or change any obligation of CSX to pay
additional amounts (except as contemplated and permitted by the
indenture), or reduce the amount of the principal of an original issue
discount security that would be due and payable upon a declaration of
acceleration of the maturity of that security or change the coin or
currency in which any debt security or any premium or interest on any
debt security is payable, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any debt
security (or, in the case of redemption, on or after the redemption
date),
. reduce the percentage in principal amount of the debt securities, the
consent of the holders of which is required for any modification or
amendment or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the indenture or certain defaults
under the indenture and their consequences) or reduce the requirements
for a quorum or voting at a meeting of holders of the debt securities,
. change any obligation of CSX to maintain an office or agency in the
places and for the purposes required by the indenture,
. solely in the case of the subordinated indenture, modify any of the
provisions of the subordinated indenture relating to subordination of
the subordinated debt securities or the definition of senior
indebtedness in a manner adverse to the holders of the subordinated debt
securities, or
. modify any of the above provisions (except as permitted by the
indenture).
Each indenture also contains provisions permitting CSX and the relevant
trustee, without the consent of the holders of the debt securities issued under
the indenture, to modify or amend the indenture in order, among other things:
. to add any additional events of default or add to the covenants of CSX
for the benefit of the holders of all or any series of debt securities
issued under the indenture;
. to establish the form or terms of debt securities of any series;
. to cure any ambiguity, to correct or supplement any provision in the
indenture which may be inconsistent with any other provision in the
indenture, or to make any other provisions with respect to matters or
questions arising under the indenture which shall not adversely affect
the interests of the holders of any debt securities issued under the
indenture in any material respect; or
. to change or eliminate any of the provisions of the indenture, provided
that the change or elimination will become effective only when there is
no debt security outstanding of any series issued under the indenture
created prior to the execution of the supplemental indenture which is
entitled to the benefit of that provision.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of a series may, on behalf of the holders of all
the debt securities of that series, waive, insofar as that series is concerned,
compliance by CSX with certain restrictive provisions of the indenture,
including the covenant described above under "--Certain Covenants and
Agreements of CSX--Covenant in the Senior Indenture--Limitation on Liens on
Stock of Our Principal Subsidiaries." The holders of not less than a majority
in aggregate principal amount of the outstanding debt securities of a series
may, on behalf of all holders of debt securities of that series and any related
coupons, waive any past default under the indenture with respect to debt
securities of that series, except a default (a) in the payment of principal of
or any premium or interest on any debt security of that series or (b) in
respect of a
16
covenant or provision of the indenture which cannot be modified or amended
without the consent of the holder of each outstanding debt security of the
series affected.
Each indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver under that
indenture or are present at a meeting of holders of debt securities for quorum
purposes,
(1) the principal amount of an original issue discount debt security that
will be deemed to be outstanding will be the amount of the principal
that would be due and payable as of the date of the determination upon
acceleration of the maturity thereof,
(2) the principal amount of a debt security denominated in a foreign
currency or currency unit will be the U.S. dollar equivalent, determined
as of the date of original issuance of that debt security, of the
principal amount of that debt security or, in the case of an original
issue discount debt security, the U.S. dollar equivalent, determined as
of the date of original issuance of that debt security, of the amount
determined as provided in (1) above and
(3) any debt security owned by CSX or any other obligor on that debt
security or any affiliate of CSX or other obligor will be deemed not to
be outstanding.
Each indenture contains provisions for convening meetings of the holders of
debt securities of any or all series. A meeting may be called at any time by
the relevant trustee, and also, upon request, by CSX or the holders of at least
10% in aggregate principal amount of the outstanding debt securities of that
series, in each case upon notice given in accordance with "Notices" below and
the provisions of the relevant indenture. Except for any consent which must be
given by the holder of each outstanding debt security that would be affected as
described above, any resolution presented at a meeting, or adjourned meeting
duly reconvened, at which a quorum (as described below) is present may be
adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding debt securities of that series; provided, however,
that, except for any consent which must be given by the holder of each
outstanding debt security that would be affected, as described above, any
resolution with respect to any consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
debt securities of a series may be adopted at a meeting, or an adjourned
meeting duly reconvened, at which a quorum is present only by the affirmative
vote of the holders of not less than the specified percentage in principal
amount of the outstanding debt securities of that series.
Any resolution passed or decision taken at any meeting of holders of debt
securities of any series duly held in accordance with the relevant indenture
will be binding on all holders of debt securities of that series and the
related coupons. The quorum required for any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding debt securities
of a series; provided, however, that if any action is to be taken at that
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding
debt securities of a series, the persons holding or representing that specified
percentage in principal amount of the outstanding debt securities of the series
will constitute a quorum.
Notices
Except as otherwise provided in the indenture, notices to holders of bearer
debt securities will be given by publication at least twice in a daily
newspaper of general circulation in The City of New York and in any other city
or cities as may be specified in those debt securities. Notices to holders of
registered debt securities will be given by mail to the addresses of those
holders as they appear in the security register.
17
Title
Title to any bearer debt securities (including bearer debt securities in
temporary global form and in permanent global form) and any related coupons
will pass by delivery. CSX, the trustee and any agent of CSX or the trustee may
treat the bearer of any bearer debt security and the bearer of any coupon and
the registered owner of any registered debt security as the absolute owner
(whether or not that debt security or coupon is overdue and notwithstanding any
notice to the contrary) for the purpose of making payment and for all other
purposes.
Replacement of Debt Securities
Any mutilated debt security or a debt security with a mutilated coupon will
be replaced by CSX at the expense of the holder upon surrender of that debt
security to the relevant trustee. Debt securities or coupons that become
destroyed, lost or stolen will be replaced by CSX at the expense of the holder
upon delivery to the relevant trustee of evidence of the destruction, loss or
theft satisfactory to CSX and the relevant trustee; in the case of any coupon
which becomes destroyed, lost or stolen, that coupon will be replaced by
issuance of a new debt security in exchange for the debt security to which the
coupon appertains. In the case of a destroyed, lost or stolen debt security or
coupon, an indemnity satisfactory to the trustee and CSX may be required at the
expense of the holder of that debt security or coupon before a replacement debt
security will be issued.
Discharge, Defeasance and Covenant Defeasance
Upon the direction of CSX, either indenture will generally cease to be of
further effect with respect to any series of debt securities issued under that
indenture specified by CSX (subject to the survival of certain provisions of
that indenture) when
. CSX has delivered to the relevant trustee for cancellation all debt
securities issued under that indenture or
. all debt securities issued under that indenture not previously delivered
to the relevant trustee for cancellation have become due and payable, or
are by their terms to become due and payable within one year or are to
be called for redemption within one year, and CSX has deposited with the
relevant trustee as trust funds the entire amount sufficient to pay and
discharge at stated maturity or upon redemption the entire indebtedness
on all debt securities issued under that indenture
(and if, in either case, CSX has paid or caused to be paid all other sums
payable under the relevant indenture with respect to the debt securities of
that series by CSX and CSX has delivered an officer's certificate and an
opinion of counsel each stating that the requisite conditions have been
complied with).
In addition, unless otherwise provided in an applicable prospectus
supplement, CSX may elect with respect to any series of debt securities either
(1) to defease and be discharged from any and all obligations with respect to
those debt securities (except as otherwise provided in the relevant
indenture) ("defeasance") or
(2) to be released from our obligations with respect to those debt securities
described above under "--Certain Covenants and Agreements of CSX--Covenant
in the Senior Indenture--Limitation on Liens on Stock of Our Principal
Subsidiaries" (which covenant appears only in the senior indenture) and
certain other restrictive covenants in the relevant indenture and, if
indicated in the applicable prospectus supplement, our obligations with
respect to any other covenant applicable to the debt securities of that
series ("covenant defeasance").
If we exercise our defeasance option with respect to any series of debt
securities, payment of those debt securities may not be accelerated because of
an event of default. If we exercise our
18
covenant defeasance option with respect to any series of debt securities,
payment of those debt securities may not be accelerated because of an event of
default related to the covenants noted under clause (2) of the immediately
preceding paragraph. We may exercise our defeasance option with respect to
those debt securities even though we may have previously exercised our covenant
defeasance option.
If CSX effects covenant defeasance with respect to any debt securities and
those debt securities are declared due and payable because of the occurrence of
any event of default other than an event of default with respect to the
covenant described above under "--Certain Covenants and Agreements of
CSX--Covenant in the Senior Indenture--Limitation on Liens on Stock of Our
Principal Subsidiaries" (which covenant appears only in the senior indenture
and which would no longer be applicable to those debt securities after the
covenant defeasance) or with respect to any other covenant as to which there
has been covenant defeasance, the amount of monies and/or government
obligations deposited with the applicable trustee to effect the covenant
defeasance may not be sufficient to pay amounts due on those debt securities at
the time of any acceleration resulting from the event of default. However, we
would remain liable to make payment of those amounts due at the time of
acceleration.
We may exercise our defeasance option or our covenant defeasance option with
respect to any series of debt securities, only if
(1) CSX irrevocably deposits in trust with the trustee cash and/or U.S.
government obligations for the payment of principal, premium, if any,
and interest with respect to those debt securities to maturity or
redemption, as the case may be, and we deliver to the relevant trustee a
certificate from a nationally recognized firm of independent public
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S.
government obligations plus any deposited money without investment will
provide cash at the times and in the amounts as will be sufficient to
pay the principal, premium, if any, and interest when due with respect
to all those debt securities to maturity or redemption, as the case may
be,
(2) no event of default with respect to the debt securities of that series
has occurred and is continuing
. on the date of the deposit or
. with respect to certain bankruptcy defaults, at any time during the
period ending on the 123rd day after the date of the deposit,
(3) the defeasance or covenant defeasance does not result in the trust
arising from that deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940,
as amended,
(4) the defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the relevant indenture or
any other agreement or instrument to which we are a party or by which we
are bound,
(5) CSX delivers to the trustee an opinion of counsel to the effect that the
holders of the debt securities will not recognize income, gain or loss
for United States federal income tax purposes as a result of the
defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the defeasance or covenant
defeasance had not occurred, and
(6) CSX delivers to the trustee an officer's certificate and an opinion of
counsel, each stating that all conditions precedent to the defeasance
and discharge of the debt securities as contemplated by the indenture
have been complied with.
19
The opinion of counsel, with respect to defeasance, referred to in clause
(5) above, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law
occurring after the date of the relevant indenture.
The trustee must hold in trust cash or U.S. government obligations deposited
with it as described above and must apply the deposited cash and the proceeds
from deposited U.S. government obligations to the payment of principal,
premium, if any, and interest with respect to the debt securities.
The applicable prospectus supplement may further describe the provisions, if
any, permitting or restricting defeasance or covenant defeasance with respect
to the debt securities of a particular series.
Governing Law
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
Concerning the Trustees
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of CSX, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
those claims, as security or otherwise. Each trustee is permitted to engage in
other transactions with CSX and our subsidiaries from time to time, provided
that if the trustee acquires any conflicting interest it must eliminate the
conflict upon the occurrence of an event of default under the relevant
indenture, or else resign.
CSX and certain of our subsidiaries may from time to time maintain lines of
credit, and have other customary banking and commercial relationships, with The
Chase Manhattan Bank, the senior trustee and the subordinated trustee. The
Chase Manhattan Bank acts as trustee under the senior indenture and another
indenture pursuant to which we issued our Series A Medium-Term Notes, Series B
Medium-Term Notes, Series C Medium Term Notes, 7.00% Notes due 2002, 7.05%
Debentures due 2002, 7.25% Debentures due 2004, 9.00% Debentures due 2006,
7.45% Debentures due 2007, 6.25% Notes due 2008, 6.75% Notes due 2011, 7.90%
Debentures due 2017, 8.625% Debentures due 2022, 8.10% Debentures due 2022,
7.95% Debentures due 2027, 6.95% Debentures due 2027, 7.25% Debentures due 2027
and 8.30% Debentures due 2032.
20
ADDITIONAL TERMS OF SUBORDINATED DEBT SECURITIES
Additional Covenants Applicable to Subordinated Debt Securities
Under the subordinated indenture, or under one or more supplemental
indentures to the subordinated indenture, we will:
. maintain 100% ownership of the common securities of any trust to which
subordinated debt securities have been issued while those subordinated
debt securities remain outstanding; and
. pay to any trust to which subordinated debt securities have been issued
any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or
any other taxing authority on that trust, so that the net amounts
received and retained by that trust (after paying any taxes, duties,
assessments or other governmental charges) will be not less than that
trust would have received had no such taxes, duties, assessments or
other governmental charges been imposed.
Option to Extend Interest Payment Period
If so indicated in the prospectus supplement, we can defer interest payments
by extending the interest payment period for the number of consecutive
extension periods specified in the applicable prospectus supplement. Other
details regarding the extension period will also be specified in the applicable
prospectus supplement. No extension period may extend beyond the maturity of
the applicable subordinated debt securities. At the end of the extension
period(s), we will pay all interest then accrued and unpaid, together with
interest compounded quarterly at the rate for the applicable subordinated debt
securities, to the extent permitted by applicable law.
During any extension period, we will not make distributions related to our
capital stock, including dividends, redemptions, repurchases, liquidation
payments, or guarantee payments. Also, we will not make any payments, redeem or
repurchase any debt securities of equal or junior rank to the subordinated debt
securities or make any guarantee payments on any such debt securities. We may,
however, make the following types of distributions:
. dividends paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan;
. payments to a trust holding securities of the same series under a
guarantee; or
. repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants.
Subordination
The payment of the principal of, premium, if any, and interest, if any, on
the subordinated debt securities will be subordinated, to the extent and in the
manner set forth in the subordinated indenture, in right of payment to the
prior payment in full of all senior indebtedness which may at any time and from
time to time be outstanding. Unless otherwise provided in the applicable
prospectus supplement with respect to an issue of subordinated debt securities,
in the event of any distribution of our assets upon any dissolution, winding
up, liquidation, reorganization or other similar proceedings of CSX,
. all senior indebtedness shall first be paid in full, or that payment
shall be provided for, before any payment on account of the principal
of, or premium, if any, or interest, if any, on the subordinated debt
securities is made, and
. if any payment or distribution of our assets is received by the
subordinated trustee or the holders of any of the subordinated debt
securities before all senior indebtedness is paid in full,
21
that payment or distribution will be paid over to the holders of senior
indebtedness or on their behalf for application to the payment of all
senior indebtedness remaining unpaid until all senior indebtedness has
been paid in full or that payment provided for, after giving effect to
any concurrent payment or distribution to the holders of senior
indebtedness.
Subject to the payment in full of all senior indebtedness upon any
distribution of our assets, the holders of the subordinated debt securities
will be subrogated to the rights of the holders of the senior indebtedness to
the extent of payments made to the holders of senior indebtedness out of the
distributive share of the subordinated debt securities.
By reason of subordination of the subordinated debt securities, if there is
any distribution of our assets upon dissolution, winding up, liquidation,
reorganization or other similar proceedings of CSX,
. holders of senior indebtedness will be entitled to be paid in full
before payments may be made on the subordinated debt securities and the
holders of subordinated debt securities will be required to pay over
their share of that distribution to the holders of senior indebtedness
until all senior indebtedness is paid in full, and
. creditors of CSX who are neither holders of subordinated debt securities
nor holders of senior indebtedness may recover less, ratably, than
holders of senior indebtedness and may recover more, ratably, than the
holders of the subordinated debt securities.
Furthermore, subordination may result in a reduction or elimination of payments
to the holders of subordinated debt securities. The subordinated indenture
provides that the subordination provisions in the subordinated indenture will
not apply to any money and securities held in trust pursuant to the discharge,
defeasance and covenant defeasance provisions of the subordinated indenture
(see "--Discharge, Defeasance and Covenant Defeasance" above).
The subordinated indenture also provides that no payment on account of the
principal of, or premium, if any, sinking funds, if any, or interest, if any,
on the subordinated debt securities will be made unless full payment of amounts
then due for the principal of, premium, if any, sinking funds, if any, and
interest, if any, on senior indebtedness has been made or duly provided for.
Senior indebtedness means, with respect to any series of subordinated debt
securities, the principal, premium, interest and any other payment in respect
of any of the following:
(1) any liability of CSX
. for borrowed money or under any reimbursement obligation relating to
a letter of credit, or
. evidenced by a bond, note, debenture or similar instrument, or
. for obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, or
. for the payment of money relating to a capitalized lease obligation,
or
. for the payment of money under any swap agreement;
(2) any liability of others described in the preceding clause (1) that CSX
has guaranteed or that is otherwise our legal liability; and
(3) any deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (1) and (2) above,
unless, in the instrument creating or evidencing any liability referred to in
clause (1) or (2) above or any deferral, renewal, extension or refunding
referred to in clause (3) above or pursuant to which the
22
same is outstanding, it is expressly provided that the liability, deferral,
renewal, extension or refunding is subordinate in right of payment to all other
indebtedness of CSX or is not senior or prior in right of payment to the
subordinated debt securities or ranks pari passu with or subordinate to the
subordinated debt securities in right of payment; and provided that the
subordinated debt securities shall not constitute senior indebtedness. Swap
agreements are defined as any financial agreement designed to manage our
exposure to fluctuations in interest rates, currency exchange rates or
commodity prices, including without limitation swap agreements, option
agreements, cap agreements, floor agreements, collar agreements and forward
purchase agreements.
Senior indebtedness will be entitled to the benefits of the subordination
provisions in the subordinated indenture irrespective of the amendment,
modification or waiver of any term of the senior indebtedness. We may not amend
the subordinated indenture to change the subordination of any outstanding
subordinated debt securities without the consent of each holder of senior
indebtedness that the amendment would adversely affect.
If this prospectus is being delivered in connection with the offering of a
series of subordinated debt securities, the accompanying prospectus supplement
or the information incorporated by reference in this prospectus will set forth
the approximate amount of senior indebtedness outstanding as of a recent date.
The subordinated indenture does not limit the amount of senior indebtedness
that we may issue.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following is a summary of the principal terms of the trust preferred
securities. The form of amended trust agreement is filed as an exhibit to the
registration statement of which this prospectus forms a part, or is
incorporated by reference. The terms of the trust preferred securities will
include those stated in the amended trust agreement and those made part of the
amended trust agreement by the Trust Indenture Act.
General
The Trust will exist until terminated as provided in its amended trust
agreement. Except under certain circumstances, CSX will be entitled to appoint,
remove, or replace trustees, who will conduct the business and affairs of the
Trust. The trustees of the Trust will consist of:
. two employees, officers or affiliates of CSX as administrative trustees;
. a financial institution unaffiliated with CSX that will act as property
trustee and as indenture trustee for purposes of the Trust Indenture
Act, under the terms set forth in a prospectus supplement; and
. one trustee with its principal place of business or who resides in the
State of Delaware and who will act under the terms set forth in a
prospectus supplement.
The amended trust agreement will authorize the administrative trustees to
issue, on behalf of the Trust, two classes of trust securities, trust preferred
securities and trust common securities, each of which will have the terms
described in this prospectus and in the applicable prospectus supplement. CSX
will own all of the trust common securities. The trust common securities will
rank equally in right of payment, and payments will be made on the trust common
securities, proportionately with the trust preferred securities. However, if an
event of default occurs and is continuing under the amended trust agreement,
the rights of the holders of the trust common securities to payment of
distributions and payments upon liquidation, redemption and otherwise, will be
subordinated to the rights of the holders of the trust preferred securities.
CSX will acquire, directly or indirectly, trust common securities in a total
liquidation amount of approximately 3% of the total capital of the Trust.
23
The proceeds from the sale of the trust preferred securities will be used by
the Trust to purchase our subordinated debt securities. These subordinated debt
securities will be held in trust by the property trustee for the benefit of the
holders of the trust securities. CSX will guarantee the payments of
distributions and payments on redemption or liquidation with respect to the
trust preferred securities, but only to the extent the Trust has funds
available to make those payments and has not made the payments. See
"Description of the Guarantee."
The assets of the Trust available for distribution to the holders of trust
preferred securities will be limited to payments from us under the subordinated
debt securities held by the Trust. If we fail to make a payment on the
subordinated debt securities, the Trust will not have sufficient funds to make
related payments, including distributions, on its trust preferred securities.
The guarantee, when taken together with our obligations under the
subordinated debt securities, the subordinated indenture and the amended trust
agreement, will provide a full and unconditional guarantee of amounts due on
the trust preferred securities issued by the Trust.
The trust preferred securities will have the terms, including distributions,
redemption, voting, liquidation rights and other preferred, deferred or other
special rights or restrictions that will be described in the amended trust
agreement or made part of the amended trust agreement by the Trust Indenture
Act or the Delaware Business Trust Act. The terms of the trust preferred
securities will mirror the terms of the subordinated debt securities held by
the Trust. In other words, the distribution rate and the distribution payment
dates and other payment dates for the trust preferred securities will
correspond to the interest rate and interest payment dates and other payment
dates on the subordinated debt securities. Holders of trust preferred
securities have no preemptive or similar rights.
Provisions of a Particular Series
The Trust may issue only one series of trust preferred securities. The
applicable prospectus supplement will set forth the principal terms of the
trust preferred securities that will be offered, including:
. the name of the trust preferred securities;
. the liquidation amount and number of trust preferred securities issued;
. the annual distribution rate(s) or method of determining such rate(s),
the payment date(s) and the record dates used to determine the holders
who are to receive distributions;
. the date from which distributions will be cumulative;
. the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions on which the trust preferred
securities will be purchased or redeemed, in whole or in part;
. the terms and conditions, if any, upon which the subordinated debt
securities and the related guarantee may be distributed to holders of
those trust preferred securities;
. any securities exchange on which the trust preferred securities will be
listed;
. whether the trust preferred securities are to be issued in book-entry
form and represented by one or more global certificates, and if so, the
depositary for those global certificates and the specific terms of the
depositary arrangements; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of the trust preferred securities.
The interest rate and interest and other payment dates of each series of
subordinated debt securities issued to a trust will correspond to the rate at
which distributions will be paid and the distribution and other payment dates
of the trust preferred securities of that trust.
24
Extensions
CSX has the right under the subordinated indenture to defer payments of
interest on the subordinated debt securities by extending the interest payment
period from time to time on the subordinated debt securities. The
administrative trustees will give the holders of the trust preferred securities
notice of any extension period upon their receipt of notice from us. If
distributions are deferred, the deferred distributions and accrued interest
will be paid to holders of record of the trust preferred securities as they
appear on the books and records of the Trust on the record date next following
the termination of such deferral period. See "Additional Terms of Subordinated
Debt Securities--Option To Extend Interest Payment Period."
Distributions
Distributions on the trust preferred securities will be made on the dates
payable to the extent that the Trust has funds available for the payment of
distributions in the property account held by the property trustee. The Trust's
funds available for distribution to the holders of the trust securities will be
limited to payments received from us on the subordinated debt securities. CSX
has guaranteed the payment of distributions out of monies held by the Trust to
the extent set forth under "Description of the Guarantee."
Distributions on the trust preferred securities will be payable to the
holders named on the securities register of the Trust at the close of business
on the record dates, which, as long as the trust preferred securities remain in
book-entry only form, will be one business day prior to the relevant payment
dates. Distributions will be paid through the property trustee who will hold
amounts received in respect of the subordinated debt securities in the property
account for the benefit of the holders of the trust securities. In the event
that the trust preferred securities do not continue to remain in book- entry
only form, the relevant record dates will conform to the rules of any
securities exchange on which the trust preferred securities are listed and, if
none, the administrative trustees will have the right to select relevant record
dates, which will be more than 14 days but less than 60 days prior to the
relevant payment dates. In the event that any date on which distributions are
to be made on the trust preferred securities is not a business day, then
payment of the distributions payable on that date will be made on the next
succeeding day which is a business day and without any interest or other
payment in respect of that delay, except that, if that business day is in the
next succeeding calendar year, the payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the record date.
Mandatory Redemption of Trust Preferred Securities
The trust preferred securities have no stated maturity date, but will be
redeemed upon the maturity of the subordinated debt securities or to the extent
the subordinated debt securities are redeemed prior to maturity. The
subordinated debt securities will mature on the date specified in the
applicable prospectus supplement and may be redeemed at any time, in whole but
not in part, in certain circumstances upon the occurrence of a Tax Event or an
Investment Company Event as described under "Special Event Redemption."
Upon the maturity of the subordinated debt securities, the proceeds of their
repayment will simultaneously be applied to redeem all the outstanding trust
securities at the applicable redemption price. Upon the redemption of the
subordinated debt securities, either at our option or as a result of a Tax
Event or an Investment Company Event, the proceeds from the redemption will
simultaneously be applied to redeem trust securities having a total liquidation
amount equal to the total principal amount of the subordinated debt securities
so redeemed at the redemption price; provided, that holders of trust securities
will be given not less than 20 nor more than 60 days' notice of the redemption.
In the event that fewer than all of the outstanding trust securities are to be
redeemed, the trust securities will be redeemed proportionately.
25
Special Event Redemption
Both a Tax Event and an Investment Company Event constitute Special Events
for purposes of the redemption provisions described in the preceding paragraph.
A Tax Event means that the administrative trustees have received an opinion
of independent tax counsel experienced in those matters to the effect that, as
a result of any amendment to, change or announced proposed change in:
. the laws or regulations of the United States or any of its political
subdivisions or taxing authorities, or
. any official administrative pronouncement, action or judicial decision
interpreting or applying those laws or regulations,
which amendment or change becomes effective or proposed change, pronouncement,
action or decision is announced on or after the date the trust preferred
securities are issued and sold, there is more than an insubstantial risk that:
. the Trust is or within 90 days would be subject to U.S. federal income
tax with respect to income accrued or received on the subordinated debt
securities,
. interest payable to the Trust on the subordinated debt securities is not
or within 90 days would not be deductible, in whole or in part, by CSX
for U.S. federal income tax purposes, or
. the Trust is or within 90 days would be subject to a material amount of
other taxes, duties or other governmental charges.
An Investment Company Event means that the administrative trustees have
received an opinion of a nationally recognized independent counsel to the
effect that, as a result of an amendment to or change in the Investment Company
Act or regulations thereunder on or after the date the trust preferred
securities are issued and sold, there is more than an insubstantial risk that
the Trust is or will be considered an investment company and be required to be
registered under the Investment Company Act.
Redemption Procedures
The Trust may not redeem fewer than all the outstanding trust securities
unless all accrued and unpaid distributions have been paid on all trust
securities for all distribution periods terminating on or before the date of
redemption. In the event that fewer than all of the outstanding trust
securities are to be redeemed, the trust securities will be redeemed
proportionately.
If the Trust gives a notice of redemption in respect of the trust securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, and if CSX has paid to the property trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
subordinated debt securities, the property trustee will irrevocably deposit
with the depositary funds sufficient to pay the applicable redemption price and
will give the depositary irrevocable instructions and authority to pay the
redemption price to the holders of the trust preferred securities, and the
paying agent will pay the applicable redemption price to the holders of the
trust common securities by check. If notice of redemption has been given and
funds deposited as required, then, immediately prior to the close of business
on the date of the deposit, distributions will cease to accrue and all rights
of holders of trust preferred securities called for redemption will cease,
except the right of the holders of the trust preferred securities to receive
the redemption price but without interest on the redemption price. In the event
that any date fixed for redemption of trust preferred securities is not a
business day, then payment of the redemption price payable on that date will be
made on the next succeeding day that is a business day, without any interest or
other payment in respect of any such delay, except that, if that
26
business day falls in the next calendar year, payment will be made on the
immediately preceding business day. In the event that payment of the redemption
price in respect of trust preferred securities is improperly withheld or
refused and not paid either by the Trust or by CSX under the guarantee,
distributions on the trust preferred securities will continue to accrue at the
then applicable rate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the redemption price.
Subject to the foregoing and applicable law, including, without limitation,
U.S. federal securities laws, we or our subsidiaries may at any time, and from
time to time, purchase outstanding trust preferred securities by tender, in the
open market or by private agreement.
Conversion or Exchange Rights
The terms on which the trust preferred securities are convertible into or
exchangeable for common stock or our other securities will be contained in the
applicable prospectus supplement. Those terms will include provisions as to
whether conversion or exchange is mandatory, at the option of the holder or at
our option, and may include provisions under which the number of shares of
common stock or our other securities to be received by the holders of trust
preferred securities would be subject to adjustment.
Distribution of the Subordinated Debt Securities
CSX will have the right at any time to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, to cause subordinated debt securities to be distributed to the
holders of the trust preferred securities in a total stated principal amount
equal to the total stated liquidation amount of the trust preferred securities
then outstanding. Prior to any such dissolution, we will obtain any required
regulatory approvals. The right to dissolve the Trust and distribute the
subordinated debt securities will be conditioned on our receipt of an opinion
rendered by an independent tax counsel that the distribution would not result
in the recognition of gain or loss for federal income tax purposes by the
holders.
Liquidation Distribution upon Dissolution
The amended trust agreement will state that the Trust will be dissolved:
. upon our bankruptcy;
. upon the filing of a certificate of dissolution or its equivalent with
respect to CSX;
. upon the filing of a certificate of cancellation with respect to the
Trust after obtaining the consent of at least a majority in liquidation
amount of the trust preferred securities, voting together as a single
class;
. 90 days after the revocation of our charter, but only if the charter is
not reinstated during that 90-day period;
. upon the distribution of the related subordinated debt securities
directly to the holders of the trust securities;
. upon the redemption of all of the trust securities; or
. upon entry of a court order for the dissolution of CSX or the Trust.
In the event of a dissolution, after the Trust pays all amounts owed to
creditors, the holders of the trust preferred securities will be entitled to
receive:
. cash equal to the total liquidation amount of each trust preferred
security specified in an accompanying prospectus supplement, plus
accumulated and unpaid distributions to the date of payment, or
27
. subordinated debt securities in a total principal amount equal to the
total liquidation amount of the trust preferred securities.
If the Trust cannot pay the full amount due on its trust securities because
insufficient assets are available for payment, then the amounts payable by the
Trust on its trust securities will be paid proportionately. However, if an
event of default under the related amended trust agreement occurs, the total
amounts due on the trust preferred securities will be paid before any
distribution on the trust common securities. Under certain circumstances
involving the dissolution of the Trust, subject to obtaining any required
regulatory approval, subordinated debt securities will be distributed to the
holders of the trust securities in liquidation of the Trust.
Trust Enforcement Events
An event of default under the subordinated indenture relating to the
subordinated debt securities will be an event of default under the amended
trust agreement (a "Trust Enforcement Event"). See "Description of Debt
Securities--Events of Default."
In addition, the voluntary or involuntary dissolution, winding up or
termination of the Trust is also a Trust Enforcement Event, except in
connection with:
. the distribution of the subordinated debt securities to holders of the
trust securities of the Trust,
. the redemption of all of the trust securities of the Trust, and
. mergers, consolidations or amalgamations permitted by the amended trust
agreement of the Trust.
Under the amended trust agreement, the holder of the trust common securities
will be deemed to have waived any Trust Enforcement Event with respect to the
trust common securities until all Trust Enforcement Events with respect to the
trust preferred securities have been cured, waived or otherwise eliminated.
Until all Trust Enforcement Events with respect to the trust preferred
securities have been so cured, waived, or otherwise eliminated, the property
trustee will be deemed to be acting solely on behalf of the holders of the
trust preferred securities and only the holders of the trust preferred
securities will have the right to direct the property trustee with respect to
certain matters under the amended trust agreement and the subordinated
indenture. In the event that any Trust Enforcement Event with respect to the
trust preferred securities is waived by the holders of the trust preferred
securities as provided in the amended trust agreement, under the amended trust
agreement the holders of trust common securities have agreed that the waiver
also constitutes a waiver of the Trust Enforcement Event with respect to the
trust common securities for all purposes under the amended trust agreement
without any further act, vote or consent of the holders of trust common
securities.
CSX and the administrative trustees must file annually with the property
trustee a certificate evidencing compliance with all the applicable conditions
and covenants under the amended trust agreement.
Upon the occurrence of a Trust Enforcement Event the property trustee, as
the sole holder of the subordinated debt securities, will have the right under
the subordinated indenture to declare the principal of, interest and premium,
if any, on the subordinated debt securities to be immediately due and payable.
If a property trustee fails to enforce its rights under the amended trust
agreement or the subordinated indenture to the fullest extent permitted by law
and subject to the terms of the amended trust agreement and the subordinated
indenture, any holder of trust preferred securities may sue us, or seek other
remedies, to enforce the property trustee's rights under the amended trust
agreement or the subordinated indenture without first instituting a legal
proceeding against the property trustee or any
28
other person. If a Trust Enforcement Event occurs and is continuing as a result
of our failure to pay principal of or interest or premium, if any, on the
subordinated debt securities when payable, then a holder of the trust preferred
securities may directly sue us or seek other remedies, to collect its
proportionate share of payments owed. See "Relationship Among the Trust
Preferred Securities, the Guarantee and the Subordinated Debt Securities Held
by the Trust."
Removal and Replacement of Trustees
Only the holders of trust common securities have the right to remove or
replace the trustees of the Trust, except that while an event of default in
respect of the subordinated debt securities has occurred or is continuing, the
holders of a majority of the trust preferred securities will have this right.
The resignation or removal of any trustee and the appointment of a successor
trustee will be effective only on the acceptance of appointment by the
successor trustee in accordance with the provisions of the amended trust
agreement.
Mergers, Consolidations or Amalgamations of the Trust
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other corporation or other body (each, a
"Merger Event"), except as described below. The Trust may, with the consent of
a majority of its administrative trustees and without the consent of the
holders of its trust securities, consolidate, amalgamate, merge with or into,
or be replaced by another trust, provided that:
. the successor entity either
. assumes all of the obligations of the Trust relating to its trust
securities, or
. substitutes other securities for the trust securities that are
substantially similar to the trust securities, so long as the
successor securities rank the same as the trust securities for
distributions and payments upon liquidation, redemption and otherwise;
. CSX acknowledges a trustee of the successor entity, who has the same
powers and duties as the property trustee of the Trust, as the holder of
the subordinated debt securities;
. the trust preferred securities are listed, or any successor securities
will be listed, upon notice of issuance, on the same securities exchange
or other organization that the trust preferred securities are then
listed;
. the Merger Event does not cause the trust preferred securities or
successor securities to be downgraded by any nationally recognized
rating agency;
. the Merger Event does not adversely affect the rights, preferences and
privileges of the holders of the trust securities or successor
securities in any material way, other than with respect to any dilution
of the holders' interest in the new entity;
. the successor entity has a purpose identical to that of the Trust;
. prior to the Merger Event, CSX has received an opinion of counsel from a
nationally recognized law firm stating that
. the Merger Event does not adversely affect the rights of the holders
of the trust preferred securities or any successor securities in any
material way, other than with respect to any dilution of the holders'
interest in the new entity, and
. following the Merger Event, neither the Trust nor the successor
entity will be required to register as an investment company under
the Investment Company Act; and
. CSX guarantees the obligations of the successor entity under the
successor securities in the same manner as in the guarantee.
29
In addition, unless all of the holders of the trust preferred securities and
trust common securities approve otherwise, the Trust will not consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it,
if, in the opinion of a nationally recognized tax counsel experienced in such
matters, the transaction would cause the Trust or the successor entity to be
classified other than as a grantor trust for U.S. federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
The holders of trust preferred securities have no voting rights except as
discussed under "Mergers, Consolidations or Amalgamations of the Trust" and
"Description of the Guarantee--Amendments", and as otherwise required by law
and the amended trust agreement.
The amended trust agreement may be amended if approved by a majority of the
administrative trustees of the Trust. However, if any proposed amendment
provides for, or the administrative trustees otherwise propose to effect,
. any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
the amended trust agreement or otherwise, or
. the dissolution, winding up or termination of the Trust other than under
the terms of its amended trust agreement,
then the holders of the trust preferred securities as a single class will be
entitled to vote on the amendment or proposal. In that case, the amendment or
proposal will only be effective if approved by at least a majority in
liquidation amount of the trust preferred securities affected by the amendment
or proposal.
No amendment may be made to an amended trust agreement if that amendment
would:
. cause the Trust to be characterized as other than a grantor trust for
U.S. federal income tax purposes;
. reduce or otherwise adversely affect the powers of the property trustee;
or
. cause the Trust to be deemed to be an investment company which is
required to be registered under the Investment Company Act.
The holders of a majority of the total liquidation amount of the trust
preferred securities have the right to:
. direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee; or
. direct the exercise of any power conferred upon the property trustee
under the amended trust agreement, including the right to direct the
property trustee, as the holder of the subordinated debt securities, to:
. exercise the remedies available under the subordinated indenture with
respect to the subordinated debt securities,
. waive any event of default under the subordinated indenture that is
waivable, or
. cancel an acceleration of the principal of the subordinated debt
securities.
In addition, before taking any of the foregoing actions, the property
trustee must obtain an opinion of counsel stating that, as a result of that
action, the Trust will continue to be classified as a grantor trust for U.S.
federal income tax purposes.
As described in the form of amended trust agreement, holders of trust
preferred securities may vote on a change at a meeting or by written consent.
30
If a vote by the holders of trust preferred securities is taken or a consent
is obtained, any trust preferred securities owned by CSX or any of our
affiliates will, for purposes of the vote or consent, be treated as if they
were not outstanding, which will have the following consequences:
. we and any of our affiliates will not be able to vote on or consent to
matters requiring the vote or consent of holders of trust preferred
securities; and
. any trust preferred securities owned by CSX or any of our affiliates
will not be counted in determining whether the required percentage of
votes or consents has been obtained.
Information Concerning the Property Trustee
The Chase Manhattan Bank will be the property trustee. The Chase Manhattan
Bank will also be the guarantee trustee, the subordinated indenture trustee and
the senior indenture trustee. CSX and certain of our affiliates may from time
to time maintain deposit accounts and other banking relationships with The
Chase Manhattan Bank. The Chase Manhattan Bank also serves as trustee under
other indentures pursuant to which securities of CSX are outstanding. See
"Description of Debt Securities--Concerning the Trustees."
For matters relating to compliance with the Trust Indenture Act, the
property trustee will have all of the duties and responsibilities of an
indenture trustee under the Trust Indenture Act. The property trustee, other
than during the occurrence and continuance of a Trust Enforcement Event,
undertakes to perform only the duties that are specifically described in the
amended trust agreement and, upon a Trust Enforcement Event, must use the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the property
trustee is under no obligation to exercise any of the powers given it by the
applicable amended trust agreement at the request of any holder of trust
preferred securities unless it is offered reasonable security or indemnity
against the costs, expenses and liabilities that it might incur.
Information Concerning the Delaware Trustee
Chase Manhattan Bank USA, National Association, will serve as trustee of the
Trust in the State of Delaware for the purpose of complying with the provisions
of the Delaware Business Trust Act. It is an affiliate of The Chase Manhattan
Bank which will serve as property trustee and in the other capacities described
above under "Information Concerning the Property Trustee."
Information Concerning the Administrative Trustees
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the Trust in a way that:
. will not cause it to be deemed to be an investment company required to
be registered under the Investment Company Act;
. will cause it to be classified as a grantor trust for U.S. federal
income tax purposes; and
. will cause the subordinated debt securities it holds to be treated as
indebtedness of CSX for U.S. federal income tax purposes.
CSX and the administrative trustees are authorized to take any action, so
long as it is not inconsistent with applicable law or the certificate of trust
or amended trust agreement, that we and the administrative trustees determine
to be necessary or desirable for those purposes.
31
DESCRIPTION OF THE GUARANTEE
CSX will execute the guarantee from time to time for the benefit of the
holders of the trust preferred securities.
The Chase Manhattan Bank will act as guarantee trustee under the guarantee.
The guarantee trustee will hold the guarantee for the benefit of the holders of
the trust preferred securities.
The following description of the guarantee is only a summary. The form of
guarantee is an exhibit to the registration statement.
General
CSX will irrevocably and unconditionally agree under the guarantee to pay
the guarantee payments that are defined below, to the extent specified in the
guarantee, to the holders of the trust preferred securities, to the extent that
the guarantee payments are not paid by or on behalf of the Trust. We are
required to pay the guarantee payments to the extent specified in the guarantee
regardless of any defense, right of set-off or counterclaim that we may have or
may assert against any person.
The following payments and distributions on the trust preferred securities
of the Trust are guarantee payments:
. any accrued and unpaid distributions required to be paid on the trust
preferred securities of the Trust, but only to the extent that the Trust
has funds legally and immediately available for those distributions;
. the redemption price for any trust preferred securities that the Trust
calls for redemption, including all accrued and unpaid distributions to
the redemption date, but only to the extent that the Trust has funds
legally and immediately available for the payment; and
. upon a dissolution, winding-up or termination of the Trust, other than
in connection with the distribution of subordinated debt securities to
the holders of trust securities of the Trust or the redemption of all
the trust preferred securities of the Trust, the lesser of:
. the sum of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities of the Trust to the
payment date, to the extent that the Trust has funds legally and
immediately available for the payment; and
. the amount of assets of the Trust remaining available for
distribution to holders of the trust preferred securities of the
Trust in liquidation of the Trust.
We may satisfy our obligation to make a guarantee payment by making that
payment directly to the holders of the related trust preferred securities or by
causing the Trust to make the payment to those holders.
The guarantee will be a full and unconditional guarantee, subject to certain
subordination provisions, of the guarantee payments with respect to the trust
preferred securities from the time of issuance of the trust preferred
securities, except that the guarantee will only apply to the payment of
distributions and other payments on the trust preferred securities when the
Trust has sufficient funds legally and immediately available to make those
distributions or other payments.
If CSX does not make the required payments on the subordinated debt
securities that the property trustee holds under the Trust, the Trust will not
make the related payments on the trust preferred securities.
32
Subordination
Our obligations under the guarantee will be unsecured obligations. Those
obligations will rank:
. subordinate and junior in right of payment to certain other liabilities
of CSX, as described in the prospectus supplement;
. equal in priority with subordinated debt securities and similar
guarantees that CSX may issue or enter into in respect of the Trust or
any similar financing vehicle sponsored by CSX; and
. senior to our preferred and common stock.
CSX has no subordinated debt securities outstanding that will rank equal in
priority with the guarantee. CSX has common stock outstanding that will rank
junior to the guarantee.
The guarantee will be a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against us, as guarantor, to enforce its rights under the guarantee without
first instituting a legal proceeding against any other person or entity.
The terms of the trust preferred securities will provide that each holder of
the trust preferred securities, by accepting those trust preferred securities,
agrees to the subordination provisions and other terms of the guarantee.
Amendments
CSX may amend the guarantee without the consent of any holder of the trust
preferred securities to which the guarantee relates if the amendment does not
materially and adversely affect the rights of those holders. We may otherwise
amend the guarantee with the approval of the holders of at least 50% of the
outstanding trust preferred securities to which the guarantee relates.
Termination
The guarantee will terminate and be of no further effect when:
. the redemption price of the trust preferred securities to which the
guarantee relates is fully paid;
. CSX distributes the related subordinated debt securities to the holders
of those trust preferred securities; or
. the amounts payable upon liquidation of the related Trust are fully paid.
The guarantee will remain in effect or will be reinstated if at any time any
holder of the related trust preferred securities must restore payment of any
sums paid to that holder with respect to those trust preferred securities or
under the guarantee.
Material Covenants
CSX will covenant that, so long as any trust preferred securities remain
outstanding, if there is an event of default under the guarantee or under the
subordinated indenture for the related subordinated debt securities or during
an extension of the interest payment period for the related subordinated debt
securities:
. we will not declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of
CSX's capital stock; and
. we will not make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any CSX debt securities that rank
equally with or junior to the subordinated debt securities issued to the
Trust or make any guarantee payments with respect to any guarantee by
CSX of the debt securities of any subsidiary of CSX if such guarantee
ranks equally with or junior to the subordinated debt securities issued
to the Trust.
33
We may, however, make the following types of distributions:
. dividends or distributions paid in common stock;
. dividends in connection with the implementation of a shareholder rights
plan or the redemption or repurchase of any rights pursuant to such a
plan;
. payments to a trust holding securities of the same series under a
guarantee; and
. purchases of common stock related to the issuance of common stock or
rights under any of the CSX's benefit plans.
Because we are a holding company that conducts all of our operations through
our subsidiaries, our ability to meet our obligations under the guarantee is
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to us. The
Trust, as holder of the guarantee and the subordinated debt securities will
generally have a junior position to claims of creditors of our subsidiaries,
including trade creditors, debtholders, secured creditors, taxing authorities,
guarantee holders and any preferred shareholders.
Events of Default
An event of default will occur under the guarantee if we fail to perform any
of our payment obligations under the guarantee. The holders of a majority of
the trust preferred securities of any series may waive any such event of
default and its consequences on behalf of all of the holders of the trust
preferred securities of that series. The guarantee trustee is entitled to
enforce the guarantee for the benefit of the holders of the trust preferred
securities of a series if an event of default occurs under the related
guarantee. The holders of a majority of the trust preferred securities to which
the guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee
with respect to the guarantee or to direct the exercise of any trust or power
that the guarantee trustee holds under the guarantee. Any holder of the related
trust preferred securities may institute a legal proceeding directly against us
to enforce that holder's rights under the guarantee without first instituting a
legal proceeding against the guarantee trustee or any other person or entity.
Concerning the Guarantee Trustee
The Chase Manhattan Bank will be the guarantee trustee. It will also serve
as the property trustee, the subordinated indenture trustee and the senior
indenture trustee. We and certain of our affiliates may from time to time
maintain deposit accounts and other banking relationships with The Chase
Manhattan Bank. The Chase Manhattan Bank also serves as trustee under another
indenture pursuant to which securities of CSX are outstanding. See "Description
of Debt Securities--Concerning the Trustees." The guarantee trustee will
perform only those duties that are specifically set forth in each guarantee
unless an event of default under the guarantee occurs and is continuing. In
case an event of default occurs and is continuing, the guarantee trustee will
exercise the same degree of care as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs. Subject to
those provisions, the guarantee trustee is under no obligation to exercise any
of its powers under any guarantee at the request of any holder of the related
trust preferred securities unless that holder offers reasonable indemnity to
the guarantee trustee against the costs, expenses and liabilities which it
might incur as a result.
Agreement as to Expenses and Liabilities
CSX will enter into an agreement as to expenses and liabilities as required
under the trust agreement. The agreement as to expenses and liabilities will
provide that we will, with certain
34
exceptions, irrevocably and unconditionally guarantee the full payment of any
indebtedness, expenses or liabilities of the Trust to each person or entity to
whom the Trust becomes indebted or liable. The exceptions are the obligations
of the Trust to pay to the holders of the trust common securities or other
similar interests in the Trust the amounts due to the holders under the terms
of the trust common securities or the similar interests.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE GUARANTEE AND THE
SUBORDINATED DEBT SECURITIES HELD BY THE TRUST
CSX will guarantee payments of distributions and redemption and liquidation
payments due on the trust preferred securities, to the extent the Trust has
funds available for the payments, as described under "Description of the
Guarantee." No single document executed by us in connection with the issuance
of the trust preferred securities will provide for our full, irrevocable and
unconditional guarantee of the trust preferred securities. It is only the
combined operation of our obligations under the guarantee, the amended trust
agreement and the subordinated indenture that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations under
the trust preferred securities.
As long as we make payments of interest and other payments when due on the
subordinated debt securities held by the Trust, those payments will be
sufficient to cover the payment of distributions and redemption and liquidation
payments due on the trust preferred securities issued by the Trust, primarily
because:
. the total principal amount of the subordinated debt securities will be
equal to the sum of the total liquidation amount of the trust securities;
. the interest rate and interest and other payment dates on the
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred securities;
. we will pay for any and all costs, expenses and liabilities of the Trust
except its obligations under its trust preferred securities; and
. the amended trust agreement will provide that the Trust will not engage
in any activity that is not consistent with the limited purposes of the
Trust.
If, and to the extent that, we do not make payments on the subordinated debt
securities, the Trust will not have funds available to make payments of
distributions or other amounts due on its trust preferred securities. In those
circumstances, you will not be able to rely upon the guarantee for payment of
these amounts. Instead, you may directly sue us or seek other remedies to
collect your proportionate share of payments owed. If you sue us to collect
payment, then we will assume your rights as a holder of trust preferred
securities under the amended trust agreement to the extent we make a payment to
you in any such legal action.
ACCOUNTING TREATMENT
The Trust will be treated as a subsidiary of ours for financial reporting
purposes. Accordingly, our consolidated financial statements will include the
accounts of the Trust. The trust preferred securities, along with other trust
preferred securities that we guarantee on an equivalent basis, will be
presented as a separate line item in our consolidated balance sheets, and
appropriate disclosures about the trust preferred securities, the guarantee and
the subordinated debt securities will be included in the notes to the
consolidated financial statements. We will record distributions that the Trust
pays on the trust preferred securities as an expense in our consolidated
statement of income.
35
DESCRIPTION OF CAPITAL STOCK
As of the date of this prospectus, the authorized capital stock of CSX is
(i) 300,000,000 shares of common stock, par value $1.00 per share, and (ii)
25,000,000 shares of preferred stock, without par value, issuable in series, of
which 3,000,000 shares of Series B Preferred Stock were reserved for issuance
under the Shareholders Rights Plan. As of March 30, 2001, 211,563,113 shares of
common stock were issued and outstanding, and no shares of preferred stock were
outstanding.
The following summary of certain provisions of common stock, preferred
stock, Series B Preferred Stock, the Amended and Restated Articles of
Incorporation and the By-laws of CSX do not purport to be complete and are
qualified in their entirety by reference to the Amended and Restated Articles
of Incorporation and the By-laws, copies of which have been incorporated by
reference or filed as exhibits to the registration statement.
Common Stock
CSX may issue shares of common stock, either separately, or together with,
or upon the conversion of or in exchange for, other securities. If we offer
common stock, the specific terms of the offering, including the number of
shares offered and the initial public offering price, will be described in the
applicable prospectus supplement.
CSX common stock is listed on the New York Stock Exchange under the symbol
"CSX." All outstanding shares of common stock are fully-paid and
non-assessable. Any additional shares of common stock we issue will also be
fully-paid and non-assessable. Holders of common stock are entitled to one vote
per share on all matters voted on by shareholders, including elections of
directors, and, except as otherwise required by law or provided by the express
provisions of any series of preferred stock, the holders of those shares
exclusively possess all voting power of CSX. If and when issued and except as
otherwise provided by law, the holders of Series B Preferred Stock will be
entitled to 100 votes per share (subject to adjustment in accordance with the
Amended and Restated Articles of Incorporation) on all matters submitted to a
vote of CSX shareholders, and the holders of Series B Preferred Stock and the
holders of common stock and any other class of stock of CSX then having general
voting rights will vote together as one class. See "--Preferred Stock" and
"--Series B Preferred Stock Reserved for Issuance" below. There is no
cumulative voting in the election of directors, and no holder of common stock
is entitled as such, as a matter of right, to subscribe for or purchase any
shares of common stock or preferred stock. Subject to the preferential rights
of any outstanding series of preferred stock, the holders of common stock are
entitled to receive ratably dividends as may be declared from time to time by
our Board of Directors from funds legally available for that purpose. In the
event of a liquidation, dissolution or winding up of CSX, holders of common
stock are entitled to share ratably in all assets remaining after payment or
provision for liabilities and amounts owing in respect of any outstanding
preferred stock.
The transfer agent for CSX common stock is Harris Trust Company located in
Chicago, Illinois.
Preferred Stock
CSX may issue shares of our preferred stock, in one or more series, either
separately, or together with, or upon the conversion of or in exchange for,
other securities.
The following description of preferred stock sets forth certain general
terms and provisions of any series of preferred stock to which any prospectus
supplement may relate. If we offer preferred stock, the terms of any particular
series of preferred stock, including preferred stock to be represented by
depositary shares, will be described in the applicable prospectus supplement,
including (where applicable):
. the title of the series;
. the number of shares offered,
36
. the initial public offering price;
. the dividend rate or method of calculation of the dividend rate and the
dividend payment dates or periods;
. the date from which dividends will accrue and whether dividends will be
cumulative;
. any right to vote with holders of shares of any other series or class
and any right to vote as a class;
. the provisions for redemption or repurchase, if applicable, including
any sinking fund provisions for the redemption or repurchase of shares;
. the amount payable with respect to both the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding up of
CSX;
. any listing on any securities exchange;
. the procedures for any auction or remarketing, if any;
. the terms and conditions, if any, upon which the preferred stock will be
convertible into or exchangeable for other securities;
. whether interests will be represented by depositary shares; and
. any other specific terms of the offered preferred stock.
The form of articles of amendment relating to a series of offered preferred
stock will be filed as an exhibit to or incorporated by reference in the
registration statement. The terms of the preferred stock offered under any
prospectus supplement may differ from the general terms set forth in this
prospectus.
Preferred stock may be issued from time to time in one or more series.
Subject to limitations prescribed by Virginia law and the Amended and Restated
Articles of Incorporation, our Board of Directors, without further action by
the shareholders, is authorized to designate and issue in series preferred
stock and to fix as to any series:
. the number of shares constituting that series,
. the rate of dividend, the time of payment and, if cumulative, the dates
from which dividends will be cumulative, and the extent of participation
rights, if any,
. any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition to
specified corporate action,
. the price at and the terms and conditions on which shares may be
redeemed, including any sinking fund provisions for the redemption or
purchase of shares,
. the amount payable in the event of a liquidation, and
. whether shares will have the privilege of conversion, and if so, the
terms and conditions on which shares may be converted.
The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of common stock and,
under certain circumstances, make it more difficult for a third party to gain
control of CSX or remove present management and could have the effect of
delaying or preventing a merger, tender offer or other attempted takeover of
CSX. No holder of preferred stock will be entitled, as a matter of right, to
subscribe for or purchase any shares of preferred stock or common stock.
37
Preferred stock will, when issued, be fully-paid and non-assessable. Unless
otherwise specified in the applicable prospectus supplement, any series of
offered preferred stock will rank, with respect to dividends and the
distribution of assets, senior to Series B Preferred Stock, if issued, and
common stock, and on a parity with shares of any other outstanding series of
preferred stock. Therefore, the Rights (described below) and any preferred
stock that may subsequently be issued may limit the rights of the holders of
our common stock and preferred stock. In addition, under certain circumstance,
preferred stock could also restrict dividend payments to our holders of common
stock.
The transfer agent and registrar for a series of preferred stock will be
named in the applicable prospectus supplement.
Series B Preferred Stock Reserved for Issuance
In connection with the issuance of the Rights (described under
"--Shareholder Rights Plan" below), our Board of Directors designated 3,000,000
shares of preferred stock as Series B Preferred Stock. No shares of Series B
Preferred Stock are outstanding as of the date of this prospectus, and shares
of Series B Preferred Stock will be issued only in connection with the exercise
of Rights.
Subject to the rights of the holders of shares of any other series of
preferred stock ranking prior and superior to Series B Preferred Stock with
respect to dividends, and in preference to common stock or any other junior
series of preferred stock or other stock, each share of Series B Preferred
Stock is generally entitled to receive, when, as and if declared by our Board
of Directors out of funds legally available for that purpose, cumulative
quarterly cash dividends equal to the greater of $1.00 per share or, subject to
certain adjustments, 100 times the aggregate per share amount of all cash
dividends and non-cash dividends paid on each share of CSX's common stock in
the preceding quarter. Whenever quarterly dividends or other distributions
payable to the holders of Series B Preferred Stock are in arrears, whether or
not those dividends or other distributions have been declared, CSX cannot
. declare or pay dividends or distributions to holders of common stock or
any shares of stock junior to Series B Preferred Stock or
. purchase or otherwise acquire shares of Series B Preferred Stock or any
shares of stock junior to or on parity with Series B Preferred Stock.
Except as otherwise provided by law, holders of shares of Series B Preferred
Stock are entitled to 100 votes for each share held, and the shares of Series B
Preferred Stock and the shares of common stock of CSX will vote together as one
class. In the event CSX declares or pays any dividend to holders of common
stock payable in common stock, or affects the number of outstanding shares of
common stock by reclassification or otherwise, the number of votes per share of
Series B Preferred Stock will be adjusted to equalize the relative voting
strength of the Series B Preferred Stock vis-a-vis the common stock to the
relative voting strength immediately prior to that event.
Upon any involuntary or voluntary liquidation, dissolution or winding up of
CSX, subject to the rights of any other capital stock prior in rank with
respect to liquidation, dissolution or winding up, the holders of Series B
Preferred Stock will be entitled to be paid out of the assets of CSX legally
available for that purpose the greater of $100 per share, plus accumulated and
unpaid dividends, or an amount per share equal to 100 times the aggregate
amount to be distributed per share to the holders of common stock (subject to
certain adjustments). In that liquidation, dissolution or winding up, Series B
Preferred Stock will be paid prior to any distributions to the holders of
common stock or any other stock ranking junior to Series B Preferred Stock.
Holders of stock ranking on a parity (either as to dividends or liquidation,
dissolution or winding up) with Series B Preferred Stock, will share ratably in
any distribution with holders of Series B Preferred Stock in proportion to the
total amounts to which the holders of all those shares are entitled upon
liquidation, dissolution or winding up of CSX.
38
In the event that CSX enters into any consolidation, merger, combination or
other transaction in which common stock is exchanged for or changed into other
securities, cash or property, the holders of Series B Preferred Stock will be
entitled to receive 100 times the per share consideration received in
connection with that transaction by holders of common stock (subject to certain
adjustments).
Shares of Series B Preferred Stock which have been acquired by CSX in any
manner whatsoever will not be reissued as Series B Preferred Stock, but will be
retired and cancelled in the manner provided by Virginia law and will
constitute authorized but unissued preferred stock undesignated as to series.
Shares of Series B Preferred Stock are not redeemable.
Shareholder Rights Plan
The following summary of certain provisions of CSX's Shareholder Rights Plan
and the Rights Agreement, dated as of May 29, 1998 as amended by Amendment No.
1 dated as of June 27, 2000 (the "Rights Agreement"), between CSX and Harris
Trust Company of New York does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, including the form of Rights
certificate attached to the Rights Agreement, and the articles of amendment for
Series B Preferred Stock, both of which are incorporated by reference as
exhibits to the registration statement.
The Rights Agreement contains provisions that could make it more difficult
for a third party to gain control of CSX and that could have the effect of
delaying or preventing a merger, tender offer or other takeover attempt of CSX.
In May 1998, the Board of Directors of CSX declared a dividend of one preferred
share purchase right (each, a "Right") for each share of common stock
outstanding as of June 8, 1998. Each Right entitles its holder to purchase from
CSX, until the earliest of June 8, 2008, or the redemption or exchange of the
Rights, one one-hundredth ( 1/100th) of a share of Series B Preferred Stock at
an exercise price of $180 per Right, subject to certain adjustments or, under
certain circumstances, to obtain additional shares of common stock of CSX in
exchange for each Right. The Rights will not be exercisable or transferable
apart from common stock of CSX until the earlier of 10 days following the
public announcement that a person or affiliated group has acquired or obtained
the right to acquire 10% or more of the outstanding common stock of CSX; or 10
days following the commencement or announcement of an intention to make a
tender offer or exchange offer, the consummation of which would result in the
ownership by a person or group of 10% or more of the outstanding common stock
of CSX. Our Board of Directors may redeem the Rights at a price of one cent per
Right at any time prior to the acquisition by a person of 10% or more of the
outstanding common stock of CSX.
Virginia Stock Corporation Act; Anti-takeover Effects
The Virginia Stock Corporation Act contains provisions governing "Affiliated
Transactions." These provisions, with several exceptions discussed below,
generally require approval of certain material transactions between a Virginia
corporation and any beneficial holder of more than 10% of any class of its
outstanding voting shares (an "Interested Shareholder") by a majority of
disinterested directors and by the holders of at least two-thirds of the
remaining voting shares. Affiliated Transactions subject to this approval
requirement include mergers, share exchanges, material dispositions of
corporate assets not in the ordinary course of business, any dissolution of the
corporation proposed by or on behalf of an Interested Shareholder, or any
reclassification, including reverse stock splits, recapitalization or merger of
the corporation with its subsidiaries, which increases the percentage of voting
shares owned beneficially by an Interested Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes an
owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with that Interested Shareholder without
the approval of two-thirds of the voting shares other than those shares
39
beneficially owned by the Interested Shareholder, and the approval of a
majority of the Disinterested Directors. "Disinterested Director" means, with
respect to a particular Interested Shareholder, a member of our Board of
Directors who was
. a member on the date on which an Interested Shareholder became an
Interested Shareholder, or
. recommended for election by, or was elected to fill a vacancy and
received the affirmative vote of, a majority of the Disinterested
Directors then on the Board.
After the expiration of the three-year period, the statute requires approval of
Affiliated Transactions by two-thirds of the voting shares other than those
beneficially owned by the Interested Shareholder.
The principal exceptions to the special voting requirements apply to
transactions proposed after the three-year period has expired and require
either that the transaction be approved by a majority of CSX's Disinterested
Directors or that the transaction satisfy the fair-price requirements of the
statute. In general, the fair-price requirement provides that in a two-step
acquisition transaction, the Interested Shareholder must pay the shareholders
in the second step either the same amount of cash or the same amount and type
of consideration paid to acquire CSX's shares in the first step.
None of the limitations and special voting requirements described above
applies to an Interested Shareholder whose acquisition of shares making that
person an Interested Shareholder was approved by a majority of CSX's
Disinterested Directors.
These provisions are designed to deter certain types of takeovers of
Virginia corporations. The statute provides that, by affirmative vote of a
majority of the voting shares other than shares owned by any Interested
Shareholder, a corporation can adopt an amendment to its articles of
incorporation or by-laws providing that the Affiliated Transactions provisions
shall not apply to the corporation. CSX has not "opted out" of the Affiliated
Transactions provisions.
Virginia law also generally provides that shares of a Virginia corporation
acquired in a transaction that would cause the acquiring person's voting
strength to meet or exceed any of three thresholds (20%, 33 1/3% or 50%) have
no voting rights with respect to those shares unless granted by a majority vote
of shares not owned by the acquiring person or any officer or employee-director
of the corporation. This provision empowers an acquiring person to require the
Virginia corporation to hold a special meeting of shareholders to consider the
matter within 50 days of its request. The Board of Directors of a Virginia
corporation can opt out of this provision at any time before four days after
receipt of a control share acquisition notice.
DESCRIPTION OF DEPOSITARY SHARES
CSX may offer depositary shares (either separately or together with other
securities) representing fractional interests in shares of our preferred stock
of any series. In connection with the issuance of any depositary shares, CSX
will enter into a deposit agreement with a bank or trust company, as
depositary, which will be named in the applicable prospectus supplement.
Depositary shares will be evidenced by depositary receipts issued pursuant to
the related deposit agreement. Immediately following the issuance by CSX of the
preferred stock related to the depositary shares, we will deposit the shares of
preferred stock with the relevant preferred stock depositary and will cause the
preferred stock depositary to issue, on our behalf, the related depositary
receipts. Subject to the terms of the deposit agreement, each owner of a
depositary receipt will be entitled, in proportion to the fraction of a share
of preferred stock represented by the related depositary share, to all the
rights, preferences and privileges of, and will be subject to all of the
limitations and restrictions on, the preferred stock represented by the
depositary receipt (including, if applicable, dividend, voting, conversion,
exchange, redemption and liquidation rights).
40
The form of deposit agreement, together with the form of related depositary
receipt, that will be entered into with respect to a particular offering of
depositary shares will be filed as an exhibit to or incorporated by reference
in the registration statement.
The applicable prospectus supplement will describe the terms of the
depositary shares and the related deposit agreement for a particular issue of
depositary shares, which terms may include the following if applicable to those
depositary shares:
. the terms of the series of preferred stock deposited by CSX under the
related deposit agreement;
. the number of depositary shares and the fraction of one share of
preferred stock represented by one depositary share;
. whether the depositary shares will be listed on any securities exchange;
. whether the depositary shares will be sold with any other securities
and, if so, the amount and terms of those securities; and
. any other specific terms of the depositary shares and the related
deposit agreement.
DESCRIPTION OF SECURITIES WARRANTS
CSX may issue, either separately or together with other securities,
securities warrants for the purchase of debt securities, preferred stock or
common stock. Each securities warrant will entitle the holder to purchase the
principal amount of debt securities or number of shares of preferred stock or
common stock, as the case may be, at the exercise price and in the manner
specified in the prospectus supplement relating to those securities warrants.
Securities warrants may be exercised at any time up to the date and time
specified in the applicable prospectus supplement.
Securities warrants will be issued under one or more warrant agreements to
be entered into between CSX and a bank or trust company, as warrant agent. The
material terms and provisions of the warrant agreement for a particular issue
of securities warrants will be set forth in the applicable prospectus
supplement. The form of securities warrant agreement, including the form of
certificates representing the securities warrants, that will be entered into
with respect to a particular offering of securities warrants will be filed as
an exhibit to or incorporated by reference in the registration statement.
The applicable prospectus supplement will describe the terms of the
securities warrants for a particular issue of securities warrants, which terms
may include the following if applicable to those securities warrants:
. the title and aggregate number of the securities warrants;
. the designation, aggregate principal amount, currency, currencies or
currency units and terms of the debt securities purchasable upon
exercise of the securities warrants; the price, or the manner of
determining the price, at which the debt securities may be purchased
upon exercise of the securities warrants;
. the designation, number of shares and terms of the series of preferred
stock purchasable upon exercise of the securities warrants; the price,
or the manner of determining the price, at which the preferred stock may
be purchased upon exercise of the securities warrants;
. the number of shares of common stock that may be purchased upon exercise
of each securities warrant; the price, or the manner of determining the
price, at which the shares may be purchased upon the exercise of the
securities warrants;
41
. if other than cash, the property and manner in which the exercise price
of the securities warrants may be paid; and any minimum number of
securities warrants that may be exercisable at any one time;
. the time or times at which, or period or periods during which, the
securities warrants may be exercised and the expiration date of the
securities warrants;
. the terms of any right of CSX to redeem the securities warrants;
. the terms of any right of CSX to accelerate the exercise of the
securities warrants upon the occurrence of certain events;
. whether the securities warrants will be sold with any other securities,
and the date, if any, on and after which the securities warrants and the
other securities will be separately transferable;
. whether the securities warrants will be issued in registered or bearer
form;
. a discussion of certain material Federal income tax, accounting and
other special considerations, procedures and limitations relating to the
securities warrants; and
. any other terms of the securities warrants.
PLAN OF DISTRIBUTION
CSX may sell securities to one or more underwriters for public offering and
sale by them or may sell securities to institutional investors directly or
through agents who solicit or receive offers on our behalf or through dealers
or through a combination of any these methods of sale. The prospectus
supplement with respect to particular securities will set forth the terms of
the offering of those securities, including the name or names of any
underwriters or agents, the public offering or purchase price and the proceeds
to CSX from that sale, the expenses of the offering, any discounts and
commissions to be allowed or paid to the underwriters or agents, all other
items constituting underwriting compensation, the discounts and commissions to
be allowed or paid to dealers, if any, and the securities exchanges, if any, on
which the securities will be listed.
Underwriters may offer and sell the securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to prevailing market prices or at negotiated
prices. We also may offer and sell securities in exchange for one or more of
our outstanding issues of debt. We may, from time to time, authorize agents
acting on a best or reasonable efforts basis as our agents to solicit or
receive offers to purchase the securities upon the terms and conditions as are
set forth in the applicable prospectus supplement. In connection with the sale
of securities, underwriters or agents may be deemed to have received
compensation from CSX in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of securities for whom they may
act as agent. Underwriters may sell securities to or through dealers, and
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Underwriters, dealers and agents who participate in the distribution of
securities and their controlling persons may be entitled, under agreements
which may be entered into with CSX, to indemnification by us against certain
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters, dealers or agents and their
controlling persons may be required to make in respect of those liabilities.
If so indicated in the applicable prospectus supplement, CSX may authorize
underwriters or other persons acting as our agents to solicit offers by certain
institutions to purchase securities from us pursuant to contracts providing for
payment and delivery on a future date. Institutions with which those contracts
may be made include commercial and savings banks, insurance companies, pension
funds,
42
investment companies, educational and charitable institutions and others, but
in all cases those institutions must be approved by us. The obligations of any
institutional purchaser under those contracts will not be subject to any
conditions except
. the purchase by that institution of the securities covered by the
contract will not at the time of delivery be prohibited under the laws
of the jurisdiction to which that institution is subject, and
. if the securities are being sold to underwriters, we will have sold to
the underwriters the total principal amount of the securities less the
principal amount covered by delayed delivery contracts.
Each series of offered securities other than common stock will be a new
issue of securities with no established trading market. Any underwriters to
whom offered securities are sold by CSX for public offering and sale may make a
market in such offered securities, but the underwriters will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
offered securities.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids to do not exceed a specified maximum. The underwriters may
over-allot offered securities, thereby creating a short position in the
underwriters' account. Syndicate covering transactions involve purchases of
offered securities in the open market after the distribution has been completed
to cover syndicate short positions. Stabilizing and syndicate covering
transactions may cause the price of the offered securities to be higher than it
would otherwise be in the absence of such transactions. These transactions, if
commenced, may be discontinued at any time.
Certain of the underwriters, dealers or agents and their affiliates may
engage in transactions with and perform services for CSX in the ordinary course
of business.
LEGAL OPINIONS
McGuireWoods LLP, Richmond, Virginia will issue an opinion concerning the
validity of the offered securities for CSX. Robert L. Burrus, Jr., a partner of
McGuireWoods LLP, is a director of CSX and owns 15,439 shares of common stock.
Certain matters relating to the formation of the Trust and the issuance of the
trust preferred securities under Delaware law and the trust agreements will be
passed upon by Richards, Layton & Finger, P.A., special Delaware counsel to the
Trust and CSX. Any underwriter, dealer or agent will be advised about other
issues relating to any offering by its own legal counsel.
EXPERTS
Ernst & Young LLP, independent auditors, have audited CSX's consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 29, 2000 and our consolidated financial statements for the year
ended December 31, 1999 as restated in our Current Report on Form 8-K filed
with the SEC on January 31, 2001, as set forth in their respective reports,
which are incorporated by reference in this prospectus and elsewhere in the
registration statement. Our consolidated financial statements are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
The consolidated financial statements of Conrail Inc. as of December 31,
2000 and 1999 and for each of the two years in the period then ended, included
in our Annual Report on Form 10-K for the year ended December 29, 2000, have
been audited by Ernst & Young LLP and KPMG LLP, independent auditors, as set
forth in their report, which is incorporated by reference in this prospectus
43
and elsewhere in the registration statement, and are included in reliance upon
such report given on the authority of said firms as experts in accounting and
auditing.
The consolidated statements of income, of stockholders' equity and of cash
flows of Conrail Inc. for the year ended December 31, 1998 incorporated in this
prospectus by reference to the Annual Report on Form 10-K of CSX Corporation
for the fiscal year ended December 29, 2000, which includes such financial
statements of Conrail Inc. in Exhibit 99, have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$400,000,000
[LOGO]
CSX CORPORATION
6.30% Notes due 2012
--------
PROSPECTUS SUPPLEMENT
March 5, 2002
--------
Salomon Smith Barney
Credit Suisse First Boston
JPMorgan
Mizuho International plc
Scotia Capital
Banc One Capital Markets, Inc.
BNY Capital Markets, Inc.
PNC Capital Markets, Inc.
Tokyo-Mitsubishi International plc
Wachovia Securities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------