FILED PURSUANT TO RULE 424 (B) (2)
                                                     REGISTRATION NOS.  33-48841
                                                                        33-41236


PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 22, 1998)
 
                               U.S. $248,000,000
 
                           [LOGO OF CSX CORPORATION]
                          MEDIUM-TERM NOTES, SERIES B
                   DUE 9 MONTHS OR LONGER FROM DATE OF ISSUE
 
                                --------------
 
  CSX Corporation (the "Company" or "CSX") may offer from time to time its
medium-term notes which are issuable in one or more series and may be offered
and sold either in the United States or outside the United States or both
simultaneously. The Medium-Term Notes, Series B (the "Notes", which term
shall, unless otherwise indicated, include Foreign Currency Notes and Indexed
Notes), offered by this Prospectus Supplement are offered in the United States
and may be denominated in U.S. dollars or such foreign currencies or currency
units (a "Specified Currency") as may be designated by CSX at the time of
offering (the "Foreign Currency Notes"). The Notes may also be issued with the
principal amount thereof payable at Maturity to be determined by reference to
an index (e.g., currencies or currency units or financial indices ("Indexed
Notes")), as specified in the accompanying Supplement to this Prospectus
Supplement (the "Pricing Supplement"). The Notes are offered in an aggregate
initial offering price of up to U.S. $248,000,000 (including, in the case of
Foreign Currency Notes, the equivalent thereof at the Market Exchange Rate on
the applicable trade dates in a Specified Currency), subject to reduction as a
result of the sale by CSX of other Securities, including the sale outside the
United States of any other series of medium-term notes. See "Description of
Notes" and "Supplemental Plan of Distribution." Each Note will mature on any
day 9 months or longer from its date of original issuance (each an "Issue
Date"), as selected by the initial purchaser and agreed to by CSX. The Notes
may be subject to optional redemption, or may obligate CSX to redeem or
purchase the Notes pursuant to sinking fund or analogous provisions or at the
option of the Holder thereof, in each case as indicated in the applicable
Pricing Supplement. See "Description of Notes--General." The Notes will be
issued in fully registered form in denominations of U.S. $1,000 and integral
multiples of U.S. $1,000 in excess thereof, or, in the case of Foreign
Currency Notes, in the denominations indicated in the applicable Pricing
Supplement. Unless otherwise indicated in an applicable Pricing Supplement, a
Foreign Currency Note will not be sold in, or to a resident of, the country of
the Specified Currency in which such Note is denominated. See "Special
Provisions Relating to Foreign Currency Notes."
 
  The interest rate or interest rate index, if any, the Specified Currency,
issue price, Stated Maturity, Interest Payment Dates and redemption or sinking
fund provisions, if any, and any other terms applicable to each Note and
established by CSX at the time of issuance of such Note will be indicated in
the applicable Pricing Supplement. Unless otherwise indicated in the
applicable Pricing Supplement, the Notes, except Zero-Coupon Notes, will bear
interest at a fixed rate or a rate or rates determined by reference to the
Commercial Paper Rate, LIBOR, the Treasury Rate, the CD Rate, the Federal
Funds Effective Rate, the Prime Rate, the CMT Rate or other rate index, as
indicated in the applicable Pricing Supplement. Zero-Coupon Notes will be
issued at a discount from the principal amount payable at Maturity thereof,
and Holders (as defined in the Indenture, which in turn is defined below) of
such Notes will not receive periodic payments of interest. Interest rates or
interest rate indices are subject to change by CSX from time to time, but no
such change will affect any Note already issued or as to which an offer to
purchase has been accepted by CSX.
 
  Unless otherwise indicated in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable semi-annually on March 1 and September 1 of
each year and at maturity and interest on Floating Rate Notes will be payable
on the dates described under "Description of Notes--Floating Rate Notes."
                                                       (continued on next page)
 
                                --------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
 
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- -------------------------------------------------------------------------------


                     PRICE TO   AGENTS DISCOUNTS AND        PROCEEDS TO
                    PUBLIC(1)      COMMISSIONS(2)          COMPANY(2)(3)
- -------------------------------------------------------------------------------
                                            
Per Note.........      100%         .125%--.750%          99.875%--99.250%
- -------------------------------------------------------------------------------
Total(4).........  $248,000,000 $310,000--$1,860,000 $247,690,000--$246,140,000

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be issued
    at 100% of their principal amount.
(2) CSX will pay Chase Securities Inc., BancAmerica Robertson Stephens, Credit
    Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers
    Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
    Incorporated, Morgan Stanley & Co. Incorporated, NationsBanc Montgomery
    Securities LLC and Salomon Brothers Inc. as agents (the "Agents"), a
    commission ranging from .125% to .750% of the principal amount of any
    Note, depending on its Stated Maturity, sold through any such Agent.
    Commissions with respect to Notes with Stated Maturities in excess of 30
    years that are sold through an Agent will be negotiated between the
    Company and such Agent at the time of such sale. CSX also may sell Notes
    to any Agent, as principal, for resale to one or more investors at varying
    prices relating to prevailing market prices at the time of resale, as
    determined by such Agent, or at a fixed price as agreed between CSX and
    such Agent.
(3) Before deducting expenses payable by CSX estimated at $200,000.
(4) Or the equivalent thereof in a specified currency or currency unit.
 
                                --------------
 
  THE NOTES MAY BE OFFERED ON A CONTINUOUS BASIS BY CSX THROUGH THE AGENTS,
EACH OF WHICH HAS AGREED OR WILL AGREE TO USE ITS BEST EFFORTS TO SOLICIT
OFFERS TO PURCHASE THE NOTES. CSX MAY ALSO SELL NOTES TO ANY AGENT ACTING AS
PRINCIPAL FOR RESALE TO ONE OR MORE INVESTORS. CSX ALSO HAS RESERVED THE RIGHT
TO SELL NOTES DIRECTLY TO INVESTORS ON ITS OWN BEHALF. NO COMMISSION WILL BE
PAYABLE NOR WILL A DISCOUNT BE ALLOWED ON ANY DIRECT SALES BY CSX. CSX
RESERVES THE RIGHT TO WITHDRAW, CANCEL OR MODIFY THE OFFER MADE HEREBY WITHOUT
NOTICE. CSX OR ANY AGENT MAY REJECT ANY OFFER TO PURCHASE NOTES, IN WHOLE OR
IN PART. SEE "SUPPLEMENTAL PLAN OF DISTRIBUTION."
 
CHASE SECURITIES INC.
     BANCAMERICA ROBERTSON STEPHENS
            CREDIT SUISSE FIRST BOSTON
                    GOLDMAN, SACHS & CO.
                            LEHMAN BROTHERS
                                  MERRILL LYNCH & CO.
                                         MORGAN STANLEY DEAN WITTER
                                          NATIONSBANC MONTGOMERY SECURITIES LLC
                                                           SALOMON SMITH BARNEY
 
           The Date of this Prospectus Supplement is April 22, 1998

 
(continued from previous page)
 
  Notes may be issued in definitive form or may be represented by one or more
permanent Global Notes, as specified in the applicable Pricing Supplement,
which will be deposited with or on behalf of The Depository Trust Company, as
Depositary (the "Depositary"), or its nominee (each beneficial interest in a
permanent Global Note being referred to herein as a "Book-Entry Note").
Ownership of Book-Entry Notes will be limited to institutions which have
accounts with the Depositary ("participants") or persons that may hold
interests through participants. Ownership of Book-Entry Notes by persons that
hold through participants will only be evidenced by, and the transfer of that
ownership interest within such participant will be effected only through,
records maintained by such participant. Except as described under "Description
of Notes--Book-Entry Notes", 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 thereof.
 
  IN CONNECTION WITH AN OFFERING OF NOTES MADE HEREBY, CERTAIN PERSONS
PARTICIPATING IN SUCH OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE,
MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED HEREBY, INCLUDING
OVERALLOTMENT, STABILIZING TRANSACTIONS AND SHORT COVERING TRANSACTIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF DISTRIBUTION".
 
                                      S-2

 
                                CSX CORPORATION
 
  CSX Corporation, headquartered in Richmond, Virginia, is a Fortune 500
transportation company providing multimodal freight transportation and
contract logistics services around the world. CSX's unique combination of
rail, container-shipping, barging, intermodal and logistics services offers
shippers global reach unmatched by any other freight transportation company.
The Company's goal, advanced at each of its business units, is to provide
efficient, competitive transportation and related services for customers and
to deliver superior value to CSX shareholders. See "CSX Corporation" in the
accompanying Prospectus.
 
                              RECENT DEVELOPMENTS
 
  On April 20, 1998, CSX announced that it had agreed to convey American
Commercial Lines LLC ("ACL") to a venture formed with Vectura Group, Inc.
("Vectura"). In exchange for ACL, CSX will receive $695 million in cash and
$155 million of securities issued by the venture, including a 34% stake in the
venture. Vectura agreed to convey National Marine, Inc., a wholly-owned
subsidiary of Vectura, to the venture. The combination will create an inland
marine transportation company with approximately $1 billion of assets.
 
  The transaction is subject to customary conditions to closing, including the
arrangement of financing. Closing is anticipated to take place in the second
quarter of 1998. If the transaction is consummated, ACL will cease to be a
Principal Subsidiary (as defined) of CSX for the purposes of the covenant
under the Indenture restricting liens on the stock of Principal Subsidiaries.
See "Description of Debt Securities--Limitation on liens on Stock of Principal
Subsidiaries" in the accompanying Prospectus.
 
  On April 21, 1998, CSX announced earnings for its first quarter of $91
million, 41 cents per share on a diluted basis. In the prior-year period CSX
earned $151 million, 69 cents per share on a diluted basis. Excluding the
effects of the Conrail transaction, earnings for the first quarter of 1998
would have been $134 million, 60 cents per share on a diluted basis.
Particular factors that adversely impacted earnings of CSX were weak demand
for coal, particularly export coal, which impacted results at CSX
Transportation, Inc., and dislocations in Asian economies, which impacted
results at Sea-Land Services, Inc.
 
                                USE OF PROCEEDS
 
  It is expected that substantially all of the net proceeds from the sale of
the Notes offered hereby will be used to refinance the portion of the
Company's outstanding commercial paper that is classified as long-term debt.
At March 27, 1998 the Company had approximately $2.3 billion of commercial
paper outstanding. Of such amount, $2.0 billion of commercial paper was
originally incurred to complete the acquisition of a 19.9% investment in
Conrail, Inc. and was classified as long-term debt based on the Company's
ability and intent to maintain the debt outstanding for more than one year. At
March 27, 1998 the weighted average maturity date of the Company's $2.3
billion of outstanding commercial paper was approximately 52.75 days and the
weighted average interest rate was approximately 5.75%. 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 the Company's major transportation units.
 
                             DESCRIPTION OF NOTES
 
  The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth
in the accompanying Prospectus, to which description reference is hereby made.
Capitalized terms not defined herein have the meanings assigned to such terms
in the accompanying Prospectus and the Indenture (as defined below). The
following description of the Notes will apply to such Notes, unless otherwise
specified in the applicable Pricing Supplement.
 
                                      S-3

 
GENERAL
 
  The Notes offered hereby will be issued under the Indenture, dated as of
August 1, 1990 between CSX and The Chase Manhattan Bank, as Trustee (the
"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 (such Indenture, as so
supplemented, is herein referred to as the "Indenture") referred to in the
accompanying Prospectus. The Indenture does not limit the amount of other debt
that may be incurred by CSX. CSX may, from time to time, without the consent
of the Holders of Notes, provide for issuance of Notes or other Debt
Securities under the Indenture in addition to the U.S. $248,000,000 aggregate
initial offering price of Notes offered hereby.
 
  The Notes constitute a single series for purposes of the Indenture and are
currently limited to an aggregate initial offering price of up to U.S.
$248,000,000 (including, in the case of Foreign Currency Notes, the equivalent
thereof at the Market Exchange Rate on the applicable trade dates, in a
Specified Currency), subject to reduction as the result of the sale by CSX of
other Debt Securities, including the sale outside the United States of any
other series of medium-term notes, or, provided that no such reduction will
affect any Note already issued or as to which an offer to purchase has been
accepted by CSX, by or pursuant to action of CSX's Board of Directors. See
"Supplemental Plan of Distribution" below. The foregoing limit, however, may
be increased by CSX if in the future it determines that it may wish to sell
additional Notes. The "Market Exchange Rate" for any Specified Currency means
the noon buying rate in The City of New York for cable transfers for such
Specified Currency as certified for customs purposes by the Federal Reserve
Bank of New York. The following description of the particular terms of the
Notes applies to definitive Notes and to any permanent Global Note or Notes
representing Book-Entry Notes, but does not apply to Book-Entry Notes. For a
description of special provisions that apply to Book-Entry Notes, see "Book-
Entry Notes" below.
 
  The Notes will be unsecured obligations of the Company and will rank pari
passu with all other unsecured and unsubordinated indebtedness of the Company.
 
  Each Note will mature on any day 9 months or longer from its Issue Date, as
selected by the initial purchaser and agreed to by CSX, as specified in the
applicable Pricing Supplement.
 
  The Notes will be issuable only in fully registered form and the Notes,
other than Foreign Currency Notes, will be issuable only in denominations of
U.S. $1,000 and integral multiples of U.S. $1,000 in excess thereof. For a
description of the denominations of Foreign Currency Notes, see "Special
Provisions Relating to Foreign Currency Notes" below.
 
  The Notes may be issued as Original Issue Discount Notes. An "Original Issue
Discount Note" is a Note, including any Zero-Coupon Note, which is issued at a
price lower than the amount payable at the Stated Maturity thereof and which
provides that upon redemption or acceleration of the Maturity thereof an
amount less than the principal amount payable at the Stated Maturity thereof
and determined in accordance with the terms thereof shall become due and
payable. Original Issue Discount Notes, as well as certain other Notes offered
hereunder, may, for United States federal income tax purposes, be considered
"Discount Notes." The principal United States federal income tax consequences
of the ownership of Discount Notes are described under "United States
Taxation--United States Holders--Original Issue Discount" in the accompanying
Prospectus. A "Zero Coupon Note" means a Note that does not bear interest
prior to Maturity.
 
  The Notes may be issued as Indexed Notes, as set forth in the applicable
Pricing Supplement. Holders of Indexed Notes may receive a principal amount at
Maturity that is greater than or less than the face amount of such Notes
depending upon the fluctuation of the relative value, rate or price of the
specified index. Specific information pertaining to the method for determining
the principal, premium or interest payable in respect of such Notes, a
historical comparison of the relative value, rate or price of the specified
index and the face amount of the Indexed Note, any risk factors, and certain
additional tax considerations will be described in the applicable Pricing
Supplement.
 
                                      S-4

 
  Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of and any
premium and interest on such Notes will be made in U.S. dollars in the manner
described in this Prospectus Supplement and in the accompanying Prospectus
under the caption "Description of Debt Securities--Payment and Paying Agents."
If any of the Notes are to be denominated in a Specified Currency, additional
information pertaining to the terms of such Notes and other matters of
interest to the Holders thereof, including any risk factors, will be described
in the applicable Pricing Supplement. See "Special Provisions Relating to
Foreign Currency Notes" and "United States Taxation" in the accompanying
Prospectus.
 
  Payments of principal of and any premium and interest payable at Maturity on
a Note denominated in U.S. dollars will be made in immediately available funds
at the offices of The Chase Manhattan Bank, as Paying Agent, in the Borough of
Manhattan, The City of New York, provided that the Note is presented to the
Paying Agent in time for the Paying Agent to make such payments in such funds
in accordance with its normal procedures. With respect to payments on Foreign
Currency Notes at Maturity, see "Special Provisions Relating to Foreign
Currency Notes" below.
 
  The Notes may be presented for registration of transfer or exchange at the
offices of The Chase Manhattan Bank, as Security Registrar, in the Borough of
Manhattan, The City of New York.
 
  For a description of the rights attaching to each series of Debt Securities
under the Indenture, see "Description of Debt Securities" in the accompanying
Prospectus.
 
  The provisions of the Indenture described under "Description of Debt
Securities--Defeasance and Covenant Defeasance" in the accompanying Prospectus
apply to the Notes.
 
REDEMPTION AT THE OPTION OF THE COMPANY
 
  Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The applicable Pricing Supplement
will indicate if the Notes will be redeemable prior to Maturity and the terms
on which such Notes will be redeemable at the option of the Company. If so
specified, the Notes will be subject to redemption at the option of the
Company on and after a specified date prior to its Stated Maturity in whole or
from time to time in part in increments of U.S. $1,000 or such other minimum
denomination specified in such Pricing Supplement (provided that any remaining
principal amount thereof shall be at least $1,000 or such minimum
denomination), at a specified price or prices (which may include a premium),
together with unpaid interest accrued to the date of redemption, on notice
given not more than 60 nor less than 30 calendar days prior to the date of
redemption and in accordance with the provisions of the Indenture.
 
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASES BY THE COMPANY
 
  The applicable Pricing Supplement will indicate if the Notes will be
repayable at the option of the Holders thereof on a date specified prior to
Maturity and, unless otherwise specified in the Pricing Supplement, such Notes
shall be repayable at a price equal to 100% of the principal amount thereof,
together with unpaid interest accrued to the date of repayment. On and after
such date of repayment, interest will cease to accrue on such Notes or any
portion thereof tendered for repayment. On or before such date of repayment,
the Company shall deposit with the Trustee or a Paying Agent money sufficient
to pay the principal of and any accrued interest on such Notes to be tendered
for repayment.
 
  In order for such a Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the repayment date (i) such Note with
the form entitled "Option of Holder to Elect Purchase" on the reverse of such
Note duly completed or (ii) facsimile transmission or a letter from a member
of a national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States
setting forth the name of the Holder of such Note, the principal amount of
such Note, the principal amount of such Note to be repaid, the certificate
number or a description of the tenor and terms of such Note, a statement that
the option to elect repayment is being exercised thereby, and a guarantee that
such Note to be repaid, together with the duly completed form entitled "Option
of Holder to Elect Purchase" on the reverse of such Note, will be received by
the Trustee not later than the fifth Business Day after the date of
 
                                      S-5

 
such facsimile transmission or letter; however, such facsimile transmission or
letter shall only be effective if such Note and duly completed form are
received by the Trustee by such fifth Business Day. Unless otherwise specified
in the applicable Pricing Supplement, exercise of the repayment option by the
Holder of a Note will be irrevocable unless waived by the Company. The
repayment option may be exercised by the Holder of a Note for less than the
entire principal amount of the Note, but in that event, the principal amount
of the Note remaining outstanding after repayment must be in an authorized
denomination and the denomination or denominations of the Note or Notes to be
issued to the Holder for the portion of the principal amount of such Note
surrendered that is not to be repaid must be specified.
 
  If a Note is represented by a Global Note, the Depositary's nominee will be
the sole Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's
nominee will timely exercise a right to repayment with respect to a particular
Note, the beneficial owner of such Note must instruct the broker or other
participant or indirect participant (as defined below) through which it holds
an interest in such Note to notify the Depositary of its desire to exercise a
right to repayment. Different firms have different deadlines for accepting
instructions from their customers. Accordingly, each beneficial owner should
consult the broker or other direct participant or indirect participant through
which it holds an interest in a Note in order to ascertain the deadline by
which such instruction must be given in order for timely notice to be
delivered to the Depositary.
 
  If applicable, the Company will comply with the provisions of Rule 13e-4,
Rule 14e-1 and any other tender offer rules under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), if required, and will file Schedule
13E-4 or any other schedule, if required, and comply with any other applicable
securities laws or regulations in connection with any such repayment.
 
  The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
 
INTEREST
 
  Each Note, except a Zero-Coupon Note, will bear interest from and including
its Issue Date or from and including the most recent Interest Payment Date (or
in the case of a Floating Rate Note with daily or weekly Interest Reset Dates,
the day following the most recent Regular Record Date) with respect to which
interest on such Note (or any predecessor Note) has been paid or duly provided
for at the fixed rate per annum, or at the rate per annum determined pursuant
to the interest rate index specified in the applicable Pricing Supplement,
until the principal thereof is paid or made available for payment. Interest
will be payable in arrears on each Interest Payment Date and at Maturity.
Interest will be payable generally to the Person in whose name a Note (or any
predecessor Note) is registered at the close of business on the Regular Record
Date next preceding each Interest Payment Date; provided, however, that
interest payable at Maturity will be payable to the Person to whom principal
shall be payable. The first payment of interest on any Note originally issued
between a Regular Record Date and an Interest Payment Date will be made on the
second Interest Payment Date following the Issue Date of such Note to the
registered owner on the Regular Record Date immediately preceding such
Interest Payment Date.
 
  Each Note, except a Zero-Coupon Note, will bear interest at either (a) a
fixed rate or rates (a "Fixed Rate Note") or (b) a variable rate determined by
reference to an interest rate index (a "Floating Rate Note"), which may be
adjusted by adding or subtracting the Spread (as defined below) or multiplying
by the Spread Multiplier (as defined below), unless otherwise indicated in the
applicable Pricing Supplement. Holders of Zero-Coupon Notes will receive no
periodic payments of interest on such Notes.
 
  Interest rates or interest rate indices are subject to change by CSX from
time to time, but no such change will affect any Note already issued or as to
which an offer to purchase has been accepted by CSX.
 
  In addition to any maximum interest rate which may be applicable to any
Note, the interest rate on the Notes will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application.
 
                                      S-6

 
FIXED RATE NOTES
 
  The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Note. Unless
otherwise indicated in the applicable Pricing Supplement, the Interest Payment
Dates for Fixed Rate Notes will be March 1 and September 1 of each year and at
Maturity and the Regular Record Dates for Fixed Rate Notes will be the
February 15 or August 15, as the case may be, next preceding the March 1 and
September 1 Interest Payment Dates. Unless otherwise indicated in the
applicable Pricing Supplement, interest payments for Fixed Rate Notes shall be
the amount of interest accrued to but excluding the relevant Interest Payment
Date. Interest on such Notes will be computed on the basis of a 360-day year
of twelve 30-day months.
 
  If any Interest Payment Date or the Maturity of a Fixed Rate Note falls on a
day that is not a Business Day, the required payment of principal, premium, if
any, or interest will be made on the next succeeding Business Day with the
same force and effect as if made on the date such payment was due, and no
interest will accrue on such payment for the period from and after such
Interest Payment Date or the Maturity, as the case may be, to the date of such
payment on the next succeeding Business Day.
 
FLOATING RATE NOTES
 
  The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate basis for such Floating Rate Note. Such index may
be: (a) the Commercial Paper Rate, in which case such Note will be a
"Commercial Paper Rate Note"; (b) LIBOR, in which case such Note will be a
"LIBOR Note"; (c) the Treasury Rate, in which case such Note will be a
"Treasury Rate Note"; (d) the Certificate of Deposit Rate, in which case such
Note will be a "CD Rate Note"; (e) the Federal Funds Effective Rate, in which
case such Note will be a "Federal Funds Rate Note"; (f) the Prime Rate, in
which case such Note will be a "Prime Rate Note"; (g) the CMT Rate, in which
case such Note will be a "CMT Rate Note"; or (h) such other interest rate
index as is set forth in such Pricing Supplement. The applicable Pricing
Supplement for a Floating Rate Note also will specify the Spread or Spread
Multiplier, if any, and the maximum or minimum interest rate limitation, if
any, applicable to such Note. "Spread" means the number of basis points
specified in the applicable Pricing Supplement as being applicable to the
interest rate for a particular Floating Rate Note and "Spread Multiplier"
means the percentage specified in the applicable Pricing Supplement as being
applicable to the interest rate for a particular Floating Rate Note. In
addition, such Pricing Supplement will particularize for each Floating Rate
Note the following terms, if applicable: Calculation Dates; Initial Interest
Rate; Interest Payment Dates; Regular Record Dates; Index Maturity; Interest
Determination Dates; and Interest Reset Dates (each as defined below). If one
or more of the applicable interest rate basis is LIBOR or the CMT Rate, the
applicable Pricing Supplement will also specify the Index Currency and the
Designated LIBOR Page or the Designated CMT Maturity Index and Designated CMT
Telerate Page, respectively, as such terms are defined below. "Calculation
Date", where applicable, means the date by which the Calculation Agent is to
calculate the interest rate for a Floating Rate Note which shall be the
earlier of (i) the tenth calendar day after the related Interest Determination
Date, or if any such day is not a Market Day (as defined below), the next
succeeding Market Day and (ii) the Market Day preceding the applicable
Interest Payment Date or Maturity, as the case may be. "Market Day" means
(a) with respect to any Note, any day that is not a Saturday or Sunday and
that, in The City of New York, is not a day on which banking institutions
generally are authorized or obligated by law or executive order to close, (b)
with respect to LIBOR Notes only, any such day on which dealings in deposits
in U.S. dollars are transacted in the London interbank market (a "London
Market Day"), and (c) with respect to Foreign Currency Notes only, any day
that, in the Principal Financial Center (as defined below) of the country of
the Specified Currency or, with respect to Foreign Currency Notes denominated
in European Currency Units, Brussels, is not a day on which banking
institutions generally are authorized or obligated by law to close. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 P.M.
Quotations for U.S. Government Securities", or any successor publication,
published by the Federal Reserve Bank of New York. "Index Maturity" means,
with respect to a Floating Rate Note, the period to maturity of the instrument
or obligation on which the interest rate index is based, as indicated in the
applicable Pricing Supplement. "H.15(519)" means the weekly statistical
release entitled "Statistical Release H.15(519), Selected Interest Rates", or
any successor publication, published
 
                                      S-7

 
by the Board of Governors of the Federal Reserve System. "Principal Financial
Center" means (i) the capital city of the country issuing the Specified
Currency (except as described above with respect to European Currency Units)
or (ii) the capital city of the country to which the Designated LIBOR Currency
relates (or, in the case of European Currency Units, Luxemburg), as
applicable, except, in the case of (i) or (ii) above, that with respect to
U.S. dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, Italian lire and Swiss francs, the "Principal Financial Center"
shall be The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan
(solely in the case of the Specified Currency) and Zurich, respectively.
 
  If a Floating Rate Note is designated in the applicable Pricing Supplement
as an "Inverse Floating Rate Note," then, except as described below or in the
applicable Pricing Supplement, such Floating Rate Note will bear interest at a
floating interest rate equal to a fixed interest rate minus the rate
determined by reference to the applicable interest rate index (a) plus or
minus the applicable Spread, if any, and/or (b) multiplied by the applicable
Spread Multiplier, if any; provided, however, that, unless otherwise specified
in the applicable Pricing Supplement, the interest rate thereon will not be
less than zero. Commencing on the initial Interest Reset Date, the rate at
which interest on such Inverse Floating Rate Note shall be payable shall be
reset as of each Interest Reset Date; provided, however, that the interest
rate in effect for the period, if any, from the date of issue to the initial
Interest Reset Date will be the Initial Interest Rate.
 
  The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each, an "Interest Reset
Date"), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the Interest Reset Date will
be as follows: in the case of Floating Rate Notes which reset daily, each
Market Day; in the case of Floating Rate Notes (other than Treasury Rate
Notes) which reset weekly, the Wednesday of each week; in the case of Treasury
Rate Notes which reset weekly, the Tuesday of each week; in the case of
Floating Rate Notes which reset monthly, the third Wednesday of each month; in
the case of Floating Rate Notes which reset quarterly, the third Wednesday of
March, June, September and December; in the case of Floating Rate Notes which
reset semi-annually, the third Wednesday of two months of each year which are
six months apart, as specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes which reset annually, the third Wednesday of
one month of each year, as specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect from the Issue Date of a
Floating Rate Note (or any predecessor Note) to the first Interest Reset Date
will be the Initial Interest Rate (as defined below and as set forth in the
applicable Pricing Supplement). If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Market Day, the Interest
Reset Date for such Floating Rate Note shall be the next succeeding Market
Day, except that in the case of a LIBOR Note, if such Market Day is in the
next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Market Day. "Initial Interest Rate" means the rate at
which a Floating Rate Note will bear interest from its Issue Date to the first
Interest Reset Date, as indicated in the applicable Pricing Supplement.
 
  The Interest Determination Date pertaining to an Interest Reset Date for (a)
a Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), (b) a CD Rate Note (the "CD Interest Determination Date"), (c) a
Federal Funds Rate Note (the "Federal Funds Interest Determination Date"), (d)
a Prime Rate Note (the "Prime Interest Determination Date") or (e) a CMT Rate
Note (the "CMT Rate Interest Determination Date") will be the second Market
Day preceding the Interest Reset Date with respect to such Note. The Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Market Day
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. Treasury bills
are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the
result of a legal holiday, an auction is so held on the preceding Friday, such
Friday will be the Treasury Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week. If an auction date
shall fall on any Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the first Market Day immediately
following such auction date.
 
                                      S-8

 
  A Floating Rate Note may have either or both of the following: (a) a maximum
numerical interest rate limitation, or ceiling, on the rate of interest which
may accrue during any interest period and (b) a minimum numerical interest
rate limitation, or floor, on the rate of interest which may accrue during any
interest period.
 
  Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, the Interest Payment Dates for Floating Rate Notes will be,
in the case of Floating Rate Notes that reset daily, weekly or that reset
monthly, the third Wednesday of each month or the third Wednesday of March,
June, September and December of each year (as indicated in the applicable
Pricing Supplement); in the case of Floating Rate Notes that reset quarterly,
the third Wednesday of March, June, September and December of each year; in
the case of Floating Rate Notes that reset semi-annually, the third Wednesday
of the two months of each year that are six months apart specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes that
reset annually, the third Wednesday of the month specified in the applicable
Pricing Supplement, and in each case, at Maturity. If an Interest Payment Date
with respect to any Floating Rate Note would otherwise be a day that is not a
Market Day, such Interest Payment Date will be the next succeeding Market Day,
except that in the case of a LIBOR Note, if such day is in the next succeeding
calendar month, such Interest Payment Date will be the immediately preceding
Market Day. The "Regular Record Date" with respect to Floating Rate Notes
shall be the date 15 calendar days prior to each Interest Payment Date,
whether or not such date shall be a Market Day. If the Maturity of a Floating
Rate Note falls on a day that is not a Market Day, the required payment of
principal, premium, if any, and interest will be made on the next succeeding
Market Day with the same force and effect as if made on the date such payment
was due, and no interest will accrue on such payment for the period from and
after the Maturity to the date of such payment on the next succeeding Market
Day.
 
  Unless otherwise indicated in the applicable Pricing Supplement, interest
payments for a Floating Rate Note shall be the amount of interest accrued from
and including each Interest Payment Date (or from and including the Issue Date
in which case no interest has been paid) to, but excluding, the next
succeeding Interest Payment Date or Maturity, as the case may be.
 
  Accrued interest on any Floating Rate Note from its Issue Date or from the
last date to which interest has been paid or duly provided for is calculated
by multiplying the face amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor is computed by adding the
interest factor calculated for each day from the Issue Date or from the last
date to which interest has been paid or duly provided for, as the case may be,
to the date for which accrued interest is being calculated. The interest
factor for each such day is computed by dividing the interest rate applicable
to such date by 360, in the case of Commercial Paper Rate Notes, LIBOR Notes,
CD Rate Notes, Federal Funds Rate Notes and Prime Rate Notes, or by the actual
number of days in the year, in the case of Treasury Rate Notes and CMT Rate
Notes.
 
  Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation on Floating Rate Notes will be
rounded, if necessary, to the nearest one-hundred thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544%
(or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar
amounts used in or resulting from such calculation on Floating Rate Notes will
be rounded to the nearest cent (with one-half cent being rounded upwards).
 
  Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect, and, if then determined,
the interest rate which will become effective as a result of a determination
made for the next succeeding Interest Reset Date with respect to such Floating
Rate Note. The "Calculation Agent" means the agent appointed by CSX to
calculate interest rates as described below for Floating Rate Notes. Unless
otherwise provided in an applicable Pricing Supplement, the Calculation Agent
will be The Chase Manhattan Bank.
 
COMMERCIAL PAPER RATE NOTES
 
  Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any) specified in the applicable Pricing Supplement.
 
                                      S-9

 
  Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate
quoted on a discount basis on such date for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Commercial Paper--Nonfinancial." If such rate is
not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on such Commercial Paper Interest Determination Date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published in Composite Quotations under the heading "Commercial
Paper." If such rate is neither published in H.15(519) or in Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Interest Determination
Date will be calculated by the Calculation Agent and shall be the Money Market
Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York
City time, on that Commercial Paper Interest Determination Date, of three
leading dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement placed for a non-financial entity whose
senior unsecured bond rating is "AA", or the equivalent, from a nationally
recognized rating agency; provided, however, that if the dealers so selected
by the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate will be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
 
  "Money Market Yield" shall be a yield (expressed as a percentage) calculated
in accordance with the following formula:
 
                                        
                    Money Market Yield =      D X 360       X 100
                                           -------------
                                           360 - (D X M)
                                          
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
 
LIBOR NOTES
 
  Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
the applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined in accordance with the following provisions:
 
    (i) With respect to any LIBOR Interest Determination Date, LIBOR will be
  either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
  Supplement, the arithmetic mean of the offered rates (unless the Designated
  LIBOR Page by its terms provides only for a single rate, in which case such
  single rate shall be used) for deposits in the Index Currency having the
  Index Maturity specified in such Pricing Supplement, commencing on the
  applicable Interest Reset Date, that appear (or, if only a single rate is
  required as aforesaid, appears) on the Designated LIBOR Page as of 11:00
  A.M., London time, on such LIBOR Interest Determination Date, or (b) if
  "LIBOR Telerate" is specified in the applicable Pricing Supplement or if
  neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
  Pricing Supplement as the method for calculating LIBOR, the rate for
  deposits in the Index Currency having the Index Maturity specified in such
  Pricing Supplement, commencing on such Interest Reset Date, that appears on
  the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
  Interest Determination Date. If fewer than two such offered rates appear,
  or if no such rate appears, as applicable, LIBOR on such LIBOR Interest
  Determination Date will be determined in accordance with the provisions
  described in clause (ii) below.
 
    (ii) With respect to a LIBOR Interest Determination Date on which fewer
  than two offered rates appear, or no rate appears, as the case may be, on
  the Designated LIBOR Page as specified in clause (i) above, the Calculation
  Agent will request the principal London offices of each of four major
  reference banks in the
 
                                     S-10

 
  London interbank market, as selected by the Calculation Agent, to provide
  the Calculation Agent with its offered quotation for deposits in the Index
  Currency for the period of the Index Maturity specified in the applicable
  Pricing Supplement, commencing on the applicable Interest Reset Date, to
  prime banks in the London interbank market at approximately 11:00 A.M.,
  London time, on such LIBOR Interest Determination Date and in a principal
  amount that is representative for a single transaction in such Index
  Currency in such market at such time. If at least two quotations are so
  provided, then LIBOR on such LIBOR Interest Determination Date will be the
  arithmetic mean of such quotations. If fewer than two such quotations are
  so provided, then LIBOR on such LIBOR Interest Determination Date will be
  the arithmetic mean of the rates quoted at approximately 11:00 A.M., in the
  applicable Principal Financial Center, on such LIBOR Interest Determination
  Date by three major banks in such Principal Financial Center selected by
  the Calculation Agent for loans in the Index Currency to leading European
  banks, having the Index Maturity specified in the applicable Pricing
  Supplement and in a principal amount that is representative for a single
  transaction in such Index Currency in such market at such time; provided,
  however, that if the banks so selected by the Calculation Agent are not
  quoting as mentioned in this sentence, LIBOR determined as of such LIBOR
  Interest Determination Date will be LIBOR in effect on such LIBOR Interest
  Determination Date.
 
  "Index Currency" means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no
such currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
 
  "Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page or such service (or any
successor service)) for the purpose of displaying the London interbank rates
of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified in the applicable Pricing Supplement as the
method for calculating LIBOR, the display on Dow Jones Markets Limited (or any
successor service) on page 3750 if the U.S. dollar is the Index Currency or
with respect to any other Index Currency, on the page specified in such
Pricing Supplement (or any other page as may replace such page or such service
(or any successor service)) for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency.
 
TREASURY RATE NOTES
 
  Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any) specified in the applicable Pricing Supplement.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the
rate from the most recent auction of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the heading "Treasury
Bills--Auction Average (Investment)" or, if not so published by 3:00 P.M., New
York City time, on the related Calculation Date, the auction average rate of
such Treasury Bills (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. If the results of
the auction of Treasury Bills having the Index Maturity specified in the
applicable Pricing Supplement are not reported as provided above by 3:00 P.M.,
New York City time, on such Calculation Date, or if no such auction is held,
then the Treasury Rate will be calculated by the Calculation Agent and will be
a yield to maturity (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates as of approximately 3:30
P.M., New York City time, on such Treasury Interest Determination Date, of
three leading primary United States government securities dealers (which may
include any of the Agents or their affiliates; each, a "Reference Dealer")
selected by the Calculation Agent, for the issue of Treasury Bills with a
remaining maturity closest to the specified Index
 
                                     S-11

 
Maturity; provided, however, that if the Reference Dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate will be the Treasury Rate in effect on such Treasury Interest
Determination Date.
 
CD RATE NOTES
 
  Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such
date for negotiable U.S. dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." If such rate is not so
published by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate will be the rate on such CD Interest Determination Date for
negotiable U.S. dollar certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If such rate is
neither published in H.15(519) or in Composite Quotations by 3:00 P.M., New
York City time, on the related Calculation Date, the CD Rate on such CD
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Interest Determination Date, of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in
The City of New York (which may include any of the Agents or their affiliates)
selected by the Calculation Agent for negotiable U.S. dollar certificates of
deposit of major United States money center banks of the highest credit
standing (in the market for negotiable U.S. dollar certificates of deposit)
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate will be the CD Rate in effect on such CD Interest
Determination Date.
 
FEDERAL FUNDS RATE NOTES
 
  Each Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Effective Rate and the Spread
or Spread Multiplier, if any) specified in the applicable Pricing Supplement.
 
  Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Interest
Determination Date, the rate on that date for Federal Funds having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Federal Funds (Effective)." If such rate is not
so published by 9:00 A.M., New York City time, on the related Calculation
Date, then the Federal Funds Effective Rate will be the rate on such Federal
Funds Interest Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If such rate is neither published
in H.15(519) or in Composite Quotations by 3:00 P.M., New York City time, on
the related Calculation Date, then the Federal Funds Effective Rate on such
Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates as of 9:00
A.M., New York City time, on such Federal Funds Interest Determination Date
for the last transaction in overnight Federal Funds arranged by three leading
brokers of Federal Funds transactions in The City of New York (which may
include any of the Agents or their affiliates) selected by the Calculation
Agent; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds
Effective Rate will be the Federal Funds Effective Rate in effect on such
Federal Funds Interest Determination Date.
 
PRIME RATE NOTES
 
  Each Prime Rate Note will bear interest at the interest rate (calculated
with reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
 
                                     S-12

 
  Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Rate Interest Determination Date, the
rate on such date as is published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time,
on the related Calculation Date, then the Prime Rate shall be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate
or base lending rate as in effect for such Prime Rate Interest Determination
Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 Page
for such Prime Rate Interest Determination Date, then the Prime Rate shall be
the arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than four such quotations are so provided, then the Prime Rate shall be
the arithmetic mean of four prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of
the United States, or any State thereof, each having total equity capital of
at least $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate
Interest Determination Date.
 
  "Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor
service) or such other page as may replace the USPRIME1 Page on the Reuter
Monitor Money Rates Service (or any successor service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
 
CMT RATE NOTES
 
  Each CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any)
specified in the applicable Pricing Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Rate Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page under the caption " . . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate
on such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the weekly or monthly average, as specified in the
applicable Pricing Supplement, for the week or the month, as applicable, ended
immediately preceding the week or month, as applicable, in which the related
CMT Rate Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page or is not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published or is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index (or other United States Treasury rate for
the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided
by 3:00 P.M., New York City time, on the related Calculation Date, then the
CMT Rate on the CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market
 
                                     S-13

 
closing offer side prices as of approximately 3:30 P.M., New York City time,
on such CMT Rate Interest Determination Date reported, according to their
written records, by three Reference Dealers in The City of New York selected
by the Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an
original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side
prices as of approximately 3:30 P.M., New York City time, on such CMT Rate
Interest Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for Treasury Notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a remaining
maturity closest to the Index Maturity specified in the applicable Pricing
Supplement and in an amount that is representative for a single transaction in
that market at that time. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer
than three Reference Dealers so selected by the Calculation Agent are quoting
as mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity and will use such quotations to calculate the CMT Rate as set forth
above.
 
  "Designated CMT Telerate Page" means the display on Dow Jones Markets
Limited (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on that service
(or any successor service) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)) for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519). If no such page is specified in
the applicable Pricing Supplement, the Designated CMT Telerate Page shall be
7052, for the most recent week.
 
  "Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either one, two, three, five, seven, 10, 20 or 30
years) specified in the applicable Pricing Supplement with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement, the Designated CMT Maturity Index shall be two
years.
 
BOOK-ENTRY NOTES
 
  Upon issuance, all Book-Entry Notes of like tenor and having the same Issue
Date will be represented by one or more permanent global Notes in definitive,
fully registered form without interest coupons (the "Global Notes"). 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 (the "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 such securities in definitive form. Such laws may impair the
ability to transfer Book-Entry Notes.
 
                                     S-14

 
  So long as the Depositary, or its nominee, is the registered owner or holder
of a Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global
Note for all purposes under the 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 Indenture.
 
  CSX has been advised by the Depositary that upon the issuance of Global
Notes representing Book-Entry Notes, and the deposit of such 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 such Global Notes to the accounts of
participants. The accounts to be credited shall be designated by the
soliciting Agent, or by CSX, if such Notes are offered and sold directly by
CSX.
 
  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 thereof. Such payments to the Depositary or its nominee, as
the case may be, will be made in immediately available funds at the offices of
The Chase Manhattan 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 such payments in such funds in accordance with its normal
procedures. None of CSX, the Trustee or any agent of CSX 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 such 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 such 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 such 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 such 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 (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 such portion of the aggregate principal amount of the Note as to
which such participant or participants has or have given such direction.
However, if there is an Event of Default under the Notes, the Depositary will
exchange the applicable Global Note for Definitive Notes, 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 Agents), 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").
 
                                     S-15

 
  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
such procedures and such procedures may be discontinued at any time. Neither
CSX 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 such nominee to a successor
of the Depositary or a nominee of such successor.
 
  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 such 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 such Book-Entry Notes shall be
exchangeable for definitive Notes in registered form or (z) any event shall
have happened and be 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 shall 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 in excess
thereof, or, in the case of Foreign Currency Notes, in the denominations
indicated in the applicable Pricing Supplement. Upon the exchange of a Global
Note for Definitive Notes, such Global Note shall be canceled by the Trustee
and the Definitive Notes shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
participants, any indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Notes to the persons in whose names
such Notes are so registered and shall recognize such persons as the Holders
thereof.
 
  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 thereof for any purpose under the Indenture, and no
Global Note representing Book-Entry Notes shall 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 such person
is not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a Holder under such Global
Note or the Indenture. The 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 Indenture.
CSX understands that under existing industry practices, in the event that 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
Indenture, the Depositary would authorize the participants owning the relevant
Book-Entry Notes to give or take such action, and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
 
             SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
 
GENERAL
 
  The following provisions which apply to Foreign Currency Notes supplement
the description of general terms and provisions of Debt Securities set forth
in the accompanying Prospectus and elsewhere in this Prospectus Supplement.
For a description of certain risks associated with Foreign Currency Notes, see
"Foreign Currency Risks."
 
  The authorized denominations for particular Foreign Currency Notes will be
indicated in the applicable Pricing Supplement.
 
                                     S-16

 
  Specific information pertaining to the foreign currency or currency unit in
which a particular Foreign Currency Note is denominated, including historical
exchange rates, risk factors and a description of the currency or currency
unit and any exchange controls, will be described in the applicable Pricing
Supplement.
 
  Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for Foreign Currency Notes in the Specified Currency. If
requested, on or prior to the fifth Market Day preceding the date of delivery
of the Notes, or by such other day as determined by the Agent who presented
such offer to purchase Notes to CSX, such Agent is prepared to arrange for the
conversion of U.S. dollars into the Specified Currency to enable the
purchasers to pay for the Notes. Each such conversion will be made by such
Agent on such terms and subject to such conditions, limitations and charges as
such Agent may from time to time establish in accordance with its regular
foreign exchange practices. All costs of exchange will be borne by the
purchasers of the Foreign Currency Notes.
 
PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST
 
  The principal of and any premium and interest on Foreign Currency Notes are
payable by CSX in U.S. dollars. Unless otherwise specified in the applicable
Pricing Supplement, the Exchange Rate Agent (as defined below) will obtain the
quotations necessary to convert the amount of all payments of principal of and
any premium and interest on Foreign Currency Notes from the Specified Currency
to U.S. dollars. Unless otherwise specified in the applicable Pricing
Supplement, however, the Holder of a Foreign Currency Note may elect to
receive such payments in the Specified Currency as described below.
 
  Any U.S. dollar amount to be received by a Holder of a Foreign Currency Note
will be based on the highest bid quotation in The City of New York received by
the Exchange Rate Agent at approximately 11:00 A.M., New York City time, on
the second Market Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for
U.S. dollars for settlement on such payment date in the aggregate amount of
the Specified Currency payable to all Holders of Foreign Currency Notes
scheduled to receive U.S. dollar payments and at which the applicable dealer
commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the Holder of the Foreign Currency Note by deductions from
such payments. "Exchange Rate Agent" means the agent appointed by CSX to
obtain the quotations necessary to convert the amount of principal and any
premium and interest payments on Foreign Currency Notes from the Specified
Currency into U.S. dollars. Unless otherwise indicated in the applicable
Pricing Supplement, the Exchange Rate Agent will be The Chase Manhattan Bank.
 
  Unless otherwise specified in the applicable Pricing Supplement, a Holder of
a Foreign Currency Note may elect to receive payment of the principal of and
any premium and interest on such Note in the Specified Currency by filing a
written request, signature guaranteed, for such payment at the office of The
Chase Manhattan Bank, as Paying Agent, in the Borough of Manhattan, The City
of New York, on or prior to the Regular Record Date or at least sixteen days
prior to Maturity, as the case may be. A Holder of a Foreign Currency Note may
make such election with respect to all principal and any premium and interest
payments and need not file a separate election for each payment. Such election
will remain in effect until changed by written notice to the Paying Agent, but
written notice of any such change must be received by the Paying Agent on or
prior to the relevant Regular Record Date or at least sixteen days prior to
Maturity, as the case may be. Any such election or change thereof will be
deemed to be made for all Foreign Currency Notes denominated in such Specified
Currency which are registered in the name of such Holder, unless such Holder
specifies in such written request the particular Foreign Currency Notes with
regard to which such election or change thereof shall not apply. Holders of
Foreign Currency Notes whose Notes are to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
 
  Except as described below, principal of and any premium and interest on
Foreign Currency Notes paid in U.S. dollars will be paid in the manner
specified in the accompanying Prospectus and this Prospectus Supplement for
principal of and any premium and interest on Notes denominated in U.S.
dollars, and principal of and any premium and interest on Foreign Currency
Notes paid in a Specified Currency will be paid by check mailed to
 
                                     S-17

 
the address of the Person entitled thereto as such address shall appear in the
Security Register. All checks payable in a Specified Currency will be drawn on
a bank office located outside the United States. In addition, payments in U.S.
dollars of principal of and any premium and interest on a Foreign Currency
Note in which the equivalent of U.S. $10,000,000 or more has been invested
may, at the request of the Holder thereof, be made in immediately available
funds at the offices of The Chase Manhattan 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, such Note is presented to the Paying
Agent in time for the Paying Agent to make such payments in such funds in
accordance with its normal procedures. Also, payments in a Specified Currency
of principal of and any premium and interest on a Foreign Currency Note in
which the equivalent of U.S. $10,000,000 or more has been invested may, at the
request of the Holder thereof, be made by wire transfer to an account with a
bank located in the country of the Specified Currency, as shall have been
designated on or prior to the relevant Regular Record Date or at least sixteen
days prior to Maturity, as the case may be, provided that, in the case of
payments of principal and any premium, the Note is presented at the offices of
The Chase Manhattan Bank, as Paying Agent, in the Borough of Manhattan, The
City of New York in time for the Paying Agent to make such payments in such
funds in accordance with its normal procedures. Any request of a Holder in
accordance with this paragraph must be transmitted to the Paying Agent on or
prior to the relevant Regular Record Date or at least sixteen days prior to
Maturity, as the case may be. Such request may be in writing (mailed or hand
delivered) or by cable, telex or other form of facsimile transmission. Such
Holder may make such election for all principal and any premium and interest
payments and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Paying Agent but
written notice of any such revocation must be received by the Paying Agent on
or prior to the relevant Regular Record Date or at least sixteen days prior to
Maturity, as the case may be.
 
  Unless otherwise specified in the applicable Pricing Supplement, a
beneficial owner of a Global Note or Notes representing Book-Entry Notes
denominated in a Specified Currency that elects to receive payments of
principal, premium or interest in such Specified Currency must notify the
participant through which its interest is held on or prior to the applicable
Record Date, in the case of a payment of interest, and at least sixteen days
prior to Maturity, in the case of a payment of principal or premium, of such
beneficial owner's election to receive such payment in such Specified
Currency. Such participant must notify the Depositary of such election on or
prior to the third Business Day after such Record Date or at least twelve days
prior to Maturity, as the case may be, and the Depositary will notify the
Paying Agent of such election on or prior to the fifth Business Day after such
Record Date or at least ten days prior to the Maturity Date, as the case may
be. If complete instructions are received by the participant from the
beneficial owner and forwarded by the participant to the Depositary, and by
the Depositary to the Paying Agent, on or prior to such dates, then such
beneficial owner will receive payments in the applicable Specified Currency.
 
PAYMENT CURRENCY
 
  If a Specified Currency is not available for the payment of principal or any
premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of
CSX or is no longer used by the government of the country issuing such
Specified Currency for the settlement of transactions by public institutions
of or within the international business community, CSX will be entitled to
satisfy its obligations to Holders of Foreign Currency Notes by making such
payment in U.S. dollars on the basis of the Market Exchange Rate two Business
Days prior to the date of such payment, or if such Market Exchange Rate is not
then available, on the basis of the most recently available Market Exchange
Rate.
 
  If payment in respect of a Foreign Currency Note is required to be made in
any currency unit (e.g., European Currency Unit or Euro), and such currency
unit is unavailable due to the imposition of exchange controls or is no longer
used by the monetary authority issuing such currency unit or other
circumstances beyond the reasonable control of CSX, CSX will be entitled to
satisfy its obligations to the Holder of such Foreign Currency Note by making
such payment in U.S. dollars. The amount of each payment in U.S. dollars shall
be computed by the Exchange Rate Agent on the basis of the equivalent of the
currency unit in U.S. dollars. The component
 
                                     S-18

 
currencies of the currency unit for this purpose (collectively, the "Component
Currencies" and each, a "Component Currency") shall be the currency amounts
that were components of the currency unit as of the last day on which the
currency unit was used. The equivalent of the currency unit in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Component Currencies. The U.S. dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified in the applicable Pricing Supplement.
 
  If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in
such single currency equal to the sum of the amounts of the consolidated
Component Currencies expressed in such single currency. If any Component
Currency is divided into two or more currencies, the amount of the original
Component Currency shall be replaced by the amounts of such two or more
currencies, the sum of which shall be equal to the amount of the original
Component Currency.
 
  Any payment made in U.S. dollars under such circumstances where the required
payment is in a Specified Currency other than U.S. dollars will not constitute
an Event of Default under the Indenture with respect to the Notes.
 
  All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
 
                                     S-19

 
                       SUPPLEMENTAL PLAN OF DISTRIBUTION
 
  Unless otherwise specified in the applicable Pricing Supplement, the Agents
shall be Chase Securities Inc., BancAmerica Robertson Stephens, Credit Suisse
First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, NationsBanc Montgomery Securities LLC and Salomon
Brothers Inc. Under the terms of a Distribution Agreement, dated April 22,
1998 (the "Distribution Agreement"), among CSX and the Agents, the Notes may
be offered on a continuing basis by CSX through the Agents, each of which has
agreed to use its best efforts to solicit purchases of the Notes. CSX will pay
each Agent a commission of from .125% to .750% of the principal amount of each
Note sold through such Agent, depending on its Stated Maturity. Commissions
with respect to Notes with Stated Maturities in excess of 30 years that are
sold through an Agent will be negotiated between the Company and such Agent at
the time of such sale. CSX has reserved the right to sell Notes directly to
investors on its own behalf. No commission will be payable nor will a discount
be allowed on any sales made directly by CSX. CSX will have the sole right to
accept offers to purchase Notes and may reject any such offer, in whole or in
part. Each Agent shall have the right, in its discretion reasonably exercised,
to reject any offer to purchase Notes received by it, in whole or in part. CSX
also may sell Notes to any Agent, acting as principal, at a discount to be
agreed upon at the time of sale, for resale to one or more investors at
varying prices related to prevailing market prices at the time of such resale,
as determined by such Agent or, if so agreed by CSX and the applicable Agent
and specified in the applicable Pricing Supplement, at a fixed public offering
price. The offering price and other selling terms may from time to time be
varied by such Agent.
 
  Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes, other than Foreign Currency Notes, will be
required to be made in funds immediately available in The City of New York.
With respect to payment of the purchase price of Foreign Currency Notes, see
"Special Provisions Relating to Foreign Currency Notes--General."
 
  The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act. CSX has agreed to indemnify the Agents against and contribute
toward certain liabilities, including liabilities under the Securities Act.
CSX has agreed to reimburse the Agents for certain expenses.
 
  In addition to offering Notes through the Agents as described herein, other
Securities that have terms substantially similar to the terms of the Notes
offered hereby (but constituting one or more separate series of Securities for
purposes of the Indenture) may in the future be offered, concurrently with the
offering of the Notes, on a continuing basis outside the United States by CSX.
The aggregate principal amount of Notes offered hereby is subject to reduction
as a result of the sale by CSX of other Securities, including the sale outside
the United States of any other series of medium-term notes.
 
  The Notes will not be listed on any securities exchange, unless otherwise
indicated in the applicable Pricing Supplement, and there can be no assurance
that the Notes offered by this Prospectus Supplement will be sold or that
there will be a secondary market for the Notes.
 
  In connection with certain offerings of the Notes, the Agents may engage in
overallotment, stabilizing transactions and short covering transactions.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Agent(s). Stabilizing transactions involve bids to
purchase the Notes in the open market for the purpose of pegging, fixing or
maintaining the price of the Notes. Short covering transactions involve
purchases of the Notes in the open market after the distribution has been
completed in order to cover short positions. Such stabilizing transactions and
short covering transactions may cause the price of the Notes to be higher than
it would otherwise be in the absence of such transactions. Such activities, if
commenced, may be discontinued at any time.
 
  In the ordinary course of business, the Agents and their affiliates have
engaged in and may in the future engage in investment banking and general
financing and banking transactions with the Company and certain of its
affiliates. In particular, affiliates of certain of the Agents participate in
certain of the Company's credit facilities and,
 
                                     S-20

 
accordingly, if any proceeds from the sale of the Notes are applied by the
Company to repay amounts borrowed under such facilities, such affiliates will
receive their proportionate share of the amounts repaid.
 
                             VALIDITY OF THE NOTES
 
  The validity of the Notes offered hereby will be passed upon for CSX by
McGuire, Woods, Battle & Boothe LLP, Richmond, Virginia. Certain legal matters
will be passed upon for the Agents by Shearman & Sterling, New York, New York.
The opinions of McGuire, Woods, Battle & Boothe LLP and Shearman & Sterling
will be conditioned upon, and subject to certain assumptions regarding, future
action required to be taken by CSX and the Trustee in connection with the
issuance and sale of any particular Note, the specific terms of Notes and
other matters which may affect the validity of Notes but which cannot be
ascertained on the date of such opinions. Robert L. Burrus, Jr., a partner of
McGuire, Woods, Battle & Boothe LLP, is a director of the Company and owns
7201 shares of the Company's Common Stock.
 
                                     S-21

 
PROSPECTUS
 
                           [LOGO OF CSX CORPORATION]
                            SENIOR DEBT SECURITIES,
                      DEBT WARRANTS AND CURRENCY WARRANTS
 
  CSX Corporation (the "Company" or "CSX") may offer from time to time its
senior debt securities (the "Debt Securities"), warrants to purchase Debt
Securities (the "Debt Warrants") and warrants to receive from the Company the
cash value in U.S. dollars of the right to purchase ("Currency Call Warrants")
and to sell ("Currency Put Warrants" and, together with the Currency Call
Warrants, the "Currency Warrants") such foreign currencies or units of two or
more currencies as shall be designated by the Company at the time of offering,
from which the Company will receive proceeds of up to U.S. $500,000,000 (or
the equivalent in foreign denominated currencies or units of two or more
currencies, based on the applicable exchange rate at the time of offering, as
shall be designated by the Company at the time of offering). The Debt
Securities, Debt Warrants and Currency Warrants, which are collectively called
the "Securities", may be offered either together or separately and in one or
more series, in amounts, at prices and on terms to be determined at the time
of the offering. Each issue of Securities may vary, where applicable, as to
aggregate principal amount, maturity date, public offering or purchase price,
interest rate or rates and timing of payments thereof, provision for
redemption or sinking fund requirements, if any, currencies of denomination or
currencies otherwise applicable thereto and any other variable terms and
methods of distribution. The specific terms with regard to the Securities in
respect of which this Prospectus is being delivered are set forth in one or
more accompanying Prospectus Supplements (each a "Prospectus Supplement").
 
  The Debt Securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company.
 
  The Debt Securities may be issued in registered form ("Registered Debt
Securities") or bearer form with coupons attached ("Bearer Debt Securities"),
or both. In addition, all or a portion of the Debt Securities of a series may
be issuable in temporary or permanent global form. Bearer Debt Securities,
Debt Securities represented by a permanent global Debt Security exchangeable
for Bearer Debt Securities and Debt Securities initially represented by a
temporary global Debt Security described under "Description of Debt
Securities--Temporary Global Debt Securities" (collectively, "Euro-Debt
Securities") are offered only to Non-United States persons and to offices of
certain United States financial institutions located outside the United States
and its possessions. See "Limitations on Issuance of Euro-Debt Securities."
For a discussion of certain United States federal income tax consequences to
Holders of Debt Securities, see "United States Taxation."
 
                               ----------------
 
  THESE SECURITIES HAVE NOT  BEEN APPROVED OR  DISAPPROVED BY THE  SECURITIES
    AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS  THE
      SECURITIES  AND  EXCHANGE  COMMISSION   OR  ANY  STATE   SECURITIES
        COMMISSION  PASSED  UPON  THE  ACCURACY  OR  ADEQUACY  OF  THIS
          PROSPECTUS.  ANY  REPRESENTATION  TO  THE  CONTRARY  IS   A
            CRIMINAL OFFENSE.
 
                               ----------------
 
  The Company may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents. See "Plan of Distribution." The accompanying Prospectus
Supplement sets forth the names of any underwriters, dealers or agents
involved in the sale of the Securities in respect of which this Prospectus is
being delivered and any applicable fee, commission or discount arrangements
with them.
 
                 The date of this Prospectus is April 22, 1998

 
                             AVAILABLE INFORMATION
 
  The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's Regional Offices in New York (Seven World Trade Center, 13th
Floor, New York, New York 10048), and Chicago (Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of these
materials may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005, where the Company's common stock is
listed.
 
  This Prospectus constitutes a part of a Registration Statement on Form S-3,
as amended (the "Registration Statement"), filed by the Company with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus omits certain of the information contained in the
Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the
Securities. Statements contained herein concerning the provisions of any
documents are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The Company's Annual Report on Form 10-K for the fiscal year ended December
26, 1997 and Current Report on Form 8-K dated April 22, 1998 have been filed
by the Company with the Commission and are incorporated herein by reference.
 
  All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this
Prospectus and prior to the termination of any offering of securities made
hereby shall be deemed to be incorporated by reference into this Prospectus
and to be a part of this Prospectus from the respective dates of filing of
such documents. Any statement contained herein or in a document, all or any
part of which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement or
document so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus. As used herein, the
terms "Prospectus" and "herein" mean this Prospectus, including the documents
incorporated or deemed incorporated by reference, as the same may be amended,
supplemented or otherwise modified from time to time. Statements contained in
this Prospectus as to the contents of any contract or other document referred
to herein do not purport to be complete and are qualified in all respects by
reference to all of the provisions of such contract or other document.
 
  The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any and all of the documents described above that are incorporated by
reference herein other than exhibits to such documents which are not
specifically incorporated by reference in such documents. Written or telephone
requests should be directed to: 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.
 
 
                                       2

 
                                CSX CORPORATION
 
  CSX Corporation, headquartered in Richmond, Virginia, is a Fortune 500
transportation company providing multimodal freight transportation and
contract logistics services around the world. CSX's unique combination of
rail, container-shipping, barging, intermodal and logistics services offers
shippers global reach unmatched by any other freight transportation company.
The Company's goal, advanced at each of its business units, is to provide
efficient, competitive transportation and related services for customers and
to deliver superior value to CSX shareholders.
 
  The Company's holdings include: CSX Transportation, Inc. ("CSXT"), Sea-Land
Service, Inc. ("Sea-Land"), CSX Intermodal, Inc. ("CSXI"), American Commercial
Lines LLC ("ACL") and Customized Transportation, Inc. ("CTI"). The Company's
non-transportation interests include: The Greenbrier, the Grand Teton Lodge
Company, and CSX Real Property, Inc. CSX also holds a majority interest in
Yukon Pacific Corporation. In 1997, CSX generated more than $10.6 billion of
operating revenue and nearly $1.6 billion of operating income.
 
  CSXT is a major eastern railroad, providing rail freight transportation over
a network of approximately 18,300 route miles in 20 states in the East,
Midwest and South; and in Ontario, Canada. Headquartered in Jacksonville,
Florida, CSXT accounted for 47% of CSX's operating revenue and 78% of
operating income in 1997.
 
  Sea-Land is the largest U.S.-based ocean carrier and a leader in the global
shipping industry. The carrier operates a fleet of 98 container ships and
approximately 220,000 containers in U.S. and foreign trade and serves 120
ports. In addition, Sea-Land operates 28 marine terminal facilities across its
global network. Headquartered in Charlotte, North Carolina, Sea-Land accounted
for 37% of CSX's operating revenue and 18% of operating income in 1997.
 
  ACL, headquartered in Jeffersonville, Indiana, is a family of marine
companies providing a wide range of services to the shipping public and other
inland waterway carriers. ACL is a leader in barge transportation, operating
135 towboats and more than 3,800 barges on U.S. and South American waterways.
Additionally, ACL operates marine construction facilities, river terminals and
communications services. ACL accounted for 6% of CSX's operating revenue and
4% of operating income in 1997.
 
  CSXI provides transcontinental intermodal transportation services and
operates a network of dedicated intermodal facilities across North America.
Every week, CSXI runs more than 300 dedicated trains between its 33 terminals.
CSXI contributed 6% of CSX's operating revenue and 3% of operating income in
1997.
 
  CTI is one of the nation's leading third-party logistics providers, offering
inventory management, distribution, warehousing, assembly and just-in-time
delivery services. The fastest growing unit of CSX, CTI provided 4% of CSX's
operating revenue and 1% of operating income in 1997.
 
  Resort holdings include the Mobil Five-Star and AAA Five-Diamond hotel, The
Greenbrier in White Sulphur Springs, West Virginia, and the Grand Teton Lodge
Company in Moran, Wyoming. CSX Real Property, Inc. is responsible for sales,
leasing and development of CSX-owned properties. CSX holds 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.
 
  The Company was incorporated in Virginia in 1978. The Company's principal
executive offices are located at One James Center, 901 East Cary Street,
Richmond, Virginia 23219 (telephone 804-782-1400). Unless the context
indicates otherwise, references herein to the Company or CSX are to CSX
Corporation and its consolidated subsidiaries.
 
                                       3

 
CONRAIL ACQUISITION
 
  In April 1997, CSX and Norfolk Southern Corporation, a Virginia corporation
("Norfolk Southern"), entered into an agreement providing for their joint
acquisition of Conrail Inc., a Pennsylvania corporation ("Conrail"), and the
division of its routes and other assets.
 
  Under the terms of the agreement, CSX and Norfolk Southern acquired all
outstanding shares of Conrail not already owned by them for $115 per share in
cash during the second quarter of 1997. CSX and Norfolk Southern each possess
50% of the voting and management rights of a jointly owned acquisition
company, and non-voting equity is divided between the parties to achieve
overall economic allocations of 42% for CSX and 58% for Norfolk Southern.
Following approval by the Surface Transportation Board ("STB") as described
below, Conrail's assets will be segregated within Conrail, and CSX and Norfolk
Southern will each benefit from the operation of a specified portion of the
Conrail routes and other assets through the use of various operating
arrangements. Certain Conrail assets will be operated for the joint benefit of
CSX and Norfolk Southern.
 
  The total cost of acquiring the outstanding shares of Conrail under the
joint CSX/Norfolk Southern agreement was approximately $9.8 billion. Pursuant
to the agreement, CSX has paid 42%, or approximately $4.1 billion, and Norfolk
Southern has paid 58%, or approximately $5.7 billion, of such cost. Including
its capitalized transaction costs, CSX's total purchase price was
approximately $4.2 billion.
 
  The Conrail shares have been placed in a voting trust pending STB approval
of the joint acquisition, control and division of Conrail. The exercise of
control over Conrail by CSX and Norfolk Southern remains subject to a number
of conditions and approvals, including approval by the STB, which has the
authority to modify contract terms and impose additional conditions. CSX and
Norfolk Southern filed an application for control of Conrail with the STB in
June 1997. The STB has adopted a schedule that contemplates a decision in late
July 1998. CSX believes that the STB will approve the joint application for
control without imposing onerous conditions. However, should the application
not be approved by the STB, or should the STB impose onerous approval
conditions, the closing may be delayed, or CSX may be required to, or may
choose to, dispose of some or all of its investment in Conrail in a manner
that could cause CSX to incur a loss on its investment in Conrail.
 
  Because of the time required to obtain necessary regulatory and other
approvals, CSX does not expect integrated operations to have a significant
effect on operating and financial results prior to fiscal 1999. The primary
impact of the Conrail transaction on net earnings prior to the integration of
operations will be the after-tax effect of CSX's share of Conrail's net
earnings, reported under the equity method of accounting, less amortization of
the excess purchase price and interest on debt incurred to acquire the Conrail
investment. Net cash flow prior to operational integration is expected to be
reduced by interest payments on the acquisition debt. At December 26, 1997,
the average interest rate on debt incurred to acquire Conrail shares was
approximately 6.9%. The degree of negative impact on net earnings and net cash
flow during 1998 will depend primarily on the net earnings reported by Conrail
and the average interest rate and timing of interest payments on the related
debt.
 
                          FORWARD-LOOKING STATEMENTS
 
  This Prospectus contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Those statements appear in number of places in this
Prospectus and include statements under "CSX Corporation" regarding the
intent, belief or current expectations of CSX, its directors or its officers
with respect to, among other things: the operational integration of Conrail,
the timing and outcome of regulatory and other approvals related to the joint
acquisition, control and division of Conrail by CSX and Norfolk Southern and
the impact of the Conrail transaction on the financial condition and results
of CSX. Estimates, forecasts and other forward-looking statements included, or
incorporated by reference in, this Prospectus are based on estimates and
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. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors
 
                                       4

 
that could cause the actual results, performance or achievements of CSX to
differ materially from any future results, performance or achievements
expressed or implied by such statements. Certain of those risks, uncertainties
and other important factors that could cause actual results to differ
materially include: future economic conditions in the markets in which CSX and
Conrail operate; financial market conditions; inflation rates; changing
competition; changes in the economic regulatory climate in the U.S. railroad
industry; the ability to eliminate duplicative administrative functions; and
adverse changes in applicable laws, regulations or rules governing
environmental, tax or accounting matters. These forward-looking statements
speak only as of the date of this Prospectus. CSX disclaims any obligation or
undertaking to disseminate any updates or revisions to any such statement to
reflect changes in CSX's expectations or any change in events, conditions or
circumstances on which any such statements are based.
 
                      RATIO OF EARNINGS TO FIXED CHARGES
 
  The Company's consolidated ratio of earnings to fixed charges for each of
the fiscal periods indicated is as follows:
 


                                           FOR THE FISCAL YEARS ENDED
                                  --------------------------------------------
                                  DEC. 26, DEC. 27, DEC. 29, DEC. 30, DEC. 31,
                                  1997 (B)   1996   1995 (C)   1994   1993 (D)
                                  -------- -------- -------- -------- --------
                                                       
      Ratio of earnings to fixed
       charges (a)...............   2.9x     4.0x     3.2x     3.1x     2.3x

- --------
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
    represent earnings (loss) before income taxes plus interest expense on
    indebtedness, amortization of debt discount, the interest portion of fixed
    rent expense, undistributed earnings of unconsolidated subsidiaries and
    minority interest expense. Fixed charges include interest on indebtedness
    (whether expensed or capitalized), amortization of debt discount and the
    interest portion of fixed rent expense.
(b) Pre-tax earnings for 1997 includes $195 million of net expense associated
    with the Company's ownership of a 42% interest in Conrail. This net
    expense includes $236 million of interest expense on indebtedness incurred
    to acquire the Conrail investment. The Conrail investment is being held in
    a voting trust pending approval of the joint acquisition, control and
    division of Conrail by CSX and Norfolk Southern. Excluding the impact of
    the investment in Conrail, the ratio of earnings to fixed charges would
    have been 4.4x.
(c) Operating income for 1995 includes a charge of $257 million to recognize
    the estimated costs of initiatives to revise, restructure and consolidate
    specific operations and administrative functions at the Company's rail and
    container-shipping units. Excluding the impact of the charge, the ratio of
    earnings to fixed charges would have been 3.7x.
(d) Operating income for 1993 includes a charge of $93 million to recognize
    the estimated costs of restructuring certain operations and functions at
    the Company's container-shipping unit. Excluding the impact of the charge,
    the ratio of earnings to fixed charges would have been 2.5x.
 
                                USE OF PROCEEDS
 
  The net proceeds from the sale of the Securities 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 the Company's major transportation
units, redemptions and repurchases of certain outstanding securities and
reduction or refinancing of outstanding indebtedness. Specific allocations of
the proceeds to such purposes have not been made 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 the
Company and the availability and cost of other funds at the time of such sale.
Allocation of the proceeds of a particular series of Securities, or the
principal reasons for the offering if no such allocation has been made, will
be described in the applicable Prospectus Supplement.
 
 
                                       5

 
                        DESCRIPTION OF DEBT SECURITIES
 
  The Debt Securities will be issued under an Indenture dated as of August 1,
1990 between the Company and The Chase Manhattan Bank, as Trustee (the
"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 (such Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"). A copy of the
Indenture has been filed as an exhibit to, or has been incorporated by
reference in, the Registration Statement of which this Prospectus is a part.
The following brief summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms capitalized and not otherwise defined
herein.
 
  The Indenture provides that, in addition to Debt Securities previously
issued thereunder, additional Debt Securities may be issued in separate series
thereunder without limitation as to aggregate principal amount. The terms of
each series of Debt Securities will be established by or pursuant to a
resolution of the Board of Directors of the Company and set forth or
determined in the manner provided in an Officers' Certificate or by a
supplemental indenture. (Section 301)
 
  The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by a Prospectus
Supplement or Prospectus Supplements will be described in such Prospectus
Supplement or Prospectus Supplements relating to such series.
 
  Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$" or "dollars").
 
GENERAL
 
  The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the Debt Securities of each series: (1) the title of
the Debt Securities; (2) any limit on the aggregate principal amount of the
Debt Securities; (3) 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; (4) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Debt Securities will be issued; (5) the
date or dates on which the Debt Securities will mature; (6) the rate or rates
per annum at which the Debt Securities will bear interest, if any, or the
formula pursuant to which such rate or rates will be determined, and the date
or dates from which any such interest will accrue; (7) the Interest Payment
Dates on which any such 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; (8) the Person to whom any Registered
Debt Securities of such 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 such
interest, the manner in which, or the Person to whom, any interest on any
Bearer Debt Security of such series will be payable, if otherwise than upon
presentation and surrender of the coupons appertaining thereto, 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 described under "Temporary Global Debt Securities" below 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; (9) 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; (10) 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, and the
other detailed terms and provisions of any such optional redemption
provisions; (11) the obligation, if any, of the Company to redeem or purchase
the Debt Securities pursuant to any sinking fund [or analogous provisions] or
at the option of the Holder thereof and the period or periods within which and
the price or prices at which the
 
                                       6

 
Debt Securities will be redeemed or purchased, in whole or in part, pursuant
to such obligation, and the other detailed terms and provisions of such
obligation; (12) 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; (13) the
currency or currency unit of payment of principal of and any premium and
interest on the Debt Securities; (14) any index used to determine the amount
of payments of principal of and any premium and interest on the Debt
Securities; (15) any limitation on the application of the terms of the
Indenture described below under "Defeasance and Covenant Defeasance;" and (16)
any other terms of the Debt Securities not inconsistent with the provisions of
the Indenture. (Section 301) Any such Prospectus Supplement or Prospectus
Supplements 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 such series and
whether the Company has the option to redeem the affected Debt Securities
rather than pay such additional amounts.
 
  Debt Securities may be issued as Original Issue Discount Debt Securities. An
Original Issue Discount Debt Security is a Debt Security, including any zero-
coupon Debt Security, which is issued at a price lower than the amount payable
upon the Stated Maturity thereof, and which provides that, upon redemption or
acceleration of the Maturity thereof, an amount less than the amount payable
upon the Stated Maturity thereof and determined in accordance with the terms
of such Debt Security shall become due and payable. Special United States
federal income tax considerations applicable to Debt Securities issued at an
original issue discount, including Original Issue Discount Debt Securities,
and special United States tax considerations applicable to any Debt Securities
which are denominated in a currency or currency unit other than United States
dollars are described below under "United States Taxation--Original Issue
Discount."
 
  The Debt Securities of each series will be unsecured and will rank pari
passu with all other unsecured and unsubordinated indebtedness of the Company.
 
  Debt Securities of a series may also be issued under the Indenture upon the
exercise of Debt Warrants issued by the Company. See "Description of Debt
Warrants."
 
  The Indenture does 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.
Any such provisions, if applicable to the Debt Securities of any series, will
be described in the Prospectus Supplement or Prospectus Supplements relating
thereto.
 
FORM, EXCHANGE, REGISTRATION AND TRANSFER
 
  Debt Securities of a series may be issuable in definitive form solely as
Registered Debt Securities, solely as Bearer Debt Securities or as both
Registered Debt Securities and Bearer Debt Securities. Unless otherwise
indicated in an applicable Prospectus Supplement or Prospectus Supplements,
Bearer Debt Securities will have interest coupons attached. The Indenture also
will provide that Debt Securities of a series may be issuable in temporary or
permanent global form. (Section 201) See "Temporary Global Debt Securities"
and "Permanent Global Debt Securities."
 
  In connection with its sale during the Restricted Period (as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations), no
Euro-Debt Security shall be mailed or otherwise delivered to any location in
the United States or its possessions. Except as may otherwise be provided in
the applicable Prospectus Supplement, a Euro-Debt Security (not including a
Debt Security in temporary global form) may be delivered in connection with
its sale during the Restricted Period only if the person entitled to physical
delivery of such Euro-Debt Security furnishes written certification, in the
form required by the Indenture, to the effect that (i) such Euro-Debt Security
is owned by a person that is not a United States person (as defined under
"Limitations on Issuance of Euro-Debt Securities"), (ii) such Euro-Debt
Security is owned by a United States person that is (A) a foreign branch of a
United States financial institution within the meaning of Section 1.165-
12(c)(1)(v) of the
 
                                       7

 
United States Treasury Regulations (a "Financial Institution") purchasing for
its own account or for resale or (B) a United States person who acquired such
Euro-Debt Security through the foreign branch of a United States Financial
Institution and who holds such Euro-Debt Security through such Financial
Institution on the date of such written certification (and, in either case (A)
or (B), the Financial Institution has agreed to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as
from time to time amended, and the regulations thereunder), or (iii) such
Euro-Debt Security is owned by a United States or foreign Financial
Institution for the purpose of resale during the Restricted Period. A
Financial Institution described in clause (iii) above, whether or not also
described in clause (i) or (ii) above, must certify that it has not acquired
the Euro-Debt Security for purposes of resale directly or indirectly to a
United States person or to any person within the United States or its
possessions. In the case of a Euro-Debt Security in permanent global form,
such certification must be given in connection with the notation of a
beneficial owner's interest therein upon original issuance of such Debt
Security or upon exchange of a portion of a temporary global Debt Security.
(Section 303) See "Temporary Global Debt Securities" and "Limitations on
Issuance of Euro-Debt Securities."
 
  At the option of the Holder, subject to the terms of the 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 Indenture, Bearer Debt Securities (with all unmatured coupons, except as
provided below, and with all matured coupons in default) of such 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
such date for payment of interest and interest will not be payable in respect
of the Registered Debt Security issued in exchange for such Bearer Debt
Security, but will be payable only to the Holder of such 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. (Section 305)
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."
(Section 201)
 
  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 endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Debt Securities and
referred to in an applicable Prospectus Supplement or Prospectus Supplements,
without a service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the Security Registrar or such transfer agent, as the case may
be, being satisfied with the documents of title and identity of the person
making the request. The Company has appointed the Trustee as Security
Registrar. (Section 305) If a Prospectus Supplement or Prospectus Supplements
refer to any transfer agents (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that, if Debt Securities of a series are issuable solely as Registered
Debt Securities, the Company will be required to maintain a transfer agent in
each Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Debt Securities, the Company will be required to maintain
(in addition to the Security Registrar) a transfer agent in a Place of Payment
for such series located outside the United States and its possessions. The
Company may at any time designate additional transfer agents with respect to
any series of Debt Securities. (Section 1002)
 
  In the event of any redemption in part, the Company shall not be required to
(i) 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 such
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
 
                                       8

 
have been given to all Holders of Debt Securities of like tenor and of such
series to be redeemed; (ii) 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
(iii) exchange any Bearer Debt Security so selected for redemption, except to
exchange such Bearer Debt Security for a Registered Debt Security of that
series and like tenor which is immediately surrendered for redemption.
(Section 305)
 
PAYMENT AND PAYING AGENTS
 
  Unless otherwise indicated in an applicable Prospectus Supplement or
Prospectus Supplements, 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 such Paying Agents outside the United States
and its possessions as the Company 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
or Prospectus Supplements, 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 such Interest Payment Date. (Section 1001) No
payment with respect to any Bearer Debt Security will be made at any office or
agency of the Company 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. Notwithstanding the foregoing, 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 thereof 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.
(Section 1002)
 
  Unless otherwise indicated in an applicable Prospectus Supplement or
Prospectus Supplements, 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 such Paying Agent or Paying Agents as the
Company may designate from time to time, except that at the option of the
Company payment of any interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register. Unless otherwise indicated in an applicable Prospectus Supplement or
Prospectus Supplements, payment of interest on a Registered Debt Security on
any Interest Payment Date will be made to the Person in whose name such
Registered Debt Security (or Predecessor Debt Security) is registered at the
close of business on the Regular Record Date for such interest. (Section 307)
 
  Unless otherwise indicated in an applicable Prospectus Supplement or
Prospectus Supplements, the Corporate Trust Office of the Trustee in The City
of New York will be designated as a Paying Agent for the Company 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
the Company for the Debt Securities of each series will be named in an
applicable Prospectus Supplement or Prospectus Supplements. The Company 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, the Company will be required to maintain a Paying
Agent in each Place of Payment for such series and, if Debt Securities of a
series are issuable as Bearer Debt Securities, the Company will be required to
maintain (i) 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 (ii) a Paying Agent in
a Place of Payment located outside the United States and its possessions where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment; provided, however, that if the Debt
Securities of such series are listed on The
 
                                       9

 
International Stock Exchange of the United Kingdom and the Republic of Ireland
Limited (the "London Stock Exchange"), the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and its possessions and
such stock exchange shall so require, the Company 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
such series. (Section 1002)
 
  All moneys paid by the Company 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 such principal, premium
or interest shall have become due and payable will be repaid to the Company
and the Holder of such Debt Security or any coupon appertaining thereto will
thereafter look only to the Company for payment thereof. (Section 1003)
 
TEMPORARY GLOBAL DEBT SECURITIES
 
  If so specified in an applicable Prospectus Supplement or Prospectus
Supplements, all or any portion of the Debt Securities of a series issuable as
Bearer Debt Securities will initially be represented by one or more temporary
global Debt Securities, without interest coupons, to be deposited with the
Trustee as custodian for, and registered in the name of, a nominee of the
Depositary for the accounts of Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System ("Euroclear") and Cedel
Bank, societe anonyme ("Cedel Bank"). On and after the date determined as
provided in any such temporary global Debt Security and described in an
applicable Prospectus Supplement or Prospectus Supplements (the "Exchange
Date"), each such temporary global Debt Security will be exchanged for
definitive Bearer Debt Securities, definitive Registered Debt Securities or
all or a portion of a permanent global Debt Security, or any combination
thereof, as specified in an applicable Prospectus Supplement or Prospectus
Supplements, but, unless otherwise specified in an applicable Prospectus
Supplement or Prospectus Supplements, only upon receipt by the Company of
written certification in the form and to the effect described above under
"Form, Exchange, Registration and Transfer." No Debt Security delivered in
exchange for any portion of a temporary global Debt Security shall be mailed
or otherwise delivered to any location in the United States or its possessions
in connection with such exchange. (Section 304)
 
  Unless otherwise specified in an applicable Prospectus Supplement or
Prospectus Supplements, interest in respect of any portion of a temporary
global Debt Security payable in respect of an Interest Payment Date occurring
prior to the issuance of definitive Debt Securities (including a permanent
global Debt Security) will be paid to each of Euroclear and Cedel Bank with
respect to the portion of the temporary global Debt Security held for its
account for which it provides certification in the form described in the
Indenture. Each of Euroclear and Cedel Bank will undertake in such
circumstances to credit such interest received by it in respect of a temporary
global Debt Security to the respective accounts for which it holds such
temporary global Debt Security, and for which it has received written
certification that, as of the relevant Interest Payment Date, is in the form
and to the effect described above under "Form, Exchange, Registration and
Transfer." Receipt of such certification shall be deemed to be a request for
an interest in a permanent global Debt Security (unless the account holder
requests that such portion be exchanged for a definitive Registered Debt
Security or Debt Securities or a definitive Bearer Debt Security or Debt
Securities). If an Interest Payment Date occurs prior to the issuance of
definitive Debt Securities (including a permanent global Debt Security) but on
or after the Exchange Date, written certification in the form and to the
effect described above under "Form, Exchange, Registration and Transfer" will
also be required to obtain an interest payment, and upon receipt of such
certificate Euroclear or Cedel Bank, as the case may be, will exchange the
portion of the temporary global Debt Security relating to such certification
for an interest in a permanent global Debt Security (unless the account holder
requests that such portion be exchanged for a definitive Registered Debt
Security or Debt Securities or a definitive Bearer Debt Security or Debt
Securities).
 
PERMANENT GLOBAL DEBT SECURITIES
 
  If any Debt Securities of a series are issuable in permanent global form,
the applicable Prospectus Supplement or Prospectus Supplements will describe
the circumstances, if any, under which beneficial owners
 
                                      10

 
of interests in any such permanent global Debt Security may exchange such
interests for Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination. No Bearer Debt Security
delivered in exchange for any portion of a permanent global Debt Security
shall be mailed or otherwise delivered to any location in the United States or
its possessions in connection with such exchange. (Section 305) Principal of
and any premium and interest on any permanent global Debt Security will be
payable in the manner described in the applicable Prospectus Supplement or
Prospectus Supplements.
 
LIMITATION ON LIENS ON STOCK OF PRINCIPAL SUBSIDIARIES
 
  The Indenture provides that the Company 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 Indenture or thereafter
acquired, of any Principal Subsidiary, to secure any Obligation (other than
the Debt Securities) of the Company, any Subsidiary or any other Person,
without in any such case making effective provision whereby all of the
outstanding Debt Securities (and other outstanding debt securities issued from
time to time pursuant to the Indenture) shall be directly secured equally and
ratably with such Obligation. (Section 1005) This provision does not restrict
any other property of the Company or its Subsidiaries. The 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, Sea-Land and ACL; and "Subsidiary" as a corporation a
majority of the outstanding voting stock of which is owned, directly or
indirectly, by the Company or one or more Subsidiaries, or by the Company and
one or more Subsidiaries. (Section 101) The Indenture does not prohibit the
sale by the Company or any Subsidiary of any stock or indebtedness of any
Subsidiary.
 
EVENTS OF DEFAULT
 
  The following will be Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of or any premium
on any of the Debt Securities of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series; (d) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the 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; (e)
certain events of bankruptcy, insolvency or reorganization of the Company; and
(f) any other Event of Default provided with respect to Debt Securities of
that series. (Section 501) Subject to the provisions of the Indenture relating
to the duties of the Trustee in case an Event of Default shall occur and be
continuing, the 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 such
Holders shall have offered to the Trustee reasonable indemnity. (Sections 601,
603) Subject to such provisions for the indemnification of the 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 Trustee, or
exercising any trust or power conferred on the Trustee, with respect to Debt
Securities of that series. (Section 512)
 
  If an Event of Default with respect to Debt Securities of any series at the
time Outstanding shall occur and be continuing, either the 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 such Outstanding
Debt Securities, or, if any such Debt Securities are Original Issue Discount
Debt Securities, such lesser amount as may be described in an applicable
Prospectus Supplement or Prospectus Supplements, of all the Debt Securities of
that series 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 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. (Section 502)
 
 
                                      11

 
  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 Indenture or
for any remedy thereunder, unless such Holder shall have previously given to
the 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 shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such 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, such Debt Security on or after
the respective due dates expressed in such Debt Security. (Sections 507, 508)
 
  The Company is required to furnish to the Trustee annually a statement as to
performance or fulfillment of covenants, agreements or conditions in the
Indenture and as to the absence of default. (Section 1004)
 
MEETINGS, MODIFICATION AND WAIVER
 
  Modifications and amendments of the Indenture may be made by the Company and
the 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
affected (voting as one class) by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of
the Holder of each Outstanding Debt Security affected thereby (a) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on any Debt Security, (b) reduce the principal amount of, or premium
or interest on, any Debt Security, (c) change any obligation of the Company to
pay additional amounts, (d) reduce the amount of principal of an Original
Issue Discount Debt Security payable upon acceleration of the Maturity
thereof, (e) change the coin or currency in which any Debt Security or any
premium or interest thereon is payable, (f) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Security,
(g) reduce the percentage in principal amount of Outstanding Debt Securities
of any series, the consent of whose Holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults, (h) reduce the
requirements contained in the Indenture for quorum or voting, (i) change any
obligation of the Company to maintain an office or agency in the places and
for the purposes required by the Indenture, or (j) modify any of the above
provisions. (Section 902)
 
  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 the Company with certain restrictive provisions of
the Indenture. (Section 1007) 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 coupons
appertaining thereto, 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 such series or
(b) in respect of a covenant or provision of the Indenture which cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security of such series affected. (Section 513)
 
  The 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
thereunder or are present at a meeting of Holders of Debt Securities for
quorum purposes, (i) the principal amount of an Original Issue Discount Debt
Security that shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof, and (ii) the
principal amount of a Debt Security denominated in a foreign currency or
currency unit shall be the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the principal amount of such Debt
Security or, in the case of an Original Issue Discount Debt Security, the U.S.
dollar equivalent, determined on the date of original issuance of such Debt
Security, of the amount determined as provided in (i) above. (Section 101)
 
                                      12

 
  The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of any or all series. (Section 1301) A meeting may be called
at any time by the Trustee, and also, upon request, by the Company or the
Holders of at least 10% in aggregate principal amount of the Outstanding Debt
Securities of such series, in any such case upon notice given in accordance
with "Notices" below. (Section 1302) Except for any consent which must be
given by the Holder of each Outstanding Debt Security affected thereby, as
described above, any resolution presented at a meeting at which a quorum 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 affected thereby, 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 at which a quorum is
present only by the affirmative vote of the Holders of not less than such
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 Indenture
will be binding on all Holders of Debt Securities of that series and the
related coupons. The quorum at any meeting called to adopt a resolution 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 such 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
such specified percentage in principal amount of the Outstanding Debt
Securities of such series will constitute a quorum. (Section 1304)
 
CONSOLIDATION, MERGER AND SALE OF ASSETS
 
  The Company may, without the consent of the Holders of any of the
Outstanding Debt Securities of a series, consolidate with, merge into or
transfer its assets substantially as an entirety to any corporation organized
under the laws of any domestic or foreign jurisdiction, provided that (i) the
successor corporation assumes, by a supplemental indenture, the Company's
obligations on the Debt Securities of each series and under the Indenture,
(ii) after giving effect thereto, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of Default shall
have occurred and be continuing, and (iii) the Company delivers to the Trustee
an officer's certificate and an opinion of counsel each stating that such
transaction and supplemental indenture, if any, comply with the applicable
article of the Indenture and that all conditions precedent therein relating to
such transaction have been complied with. (Sections 801, 802)
 
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 such other
city or cities as may be specified in such Debt Securities. Notices to Holders
of Registered Debt Securities will be given by mail to the addresses of such
Holders as they appear in the Security Register. (Sections 101, 106)
 
TITLE
 
  Title to any Bearer Debt Securities (including Bearer Debt Securities in
temporary global form and in permanent global form) and any coupons
appertaining thereto will pass by delivery. The Company, the Trustee and any
agent of the Company 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 thereof (whether or not such
Debt Security or coupon shall be overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes.
(Section 308)
 
REPLACEMENT OF DEBT SECURITIES AND COUPONS
 
  Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such Debt Security to the Trustee.
 
                                      13

 
Debt Securities or coupons that become destroyed, lost or stolen will be
replaced by the Company at the expense of the Holder upon delivery to the
Trustee of evidence of the destruction, loss or theft thereof satisfactory to
the Company and the Trustee; in the case of any coupon which becomes
destroyed, lost or stolen, such coupon will be replaced by issuance of a new
Debt Security in exchange for the Debt Security to which such coupon
appertains. In the case of a destroyed, lost or stolen Debt Security or
coupon, an indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Debt Security or coupon before a
replacement Debt Security will be issued. (Section 306)
 
DEFEASANCE AND COVENANT DEFEASANCE
 
  Unless otherwise indicated in an applicable Prospectus Supplement or
Prospectus Supplements, the Company may elect either (i) to defease and be
discharged from any and all obligations with respect to the Debt Securities of
any series (except as otherwise provided in the Indenture) ("defeasance") or
(ii) to be released from its obligations with respect to certain covenants
applicable to such Debt Securities, including its obligations described above
under "Limitations on Liens on Stock of Restricted Subsidiaries" ("covenant
defeasance"), upon the deposit with the Trustee (or other qualifying trustee),
in trust for such purpose, of money and/or U.S. Government Obligations which
through the payment of principal and interest in accordance with their terms
will provide money in an amount sufficient, without reinvestment, to pay the
principal of and any premium or interest on such Debt Securities to Maturity
or redemption, as the case may be, and any mandatory sinking fund or analogous
payments thereon. As a condition to defeasance or covenant defeasance, the
Company must deliver to the Trustee an Opinion of Counsel to the effect that
the Holders of such Debt Securities will not recognize income, gain or loss
for United States federal income tax purposes as a result of such 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 such defeasance or covenant defeasance had not occurred. Such
Opinion of Counsel, in the case of defeasance under clause (i) 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 Indenture. (Article Fourteen)
 
  The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to the covenants noted under
clause (ii) of the immediately preceding paragraph. However, if such
acceleration were to occur, the realizable value at the acceleration date of
the money and U.S. Government Obligations in the defeasance trust could be
less than the principal and interest then due on such Debt Securities, in that
the required deposit in the defeasance trust is based upon scheduled cash
flows rather than market value, which will vary depending upon interest rates
and other factors.
 
GOVERNING LAW
 
  The Indenture, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York. (Section 113)
 
CONCERNING THE TRUSTEE
 
  The Company and certain of its subsidiaries may from time to time maintain
lines of credit, and have other customary banking and commercial
relationships, with The Chase Manhattan Bank, the Trustee under the Indenture.
The Trustee acts as trustee under this Indenture and another indenture
pursuant to which the Company issued its 9.64% Medium-Term Note due 2000,
9.50% Notes due 2000, 7.00% Notes due 2000, 7.05% Debentures due 2002, 7.25%
Debentures due 2004, 9.00% Debentures due 2006, 7.45% Debentures due 2007,
9.78% Medium Term Note due 2011, 7.90% Debentures due 2017, 9.87% Medium-Term
Note due 2021, 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.
 
                                      14

 
                LIMITATIONS ON ISSUANCE OF EURO-DEBT SECURITIES
 
  United States tax laws and regulations impose certain restrictions on the
issuance of any securities in bearer form. Except as may otherwise be provided
in the Prospectus Supplement applicable thereto, in accordance with the
federal tax laws and regulations of the United States, Euro-Debt Securities
may not, in connection with their offer or sale during the Restricted Period
(as defined above under "Description of Debt Securities--Form, Exchange,
Registration and Transfer"), be offered or sold, directly or indirectly, (i)
to any person in the United States or its possessions (as defined below), or
(ii) to any United States person (as defined below) other than (x) an office
located outside the United States or its possessions of a Financial
Institution (as defined above under "Description of Debt Securities--Form,
Exchange, Registration and Transfer" purchasing for its own account or for the
account of a customer, provided that such Financial Institution agrees in
writing to comply with the requirements of Section 165(j)(3)(A), (B), or (C)
of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder or (y) otherwise as permitted by United States Treasury Regulation
Section 1.163-5(c)(2)(i)(D). Any underwriters, agents and dealers
participating in the offering of Debt Securities must covenant that they will
not offer or sell during the Restricted Period any Euro-Debt Securities to any
person in the United States or its possessions or to any United States person
(other than (x) an office located outside the United States and its
possessions of a Financial Institution or (y) otherwise as permitted by United
States Treasury Regulation Section 1.163-5(c)(2)(i)(D)), and that they will
not deliver Euro-Debt Securities within the United States or its possessions.
 
  In addition, any such underwriters, agents and dealers must covenant that
they have in effect procedures reasonably designed to ensure that their
employees or agents who are directly engaged in selling Euro-Debt Securities
are aware of the above restrictions on the offer or sale of Euro-Debt
Securities. Moreover, Bearer Debt Securities (including a permanent global
Debt Security) and any coupons appertaining thereto will not be delivered in
definitive form or, if prior to delivery in definitive form, interest will not
be paid on any Euro-Debt Securities, unless the Company has received a signed
certificate in writing (or an electronic certificate described in United
States Treasury Regulation Section 1.163-5(c)(2)(i)(D)(3)(ii)) in the form and
to the effect described above under "Description of Debt Securities--Form,
Exchange, Registration and Transfer." Bearer Debt Securities (including a
permanent global Debt Security) and coupons 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 Section 165(j) and 1287(a) of the Internal Revenue
Code." The sections referred to in such legend provide that a United States
person (other than a Financial Institution or a United States person holding
through a Financial Institution) who holds a Bearer Security or coupon will
not be allowed to deduct any loss realized on the sale, exchange or redemption
of such Bearer Security or coupon and any gain (which might otherwise be
characterized as capital gain) recognized on such sale, exchange or redemption
will be treated as ordinary income.
 
  As used herein, "United States person" means a citizen of the United States,
a resident of the United States for federal income tax purposes, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, an estate the income of which is subject to United
States federal income taxation regardless of its source and a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantive decisions of the trust. "United States"
means the United States of America (including the States and the District of
Columbia) and "possessions" of the United States include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and Northern Mariana
Islands.
 
                         DESCRIPTION OF DEBT WARRANTS
 
  The Company may issue, together with Debt Securities or Currency Warrants or
separately, Debt Warrants for the purchase of Debt Securities. The Debt
Warrants are to be issued under Debt Warrant Agreements (each a "Debt Warrant
Agreement") to be entered into between the Company and a bank or trust
company, as Debt Warrant Agent (the "Debt Warrant Agent"), all as shall be set
forth in the Prospectus Supplement relating to Debt Warrants being offered
thereby. A copy of the form of Debt Warrant Agreement, including the form of
Warrant Certificates representing the Debt Warrants (the "Debt Warrant
Certificates"), reflecting the alternative provisions to be included in the
Debt Warrant Agreements that will be entered into with respect to particular
 
                                      15

 
offerings of Debt Warrants, is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following summaries of
certain provisions of the Debt Warrant Agreement and the Debt Warrant
Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Debt
Warrant Agreement and the Debt Warrant Certificates, respectively, including
the definitions therein of certain terms.
 
GENERAL
 
  The applicable Prospectus Supplement will describe the terms of the Debt
Warrants offered thereby, the Debt Warrant Agreement relating to such Debt
Warrants and the Debt Warrant Certificates representing such Debt Warrants,
including the following: (1) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of such Debt Warrants
and the procedures and conditions relating to the exercise of such Debt
Warrants; (2) the designation and terms of any related Debt Securities with
which such Debt Warrants are issued and the number of such Debt Warrants
issued with each such Debt Security; (3) the date, if any, on and after which
such Debt Warrants and the related Debt Securities will be separately
transferable; (4) the principal amount of Debt Securities purchasable upon
exercise of each Debt Warrant and the price at which such principal amount of
Debt Securities may be purchased upon such exercise; (5) the date on which the
right to exercise such Debt Warrants shall commence and the date on which such
right shall expire (the "Expiration Date"); and (6) whether the Debt Warrants
represented by the Debt Warrant Certificates will be issued in registered or
bearer form, and, if registered, where they may be transferred and registered.
 
  Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of
their Debt Warrants, holders of Debt Warrants will not have any of the rights
of holders of the Debt Securities purchasable upon such exercise and will not
be entitled to payments of principal of (premium, if any) or interest, if any,
on the Debt Securities purchasable upon such exercise.
 
EXERCISE OF DEBT WARRANTS
 
  Each Debt Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each
case be set forth in, or be determinable as set forth in, the Prospectus
Supplement relating to the Debt Warrants offered thereby. Debt Warrants may be
exercised at any time up to the close of business on the Expiration Date set
forth in the Prospectus Supplement relating to the Debt Warrants offered
thereby. After the close of business on the Expiration Date, unexercised Debt
Warrants will become void.
 
  Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly executed at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward the
Debt Securities purchasable upon such exercise. If less than all of the Debt
Warrants represented by such Debt Warrant Certificate are exercised, a new
Debt Warrant Certificate will be issued for the remaining amount of Debt
Warrants.
 
                       DESCRIPTION OF CURRENCY WARRANTS
 
  The Company may issue, together with Debt Securities or Debt Warrants or
separately, Currency Warrants either in the form of Currency Put Warrants
entitling the holders thereof to receive from the Company the Cash Settlement
Value in U.S. dollars of the right to sell a specified amount of a specified
foreign currency or currency unit for a specified amount of U.S. dollars, or
in the form of Currency Call Warrants entitling the holders thereof to receive
from the Company the Cash Settlement Value in U.S. dollars of the right to
purchase a specified amount of a specified foreign currency or units of two or
more currencies for a specified amount of U.S. dollars. The spot exchange rate
of the applicable Base Currency, upon exercise, as compared to the U.S.
dollar, will determine whether the Currency Warrants have a Cash Settlement
Value on any given day prior to their expiration.
 
                                      16

 
  The Currency Warrants are to be issued under a Currency Warrant Agreement to
be entered into between the Company and a bank or trust company, as Currency
Warrant Agent (the "Currency Warrant Agent"), all as shall be set forth in the
applicable Prospectus Supplement. A copy of the form of Currency Warrant
Agreement, including the forms of global Warrant Certificates representing the
Currency Put Warrants and Currency Call Warrants (the "Currency Warrant
Certificates"), reflecting the provisions to be included in the Currency
Warrant Agreement that will be entered into with respect to particular
offerings of Currency Warrants, is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following summaries of
certain provisions of the Currency Warrant Agreement and the Currency Warrant
Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Currency Warrant Agreement and the Currency Warrant Certificates,
respectively, including the definitions therein of certain terms.
 
GENERAL
 
  The applicable Prospectus Supplement will describe the terms of the Currency
Warrants offered thereby, the Currency Warrant Agreement relating to such
Currency Warrants and the Currency Warrant Certificates representing such
Currency Warrants, including the following: (1) whether such Currency Warrants
will be Currency Put Warrants, Currency Call Warrants, or both; (2) the
formula for determining the Cash Settlement Value, if any, of each Currency
Warrant; (3) the procedures and conditions relating to the exercise of such
Currency Warrants; (4) the circumstances which will cause the Currency
Warrants to be deemed to be automatically exercised; (5) any minimum number of
Currency Warrants which must be exercised at any one time, other than upon
automatic exercise; and (6) the date on which the right to exercise such
Currency Warrants will commence and the date on which such right will expire
(the "Expiration Date").
 
BOOK-ENTRY PROCEDURES AND SETTLEMENT
 
  Except as may otherwise be provided in the applicable Prospectus Supplement,
the Currency Warrants will be issued in the form of global Currency Warrant
Certificates, registered in the name of a depository or its nominee. Holders
will not be entitled to receive definitive certificates representing Currency
Warrants. A holder's ownership of a Currency Warrant will be recorded on or
through the records of the brokerage firm or other entity that maintains such
holder's account. In turn, the total number of Currency Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
the depository in the name of such brokerage firm or its agent. Transfer of
ownership of any Currency Warrant will be effected only through the selling
holder's brokerage firm.
 
EXERCISE OF CURRENCY WARRANTS
 
  Each Currency Warrant will entitle the holder to receive the Cash Settlement
Value of such Currency Warrant on the applicable Exercise Date, in each case
as such terms will be defined in the applicable Prospectus Supplement. If not
exercised prior to 3:00 P.M., New York City time, on the fifth New York
Business Day preceding the Expiration Date, Currency Warrants will be deemed
automatically exercised on the Expiration Date.
 
LISTING
 
  Each issue of Currency Warrants will be listed on a national securities
exchange, subject only to official notice of issuance, as a condition of sale
of any such Currency Warrants. In the event that the Currency Warrants are
delisted from, or permanently suspended from trading on, such exchange, the
Expiration Date for such Currency Warrants will be the date such delisting or
trading suspension becomes effective and Currency Warrants not previously
exercised will be deemed automatically exercised on such Expiration Date. The
applicable Currency Warrant Agreement will contain a covenant of the Company
not to seek delisting of the Currency Warrants, or suspension of their
trading, on such exchange.
 
                                      17

 
                            FOREIGN CURRENCY RISKS
 
  Debt Securities denominated or payable in foreign currencies and Currency
Warrants may entail significant risks. These risks include, without
limitation, the possibility of significant fluctuations in the foreign
currency markets. These risks will vary depending upon the currency or
currencies involved, and in the case of any Currency Warrants, the particular
form of such Currency Warrants. These risks will be more fully described in
the Prospectus Supplement or Pricing Supplement relating thereto.
 
                            UNITED STATES TAXATION
 
  The following summary of the principal United States federal income tax
consequences of the ownership and disposition of Debt Securities is based upon
the opinion of McGuire, Woods, Battle & Boothe LLP, special tax counsel for
the Company. It deals only with Debt Securities held as capital assets and
does not deal with special classes of Holders, such as dealers in securities
or currencies, life insurance companies, tax-exempt organizations, persons
holding Debt Securities as a hedge against currency risks, certain United
States expatriates or United States Holders (as defined below) whose
functional currency is not the U.S. dollar. It also does not deal with Holders
other than original purchasers and thus does not deal with the "market
discount rules." The discussion of original issue discount is based on the
Internal Revenue Code of 1986, as amended (the "Code"), regulations
promulgated thereunder, judicial decisions and administrative rulings in
effect on the date hereof, all of which are subject to change, possibly with
retroactive effect. PERSONS CONSIDERING THE PURCHASE OF DEBT SECURITIES SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE UNITED STATES
FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS THE
APPLICATION OF STATE, LOCAL, OR FOREIGN LAWS.
 
UNITED STATES HOLDERS
 
  The following discussion pertains to a Holder of a Debt Security who or
which is a United States person as defined above under "Limitations on
Issuance of Euro-Debt Securities" (a "United States Holder").
 
 Payments of Interest
 
  Interest on a Debt Security (including payments received on the sale,
exchange or retirement of a Debt Security that are attributable to accrued but
unpaid interest) will be taxable to a United States Holder as ordinary
interest income at the time it is accrued or is received (or made available
for payment, if earlier), depending on the United States Holder's method of
accounting for tax purposes. If interest is payable in a currency or currency
unit other than the U.S. dollar (a "Specified Currency"), the amount of income
will be the U.S. dollar value of the Specified Currency, which (i) will be
determined, in the case of a cash basis United States Holder, at the time such
payment is received or is made available for payment, if earlier, and (ii) in
the case of an accrual basis United States Holder, or a cash basis United
States Holder accruing original issue discount, will be translated at the
average exchange rate for the interest accrual period or, with respect to an
interest accrual period that spans two taxable years, at the average rate for
the partial period within the taxable year, or, if so elected, at the spot
rate on the applicable date, as provided in Section 1.988-2(b)(iii)(B) of the
Treasury Regulations. The rules described in the preceding sentence will apply
regardless of whether the payment is in fact converted to U.S. dollars. In
general, upon the receipt of an interest payment (including a payment
attributable to accrued but unpaid interest upon the sale or retirement of a
Debt Security) in the Specified Currency, an accrual basis United States
Holder will recognize foreign currency gain or loss to the extent of the
difference, if any, between the U.S. dollar value of the accrued interest with
respect to which payment is being made (determined as described in the
preceding sentence), and the U.S. dollar value of the interest payments
received (determined as of the time of receipt). Such foreign currency gain or
loss generally will be treated as ordinary income or loss.
 
 Original Issue Discount
 
  General. A Debt Security will be treated as having been issued at an
original issue discount (a "Discount Security") if the excess of its "stated
redemption price at maturity" over its issue price (defined as the initial
 
                                      18

 
offering price to the public at which a substantial amount of the Discount
Debt Securities have been sold) equals or exceeds 1/4 of 1 percent of such
Debt Security's "stated redemption price at maturity" multiplied by the number
of complete years to its maturity. The stated redemption price at maturity of
a Debt Security is the total of all payments provided by the Debt Security
that are not "qualified stated interest payments." Stated generally, a
qualified stated interest payment is stated interest that is unconditionally
payable in cash or in property (other than in debt instruments of the issuer)
at least annually over the term of the Debt Security at (i) a single fixed
rate of interest, (ii) one or more qualified floating rates, (iii) a single
fixed rate and one or more qualified floating rates, (iv) a single fixed rate
and a single objective rate that is a qualified inverse floating rate, or (v)
a single objective rate.
 
  A United States Holder (including a cash basis Holder) of a Discount
Security will be required to include original issue discount ("Discount") in
income as it accrues, generally before the receipt of cash attributable to
such income. The amount of Discount includable in income is the sum of the
daily portions of Discount with respect to the Discount Security determined
for each day during the taxable year or portion of the taxable year in which a
United States Holder holds such Discount Security. The daily portion is
determined by allocating to each day in any "accrual period" a pro rata
portion of the Discount allocable to such accrual period. The amount of
Discount allocable to any accrual period is an amount equal to the excess of
(a) the product of the Discount Security's adjusted issue price at the
beginning of such accrual period and the yield to maturity of the Discount
Security (determined by compounding at the close of each accrual period and
adjusted for the length of such period) over (b) the qualified stated interest
payments, if any, allocable to the accrual period. In general, unless
otherwise specified, the accrual period is each period between Interest
Payment Dates (including (i) the period from the issue date to the first
Interest Payment Date and (ii) the period from the final Interest Payment Date
to Stated Maturity). The accrual period may be of any length and may vary in
length over the term of the Debt Security, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day or on the first day of an accrual period. The
adjusted issue price of the Discount Security at the start of any accrual
period is the sum of the issue price of such Discount Security, increased by
the amount of Discount previously includable by the Holder for each prior
accrual period, and decreased by any prior payments made during each prior
accrual period on the Discount Security that were not qualified stated
interest payments.
 
  Under existing Treasury Regulations, it is possible that Debt Securities
that (i) do not provide for payments of stated interest at least annually,
(ii) bear interest pursuant to an interest rate formula that is subject to a
restriction or restrictions on the maximum stated interest rate, on the
minimum stated interest rate, on the amount of increase or decrease in the
stated interest rate, or other similar restrictions, or (iii) bear interest at
a base rate that is not based on either changes in the price of actively
traded personal property or on one or more floating market interest rates,
that are issued at par may be subject to the original issue discount rules of
the Code as Discount Securities even though such Debt Securities may not be
Original Issue Discount Securities (as defined above in "Description of Debt
Securities--General"). Accordingly, United States Holders (including cash
basis Holders) may be required to report income in respect of such Debt
Securities before the receipt of cash attributable thereto.
 
  Other Considerations. The preceding discussion sets forth the general
structure of the federal income tax rules applicable to Discount Securities
that have a maturity date in excess of one year from the date of issue. The
precise application of these rules will be affected by the terms of the
particular Discount Security, including the existence of any optional
redemption rights exercisable by the Company, the denomination of the Debt
Security in a Specified Currency, and the term of the Debt Security. The
impact of such terms, if any, on the application of these rules will be
discussed in the applicable Prospectus Supplement.
 
  Reporting. The Company is required to report to the Internal Revenue Service
the amount of Discount accrued on Discount Securities held of record by United
States persons other than corporations and other exempt Holders. The amount
required to be reported by the Company may not be equal to the amount of
original issue discount required to be reported as taxable income by a Holder
of such Debt Security.
 
                                      19

 
 Debt Securities Issued at a Premium
 
  A United States Holder that purchases a Debt Security for an amount that
exceeds the sum of all amounts payable on the Debt Security after the purchase
date (other than qualified stated interest payments) will not be required to
include any Discount in income and may elect to treat such excess as
"amortizable bond premium," in which case the amount required to be included
in such Holder's income each year with respect to interest on the Debt
Security will be reduced by the amount of amortizable bond premium allocable
to such year (based on the Debt Security's yield to maturity). Any such
election shall apply to all bonds (other than bonds the interest on which is
excludable from gross income) held by the United States Holder at the
beginning of the first taxable year to which the election applies or
thereafter acquired by such Holder, and is irrevocable without the consent of
the Internal Revenue Service (the "IRS").
 
 Indexed Debt Securities
 
  The applicable Prospectus Supplement or Prospectus Supplements (or any
Pricing Supplement or Pricing Supplements thereto) will contain a discussion
of special United States federal income tax rules with respect to the Debt
Securities, payments on which are determined by reference to any index (other
than a single objective index of market interest rates).
 
 Short-Term Notes
 
  In the case of a Debt Security having a maturity date of not more than one
year from the date of issuance (a "Short-Term Note"), a United States Holder
that uses the accrual method of accounting for United States federal income
tax purposes generally will be required to accrue the excess of all payments
to be received on the Note over the issue price of the Note on a straight-line
basis over the term of the Note, unless such Holder elects to accrue interest
income and Discount on such Note based on a constant interest rate and daily
compounding.
 
  A United States Holder that uses the cash method of accounting generally
will not be required to recognize interest income or Discount on a Short-Term
Note until payment is actually or constructively received. However, certain
cash method Holders (including common trust funds and regulated investment
companies) will be required to account for original issue discount on Short-
Term Notes in the same manner as accrual method Holders. In the case of a
United States Holder not required and not electing to include the short-term
Discount in income currently, any gain realized on the sale or retirement of
the Short-Term Note will be ordinary income to the extent of the short-term
Discount accrued on a straight-line basis (unless an election is made to
accrue the short-term Discount under the constant-yield method) through the
date of sale or retirement. A cash method Holder not electing to recognize
interest income or Discount on a Short-Term Note correctly may be required to
defer its deduction of interest expense for indebtedness incurred to purchase
or carry a Short-Term Note, except to the extent that such interest expense
exceeds the sum of the Discount and stated interest recognized as income in
respect of such Short-Term Note, unless such Holder has made an election to
recognize income on short-term debt obligations on the accrual method as
described in the preceding paragraph. Any such election must be made with
respect to all debt obligations having a term of not more than one year that
are acquired on or after the first day of the first taxable year for such
election is in effect, and such election may not be revoked without the
consent of the IRS.
 
  Under the Treasury Regulations, a United States Holder may elect to treat
all interest on any Debt Security as Discount and calculate the amount
includible in gross income under the constant-yield method described above.
For the purpose of this election, interest includes stated interest, short-
term Discount, Discount, de minimis Discount, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. If a United States Holder makes this election
for a Debt Security with market discount or amortizable bond premium, the
election is treated as an election under the market discount or amortizable
bond premium provisions as described above, as the case may be, and the
electing United States Holder will be required to include market discount in
income currently or amortize bond premium. The election is to be made for the
taxable year in which the United States Holder acquired the Debt Security, and
may not be revoked without the consent of the IRS. United States Holders
should consult with their own tax advisors about this election.
 
                                      20

 
 Purchase, Sale and Retirement of Debt Securities
 
  A United States Holder's adjusted tax basis in a Debt Security generally
will be its U.S. dollar cost to such Holder (which, in the case of a Debt
Security denominated in a Specified Currency will be the U.S. dollar value (on
the date of the purchase of the Debt Security) of the Specified Currency paid
for the Debt Security), increased by the amount of any Discount previously
included in such Holder's income with respect to a Debt Security, and reduced
by the amount of any payments on a Debt Security that are not qualified stated
interest payments and by the amount of any amortizable bond premium applied to
reduce interest on a Debt Security. A United States Holder will recognize gain
or loss upon the sale, exchange or retirement of a Debt Security equal to the
difference between the amount realized (which, in the case of an amount
received in other than U.S. dollars, will be the U.S. dollar value of the
amount realized on the date of sale or retirement), except to the extent that
such amount is attributable to accrued interest, and such Holder's tax basis
in the Debt Security. Such gain or loss generally will be long-term capital
gain or loss if, at the time of sale or retirement, such Holder has held such
Debt Security for more than one year. Under current law, net capital gains of
individuals are, under certain circumstances, taxed at lower rates than the
rates imposed on items of ordinary income (generally, with a maximum rate of
28% for capital assets held for more than one year and a maximum rate of 20%
for capital assets held for more than 18 months). However, gain or loss
attributable to changes in exchange rates will be treated as ordinary gain or
loss, which generally will not be treated as interest income or expense,
except to the extent provided by administrative pronouncements of the IRS.
 
 Exchange of Specified Currency
 
  A United States Holder's tax basis in Specified Currency purchased by such
Holder generally will be the U.S. dollar value thereof at the spot rate on the
date such Specified Currency is purchased. A United States Holder's tax basis
in Specified Currency received as interest on, or on the sale, exchange or
retirement of, a Debt Security will be the U.S. dollar value thereof at the
spot rate at the time such Specified Currency is received. The amount of gain
or loss recognized by a United States Holder on a sale, exchange or other
disposition of Specified Currency will be equal to the difference between (i)
the amount of U.S. dollars, the U.S. dollar value at the spot rate of
Specified Currency, or the fair market value in U.S. dollars of any other
property received by the Holder in the sale, exchange or other disposition,
and (ii) the Holder's tax basis in the Specified Currency.
 
  Accordingly, a United States Holder that purchases a Debt Security with
Specified Currency will recognize gain or loss in an amount equal to the
difference, if any, between such Holder's tax basis in the Specified Currency
and the U.S. dollar value at the spot rate of the Specified Currency on the
date of purchase. Generally, any such gain or loss will be ordinary income or
loss and will not be treated as interest income or expense, except to the
extent provided by administrative pronouncements of the IRS.
 
 Bearer Debt Securities
 
  Under Sections 165(j) and 1287(a) of the Code, a United States Holder
generally will not be entitled to deduct any loss on Bearer Debt Securities
(including for purposes of this paragraph Debt Securities in global form
exchangeable for Bearer Debt Securities) or coupons (other than Bearer Debt
Securities having a maturity of one year or less from their date of issuance)
and must treat as ordinary income any gain realized on the sale, exchange or
other disposition (including the receipt of principal) of Bearer Debt
Securities or coupons (other than Bearer Debt Securities having a maturity of
one year or less from their date of issue).
 
UNITED STATES ALIEN HOLDERS
 
  Under present United States federal income and estate tax law and subject to
the discussion of backup withholding below:
 
    (1) payments of principal and any premium and interest (including any
  Discount) on a Debt Security by the Company or any of its Paying Agents to
  any Holder that is a United States Alien Holder (as defined below) will not
  be subject to United States federal withholding tax, provided that in the
  case of such Debt
 
                                      21

 
  Security, (i) the Holder does not actually or constructively own 10% or
  more of the total combined voting power of all classes of stock of the
  Company, (ii) the Holder is not a controlled foreign corporation that is
  related to the Company through stock ownership; (iii) the Holder is not a
  bank that acquired the Notes pursuant to a loan agreement made in the
  ordinary course or its trade or business; (iv) if the Debt Security is a
  Bearer Debt Security, the Company and any underwriters, agents, and dealers
  participating in the offering of such Debt Security have complied with
  certain requirements described in "Limitations on Issuance of Euro-Debt
  Securities," and (v) if the Debt Security is a Registered Debt Security
  (including such Debt Securities which were received in exchange for Bearer
  Debt Securities), either (x) the beneficial owner of the Debt Securities
  certifies to the Company or its agent, under penalties of perjury, that
  such Owner is not a United States Holder and provides such Owner's name and
  address, or (y) a securities clearing organization, bank or other financial
  institution that holds customers' securities in the ordinary course of its
  trade or business (a "financial institution") and holds the Debt Securities
  on behalf of a beneficial owner certifies to the Company or its Paying
  Agent, under penalties of perjury, that such statement has been received
  from the beneficial owner by it or by a financial institution between it
  and the beneficial owner and furnishes the payor with a copy thereof;
 
    (2) a United States Alien Holder generally will not be subject to United
  States federal income tax or withholding tax on gain realized on the sale,
  exchange or redemption of a Debt Security, unless (i) in the case of an
  individual Holder, such Holder is present in the United States for a period
  of 183 days or more during the taxable year in which gain is realized and
  certain other conditions are met or (ii) if the Company is a "United States
  real property holding corporation," as defined in Section 897 of the Code,
  such Holder actually or constructively owns any other interests in the
  Company (excluding an interest solely as a creditor, but including
  convertible debt instruments) that are not regularly traded with an
  aggregate fair market value exceeding the fair market value of 5% of the
  "regularly traded class," as defined in the United States Treasury
  Regulations, of the Company's stock with the lowest fair market value
  (currently, the Company's Common Stock); and
 
    (3) a Debt Security or coupon held by an individual who at the time of
  death is not a citizen or resident (as defined for federal estate tax
  purposes) of the United States (as defined under "Limitations on Issuance
  of Euro-Debt Securities") will not be subject to United States federal
  estate tax as a result of such individual's death if (i) the individual
  does not actually or constructively own 10% or more of the total combined
  voting power of all classes of stock of the Company entitled to vote (ii)
  the Debt Security does not provide for any payment of contingent interest,
  and (iii) the income on the Debt Securities would not have been effectively
  connected with the conduct of a trade or business by the individual in the
  United States.
 
  A United States Alien Holder will be subject to United States federal income
tax on any interest income (including Discount) and on any gain realized on
the sale, exchange or other disposition of a Debt Security in the same manner
as a United States Holder, if interest (including Discount) or gain on such
Debt Security is effectively connected with the conduct by the United States
Alien Holder of a trade or business within the United States. See "United
States Holders" above. Such a Holder generally will be exempt from withholding
tax with respect to such income, provided that it provides the Company with a
properly executed Internal Revenue Service Form 4224.
 
  In the case of a Non-U.S. Holder that is a corporation, such U.S. trade or
business income may also be subject to the branch profits tax, which is
generally imposed on a foreign corporation on the actual or deemed
repatriation from the United States of earnings and profits attributable to
U.S. trade or business income, at a 30% rate. The branch profits tax may not
apply, or may apply at a reduced rate, in the case of Non-U.S. Holders that
are qualified residents of certain countries with which the United States has
an income tax treaty.
 
  As used herein, a "United States Alien Holder" is a beneficial owner of a
Debt Security that is not a United States Holder.
 
                                      22

 
BACKUP WITHHOLDING AND INFORMATION REPORTING
 
  In general, payments of principal and any premium and interest (including
Discount, if any) made within the United States by the Company or any of its
Paying Agents are subject to information reporting and, in certain cases, to
"backup withholding" at a rate of 31%. Similarly, payment of the proceeds from
the sale of a Debt Security to or through the United States office of a broker
will be subject to information reporting and backup withholding unless the
Holder or beneficial owner provides a certification that it is not a United
States person or otherwise establishes its entitlement to an exemption from
the information reporting and backup withholding rules.
 
  Information reporting and backup withholding ordinarily do not apply to
payments made outside the United States by the Company or a Paying Agent on a
Bearer Debt Security described in clause (1)(iii) under "United States Alien
Holders" or on a Registered Debt Security described in clause (1)(iv) under
"United States Alien Holders," provided that the payor does not have actual
knowledge that the Holder is a United States person. Payments made outside the
United States will be subject to information reporting, however, if collected
by a custodian, nominee, or other agent that is either a United States person,
a controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income over a specified three-year period is
effectively connected with the conduct of a trade or business within the
United States, unless such custodian, nominee, or other agent has documentary
evidence of the beneficial owner's foreign status and has no actual knowledge
to the contrary, or unless the owner otherwise establishes entitlement to an
exemption.
 
  In general, payment of the proceeds from the sale of a Debt Security to or
through the foreign office of a broker will not be subject to information
reporting or backup reporting; however, if the broker is a United States
person, a controlled foreign corporation for United States tax purposes, or a
foreign person 50% or more of whose gross income over a specified three-year
period is effectively connected with the conduct of a trade or business within
the United States, such payments will be subject to information reporting
unless such broker has documentary evidence in its files of the owner's
foreign status and has no actual knowledge to the contrary, or unless the
owner otherwise establishes entitlement to an exemption.
 
  With respect to United States Holders, backup withholding ordinarily applies
only to certain noncorporate Holders who fail to supply accurate taxpayer
identification numbers or who fail to report all interest and dividend income
required to be shown on their federal income tax returns.
 
  On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make modifications to the withholding, backup withholding
and information reporting rules described above. The New Regulations will
generally be effective for payments made after December 31, 1999, subject to
certain transition rules. Prospective investors are urged to consult their own
tax advisors regarding the New Regulations.
 
PURCHASE OF DEBT WARRANTS AND CURRENCY WARRANTS
 
  The applicable Prospectus Supplement will set forth in further detail the
United States federal income tax consequences of the purchase of Debt Warrants
and Currency Warrants.
 
                             PLAN OF DISTRIBUTION
 
  The Company may sell the Securities in any of the following ways: (i)
through underwriters or dealers, (ii) directly to a limited number of
institutional purchasers or to a single institutional purchaser, (iii) through
agents and (iv) a combination of any of the foregoing. Any such underwriter,
dealer or agent may be deemed to be an underwriter within the meaning of the
Securities Act. The Prospectus Supplement or Prospectus Supplements with
respect to the Securities of a particular series will set forth the terms of
the offering of such Securities, including the name or names of any
underwriters or agents, the public offering or purchase price and the proceeds
to the Company from such sale, 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.
 
                                      23

 
  If so indicated in the applicable Prospectus Supplement or Prospectus
Supplements, the Company will authorize underwriters, dealers or agents to
solicit offers by certain institutions to purchase Debt Securities from the
Company pursuant to Delayed Delivery Contracts providing for payment and
delivery on the date stated in the applicable Prospectus Supplement or
Prospectus Supplements. Each such contract will be for an amount not less than
the amount specified in the applicable Prospectus Supplement or Prospectus
Supplements and unless the Company otherwise agrees, the aggregate principal
amount of Debt Securities sold pursuant to such contracts shall not be more
than the respective amounts stated in the applicable Prospectus Supplement or
Prospectus Supplements. Institutions with whom such contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, but shall in all cases be subject to the approval of the
Company. Delayed Delivery Contracts will not be subject to any conditions
except that the purchase by an institution of the Debt Securities covered
thereby shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject.
 
  Under the agreements that may be entered into with the Company, the
underwriters, dealers and agents may be entitled to indemnification by the
Company against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the
underwriters, dealers or agents may be required to make in respect thereof.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
 
  Each underwriter and agent participating in the distribution of any Debt
Securities which are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, Debt Securities in bearer form
in the United States or to United States persons (other than qualifying
financial institutions) in connection with the original issuance of Debt
Securities.
 
                                    EXPERTS
 
  The consolidated financial statements of the Company, included in the
Company's Annual Report on Form 10-K, incorporated by reference in this
Prospectus and in the Registration Statement, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated by reference in this Prospectus and in the
Registration Statement in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
 
                                      24

 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT,
THE PROSPECTUS OR THE APPLICABLE PRICING SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY CSX CORPORATION OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS AND THE APPLICABLE PRICING SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
AND THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR THE APPLICABLE PRICING SUPPLEMENT NOR
ANY SALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CSX CORPORATION SINCE THE DATE
OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR THE APPLICABLE PRICING SUPPLE-
MENT, OR THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUB-
SEQUENT TO THEIR RESPECTIVE DATES.
 
                                ---------------
 
                               TABLE OF CONTENTS
 


                                                                            PAGE
                                                                            ----
                             PROSPECTUS SUPPLEMENT
 
                                                                         
CSX Corporation............................................................  S-3
Recent Developments........................................................  S-3
Use of Proceeds ...........................................................  S-3
Description of Notes.......................................................  S-3
Special Provisions Relating to Foreign Currency Notes...................... S-16
Supplemental Plan of Distribution.......................................... S-20
Validity of the Notes...................................................... S-21
 
                                   PROSPECTUS
 
Available Information......................................................    2
Incorporation of Certain Documents by Reference............................    2
CSX Corporation............................................................    3
Forward-Looking Statements.................................................    4
Ratio of Earnings to Fixed Charges.........................................    5
Use of Proceeds............................................................    5
Description of Debt Securities.............................................    6
Limitations on Issuance of Euro-Debt Securities............................   15
Description of Debt Warrants...............................................   15
Description of Currency Warrants...........................................   16
Foreign Currency Risks.....................................................   18
United States Taxation.....................................................   18
Plan of Distribution.......................................................   23
Experts....................................................................   24

 
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                                  $248,000,000
 
                           [LOGO OF CSX CORPORATION]
 
                               MEDIUM-TERM NOTES,
                                    SERIES B
 
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                             PROSPECTUS SUPPLEMENT
 
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                             CHASE SECURITIES INC.
                        BANCAMERICA ROBERTSON STEPHENS
                          CREDIT SUISSE FIRST BOSTON
                             GOLDMAN, SACHS & CO.
                                LEHMAN BROTHERS
                              MERRILL LYNCH & CO.
                          MORGAN STANLEY DEAN WITTER
                     NATIONSBANC MONTGOMERY SECURITIES LLC
                             SALOMON SMITH BARNEY
 
                                April 22, 1998
 
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