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                                                                   Exhibit 10(e)



                      DEFERRED COMPENSATION AND STOCK PLAN
                                  FOR DIRECTORS

                       (AS AMENDED AS OF JANUARY 1, 1998)


SECTION 1.         INTRODUCTION

         1.1 Establishment. CBS Corporation, a Pennsylvania corporation formerly
known as Westinghouse Electric Corporation (the "Company"), has established the
Deferred Compensation and Stock Plan for Directors, as amended from time to time
(the "Plan"), for those directors of the Company who are neither officers nor
employees of the Company. The Plan provides, among other things, for the payment
of specified portions of the Annual Director's Fee in the form of Stock Options
and Restricted Stock and for the payment of the Annual Committee Chair's Fee in
the form of Restricted Stock, and the opportunity for the Directors to defer
receipt of all or a part of their cash compensation. Unless otherwise provided
for herein, the term Company includes CBS Corporation and its subsidiaries.

         1.2 Purposes. The purposes of the Plan are to encourage the Directors
to own shares of the Company's stock and thereby to align their interests more
closely with the interests of the other shareholders of the Company, to
encourage the highest level of Director performance, and to provide a financial
incentive that will help attract and retain the most qualified Directors.

SECTION 2.        DEFINITIONS

         2.1 Definitions. The following terms will have the meanings set forth
below:

                  (a) "Annual Committee Chair's Fee" means the annual amount
established from time to time by the Board as the annual fee to be paid to
Directors for their services as chairs of standing committees of the Board.

                  (b) "Annual Director's Fee" means the annual amount (which may
be prorated for a Director serving less than a full calendar year, as in the
case of a Director who will be retiring or not standing for reelection at the
annual meeting of shareholders or a Director joining the Board (or otherwise
first becoming a Director) after the beginning of the year) established from
time to time by the Board as the annual fee to be paid to Directors for their
services as directors.

                  (c) "Attendance Percentage" for a Director with respect to a
particular Grant Year means the percentage of the aggregate of all meetings of
the Board and committees of which the Director was a member held during the
Grant Year (or, for Directors who join the Board or otherwise first become
Directors after the beginning of the Grant Year, Directors who retire at the
annual meeting of shareholders (as described in the Company's By-laws) held
during the Grant Year, Directors who do not stand for reelection at the annual
meeting of shareholders



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held during the Grant Year, or Directors who die during the Grant Year, the
aggregate of all such meetings held for the portion of the Grant Year during
which the Director served as a director), excluding any meeting(s) not attended
because of illness, which were attended by the Director. Except as otherwise
provided below, in the event that a Director ceases to be a director at any time
during the Grant Year for any reason other than retirement at the annual meeting
of shareholders, not standing for reelection at the annual meeting of
shareholders, or death, all meetings held during the Grant Year of the Board and
committees of which he was a member at the time of termination of service will
continue to be included as meetings when calculating the Attendance Percentage.

                  (d) "Board" means the Board of Directors of the Company.

                  (e) "Cash Account" means the account established by the
Company in respect of each Director pursuant to Section 6.3(a) hereof and to
which deferred cash compensation has been or will be credited pursuant to the
Plan.

                  (f) "Cause" means any act of (a) fraud or intentional
misrepresentation or (b) embezzlement, misappropriation or conversion of assets
or opportunities of the Company or any of its direct or indirect majority-owned
subsidiaries.

                  (g) "Change in Control" will have the meaning assigned to it
in Section 9.2 hereof.

                  (h) "Committee" means the Compensation Committee of the Board
(or any subcommittee thereof) or any successor committee established by the
Board, or any subcommittee thereof, in each case consisting of two or more
members each of whom is a "non-employee director" as that term is defined by
Rule 16b-3 under the Exchange Act, as such rule may be amended, or any successor
rule.

                  (i) "Common Stock Equivalent" means a hypothetical share of
Stock which will have a value on any date equal to the mean of the high and low
prices of the Stock as reported by the composite tape of the New York Stock
Exchange on that date, except as otherwise provided under Section 9.1.

                  (j) "Common Stock Equivalent Award" means an award of Common
Stock Equivalents granted to a Director pursuant to Section 5 of the Plan prior
to its amendment as of April 26, 1995.

                  (k) "Debenture" means a hypothetical debenture of the Company
that has a face value of $100, bears interest at a rate equal to the ten-year
U.S. Treasury Bond rate (prior to January 1, 1995, the seven-year U.S. Treasury
Bond rate) in effect the week prior to the regular January meeting of the Board
(or, if no such meeting is held, the week prior to the first trading day of the
New York Stock Exchange in February) in the year in respect of which deferred
amounts are earned, and is convertible into Stock at a conversion rate
determined by dividing $100 by the mean of the high and low prices of the Stock
as reported by the composite tape



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of the New York Stock Exchange on the date the Debenture is credited to the
Deferred Debenture Account pursuant to Section 6.3 hereof.

                  (l) "Deferred Debenture Account" means the account established
by the Company pursuant to Section 6.3(c) hereof in respect of each Director
electing to defer cash compensation under the Plan for 1997 and/or for an
earlier year or years and to which has been or will be credited Debentures and
other amounts pursuant to the Plan.

                  (m) "Deferred Stock Account" means the account established by
the Company in respect of each Director pursuant to Section 5.2 hereof and to
which has been or will be credited Common Stock Equivalents pursuant to the
Plan.

                  (n) "Director" means a member of the Board who is neither an
officer nor an employee of the Company. For purposes of the Plan, an employee is
an individual whose wages are subject to the withholding of federal income tax
under Section 3401 of the Internal Revenue Code, and an officer is an individual
elected or appointed by the Board or chosen in such other manner as may be
prescribed in the By-laws of the Company to serve as such.

                  (o) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.

                  (p) "Fair Market Value" means the mean of the high and low
prices of the Stock as reported by the composite tape of the New York Stock
Exchange (or such successor reporting system as the Committee may select) on the
relevant date or, if no sale of the Stock has been reported for that day, the
average of such prices on the next preceding day and the next following day for
which there were reported sales.

                  (q) "Grant Date" means, as to a Stock Option Award, the date
of grant pursuant to Section 7.1 and as to a Restricted Stock Award, the date of
grant pursuant to Section 8.1.

                  (r) "Grant Year" means, as to a particular award, the calendar
year in which the award was granted.

                  (s) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.

                  (t) "Restricted Stock" means shares of Stock awarded to a
Director pursuant to Section 8 and subject to certain restrictions in accordance
with the Plan.

                  (u) "Restricted Stock Award" means an award of shares of
Restricted Stock granted to a Director pursuant to Section 8 of the Plan.

                  (v) "Stock" means the common stock, $1.00 par value, of the
Company.

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                   (w) "Stock Option" means a non-statutory stock option to
purchase shares of Stock for a purchase price per share equal to the Exercise
Price (as defined in Section 7.2(a)) in accordance with the provisions of the
Plan.

                   (x) "Stock Option Award" means an award of Stock Options
granted to a Director pursuant to Section 7 of the Plan.

                   (y) "Stock Option Value" means the value of a Stock Option
for one share of Stock on the relevant date as determined by an outside firm
selected by the Company.

         2.2 Gender and Number. Except when otherwise indicated by the context,
the masculine gender will also include the feminine gender, and the definition
of any term herein in the singular will also include the plural.

SECTION 3.         PLAN ADMINISTRATION

                   (a) The Plan will be administered by the Committee. The
members of the Committee will be members of the Board appointed by the Board,
and any vacancy on the Committee will be filled by the Board or in a manner
authorized by the Board.

         The Committee will keep minutes of its meetings and of any action taken
by it without a meeting. A majority of the Committee will constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present will be the acts of the Committee. Any action that may be
taken at a meeting of the Committee may be taken without a meeting if a consent
or consents in writing setting forth the action so taken is signed by all of the
members of the Committee. The Committee will make appropriate reports to the
Board concerning the operations of the Plan.

                   (b) Subject to the limitations of the Plan, the Committee
will have the sole and complete authority: (i) to impose such limitations,
restrictions and conditions upon such awards as it deems appropriate; (ii) to
interpret the Plan and to adopt, amend and rescind administrative guidelines and
other rules and regulations relating to the Plan; and (iii) to make all other
determinations and to take all other actions necessary or advisable for the
implementation and administration of the Plan. Notwithstanding the foregoing,
the Committee will have no authority, discretion or power to select the
Directors who will receive awards pursuant to the Plan, determine the awards to
be granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder or the price thereof or the time at which such awards are to be
granted, establish the duration and nature of awards or alter any other terms or
conditions specified in the Plan, except in the sense of administering the Plan
subject to the provisions of the Plan. The Committee's determinations on matters
within its authority will be conclusive and binding upon the Company and all
other persons.

                   (c) The Company will be the sponsor of the Plan. All expenses
associated with the Plan will be borne by the Company.



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SECTION 4.         STOCK SUBJECT TO THE PLAN

         4.1 Number of Shares. 600,000 shares of Stock are authorized for
issuance under the Plan in accordance with the provisions of the Plan, subject
to adjustment and substitution as set forth in this Section 4. This
authorization may be increased from time to time by approval of the Board and,
if such approval is required, by the shareholders of the Company. The Company
will at all times during the term of the Plan retain as authorized and unissued
Stock at least the number of shares from time to time required under the
provisions of the Plan, or otherwise assure itself of its ability to perform its
obligations hereunder.

         4.2 Other Shares of Stock. Any shares of Stock that are subject to a
Common Stock Equivalent Award, a Stock Option Award, a Restricted Stock Award or
a Debenture and which are forfeited, any shares of Stock that for any other
reason are not issued to a Director, and any shares of Stock tendered by a
Director to pay the Exercise Price of a Stock Option will automatically become
available again for use under the Plan if Rule 16b-3 under the Exchange Act, as
such rule may be amended, or any successor rule, and interpretations thereof by
the Securities and Exchange Commission or its staff permit such share
replenishment.

         4.3 Adjustments Upon Changes in Stock. If there is any change in the
Stock of the Company, through merger, consolidation, division, share exchange,
combination, reorganization, recapitalization, stock dividend, stock split,
spin-off, split up, dividend in kind or other change in the corporate structure
or distribution to the shareholders, appropriate adjustments may be made by the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the number and kind
of shares which may be issued under the Plan. Appropriate adjustments may also
be made by the Committee in the terms of any awards or Debentures under the Plan
to reflect such changes and to modify any other terms of outstanding awards on
an equitable basis as the Committee in its discretion determines.

SECTION 5.         COMMON STOCK EQUIVALENT AWARDS

         5.1 Grants of Common Stock Equivalent Awards. Common Stock Equivalents
equal to a fixed number of shares of Stock were granted automatically to
Directors on a formula basis under Section 5.1 of the Plan prior to its
amendment as of April 26, 1995. All Common Stock Equivalents granted pursuant to
Section 5.1 prior to its amendment as of April 26, 1995 are subject to
adjustment as provided in Section 4.3.

         5.2 Deferred Stock Account. A Deferred Stock Account has been
established for each Director elected prior to the annual meeting of
shareholders held in 1995. The Deferred Stock Account consists of compensation
in the form of Common Stock Equivalents which have been awarded to the Director
hereunder by the Company plus Common Stock Equivalents credited to the Deferred
Stock Account in respect of dividends and other distributions on the Stock
pursuant to Sections 5.3 and 5.4.

         5.3 Hypothetical Investment. Compensation awarded hereunder in the form
of Common Stock Equivalents is assumed to be a hypothetical investment in shares
of Stock, and is



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subject to adjustment to reflect stock dividends, splits and reclassifications
and as otherwise set forth in Section 4.3.

         5.4 Hypothetical Dividends. Dividends and other distributions on Common
Stock Equivalents will be deemed to have been paid as if such Common Stock
Equivalents were actual shares of Stock issued and outstanding on the respective
record or distribution dates. Common Stock Equivalents will be credited to the
Deferred Stock Account in respect of cash dividends and any other securities or
property issued on the Stock in connection with reclassifications, spin-offs and
the like on the basis of the value of the dividend or other asset distributed
and the value of the Common Stock Equivalents on the date of the announcement of
the dividend or asset distribution, all at the same time and in the same amount
as dividends or other distributions are paid or issued on the Stock. Such Common
Stock Equivalents are subject to adjustment as provided in Section 4.3.
Fractional shares will be credited to a Director's Deferred Stock Account
cumulatively but the balance of shares of Common Stock Equivalents in a
Director's Deferred Stock Account will be rounded to the next highest whole
share for any payment to such Director pursuant to Section 5.6.

         5.5 Statement of Account. A statement will be sent to each Director as
to the balance of his Deferred Stock Account at least once each calendar year.

         5.6 Payment of Deferred Stock. Upon termination of services as a
Director, the balance of the Director's Deferred Stock Account will be paid to
such Director in Stock in January of the year following the year of termination
of services as a director on the basis of one share of Stock for each Common
Stock Equivalent in such Director's Deferred Stock Account.

         5.7 Payments to a Deceased Director's Estate. In the event of a
Director's death before the balance of his or her Deferred Stock Account is
fully paid to the Director, payment of the balance of the Director's Deferred
Stock Account will then be made to the beneficiary properly designated by the
Director pursuant to Section 5.8, if any, or to his or her estate in the absence
of such a beneficiary designation, in the time and manner selected by the
Committee. The Committee may take into account the application of any duly
appointed administrator or executor of a Director's estate and direct that the
balance of the Director's Deferred Stock Account be paid to his or her estate in
the manner requested by such application.

         5.8 Designation of Beneficiary. A Director may designate a beneficiary
in the event of the Director's death in a form approved by the Company.

SECTION 6.         DEFERRAL OF COMPENSATION

         6.1 Amount of Deferral. A Director may elect to defer receipt of all or
a specified portion of the cash compensation otherwise payable to the Director
for services rendered to the Company as a director.

         6.2 Manner of Electing Deferral. A Director will make elections
permitted hereunder by giving written notice to the Company in a form approved
by the Committee and in compliance with Section 6.4. The notice will include:
(i) the percentage of cash compensation



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to be deferred, which amount must be stated in whole increments of five percent;
and (ii) the time as of which deferral is to commence.

         6.3       Accounts.

                   (a) Cash Account. A Cash Account has been or will be
established for each Director electing to defer hereunder. Each Cash Account
will be credited with the amounts deferred on the date such compensation is
otherwise payable and will be debited with the amount of any such compensation
forfeited in accordance with applicable Board policy.

                   (b) Interest. Deferred amounts in the Cash Account will
accrue interest from time to time as follows:

                             (1) For deferred amounts credited to the Cash
                   Account prior to January 1, 1998 (including but not limited
                   to Annual Director's Fees for the calendar year 1997), such
                   deferred amounts will accrue interest from time to time at a
                   rate equal to the ten-year U.S. Treasury Bond rate (prior to
                   January 1, 1995, the seven-year U.S. Treasury Bond rate) in
                   effect the week prior to the regular January meeting of the
                   Board (or, if no such meeting is held, the week prior to the
                   first trading day of the New York Stock Exchange in February)
                   in the year in respect of which such deferred amounts are
                   earned until the last trading day of the New York Stock
                   Exchange prior to the regular January meeting of the Board
                   (or, if no such meeting is held, until the first trading day
                   of February) in the year following the year in respect of
                   which deferred amounts are earned, at which time such
                   deferred amounts, including interest, will be invested in
                   Debentures and credited to the Deferred Debenture Account.
                   Deferred amounts will be credited to the Deferred Debenture
                   Account only in $100 amounts. Fractional amounts of $100 will
                   remain in the Cash Account and continue to accrue interest.

                             (2) For deferred amounts credited to the Cash
                   Account on or after January 1, 1998 (and any fractional
                   amounts remaining in the Cash Account from prior deferrals),
                   such deferred amounts will accrue interest from time to time
                   at the Interest Credit Rate then in effect, compounded
                   annually. The "Interest Credit Rate" will be reset by the
                   Company on an annual basis in January of the year, and will
                   equal the then current one-year U.S. Treasury Bill rate or
                   such other fixed rate as the Committee may from time to time
                   determine.

                   (c) Deferred Debenture Account. A Deferred Debenture Account
has been established for each Director electing to defer cash compensation
hereunder for the calendar year 1997 and/or for an earlier year or years.
Deferred amounts credited to the Cash Account prior to January 1, 1998 will be
invested in Debentures and credited to the Deferred Debenture Account at the
time and in the manner set forth in Section 6.3(b)(1). Deferred amounts credited
to the Cash Account on or after January 1, 1998 will not be invested in
Debentures but will remain in the Cash Account and accrue interest until payment
hereunder.



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         6.4 Time for Electing Deferral. Any election to (i) defer cash
compensation, (ii) alter the portion of such amounts deferred, or (iii) revoke
an election to defer such amounts, must be made prior to the time such
compensation is earned by the Director and otherwise in compliance with any
deadline which the Company may from time to time impose and in the manner set
forth in Section 6.2.

         6.5 Payment of Deferred Amounts. Payments from a Deferred Debenture
Account and/or from a Cash Account will be made in five consecutive annual
installments beginning in the January following the Director's termination of
service.

         Payments from a Deferred Debenture Account will consist of accumulated
interest on the Debentures (which amount will only be payable in cash) plus the
greater value of (i) the face value of the Debentures or (ii) the shares of
Stock into which the Debentures are convertible. In the event the value of the
payment is determined by the amount referred to in clause (i), payment will be
made in cash. In the event such value is determined by clause (ii), such payment
will be made in Stock, other than the value of fractional shares which will be
paid in cash.

         Payments from a Cash Account will consist of the deferred cash
compensation and accumulated interest in said account and will be made in cash.

         6.6 Payments to a Deceased Director's Estate. In the event of a
Director's death before the balance of his or her Cash Account or Deferred
Debenture Account is fully paid to the Director, payment of the balance of the
Cash Account or Deferred Debenture Account will then be made to the beneficiary
properly designated by the Director pursuant to Section 6.7, if any, or to his
or her estate in the absence of such a beneficiary designation, in the time and
manner selected by the Committee. The Committee may take into account the
application of any duly appointed administrator or executor of a Director's
estate and direct that the balance of the Director's Cash Account or Deferred
Debenture Account be paid to his or her estate in the manner requested by such
application.

         6.7 Designation of Beneficiary. A Director may designate a beneficiary
in the event of the Director's death in a form approved by the Company.

SECTION 7.         STOCK OPTION AWARDS

         7.1       Grants of Stock Option Awards.

                   (a) For calendar year 1995, Stock Options for a fixed number
of shares of Stock were granted automatically to Directors on a formula basis
under Section 7.1(a) of the Plan.

                   (b) For calendar year 1995, Stock Options for a fixed number
of shares of Stock were granted automatically on a formula basis under Section
7.1(b) of the Plan to Directors serving as chairs of standing committees of the
Board.



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                   (c) For calendar years 1996 and 1997, Stock Options were
granted automatically under Section 7.1(c) of the Plan to Directors for
one-fourth of the value of their Annual Director's Fees.

                   (d) Beginning with calendar year 1998, each Director will
receive 5/16ths (31.25%) of the value of his or her Annual Director's Fee in the
form of a Stock Option Award. Such Stock Options will be granted automatically
each year on the last Wednesday in January of such year to each Director in
office on such Grant Date. If a person joins the Board or otherwise first
becomes a Director at any time after the last Wednesday in January of a given
calendar year (beginning with 1998) but before the end of that calendar year,
whether by action of the shareholders of the Company or the Board or otherwise,
such person upon becoming a Director will be granted automatically 5/16ths
(31.25%) of the value of his or her Annual Director's Fee for that calendar year
in the form of a Stock Option Award on the last Wednesday of the calendar month
in which such person first becomes a Director (or in the next following calendar
month if such person first becomes a Director after the last Wednesday of the
month). The total number of shares of Stock subject to any such Stock Option
Award will be the number of shares determined by dividing the amount of the
Annual Director's Fee to be paid in the form of a Stock Option Award by the
Stock Option Value on the Grant Date, rounded up to the nearest whole share.

                   (e) All Stock Options granted pursuant to Section 7.1 are
subject to adjustment as provided in Section 4.3.

         7.2 Terms and Conditions of Stock Options. Stock Options granted under
the Plan will be subject to the following terms and conditions:

                   (a) Exercise Price. Beginning with calendar year 1998, the
purchase price per share at which a Stock Option may be exercised ("Exercise
Price") will be equal to 100% of the Fair Market Value of a share of Stock on
the Grant Date.

         For Stock Options granted in 1995, 1996 and 1997, the Exercise Price
was determined as follows: on any Grant Date, (1) Stock Options for two-thirds
of the option shares granted on the Grant Date had an Exercise Price per share
equal to 100% of the Fair Market Value of a share of Stock on the Grant Date;
and (2) Stock Options for the remaining one-third of the option shares granted
on the Grant Date had an Exercise Price per share equal to 125% of the Fair
Market Value of a share of Stock on the Grant Date.

                   (b) Exercisability. Subject to the terms and conditions of
the Plan and of the agreement referred to in Section 7.2(j), a Stock Option may
be exercised in whole or in part upon notice of exercise to the Company, (1) as
to any Stock Option granted in calendar year 1995, commencing on the first day
after the Grant Date and until it terminates, and (2) as to any Stock Option
granted after January 1, 1996 that vests as provided in Section 7.2(c)(2) or
7.2(c)(3), commencing on January 1 of the calendar year next following the Grant
Year or upon the occurrence of a Change in Control, if earlier, and until it
terminates. During a Director's lifetime, a Stock Option may be exercised only
by the Director or the Director's guardian or legal representative.



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                   (c)       Vesting of Stock Option Awards.

                   (1)       Stock Options granted in calendar year 1995 vested
immediately on grant.

                   (2) Stock Options granted after January 1, 1996 will vest on
January 1 of the calendar year next following the Grant Year (the "Option
Vesting Date") if the Director has an Attendance Percentage of at least
seventy-five percent (75%) for the Grant Year. In the event that a Director has
an Attendance Percentage of less than seventy-five percent (75%) for a Grant
Year, Stock Options granted in that Grant Year for a number of shares equal to
the Director's Attendance Percentage for that year multiplied by the total
number of option shares granted for that year (rounded up to the nearest whole
share) will vest on the Option Vesting Date, and Stock Options granted in that
Grant Year as to the remaining option shares will be forfeited and will
terminate as of the Option Vesting Date.

                   (3) Notwithstanding anything to the contrary herein, (i) in
the event that a director is removed from office for Cause, all outstanding
Stock Options will be forfeited immediately as of the time the grantee is so
removed from office, and (ii) upon the occurrence of a Change in Control, all
outstanding Stock Options will vest and become immediately exercisable.

                   (d) Mandatory Holding of Stock. Except as otherwise provided
in Section 7.5 or Section 10, any Stock acquired on exercise of a Stock Option
must be held by the grantee for a minimum of: (1) three years from the date of
exercise; (2) two years from the date the grantee ceases to be a director of the
Company; or (3) until the occurrence of a Change in Control, whichever first
occurs (the "Option Shares Holding Period").

                   (e) Option Term. The term of a Stock Option (the "Option
Term") will be the shorter of: (1) the period of ten years from its Grant Date;
(2) the period from the Grant Date until the Option Vesting Date for a Stock
Option that does not vest and is terminated on said date as provided in Section
7.2(c)(2) (or with respect to any portion of a Stock Option that does not vest
on the Option Vesting Date and is terminated as provided in Section 7.2(c)(2));
(3) the period from the Grant Date until the time the Stock Option is forfeited
as provided in Section 7.2(c)(3)(i) in the event a director is removed from
office for Cause; or (4) the period from the Grant Date until the date the Stock
Option ceases to be exercisable as provided in Section 7.2(h).

                   (f) Payment of Exercise Price. Stock purchased on exercise of
a Stock Option must be paid for as follows: (1) in cash or by check (acceptable
to the Company), bank draft or money order payable to the order of the Company,
(2) through the delivery of shares of Stock which are then outstanding and which
have a Fair Market Value on the date of exercise equal to the Exercise Price per
share multiplied by the number of shares as to which the Stock Option is being
exercised (the "Aggregate Exercise Price"); (3) by delivery of an unconditional
and irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the Aggregate Exercise Price, or (4) by a combination of
the permissible forms of payment; provided, however, that any portion of the
Exercise Price representing a fraction of a share must



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be paid in cash and no share of Stock held for less than six months may be
delivered in payment of the Aggregate Exercise Price.

                   (g) Rights as a Shareholder. The holder of a Stock Option
will not have any of the rights of a shareholder with respect to any shares of
Stock subject to the Stock Option until such shares are issued by the Company
following the exercise of the Stock Option.

                   (h) Termination of Eligibility. If a grantee ceases to be a
Director for any reason, any outstanding Stock Options will be exercisable
according to the following provisions:

                   (1) If a grantee ceases to be a director for any reason other
than removal for Cause or death, any outstanding Stock Options held by such
grantee which are vested or which thereafter vest will be exercisable by the
grantee in accordance with their terms at any time prior to the expiration of
the Option Term;

                   (2) If a grantee is removed from office as a director of the
Company for Cause, any outstanding vested Stock Options held by such grantee
will be exercisable by the grantee in accordance with their terms at any time
prior to the earlier of (a) the time the grantee is so removed from office and
(b) the expiration of the Option Term; and

                   (3) Following the death of a grantee while a director or
after the grantee ceased to be a director for any reason other than removal for
Cause, any Stock Options that are outstanding and exercisable by such grantee at
the time of death or which thereafter vest will be exercisable in accordance
with their terms by the person or persons entitled to do so under the grantee's
will, by a beneficiary properly designated by the Director in the event of death
pursuant to Section 7.4, if any, or by the person or persons entitled to do so
under the applicable laws of descent and distribution at any time prior to the
earlier of (a) the expiration of the Option Term and (b) two years after the
date of death.

                   (i) Termination of Stock Option. A Stock Option will
terminate on the earlier of (1) exercise of the Stock Option in accordance with
the terms of the Plan, and (2) expiration of the Option Term as specified in
Sections 7.2(e) and 7.2(h).

                   (j) Stock Option Agreement. All Stock Options will be
confirmed by an agreement, or an amendment thereto, which will be executed on
behalf of the Company by the Chief Executive Officer, the President or any Vice
President and by the grantee.

                   (k)       General Restrictions.

                   (1) The obligation of the Company to issue Stock pursuant to
Stock Options under the Plan will be subject to the condition that, if at any
time the Company determines that (a) the listing, registration or qualification
of shares of Stock upon any securities exchange or under any state or federal
law, or (b) the consent or approval of any government or regulatory body is
necessary or desirable, then such Stock will not be issued unless such listing,
registration, qualification, consent or approval has been effected or obtained
free from any conditions not acceptable to the Company.



                                      -11-
<PAGE>   12

                   (2) Shares of Stock for use under the provisions of this
Section 7 will not be issued until they have been duly listed, upon official
notice of issuance, upon the New York Stock Exchange and such other exchanges,
if any, as the Board may determine, and a registration statement under the
Securities Act of 1933 with respect to such shares has become, and is,
effective.

         Subject to the foregoing provisions of this Section 7.2 and the other
provisions of the Plan, any Stock Option granted under the Plan will be subject
to such restrictions and other terms and conditions, if any, as the Committee
may determine, in its discretion, and as are set forth in the agreement referred
to in Section 7.2(j), or an amendment thereto; provided, however, that in no
event will the Committee or the Board have any power or authority which would
cause transactions pursuant to the Plan to cease to be exempt from the
provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3, as such
rule may be amended, or any successor rule.

         7.3 Annual Statement. A statement will be sent to each Director as to
the status of his or her Stock Options at least once each calendar year.

         7.4 Designation of a Beneficiary. A Director may designate a
beneficiary to hold and exercise outstanding Stock Options in accordance with
the Plan in the event of the Director's death in a form approved by the Company.

         7.5 Holding Period Applicable to a Deceased Grantee's Estate. As long
as at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 7.4, if any, or a person holding
a Stock Option under a deceased grantee's will or under the applicable laws of
descent or distribution, exercising a Stock Option in accordance with Section
7.2(h) will not be subject to the Holding Period with respect to shares of Stock
received on exercise of a Stock Option.

SECTION 8.         RESTRICTED STOCK AWARDS.

         8.1       Grants of Restricted Stock Awards.

                   (a) For calendar years 1996 and 1997, each Director received
one-fourth of the value of his or her Annual Director's Fee in the form of a
Restricted Stock Award.

         Beginning with calendar year 1998, each Director will receive 5/16ths
(31.25%) of the value of his or her Annual Director's Fee in the form of a
Restricted Stock Award. Such Restricted Stock will be granted automatically each
year on the last Wednesday in January of such year to each Director in office on
such Grant Date. If a person joins the Board or otherwise first becomes a
Director at any time after the last Wednesday in January of a given calendar
year (beginning with 1998) but before the end of that calendar year, whether by
action of the shareholders of the Company or the Board or otherwise, such person
upon becoming a Director will be granted automatically 5/16ths (31.25%) of the
value of his or her Annual Director's Fee for that calendar year in the form of
a Restricted Stock Award on the last Wednesday in the



                                      -12-
<PAGE>   13

calendar month in which such person first becomes a Director (or in the next
following calendar month if said person first becomes a Director after the last
Wednesday of the month).

                   (b) Beginning with calendar year 1996, each Director who is
the chair of a standing committee of the Board will receive the full value of
his or her Annual Committee Chair's Fee in the form of a Restricted Stock Award.
Such Restricted Stock will be granted automatically each year immediately
following the annual meeting of shareholders and the organization meeting of the
Board related to such annual meeting of shareholders, beginning with the annual
meeting of shareholders and related organization meeting held in 1996, to each
Director who is elected at such organization meeting to serve as the chair of a
standing committee of the Board.

                   (c) The total number of shares of Stock representing any such
Restricted Stock Award will be the number of shares determined by dividing the
amount of the Annual Director's Fee or the Annual Committee Chair's Fee, as the
case may be, to be paid in the form of a Restricted Stock Award by the Fair
Market Value of a share of Stock on the Grant Date, rounded up to the nearest
whole share.

                   (d) Restricted Stock granted pursuant to Section 8.1 is
subject to adjustment as provided in Section 4.3.

         8.2 Terms and Conditions of Restricted Stock. Restricted Stock granted
under the Plan will be subject to the following terms and conditions:

                   (a) Restriction Period. Restricted Stock will be subject to a
Restriction Period ("Restriction Period") beginning on the Grant Date and
continuing through December 31 of the Grant Year.

                   (b) Vesting.

                   (1) Except as set forth in Section 8.2(b)(3), a Director's
right to ownership in shares of Restricted Stock granted to a Director pursuant
to Section 8.1(a) will vest on the January 1 immediately following the
expiration of the Restriction Period for such shares (the "Restricted Stock
Vesting Date") if the Director has an Attendance Percentage of at least
seventy-five percent (75%) for the Grant Year. In the event that a Director has
an Attendance Percentage of less than seventy-five percent (75%) for a Grant
Year, a number of shares of Restricted Stock equal to the Director's Attendance
Percentage for the Grant Year multiplied by the total number of shares of
Restricted Stock granted pursuant to Section 8.1(a) during the Grant Year
(rounded up to the nearest whole share) will vest on the Restricted Stock
Vesting Date and the remaining shares of Restricted Stock granted pursuant to
Section 8.1(a) during the Grant Year will be forfeited as of the Restricted
Stock Vesting Date.

                   (2) Except as set forth in Section 8.2(b)(3) below, a
Director's right to ownership in shares of Restricted Stock granted to a
committee chair pursuant to Section 8.1(b) will vest on the Restricted Stock
Vesting Date.



                                      -13-
<PAGE>   14

                   (3) Notwithstanding anything to the contrary herein, (i) in
the event that a director is removed from office for Cause prior to the
Restricted Stock Vesting Date, all of said Director's shares of Restricted Stock
that have not yet vested will be forfeited immediately as of the time the
grantee is so removed from office and the Company will have the right to
complete the blank stock power described below with respect to such shares, and
(ii) upon the occurrence of a Change in Control, all shares of Restricted Stock
that have not yet vested will immediately vest.

                   (c) Issuance of Shares. On or about the Grant Date, a
certificate representing the shares of Restricted Stock will be registered in
the Director's name and deposited by the Director, together with a stock power
endorsed in blank, with the Company. Subject to the transfer restrictions set
forth in Section 8.2(d) and to the last sentence of this Section 8.2(c), the
Director as owner of shares of Restricted Stock will have the rights of the
holder of such Restricted Stock during the Restriction Period. On the Restricted
Stock Vesting Date following expiration of the Restriction Period, vested shares
of Restricted Stock will be redelivered by the Company to the Director, and
non-vested shares of Restricted Stock will be forfeited and the Company will
have the right to complete the blank stock power with respect to such non-vested
shares; provided, however, with respect to shares of Restricted Stock granted in
1996 prior to shareholder approval of an amendment to the Plan on April 24,
1996, no certificates were issued, such shares were not issued and outstanding,
and the Directors did not have any of the rights of an owner of the shares until
the date such shareholder approval occurred.

                   (d) Transfer Restrictions; Mandatory Holding of Stock. Except
as otherwise provided in Section 8.5 or Section 10, shares of Restricted Stock
are not transferable during the Restriction Period. Once the Restriction Period
lapses and shares vest, except as otherwise provided in Section 8.5 or Section
10, shares acquired as a Restricted Stock Award must be held by the grantee for
a minimum of: (1) three years from the Grant Date; (2) two years from the date
the grantee ceases to be a director of the Company; or (3) until the occurrence
of a Change of Control, whichever first occurs (the "Restricted Shares Holding
Period").

                   (e) Restricted Stock Agreement. All Restricted Stock Awards
will be confirmed by an agreement, or an amendment thereto, which will be
executed on behalf of the Company by the Chief Executive Officer, the President
or any Vice President and by the grantee.

                   (f) General Restriction.

                   (1) The obligation of the Company to issue shares of
Restricted Stock under the Plan will be subject to the condition that if, at any
time, the Committee determines that (a) the listing, registration or
qualification of shares of Restricted Stock upon any securities exchange or
under any state or federal law or (b) the consent or approval of any government
or regulatory body is necessary or desirable, then such Restricted Stock will
not be issued unless such listing, registration, qualification, consent or
approval has been effected or obtained free from any conditions not acceptable
to the Company.



                                      -14-
<PAGE>   15

                   (2) Shares of Stock for use under the provisions of this
Section 8 will not be issued until they have been duly listed, upon official
notice of issuance, upon the New York Stock Exchange and such other exchanges,
if any, as the Board may determine, and a registration statement under the
Securities Act of 1933 with respect to such shares has become, and is,
effective.

         Subject to the foregoing provisions of this Section 8.2 and the other
provisions of the Plan, any shares of Restricted Stock granted under the Plan
will be subject to such restrictions and other terms and conditions, if any, as
may be determined by the Committee, in its discretion, and as are set forth in
the agreement referred to in Section 8.2(e), or an amendment thereto; provided,
however, that in no event will the Committee or the Board have any power or
authority which would cause transactions pursuant to the Plan to cease to be
exempt from the provisions of Section 16(b) of the Exchange Act under Rule
16b-3, as such rule may be amended, or any successor rule.

         8.3 Annual Statement. A statement will be sent to each Director as to
the status of his Restricted Stock at least once each calendar year.

         8.4 Designation of a Beneficiary. A Director may designate a
beneficiary to hold shares of Restricted Stock in accordance with the Plan in
the event of the Director's death in a form approved by the Company.

         8.5 Holding Period Applicable to a Deceased Grantee's Estate. As long
as at least six months have elapsed since the Grant Date, a beneficiary properly
designated by the Director pursuant to Section 8.4 in the event of death, if
any, or a person holding shares of Restricted Stock under a deceased grantee's
will or under the applicable laws of descent or distribution, will not be
subject to the Restricted Shares Holding Period with respect to such shares of
Restricted Stock.

SECTION 9.         CHANGE IN CONTROL

         9.1 Settlement of Compensation. In the event of a Change in Control of
the Company as defined herein, (a) to the extent not already vested, all Stock
Option Awards, Restricted Stock Awards and other benefits hereunder will be
vested immediately; and (b) the value of all unpaid benefits and deferred
amounts will be paid in cash to PNC Bank, National Association, the trustee
pursuant to a trust agreement dated as of June 22, 1995, as amended from time to
time, or any successor trustee, or otherwise on such terms as the Committee may
prescribe or permit. For purposes of this Section 9.1, the value of deferred
amounts will be equal to the sum of (i) the value of all Common Stock Equivalent
Awards then held in such Director's Deferred Stock Account (the value of which
will be based upon the highest price of the Stock as reported by the composite
tape of the New York Stock Exchange during the 30 days immediately preceding the
Change in Control), (ii) the value of the Director's Cash Account, and (iii) the
greater value of (x) the cash amount equal to the face value of the Debentures
in the Director's Deferred Debenture Account plus cash equal to accrued interest
on the Debentures or (y) the number of shares of Stock into which the Debentures
in the Director's Deferred Debenture Account are convertible (the value of which
will be based upon the highest price of the Stock as



                                      -15-
<PAGE>   16

reported by the composite tape of the New York Stock Exchange during the 30 days
immediately preceding the Change in Control), plus cash equal to accrued
interest on the Debentures.

         9.2 Definition of Change in Control. A Change in Control will mean the
occurrence of one or more of the following events:

                   (a) there shall be consummated (i) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Stock immediately prior to the
merger have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; or

                   (b) the shareholders of the Company shall approve of any plan
or proposal for the liquidation or dissolution of the Company; or

                   (c) (i) any person (as such term is defined in Section 13(d)
of the Exchange Act), corporation or other entity shall purchase any Stock of
the Company (or securities convertible into the Company's Stock) for cash,
securities or any other consideration pursuant to a tender offer or exchange
offer, unless, prior to the making of such purchase of Stock (or securities
convertible into Stock), the Board shall determine that the making of such
purchase shall not constitute a Change in Control, or (ii) any person (as such
term is defined in Section 13(d) of the Exchange Act), corporation or other
entity (other than the Company or any benefit plan sponsored by the Company or
any of its subsidiaries) shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding securities ordinarily (and apart
from any rights accruing under special circumstances) having the right to vote
in the election of directors (calculated as provided in Rule 13d-3(d) in the
case of rights to acquire any such securities), unless, prior to such person so
becoming such beneficial owner, the Board shall determine that such person so
becoming such beneficial owner shall not constitute a Change in Control; or

                   (d) at any time during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire Board
shall cease for any reason to constitute at least a majority thereof, unless the
election or nomination for election of each new director during such two-year
period is approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such two-year period.

SECTION 10.        ASSIGNABILITY

         10.1 The right to receive payments or distributions hereunder
(including any "derivative security" issued pursuant to the Plan, as such term
is defined by the rules promulgated under Section 16 of the Exchange Act), any
shares of Restricted Stock granted hereunder during the Restriction Period, and
any Stock Options granted hereunder will not be



                                      -16-
<PAGE>   17

transferable or assignable by a Director other than by will, by the laws of
descent and distribution, to a beneficiary properly designated by the Director
pursuant to the appropriate section of the Plan in the event of death, if any,
or pursuant to a domestic relations order as defined by Section 414(p)(1)(B) of
the Internal Revenue Code or the rules thereunder that satisfies Section
414(p)(1)(A) of the Internal Revenue Code or the rules thereunder.

         10.2 In addition, Stock acquired on exercise of a Stock Option will not
be transferable prior to the end of the applicable Option Shares Holding Period,
if any, set forth in Sections 7.2(d) and 7.5, and Stock acquired as Restricted
Stock will not be transferable prior to the end of the applicable Restricted
Shares Holding Period, if any, set forth in Sections 8.2(d) and 8.5, in either
case other than by will, by transfer to a beneficiary properly designated by the
Director pursuant to the appropriate section of the Plan in the event of death,
if any, by the applicable laws of descent and distribution, or pursuant to a
domestic relations order as defined by Section 414(p)(1)(B) of the Internal
Revenue Code or the rules thereunder that satisfies Section 414(p)(1)(A) of the
Internal Revenue Code or the rules thereunder.

SECTION 11.        RETENTION; WITHHOLDING OF TAX

         11.1 Retention. Nothing contained in the Plan or in any Stock Option
Award or Restricted Stock Award granted under the Plan will interfere with or
limit in any way the right of the Company to remove any Director from the Board
pursuant to the Restated Articles of Incorporation and the By-laws of the
Company, nor confer upon any Director any right to continue in the service of
the Company.

         11.2 Withholding of Tax. To the extent required by applicable law and
regulation, each Director must arrange with the Company for the payment of any
federal, state or local income or other tax applicable to any payment or any
delivery of Stock hereunder before the Company will be required to make such
payment or issue (or, in the case of Restricted Stock, deliver) such shares
under the Plan.

SECTION 12.        PLAN AMENDMENT, MODIFICATION AND TERMINATION

         The Board may at any time terminate, and from time to time may amend or
modify the Plan, provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the shareholders
if shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements.

SECTION 13.        REQUIREMENTS OF LAW

         13.1 Federal Securities Law Requirements. Implementation and
interpretations of, transactions pursuant to, the Plan will be subject to all
conditions required under Rule 16b-3, as such rule may be amended, or any
successor rule, to qualify such transactions for any exemption from the
provisions of Section 16(b) of the Exchange Act available under that rule, or
any successor rule.



                                      -17-
<PAGE>   18

         13.2 Governing Law. The Plan and all agreements hereunder will be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.

SECTION 14.        OTHER COMPENSATION

         This Plan will not preclude the adoption by appropriate means of any
other compensation or deferral plan for directors.


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