-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ig0OqZudC3p0BD4HrsmU2sVmepg0AAxx9l3OnybrTMAtOfawWxwK0gCxVq4FGZ7U H2IS6z/KYWSBPXgyUzmZbg== 0000018366-94-000004.txt : 19940315 0000018366-94-000004.hdr.sgml : 19940315 ACCESSION NUMBER: 0000018366-94-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CBS INC CENTRAL INDEX KEY: 0000018366 STANDARD INDUSTRIAL CLASSIFICATION: 4833 IRS NUMBER: 130590730 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-02931 FILM NUMBER: 94515909 BUSINESS ADDRESS: STREET 1: 51 W 52ND ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2129754321 FORMER COMPANY: FORMER CONFORMED NAME: COLUMBIA BROADCASTING SYSTEM INC DATE OF NAME CHANGE: 19740605 10-K 1 PAGES 1-48 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1993 Commission File No. 1-2931 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 CBS INC. A NEW YORK CORPORATION I.R.S. EMPLOYER NO. 13-0590730 51 West 52 Street, New York, NY 10019 Telephone Number (212) 975-4321 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ___________________ _______________________ Common stock, $2.50 par value New York Stock Exchange Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES X NO . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 28, 1994 was $3,827,716,813. As of February 28, 1994 there were 15,491,633 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for Annual Meeting of Shareholders to be held May 11, 1994 (Part III). PART I Item 1. Business. The registrant, CBS Inc. ("CBS")*, conducts its domestic and international operations either directly or through subsidiaries and joint ventures. The operations of CBS are carried out primarily by the CBS/Broadcast Group. Other activities of CBS include various activities not directly associated with the Group, i.e., The CBS/FOX Company, Radford Studio Center Inc. and other non-material miscellaneous activities. CBS/Broadcast Group The CBS/Broadcast Group, through the CBS Television Network, distributes a comprehensive schedule of news and public affairs broadcasts, entertainment and sports programming and feature films to 206 independently owned affiliated stations and the seven CBS owned and operated television stations, which in the aggregate serve the 50 states and the District of Columbia, and to certain overseas affiliated stations. The CBS Operations and Administration Division operates the technical facilities used to produce and distribute programs of the CBS News, Sports and Entertainment Divisions. This division is also responsible for providing facilities management, personnel services, management information systems and administrative support services to CBS, including the CBS/Broadcast Group, and to unaffiliated companies for a fee. The CBS/Broadcast Group consists of eight divisions, whose operations are briefly described below: The CBS Entertainment Division produces and otherwise acquires entertainment series and other programs, and acquires feature films, for distribution by the CBS Television Network for broadcast. The CBS Marketing Division is responsible for sales of advertising time for CBS Television Network broadcasts and related marketing research, merchandising and sales promotion activities. The CBS Enterprises Division, operating primarily through the CBS Broadcast International and CBS Video units, is responsible for the worldwide distribution of CBS-owned news and public affairs broadcasts, sports and entertainment programming and feature films to broadcast and other media (including cable, airlines and home video, in the latter case through The CBS/Fox Company) and the acquisition of broadcast and non- broadcast rights in independently produced programs where permitted by law. The CBS Affiliate Relations Division is responsible for the full range of ongoing activities and mutual concerns between the CBS Television Network and the 206 independently owned affiliated stations. The CBS News Division operates a worldwide news organization which produces regularly scheduled news and public affairs broadcasts and special reports for the CBS Television and Radio Networks. This division also produces certain news- _______________ * Except as the context otherwise requires, references to CBS in this Annual Report mean CBS Inc. and include its subsidiaries. - 2 - oriented programming for broadcast in the early morning daypart and in designated hours during prime time. The CBS Sports Division produces and otherwise acquires sports programs for distribution by the CBS Television Network for broadcast. The CBS Television Stations Division operates and serves as sales representative for the seven CBS owned television stations (serving New York, Chicago, Los Angeles, Philadelphia, Minneapolis-St. Paul (which includes two satellite stations), Green Bay-Appleton (which includes a satellite station) and Miami). The division also owns and operates Midwest Sports Channel, a supplier of regional sports programming to cable subscribers in Minnesota, North Dakota, South Dakota, northern Iowa and western Wisconsin, and Teleport Minnesota, which provides programming and technical services to cable operators in the upper Midwest and operates a service enabling broadcast companies and other clients to transmit video signals into and out of Minnesota. The CBS Radio Division operates the eight CBS owned AM radio stations (serving New York, Chicago, Detroit, Los Angeles, Philadelphia, Minneapolis- St. Paul, St. Louis and San Francisco) and 13 CBS owned FM radio stations (serving the same cities named above, as well as Boston, Dallas/Fort Worth (two stations), Houston and Washington, D.C.); serves as broadcast sales representative for the CBS owned radio stations, 14 independently owned AM and 24 independently owned FM radio stations; and operates the CBS Radio Networks, which serve approximately 585 affiliated stations nationwide. Other Activities The CBS/FOX Company is a partnership in which CBS and a wholly-owned subsidiary of Twentieth Century-Fox Film Corporation ("Fox") each own a 50% interest. This partnership is engaged in the acquisition from unrelated third parties of the videocassette rights to feature films and other, non-theatrical product, and provides marketing activities relating to the videocassette distribution (by a subsidiary of Fox) of products produced by CBS and the partnership. It also engages in selling activities to specialized accounts of product of CBS and the partnership. The related partnership agreement expires February 28, 1997. Radford Studio Center Inc., a wholly owned subsidiary of CBS ("Radford"), owns and operates television and film production facilities at its Studio Center facility in Studio City, California. CBS, through Radford, became the sole owner of the Studio Center business and facilities in March 1992 when it acquired the 50 percent partnership interest of MTM Studios, Ltd. in The CBS/MTM Company. Industry Segment Information Since January 1988, CBS has operated predominantly in a single industry - -- broadcasting. Accordingly, there is no requirement for segment reporting. Competition The CBS Television Network and CBS owned television stations compete for audiences with other television networks and television stations, as well as with other video media, including cable television, multipoint distribution services, low power television stations, satellite television services and video cassettes. In the sale of advertising, the CBS Television Network competes with other networks, - 3 - television stations, cable television programmers, and other advertising media. The CBS owned television stations compete for advertising with other television stations and cable television systems, as well as with newspapers, magazines and billboards. The CBS Television Network and CBS owned television stations also compete with other video media for distribution rights to television programming. The CBS owned television stations compete primarily in their individual markets. In addition to competing television broadcast stations, cable television systems and program services represent a significant source of competition for audiences, advertising and program rights to CBS. In individual markets, cable systems provide competition by offering audiences additional signals and by supplying a broad array of advertiser- and subscription-supported video programming not available on conventional stations. Current and future technological developments may affect competition within the television field. Developments in advanced digital technology may enable competitors to provide "high definition" pictures and sound qualitatively superior to what television stations now provide. Development of the technology to compress digital signals may also permit the same broadcast or cable channel or satellite transponder to carry multiple video and data services, and could result in an expanded field of competing services. CBS cannot predict when and to what extent digital technology will be implemented in the various television services, and whether and how television stations will be able to make use of the improvements inherent in it. The Federal Communications Commission (FCC) has initiated proceedings having the ultimate goal of adopting a standard for the use of advanced digital technology in terrestrial television broadcast service. Recent statutory, judicial and regulatory actions may also affect competition. The Cable Consumer Protection and Competition Act of 1992 ("1992 Cable Act") for the first time required cable systems to obtain broadcast stations' consent to retransmit the stations' signals, thereby providing television stations the opportunity to negotiate a fee or other compensation for such retransmission. (In September 1993 CBS granted cable systems carrying the signals of its owned television stations consent to continue to carry those signals, without compensation, until October 6, 1994.) As an alternative, the Cable Act allowed television stations to require cable systems to carry their signals within their television markets without compensation. The cable industry has brought legal challenges to the latter provisions of the 1992 Cable Act (commonly referred to as the "must carry" provisions), and a split lower court decision upholding them has been appealed to the United States Supreme Court, which is expected to render its decision by the end of June 1994. Telephone companies represent another source of potential competition in the television field through their efforts to provide both video services and data transmission services directly to their subscribers' homes. While the Cable Communications Policy Act of 1984 ("1984 Cable Act") prohibits regional Bell operating companies ("RBOCs") from providing video programming directly to subscribers' homes, several recent developments may affect competition. In 1992, the FCC permitted telephone companies, without the necessity of obtaining a municipal cable franchise, to offer "video dialtone" distribution services to programmers on a common carrier basis. In 1993, a federal district court in Virginia ruled that the 1984 Cable Act's prohibition on telephone companies' provision of video programming to subscribers is unconstitutional as applied to the Bell Atlantic Corporation. Other RBOCs have sought similar rulings, and the Bell Atlantic ruling is on appeal. Currently, there are a number of legislative - 4 - proposals that would provide a regulatory framework for telephone company entry into the cable television business and into the provision of future broadband video services in the companies' service areas. Network regulations may also affect competition. In 1991, the FCC modified its Financial Interest and Syndication ("Fin/Syn") rules, which had limited the ability of television networks to acquire any financial interest or syndication rights in television programs and prohibited the networks from themselves syndicating television programs. CBS and other television networks appealed this decision to the United States Court of Appeals for the Seventh Circuit, contending that the rules should have been eliminated rather than modified. The Court affirmed the FCC's decision to abrogate the pre-existing rules, but vacated the FCC's modification of those rules as arbitrary and capricious and remanded the matter to the FCC. In April 1993, the FCC announced new rules which eliminate all restrictions on network acquisition of financial interests and syndication rights in network programming and retain most restrictions on syndication by the networks themselves. Petitions to review the new rules are before the Seventh Circuit Court of Appeals. The television network operations of CBS and other television networks are subject to consent decrees entered by the United States District Court for the Central District of California in 1980. In November 1993, the court modified the consent decrees to eliminate restrictions parallel to the FCC's old Fin/Syn rules, thereby permitting the networks to act to the extent permitted by the FCC's 1993 rules. The FCC has provided that all its Fin/Syn restrictions are to "sunset" two years from the date of the November 1993 modification of the consent decrees. It has also determined that it will review the rules six months before they expire and that the burden of proof in this review will rest on those favoring retention of the rules. The CBS Radio Network and CBS's owned radio stations compete with other radio networks, independent radio stations, suppliers of radio programming, and other advertising media. Competition with CBS's owned radio stations occurs primarily in their individual market areas, although on occasion stations outside a market place signals within that area. While such outside stations may obtain an audience share, they generally do not obtain any significant share of the advertising within the market. Developments in radio technology could affect competition in the radio field. New radio technology, known as "digital audio broadcasting" (DAB), can provide sound of the quality of compact discs, which is significantly higher than that now provided by radio networks and stations using analog technology. CBS, among others, is actively involved in the study and development of this digital technology, but cannot predict when and to what extent existing radio networks and stations will be in a position to utilize it. The FCC has initiated proceedings to consider the development and implementation of DAB services. The FCC is also currently considering an application to establish a nationwide, satellite-delivered DAB service, which, if approved, could constitute an additional source of competition to conventional radio stations and networks. CBS cannot predict the effect on its business or earnings of possible future competitive, economic, technological, international or industrial changes. Nor can CBS generally predict the outcome of administrative and judicial procedures or whether new legislation may be enacted or new regulations adopted that might bear on the broadcast industry or affect CBS's business. - 5 - Material Licenses and Federal Regulation Except as indicated below, all of CBS's television and radio stations operate under currently effective licenses from the Federal Communications Commission ("FCC"), which is empowered by the Communications Act of 1934, as amended, to, inter alia, license and regulate television and radio broadcasting stations. The FCC has authority to grant or renew broadcast licenses for a maximum term of five years for television and seven years for radio if it determines that the "public convenience, interest or necessity" will be served thereby. During a specified period after an application for renewal of a broadcast station license has been filed, competing applications seeking a license to broadcast on the same frequency may be filed with the FCC, and are entitled to consideration by the FCC in a hearing to evaluate the comparative merits of the applications. Persons objecting to the license renewal application may also file petitions to deny during this period. In Item 1 of CBS's Form 10-K for 1992 (under the caption "Material Licenses and Federal Regulation"), CBS reported that, on August 3, 1992, it had filed with the FCC timely applications to renew the television broadcast licenses for WBBM-TV, Chicago, Illinois; WFRV-TV, Green Bay, Wisconsin; and WJMN-TV, Escanaba, Michigan. The applications to renew such licenses for WFRV-TV and WJMN-TV were granted on November 23, 1993. There is no change in the status of CBS's application to renew the license for WBBM-TV. CBS believes that the station has been operated in accordance with all requirements. In Item 1 of Part II of CBS's Form 10-Q for the quarter ended September 30, 1993, CBS reported that, on August 2, 1993, CBS filed with the FCC a timely application to renew the television broadcast license for KCBS-TV, Los Angeles, California. On November 17, 1993, Mark McDermott and Americans for Responsible Media filed with the FCC a petition to deny the KCBS-TV application, to which CBS responded on December 14, 1993. CBS believes that the station has been operated in accordance with all requirements. On February 1, 1994 CBS filed with the FCC a timely application to renew the television license for WCBS-TV, New York, New York. The date by which oppositions or competing applications may be filed is May 2, 1994. The FCC has adopted rules prohibiting common ownership in the same market of radio and VHF television stations and prohibiting common ownership of stations with certain overlapping signals ("duopoly"). When those rules were adopted, existing commonly owned stations, including the VHF/radio combinations and a television duopoly then owned by CBS, were "grandfathered". In addition, in February 1992, CBS acquired from Midwest Communications, Inc., a VHF television station and AM and FM radio stations in Minneapolis, Minnesota, pursuant to an FCC waiver of its rules relating to VHF/radio combinations. As a result, absent an FCC waiver, a transfer of CBS licenses to a third party or a change in control of CBS could result in the loss of the license of either the television station or the radio stations in New York, Philadelphia, Chicago, Los Angeles and Minneapolis, and (as a result of overlapping television signals) the television station in either New York or Philadelphia. Under the FCC's waiver policy, however, the FCC will generally look favorably on waiver applications relating to radio-television station combinations in the top 25 television markets where there would be at least 30 separately owned broadcast stations after the proposed combination. Employees As of December 31, 1993, CBS had approximately 6,500 full-time employees. - 6 - Executive Officers of the Registrant (as of March 1, 1994) Date of Commencement of Service as Executive Officer in Present Position; Other Positions Since Name Age Present Positions January 1, 1989 ____ ___ _________________ ______________________ Laurence A. Tisch 71 Chairman of the Board, December 12, 1990; President President and Chief Exe- and Chief Executive Officer cutive Officer, CBS Inc. since January 1987; Chairman of the Board and Co-chief Executive Officer, Loews Corporation (Chief Executive Officer from August 1986 to February 1988 and a Director since 1959) (insurance, tobacco products, hotels, watches) Edward Grebow 44 Senior Vice President, February 8, 1988; executive Administration, CBS Inc. in charge of CBS Operations and Administration Division since June 1988 Ellen Oran Kaden 42 Senior Vice President, October 13, 1993; Vice General Counsel and President, General Counsel Secretary, CBS Inc. and Secretary, from July 1991 to October 1993; Vice President, Deputy General Counsel and Secretary (Acting General Counsel), from May to July 1991; Deputy General Counsel, from April 1989 to July 1991; Associate General Counsel, from September 1986 to April 1989 Peter W. Keegan 49 Senior Vice President, March 9, 1988 Finance, CBS Inc. Howard Stringer 52 Vice President, CBS Inc.; August 1, 1988 President, CBS/Broadcast Group Peter A. Lund 53 Executive Vice President, January 3, 1994; President, CBS/Broadcast Group; CBS Marketing Division, from President, CBS Television October 9, 1990 to December Network 1993; President, Multimedia Entertainment, from March 1987 to October 1990 Anthony C. Malara 57 President, CBS Affiliate May 31, 1988 Relations, a Division of CBS Inc. - 7 - Eric W. Ober 52 President, CBS News, a September 1, 1990; Division of CBS Inc. President, CBS Television Stations Division, from March 1987 to August 1990 Neal H. Pilson 53 President, CBS Sports, December 15, 1986 a Division of CBS Inc. Johnathan Rodgers 48 President, CBS Television September 1, 1990; Vice Stations, a Division of President and General CBS Inc. Manager, WBBM-TV, from March 1986 to August 1990 Jeffrey F. Sagansky 42 President, CBS January 1, 1990; President, Entertainment, a Tri-Star Pictures Inc., Division of from March to December CBS Inc. 1989; President, Production, Tri-Star Pictures Inc., from February 1985 to March 1989 James A. Warner 40 President, CBS December 4, 1989; Vice Enterprises, a Division President, HBO Enterprises, of CBS Inc. Home Box Office, Inc., from April 1986 to November 1989 Nancy C. Widmann 51 President, CBS Radio, a August 1, 1988 Division of CBS Inc. - 8 - Item 2. Properties. The principal executive offices of CBS are located in its headquarters building at 51 West 52 Street, New York, NY 10019. Major CBS television and/or radio facilities are located at the CBS Broadcast Center at 524 West 57 Street, New York, NY and the headquarters building in New York, NY; CBS Television City and Columbia Square in Los Angeles, CA; and in Chicago, IL; Philadelphia, PA; St. Louis, MO; Boston, MA; San Francisco, CA; a suburb of Washington, D.C.; Miami, FL; Detroit, MI; St. Petersburg, FL; Dallas/Fort Worth and Houston, TX; Minneapolis, MN; and Green Bay, WI. Of the foregoing real estate properties, all are owned by CBS except as described below: CBS Radio Division occupies radio studios and offices in St. Louis, MO (leases expire December 31, 2002); Boston, MA (lease expires December 31, 2006); San Francisco, CA (lease expires December 31, 1995); Dallas, TX (lease expires December 31, 1996); Houston, TX (lease expires March 25, 1994); Detroit, MI (lease expires April 30, 1998); and Minneapolis, MN (month-to-month). Radford owns and operates a television and film production facility lot in Studio City, CA which includes 17 sound stages. Some of these facilities are made available to the CBS Entertainment Division, and the balance is leased to third parties. CBS owns and leases other domestic real properties (including transmitter sites), and leases foreign real properties, used in connection with its business activities. In October 1993, CBS and the City of New York consummated a previously- announced agreement whereby, for a 15-year period, CBS agreed to maintain current principal operations and specified levels of employment in New York City, and in consideration thereof the City of New York granted to CBS annual tax abatements, investment incentives, and certain other concessions. Over such period, the abatements and concessions are expected to aggregate approximately $48.5 million, and will reduce CBS's annual operating costs accordingly. Included among a series of interrelated transactions among CBS, the City and certain of its administrative units, and the New York State Power Authority, was CBS's conveyance of fee title to its Broadcast Center properties, located on West 57th Street in Manhattan, to the New York City Industrial Development Agency for a period of 15 years with a lease of those properties back to CBS. Such conveyance is expressly subject to CBS's retaining a reversionary interest in the properties, so that title in fee will revert to CBS at the end of the 15-year term, or prior thereto in the event of the occurrence of certain contingencies. Also, on March 15, 1993, CBS acquired the Ed Sullivan Theater and an adjacent 13-story office building in New York City. The Ed Sullivan Theater has been designated a landmark theater by the New York City Landmark Preservation Commission. CBS has renovated the theater for use as a television production facility, and the Landmark Commission has granted its approval of the renovation. The Ed Sullivan Theater currently serves as the home of the LATE SHOW with DAVID LETTERMAN, which commenced broadcasting on the CBS Television Network in August, 1993. - 9 - Item 3. Legal Proceedings. There are no active pending legal proceedings to which CBS is a party, or to which any of its property is subject, other than (a) routine litigation incidental to the business, and (b) proceedings before the FCC with respect to the renewal of certain radio broadcast and television broadcast licenses reported in Item 1 under the caption "Material Licenses and Federal Regulation". In addition, various other legal actions, governmental proceedings and other claims (including those relating to environmental investigations and remediation resulting from the operations of discontinued businesses) are pending or, with respect to certain claims, unasserted. Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters. Incorporated herein by this reference and made a part of this Item 5 are the materials included under the captions "Stock Data" and "Dividends" at page 41 of Item 8 of this Report. There were approximately 11,584 holders of CBS common stock as of February 28, 1994. In May 1993, CBS converted $389.6 million of its outstanding 5% Convertible Subordinated Debentures Due 2002 for 1,947,975 shares of its common stock, issued from its treasury shares. The remaining Debentures of $.9 million were redeemed. In November 1993, CBS issued $100,000,000 of 7-1/8% Senior Notes that are due on November 1, 2023 and may not be redeemed prior to maturity. The net proceeds from the sale of those debt securities were used to fund the cost of implementing a related transaction with the New York City Industrial Development Agency, referred to in Item 2 of this Report. Item 6. Selected Financial Data. Incorporated herein by this reference and made a part of this Item 6 is the information set forth for the years 1989 through 1993 in Item 7 of this Report under the captions or opposite the line items and at the pages identified below: "Management's Financial Commentary": "Net sales", page 16; "Income (loss) from continuing operations", page 16; "Per share of common stock: Continuing operations", page 16; "Dividends per common share", page 16; "Long-term debt" and "Preference stock subject to redemption", page 20; and "Total assets", page 20. - 10 - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Incorporated herein by this reference and made a part of this Item 7 are the materials included under the caption "Management's Financial Commentary" at pages 15 through 20 of this Report. Item 8. Financial Statements and Supplementary Data. Incorporated herein by this reference and made a part of this Item 8 are the Consolidated Statements of Income, Retained Earnings, Additional Paid-In Capital and Cash Flows for the years ended December 31, 1993, 1992, and 1991; the Consolidated Balance Sheets as of December 31, 1993, 1992, and 1991; the Notes to Consolidated Financial Statements; the Report of Independent Certified Public Accountants thereon; the material set forth under "Quarterly Results of Operations (Unaudited)"; and the material set forth under "Shareholder Reference Information"; all of which are set forth at pages 21 through 41 of this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Inapplicable. PART III Item 10. Directors and Executive Officers of the Registrant. Incorporated herein by this reference and made a part of this Item 10 are the materials included in CBS's Proxy Statement relating to the 1994 Annual Meeting of Shareholders (the "1994 Proxy Statement") under the captions "Information Concerning the Director-Nominees" and "Board of Directors and Its Committees". Definitive copies of the 1994 Proxy Statement are to be filed with the Commission on or about April 8, 1994. See also, "Executive Officers of the Registrant", included in Item 1 hereof pursuant to Instruction 3 to Item 401(b) of Regulation S-K. Item 11. Executive Compensation. Incorporated herein by this reference and made a part of this Item 11 are the materials included under the caption "Executive Compensation" and the sub-headings thereunder, as set forth in the 1994 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management. Incorporated herein by this reference and made a part of this Item 12 are the materials included under the caption "Principal Stockholders and Management Ownership of Equity Securities", as set forth in the 1994 Proxy Statement. Item 13. Certain Relationships and Related Transactions. Incorporated herein by this reference and made a part of this Item 13 are the materials included under the caption "Certain Relationships and Related Transactions", as set forth in the 1994 Proxy Statement. - 11 - PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The Index to Financial Statements and Schedules filed as a part of this Report appears on page 14 and the report and consent of the independent certified public accountants thereon appears on page 22. The following compensatory plans and management contracts have been filed (or incorporated by reference) as Exhibits hereunder. (i) Compensatory Plans: CBS Additional Compensation Plan, CBS Stock Rights Plan, CBS Pension Plan, CBS Supplemental Executive Retirement Plan, CBS Supplemental Executive Retirement Plan #2, CBS Excess Benefits Plan, CBS Senior Executive Life Insurance Plan, CBS Deferred Compensation Plan, CBS Employee Investment Fund, CBS Retirement Plan for Outside Directors, Restricted Stock Plan for Eligible Directors. (ii) Management Contracts: The following executive officers of CBS are the only executive officers of CBS who have employment agreements: Messrs. Stringer, Lund, Ober, Sagansky, Grebow, Warner and Rodgers. (b) No reports on Form 8-K were filed during the fourth quarter of 1993. (c) The Index to Exhibits begins on page 46. (d) Not applicable. - 12 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 9, 1994 (Registrant) CBS Inc. Peter W. Keegan By:________________________________ Peter W. Keegan Senior Vice President, Finance Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Laurence A. Tisch Henry B. Schacht _______________________________ _____________________________ Laurence A. Tisch Henry B. Schacht, Director Chairman of the Board, Dated: March 7, 1994 President and Chief Executive Officer (principal executive officer) Dated: March 9, 1994 Peter W. Keegan Edson W. Spencer ________________________________ ______________________________ Peter W. Keegan Edson W. Spencer, Director Senior Vice President, Finance Dated: March 9, 1994 (principal financial and accounting officer) Dated: March 9, 1994 Michel C. Bergerac Franklin A. Thomas ________________________________ ______________________________ Michel C. Bergerac, Director Franklin A. Thomas, Director Dated: March 9, 1994 Dated: March 9, 1994 Harold Brown Preston R. Tisch ________________________________ _____________________________ Harold Brown, Director Preston R. Tisch, Director Dated: March 9, 1994 Dated: March 9, 1994 Ellen V. Futter James D. Wolfensohn ________________________________ _____________________________ Ellen V. Futter, Director James D. Wolfensohn, Director Dated: March 9, 1994 Dated: March 9, 1994 Henry A. Kissinger ________________________________ Henry A. Kissinger, Director Dated: March 9, 1994 - 13 - INDEX TO FINANCIAL STATEMENTS AND SCHEDULES PAGE NO. DESCRIPTION IN 10-K ___________ _______ Management's Financial Commentary 15 Consolidated Financial Statements Management's Responsibility for Financial Statements 21 Report and Consent of Independent Certified Public Accountants 22 Statements of Income 23 Balance Sheets 24 Statements of Retained Earnings and Additional Paid-In Capital 25 Statements of Cash Flows 26 Notes to Financial Statements 27 Quarterly Results of Operations (unaudited) 40 Shareholder Reference Information 41 Schedules Schedule I - Marketable Securities - Other Investments 42 Schedule II - Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees other than Related Parties 44 Schedule X - Supplementary Income Statement Information 45 Schedules other than those listed above have been omitted since they are either not required or not applicable. Financial statements of 50% or less owned persons, the investments in which are carried on an equity basis, are omitted because such persons are not "significant subsidiaries" within the meaning of Rule 1-02(v) of Regulation S-X. - 14 - MANAGEMENT'S FINANCIAL COMMENTARY In 1993, the Company's operating results improved significantly, reflecting both its ratings strength and higher unit pricing. Earnings in 1993 were also enhanced by several special items as well as by capital gains from the sale of marketable securities. The special items, which are not expected to recur in 1994, included a legal settlement with Viacom International Inc. (Viacom), an insurance settlement for hurricane damage to the Company's television station in Miami, a favorable Federal income tax audit settlement, and deferred tax benefits resulting from new Federal tax law. Excluding the effect of the above noted special items and capital gains, the Company anticipates improved operating results in 1994 based on continuing solid audience ratings, improving advertiser demand and active cost control. The Company continually updates its evaluations of environmental liabilities and the adequacy of the provisions made in prior years to cover asserted and unasserted environmental claims arising from the operations of its discontinued businesses. (There are no significant environmental claims known to the Company arising from its continuing operations.) In the Company's opinion, any additional liabilities that may result from such claims are not reasonably likely to have a material adverse effect on its consolidated financial position, results of operations, or liquidity. The impact of inflation on the Company's financial statements in 1993 was not considered sufficient to warrant the inclusion of any additional current cost disclosures in these statements. This Financial Commentary should be read in conjunction with the consolidated financial statements and notes to these financial statements. In addition, although the Commentary's Liquidity and Capital Resources section is based upon the Consolidated Statements of Cash Flows, certain data have been rearranged for purposes of clarification and, therefore, it should be read in conjunction with the Consolidated Statements of Cash Flows. -15- RESULTS OF OPERATIONS Income from Continuing Operations and Net Income The Company's sales in 1993 were essentially the same as in 1992. The Television Network's strong household ratings and better unit prices resulted in increased sales in 1993 from its regularly scheduled programming which largely compensated for the absence of the sales generated from the broadcasts of the Olympic Winter Games and the Super Bowl in 1992. As a result, the Company's operating income improved significantly in 1993 over 1992 from the Television Network's more profitable entertainment and news programs. The Television Stations Division recorded increased sales and profits at all stations except Los Angeles. The Radio Division experienced a significant improvement in earnings, attributable to sales increases at most of its stations and to lower operating costs. Also, in 1993, earnings benefited from a legal settlement with Viacom and an insurance settlement for hurricane damage to the Company's television station in Miami (both of which were included in other income, net); capital gains from the sale of marketable securities; a favorable Federal income tax audit settlement; and deferred tax benefits resulting from new Federal tax law-all of which contributed $5.33 to earnings per share. The Company's sales and operating income improved significantly in 1992. The Television Network's stronger primetime program schedule, as well as the sales generated by the acquisition of Midwest Communications, Inc. (Midwest) (note 2), contributed to the sales and operating income increases. The sales increases due to the broadcasts of the Olympic Winter Games and the Super Bowl were largely offset by their related costs. In 1991 and 1990, the Company recorded operating losses due mainly to the provisions for losses on its Major League Baseball and National Football League television contracts (note 3). Interest income increased slightly in 1993. In 1992 and 1991, it decreased from previous years, largely as a result of the sale of marketable securities to fund the Company's $2 billion repurchase of its common stock in February 1991 (note 12). The decrease in interest expense in 1993 resulted mainly from the conversion of the 5% convertible debt into common stock in 1993 and the refinancing of the 10 7/8% senior notes in 1992. The increase in interest expense in 1992 was due mainly to the issuance of $150.0 million of debt related to the acquisition of Midwest. The decrease in interest expense in 1991 and 1990 was due primarily to the retirement of debt in 1990 and 1989. In 1993, the effective income tax expense rate was reduced by deferred tax benefits of $11.2 million resulting from new Federal tax law and by a favorable Federal tax audit settlement for the years 1988-1990 of $23.0 million. The 1992 effective income tax expense rate was reduced by a favorable Federal tax audit settlement of $17.9 million for the years 1985-1987. Income from tax preference securities increased the effective tax benefit rate in 1991 and reduced the effective tax expense rate in 1990. The Company recorded additional gains in 1991 and 1990 as a result of the final settlement of all disputed items in arbitration related to the sale of its Records Group in 1988. In 1992, the Company adopted certain accounting standards (note 1) that resulted in a one-time charge to net income, shown as cumulative effects of changes in accounting principles. The decreases in 1992 and 1991 of the adjusted weighted average shares outstanding were related mainly to the Company's repurchase of 10.5 million shares of its common stock in February 1991. In connection with this repurchase, the Company reduced its quarterly dividend per share in the first quarter of 1991 from $1.10 to $.25. Based on the Company's improved financial condition, it raised its quarterly dividend per share to $.50 in the fourth quarter of 1993. -16 (Page 1 of 2)- Year ended December 31 1993 1992 1991 1990 1989 (In millions, except per share amounts) Net sales $3,510.1 $3,503.0 $3,035.0 $3,261.2 $2,961.5 Cost of sales (2,688.8) (2,906.5) (2,938.0)(2,925.6) (2,313.2) Selling, general and administrative expenses (461.3) (422.9) (384.6) (409.3) (384.1) Other income, net 51.2 6.5 16.3 23.9 9.6 Operating income (loss) 411.2 180.1 (271.3) (49.8) 273.8 Interest income on investments, net 110.4 107.6 140.1 210.1 246.7 Interest expense on debt, net (42.3) (60.7) (47.4) (57.9) (64.8) Interest, net 68.1 46.9 92.7 152.2 181.9 Income (loss) from continuing operations before income taxes 479.3 227.0 (178.6) 102.4 455.7 Income tax (expense) benefit (153.1) (64.5) 79.9 (10.9) (158.6) Income (loss) from continuing operations 326.2 162.5 (98.7) 91.5 297.1 Discontinued operations 12.9 20.0 Extraordinary items (.7) (.8) Cumulative effects of changes in accounting principles (81.5) Net income (loss) $326.2 $81.0 $(85.8) $110.8 $296.3 Per share of common stock: Continuing operations $20.39 $10.51 $(6.11) $3.55 $11.54 Discontinued operations .79 .78 Extraordinary items (.03) (.03) Cumulative effects of changes in accounting principles (5.28) Net income (loss) $20.39 $5.23 $(5.32) $4.30 $11.51 Dividends per common share $1.25 $1.00 $1.00 $4.40 $4.40 Adjusted weighted average shares outstanding 15.5 15.4 16.2 25.7 25.7 -16 (Page 2 of 2)- LIQUIDITY AND CAPITAL RESOURCES Cash Flows The Company's liquid assets include its cash and cash equivalents and readily marketable securities held in its short-term and long-term portfolios. In 1993, the increase in liquid assets of $123.8 million was attributable primarily to cash flows from operating activities, gain on sale of marketable securities and the issuance of $100.0 million of debt, partially offset by capital expenditures. In 1992, the increase of $46.7 million was due mainly to cash flows from operating activities, partially offset by capital expenditures. The issuance of $150.0 million of debt in 1992 was used to fund major acquisitions. The decrease in liquid assets in 1991 was related principally to the Company's $2 billion repurchase of its common stock (note 12). In 1990, the combination of capital expenditures, retirement of debt and the payment of dividends to shareholders moderately exceeded the Company's cash flows from operating activities. In 1989, the Company retired debt, acquired a television station and two radio stations, and made substantial investments in broadcasting assets. These expenditures more than offset cash flows from operations, after dividend payments, and resulted in negative cash flows. The positive cash flows from asset dispositions in the 1985-1988 period and from normal operations have enabled the Company to accumulate a substantial amount of cash and marketable securities while allowing it to repurchase its common stock and make major investments in program rights, broadcasting assets, and television and radio stations. Additional details on specific cash flows are provided in subsequent sections of this Commentary. Year ended December 31 1993 1992 1991 1990 1989 (In millions) Cash flows: Operating activities $117.6 $144.2 $97.8 $217.7 $180.7 Investing activities (163.0) (374.1) 1,484.3 103.5 203.8 Financing activities 73.4 105.3 (2,033.2) (198.6) (192.1) Net change in cash and cash equivalents 28.0 (124.6) (451.1) 122.6 192.4 Remove net investment in marketable securities (included above)* 95.8 171.3 (1,456.2) (147.6) (404.8) Cash flows before investment in marketable securities** 123.8 46.7 (1,907.3) (25.0) (212.4) Cash and marketable securities at beginning of year** 921.6 874.9 2,782.2 2,807.2 3,019.6 Cash and marketable securities at end of year** $1,045.4 $921.6 $874.9 $2,782.2 $2,807.2 *Includes liabilities for securities sold subject to repurchase agreements (note 1). **Includes cash and cash equivalents and readily marketable securites held in the Company's short-term and long-term portfolios as well as liabilities for securities sold under repurchase agreements. -17- Cash Flows from Operating Activities In accordance with Statement of Financial Accounting Standards (SFAS) No. 95, "Statement of Cash Flows," all cash flows not classified as investing or financing activities, and all interest and income taxes including those related to investing and financing activities, are classified as operating activities. In 1993, cash flows from operating activities were lower than in 1992. This was primarily caused by the excess of payments for baseball and football program rights over their related revenues, the rights fee paid for the 1994 Olympic Winter Games, and a higher level of year-end accounts receivable, due to increased sales in the fourth quarter. In 1992, cash flows from operating activities increased over the preceding year due to improved operating results. The main reasons for this increase were the sales due to the improved primetime ratings and unit pricing, and the operating cash flows related to the acquisition of Midwest (note 2). In 1991, cash flows from operating activities declined from 1990's level, principally as a result of a decline in sales which more than offset cost reductions, and also because of reduced interest income resulting from the sale of marketable securities in February 1991 to fund the Company's $2 billion repurchase of its common stock (note 12). Cash flows from operating activities in 1990 rose over 1989's level, despite a signficant reduction in income in 1990, because of lower year-end accounts receivable in 1990 and the absence of 1989's buildup of program rights. Interest, net, increased in 1993, mainly because of the conversion of the 5% convertible debt into common stock in 1993 and the refinancing of the 10 7/8% senior notes in 1992. In the preceding two years, interest, net, had declined, due primarily to the issuance of debt in 1992 related to the acquisition of Midwest and to the sale of securities in February 1991 to fund the Company's $2 billion repurchase of its common stock. The significant taxes paid in 1993 related primarily to the Company's improved operating results. The small positive cash flows from taxes in 1992 and 1991 were attributable principally to refunds related to prior years, offsetting the current years'tax payments which were small due to tax deductions for timing items. These timing items arose mainly from baseball and football losses (note 3) which were accrued in 1990 and 1991 but which were deducted for tax purposes in 1991, 1992 and 1993. From an overall standpoint, the fluctuations in cash flows from operating activities, over the period covered by the table, were due largely to changes in operating income (exclusive of noncash items) and investments in program rights. Additionally, there were period-to-period changes in year-end levels of accounts receivable and various other assets and liabilities, due largely to the timing of transactions. -18 (Page 1 of 2)- Year ended December 31 1993 1992 1991 1990 1989 (In millions) Net income (loss) $326.2 $81.0 $(85.8) $110.8 $296.3 Adjustments: Depreciation and amortization 71.0 66.7 59.9 58.7 63.6 Gain on sale of marketable securities, net (39.6) (28.9) (38.1) (12.4) (10.5) Cumulative effects of changes in accounting principles 81.5 Gain on discontinued operations (21.2) (33.0) Changes in assets and liabilities: Accounts receivable (37.1) 7.8 (2.7) 32.4 (46.9) Program rights, net (26.0) 23.3 .9 8.1 (160.5) Accounts payable (2.3) (18.1) 4.7 (5.0) 6.6 Accrual on baseball and football television contracts (242.0) (160.0) 233.0 190.0 Recoverable income taxes 88.3 (9.6) (2.6) (88.5) (4.0) Deferred income taxes (27.8) 79.4 (61.9) (26.2) 27.4 Other, net 6.9 21.1 11.6 (17.2) 8.7 Cash flows from operating activities $117.6 $144.2 $97.8 $217.7 $180.7 Cash flows from interest and income taxes included above: Interest, net* $28.5 $18.0 $54.6 $139.8 $171.4 Income taxes (94.2) 2.6 2.4 (143.4) (144.4) *Excludes gain on sale of marketable securities, which was included in cash flows from investing activities. -18 (Page 2 of 2)- Cash Flows from Investing Activities The cash flows from marketable securities in 1991 were used mainly to fund the Company's $2 billion repurchase of shares of its common stock (note 12). Other changes in net investment in marketable securities were due essentially to the cash requirements of the Company. In addition, the increases and decreases in the sales and purchases of these securities, as presented in the Statements of Cash Flows, reflected activity stimulated by market conditions. In 1992, the Company acquired Midwest and the remaining 50 percent interest in television and film production facilities in Los Angeles (note 2). In 1989, it acquired a television station in Miami and two radio stations in Detroit. The Company's principal capital expenditures in 1993, as in previous years, were for broadcasting assets. In 1993, they also included the acquisition and renovation of the Ed Sullivan Theater in New York City from which the Late Show with David Letterman is broadcast. In 1989, the Company also acquired satellite capacity for the distribution of Television Network programs to affiliated stations. The asset dispositions in 1991 represent the cash receipt of the final settlement of all disputed items in arbitration related to the 1988 sale of the Company's Records Group. Interest income on investments, net, excluding gain on sale of marketable securities, was included in operating activities and is presented for informational purposes. -19 (Page 1 of 4)- Year ended December 31 1993 1992 1991 1990 1989 (In millions) Marketable securities: Gain on sale $ 39.6 $ 28.9 $ 38.1 $ 12.4 $ 10.5 Net investment (95.8) (171.3) 1,456.2 147.6 404.8 Cash flows from marketable securities* (56.2) (142.4) 1,494.3 160.0 415.3 Major acquisitions** (160.2) (117.0) Capital expenditures (106.8) (71.5) (64.2) (60.4) (98.7) Asset dispositions 54.2 3.9 4.2 Cash flows from investing activities*** $(163.0) $(374.1) $1,484.3 $ 103.5 $ 203.8 Interest income on investments, net (not included above)*** $ 70.8 $ 78.7 $ 102.0 $ 197.7 $ 236.2 *Includes liabilities for securities sold subject to repurchase agreements (note 1). **The table excludes the noncash items indicated in the footnotes to the Statements of Cash Flows. ***Cash flows related to interest (excluding gain on sale of marketable securities) and taxes are included in operating activities in accordance with SFAS No. 95. -19 (Page 2 of 4)- Cash Flows from Financing Activities In 1993, the Company issued $100.0 million of senior notes. The proceeds from the issuance of these debt securities were used to purchase New York City Industrial Development Agency (IDA) bonds, which were issued by the IDA to establish a trust fund to implement the Company's agreement with the IDA. Under this agreement, the Company is required to invest in production facilities and develop new broadcasting and production technologies in New York City in return for certain tax incentives and low-cost energy. In 1992, the Company issued $150.0 million of senior notes in connection with the acquisition of Midwest. In addition, it issued $125.0 million of senior notes and $125.0 million of senior debentures to refinance the $263.0 million of 10 7/8% senior notes due 1995. During the period 1989-1991, the Company retired debt of $171.5 million. In 1991, the Company repurchased 10.5 million shares of its common stock at a cost of approximately $2 billion. In connection with this repurchase of shares, the Company reduced its quarterly dividend per share in the first quarter of 1991 from $1.10 to $.25. In the fourth quarter of 1993, based on its improved financial condition, the Company increased its quarterly dividend per share to $.50. Interest expense on debt, net, was included in operating activities and is presented for informational purposes. -19 (Page 3 of 4)- Year ended December 31 1993 1992 1991 1990 1989 (In millions) 7 1/8% senior notes due 2023 $100.0 7 5/8% senior notes due 2002 $ 150.0 7 3/4% senior notes due 1999 125.0 8 7/8% senior debentures due 2022 125.0 10 7/8% senior notes due 1995 (263.0) $(3.0) $ (7.7) $ (26.7) 11 3/8% notes due 1992 (75.6) (1.0) 14 1/2% notes due 1992 (50.0) Other debt (.9) (2.5) (2.5) (2.3) (2.7) Debt issued (retired)* 99.1 134.5 (5.5) (85.6) (80.4) Repurchases of common stock (3.0) (2,005.1) Dividends to shareholders (31.3) (25.9) (25.7) (116.6) (116.5) Other, net 5.6 (.3) 3.1 3.6 4.8 Cash flows from financing activities** $ 73.4 $105.3 $(2,033.2) $(198.6) $(192.1) Interest expense on debt, net (not included above)** $(42.3) $(60.7) $ (47.4) $ (57.9) $ (64.8) *The table excludes the noncash items indicated in the footnotes to the Statements of Cash Flows. **Cash flows related to interest and taxes are included in operating activities in accordance with SFAS No. 95. -19 (Page 4 of 4)- Working Capital In 1993, the increase in working capital was due largely to the decrease in other current liabilities caused by the reversal of accrued losses recorded in prior years related to the baseball and football television contracts (note 3), partially offset by the realization of tax benefits related to these losses. The increase in accounts receivable, due to increased sales in the fourth quarter, and the increase in net program rights, due primarily to the 1994 Olympic Winter Games, contributed to the increase in working capital. In 1992, the decrease in working capital was due primarily to the reclassification of certain marketable securities to the Company's long-term portfolio, and to a reclassification from long-term to other current liabilities for the accrued losses related to the baseball and football television contracts. The main reason for the decrease in working capital in 1991 related to the Company's cash outlay for its $2 billion common stock repurchase (note 12). In addition, the increase in other current liabilities was due mainly to accrued losses on the baseball and football television contracts. In 1990, the primary reason for the increased working capital was the reclassification of marketable securities from long-term to short-term in anticipation of their sale to fund the $2 billion common stock repurchase. -20 (Page 1 of 4)- December 31 1993 1992 1991 1990 1989 (In millions) Current assets: Cash and marketable securities* $ 219.4 $169.0 $272.5 $2,318.8 $755.8 Accounts receivable 454.5 417.4 420.3 417.6 450.0 Program rights 581.9 447.4 505.5 403.3 353.5 Recoverable income taxes** 28.8 117.1 90.2 87.6 Other 18.2 20.9 18.2 17.8 19.8 Total current assets 1,302.8 1,171.8 1,306.7 3,245.1 1,579.1 Current liabilities: Accounts payable 33.4 35.7 48.1 43.4 48.4 Liabilities for talent and program rights 317.4 245.5 276.3 236.4 183.9 Debt .9 13.0 3.5 3.4 3.3 Other 312.5 514.4 410.0 251.7 263.1 Total current liabilities 664.2 808.6 737.9 534.9 498.7 Working capital $ 638.6 $363.2 $ 568.8 $2,710.2 $1,080.4 Ratio of current assets to current liabilities 1.96:1 1.45:1 1.77:1 6.07:1 3.17:1 *Includes cash and cash equivalents and liabilities related to securities sold subject to repurchase agreements (note 1). **Primarily related to temporary differences attributable to the Major League Baseball and National Football League television contracts (note 3). -20 (Page 2 of 4)- Capital Structure and Total Assets In 1993, the Company's total debt as a percentage of total capitalization improved, mainly because of the conversion of $389.6 million of the 5% convertible debentures into common stock, and net income $326.2 million. The percentage remained essentially unchanged in 1992 compared with 1991, due mainly to the higher level of debt largely offset by the increase in shareholders' equity. The percentage rose in 1991, primarily as a result of the Company's repurchase of common stock, which reduced shareholders' equity by $2 billion in 1991. The higher level of debt in 1992 was due primarily to the issuance of $150.0 million of senior notes in connection with the acquisition of Midwest (note 2). Also, in 1992, the Company retired its 10 7/8% senior notes due 1995 by refinancing debt with lower interest rates and lengthened maturities. The Company believes that, with a substantial amount of highly liquid assets and a low debt-to-total capitalization ratio, it remains fully capable of funding its current operations and sufficiently flexible with respect to the acquisition of additional broadcast properties should suitable opportunities arise. The principal changes in total assets over the five-year period were related to the Company's $2 billion common stock repurchase in 1991, the acquisitions of Midwest and television and film production facilities in 1992, and increased investment in marketable securities from the issuance of debt and increased program rights in 1993. -20 (Page 3 of 4)- December 31 1993 1992 1991 1990 1989 (In millions) Current debt $ .9 $ 13.0 $ 3.5 $ 3.4 $ 3.3 Long-term debt 590.3 870.0 696.5 712.4 795.5 Total debt 591.2 883.0 700.0 715.8 798.8 Common stock subject to redemption 65.2 65.2 Preference stock subject to redemption 124.7 124.5 124.4 124.2 124.0 Shareholders' equity 1,138.0 446.8 354.8 2,392.7 2,394.0 Total capitalization $1,853.9 $1,454.3 $1,179.2 $3,297.9 $3,382.0 Total debt as a percentage of total capitalization 31.9% 60.7% 59.4% 21.7% 23.6% Total assets $3,418.7 $3,175.0 $2,798.6 $4,691.8 $4,637.9 -20 (Page 4 of 4)- FINANCIAL STATEMENTS Management's Responsibility for Financial Statements The consolidated financial statements presented on the following pages have been prepared by management in conformity with generally accepted accounting principles. The reliability of the financial information, which includes amounts based on judgment, is the responsibility of management. The Company uses systems and procedures for handling routine business activities which seek to prevent or detect unauthorized transactions. The Company's internal control system envisages a segregation of duties among the Company's personnel, a wide dissemination to these personnel of the Company's written policies and procedures, the use of formal approval authorities and the selection and training of qualified people. The design of internal control systems involves a balancing of estimated benefits against estimated costs. The system is monitored by an internal audit program. The scope and results of the internal audit function and the adequacy of the system of internal accounting controls are reviewed regularly by the Audit Committee of the Board of Directors. Management believes that the Company's system provides reasonable assurance that assets are safeguarded against material loss and that the Company's financial records permit the preparation of financial statements that are fairly presented in accordance with generally accepted accounting principles. -21- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ____________________ To the Shareholders of CBS Inc.: We have audited the consolidated financial statements and the financial statement schedules of CBS Inc. and subsidiaries listed in the index on page 14 of this Form 10-K. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CBS Inc. and subsidiaries as of December 31, 1993, 1992, and 1991, and the consolidated results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. As discussed in note 1 to the consolidated financial statements, in 1992 the Company changed its method of accounting for postretirement benefits other than pensions, postemployment benefits and income taxes. COOPERS & LYBRAND New York, New York February 9, 1994 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ____________________ We consent to the incorporation by reference in the registration statements of CBS Inc. and subsidiaries on Form S-8 (File Nos. 2-87270, 2-58540, and 2- 33-2098) and the registration statement of CBS Inc. on Form S-3 (File No. 33- 59462) of our report dated February 9, 1994, on our audits of the consolidated financial statements and financial statement schedules of CBS Inc. and subsidiaries as of December 31, 1993 and 1992, and for the years ended December 31, 1993, 1992 and 1991, which report appears above. COOPERS & LYBRAND New York, New York March 9, 1994 -22- CONSOLIDATED STATEMENTS OF INCOME CBS Inc. and subsidiaries (Dollars in millions, except per share amounts) Year ended December 31 1993 1992 1991 Net sales. . . . . . . . . . . . . . . . . . $3,510.1 $3,503.0 $3,035.0 Cost of sales (note 3) . . . . . . . . . . . (2,688.8) (2,906.5) (2,938.0) Selling, general and administrative expenses . . . . . . . . . . . . . . . . . (461.3) (422.9) (384.6) Other income, net (note 4) . . . . . . . . . 51.2 6.5 16.3 Operating income (loss). . . . . . . . . . . 411.2 180.1 (271.3) Interest income on investments, net. . . . . . . . . . . . . . . . . . . . 110.4 107.6 140.1 Interest expense on debt, net. . . . . . . . (42.3) (60.7) (47.4) Interest, net (note 4) . . . . . . . . . . . 68.1 46.9 92.7 Income (loss) from continuing operations before income taxes . . . . . . . . . . . . 479.3 227.0 (178.6) Income tax (expense) benefit (note 5). . . . (153.1) (64.5) 79.9 Income (loss) from continuing operations . . 326.2 162.5 (98.7) Discontinued operations (note 7) . . . . . . 12.9 Income (loss) before cumulative effects of changes in accounting principles . . . . . 326.2 162.5 (85.8) Cumulative effects of changes in accounting principles (note 1) . . . . . . (81.5) Net income (loss). . . . . . . . . . . . . . $ 326.2 $ 81.0 $ (85.8) Per share of common stock (note 6): Continuing operations . . . . . . . . . . . $ 20.39 $ 10.51 $ (6.11) Discontinued operations . . . . . . . . . . .79 Cumulative effects of changes in accounting principles (note 1) . . . . . (5.28) Net income (loss) . . . . . . . . . . . . . $ 20.39 $ 5.23 $ (5.32) See notes to consolidated financial statements. -23- CONSOLIDATED BALANCE SHEETS CBS Inc. and subsidiaries (Dollars in millions, except per share amounts) ASSETS December 31 1993 1992 1991 Current assets: Cash and cash equivalents (note 1). . . . . . . . $ 173.4 $ 145.4 $ 270.0 Marketable securities (note 1). . . . . . . . . . 420.7 332.3 215.7 Accounts receivable, less allowance for doubtful accounts: 1993, $9.1; 1992, $9.7; 1991, $9.0 . . 454.5 417.4 420.3 Program rights. . . . . . . . . . . . . . . . . . 581.9 447.4 505.5 Recoverable income taxes (note 5) . . . . . . . . 28.8 117.1 90.2 Other . . . . . . . . . . . . . . . . . . . . . . 18.2 20.9 18.2 Total current assets. . . . . . . . . . . . . . . 1,677.5 1,480.5 1,519.9 Marketable securities (note 1). . . . . . . . . . 826.0 752.6 602.4 Property, plant and equipment (note 2): Land. . . . . . . . . . . . . . . . . . . . . . . 81.4 76.8 32.5 Buildings . . . . . . . . . . . . . . . . . . . . 319.0 297.2 218.0 Machinery and equipment . . . . . . . . . . . . . 556.9 542.0 544.2 Leasehold improvements. . . . . . . . . . . . . . 20.8 21.3 21.4 978.1 937.3 816.1 Less accumulated depreciation . . . . . . . . . . 459.0 451.9 437.5 Net property, plant and equipment . . . . . . . . 519.1 485.4 378.6 Other assets: Program rights. . . . . . . . . . . . . . . . . . 90.9 154.1 131.9 Goodwill, less accumulated amortization (note 1): 1993, $33.0; 1992, $28.0; 1991, $20.4; . . . . . 280.6 283.8 144.6 Other . . . . . . . . . . . . . . . . . . . . . . 24.6 18.6 21.2 Total other assets. . . . . . . . . . . . . . . . 396.1 456.5 297.7 $3,418.7 $3,175.0 $2,798.6 -24 (Page 1 of 2)- LIABILITIES AND SHAREHOLDERS' EQUITY December 31 1993 1992 1991 Current liabilities: Accounts payable . . . . . . . . . . . . . . . $ 33.4 $ 35.7 $ 48.1 Accrued salaries, wages and benefits . . . . . 72.6 61.4 53.5 Liabilities for talent and program rights. . . 317.4 245.5 276.3 Liabilities for securities sold under repurchase agreements (note 1). . . . . . . . 374.7 308.7 213.2 Debt (note 8). . . . . . . . . . . . . . . . . .9 13.0 3.5 Other (note 3) . . . . . . . . . . . . . . . . 239.9 453.0 356.5 Total current liabilities. . . . . . . . . . . 1,038.9 1,117.3 951.1 Long-term debt (note 8). . . . . . . . . . . . 590.3 870.0 696.5 Other liabilities (notes 3, 9 and 11). . . . . 406.0 467.8 554.3 Deferred income taxes (note 5) . . . . . . . . 120.8 148.6 117.5 Commitments and contingent liabilities (notes 10 and 16) . . . . . . . . . . . . . . Preference stock, Series B, par value $1.00 per share, subject to redemption (note 14). . 124.7 124.5 124.4 Shareholders' equity (notes 12, 13 and 14): Common stock, par value $2.50 per share; authorized 100,000,000 shares; issued 24,816,623 shares . . . . . . . . . . . . . . 62.0 61.8 61.8 Additional paid-in capital . . . . . . . . . . 318.6 274.7 277.7 Retained earnings. . . . . . . . . . . . . . . 2,441.9 2,147.2 2,092.3 2,822.5 2,483.7 2,431.8 Less shares of common stock in treasury, at cost: 9,332,916 in 1993; 11,284,669 in 1992; 11,504,270 in 1991 . . . . . . . . . . . . . 1,684.5 2,036.9 2,077.0 Total shareholders' equity . . . . . . . . . . 1,138.0 446.8 354.8 $3,418.7 $3,175.0 $2,798.6 See notes to consolidated financial statements. -24 (Page 2 of 2)- CONSOLIDATED STATEMENTS OF RETAINED EARNINGS AND ADDITIONAL PAID-IN CAPITAL CBS Inc. and subsidiaries (Dollars in millions, except per share amounts) Year ended December 31 1993 1992 1991 RETAINED EARNINGS Balance at beginning of year. . . . . . . . $2,147.2 $2,092.3 $2,143.9 Net income (loss) . . . . . . . . . . . . . 326.2 81.0 (85.8) Cash dividends: Common stock (per share - 1993, $1.25; 1992 and 1991, $1.00) . . . . . . . . . (18.8) (13.4) (13.2) Preference stock, Series B ($10.00 per share) . . . . . . . . . . . (12.5) (12.5) (12.5) Accretion of preference stock, Series B (note 14). . . . . . . . . . . . (.2) (.2) (.2) Reclassification of common stock subject to redemption (note 13). . . . . . 60.1 Balance at end of year. . . . . . . . . . . $2,441.9 $2,147.2 $2,092.3 ADDITIONAL PAID-IN CAPITAL Balance at beginning of year. . . . . . . . $ 274.7 $ 277.7 $ 260.9 Exercise of stock options and other items . 12.5 1.8 3.3 Conversion of convertible debentures (note 8) . . . . . . . . . . . 31.4 9.5 Acquisition of Midwest (note 2) . . . . . . (4.8) Reclassification of common stock subject to redemption (note 13). . . . . . 4.0 Balance at end of year. . . . . . . . . . . $ 318.6 $ 274.7 $ 277.7 See notes to consolidated financial statements. -25- CONSOLIDATED STATEMENTS OF CASH FLOWS CBS Inc. and subsidiaries (Dollars in millions) Year ended December 31 1993 1992 1991 Operating activities: Net income (loss). . . . . . . . . . . . . . . $ 326.2 $ 81.0 $ (85.8) Adjustments: Depreciation and amortization. . . . . . . . 71.0 66.7 59.9 Gain on sale of marketable securities, net . (39.6) (28.9) (38.1) Cumulative effects of changes in accounting principles. . . . . . . . . . . 81.5 Gain on discontinued operations. . . . . . . (21.2) Changes in assets and liabilities*: Accounts receivable. . . . . . . . . . . . . (37.1) 7.8 (2.7) Program rights, net. . . . . . . . . . . . . (26.0) 23.3 .9 Accounts payable . . . . . . . . . . . . . . (2.3) (18.1) 4.7 Accrual on baseball and football television contracts . . . . . . . . . . . (242.0) (160.0) 233.0 Recoverable income taxes . . . . . . . . . . 88.3 (9.6) (2.6) Deferred income taxes. . . . . . . . . . . . (27.8) 79.4 (61.9) Other, net . . . . . . . . . . . . . . . . . 6.9 21.1 11.6 117.6 144.2 97.8 Investing activities**: Marketable securities Gross sales . . . . . . . . . . . . . . . . . 2,521.3 1,495.0 3,536.4 Gross purchases . . . . . . . . . . . . . . . (2,643.5) (1,732.9)(1,975.3) Liabilities for securities sold under repurchase agreements . . . . . . . . . . . 66.0 95.5 (66.8) Capital expenditures . . . . . . . . . . . . . (106.8) (71.5) (64.2) Major acquisitions . . . . . . . . . . . . . . (160.2) Discontinued operations. . . . . . . . . . . . 54.2 (163.0) (374.1) 1,484.3 Financing activities**: Issuance of debt . . . . . . . . . . . . . . . 124.0 422.5 Extinguishment of debt . . . . . . . . . . . . (24.9) (288.0) (5.5) Dividends to shareholders. . . . . . . . . . . (31.3) (25.9) (25.7) Repurchases of common stock. . . . . . . . . . (3.0)(2,005.1) Other, net . . . . . . . . . . . . . . . . . . 5.6 (.3) 3.1 73.4 105.3 (2,033.2) Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . 28.0 (124.6) (451.1) Cash and cash equivalents at beginning of year. 145.4 270.0 721.1 Cash and cash equivalents at end of year. . . . $ 173.4 $ 145.4 $ 270.0 See notes to consolidated financial statements. *Excludes effect of major acquisitions and items included in Adjustments. **Excludes the following noncash items: a) In 1993 and 1991, the conversion of $389.6 and $9.5, respectively, of the Company's 5% convertible debentures into common stock (note 8). b) In 1992, the issuance of $36.8 of the Company's common stock re: Midwest, and the consolidation of a mortgage obligation of $51.0 re: CBS/MTM Partnership (note 2). -26- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Statement of Significant Accounting Policies Basis of presentation. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been excluded from the consolidated financial statements. All notes relate to continuing operations unless otherwise indicated. Revenue recognition. The Company's practice is to record revenues from services when performed. Income taxes. The Company provides deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. Cash equivalents and marketable securities. The Company considers all highly liquid debt instruments purchased with a maturity of three months or less, including accrued interest thereon, to be cash equivalents. Marketable securities include U.S. Treasury notes, money market instruments, tax-exempt securities and corporate securities. The Company also enters into agreements to sell and repurchase certain of these securities. Due to the agreements to repurchase, the sales of these securities are not recorded. Instead, the liabilities to repurchase securities sold under these agreements are reported as current liabilities and the investments acquired with the funds received are included in cash equivalents and/or short-term marketable securities. Marketable securities managed for long-term yield and not required for working capital are classified as long-term investments and are carried at cost. At December 31, 1993, these long-term investments included $94.0 million in a trust fund to implement the Company's agreement with the New York City Industrial Development Agency. (Under this agreement, the Company is required to invest in production facilities and develop new broadcasting and production technologies in New York City in return for certain tax incentives and low-cost energy.) Other marketable securities are classified as current assets and are carried at the aggregate of the lower of cost or market value. Marketable securities, in current assets, also included accrued interest on short-term and long-term marketable securities at December 31, 1993, 1992 and 1991 of $20.4 million, $20.1 million and $19.3 million, respectively. The market values of these securities were as follows (in millions): December 31 1993 1992 1991 Marketable securities (current) . . . . . $405.0 $317.4 $198.7 Marketable securities (noncurrent). . . . 878.5 811.2 660.3 -27 (Page 1 of 2)- As of December 31, 1993, securities sold and the corresponding liabilities (both including accrued interest) under repurchase agreements were as follows (in millions): Maturity Carrying Market Repurchase Term Amount Value Liabilities U.S. Treasury notes up to 30 days $281.6 $302.4 $301.4 U.S. Government agency notes up to 30 days 73.0 73.7 73.3 $354.6 $376.1 $374.7 The loan rates on the repurchase liabilities varied between 2.75% and 3.32% for U.S. Treasury notes and between 3.30% and 3.35% for U.S. Government agency notes. Program rights. Costs incurred in connection with the production of, or the purchase of rights to, programs to be broadcast within one year are classified as current assets while costs of those programs to be broadcast subsequently are considered noncurrent. Program costs are charged to expense as the respective programs are broadcast. -27 (Page 2 of 2)- 1. Statement of Significant Accounting Policies (continued) Property, plant and equipment. Land, buildings, machinery and equipment are stated at cost. Major improvements to existing plant and equipment are capitalized. Expenditures for maintenance and repairs which do not extend the life of the assets are charged to expense as incurred. The cost of properties retired or otherwise disposed of and any related accumulated depreciation are generally removed from the accounts and the resulting gain or loss is reflected in income currently. Depreciation is computed using principally the straight-line method over the estimated useful lives of the assets. Depreciation expense, in millions, for 1993, 1992 and 1991 was $63.1, $58.9 and $53.9, respectively. Goodwill. The goodwill at the date of acquisition of net assets of businesses acquired is amortized over 40 years on a straight-line basis. The increase in 1992 was attributable primarily to the acquisition of Midwest (note 2). Other. In 1992, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (note 11); SFAS No. 109, "Accounting for Income Taxes"; and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." In accordance with the provisions of SFAS No. 112, the Company recorded a one-time pretax charge of $9.9 million for severance and long-term disability-related benefits. These adoptions resulted in a one-time post-tax charge to net income as follows: (In Millions) Per Share Postretirement benefits other than pensions $(76.1) $(4.94) Postemployment benefits . . . . . . . . (6.1) (.39) Income taxes. . . . . . . . . . . . . . .7 .05 $(81.5) $(5.28) The ongoing costs related to these adoptions do not have a material effect on continuing operations. On January 1, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." It classified its marketable securities as available-for-sale and recorded an unrealized post- tax holding gain of $34.2 million, net of a tax effect of $23.0 million, in a separate component of shareholders' equity. There was no effect on net income as a result of this adoption. -28 (Page 1 of 2)- 2. Business Acquisitions (Dollars in millions, except per share amounts) In February 1992, the Company acquired substantially all of the assets of Midwest Communications, Inc. (Midwest), including a television station (with two satellite stations) located in Minneapolis, Minnesota (WCCO-TV); a television station (with one satellite station) located in Green Bay, Wisconsin (WFRV-TV); two radio stations located in Minneapolis, Minnesota (WCCO-AM and WLTE-FM); and Midwest Cable & Satellite, which operates Midwest Sports Channel, a supplier of regional sports programming. This transaction was consummated at a price of $177.0 through the issuance of $36.8 of the Company's common stock, valued at an exchange price of $160 per share (the market value of the Company's common stock on the closing date was $144 per share), and the assumption and immediate pay-down of $140.2 of Midwest's debt and other liabilities. In March 1992, the Company acquired for $27.0 the 50 percent interest of MTM Studios, Ltd. in the CBS/MTM Partnership, which operated television and film production facilities in Los Angeles, California. The acquisition of this interest also included the assumption of MTM's partnership mortgage indebtedness. The Company is the sole owner of these television and film production facilities and is obligated for the entire mortgage indebtedness (note 8). These acquisitions were accounted for by the purchase method and the results of their operations from the respective dates of acquisition are included in the accompanying financial statements. Had the acquisitions occurred on January 1, 1991, consolidated results of operations for 1992 and 1991 would not have been materially different. -28 (Page 2 of 2)- 3. Major League Baseball and National Football League Television Contracts (Dollars in millions) In 1991, the Company recorded a $322.0 pretax provision, reflected in cost of sales, for losses over the remaining lives of its Major League Baseball and National Football League television contracts. This provision was in addition to a $282.0 pretax loss on the baseball contract recorded in 1990 and reflected the severely depressed condition of the television sports marketplace. The remaining balances of the loss accruals, recorded to reduce these contracts to their net realizable value, were as follows: December 31 1993 1992 1991 Included in: Other current liabilities . . $ 21.0 $242.0 $160.0 Other liabilities . . . . . . 21.0 263.0 $ 21.0 $263.0 $423.0 -29 (Page 1 of 2)- 4. Interest and Other Income, net (Dollars in millions) Interest income on investments, net, consisted of the following: Year ended December 31 1993 1992 1991 Interest income. . . . . . . . . . . . . . . .$ 75.6 $ 82.1 $103.6 Dividend income. . . . . . . . . . . . . . . . 6.6 8.7 10.4 Interest expense on repurchase agreements. . . (11.4) (12.1) (12.0) Gain on sale of marketable securities, net: Equity securities. . . . . . . . . . . . . . 8.0 10.5 2.1 Other securities . . . . . . . . . . . . . . 31.6 18.4 36.0 $110.4 $107.6 $140.1 The cost of marketable securities sold was determined by specific identification. As of December 31, 1993, gross unrealized gains and gross unrealized losses on equity securities were $18.1 and $.2, respectively. The aggregate cost and market value of the Company's equity securities, all of which were noncurrent, were as follows: December 31 1993 1992 1991 Aggregate cost . . . . . . . . . . . . . . . $74.2 $70.7 $78.1 Aggregate market value . . . . . . . . . . . 92.1 89.0 92.8 Interest expense on debt, net, was net of amounts capitalized in 1993, 1992 and 1991 of $6.4, $10.2 and $8.4, respectively, as part of the cost of investments in property, plant and equipment, made-for-television movies and mini-series. Interest paid on debt in 1993, 1992 and 1991 was $59.6, $76.3 and $56.3, respectively. Other income, net, in 1993, included a pretax gain of $29.5 from a legal settlement with Viacom International Inc., a portion of which constituted payment for rights granted to Viacom to distribute in the United States and abroad certain television programs owned by the Company, and a pretax gain of $12.4 from insurance settlements for hurricane damage to the Company's television station in Miami. It also included other miscellaneous items of income and expense. -29 (Page 2 of 2)- 5. Income Taxes (Dollars in millions) Income tax expense (benefit) consisted of the following: Year ended December 31 1993 1992 1991 Federal: Current . . . . . . . . . . . . . . . . . . $ 60.0 $ 5.2 $ 14.9 Deferred* . . . . . . . . . . . . . . . . . 54.3 40.4 (81.2) Other: Current . . . . . . . . . . . . . . . . . . 9.3 1.8 2.9 Deferred* . . . . . . . . . . . . . . . . . 29.5 17.1 (16.5) $153.1 $64.5 $(79.9) *Deferred taxes: Accrual on baseball and football television contracts. . . . . . . . . . $ 97.3 $62.9 $(91.6) Federal tax audit settlement. . . . . . . . (23.0) (17.9) Federal tax law changes . . . . . . . . . . (11.2) Write-down of marketable securities . . . . 6.6 11.9 1.4 Amortization of intangibles . . . . . . . . (1.3) 13.9 .4 Other state and local taxes . . . . . . . . 7.9 11.9 (11.9) Other, net. . . . . . . . . . . . . . . . . 7.5 (25.2) 4.0 $ 83.8 $57.5 $(97.7) Income taxes of $94.2 were paid in 1993. In 1992 and 1991, there were net income tax refunds of $2.6 and $2.4, respectively. In 1991, the Company's loss from continuing operations before income taxes reflected significant provisions for future losses over the remaining lives of its Major League Baseball and National Football League television contracts, as explained in note 3. The tax benefits attributable to these charges were included in deferred taxes and are realized as the transactions provided for become taxable events. Reconciliations between the statutory Federal income tax expense (benefit) rate and the Company's effective income tax expense (benefit) rate as a percentage of income (loss) from continuing operations before income taxes were as follows: Year ended December 31 1993 1992 1991 Statutory Federal income tax expense (benefit) rate. . . . . . . . . . . . . . . 35.1% 34.1% (34.1)% Federal tax audit settlement. . . . . . . . (4.8) (7.9) Federal tax law changes . . . . . . . . . . (2.3) Income from tax preference securities . . . (1.9) (4.2) (5.6) State and local taxes . . . . . . . . . . . 5.2 5.3 (5.2) Other, net. . . . . . . . . . . . . . . . . .6 1.1 .1 Effective income tax expense (benefit) rate. 31.9% 28.4% (44.8)% -30- 5. Income Taxes (continued) Deferred tax assets and liabilities consisted of the following*: December 31 1993 1992 Deferred tax assets: Accrual on baseball and football television contracts. . . . . . . . . . . . . . $ 9.0 $110.2 Postretirement benefits other than pensions. . . 67.5 65.0 Employee benefits. . . . . . . . . . . . . . . . 21.6 19.6 Other. . . . . . . . . . . . . . . . . . . . . . 76.3 50.7 $174.4 $245.5 Deferred tax liabilities: Property, plant and equipment. . . . . . . . . . $ 89.6 $ 90.0 Safe harbor leases . . . . . . . . . . . . . . . 97.6 96.5 Other. . . . . . . . . . . . . . . . . . . . . . 79.2 90.5 $266.4 $277.0 *Recoverable income taxes, reflected in the balance sheet at December 31, 1993 and 1992, include current deferred tax assets of $41.2 and $147.1, respectively, reduced by current deferred tax liabilities of $12.4 and $30.0, respectively. The remaining deferred tax liabilities, net of deferred tax assets, were reflected in the balance sheet as deferred income taxes. -31 (Page 1 of 2)- 6. Earnings Per Share Data (In thousands) The data used in the computation of earnings per share were as follows: Year ended December 31 1993 1992 1991 Earnings: Income (loss) from continuing operations . $326,188 $162,479 $(98,634) Add post-tax interest on convertible debentures*. . . . . . . . . . . . . . . 3,288 12,259 12,277 Less dividends on preference stock . . . . (12,688) (12,688) (12,688) Income (loss) from continuing operations applicable to common shares. . . . . . . 316,788 162,050 (99,045) Discontinued operations. . . . . . . . . . 12,871 Cumulative effects of changes in accounting principles. . . . . . . . . . (81,472) Net income (loss) applicable to common shares. . . . . . . . . . . . . . $316,788 $ 80,578 $(86,174) Shares: Weighted average shares outstanding. . . . 14,797 13,423 14,217 Add common stock equivalents: Convertible debentures*. . . . . . . . . 649 1,953 1,953 Other. . . . . . . . . . . . . . . . . . 92 40 35 Adjusted weighted average shares outstanding. . . . . . . . . . . . 15,538 15,416 16,205 *The debentures were converted in May 1993. Conversion was assumed for all prior periods. In 1993, fully diluted earnings per share was considered equal to primary earnings per share because the addition of potentially dilutive securities that were not common stock equivalents would have resulted in immaterial dilution. In 1992 and 1991, the fully diluted earnings per share calculation produced an antidilutive effect. - 31 (Page 2 of 2)- 7. Discontinued Operations As a result of the final settlement of all disputed items in arbitration, the Company recorded an additional gain in 1991 related to the 1988 sale of its Records Group. Income tax expense applicable to this additional gain was $8.3 million. -32 (Page 1 of 2)- 8. Long-Term Debt (Dollars in millions) Long-term debt consisted of the following: December 31 1993 1992 1991 7 5/8% senior notes due 2002. . . . . . . . . $150.0 $150.0 7 3/4% senior notes due 1999. . . . . . . . . 125.0 125.0 8 7/8% senior debentures due 2022 . . . . . . 125.0 125.0 7 1/8% senior notes due 2023. . . . . . . . . 100.0 9.03% mortgage due 1998 . . . . . . . . . . . 27.0 51.0 5% convertible debentures due 2002. . . . . . 390.5 $390.5 10 7/8% senior notes due 1995 . . . . . . . . 263.0 7.85% debentures due 2001 . . . . . . . . . . 25.0 Capital lease obligations . . . . . . . . . . 19.4 20.4 21.5 Other debt. . . . . . . . . . . . . . . . . . 44.8 21.1 Reclassified to current debt. . . . . . . . . (.9) (13.0) (3.5) $590.3 $870.0 $696.5 During 1993, 1992 and 1991, debt was repurchased, redeemed or converted as follows: Year ended December 31 1993 1992 1991 5% convertible debentures due 2002. . . . . . $390.5 $ 9.5 9.03% mortgage due 1998 . . . . . . . . . . . 24.0 10 7/8% senior notes due 1995 . . . . . . . . $263.0 3.0 7.85% debentures due 2001 . . . . . . . . . . 25.0 2.5 $414.5 $288.0 $15.0 In May 1993, the Company converted $389.6 of its 5% convertible debentures into 1,947,975 shares of its common stock, issued from its treasury shares (note 12). The difference between the amount of debt converted, net of unamortized issue costs, and the average cost of the treasury shares issued was credited to additional paid-in-capital. The remaining debentures of $.9 were redeemed. The principal terms of the various long-term issues are as follows: The 7 5/8% senior notes, issued in connection with the acquisition of Midwest (note 2), are due January 1, 2002 and may not be redeemed prior to maturity. The 7 3/4% senior notes are due June 1, 1999 and may not be redeemed prior to maturity. The 8 7/8% senior debentures are due June 1, 2022 and may not be redeemed prior to June 1, 2002. On and after that date they may be redeemed, at the option of the Company, as a whole at any time, or in part from time to time, at specified redemption prices. The net proceeds from the issuance of the 7 3/4% senior notes due June 1, 1999 and the 8 7/8% senior debentures due June 1, 2022 were used to retire the 10 7/8% senior notes due August 1, 1995. -32 (Page 2 of 2)- 8. Long-Term Debt (continued) The 7 1/8% senior notes are due on November 1, 2023 and may not be redeemed prior to maturity. The proceeds from the issuance of these debt securities were used to purchase New York City Industrial Development Agency (IDA) bonds, which were issued by the IDA to establish a trust fund to implement the Company's agreement with the IDA. Under this agreement, the Company is required to invest in production facilities and develop new broadcasting and production technologies in New York City in return for certain tax incentives and low-cost energy. The 9.03% mortgage, which was recorded as a result of the Company's acquisition of the remaining 50 percent interest in the CBS/MTM Partnership (note 2), is due $12.0 on July 15, 1996 and $15.0 on July 15, 1998. The aggregate amounts of maturities of the Company's long-term debt for each of the five years subsequent to December 31, 1993 are as follows: 1994. . . . . . . . . . . . . . . $ .9 1995. . . . . . . . . . . . . . . .6 1996. . . . . . . . . . . . . . . 12.7 1997. . . . . . . . . . . . . . . 23.3 1998. . . . . . . . . . . . . . . 40.2 To meet the disclosure requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," the Company estimated that, based primarily on quoted market prices for its traded issues, the fair value of its long- term debt at December 31, 1993 exceeded its book value by approximately $38.0. It is anticipated, however, that the debt ultimately will be redeemed at amounts approximating its book value. -33 (Page 1 of 3)- 9. Environmental Liabilities The Company continually evaluates its environmental liabilities and has determined that, as of December 31, 1993, 1992, and 1991, its recorded liabilities were adequate to cover asserted and unasserted claims arising from the operations of its discontinued businesses. These liabilities were not reduced by any potential recoveries from insurance companies or others. There are no significant environmental claims known to the Company arising from its continuing operations. -33 (Page 2 of 3)- 10. Commitments and Contingent Liabilities (Dollars in millions) The Company routinely enters into commitments to purchase the rights to broadcast programs, including feature films and sports events. These contracts permit the broadcast of such properties for various periods ending no later than September 1999. As of December 31, 1993, the Company was committed to make payments of $1,451.5 under such broadcasting contracts. Rent expense, excluding payments of real estate taxes, insurance and other expenses required under some leases, amounted to $50.3, $53.6 and $57.8 in 1993, 1992 and 1991, respectively. At December 31, 1993, minimum future rental payments and receipts under noncancelable leases (including capital leases and subleases, which were not significant) were as follows: Payments Receipts 1994. . . . . . . . . . . $18.4 $ 10.1 1995. . . . . . . . . . . 13.3 9.7 1996. . . . . . . . . . . 11.2 9.6 1997. . . . . . . . . . . 8.1 9.5 1998. . . . . . . . . . . 6.4 9.4 1999 and thereafter . . . 30.0 58.7 $87.4 $107.0 The Company did not have any significant concentrations of credit risk at December 31, 1993. -33 (Page 3 of 3)- 11. Retirement Plans (Dollars in millions) The Company has pension plans covering substantially all of its employees. Benefits are based on formulas that consider years of service and average compensation. The Company's general policy is to fund pension costs accrued over the lives of the plans to the extent the contributions will be tax- deductible. At December 31, 1993, the aggregate market value of all plan assets exceeded the projected benefit obligations of all plans by $91.3. This net amount consisted of $145.8 related to plans whose assets exceeded their projected benefit obligations and $54.5 related to plans whose projected benefit obligations exceeded their assets. Those plans whose projected benefit obligations exceeded their assets are excluded from coverage under Section 4021(b) of the Employee Retirement Income Security Act of 1974 (ERISA). The assets of the funded plans consisted primarily of interest-bearing securities. The net pension costs for 1993, 1992 and 1991 were as follows: Year ended December 31 1993 1992 1991 Service cost . . . . . . . . . . . . $16.8 $ 15.9 $ 15.4 Interest cost. . . . . . . . . . . . 41.6 39.3 38.4 Net amortization and deferral. . . . (2.6) (25.1) 29.4 55.8 30.1 83.2 Less return on plan assets . . . . . 55.5 33.8 84.2 Net pension cost (credit). . . . . . $ .3 $ (3.7) $ (1.0) Reconciliations of the funded status of these plans were as follows: December 31 1993 1992 1991 Plans whose assets exceed accumulated benefits Accumulated pension benefit obligation: Vested . . . . . . . . . . . . . . . . . $391.7 $352.5 $336.0 Nonvested. . . . . . . . . . . . . . . . 20.4 18.0 22.3 $412.1 $370.5 $358.3 Market value of plan assets. . . . . . . . $669.1 $637.4 $636.5 Less projected pension benefit obligation . . . . . . . . . . . . . . . 523.3 473.2 455.0 Assets exceed projected benefit obligation . . . . . . . . . . . . . . . 145.8 164.2 181.5 Less items not yet recognized in net periodic pension cost: Unrecognized net asset . . . . . . . . . 84.3 94.6 105.3 Unrecognized net gain. . . . . . . . . . 31.1 55.6 73.0 Unrecognized prior service cost. . . . . 1.1 (10.0) (10.8) Pension asset excluding unrecognized items*. . . . . . . . . . . . . . . . . $ 29.3 $ 24.0 $ 14.0 * Amounts recognized in the Consolidated Balance Sheets. Unrecognized items, in the aggregate, will be recognized in future years as a net reduction in pension expense and pension liability under the provisions of SFAS No. 87, "Employers' Accounting for Pensions." -34- 11. Retirement Plans (continued) December 31 1993 1992 1991 Plans whose accumulated benefits exceed assets Accumulated pension benefit obligation: Vested . . . . . . . . . . . . . . . . . $ 26.3 $ 20.0 $ 17.4 Nonvested. . . . . . . . . . . . . . . . 2.9 2.3 2.3 $ 29.2 $ 22.3 $ 19.7 Market value of plan assets. . . . . . . . $ - $ - $ - Less projected pension benefit obligation . . . . . . . . . . . . . . 54.5 34.4 31.0 Assets (are less than) projected benefit obligation. . . . . . . . . . . . . . . (54.5) (34.4) (31.0) Additional minimum (liability) . . . . . . (.6) (.6) (.9) (55.1) (35.0) (31.9) Less items not yet recognized in net periodic pension cost: Unrecognized net (liability). . . . . . (5.1) (5.7) (6.4) Unrecognized net (loss) . . . . . . . . (8.7) (1.9) (.9) Unrecognized prior service cost . . . . (10.0) (.3) (.5) Pension (liability) excluding unrecognized items* . . . . . . . . . $(31.3) $(27.1) $(24.1) *Amounts recognized in the Consolidated Balance Sheets. Unrecognized items, in the aggregate, will be recognized in future years as a net increase in pension expense and pension liability under the provisions of SFAS No. 87, "Employers' Accounting for Pensions." The Company also participates in various multi-employer union-administered defined benefit pension plans that cover certain broadcast employees. Pension expense under these plans for 1993, 1992 and 1991 was $10.2, $9.2 and $7.9, respectively. In addition to providing pension benefits, the Company provides medical and life insurance benefits for its retired employees. Substantially all of the Company's nonunion employees may become eligible for these benefits when they retire from the Company. Also included are those union employees covered by a collective bargaining agreement that provides for such benefits. During 1991, the Company made certain revisions to its retiree medical insurance program. Effective January 1, 1992, most current retirees and all future retirees were required to contribute to the cost of this coverage, and a maximum outlay by the Company for this cost was established. In addition, all retirees whose employment started after March 31, 1991 may maintain their coverage only if they pay its full cost. In 1992, the Company implemented, on the immediate recognition basis, SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and recorded a transition obligation that resulted in a charge to net income of $76.1, net of an income tax benefit of $49.3. -35- 11. Retirement Plans (continued) Under the new guidelines, the costs of the benefits are accrued over a period ending with the date that the qualified employees become eligible to retire, and future inflation of medical costs is considered in the determination of these costs. As a result, the costs of providing these benefits were as follows: Year ended December 31 1993 1992 Service cost . . . . . . . . . . . . . . . . $ 1.9 $ 1.9 Interest cost. . . . . . . . . . . . . . . . 14.1 14.6 Net amortization and deferral. . . . . . . . 1.9 17.9 16.5 Less return on plan assets . . . . . . . . . 5.5 3.4 Net periodic postretirement benefit cost . . $12.4 $13.1 Prior to the implementation of SFAS No. 106, the Company's practice was to determine the costs of these benefits actuarially, without considering future inflation of medical costs, and to accrue these costs over the working lives of those employees expected to qualify for the benefits. The costs of providing these benefits under this method in 1991 were $5.1. The Company's general policy is to fund accrued postretirement medical and life insurance costs to the extent the contributions will be tax- deductible. The funded assets consisted primarily of interest-bearing securities. The funded status of the postretirement medical and life insurance plans were as follows: December 31 1993 1992 Accumulated postretirement benefit obligation (APBO): Retirees. . . . . . . . . . . . . . . . . . . $141.1 $152.6 Fully eligible active plan participants . . . 17.1 16.0 Other active plan participants. . . . . . . . 34.1 30.2 192.3 198.8 Less market value of plan assets . . . . . . . 52.0 46.4 Assets are less than accumulated postretirement benefit obligation . . . . . . 140.3 152.4 Add unrecognized net gain. . . . . . . . . . . 16.9 Postretirement benefit liability recognized in the balance sheet. . . . . . . . . . . . . $157.2 $152.4 The calculations for the postretirement medical and life insurance plans were based on an actuarial assumption of a medical inflation rate of 14.0 percent in 1993, grading down to 7.0 percent in the year 2000. The effect of a one- percentage-point annual increase in the assumed medical inflation rates would increase the APBO by approximately $1.7; the annual service cost would not be materially affected. -36 (Page 1 of 2)- The actuarial assumptions used in computing the funded status of the pension plans and the postretirement medical and life insurance plans were as follows: 1993 1992 1991 Weighted average discount rate . . . . 7.5% 8.0% 8.0% Rate of compensation increase. . . . . 6.0% 6.5% 6.5% Weighted average long-term rate of return on plan assets . . . . . . 8.0% 8.0% 8.0% All costs in this note relate to the covered employees of both the continuing and discontinued operations of the Company. -36 (Page 2 of 2)- 12. Common Stock (Dollars in millions, except per share amounts) As a result of a tender offer in December 1990, the Company purchased 10.5 million of its shares, at $190 per share, in February 1991 and funded the purchase from available cash and the sale of marketable securities. In 1993, the Company converted $389.6 of its 5% convertible debentures into 1,947,975 shares of its common stock, issued from its treasury shares (note 8). Changes in common stock during 1991, 1992 and 1993 were as follows: Issued Treasury Shares Amount Shares Amount (Shares in thousands) Balance - December 31, 1990 . . . . . . . 24,644 $60.5 960 $ 72.6 Conversions of preference stock . . . . . (4) (.3) Issuances under employee benefit plans. . 31 .1 (8) (.4) Repurchases of common stock . . . . . . . 10,556 2,005.1 Conversions of convertible debentures . . 47 .1 Reclassification of common stock subject to redemption (note 13). . . . . . . . . 1.1 Balance - December 31, 1991 . . . . . . . 24,722 61.8 11,504 2,077.0 Conversions of preference stock . . . . . (7) (1.3) Issuances under employee benefit plans. . 17 (4) (.2) Repurchases of common stock . . . . . . . 22 3.0 Acquisition of Midwest (note 2) . . . . . (230) (41.6) Balance - December 31, 1992 . . . . . . . 24,739 61.8 11,285 2,036.9 Issuances under employee benefit plans. . 78 .2 (4) (.2) Conversions of convertible debentures . . (1,948) (352.2) Balance - December 31, 1993 . . . . . . . 24,817 $62.0 9,333 $1,684.5 See notes 8 and 15 for additional information about the Company's common stock. -37 (Page 1 of 2)- 13. Common Stock Subject to Redemption In July 1985, the Company offered to repurchase 6.365 million shares of its common stock. In consideration for not tendering their shares pursuant to the offer, William S. Paley, certain members of his family and other related entities received the right to sell to the Company a maximum of 434,489 shares at $150 per share. Certain of these rights were relinquished in connection with the Company's December 1990 tender offer (note 12) and the remaining rights expired in October 1991. The common stock subject to redemption was therefore reclassified to the appropriate components of shareholders' equity, as indicated in the Consolidated Statements of Retained Earnings and Additional Paid-In Capital and in note 12. -37 (Page 2 of 2)- 14. Preference Stock The Company's certificate of incorporation provides authority for the issuance of 6.0 million shares of preference stock, $1 par value. In 1985, the Company issued 1.25 million shares of preference stock, specifically authorized and designated as $10 Convertible Series B preference stock. The net proceeds of the issuance was $123.1 million. The issue has an aggregate liquidation preference of $125.0 million. The difference between the redemption value and the net proceeds from the issue is being amortized to retained earnings over 10 years. Each share is entitled to receive cumulative cash dividends at the rate of $10 per year, payable in equal quarterly installments, is subject to mandatory redemption on August 1, 1995, and is convertible, at the option of the holder, into .6915 of a share of common stock. At December 31, 1993 there were 1.25 million shares of Series B preference stock outstanding, for which there were 864,375 common shares reserved for issuance upon conversion. Upon redemption, or in the event of voluntary or involuntary liquidation, each shareholder will be entitled to $l00 per share plus any accrued or unpaid dividends. The terms of the Series B preference stock provide that the Company may not take any action that would result in the Company's ratio of total debt to total capitalization exceeding .75 to 1. As of December 31, 1993, this ratio was .32 to 1. -38 (Page 1 of 2)- 15. Stock Rights Plan The Company's 1983 Stock Rights Plan (as amended) has been approved by the Company's shareholders. It is administered by the Compensation Committee of the Board of Directors (the "Committee"), consisting entirely of outside directors, and under the terms of the plan certain key employees (including officers, who may also be directors) of the Company may be granted nonqualified stock options at an exercise price not less than 100 percent of the closing market price of a share of common stock on the date of the grant. These are ten-year options that become exercisable in installments of 25 percent per year, with the first installment commencing one year following the date of grant. The plan also provides that option grants to any one participant in a calendar year may not exceed 15,000 underlying shares of common stock. Prior to May 7, 1991, options granted to officers subject to the "short swing" profit provisions of Section 16 of the Securities and Exchange Act of 1934 (as amended) were coupled with alternative stock appreciation rights (SAR's) which enabled such holder to receive in cash or shares the excess of the common stock price on the date of exercise over the option price (the "spread"). Due to the manner in which the grant of an option to a person subject to the provisions of Section 16 is now treated by the Securities and Exchange Commission, the Committee has taken action to provide that options granted after May 7, 1991 would not be coupled with SAR's. In November 1985, the Plan was amended to provide that then outstanding options not coupled with SAR's would be subject to limited SAR's. (Such limited SAR's provided for treatment of the spread similar to that of alternative SAR's and became exercisable only if certain defined changes in control or concentration of equity ownership of the Company occurred.) The limited SAR feature was not extended to any option grants subsequent to 1986. The Plan provides that the Committee can authorize dividend share credits on outstanding options and on previously issued dividend share credits. Such credits are recorded in shares of common stock based on cash dividends paid to holders of common stock. In 1986, the Committee permanently suspended granting dividend share credits. The Plan provides that a maximum of 1.5 million shares in the aggregate are available for option grants and dividend share credits. Options granted to purchase 171,376 shares of common stock were exercisable at December 31, 1993. The number of shares available for option grants and dividend share credits, should the Committee choose to reintroduce the granting of such credits, was 369,200 shares, 550,745 shares and 634,945 shares at December 31, 1993, 1992 and 1991, respectively. To record the estimated cost of the Plan, in 1993 and 1992, $6.1 and $.7 million, respectively, were charged to income and, in 1991, $.5 million was credited to income (to adjust prior accruals). The Plan also provides that, absent shareholder approval, options may not be granted after 2001, options for more than 15,000 underlying shares may not be granted to any one participant in any calendar year, and options for an aggregate of 1.5 million underlying shares may not be granted. -38 (Page 2 of 2)- 15. Stock Rights Plan (continued) The following table summarizes the activity under the Plan during the years ended December 31, 1991, 1992 and 1993: Options With Stock Appreciation Rights Other* Dividend Common Common Share Shares Exercise Price Shares Exercise Price Credits Outstanding - December 31, 1990 68,050 $72 -$191 1/2 219,618 $56 1/4-$191 1/2 3,201 Granted. . . 85,600 159 7/8 Exercised. . ( 700) 118 3/4 (30,781) 56 1/4- 163 5/8 (1,678) Cancelled. . (4,500) 163 5/8- 191 1/2 (18,450) 159 7/8- 191 1/2 _____ Outstanding - December 31, 1991 62,850 72 - 191 1/2 255,987 56 1/4- 191 1/2 1,523 Granted. . . 91,600 191 1/2 Exercised. . (2,000) 118 3/4- 163 5/8 (16,762) 56 1/4- 191 1/2 (325) Cancelled. . ______ (8,400) 159 7/8- 191 1/2 Outstanding - December 31, 1992 60,850 72 - 191 1/2 322,425 56 1/4- 191 1/2 1,198 Granted. . . 93,000 237 1/8 Exercised. . (20,500) 72 - 191 1/2 (77,550) 56 1/4- 191 1/2 (883) Cancelled. . ______ (5,750) 159 7/8- 237 1/8 _____ Outstanding - December 31, 1993 40,350 $163 5/8-$191 1/2 332,125 $76 3/4-$237 1/8 315 *All grants outstanding which were issued prior to January 1, 1987 contain limited stock appreciation rights as explained above. At December 31, 1993, there were 12,450 options of this type outstanding with exercise prices between $76 3/4 and $136 5/8. -39 (Page 1 of 2)- 16. Litigation Various legal actions, governmental proceedings and other claims (including those relating to environmental investigations and remediation resulting from the operations of discontinued businesses) are pending or, with respect to certain claims, unasserted. The Company believes that the liabilities, if any, which may result from such litigation, proceedings or claims are not reasonably likely to have a material adverse effect on its consolidated financial position, results of operations, or liquidity. -39 (Page 2 of 2)- OTHER FINANCIAL INFORMATION QUARTERLY RESULTS OF OPERATIONS (Unaudited) (Dollars in millions, except per share amounts) The quarterly results of operations for the years ended December 31, 1993 and 1992 were as follows: 1993 1992 1993 1992 Net Sales Operating Income 1st Quarter . . . . . . . $ 878.7 $1,082.6 $ 62.5 $ 17.6 2nd Quarter . . . . . . . 835.7 779.9 153.2 83.7 3rd Quarter . . . . . . . 752.9 672.2 132.8 39.0 4th Quarter . . . . . . . 1,042.8 968.3 62.7 39.8 $3,510.1 $3,503.0 $411.2 $180.1 Income from Continuing Operations Net Income (Loss) 1st Quarter . . . . . . . $ 54.2 $ 17.5 $ 54.2 $(64.0) 2nd Quarter . . . . . . . 107.4 69.0 107.4 69.0 3rd Quarter . . . . . . . 118.2 42.7 118.2 42.7 4th Quarter . . . . . . . 46.4 33.3 46.4 33.3 $ 326.2 $162.5 $326.2 $ 81.0 Income from Continuing Operations Net Income (Loss) Per Common Share Per Common Share 1st Quarter . . . . . . . $ 3.50 $ 1.14 $ 3.50 $(4.18) 2nd Quarter . . . . . . . 6.73 4.46 6.73 4.46 3rd Quarter . . . . . . . 7.39 2.76 7.39 2.76 4th Quarter . . . . . . . 2.77 2.14 2.77 2.14 $20.39 $10.51 $20.39 $ 5.23 The first quarter of 1992 included a net charge of $81.5 ($5.32 per share) to net income for the adoption of SFAS No. 106, SFAS No. 109 and SFAS No. 112 (note 1). Quarterly and full year per share amounts are calculated independently based on the adjusted weighted average number of outstanding common shares applicable to each period. In 1992, because of the issuance of shares in connection with the acquisition of Midwest (note 2), the sum of the four quarters per common share does not equal the full year. -40- SHAREHOLDER REFERENCE INFORMATION Stock Data The principal market for CBS common stock is the New York Stock Exchange. It is also traded on the Pacific Stock Exchange. There were 11,629 holders of record of CBS common stock as of December 31, 1993. The following table indicates the quarterly high and low prices for CBS common stock as reported in the quotations of consolidated trading for issues on the New York Stock Exchange during the past two years: 1993 1992 1993 1992 High Low 1st Quarter . . . . . . . $217 3/4 $176 7/8 $186 1/8 $136 2nd Quarter . . . . . . . 250 1/2 209 7/8 214 164 5/8 3rd Quarter . . . . . . . 277 7/8 217 228 182 1/4 4th Quarter . . . . . . . 326 1/2 220 1/2 268 5/8 176 Dividends Dividends on CBS common stock were paid quarterly at $.25 per share in 1992 and for the first three quarters of 1993, and at $.50 per share for the fourth quarter of 1993. In 1993 and 1992, dividends were paid quarterly at $2.50 per share on CBS Series B preference stock. Transfer Agent and Registrar Independent Certified Public Accountants First Chicago Trust Company Coopers & Lybrand of New York 1301 Avenue of the Americas P.O. Box 2500 New York, New York 10019 Jersey City, New Jersey 07303-2500 Annual Meeting The 1994 annual meeting of shareholders of CBS Inc. will be held at 11 A.M., Wednesday, May 11, 1994, at The Museum of Modern Art, 11 West 53 Street, New York, New York. Form 10-K Annual Report The Form 10-K Annual Report for the Company's 1993 fiscal year, filed with the Securities and Exchange Commission, contains certain financial information and, when appropriate, other matters concerning the Company which are required to be reported to the SEC. Shareholders who wish a copy of this report may obtain one, without charge, upon request to the CBS Shareholder Relations Department, 51 West 52 Street, New York, New York 10019. -41- Schedule I (Page 1 of 4) CBS INC. and SUBSIDIARIES MARKETABLE SECURITIES - OTHER INVESTMENTS As of December 31, 1993 (In Thousands) ____________________ Col. A Col. B Number of Shares or Units - Principal Name of Issuer and Amount of Title of Each Issue Bonds and Notes U.S. Government and its Agencies $122,430 States and their Agencies 2,140 Corporations Bonds: Time Warner 23,985 Other 52,656 Money Markets: Bank of America 18,000 Other 60,478 Asset Backed Securities 41,880 Notes 41,300 Other 36,250 -42 (Page 1 of 2)- Schedule I (Page 2 of 4) CBS INC. and SUBSIDIARIES MARKETABLE SECURITIES - OTHER INVESTMENTS As of December 31, 1993 (In Thousands) ____________________ Col. A Col. C Col. D Col. E Amount at Which Each Portfolio of Equity Security Issues and Each Market Value of Other Security Name of Issuer and Cost of Each Issue at Issue is Carried in Title of Each Issue Each Issue Balance Sheet Date the Balance Sheet U.S. Government and its Agencies $121,998 $123,715 $121,998 States and their Agencies 2,140 2,140 2,140 Corporations Bonds: Time Warner 23,209 24,714 23,209 Other 53,420 54,023 53,420 Money Markets: Bank of America 18,006 18,045 18,006 Other 60,458 60,633 60,458 Asset Backed Securities 41,945 41,967 41,945 Notes 42,921 43,198 42,921 Other 36,221 36,522 36,221 $400,318 $404,957 400,318 Accrued Interest on Short-Term and Long-Term Securities 20,406 TOTAL SHORT-TERM MARKETABLE SECURITIES $420,724 -42 (Page 2 of 2)- Schedule I (Page 3 of 4) CBS INC. and SUBSIDIARIES MARKETABLE SECURITIES - OTHER INVESTMENTS As of December 31, 1993 (In Thousands) ____________________ Col. A Col. B Number of Shares or Units - Principal Name of Issuer and Amount of Title of Each Issue Bonds and Notes Amount Shares U.S. Government and its Agencies $296,000 States and their Agencies 61,365 Political Subdivisions of States, and their Agencies Utah 40,070 Florida 23,675 Georgia 21,525 Washington 20,975 New Mexico 18,395 California 17,530 New York 13,575 Alabama 13,515 Texas 13,495 Illinois 12,935 Other 52,390 Corporations Preferred Stock Banks 1,108 Other 1,326 Time Warner Convertible Bonds 21,592 Asset Backed Securities 30,382 Other 64,657 -43 (Page 1 of 2)- Schedule I (Page 4 of 4) CBS INC. and SUBSIDIARIES MARKETABLE SECURITIES - OTHER INVESTMENTS As of December 31, 1993 (In Thousands) ____________________ Col. A Col. C Col. D Col. E Amount at Which Each Portfolio of Equity Security Issues and Each Market Value of Other Security Name of Issuer and Cost of Each Issue at Issue is Carried in Title of Each Issue Each Issue Balance Sheet Date the Balance Sheet U.S. Government and its Agencies $286,914 $308,306 $286,914 States and their Agencies 66,324 68,324 66,324 (a) Political Subdivisions of States, and their Agencies Utah 42,332 44,400 42,332 Florida 25,708 26,795 25,708 (b) Georgia 22,966 23,887 22,966 Washington 23,384 24,477 23,384 New Mexico 21,005 20,897 21,005 California 19,955 20,441 19,955 (c) New York 14,572 15,434 14,572 (d) Alabama 15,268 15,211 15,268 Texas 14,247 14,762 14,247 (e) Illinois 14,265 14,921 14,265 (f) Other 56,069 59,030 56,069 (g) Corporations Preferred Stock Banks 38,915 53,025 38,915 Other 45,215 49,352 45,215 Time Warner Convertible Bonds 22,475 22,726 22,475 Asset Backed Securities 30,475 30,466 30,475 Other 65,915 66,093 65,915 TOTAL LONG-TERM MARKETABLE SECURITIES $826,004 $878,547 $826,004 (a) Includes $18,596 (Maryland $8,335, New York $5,561, and Massachusetts $4,700) for which insurance exists if the issuer defaults. (b) Includes $16,502 for which insurance exists if the issuer defaults. (c) Includes $7,785 for which insurance exists if the issuer defaults. (d) Includes $4,455 for which insurance exists if the issuer defaults. (e) Includes $14,247 for which insurance exists if the issuer defaults. (f) Includes $2,120 for which insurance exists if the issuer defaults. (g) Includes $7,654 (Maryland $4,000, Washington, D.C. $2,160 and Minnesota $1,494) for which insurance exists if the issuer defaults. -43 (Page 2 of 2)- Schedule II CBS INC. and SUBSIDIARIES AMOUNTS RECEIVABLE from RELATED PARTIES and UNDERWRITERS, PROMOTERS, and EMPLOYEES other than RELATED PARTIES for the years ended December 31, 1993, 1992 and 1991 (Dollars in Thousands) ____________________ Col. A Col. B Col. C Balance at Beginning Name of Debtor of Period Additions Year ended December 31, 1993: Peter Tortorici - $350 (A) Martin Franks $243 $ 19 Year ended December 31, 1992: Martin Franks $ 61 $183 (B) Year ended December 31, 1991: Martin Franks - $ 61 (B) Col. A Col. D Col. E Deductions Amounts Amounts Balance at End of Period Name of Debtor Collected Written Off Current Not Current Year ended December 31, 1993: Peter Tortorici - - $350 - Martin Franks - - $ 87 $175 Year ended December 31, 1992: Martin Franks $ 1 - $ 68 $175 Year ended December 31, 1991: Martin Franks - - $ 61 - (A) A note receivable for $350.0 at 8% dated 12/1/93 and due 11/30/94. (B) Includes a note receivable for $60.0 at 8% dated 9/25/91, a note receivable for $175.0 at 8% dated 10/13/92, and related accrued interest. By agreement dated January 3, 1994, Registrant will forgive 25% of these loans (and accrued interest) in each of January 1994, 1995, 1996 and 1997. -44- Schedule X CBS INC. and SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION For the years ended December 31, 1993, 1992, and 1991 (Dollars in Thousands) ____________________ Col. A Col. B Item Charged to Costs and Expenses 1993 1992 1991 Advertising costs $107,129 $98,781 $93,957 Depreciation and amortization $70,983 $66,689 $59,882 -45- INDEX TO EXHIBITS Number Description ______ ___________ 3-A Restated Certificate of Incorporation of registrant, as amended May 13, 1988 and filed as Exhibit 3 to Form 10-Q for the quarter ended June 30, 1988.* 3-B By-Laws of registrant, as amended to March 11, 1994, is filed herewith. 4-A See Article 3 of Restated Certificate of Incorporation, as amended, filed as Exhibit 3-A to Form 10-K for 1992.* 4-B(i) Indenture dated as of January 2, 1992 between Registrant and The Chase Manhattan Bank (National Association), as Trustee, filed as Exhibit 4-F(i) to Form 10-K for 1991.* (ii) Specimen Form of 7-5/8% Senior Note Due 2002, filed as Exhibit 4-F(ii) to Form 10-K for 1991.* (iii) Specimen Form of 8-7/8% Senior Debenture Due 2022, issued May 21, 1992, filed as Exhibit 4-D(iii) to Form 10-K for 1992.* (iv) Specimen Form of 7-3/4% Senior Note Due 1999, issued May 21, 1992, filed as Exhibit 4-D(iv) to Form 10-K for 1992.* (v) Specimen Form of 7-1/8% Senior Note Due 2023, issued October 28, 1993, is filed herewith. 4-C Pursuant to Regulation S-K Item 601(b)(4), CBS agrees to furnish to the Securities and Exchange Commission, upon request, a copy of other instruments defining the rights of holders of long-term debt of CBS. 10-A CBS Additional Compensation Plan, filed as Exhibit 10-A to Form 10-K for 1980.* 10-B CBS Stock Rights Plan, as amended effective March 13, 1991, filed as Exhibit 10-B to Form 10-K for 1991.* 10-C CBS Pension Plan, dated as of October 1, 1969, and all amendments through March 11, 1992, filed as Exhibit 10-C to Form 10-K for 1992.* Amendment No. 13 to such Plan, dated July 14, 1993 and effective as of April 1, 1992, is filed herewith. 10-D(i) CBS Supplemental Executive Retirement Plan, as amended October 14, 1987, filed as Exhibit 10-C to Registrant's Form 10-K for 1987.* (ii) CBS Supplemental Executive Retirement Plan #2, dated as of January 1, 1989, as amended January 1, 1993, filed as Exhibit 10-D(ii) to Form 10-K for 1992.* 10-E CBS Excess Benefit Plan, dated as of March 9, 1976, effective January 1, 1976, filed as Exhibit 10-E to Form 10-K for 1992.* ____________ * Previously filed as indicated and incorporated herein by reference. - 46 - 10-F Senior Executive Life Insurance Plan, dated July 9, 1990, filed as Exhibit 10-D to Registrant's Form 10-K for 1990.* 10-G CBS Deferred Compensation Plan for Non-Employee Directors, dated as of November 2, 1981, filed as Exhibit 10-G to Form 10-K for 1992.* 10-H CBS Employee Investment Fund, dated as of June 29, 1969, restated to include all amendments through December 30, 1993, is filed herewith. 10-I CBS Retirement Plan for Outside Directors, as amended May 9,1990, filed as Exhibit 10-E to Registrant's Form 10-K for 1990.* 10-J Restricted Stock Plan for Eligible Directors is filed herewith. 10-K Employment Agreement between CBS Inc. and Howard Stringer, dated December 27, 1992, filed as Exhibit 10-J to Form 10-K for 1992.* 10-L Employment Agreement between CBS Inc. and Edward Grebow, dated as of November 8, 1993, is filed herewith. 10-M Employment Agreement between CBS Inc. and Eric W. Ober, dated as of September 1, 1990, filed as Exhibit 10-H to Form 10-K for 1990.* 10-N Employment Agreement between CBS Inc. and Jeffrey F. Sagansky, dated as of July 1, 1992, filed as Exhibit 10-M to Form 10-K for 1992.* 10-O Employment Agreement between CBS Inc. and James A. Warner, dated January 28, 1992, filed as Exhibit 10-J to Form 10-K for 1991.* 10-P Employment Agreement between CBS Inc. and Peter A. Lund, dated as of January 31, 1994, is filed herewith. 10-Q Employment Agreement between CBS Inc. and Johnathan Rodgers, dated as of September 1, 1990, filed as Exhibit 10-O to Form 10-K for 1990.* 11 Computation of per share income is filed herewith. 12 Computation of ratios is filed herewith. 13 Registrant's 1994 Notice of Annual Meeting and Proxy Statement (to be filed on or about April 8, 1994), which except for those portions thereof expressly incorporated by reference elsewhere in this Form 10-K is furnished for the information of the Securities and Exchange Commission and is not to be deemed "filed" as part of the filing. 21 List of registrant's subsidiaries is filed herewith. 23 Consent of Independent Certified Public Accountants is filed herewith (p. 22). 99 Form S-8 Undertakings pursuant to Item 512 of Regulation S-K is filed herewith. ___________________ * Previously filed as indicated and incorporated herein by reference. - 47 - NOTE Copies of the Exhibits filed may be inspected at the Library of the New York Stock Exchange, 11 Wall Street, New York, NY 10005; at the Pacific Stock Exchange, 301 Pine Street, San Francisco, CA 94104; or at the Public Reference Room of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. - 48 - EX-3.B 2 BY-LAWS CBS INC. BY-LAWS AS AMENDED MARCH 9, 1994 (EFFECTIVE MAY 11, 1994) CBS INC. BY-LAWS ARTICLE I Shareholders SECTION 1. Annual Meeting. A meeting of the shareholders of the Corporation shall be held annually on the third Wednesday in April at two o'clock in the afternoon, then current New York Time, or on such other date or at such other time as may be fixed by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting. SECTION 2. Special Meetings. Special meetings of the shareholders of the Corporation may be called by the Chairman of the Board and the Chairman of the Executive Committee jointly or by the vote of a majority of the entire Board of Directors, and shall be called by the proper officers as provided in the Certificate of Incorporation. In addition, a special meeting of shareholders shall be called by the proper officers of the Corporation at the request of any two members of the Board of Directors (other than the Chairman of the Board and the Chairman of the Executive Committee jointly) if they shall have first presented their reasons for such request to a meeting of the Board of Directors at which a quorum is present after at least five days prior written notice of such request to all the directors. A special meeting of shareholders called as provided in this Section 2 shall be held on such date and at such time as shall be specified in the written notice of such special meeting. SECTION 3. Place of Meetings. Each annual or special meeting of the shareholders of the Corporation shall be held at such place within or outside the State of New York, but within the United States, as may be fixed by the Board of Directors, or, if not so fixed, at the office of the Corporation in the State of New York. SECTION 4. Notice of Meetings; Business to be Conducted at Meetings. Written notice of each annual or special meeting of the shareholders of the Corporation stating the day, hour and place thereof, and in general terms the business to be transacted thereat shall be delivered personally or mailed, not less than ten nor more than fifty days before the proposed date of such meeting, to each person who appears on the books of the Corporation as a shareholder entitled to vote at such meeting. Such notice if mailed shall be - 2 - directed to such shareholder at his or her address as the same appears on the stock book of the Corporation. Whenever all the shareholders entitled to vote at the said meeting shall meet in person or by proxy, or shall have waived notice of the meeting, such meeting shall be valid for all purposes. If the notice of a special meeting shall state as a purpose of the meeting the transaction of any business whatsoever, then at such meeting any corporate action may validly be taken. At any annual meeting any business whatsoever that shall be brought before the meeting may be transacted whether or not referred to in the notice of the meeting. SECTION 5. Quorum. Except as otherwise provided by statute, the holders of a majority of the shares entitled to vote thereat shall constitute a quorum at a meeting of shareholders of the Corporation for the transaction of any business, provided that when a specified item of business is required to be voted on by a class or series, voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such specified item of business. If the holders of the number of shares necessary to constitute a quorum shall fail to attend in person or by proxy at the time and place fixed for a meeting of the shareholders of the Corporation, the holders of a majority in number of the shares entitled to vote, present in person or represented by proxy, may adjourn such meeting from time to time without further notice to shareholders, unless a new record date is fixed for an adjourned meeting, until holders of the number of shares requisite to constitute a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted on the original date of the meeting. SECTION 6. Order of Business. The order of business at each meeting of the shareholders of the Corporation shall be determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the dismissal of business not properly presented, the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting after the time prescribed for the commencement thereof and the opening and closing of the voting polls. SECTION 7. Voting. Except as otherwise expressly provided in the Certificate of Incorporation or in these By-Laws or in a resolution of the Board of Directors authorized under the Certificate of Incorporation, each shareholder of record entitled to vote on any matter before a meeting of the shareholders of the - 3 - Corporation, present in person or represented by proxy, shall have the right to one vote upon such matter for each share standing in such shareholder's name on the record of shareholders of the Corporation as of the record date fixed for such meeting. The Board of Directors may prescribe a period, not exceeding fifty days prior to a meeting of the shareholders of the Corporation, during which no transfer of stock on the books of the Corporation may be made; or in lieu of prohibiting the transfer of stock, may fix a date not less than ten nor more than fifty days prior to the holding of any meeting of shareholders of the Corporation as the record date as of which shareholders entitled to notice of and to vote at such meeting shall be determined, and, except as otherwise expressly provided in Section 8 of this Article I of these By-Laws, all persons who are holders of record of voting stock at such time and no others shall be entitled to notice of and to vote at such meeting. Each shareholder entitled to vote at any meeting of shareholders of the Corporation may authorize not more than four persons to act for such shareholder by a proxy signed by such shareholder or such shareholder's attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated by the chairman of the meeting or in the order of business for so delivering such proxies. Except as otherwise provided by statute or the Certificate of Incorporation, any corporate action to be taken by vote of the shareholders shall be authorized by a majority of the votes cast at a meeting of shareholders by the holders of shares present in person or represented by proxy and entitled to vote on such action. Unless required by statute or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting or by such shareholder's proxy, if there be such proxy. SECTION 8. Voting by Alien Shareholders. Except as otherwise provided by law, not more than twenty percent of the aggregate number of shares of stock of the Corporation outstanding in any class or series entitled to vote on any matter before a meeting of shareholders of the Corporation shall at any time be voted by or for the account of aliens or their representatives or by or for the account of a foreign government or representative thereof, or by or for the account of any corporation organized under the laws of a foreign country. The Board of Directors may make such rules and regulations as it shall deem necessary or appropriate to enforce the foregoing provisions of this Section 8. ARTICLE II Board of Directors SECTION 1. Number, Election and Term of Office. The number of directors of the Corporation will be eleven. By vote of - 4 - a majority of the entire Board of Directors, the number of directors may be increased, or decreased to not less than three, by amendment of these By-Laws. Each director of the Corporation shall be elected at the annual meeting of shareholders of the Corporation and shall hold office until the next annual meeting and until his or her successor shall be elected and shall qualify or until such director's death or until the effectiveness of the resignation of such director. Directors need not be shareholders of the Corporation. Every director shall be a citizen of the United States. SECTION 2. Vacancies. If at any time there shall be a vacancy or vacancies on the Board of Directors whether by reason of the death or resignation of one or more directors, or otherwise, the remaining directors, by a majority vote of those then in office, though less than a quorum, may elect a successor to hold office for the unexpired portion of the term of each director whose place shall be vacant. SECTION 3. Meetings. Regular meetings of the Board of Directors may be held, without call or notice, at such time and place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be held whenever called by the Chairman of the Board, the President or by not less than three directors then in office. Notice of each special meeting shall be mailed or telegraphed at least forty eight hours before the meeting to each director, but such notice need not be given to any director who shall, either before or after such meeting, submit a signed waiver of such notice or who attends such meeting without protesting, prior thereto or at its commencement, the lack of notice. In any case, any acts or proceedings taken at a meeting not validly called or constituted may be made valid and fully effective by ratification at a subsequent meeting that is legally and validly called. Notices and waivers of notice of meetings of the Board of Directors need not state the purposes of the meeting, and at any such meeting duly held as provided in these By-Laws, any business within the general province and authority of the Board of Directors may be transacted. SECTION 4. Quorum. One-half in number of the entire Board of Directors for the time being in office, but not less than one-third of the entire Board of Directors, shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, the majority of the directors present may adjourn the meeting to another time and place. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 5. Powers. Subject to the provisions of law and the Certificate of Incorporation, but in furtherance and not - 5 - in limitation of any rights and powers thereby conferred, the directors of the Corporation shall have the general management and control of the business and affairs of the Corporation and shall exercise all the powers that may be exercised or performed by the Corporation; provided, however, that one or more directors may be denied access, by resolution of the Board of Directors, to classified matter and, in such event, the directors who have not so been denied access to such matter shall have the general management and control of the business and affairs of the Corporation and shall exercise all the powers that may be exercised or performed by the Corporation insofar as such business and affairs shall relate to such classified matter. SECTION 6. Compensation and Reimbursement of Expenses. Directors shall be paid such compensation including retainers or attendance fees or both as shall be determined from time to time by vote of the Board of Directors as compensation for their services as directors, as members of committees of the Board of Directors and as directors of other corporations at the request of the Chairman of the Board or the President of the Corporation. At the discretion of the Board of Directors any such retainer or attendance fee may be payable only to directors who are not officers or employees of the Corporation or any subsidiary thereof or compensated for serving under contract as a consultant to the Corporation. Any director not maintaining a residence or business office within one hundred miles of the principal office of the Corporation shall be reimbursed his or her actual expenses incurred in traveling between his or her residence and such principal office of the Corporation in connection with his or her attendance at any meeting of the Board of Directors or of any committee thereof on which such director serves. SECTION 7. Committees. The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate from among its members an Executive Committee and other committees, each consisting of three or more directors, and each of which, to the extent provided in such resolution, shall have all the authority of the Board of Directors, except that no such committee shall have authority as to any matter with respect to which any law of the State of New York states that it shall not have authority. The Board of Directors may designate one or more directors as alternate members of any such committee, who may replace any absent member or members at any meeting of such committee. Each such committee shall serve at the pleasure of the Board of Directors. A majority of the entire membership (exclusive of alternates) of any such committee shall constitute a quorum for the transaction of business, or of any specified item of business, and, solely for the purpose of determining whether a quorum is present at any time, an absent member of the committee shall be deemed to have been present if replaced at that time by an alternate member of such committee. - 6 - SECTION 8. Action Without Meeting. Any action required or permitted to be taken by the Board of Directors or by any committee thereof may be taken without a meeting if all of the members of the Board of Directors or of the committee, as the case may be, consent in writing to the adoption of a resolution authorizing the action. Such resolution and the written consents thereto shall be filed with the minutes of the proceedings of the Board of Directors or committee, as the case may be. SECTION 9. Attendance by Electronic Means. Any one or more directors may participate in a meeting of the Board of Directors, and any one or more members of any committee of the Board of Directors may participate in a meeting of such committee, by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. ARTICLE III Officers SECTION 1. Election, Term of Office and Removal. The officers of the Corporation shall be a Chairman of the Board, a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a Controller, one or more Assistant Controllers, a Director of Taxes, a General Auditor and such other officers as shall from time to time be provided for by the Board of Directors. Any two or more of such offices may be held by the same person, except the offices of President and Secretary. Such officers shall have such authority and perform such duties in the management of the Corporation as provided in these By-Laws or, to the extent not provided, by the Board of Directors. Such officers shall be elected at any meeting of the Board of Directors and, unless removed as hereinafter provided, shall hold office until their respective successors shall be elected and shall qualify, or until such officer's death or resignation or until such officer's removal in the manner hereinafter provided. Every officer shall be a citizen of the United States. All officers, agents and employees of the Corpation shall be subject to removal with or without cause at any time by the Board of Directors. SECTION 2. Powers and Duties of the Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and at all meetings of the shareholders. With the Secretary or any Assistant Secretary or with the Treasurer or any Assistant Treasurer, the Chairman of the Board may sign certificates of the shares of the capital stock of the - 7 - Corporation. The Chairman of the Board shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 3. Powers and Duties of the President. The President shall be the chief executive officer of the Corporation. The President shall have the powers and shall perform the duties of the Chairman of the Board in the absence or disability of the Chairman of the Board. With the Secretary or any Assistant Secretary or with the Treasurer or any Assistant Treasurer, the President may sign certificates of the shares of the capital stock of the Corporation. The President shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 4. Powers and Duties of the Executive Vice Presidents and of the Senior Vice Presidents. Each of the Executive Vice Presidents, and each of the Senior Vice Presidents, shall perform such duties as may from time to time be assigned to him or her by the Board of Directors. With the Secretary or any Assistant Secretary or with the Treasurer or any Assistant Treasurer, each of the Executive Vice Presidents, and each of the Senior Vice Presidents, may sign certificates of the shares of the capital stock of the Corporation. SECTION 5. Powers and Duties of the Vice Presidents. Each of the Vice Presidents shall perform such duties as may from time to time be assigned to him or her by the Board of Directors. With the Secretary or any Assistant Secretary or with the Treasurer or any Assistant Treasurer, each Vice President may sign certificates of the shares of the capital stock of the Corporation. SECTION 6. Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the shareholders of the Corporation and, if requested, the minutes of meetings of the Board of Directors. The Secretary shall attend to the giving and serving of all notices by the Corporation. The Secretary shall be the custodian of and shall make or cause to be made the proper entries in the minute book of the Corporation, and such other books and papers as the Board of Directors may direct. The Secretary shall be the custodian of the corporate seal and shall affix such seal to such contracts and other instruments as the Board of Directors or any committee thereof may direct. With the Chairman of the Board or the President or any Executive Vice President or any Senior Vice President or any Vice President, the Secretary may sign certificates of the shares of the capital stock of the Corporation. The Secretary shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 7. Powers and Duties of the Assistant Secretaries. Each of the Assistant Secretaries shall have such powers - 8 - and perform such duties as may from time to time be assigned to him or her by the Board of Directors. With the Chairman of the Board or the President or any Executive Vice President or any Senior Vice President or any Vice President, any Assistant Secretary may sign certificates of the shares of the capital stock of the Corporation. SECTION 8. Powers and Duties of the Treasurer. The Treasurer shall be responsible for the custody and investment of all of the funds and securities of the Corporation. With the Chairman of the Board or the President or any Executive Vice President or any Senior Vice President or any Vice President, the Treasurer may sign certificates of the shares of the capital stock of the Corporation. The Treasurer shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 9. Powers and Duties of the Assistant Treasurers. Each of the Assistant Treasurers shall have such powers and perform such duties as may from time to time be assigned to him or her by the Board of Directors. With the Chairman of the Board or the President or any Executive Vice President or any Senior Vice President or any Vice President, any Assistant Treasurer may sign certificates of the shares of the capital stock of the Corporation. SECTION 10. Powers and Duties of the Controller. The Controller shall be responsible for keeping full and accurate accounts of the Corporation. The Controller shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 11. Powers and Duties of the Assistant Controllers. Each of the Assistant Controllers shall have such powers and perform such duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 12. Powers and Duties of the Director of Taxes. The Director of Taxes shall have responsibility for advising the officers of the Corporation with respect to tax matters, for the preparation and filing of all tax returns required to be filed by the Corporation and shall have authority to represent the Corporation in all tax matters. The Director of Taxes shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 13. Powers and Duties of the General Auditor. The General Auditor shall be responsible for establishing and administering internal audit procedures and programs of the Corporation, and in connection therewith, shall audit or cause to be audited all of the accounts of the Corporation. The General Auditor shall make such reports to the Board of Directors, the - 9 - Audit Committee of the Board of Directors, the Chairman of the Board and the President as may be requested. The General Auditor shall perform such other duties as may from time to time be assigned to him or her by the Board of Directors. SECTION 14. Delegation of Powers. In case of the absence of any officer or agent of the Corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors may, at any time and from time to time, delegate all or any part of the powers or duties of any officer or agent to any other officer or agent. ARTICLE IV Indemnification of Directors, Officers and Employees SECTION 1. Indemnification. The Corporation shall to the fullest extent permitted by statute and subject to such conditions, not inconsistent with statute, as the Board of Directors may impose in general or particular cases or classes, indemnify any person made, or threatened to be made, a party to an action or proceeding, civil or criminal (including an action by or in the right of the Corporation or any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director, officer or employee of the Corporation served in any capacity at the request of the Corporation), by reason of the fact that such person, his or her testator or his or her intestate was a director, officer or employee of the Corporation (or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity), against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, and the Corporation may pay, in advance of final disposition of any such action or proceeding, expenses incurred by such person in defending such action or proceeding; provided however that no indemnification may be made to or on behalf of such person if (i) such person's acts were committed in bad faith or were the result of such person's active and deliberate dishonesty and were material to such action or proceeding or (ii) such person personally gained in fact a financial profit or other advantage to which such person was not legally entitled. SECTION 2. Reliance. Each person who was at the time of the adoption of this Article IV of these By-Laws such director, officer or employee shall be deemed to have continued to serve in such office or employment in reliance upon the indemnity provided by Section 1 of this Article IV, and each person who shall at any time subsequent to such adoption have become such director, officer or employee shall be deemed to have accepted such office - 10 - or employment in reliance upon the indemnity provided by said Section 1. SECTION 3. Insurance. To the extent permitted by law, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the Corporation, or is or was serving any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Corporation, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article IV of these By-laws. SECTION 4. Separability. The provisions of this Article IV of these By-Laws shall be separable, and if any of the provisions of any Section of this Article IV shall be finally adjudged to be invalid, or shall for any other reason be inapplicable or ineffective, such invalidity, inapplicability or ineffectiveness shall not affect any other provisions or applications of such Section or of any other Section of this Article IV which can be given effect without the invalid, inapplicable or ineffective provision. ARTICLE V Capital Stock SECTION 1. Certificates of Shares. Except as otherwise expressly contemplated by Section 3 of this Article V of these By-Laws, each holder of shares of stock of the Corporation shall be entitled to a certificate representing such stock. Each such certificate shall be signed by one of the Chairman of the Board, the President, any Executive Vice President, any Senior Vice President or any Vice President and also by one of the Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer. Where any such certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation or its employee, the signatures of the Chairman of the Board, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer and any Assistant Treasurer upon such certificate may be facsimiles, engraved or printed. In case any officer or officers who have signed, or whose facsimile signature or signatures have been placed on, any such certificate or certificates, shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates have been issued by the Corporation, such certificate or certificates may nevertheless be issued by the Corporation with the same effect as if such former officer or officers were still in office at the date of issue. Shares of stock issued to or held - 11 - by or for the account of aliens and their representatives, foreign governments and representatives thereof, and corporations organized under the laws of foreign countries shall be represented by Foreign Share Certificates. All other shares of stock shall be represented by Domestic Share Certificates. All of such certificates shall be in such form not inconsistent with the Certificate of Incorporation and these By-Laws as shall be prepared or approved by the Board of Directors. SECTION 2. Transfer of Shares. Shares of stock of any class or series of the Corporation shall be transferred only on the books of the Corporation by the holder thereof in person or by his or her attorney duly authorized in writing, and upon surrender of the certificate or certificates representing such shares, duly endorsed, or accompanied by a duly executed stock transfer power, and the payment of all taxes thereon. Every certificate exchanged, returned or surrendered to the Corporation shall be canceled. The Board of Directors shall have power and authority to make all such rules and regulations as it deems expedient concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. In the event of the declaration of dividends, the stock transfer books need not be closed but the Board of Directors may fix a record date, not more than fifty days preceding the date fixed for the payment of any dividend, for the purpose of determining the shareholders entitled to the payment of dividends. If such record date shall not have been so fixed, then the record date for the determination of shareholders entitled to payment of such dividends shall be at the close of business on the day on which the dividend is declared by the Board of Directors. Prior to due presentment for registration of transfer, the person in whose name shares of stock shall stand on the record of shareholders of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation; provided, however, that whenever any transfer of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary of the Corporation or to such transfer agent, such fact shall be stated in the entry of the transfer. No transfer of shares shall be valid as against the Corporation, its shareholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. SECTION 3. Transfer of Shares to Alien Shareholders. Except as otherwise provided by law, not more than twenty percent of the aggregate number of shares of stock of the Corporation outstanding in any class or series shall at any time be owned of record by or for the account of aliens or their representatives or by or for the account of a foreign government or representatives thereof, or by or for the account of any corporation organized under the laws of a foreign country. Shares of stock shall not be - 12 - transferable on the books of the Corporation to aliens and their representatives, foreign governments and representatives thereof, and corporations organized under the laws of foreign countries if, as a result of such transfer, the aggregate number of shares of stock in any class or series owned by or for the account of aliens and their representatives, foreign governments and representatives thereof, and corporations organized under the laws of foreign countries shall be twenty percent or more of the number of shares of stock then outstanding in such class or series. The Board of Directors may make such rules and regulations as it shall deem necessary or appropriate to enforce the foregoing provisions of this Section 3. SECTION 4. Record of Alien Ownership. The Board of Directors may make such rules and regulations as it shall deem necessary or appropriate so that accurate records may be kept of the shares of stock of the Corporation owned of record and/or voted by or for the account of aliens or their representatives or by or for the account of a foreign government or representative thereof, or by or for the account of any corporation organized under the laws of a foreign country. ARTICLE VI Corporate Seal A seal with the words "CBS INC., Corporate Seal, New York, 1927" upon it shall be the common corporate seal of the Corporation and shall be in the custody of the Secretary of the Corporation. The Board of Directors may, from time to time, approve a different form of seal and any such seal so approved shall be the common corporate seal of the Corporation. ARTICLE VII Accounting Periods Each of the Corporation's accounting years and each of the Corporation's quarterly and monthly accounting periods shall coincide with a calendar year, calendar quarter and calendar month. ARTICLE VIII Amendment of By-Laws Except as otherwise specifically provided by statute or the Certificate of Incorporation, these By-Laws or any of them (including any by-law adopted by the shareholders) may be amended or repealed or new by-laws may be adopted by the Board of Directors at any meeting thereof by such vote of the Board of Directors as specified in the Certificate of Incorporation. By-laws adopted or amended by the Board of Directors shall be subject to repeal or amendment by the shareholders at any annual or special meeting. EX-4.B(V) 3 SPECIMEN 7 1/8% NOTE SPECIMEN/Page 1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. CBS INC. 7-1/8% NOTE DUE 2023 REGISTERED CUSIP 124845 AF 5 NO. R-1 CBS INC., a corporation duly organized and existing under the laws of the State of New York (herein called the "Company", which term includes any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of $100,000,000 at the office of agency of the Company in The City of New York on November 1, 2023, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal sum semiannually on May 1 and November 1 of each year, at said office or agency, in like coin or currency, at the rate per annum specified in the title hereof, from the May 1 or the November 1, as the case may be, next preceding the date of this Note to which interest on the Notes has been paid (unless the date hereof is the date to which interest on the Notes has been paid, in which case from the date of this Note), or, if no interest has been paid on the Notes since the original issue date of this Note, from the May 1 or November 1 next preceding such original issue date, until payment of said principal sum has been made or duly provided for. Notwithstanding the foregoing, if the date hereof is after the 15th day of any April or October and before the first day of the next succeeding May or November, this Note shall bear interest from such May 1 or November 1; provided, however, that if the Company shall default in the payment of interest due on such May 1 or November 1, then this Note shall bear interest from the next preceding November 1 or May 1 to which interest on the Notes has been paid, or, if no interest has been paid on the Notes since the original issue date of this Note, from the May 1 or November 1 next preceding such original issue date. The interest so payable, and punctually paid or duly provided for, on any May 1 or November 1 will, except as provided in the Indenture dated as of January 2, 1992 SPECIMEN/Page 2 (herein called the "Indenture"), duly executed and delivered by the Company to The Chase Manhattan Bank, N.A., as Trustee (herein called the "Trustee"), be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the 15th day of the next preceding April or October (herein called the "Regular Record Date") whether or not a Business Day, and may, at the option of the Company, be paid by check mailed to the registered address of such Person. Any such interest which is payable, but is not so punctually paid or duly provided for, shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may be paid either to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed and upon such notice as may be required by such exchange, if such manner of payment shall be deemed practical by the Trustee, all as more fully provided in the Indenture. Initially, the Trustee will be the Paying Agent and the Security Registrar with respect to this Note. The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent or Security Registrar, to appoint additional or other Paying Agents and other Security Registrars and to approve any change in the office through which any Paying Agent or Security Registrar acts; provided that there will at all times be a Paying Agent in the City of New York. This Note is one of the duly authorized issue of debentures, notes, bonds or other evidences of indebtedness (hereinafter called the "Securities") of the Company, of the series hereinafter specified, all issued or to be issued under and pursuant to the Indenture, to which Indenture and all other indentures supplemental thereto reference is hereby made for a statement of the rights and limitations of rights, obligations, duties and immunities thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the Company and the Holders of the Securities and the terms upon which the Securities are issued and are to be authenticated and delivered. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at difference rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as provided or permitted in the Indenture. This Note is one of the series of Securities of the Company issued pursuant SPECIMEN/Page 3 to the Indenture designated as the 7-1/8% Senior Notes Due 2023 (herein called the "Notes"), limited in aggregate principal amount to $100,000,000. The Notes of this series are not redeemable prior to the Stated Maturity of the principal hereof and will not be subject to any sinking fund. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of all of the Notes may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee to enter into supplemental indentures to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in an manner the rights of the Holders of the Securities of each series under the Indenture with the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series to be affected thereby on behalf of the Holders of all Securities of such series. The Indenture also permits the Holders of a majority in principal amount of the Securities at the time Outstanding of each series on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults and their consequences with respect to such series under the Indenture. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note or such other Notes. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal and any premium of and any interest on this Note at the place, rate and respective times and in the coin or currency herein and in the Indenture prescribed. As provided in the Indenture and subject to the satisfaction of certain conditions therein set forth, including the deposit of certain trust funds in trust, at the Company's option, either the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and the obligations under, the Securities of any series and to have satisfied all the obligations (with certain exceptions) under the Indenture relating to the Securities of such series or the Company shall cease to be under any obligation to comply with any term, provision or condition of certain restrictive covenants or provisions with respect to the Securities of such series. SPECIMEN/Page 4 The Notes are issuable in registered form without coupons in denominations of $1,000 and any integral multiple of $1,000. Notes may be exchanged for a like aggregate principal amount and Stated Maturity of Notes of other authorized denominations at the office or agency of the Company in The City of New York and in the manner subject to the limitations provided in the Indenture. Upon due presentment for registration of transfer of this Note at the office or agency of the Company in The City of New York, a new Note or Notes of authorized denominations for a like aggregate principal amount and Stated Maturity will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture. No charge shall be made for any such transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. Prior to due presentment for registration of transfer of this Note, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Unless otherwise defined herein, all terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note shall be construed in accordance with and governed by the laws of the State of New York. Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Note shall not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, CBS INC. has caused this Note to be duly executed under its corporate seal. Dated: November 4, 1993 CBS INC., By: Senior Vice President, Finance [SEAL] ATTEST: By: Assistant Secretary SPECIMEN/Page 5 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. The Chase Manhattan Bank, N.A., As Trustee, By: Authorized Officer EX-10.C 4 PENSION PLAN AMENDMENT Amdt. #13 Amendment to the CBS Pension Plan (and its related Trust Agreement), adopted by the Minor Amendments Committee by Unanimous Written Consent dated July 14, 1993, effective April 1, 1992, and pertaining to the transfer of employees from CBS News Special Projects Inc. to CBS Inc., accompanied by the transfer of their accrued benefits (account balances) from the CBS News Special Projects Inc. Pension Plan to the CBS Pension, without loss of benefits. RESOLVED that the CBS Pension Plan, as heretofore amended, be and it hereby is further amended, effective with respect to participants whose employment was transferred from CBS News Special Projects Inc. to CBS Inc. on or after April 1, 1992, in the following particulars: (1) A new Section 2.05 is added, to read as follows: "2.05 Each person who becomes an employee and who was a participant in the CBS News Special Projects Inc. Pension Plan immediately prior to the date such person becomes an employee shall become a participant in the Plan as of the date such person satisfies the conditions of Section 2.02A. Upon the transfer of assets and liabilities from the CBS News Special Projects Inc. Pension Plan to this Plan, all periods of such person's prior benefit service and vesting service under the CBS News Special Projects Inc. Pension Plan shall count in determining such person's continuous employment period and years of service under the Plan, subject to the following: (a) The person's regular compensation during the period of participation in the CBS News Special Projects Inc. Pension Plan before the date such person becomes a participant in the Plan shall be used, to the extent necessary, to calculate the participant's average compensation under the Plan, and when so used regular compensation shall have the meaning defined in Section 13.08 of this Plan. (b) The participant's primary Social Security benefit at the date of retirement or the date of termination of employment, as the case may be, shall be calculated pursuant to the Plan and will take into account the participant's prior period of employment with CBS News Special Projects Inc. (c) If such participant shall have been a 1942 participant prior to his transfer to CBS News Special Projects Inc., the provisions of the Plan applicable to such participant shall continue to be so applicable, notwithstanding such participant's employment by CBS News Special Projects Inc. (d) Notwithstanding anything to the contrary in this Section 2.05, in no event shall the aggregate of the participant's benefit service under the CBS News Special Projects Inc. Pension Plan and the participant's continuous employment period in the Plan exceed 35 years." - 2 - (2) A second paragraph is added to Section 8.06A, to read as follows: "Subject to the approval of the Plans Administration Committee, the Trustee shall accept a transfer of assets and liabilities accrued by a participant under any other plan which transfer shall be in accordance with the requirements of Section 414(1) of the Code. In no event shall the accrued benefit of any such participant under this Plan immediately after such transfer be less than the accrued benefit of such participant under the transferor plan immediately prior to such transfer. In addition, and distribution, withdrawal, or other rights available to each affected participant under the terms of the transferor plan as of the date of such transfer which are protected under Section 411(d)(6) of the Code shall continue to be available with respect to such transferred accrued benefits." ***** RESOLVED that ... the Trust Agreement entered into as of September 1, 1986 between CBS Inc. and Boston Safe Deposit and Trust Company with respect to the CBS Pension Plan and amended effective as of January 1, 1991 to constitute a Master Pension Trust ... is hereby amended, effective with respect to participants whose employment was transferred from CBS News Special Projects Inc. to CBS Inc. on or after April 1, 1992, by the addition of a new paragraph, to constitute a fifth paragraph of Article SEVENTEENTH, to read as follows: "Upon the written direction of CBS News Special Projects Inc., the Trustee shall transfer and deliver to the trustee of the trust under the CBS Pension Plan established by CBS Inc. and qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended, such part of the assets of the Trust Fund on such date, in such amount, and in such form as CBS News Special Projects Inc. shall so direct. The provisions of the two final sentences of the first paragraph of this Article shall apply to the transfer authorized by this paragraph." EX-10.H 5 RESTATED EMPLOYEE INVESTMENT FUND CBS EMPLOYEE INVESTMENT FUND FOR ELIGIBLE EMPLOYEES OF CBS INC. AND CERTAIN OF ITS SUBSIDIARIES June 29, 1969 AS RESTATED THROUGH DECEMBER 30, 1993 CBS EMPLOYEE INVESTMENT FUND Contents Article Page I. THE PURPOSE OF THE PLAN; THE TRUST ............................ 1 A. The Investment Fund ..................................... 1 B. The Trust ............................................... 1 C. Application ............................................. 1 D. Definitions (applicable to the Plan and the Trust) ...... 1 II. PARTICIPATION ................................................. 1 A. Eligibility ............................................. 1 B. Participation ........................................... 2 III. ACCOUNTS ...................................................... 2 A. Participants' A accounts ................................ 2 B. Participants' B accounts ................................ 2 C. Participants' C accounts ................................ 3 D. Employers' C accounts ................................... 3 E. Participants' D accounts ................................ 3 F. Participants' E accounts ................................ 3 G. Participants' numbered C and D accounts ................. 3 IV. EMPLOYEE CONTRIBUTIONS; CONTRIBUTION ELECTIONS; INVESTMENT DIRECTIONS; CONVERSION DIRECTIONS ............................. 3 Contribution Elections Generally .............................. 3 (i) The required basic contribution and the voluntary supplemental contribution ................................ 4 A. Nature ............................................. 4 1. Election of required basic contribution; Modifications ................................ 4 2. Election of voluntary supplemental contribution; Modifications .................. 4 3. Suspension ................................... 5 B. Investment Direction ............................... 5 1. Crediting units to A, B and/or E accounts .... 5 2. Modification ................................. 5 C. Withholding by Employers and/or deferral, and payment to Trustee ................................. 5 (ii) The periodic special contribution ....................... 6 A. Nature ............................................. 6 1. Cash payment ................................. 6 2. Limitation of amount ......................... 6 3. Investment direction ......................... 6 (iii) Limitations ............................................. 7 A. Special Rules - Actual Deferral Percentage Tests ... 7 B. General Rules ...................................... 11 C. Limitation on Before-Tax Contributions ............. 11 D. Actual Contribution Percentage Tests ............... 12 (iv) Conversion Directions .................................... 15 (i) Article Page V. EMPLOYERS' MATCHING CONTRIBUTIONS ............................. 15 VI. TERMINATION OF PARTICIPATION; WITHDRAWALS; DETERMINATION AND PAYMENT OF BENEFITS ....................................... 17 A. Termination of participation ............................ 17 B. Withdrawals ............................................. 17 1. Request for withdrawal; Payment ................... 17 2. Withdrawal before five years or twice within five-year period; Suspension of authorization ..... 18 3. Restrictions on withdrawals before age 59-1/2 ..... 18 C. Termination benefit ..................................... 20 1. Termination of employment - A, B , D, and E units . 20 2. Termination of employment after three years, after 65th birthday, or by reason of death or disability - C units .............................. 20 3. Other termination of employment - C units ......... 20 4. Re-employment after termination ................... 20 5. Inclusion of numbered units and accounts .......... 21 D. Amounts withheld or deferred in month of termination .... 21 E. Manner of payment; Elections ............................ 21 1. Distribution election ............................. 21 2. Lump sum death benefit election ................... 22 3. Modification or revocation of election ............ 22 4. Spousal consent in certain cases .................. 23 F. Payment by Trustee ...................................... 23 1. Distribution election - lump sum payment .......... 23 (a) Cash ........................................ 23 (b) CBS Stock ................................... 24 2. Distribution election - installment payment ....... 24 (a) Cash ........................................ 24 (b) CBS Stock ................................... 25 3. Withholding ....................................... 26 4. Commencement of payment ........................... 26 5. No contributions after age 70 ..................... 26 6. Inclusion of numbered units and accounts .......... 26 7. Unclaimed benefit payment ......................... 27 G. Loans to Participants ................................... 27 1. Governing rules ................................... 27 2. Collateral ........................................ 27 3. Deduction of loan proceeds ........................ 28 4. Interest rate(s) .................................. 28 5. Repayment ......................................... 28 6. Default; Collection of unpaid amount .............. 28 7. Loan requests ..................................... 29 8. Reinvestment of repayments ........................ 29 9. Qualified domestic relations order(s) ............. 29 10. Payment to beneficiaries/alternate payees ......... 29 H. Direct Rollover Distributions ........................... 29 (ii) Article Page VII. THE COMMITTEE ................................................. 31 A. Appointment and removal; Investment managers ............ 31 B. Additional members; Successors .......................... 31 C. Majority decision ....................................... 31 D. Powers and duties of additional and successor members ... 31 E. Absence of requirement for security ..................... 31 VIII. ADMINISTRATION ................................................ 31 A. Committee as "administrator" ............................ 31 B. Retention of auditors, accountants, legal counsel ....... 32 C. Allocation and delegation of authority .................. 32 D. Compensation ............................................ 32 E. Communications, forms ................................... 32 F. Determinations; Discretion, non-discrimination .......... 32 G. Determinations, binding ................................. 33 H. Claims; Procedure on denial of claims ................... 33 I. Relations with Trustee .................................. 33 J. Fiduciary duties ........................................ 34 K. Non-assignability of benefits ........................... 34 L. Pass-through rights as to CBS Stock ..................... 34 1. Voting ............................................ 34 2. Tender or exchange offers ......................... 35 IX. DEFINITIONS ................................................... 35 A. Definitions (in alphabetical order) ..................... 35 B. Construction ............................................ 44 X. ADOPTION BY SUBSIDIARIES ...................................... 45 A. Adoption - CBS consent .................................. 45 B. Party to Trust Agreement ................................ 45 XI. AMENDMENT; TERMINATION ........................................ 45 A. Amendment by CBS ........................................ 45 B. Termination - effect on accounts ........................ 46 C. Merger, consolidation, transfer ......................... 47 1. CBS News Special Projects Inc. .................... 47 2. CBS News Special Projects Inc. .................... 47 3. Transfer of assets and liabilities accrued under another plan ...................................... 47 D. Return of matching Employer contributions ............... 47 XII. LIMITATIONS ................................................... 48 A. Maximum annual addition ................................. 48 B. "Annual addition" ....................................... 48 C. Participation in another defined contribution plan or in more than one defined benefit plan maintained by Employer; "Employer" .................................... 48 D. Participation in Investment Fund and CBS Pension Plan or other applicable defined benefit plan ................ 49 (iii) Article Page E. Definitions .............................................. 49 1. Defined benefit plan fraction ...................... 49 2. Defined contribution plan fraction ................. 49 F. Non-applicability ........................................ 49 G. Reduction of contributions in event of exceeding limitation on annual additions or limitation applicable to combination of plans .................................. 50 H. Reduction/freezing of benefits under defined benefit plan prior to making adjustments ......................... 50 I. Treatment of excess arising from errors .................. 50 XIII. INTERPRETATION; CONSTRUCTION ................................... 51 XIV. TOP-HEAVY PLAN ................................................. 51 A. Effective date if Investment Fund determined to be a top-heavy plan ......................................... 51 B. Determination of a top-heavy plan ........................ 51 C. Definitions .............................................. 52 D. Requirements if Investment Fund determined to be a top-heavy plan ........................................... 53 XV. MIDWEST COMMUNICATIONS, INC. TRANSACTION ....................... 54 A. Transfer of Accounts from Midwest Communications, Inc. Retirement Savings Plan to Investment Fund ............... 54 1. Eligibility of Midwest's non-union employees to participate in Investment Fund; Transfer; "Transferred Amount(s)" ............................ 54 2. Eligibility of Midwest's union employees to participate in Investment Fund; Transfer; "Transferred Amount(s)" ............................ 54 3. Procedures for Transferred Amounts ................. 54 B. Merger of WCCO Television, Inc. AFTRA 401(k) Plan into Investment Fund .......................................... 55 1. Eligibility of WCCO Television, Inc. employees to participate in Investment Fund; transfer; "Transferred Amount(s)" ............................ 55 2. Procedures for Transferred Amounts ................. 56 (iv) CBS EMPLOYEE INVESTMENT FUND I. The Purpose of the Plan; the Trust. A. The purpose of the Investment Fund, the plan embodied herein, is to provide Employees of CBS and certain of its subsidiaries who are eligible to participate therein a convenient way both to save for their retirement and to become shareholders of CBS. It is intended that at all times the Investment Fund and the related Trust will constitute a plan qualified under Section 401(a) and exempt under Section 501(a) of the Internal Revenue Code, as amended ("the Code"), and will comply with the requirements of Section 401(k) of the Code and of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Investment Fund embodied herein constitutes an amendment to and restatement of the Investment Fund in effect on July 31, 1993. Nothing in this amendment and restatement shall have the effect of reducing any participant's rights to accrued benefits (including optional forms of benefit) under the terms of the Investment Fund in effect on July 31, 1993. With respect to periods prior to August 1, 1993, certain provisions of the Investment Fund applied solely to individuals who participated in the CBS Stock Purchase Plan prior to its termination and to former participants who were CRG employees affected by the sale of CBS Records Inc. to Sony Corporation. Such participants' or former participants' rights with respect to these provisions shall be governed by the terms of the Investment Fund in effect on July 31, 1993. B. As a part of the Investment Fund, and solely to aid in the proper execution thereof, CBS and the other Employers have entered into the Trust Agreement. The Trust has been created solely to aid in the proper execution of the Investment Fund and shall be availed of solely for such purpose. Each provision of the Trust Agreement shall be deemed to be a provision hereof as fully as if it were set forth herein. C. The Investment Fund, as amended to July 31, 1993, shall continue to be applicable to all former Employees whose employment (and participation) terminated prior to August 1, 1993, except as otherwise provided herein. The Investment Fund, as amended as of August 1, 1993 and as may be amended thereafter, shall be applicable to all Employees who are or become eligible to participate therein on or after such date. Nothing contained in the Investment Fund shall be deemed to increase the number or value of the C units credited as of July 31, 1993 to the account of any participant or any former participant whose participation terminated prior to August 1, 1993. D. Certain terms used herein and in the Trust Agreement are defined and set forth in alphabetical order in Paragraph A of Article IX hereof. II. Participation. A. Each person who, on August 1, 1993 or on the first day of any monthly accounting period commencing subsequent to such date, (1) is an Employee of one or more of the Employers and either (a) during the 12-month period preceding such date or, in the case of an Employee employed on other than a full-time basis, during any 12-month - 1 - period subsequent to December 31, 1975 preceding such date has been such an Employee, or (b) is included in a group determined by the Board to be eligible to participate in the Investment Fund after employment by one or more of the Employers during such period of less than one year as the Board has determined, and during such period has continuously been such an Employee, and (2) has completed a year of service shall become eligible to participate in the Investment Fund on the first day of his earliest payroll period commencing with or within such monthly accounting period. Any participant and any Employee eligible to participate in the Investment Fund whose employment terminated or who incurs a break in service and who shall become an Employee after July 31, 1993 shall be eligible to participate in the Investment Fund on the date he is reemployed or returns from a break in service, as the case may be. Any person eligible to participate in the CBS News Special Projects Inc. Employee Investment Fund shall be excluded from participation in this Investment Fund as of the date such person becomes eligible to participate in the CBS News Special Projects Inc. Employee Investment Fund. Any person who was eligible to participate in the CBS News Special Projects Inc. Employee Investment Fund and is subsequently employed or reemployed by CBS shall be immediately eligible to participate in this Investment Fund upon such date of employment or reemployment. B. Each new Employee who shall become eligible to participate in the Investment Fund and who shall file with CBS his election to do so shall become a participant therein. A participant may be such by reason of his concurrent employment by two or more Employers. Any such participant shall be entitled to participate in the Investment Fund as an Employee of each such Employer. In no event, however, shall a "leased employee," as defined in Section 414(n) of the Internal Revenue Code, be entitled to participate in the Investment Fund. III. Accounts. A. CBS shall cause to be established a separate A account for each participant, and within such account a separate after-tax subaccount and a separate before-tax subaccount to account respectively for contributions to the account made on an after-tax and made on a before-tax basis, which shall be used in connection with the investment by the Trustee of specified portions (if any) of such participant's contributions in securities and other properties of every nature other than securities issued by CBS or any of its subsidiaries. B. CBS shall cause to be established a separate B account for each participant, and within such account a separate after-tax subaccount and a separate before-tax subaccount to account respectively for contributions to the account made on an after-tax and made on a before-tax basis, which shall be used in connection with the investment by the Trustee of specified portions (if any) of such participant's contributions in securities and other properties of every nature other than common stocks and other than securities issued by CBS or any of its subsidiaries. - 2 - C. CBS shall cause to be established a separate C account for each participant which shall be used in connection with the investment by the Trustee of Employers' matching contributions allocated to such participant in CBS Stock. D. CBS shall cause to be established a separate C account for each Employer which shall be used with respect to such Employer's matching contributions and the allocation thereof to the participants who shall be Employees of such Employer. E. CBS shall cause to be established a separate D account for each participant, and within such account a separate after-tax subaccount and a separate before-tax subaccount to account respectively for contributions to the account made on an after-tax and made on a before-tax basis, which shall be used in connection with the investment in CBS Stock by the Trustee of specified portions (if any) of such participant's contributions. F. CBS shall cause to be established a separate E account for each participant, and within such account a separate after-tax subaccount and a separate before-tax subaccount to account respectively for contributions to the account made on an after-tax and made on a before-tax basis, which shall be used in connection with the investment by the Trustee of specified portions (if any) of such participant's contributions in securities and other properties of every nature other than securities issued by CBS or any of its subsidiaries. G. When a tender or exchange offer or other offer to purchase CBS Stock (other than on an all-cash basis) is made, CBS shall cause to be established a separate, numerically designated C account and D account (hereinafter described as a C-# and D-# account, respectively) for each participant who shall have instructed the Trustee, pursuant to subparagraph 2 of Paragraph L of Article VIII, to tender or sell shares of CBS Stock representing C units credited to such participant's C account and D units credited to such participant's D account. Such newly established, numerically designated C and D accounts shall be used only in connection with the investment by the Trustee of the securities or other property received by the Trustee with respect to such participant's C and D units, and held by the Trustee in separate, numerically designated C and D Funds (hereafter respectively described as a C-# and D-# Fund), as a consequence of the closing of such a transaction. The C-# and the D-# account of a participant shall be respectively credited with numerically designated C and D units (hereinafter described as C-# and D-# units) representing such participant's proportional share of the C-# and D-# Funds, as initially valued and as periodically thereafter valued on a valuation date. IV. Employee Contributions; Contribution Elections; Investment Directions; Conversion Directions. Three methods of making contributions to the Investment Fund are provided: the required basic contribution and the voluntary supplemental contribution (both pursuant to contribution elections) and the periodic special contribution. - 3 - Each contribution election of a participant with respect to the required basic contribution and the voluntary supplemental contribution shall be made on such form as CBS may from time to time prescribe and shall specify the participant's: (i) designation of the percent of his salary to constitute the contribution amount; (ii) investment direction as to the mode of investment of such contribution and (iii) election (a) to have such contribution amount (or, with respect to the voluntary supplemental contribution, a portion thereof) treated as an "after-tax" contribution and his authorization to his Employer to withhold from his salary and pay to the Trustee the contribution amount for conversion to unit credits in his after-tax subaccount(s) and/or (b) to have such contribution amount (or, with respect to the voluntary supplemental contribution, a portion thereof) treated as a "before-tax" contribution and his salary deferral agreement with his Employer to defer payment to him of, and to pay to the Trustee, the contribution amount for conversion to unit credits in his before-tax subaccount(s). For purposes of Section 401(k) of the Code only, all amounts designated by a participant as before-tax contributions and credited to his before-tax subaccounts shall be considered Employer contributions made pursuant to a participant's election. (i) The required basic contribution and the voluntary supplemental contribution: A. 1. As a part of, or concurrently with, his participation election, each Employee shall file with CBS a contribution election, with respect to such Employee's required basic contribution for and during those of such Employee's payroll periods for which such contribution election shall be in effect, which shall designate either 1, 1-1/2, 2, 2-1/2, or, if applicable, 3 or 4 percent of such Employee's salary from his Employer during such periods as such contribution and which shall include an election to have all of such contribution amount treated either as an after-tax or as a before-tax contribution. At any time after filing a contribution election with respect to a required basic contribution, except as otherwise provided in Paragraph A of Article VI hereof or subparagraph 2 of Paragraph B of said Article VI, a participant may file a modification thereof either to designate a different permitted percent of his salary as his required basic contribution, or to change his election as to the after-tax or before-tax treatment of such contribution amount, or both. 2. At the time of his participation election, or at any time thereafter (except during any period when a suspension of his contribution election for his required basic contribution is in effect), a participant whose required basic contribution is the maximum basic contribution may also file with CBS a contribution election providing for his Employer to pay to the Trustee as such Employee's voluntary supplemental contribution to the Investment Fund the percentage therein specified, which may be any whole or half number from one-half to ten, of such Employee's salary from such Employer for those of such Employee's payroll periods for which contribution elections for his required basic contribution and for a voluntary supplemental contribution shall be in effect. Any participant who has filed a contribution election for a voluntary supplemental contribution may at any time thereafter file with CBS a modification of such contribution election for his voluntary supplemental contribution as then in effect which shall provide that his Employer shall pay to the Trustee as such participant's voluntary supplemental contribution to the Investment Fund a specified - 4 - percentage of such participant's salary from such Employer different from the percentage provided in such participant's voluntary supplemental contribution contribution election as then in effect. The percentage specified in such a modification shall be any whole or half number from zero to ten. A participant, in filing a contribution election (or modification thereof) with respect to his voluntary supplemental contribution, shall designate which portion (which may be all, or none, or any percentage thereof divisible by five) of the amount of his salary so designated shall be treated as an after-tax contribution and which portion treated as a before-tax contribution, the total of such portions not to exceed 100 percent of the voluntary supplemental contribution amount. 3. Any participant may also at any time file with CBS a suspension of such participant's contribution election for his required basic contribution as then in effect which shall provide that his Employer shall not pay to the Trustee as such participant's required basic contribution to the Investment Fund any portion of such participant's salary from such Employer. Such a suspension of a participant's contribution election for his required basic contribution shall automatically cause a suspension of his contribution election, if any, then in effect for a voluntary supplemental contribution. Except as otherwise provided in Paragraph A of Article VI hereof or subparagraph 2 of Paragraph B of said Article VI, any such participant may at any time file a new contribution election with CBS. B. 1. As a part of every contribution election each Employee shall also file with CBS such Employee's direction with respect to the portion of such Employee's required basic contribution (and voluntary supplemental contribution, if any) for each of his payroll periods for which such investment direction shall be in effect which is to be (a) converted to A units and credited to such Employee's A account, (b) converted to B units and credited to such Employee's B account, (c) converted to D units and credited to such Employee's D account and (d) converted to E units and credited to such Employee's E account. Up to 100 percent of the total of an Employee's required basic contribution and, if any, voluntary supplemental contribution may be directed to be converted to A units, B units, D units or E units. All conversions under the Investment Fund shall be effected in accordance with the provisions of subparagraph 5 of Paragraph B of Article IX hereof. 2. Subject to such conditions as CBS shall prescribe on a uniform basis, any participant may from time to time file with CBS a modification of such participant's investment direction as made in connection with a contribution election or elections then in effect. Such modification shall become effective on the next date (of which there shall be not fewer than two in any calendar year) which CBS shall specify for the effective date of such modifications. C. Each Employer shall withhold and/or defer from the payment of the salary of each participant for each payroll period with respect to which there shall be a contribution election or elections of such participant in effect the percentage of the salary of such participant specified in such election or elections and, as of and as promptly as shall be practicable after the valuation date which shall be nearest to the last day of the monthly accounting period in which such payroll period shall end, (1) such - 5 - Employer shall pay to the Trustee the aggregate amount of such Employer's said withholdings and/or deferrals for the payroll periods ending in such monthly accounting period, and (2) CBS or its designee shall convert the amounts so paid to it into A units, B units, D units and E units, credit such units to the A accounts, B accounts, D accounts and E accounts of the respective participants whose contributions are so paid to it and credit such amounts to the A Fund, the B Fund, the D Fund and the E Fund, all in conformity with the respective investment directions of such participants for such payroll periods. Such credits as result from contributions elected to be made on an after-tax basis shall be credited to the after-tax subaccounts of the A, B, D and E accounts of the respective participants, and such credits as result from contributions elected to be made on a before-tax basis shall be credited to the before-tax subaccounts of the A, B, D and E accounts of the respective participants. (ii) the periodic special contribution: A. 1. At such intervals and subject to such conditions as CBS shall prescribe on a uniform basis, each participant who at that time has in effect a contribution election for a required basic contribution shall be provided the opportunity to make a periodic special contribution, on an after-tax basis, by a cash payment to the Investment Fund. 2. The amount of any periodic special contribution of a participant may be in such amount as such participant shall elect but not in excess of: (a) 140 percent of the total of all his actual contributions, if any, made by him to the Investment Fund through payroll authorizations at any time from the date he first became a participant in the Investment Fund to June 30, 1977 (which amount shall be described as a participant's "past frozen credit"), plus (b) the difference, if any, between (i) the total of (y) the aggregate amount he could have contributed to the Investment Fund as required basic contributions and voluntary supplemental contributions subsequent to June 30, 1977 if at all times subsequent to that date he had had in effect payroll authorizations (throughout the period ended December 31, 1983) and contribution elections (throughout the period commencing January 1, 1984) for the required basic contribution and the voluntary supplemental contribution for the maximum percentage of base salary permitted plus (z) the withdrawals made by him subsequent to June 30, 1977, and (ii) the total of all his actual contributions made as required basic contributions, voluntary supplemental contributions and periodic special contributions to the Investment Fund subsequent to June 30, 1977. 3. At the time of making a periodic special contribution, a participant shall also file with CBS an investment direction with respect to the portion, if any, of such contribution which is to be converted to A units and credited to such participant's after-tax subaccount of his A account and with respect to the portion, if any, of such contribution which is to be converted to B units and credited to such participant's after-tax subaccount of his B account and with respect to the portion, if any, of such - 6 - contribution which is to be converted to D units and credited to such participant's after-tax subaccount of his D account and with respect to the portion, if any, of such contribution which is to be converted to E units and credited to such participant's after-tax subaccount of his E account. Such proportion, if any, elected in such an investment direction shall be a percentage of 100 percent which is a whole number divisible by five. (iii) limitations: A. Notwithstanding anything contained in the foregoing provisions of this Article IV, the following rules and limitations shall apply to a participant's before-tax basic required contributions and, if applicable, before-tax voluntary supplemental contributions. If the Committee shall at any time determine that the spread between the then-current percentage of salary being contributed to the Investment Fund by means of before-tax contributions for (i) "highly compensated eligible Employees" and (ii) the remaining eligible Employees, is such that before-tax contributions under the Investment Fund would fail to satisfy either of the "actual deferral percentage tests" for the current plan year (assuming such percentages had been and would continue in constant effect for the entire plan year), the Committee, in its sole discretion, may unilaterally reduce, on a prospective basis, the maximum percentage of salary with respect to which such "highly compensated eligible Employees" elected to defer as before-tax contributions under the Investment Fund. The participant's salary deferral agreement incorporated in his contribution election shall be automatically adjusted, without any further action on the part of such participant or his Employer, to conform to the new limitation imposed by the Committee and unless such participant otherwise instructs the Committee in a written notice, his after-tax contribution agreement incorporated in his contribution election (if one is then in effect) also shall be automatically adjusted so as to increase the percentage of his salary which shall be contributed pursuant thereto by the amount of such automatic adjustment. The Committee, in its sole discretion, may at any time remove any limitation imposed by it under this provision and any modifications to the participant's contribution election resulting from such limitation shall automatically cease to be effective and such contribution election shall continue in effect under the terms that existed immediately prior to such modifications. For purposes of this Paragraph A, the following terms shall have the following meanings: "actual deferral percentage tests" shall mean either of the following: 1. the "actual deferral percentage" for the group of "highly compensated eligible Employees" is not more than the "actual deferral percentage" for all other eligible Employees multiplied by 1.25; or 2. the excess of the "actual deferral percentage" for the group of "highly compensated eligible Employees" over that of all other eligible Employees is not more than two percentage points, and the "actual deferral percentage" for the group of "highly compensated eligible Employees" is not more than the "actual deferral percentage" of all other eligible Employees multiplied by 2.0. - 7 - "Actual deferral percentage" with respect to any group of active eligible Employees for a plan year shall mean the average of the ratios (calculated separately for each eligible Employee in the group) of 1. the amount of before-tax contributions authorized by the eligible Employee to be paid to the Investment Fund for such plan year, to 2. the eligible Employee's salary for such plan year. For purposes of determining "actual deferral percentages", any eligible Employee who is suspended from participation shall be treated as an eligible Employee. In the case of a "highly compensated eligible Employee" who is subject to the family aggregation requirements of Section 414(q)(6) of the Code, the combined "actual deferral percentage" for the family group (which is treated as one "highly compensated eligible Employee") is determined by combining the before-tax contributions that are paid to the Investment Fund on behalf of all eligible family members for such plan year. In all events, "actual deferral percentages" will be determined in accordance with all of the applicable requirements (including to the extent applicable, the plan aggregation requirements) of Section 401(k) of the Code, and the regulations issued thereunder. The term "highly compensated eligible Employees" include those participants who meet the definition of "highly compensated Employee" as determined under Section 414(q) of the Code and the regulations issued thereunder. The term "highly compensated Employee" includes highly compensated active Employees and highly compensated former Employees. A highly compensated active Employee means an Employee of the Employer or an affiliated company who performs services for the Employer or an affiliated company during the current plan year (the "determination year") and who, during the preceding plan year (the "look-back year"), was an Employee who (i) received compensation in excess of $75,000 (adjusted at the same time and in the same manner as under Section 415(d) of the Code), (ii) received compensation in excess of $50,000 (adjusted at the same time and in the same manner as under Section 415(d) of the Code) and was a member of the "top-paid group," or (iii) was an officer earning more than 50 percent of the dollar limitation under Section 415(b)(1)(A) of the Code. A "highly compensated active Employee" also includes an Employee described in the preceding sentence if (i) the term "determination year" is substituted for the term "look-back year" and the Employee was one of the 100 Employees who earned the most compensation during the determination year, or (ii) the Employee was at any time during the determination year or the look-back year a five-percent owner of the Employer as defined in Section 416(i)(1) of the Code. The "top-paid group" shall include all Employees who are in the top 20 percent of all Employees on the basis of compensation. For purposes of determining the number of Employees in the "top-paid group," the following Employees shall be excluded: (i) Employees who have not completed six months of service; (ii) Employees who normally work less than 17-1/2 hours per week; (iii) Employees who normally work during not more than six months during any calendar year; (iv) Employees who have - 8 - not attained age 21; and (v) Employees who are nonresident aliens receiving no United States source income within the meaning of Section 861(a)(3) and Section 911(d)(2) of the Code. For purposes of determining the number of Employees who will be considered "officers," no more than 50 Employees (or if less, the greater of three Employees or 10 percent of the Employees), excluding those Employees who are excluded for purposes of determining the "top-paid group" under the preceding paragraph, shall be treated as officers. If, for any year, no officer has earned more than 50 percent of the dollar limitation under Section 415(b)(1)(A) of the Code, the highest paid officer of the Employer or an affiliated company shall be treated as having earned such amount. A "highly compensated former Employee" means an Employee who separated from service prior to the determination year, who performed no services for an Employer during the determination year, and who was a highly compensated active Employee for either such Employee's separation year or any determination year ending on or after the Employee's 55th birthday. An Employee who separated from service before January 1, 1987 will be a highly compensated former Employee only if the Employee was a five-percent owner or received compensation in excess of $50,000 during the Employee's separation year (or the year preceding such separation year) or any year ending on or after such Employee's 55th birthday (or the last year ending before such Employee's 55th birthday). If during the determination year, a highly compensated Employee is a five-percent owner or one of the 10 most highly compensated Employees on the basis of compensation paid during such determination year, then such Employee shall be subject to the family aggregation requirements of Section 414(q)(6) of the Code, and the compensation and contributions paid to or on behalf of all family members who are Employees shall be aggregated with and attributable to the highly compensated Employee. Except as otherwise provided in the Plan, family members shall include the highly compensated Employee's spouse and lineal ascendants or descendants and the spouse of such lineal ascendants or descendants. For purposes of determining highly compensated Employees, "compensation" shall be determined in the same manner as "annual compensation" in Article XII of the Plan, increased by before-tax contributions under a cafeteria plan (as defined in Section 125 of the Code) maintained by the Employer or an affiliated company. The determination of highly compensated eligible Employees may be made by the Committee on the basis of the calendar year election or the substantiation guidelines in accordance with such regulations, notices or other guidance issued under Section 414(q) of the Code. If after the close of any plan year the Committee shall determine that the Investment Fund failed to satisfy either of the "actual deferral percentage tests", the Committee may utilize any combination of the following methods to assure that the Investment Fund complies with one or both of the "actual deferral percentage tests": - 9 - 1. The "excess deferrals" and the income allocable thereto shall be distributed to the applicable "highly compensated eligible Employees" as soon as practicable after the end of such plan year, but no later than 12 months after the close of such plan year; the amount of income allocable to each affected highly compensated eligible Employee's excess deferrals shall be determined by multiplying the income for the plan year allocable to the eligible Employee's before-tax contributions (defined below) by a fraction, the numerator of which is the highly compensated eligible Employee's excess deferrals for the plan year and the denominator of which is the sum of: (A) the eligible Employee's account balance attributable to before-tax contributions as of the first day of the plan year, plus (B) the eligible Employee's before-tax contributions for the plan year. The income for the plan year allocable to each affected highly compensated eligible Employee's before-tax contributions shall be determined by subtracting the amount in the denominator of the above-described fraction from the account balance attributable to before-tax contributions determined as of the last day of the plan year. The amount of excess deferrals that may be distributed under this Paragraph A with respect to any participant for any plan year shall be reduced by the amount of any excess before-tax contributions previously distributed pursuant to Paragraph C, if any, for such plan year; or 2. The "excess deferrals" shall be recharacterized as after-tax contributions in accordance with regulations issued under Section 401(k)(3) of the Code to the extent required to comply with either of the "actual deferral percentage tests". "Excess deferrals" shall mean, with respect to each "highly compensated eligible Employee", the amount equal to total before-tax contributions made on behalf of the eligible Employee (determined prior to the application of the leveling procedure described below) minus the product of the eligible Employee's "actual deferral percentage" (determined after application of the leveling procedure described below) multiplied by the eligible Employee's salary. In accordance with the regulations issued under Section 401(k) of the Code, "excess deferrals" shall be determined by a leveling procedure under which the "actual deferral percentage" of the "highly compensated eligible Employee" with the highest such percentage shall be reduced to the extent required to satisfy either of the "actual deferral percentage tests" or, if it results in a lower reduction, to the extent required to cause such "highly compensated eligible Employee's" "actual deferral percentage" to equal the "actual deferral percentage" of the "highly compensated eligible Employee" with the next highest "actual deferral percentage". This leveling procedure shall be repeated until the requirements of either of the "actual deferral percentage tests" are first satisfied. The determination and correction of excess deferrals of a highly compensated eligible Employee whose actual deferral percentage is determined under the family aggregation requirements of Section 401(k) and Section 414(q)(6) of the Code is accomplished by reducing the family unit's actual deferral percentage under the leveling procedure described in this paragraph and allocating the excess deferrals among the family group in proportion to the before-tax contributions made on behalf of - 10 - each family member that are combined to determine the family unit's actual deferral percentage. B. Notwithstanding anything contained in the foregoing provisions of this Article IV or in the provisions of Article V, the provisions on limitations set forth in Article XII shall apply to limit Employee and Employer matching contributions in any calendar year which exceed those specified in Article XII. C. Notwithstanding anything contained in the foregoing provisions of this Article IV or in the provisions of Article V, in no event may the amount of an eligible Employee's before-tax contributions to the Plan, in addition to all such before-tax contributions under all other cash or deferred arrangements (as defined in Section 401(k) of the Code) in which an eligible Employee participates, exceed $7,000 (adjusted for increases in the cost-of-living under Section 402(g) of the Code) in any calendar year. If in any calendar year an eligible Employee's total before-tax contributions under the Investment Fund, in addition to all such salary reduction contributions under all other qualified cash or deferred arrangements (as defined in Section 401(k) of the Code) maintained by the Employer or an affiliated company in which the eligible Employee participates, exceed $7,000 (as adjusted), the excess before-tax contributions (before-tax contributions in excess of $7,000 (as adjusted)) together with earnings thereon shall be distributed to the eligible Employee as soon as practicable after the Committee determines that the excess before-tax contribution was made, but no later than April 15 of the calendar year following the calendar year in which the excess before-tax contribution was made. If an eligible Employee participates in another cash or deferred arrangement which is not maintained by an Employer or an affiliated company in any calendar year and his total before-tax contributions under the Investment Fund and such other plan exceed $7,000 (as adjusted) in a calendar year, he may request to receive a distribution of the amount of the excess before-tax contributions (a deferral in excess of $7,000 (as adjusted)) that is attributable to before-tax contributions in the Investment Fund together with earnings thereon, notwithstanding any limitations on distributions contained in the Investment Fund. Such distribution shall be made by the April 15 following the plan year of the excess before-tax contributions provided that the eligible Employee notifies the Committee of the amount of the excess before-tax contributions that is attributable to before-tax contributions to the Investment Fund and requests such a distribution. The eligible Employee's notice must be received by the Committee no later than the March 1 following the plan year of the excess before-tax contributions. In the absence of such notice, the amount of such excess before-tax contributions attributable to before-tax contributions to the Investment Fund shall be subject to all requirements on withdrawals and distributions in the Investment Fund. The amount of excess before-tax contributions that may be distributed under this Paragraph C with respect to any eligible Employee for any calendar year shall be reduced by the amount of any excess deferrals previously distributed pursuant to Paragraph A of this Article IV, if any, for such year. The amount of earnings allocable to each affected Employee's excess before-tax contributions shall be determined by multiplying the income for the plan year allocable to the Employee's before-tax contributions by a fraction, the numerator of which is the Employee's excess before-tax contributions for the calendar year, and the denominator of which is the sum of: (A) the Employee's account balance - 11 - attributable to before-tax contributions as of the first day of the calendar year, plus (B) the Employee's before-tax contributions for the calendar year. The earnings for the calendar year allocable to each affected Employee's before-tax contributions shall be determined by subtracting the amount in the denominator of the above-described fraction from the account balance attributable to before-tax contributions determined as of the last day of the calendar year. D. Notwithstanding anything contained in the foregoing provisions of this Article IV or in the provisions of Article V, the following rules and limitations shall apply to a participant's after-tax basic required contributions, after-tax voluntary supplemental contributions, Employers' matching contributions, and, if applicable, after-tax periodic special contributions. If the Committee shall at any time determine that the spread between the Employers' matching contributions and the then current percentage of salary being contributed to the Investment Fund by means of after-tax contributions for (1) "highly compensated eligible Employees" of the Employers, and (2) the remaining eligible Employees is such that Employers' matching contributions and after-tax contributions under the Investment Fund would fail to satisfy either of the "actual contribution percentage tests" or the "multiple use test" for the current plan year (assuming such percentages had been and would continue in constant effect for the plan year), the Committee, in its sole discretion, may unilaterally reduce, on a prospective basis, the maximum percentage of salary with respect to which "highly compensated eligible Employees" elected to contribute as after-tax contributions under the Investment Fund. The participant's after-tax contribution agreement incorporated in his contribution election shall be automatically adjusted, without any further action on the part of such participant or his Employer, to conform to the new limitation imposed by the Committee. The Committee, in its sole discretion, may at any time remove any limitation imposed by it under this provision and any modifications to the participant's contribution election resulting from such limitation shall automatically cease to be effective and such contribution election shall continue in effect under the terms that existed immediately prior to such modifications. For purposes of this Paragraph D, the following terms shall have the following meanings: "Actual contribution percentage test" shall mean either of the following: 1. The "actual contribution percentage" for the group of "highly compensated eligible Employees" is not more than the "actual contribution percentage" for all other eligible Employees multiplied by 1.25; or 2. The excess of the "actual contribution percentage" for the group of "highly compensated eligible Employees" over that of all other eligible Employees is not more than two percentage points, and the "actual contribution percentage" for the group of "highly compensated eligible Employees" is not more than the "actual contribution percentage" of all other eligible Employees multiplied by 2.0. - 12 - "Actual contribution percentage" with respect to any specified group of active eligible Employees for a plan year shall mean the average of the ratios (calculated separately for each eligible Employee in the group) of: 1. the amount of Employers' matching contributions and after-tax contributions, plus the amount of any before-tax contributions recharacterized pursuant to Article IV, the amount of any before-tax contributions treated as Employers' matching contributions for purposes of the "actual contribution percentage test", contributed to the Investment Fund on behalf of each such eligible Employee for such plan year, to 2. the eligible Employee's salary for such plan year. For purposes of determining "actual contribution percentages", any eligible Employee who is suspended from participation shall be treated as an eligible Employee. In the case of a "highly compensated eligible Employee" who is subject to the family aggregation requirements of Section 414(q)(6) of the Code, the combined "actual contribution percentage" for the family group (which is treated as one "highly compensated eligible Employee") is determined by combining the matching contributions, after-tax contributions, recharacterized before-tax contributions, and before-tax contributions used as Employers' matching contributions for purposes of the "actual contribution percentage test" that are paid to the Investment Fund on behalf of all eligible family members for such plan year. In all events, "actual contribution percentages" will be determined in accordance with all of the applicable requirements (including to the extent applicable, the plan aggregation requirements) of Section 401(m) of the Code and the regulations issued thereunder. The term "highly compensated eligible Employee" shall have the same meaning as in Article IV, Paragraph A. The term "multiple use test" shall mean the rules prohibiting the multiple use of the alternative limitation described in Section 401(k)(3)(A)(ii)(II) and Section 401(m)(2)(A)(ii) of the Code, and the provisions of Treas. Reg. Section 1.401(m)-2(b) and any further guidance issued thereunder. If after the close of any plan year the Committee shall determine that the Investment Fund failed to satisfy either of the "actual contribution percentage tests", the Committee may utilize any combination of the following methods to assure that the Investment Fund complies with one or more of the "actual contribution percentage tests": 1. The "excess aggregate contributions" made with respect to "highly compensated eligible Employees" with respect to such plan year, and any income allocable thereto, determined in accordance with regulations issued under Section 401(m) of the Code, shall be distributed to the applicable "highly compensated eligible Employees" in an amount equal to each such Employee's after-tax contributions (including recharacterized before-tax contribution) - 13 - as soon as practicable after the end of such plan year, but no later than 12 months after the close of such plan year. 2. If the Investment Fund fails to satisfy either of the "actual contribution percentage tests" following the distribution of after-tax contributions and income described under (1) above, the remaining "excess aggregate contributions" made on behalf of "highly compensated eligible Employees" with respect to such plan year, and the income allocable thereto, determined in accordance with regulations under Section 401(m) of the Code shall be distributed to the applicable "highly compensated eligible Employees" as soon as practicable after the end of such plan year, but no later than 12 months after the close of such plan year. 3. Before-tax contributions may be treated as Employer matching contributions solely for the purposes of satisfying either of the "actual contribution percentage tests". "Excess aggregate contributions" shall mean with respect to each "highly compensated eligible Employee," the amount equal to the total Employer matching contributions made on his behalf and his after-tax contributions (including the amount of any before-tax contributions recharacterized pursuant to Article IV) determined prior to the application of the leveling procedure described below minus the product of the eligible Employee's contribution percentage, determined after the application of the leveling procedure described below, multiplied by the eligible Employee's compensation. Under the leveling procedure, the contribution percentage of the "highly compensated eligible Employee" with the highest such percentage is reduced to the extent required to enable the Plan to satisfy either of the "actual contribution percentage tests", or it results in a lower reduction, to the extent required to cause such eligible Employee's contribution percentage to equal that of the "highly compensated eligible Employee" with the next highest contribution percentage. This leveling procedure is repeated until the Plan complies with either of the "actual contribution percentage tests". In no case shall the amount of "excess aggregate contributions" with respect to any "highly compensated eligible Employee" exceed the after-tax contributions and Employer matching contributions made on behalf of such eligible Employee in any plan year. E. Notwithstanding anything to the contrary in this Article IV, Employer matching contributions, before-tax contributions and after-tax contributions may not be made to this Investment Fund in violation of the "multiple use test." If such multiple use occurs, the actual contribution percentages for all "highly compensated eligible Employees" (determined after applying the "actual deferral percentage" and "actual contribution percentage" tests) shall be reduced in accordance with Treas. Reg. Section 1.401(m)-2(c) and any further guidance issued thereunder in order to prevent such multiple use of the alternative limitation. F. Notwithstanding anything in the Investment Fund to the contrary, if the rate of the Employers' matching contributions (determined after application of the corrective mechanisms described in Paragraph A, Paragraph C and Paragraph D) discriminates in favor of "highly compensated eligible Employees," the Employer matching contribution attributable to any excess - 14 - deferrals, excess before-tax contributions of each affected "highly compensated eligible Employee" shall be charged to the participant's C account and credited to his Employer's C account so that the rate of Employer matching contributions is nondiscriminatory. Any such charges shall be made no later than the end of the plan year following the plan year for which the Employer's matching contribution was made. (iv) conversion directions: Subject to such conditions as CBS shall prescribe on a uniform basis, any participant may from time to time file with CBS a direction (i) to the effect that, as of and as promptly as shall be practicable after the valuation date nearest to the next date (of which there shall be not fewer than two in any calendar year) which CBS shall specify for the purpose, CBS or its designee shall charge to such participant's A account, D account or E account all or the portion specified in such direction of the A units, D units or E units credited to such account immediately prior to such valuation date, shall convert the value of such A units, D units or E units so charged to B units and shall credit such B units to such participant's B account or (ii) to the effect that, as of and as promptly as shall be practicable after such valuation date, CBS or its designee shall charge to such participant's B account, D account or E account all or the portion specified in such direction of the B units, D units or E units credited to such account immediately prior to such valuation date, shall convert the value of such B units, D units or E units so charged to A units and shall credit such A units to such participant's A account or (iii) to the effect that, as of and as promptly as shall be practicable after such valuation date, CBS or its designee shall charge to such participant's A account, B account or E account all or the portion specified in such direction of the A units, B units or E units credited to such account immediately prior to such valuation date, shall convert the value of such A units, B units or E units so charged to D units and shall credit such D units to such participant's D account, or (iv) to the effect that, as of and as promptly as shall be practicable after such valuation date, CBS or its designee shall charge to such participant's A account, B account or D account all or the portion specified in such direction of the A units, B units or D units credited to such account immediately prior to such valuation date, shall convert the value of such A units, B units or D units so charged to E units and shall credit such E units to such participant's E account, and CBS or its designee shall so effect such charges, conversions and credits and shall also effect corresponding credits and charges of the values of such units to the A Fund, the B Fund, the D Fund or the E Fund. Following such charges, conversions and credits, the units whose value have been thus converted shall retain the after-tax or before-tax character which was attributable to the units immediately prior to the conversion. V. Employers' Matching Contributions. Except as otherwise provided in the last sentence of this Article V, as of and as promptly as shall be practicable after each valuation date, (a) each Employer shall pay to the Trustee, as such Employer's matching contribution, the amount which, together with the value of the C units credited to such Employer's C account as of such valuation date (prior to effecting the credits thereto as of such valuation date provided for in - 15 - subparagraph 1 of Paragraph B of Article VI hereof and subparagraph 3 of Paragraph C of said Article VI), will enable CBS or its designee to effect the credits hereinafter in this Article V referred to in the C accounts of those participants whose required basic contributions shall be or shall have been paid to the Trustee by such Employer as of such valuation date, and (b) CBS or its designee shall convert the amount of such Employer's matching contribution so paid to it to C units, credit such C units to such Employer's C account, credit to the C account of each of said participants the number of C units the value of which shall be equal to 100 percent of such participant's required basic contribution so paid to the Trustee, charge to such Employer's C account all of the C units so credited to the C accounts of said participants and credit the amount of such Employer's matching contribution to the C Fund. Notwithstanding the foregoing provisions of this Article V, no Employer shall make a matching contribution as of any valuation date in excess of whichever shall be greater of the amount of such Employer's earnings and profits for such Employer's taxable year in which such valuation date shall occur or the amount of such Employer's earnings and profits as of the end of such taxable year, prior, in either case, to any charge for such contribution; if and to the extent that any Employer shall not be able to make such a matching contribution because it shall have insufficient such earnings and profits, the other Employers shall, in such proportions as CBS shall determine and subject to the same limitations based upon their earnings and profits, make such matching contribution on behalf of such first-mentioned Employer. With respect to a participant whose required basic contribution is the maximum permitted amount of 2-1/2 percent of his or her salary and for whom the numerical total of his or her attained years of age plus the full years of his or her continuous employment period equals 55 or greater, the Employer's matching contribution to be credited to such participant's C account shall be increased to be of a value equal to (i) 120 percent of his or her required basic contribution if the participant has not attained age 50 or (ii) 160 percent of his or her required basic contribution if the participant has attained age 50. Such increased rate of Employer's matching contribution shall become effective as of and as promptly as shall be practicable after the valuation date following January 1 of the year in which a participant shall satisfy the one or several requirements for entitlement thereto, but shall be made only if the total of the participant's required basic contribution election and voluntary supplemental contribution election as then in effect, as a percentage of the participant's salary, equals or exceeds such increased rate. The manner for payment, conversion, charging and crediting of Employer's matching contributions at such increased rates shall be identical to that provided in the first sentence of this Article, and the making thereof shall not be deemed to contravene the final sentence of this paragraph. No Employer matching contributions shall be made with respect to voluntary supplemental contributions or periodic special contributions of a participant. Subject to such conditions as CBS shall prescribe on a uniform basis, a participant who has attained age 55 may thereafter from time to time, but not more than twice, file with CBS a direction to the effect that, as of and as promptly as shall be practicable after the valuation date nearest to the next date (of which there shall be not fewer than two in any calendar year) which CBS shall specify for the purpose, CBS or its designee shall charge to such participant's C account all, or the portion designated by the participant, of the vested C units credited to such account immediately - 16 - prior to such valuation date, shall convert the value of such vested C units so charged to B units and shall credit such B units to such participant's B account in a separate before-tax subaccount therein to be designated the participant's "converted C/B unit subaccount". A participant shall not have the right to withdraw any of the amounts credited to such a subaccount prior to the termination of his or her employment (and participation), and the limited conversion privilege herein provided is separate and distinct from the "C unit conversion election" relating to the payment of a termination benefit which is set forth in subparagraph 3 of Paragraph E of Article VI of the Investment Fund. VI. Termination of Participation; Withdrawals; Determination and Payment of Benefits. A. Nothing contained herein shall require any Employer to continue any participant in its employ, or require any participant to continue in the employ of any Employer, or require any Employer to continue to pay compensation to any participant during a leave of absence, or require any Employer to pay compensation to any participant during a leave of absence at the same rate as prior to the commencement thereof. Except as otherwise provided in the next sentence of this Paragraph A, if the employment of any participant by an Employer shall terminate for any reason whatever, including his death, his participation in the Investment Fund shall terminate as of the date of such termination of employment. In any event, (a) if, concurrently with the termination of the employment of a participant by any of the Employers, such participant shall become an employee of a non-Fund subsidiary, or (b) if a participant shall either (i) be transferred to a group of employees not determined by the Board to be eligible to participate in the Investment Fund or (ii) become an employee whose principal terms and conditions of employment are subject to the terms of a collective bargaining agreement which does not provide for eligibility for participation in the Investment Fund, his participation in the Investment Fund shall not terminate until the business day on which he shall no longer be an Employee of any of the Employers or an employee of any non-Fund subsidiary and he shall be deemed to have suspended his contribution election as then in effect for those of his consecutive payroll periods which shall be co-extensive with the period during which he shall be an employee of a non-Fund subsidiary or any employee included in such an ineligible group or an employee whose principal employment terms and conditions are subject to such a collective bargaining agreement, as the case may be, and such contribution election shall not be subject to renewal during such payroll periods. B. 1. Prior to any valuation date, a participant may file with CBS a request to have paid to him as of such valuation date the amount equal to whichever shall be the lesser of (a) the amount specified in, or computed in accordance with, such request or (b) the amount equal to the sum of the value as of such valuation date of the A units then credited to such participant's after-tax subaccount of his A account, the B units then credited so such participant's after-tax subaccount of his B account, the D units then credited to such participant's after-tax subaccount of his D account, and the E units then credited to such participant's after-tax subaccount of his E account. Such request shall specify the extent, if any, to which after-tax subaccount A units, after-tax subaccount B units, - 17 - after-tax subaccount D units and after-tax subaccount E units shall respectively be charged to such participant's A account, B account, D account and E account to effect such withdrawal. CBS or its designee shall, as of and as promptly as shall be practicable after such valuation date, effect the charges so specified to such accounts, effect corresponding charges of the value of such units to the A Fund, the B Fund, the D Fund and the E Fund and make such payment to such participant. After a participant has attained age 59-1/2, the foregoing provisions limiting the right of withdrawal to the value only of the A and/or B and/or D and/or E units in his after-tax subaccounts shall lapse, and the withdrawal may be requested and effected of amounts which include the value of the A and/or B and/or D and/or E units in his before-tax as well as in his after-tax subaccounts then credited to such participant's accounts, subject however to the limitation of Section B.2 below. 2. If any participant shall effect a withdrawal of his required basic contributions as of a valuation date which shall be less than five full years subsequent to the valuation date (if any) as of which he shall last have effected a withdrawal of his required basic contributions, such withdrawal shall be deemed to be a suspension of all of such participant's contribution election as then in effect for those of his consecutive payroll periods the last of which shall be the last payroll period ending within the twelfth monthly accounting period commencing subsequent to such first-mentioned valuation date, and such contribution election shall not be subject to renewal during such payroll periods. 3. Prior to his attainment of age 59-1/2, a participant who has already withdrawn the maximum amount allowable under this Article VI may, in accordance with the foregoing procedures, request a withdrawal, to meet a bona fide financial emergency, of amounts which include all or a portion of credits then credited as units in his A and/or B and/or D and/or E accounts in the before-tax subaccounts thereof. In considering and making determinations upon such hardship requests, the Committee will act on the basis of positive evidence which the participant will be required to furnish, and will make its determinations on a uniform and nondiscriminatory basis. Consent for such hardship withdrawals will be granted if and only to the extent that the Committee determines that (i) the distribution is necessary in light of immediate and heavy financial needs of the participant, (ii) the distribution will not exceed the amount required to meet such financial needs, and (iii) funds to meet such financial needs are not reasonably available from other resources of the participant. Such determination shall be made in accordance with the following guidelines: (a) Demonstration of Need. The participant must establish an immediate and heavy financial need for a withdrawal of funds pursuant to this section. The Committee shall determine, in a nondiscriminatory manner and in accordance with the provisions of Section 401(k) of the Code, whether a participant has a financial hardship. For this purpose, the term "financial hardship" shall be determined in accordance with the regulations issued pursuant to Section 401(k) of the Code and any other notices or rulings of general applicability issued under Section 401(k) of the Code and, to the extent permitted by such regulations, shall be limited to any financial need arising from: (1) medical expenses previously incurred or expenses necessary to obtain medical care not covered by insurance and arising from serious illness, accident or total - 18 - disability of the participant or any member of his family, (2) expenses relating to the payment of tuition for the next 12 months of post-secondary education of a participant, his spouse or dependent, (3) the expenses (excluding mortgage payments) required for the purchase of a primary residence for the participant, (4) expenses relating to the need to prevent the eviction of the participant from his principal residence or foreclosure on the mortgage of the participant's principal residence, or (5) expenses arising from circumstances of sufficient severity that a participant is confronted by present or impending financial ruin or his family is clearly endangered by present or impending want or deprivation. (b) Amount of Hardship Withdrawal. The amount of any withdrawal by a participant under subsection (a) above shall not exceed the amount required to meet the immediate financial need created by the hardship. In no event may the amount of any withdrawal exceed the lesser of: (1) the total value of the participant's before-tax contributions determined as of December 31, 1988 (taking into account earnings and losses attributable to such amounts), plus the total amount of the participant's before-tax contributions that are made after December 31, 1988, or (2) the value of all before-tax contributions made to the Plan (taking into account earnings and losses attributable to such amounts). (c) Availability of Other Resources. In order to make a withdrawal under this paragraph, the participant must establish that he cannot relieve the financial hardship with assets that are reasonably available to the participant from other resources of the participant. For this purpose, the Committee may reasonably rely upon a participant's representation that the financial hardship cannot be relieved through: (i) reimbursement or compensation by insurance or otherwise, (ii) reasonable liquidation of the participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, (iii) cessation of before-tax contributions and after-tax contributions under the Investment Fund, or (iv) nontaxable (at the time of the loan) loans from plans maintained by the Employer or by any other employer or by borrowing from commercial sources on reasonable commercial terms (except to the extent any such borrowing would fail to alleviate the hardship or the repayment of such borrowing would cause a financial hardship). A participant's resources shall be deemed to include those assets of his spouse and minor children that are reasonably available to the participant. In the absence of such representations, a participant shall be deemed to have no other resources reasonably available if: (i) the participant has obtained all withdrawals, distributions and loans currently available to the participant under the Investment Fund and all other plans maintained by the Employer or an affiliated company (except to the extent any such borrowing would fail to alleviate the hardship or the repayment of such borrowing would cause a financial hardship); (ii) the participant agrees to cease all before-tax contributions and after-tax contributions under the Investment Fund as well as all similar contributions to all other plans maintained by the Employer or an affiliated company for a period of at least 12 months from the date of the hardship withdrawal; and (iii) the amount of the participant's before-tax contributions under the Investment Fund and under all plans maintained by the Employer or an affiliated company for the year following the year of the withdrawal are - 19 - limited to the applicable limit under Section 402(g) of the Code for such year minus the participant's before-tax contributions for the year of the hardship withdrawal. C. 1. Except as otherwise provided in Paragraph E of this Article VI, each participant whose employment (and participation) shall terminate at any time for any reason whatever shall be entitled to receive as a termination benefit the amount equal to the value on the valuation date immediately following or coincident with his termination date of the A units credited to his A account, of the B units credited to his B account, of the D units credited to his D account and of the E units credited to his E account, all as of such termination date. 2. Except as otherwise provided in Paragraph E of this Article VI, each participant whose employment (and participation) shall terminate either (a) for any reason on or subsequent to his 65th birthday or (b) at any time by reason of his death or his disability or (c) at any time prior to his 65th birthday when his continuous employment period shall be three or more years, shall be entitled to receive as a termination benefit the amount equal to the value on the valuation date immediately following or coincident with his termination date of the C units credited to his C account as of such termination date. 3. Except as otherwise provided in Paragraph E of this Article VI, each participant whose employment (and participation) shall terminate, other than by reason of his death or his disability, at any time prior to his 65th birthday when his continuous employment period shall be less than three years, shall be entitled to receive as a termination benefit the amount equal to the value on the valuation date immediately following or coincident with his termination date of the vested C units credited to his C account as of such termination date. CBS or its designee shall, as of and as promptly as shall be practicable after such valuation date, charge to such former participant's C account and credit to his Employer's C account the unvested C units credited to such former participant's C account as of such termination date; provided, however, that if such participant returns to employment before incurring a one-year break in service, he shall be entitled to repay to the Investment Fund the amount of his termination benefit attributable to his C account if such repayment is made prior to the second anniversary of his resumption of employment. In that event, such participant shall have credited to his C account the unvested C units which were credited to his account as of his prior termination date and the Employer's C account shall be charged in an identical amount. 4. If a participant whose employment terminated and who received a termination benefit is reemployed and repays the full amount of his termination benefit to the Investment Fund prior to incurring five consecutive one-year breaks-in-service, there shall be restored to the A account, B account, D account, E account and C account of such participant the number of A units, B units, D units, E units and C units, respectively, that have a value as of the valuation date immediately following or coincident with the date of such repayment equal to the value of the number of units that had been credited to each such account as of the date of such termination of employment. - 20 - 5. All references to "C units", "D units", "C accounts" and "D accounts" above in this Paragraph C shall be deemed to include any and all C-# units, D-# units, C-# accounts and D-# accounts which may be in existence at the relevant time or times. D. Upon the termination of a participant's employment (and participation) at any time for any reason whatever, and upon the termination of a participant's employment (but not his participation) under the circumstances referred to in the third sentence of Paragraph A of this Article VI, his Employer shall repay to such former participant (or, in the event of his death, to his executors or administrators) or to such participant any amounts withheld or deferred from his salary, pursuant to a contribution election in effect prior to such termination, with respect to payroll periods ending in the monthly accounting period in which his termination date shall occur, or his employment shall terminate under said circumstances, as the case may be. E. 1. (a) Any participant may file with CBS an election to have his termination benefit (other than a termination benefit payable by reason of his death) paid in a single payment or in a series of monthly or annual installments over a period not exceeding the lesser of 20 years or the life expectancy of such participant or the life expectancy of such participant and any individual designated as a beneficiary by such participant, provided that if the beneficiary is not the spouse of the participant, the present value of the installments payable to the participant shall at least equal 50 percent of the present value of the total installments payable to the participant and his beneficiary. Such single payment or the first such installment payment shall be made at the time specified in such election but not later than April 1 of the calendar year following the later of the calendar year in which such participant attains age 70-1/2, or the year in which such participant retires. If a participant is receiving his termination benefit in a series of installments and dies before his entire interest has been distributed to him, the balance of his termination benefit shall continue to be paid in such installments or, if his beneficiary so elects, in a single payment. (b) Any participant may file with CBS an election to have a termination benefit payable by reason of his death paid in a single payment to be paid to his beneficiary at the time specified in such election but not later than five years after the date of his death or in a series of monthly or annual installments to an individual designated as his beneficiary over a period not exceeding the lesser of 20 years or the life expectancy of such beneficiary and beginning at the time specified in such election but not later than one year after the date of his death (or if the participant's beneficiary is his surviving spouse, the date on which the participant would have attained age 70-1/2). (c) Any participant may also, not less than 30 days prior to his termination date, modify or revoke any distribution election theretofore made by him. If any participant shall not have a distribution election in effect on his termination date, his termination benefit shall, subject to the provisions of a stock election of such former participant then in effect, be paid to him (or in the event of his death, to his beneficiaries) in a single payment, provided, that if the value on the valuation date coincident with or immediately following such termination date of the A - 21 - units credited to his A account as of such termination date, of the B units credited to his B account as of such termination date, of the D units credited to his D account as of such termination date, of the E units credited to his E account as of such termination date and of the C units credited to his C account as of such termination date shall exceed $3,500, his termination benefit shall not be immediately distributed without his consent. If any participant does not consent to such a distribution, his termination benefit will not be paid until his attainment of age 70. The value of his termination benefit shall be determined as of the earliest to occur of the valuation date coincident with or (i) immediately following his 70th birthday, or (ii) immediately following the receipt by CBS on or prior to the 15th day of the month of his consent to an immediate distribution. 2. (a) A distribution election shall be set forth in a written notice given to the Committee and, if made, such notice shall be given during the 90-day period before the date the payment of his termination benefit shall commence, which period shall be extended, if necessary, to include at least the 90 days after the date the information referred to in section (b) of this subparagraph 2 shall have been given to such participant; provided, however, that if such participant shall have given notice less than 90 days before the date on which the payment of his termination benefit shall commence of his intent to terminate employment, such election period shall end on the later of such date or the 14th day after the date on which such notice shall have been given, which period shall be extended, if necessary, to include at least 15 days after the information referred to in section (b) of this subparagraph 2 shall have been given to such participant. Elections hereunder shall be revocable during such election period. (b) Within seven days after the commencement of such election period, or, if earlier, nine months prior to a participant's attainment of age 55, such participant shall be furnished with a notice written in non-technical terms of the availability of the distribution election. 3. Any participant may, in accordance with the provisions of section (a) of subparagraph 2 of this Paragraph E, file with CBS an election to have that portion of his termination benefit consisting of the value of the D units credited to his D account and/or the value of the vested C units credited to his C account paid to him (or, in the event of his death, to his beneficiaries), to the extent possible, in shares of CBS Stock in lieu of in cash ("a stock election"), or, alternatively, to have such value of such D units (a "D unit conversion election") and/or of such vested C units (a "C unit conversion election") converted as of his termination date to units in his A and/or B and/or E account(s) as he may designate. (In the case of a C unit conversion election, such value shall be converted to units in said participant's before-tax subaccount(s); in the case of a D unit conversion election, that portion of such value representing the before-tax subaccount in said participant's D account shall be converted to units in his before-tax subaccount(s) and that portion of such value representing the after-tax subaccount in his D account shall be converted to units in his after-tax subaccount(s).) Any participant may also, in accordance with such provisions of said section (a), revoke any such election theretofore made by him. - 22 - 4. Notwithstanding any other provisions of Paragraph E of this Article VI, if a participant is married, any designation of a beneficiary other than the participant's spouse shall be given effect only if such spouse consents in writing to such designation and such consent acknowledges that such spouse is thereby waiving in favor of such other beneficiary the right to receive the amount payable hereunder upon the death of the participant and such consent is witnessed by a notary public. The preceding sentence shall not apply to a designation by a participant who establishes to the satisfaction of the Committee that his spouse cannot be located. No designation of a beneficiary made before a participant is married shall be given effect after the participant becomes married. F. 1. If any former participant shall have in effect a distribution election referred to in section (b) of subparagraph 1 of Paragraph E of this Article VI, or if any former participant shall have in effect a distribution election referred to in section (a) of said subparagraph 1 and shall die prior to the payment of his termination benefit in full: (a) As of and as promptly as shall be practicable after the valuation date immediately following or coincident with such former participant's termination date (if such distribution election shall be one referred to in said section (b)) or the valuation date immediately following or coincident with the date of such former participant's death (if such distribution election shall be one referred to in said section (a) and such participant shall die prior to the payment of his entire termination benefit in full), as the case may be: (i) CBS or its designee shall determine the value of the A units credited to such former participant's A account as of such termination date or as of the date of the death of such former participant, as the case may be, the value of the B units credited to such former participant's B account as of such date and the value of the E units credited to such former participant's E account as of such date, and, if a stock election, a D unit conversion or a C unit conversion election of such former participant shall not be in effect, also the value of the D units and the vested C units credited to such former participant's D account and C account, respectively, as of such date. (ii) CBS or its designee shall charge such units (whether A units and/or B units and/or D units and/or E units and/or vested C units) to such respective accounts and charge the respective values thereof to the A Fund and/or the B Fund and/or the D Fund and/or the E Fund and/or the C Fund, as the case may be. (iii) If such distribution election shall be one referred to in said section (a) or said section (b), the Trustee shall pay to such former participant or his beneficiaries, as the case may be, the amounts so charged to the A Fund and/or the B Fund and/or the D Fund and/or the E Fund and/or the C Fund. - 23 - (b) If a stock election of such former participant shall be in effect, as of and as promptly as shall be practicable after the applicable valuation date referred to in section (a) of this subparagraph 1: (i) The Trustee shall distribute to such former participant or his beneficiaries, as the case may be, the largest possible number of full shares of CBS Stock, registered in the name of such former participant or his beneficiaries, the value of which shall be equal to or less than the value of the D units and the vested C units credited to the D account and C account, respectively, of such former participant as of his termination date or as of the date of the death of such former participant, as the case may be. (ii) CBS or its designee shall charge the D units and the vested C units the value of which is so distributed to the D account and the C account, respectively, of such former participant and charge the value thereof to the D Fund and the C Fund, respectively. (iii) The Trustee shall pay to such former participant or his beneficiaries, as the case may be, the amount equal to the value of the D units and the vested C units credited to the D account and the C account of such former participant as of such date and not so charged to such D account or C account and charge such amount to the D Fund or the C Fund, as the case may be. 2. If any former participant shall have in effect a distribution election referred to in section (a) of subparagraph 1 of Paragraph E of this Article VI: (a) As of and as promptly as shall be practicable after the valuation date immediately following or coincident with such former participant's termination date or the filing by such participant of the aforementioned distribution election, whichever shall be the later, and (I) if such distribution election shall be one requiring monthly installments, as of and as promptly as shall be practicable after each subsequent valuation date or (II) if such distribution election shall be one requiring annual installments, as of and as promptly as shall be practicable after each subsequent valuation occurring during the same calendar month as such first-mentioned valuation date, and in either case, to and including the valuation date as of which such former participant's termination benefit shall have been paid in full, or to and including the valuation date immediately following the date of such former participant's death (if such former participant shall die prior to the payment of his termination benefit in full), as the case may be: (i) CBS or its designee shall determine the value of the A units then credited to such former participant's A account and the B units then credited to such former participant's B account and the E units then credited to such former participant's E account, and, if a stock election or a D unit - 24 - or C unit conversion election of such former participant shall be in effect, also the value of the D units and the vested C units then credited to such former participant's D account and C account, respectively. (ii) The Trustee shall pay to such former participant or his beneficiaries, as the case may be, that fraction of the respective amounts determined pursuant to the provisions of subsection (i) of this section (a) the numerator of which shall be one and the denominator of which shall be the total number of installments specified to be paid in the distribution election of such former participant minus the number of such installments paid as of valuation dates prior to the valuation date first referred to in this section (a). (iii) CBS or its designee shall charge to the A account of such former participant and to the B account of such former participant and to the E account of such former participant, and, if a stock election or a D unit or C unit conversion election of such former participant shall not be in effect, also to the D account and C account of such former participant, the fraction determined pursuant to the provisions of subsection (ii) of this section (a) of the respective numbers of the A units and the B units and the E units, and, if such stock election or a D unit or C unit conversion election shall not be in effect, also any D units and vested C units credited to such accounts as of the valuation date first referred to in this section (a) and make corresponding charges to the A Fund and/or the B Fund and/or the E Fund and/or the D Fund and/or the C Fund. (b) If a stock election of such former participant shall be in effect as of and as promptly as shall be practicable after the valuation date first referred to in section (a) of this subparagraph 2, and (I) if such former participant's distribution election shall be one requiring monthly installments, as of and as promptly as shall be practicable after each subsequent valuation date, or (II) if such distribution election shall be one requiring annual installments, as of and as promptly as shall be practicable after each subsequent valuation date occurring during the same calendar month as such first-mentioned valuation date, and, in either case to and including the valuation date as of which such former participant's termination benefit shall have been paid in full, or to and including the valuation date next preceding the date of such former participant's death (if such former participant shall die prior to the payment of his termination benefit in full), as the case may be: (i) The Trustee shall distribute to such former participant or his beneficiaries, as the case may be, the largest possible number of full shares of CBS Stock, registered in the name of such former participant or his beneficiaries, as the case may be, the value of which shall be equal to or less than the value of the fraction determined pursuant to the provisions of subsection (ii) of section (a) - 25 - of this subparagraph 2 of the D units and the vested C units credited to the D account and the C account of such former participant as of such valuation date. (ii) CBS or its designee shall charge the D units and the vested C units the value of which is so distributed to the D account and the C account of such former participant and charge the value thereof to the D Fund and the C Fund, respectively. (iii) If said distribution election is one referred to in said section (a), concurrently with the last distribution of CBS Stock to such former participant or his beneficiaries, as the case may be, the Trustee shall pay to him or them the amount equal to the value as of the valuation date as of which such distribution is made of the D units and the vested C units credited to the D account and the C account of such former participant as of such valuation date and not theretofore charged thereto and CBS or its designee shall charge such D units and C units to such D account and C account and charge such amount to the D Fund and the C Fund, respectively. 3. All payments made by the Trustee to any former participant (and/or his beneficiaries) pursuant to the foregoing provisions of this Paragraph F shall be subject to such withholding and to such other deductions as shall at the time of such payment be required by reason of any income tax or other law, whether of the United States or of any other jurisdiction, and, in the case of payments to beneficiaries of former participants, the delivery to the Trustee of all appropriate tax waivers and other documents. 4. Notwithstanding anything contained herein to the contrary, the payment of any benefits to any former participant (and/or his beneficiaries) shall commence, unless such former participant (and/or his beneficiaries) shall elect otherwise hereunder, not later than the 60th day after the close of the calendar year in which occurs his 65th birthday or his retirement in a calendar year thereafter, whichever shall last occur. 5. Notwithstanding anything contained herein to the contrary, if a participant shall attain age 70 on or after January 1, 1988 and shall thereafter continue to be an Employee, then, as of the first day of the month following the month in which such age is attained such participant may elect then or at any time thereafter to terminate permanently his or her participation, which shall result in the participant's right to commence to receive payment of his or her benefits, the value of which shall be determined as of the valuation date coincident with or immediately following such election. In the absence of such an election, such participant shall continue to participate in the Investment Fund on the same terms and conditions as any other Employee. 6. To the extent practicable, the foregoing provisions of this Paragraph F pertinent to the valuation, charging and distributions with respect to the D units of a participant shall be applicable to the D-# units credited to a D-# account of a participant, and those with respect to the - 26 - vested C units of a participant shall be applicable to the vested C-# units credited to a C-# account of a participant, at the time in question, and if the application of such provisions shall not be practicable in any given circumstances, the Committee shall make or direct to be made an equitable and reasonable determination of the matter. 7. Any benefits payable to a participant or beneficiary which are not claimed for a period of five years from the date of entitlement, as determined by the Committee and following a diligent effort to locate such participant or beneficiary, shall with the approval of the Committee be charged to such former participant's or beneficiary's accounts and credited to his Employer's C account; provided, however, that if a claim for such forfeited benefits is made by the participant or beneficiary, all such amounts shall be reinstated to the accounts of the participant or beneficiary. G. 1. The Committee, as defined in Article VIIA, may determine to make a loan to any participant who then qualifies as an Employee under Article IX, Paragraph A, subparagraph 26, or is otherwise a "party in interest" with respect to the Investment Fund under Section 3(14) of ERISA. The total amount of each loan will be subject to the following rules: (a) The loan must be for a minimum of $1,000. Loans above the minimum amount may be made only in multiples of $100. (b) The maximum amount of the loan will be limited to the lesser of: (i) $50,000 (reduced by the highest outstanding balance of any loan from the Investment Fund during the one-year period ending on the date before the date such loan is made), or (ii) one-half of the market value of the vested portions of all the participant's separate accounts on the date that such loan was made. (c) A participant may have only two outstanding loans at any one time and may not have more than one loan per calendar year. One of the outstanding loans must be for a primary residence. 2. Any loan to a participant shall be secured by the pledge of all the participant's right, title and interest in the vested portion of the participant's accounts in the Investment Fund, provided, however, that in no event shall more than 50 percent of the vested portion of the participant's account, determined at the time the loan is made, be pledged as collateral for the loan. Such pledge shall be evidenced by the execution of a promissory note by the participant, which promissory note shall provide that, in the event of any default by the participant on a loan repayment, the Committee shall be authorized (to the extent permitted by law) to deduct the amount of the loan outstanding and any unpaid interest due thereon from the participant's wages or salary to be thereafter paid by the Employer, and to take any and all other actions necessary and appropriate to enforce collection of the unpaid loan. - 27 - 3. There shall be deducted from the accounts of a participant to whom a loan is made an amount having a value equal to the principal amount of the loan. The proceeds of any loan shall be charged against the accounts of the borrowing participant according to the order in which items (i) and (ii) are presented, as the amounts described in each successive paragraph are exhausted: (i) before-tax subaccounts; and (ii) after-tax subaccounts. The loan proceeds shall be deducted from the various investment funds in which the participant's accounts are invested in accordance with directions received from the participant and subject to rules prescribed by the Committee. 4. The rate of interest charged on any loan to a participant shall be a reasonable rate of interest determined by the Committee taking into consideration interest rates being charged under generally prevailing market conditions. The Committee shall not discriminate among participants in the matter of interest rates, but loans granted at different times may bear different interest rates if, in the opinion of the Committee, the difference in rates is justified by a change in general economic conditions. 5. Loans shall be repaid in accordance with the following procedures: (a) Any loan to a participant shall be repaid within five years of the date on which the loan is made (or upon the participant's termination of employment with Employer, if earlier), except that in the case of a loan to a participant that is used to acquire a principal residence of the participant, such loan may be repaid over a longer period of time, not to exceed 15 years, as determined by the Committee. Repayments of principal and interest on any loan shall be made by substantially level payments (not less frequently than quarterly) by payroll deduction and shall be applied to reduce the principal as well as the accrued interest of the loan. (b) The Committee shall have the sole responsibility for assuring that a participant timely makes all loan repayments. Each loan repayment shall be paid to the Investment Fund, and shall be accompanied by written instructions from the Committee that: (1) identify the participant on whose behalf the loan repayment is being made; and (2) specify the separate accounts of the participant to which the loan repayment should be credited and the investment of the loan repayment in accordance with the investment procedures of Article IV. (c) A participant may prepay the entire outstanding loan balance with respect to the loan at any time without penalty. (d) The Committee may implement a reasonable loan set-up charge for all loans. 6. In the event of a default by a participant on a loan repayment, all remaining payments on the loan shall be immediately due and payable. In the case of any participant who is not entitled to a distribution under Article VI, the Committee shall, to the extent permitted by law, deduct the total amount of the loan outstanding and any unpaid - 28 - interest due thereon from the wages or salary payable to the participant by the Employer in accordance with the participant's promissory note. In addition, the Committee shall take any and all other actions necessary and appropriate to enforce collection of the unpaid loan, although foreclosure on the note and attachment of security shall not occur until a distributable event occurs under the Investment Fund with respect to before-tax contributions. In the case of any participant or beneficiary who is entitled to a distribution or withdrawal under Article VI, the Committee shall deduct the total amount of the loan outstanding and any unpaid interest due thereon from the amounts to be distributed from the participant's separate accounts under the Investment Fund in order to satisfy the amount due. 7. A request by a participant for a loan shall be made in writing to the Committee [and shall specify the amount of the loan and the separate accounts of the participant from which the loan should be made]. The terms and conditions on which the Committee shall approve loans shall be applied on a uniform and reasonably equivalent basis with respect to all participants. If a participant's request for a loan is approved by the Committee, the Committee shall cause the loan to be made in a lump sum payment of cash to the participant. 8. All loan repayments by the participant shall be credited to such separate accounts and reinvested in accordance with the Employee's investment directions pursuant to Article IV, Paragraph (B). 9. Notwithstanding the foregoing, no loan shall be made to a participant during the period in which the Committee is making a determination of whether a domestic relations order affecting the participant's account is a qualified domestic relations order, within the meaning of Section 414(p) of the Code. Further, if the Committee is in receipt of a qualified domestic relations order with respect to any participant's accounts, it may prohibit such participant from obtaining a loan until the alternate payee's rights under such order are satisfied. 10. In the event that a payment is required to be made to a beneficiary upon the death of a participant or an alternate payee pursuant to a qualified domestic relations order, within the meaning of Section 414(p) of the Code, while the participant whose account is the subject of such order has a loan outstanding, the Committee, in its discretion, may direct that the participant's promissory note be transferred to the beneficiary or the alternate payee, as applicable. H. 1. At the written request of a distributee (which shall mean a participant, a surviving spouse of a participant, or a spouse or former spouse of a participant that is an alternative payee under a qualified domestic relations order), and upon receipt of the written consent of the Committee, the Trustee shall effectuate a direct rollover distribution of the amount requested by the distributee, in accordance with Section 401(a)(31) of the Code, to an eligible retirement plan (as defined in Section 402(c)(8)(B) of the Code). Such amount may constitute all or part of any distribution otherwise to be made hereunder to the distributee, provided that such distribution constitutes an "eligible rollover distribution," as defined in Section 402(c) of the Code and the regulations and other guidance issued thereunder. All direct rollover distributions - 29 - shall be made in accordance with the following subparagraphs 2 through 6. For purposes of this Paragraph H, the following terms have the following meanings: (a) The term "eligible rollover distribution" means any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or for a specified period of 10 years or more; or any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; or any distribution to the extent such distribution is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities). (b) The term "eligible retirement plan" means an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. 2. A direct rollover distribution shall only be made to one eligible retirement plan; a distributee may not elect to have a direct rollover distribution apportioned between or among more than one eligible retirement plan. 3. Direct rollover distributions shall be made in cash in the form of a check made out to the trustee of the eligible retirement plan, in accordance with procedures established by the Committee, plus shares of CBS Stock otherwise distributable hereunder to the distributee, which shares shall be registered in a manner necessary to effectuate a direct rollover under Section 401(a)(31) of the Code. 4. Amounts distributable to after-tax Employee contributions shall be distributed directly to the distributee and may not be distributed in a direct rollover distribution. 5. No direct rollover distribution shall be made unless the distributee furnishes the Committee with such information as the Committee shall require, including but not limited to: the name of the recipient eligible retirement plan, a representation from a representative of the recipient plan that it is an eligible retirement plan, and any account number or other identifying information. 6. If a distributee's distribution is otherwise to be paid in the form of installment payments, the distributee must make a separate direct rollover distribution request with respect to each calendar year during which installment payments are made. - 30 - VII. The Committee. A. There shall at all times be at least three individuals, any or all of whom may be participants, acting as a Committee hereunder to administer the Investment Fund. Any Committee member may at any time resign by giving written notice of such resignation to CBS, to the other Committee member or Committee members, if any, then acting hereunder and to the Trustee; any such resignation shall become effective immediately upon the delivery of such notice to CBS. CBS may at any time remove any or all of the Committee members then acting hereunder by giving written notice of such removal to all of the Committee members then acting hereunder and to the Trustee; any such removal shall become effective immediately upon the delivery of such notice to the Committee member so removed. The Board of Directors of CBS may at any time or from time to time appoint one or more investment managers, each of which shall in its sole discretion direct the Trustee in the investment or reinvestment of all or part of the Trust Fund under the Trust Agreement as designated by such Board of Directors. B. CBS may, at any time and from time to time, and, if there shall at any time be less than three Committee members acting hereunder, CBS shall, designate one or more individuals to act as an additional or successor Committee member or additional or successor Committee members by giving written notice of such designation to the Committee member or members, if any, then acting hereunder, to each such designee and to the Trustee. C. In the event of any disagreement among the Committee members at any time acting hereunder and authorized to act with respect to any matter, the decision of a majority of such Committee members authorized to act upon such matter shall be controlling and shall be binding and conclusive upon all persons, including, without in any manner limiting the generality of the foregoing, the Employers, the other Committee member or Committee members, the Trustee, all persons at any time in the employ of any of the Employers and the participants, the former participants and their respective beneficiaries, and upon the respective successors, assigns, executors and administrators of all of the foregoing. D. Each additional and each successor Committee member at any time acting hereunder shall have all of the rights and powers (including discretionary rights and powers) and all of the privileges and immunities hereby conferred upon the original Committee members, and all of the duties and obligations so imposed upon the original Committee members. E. No Committee member at any time acting hereunder shall be required to give any bond or other security for the faithful performance of his duties as such Committee member. VIII. Administration. A. The Committee shall be the "administrator" of the Investment Fund within the meaning of Section 3(16)(A) of the Act and shall have the power to administer and construe the Investment Fund, determine questions of fact and law arising under the Investment Fund, direct disbursements by the Trustee and exercise the other rights and powers specified herein. - 31 - B. CBS and the Committee may each retain auditors, accountants and legal counsel selected by it, and CBS and the Committee may each retain such other persons as it deems appropriate in connection with administering the Investment Fund. Any Committee member may himself act in any such capacity, and any such auditors, accountants and legal counsel may be persons acting in a similar capacity for any Employer and may be Employees of any Employer. To the extent permitted by law, the opinion of any such auditor, accountant or legal counsel shall be full and complete authority and protection in respect of any action taken, suffered or omitted by the Committee in good faith and in accordance with such opinion. C. The Committee members may allocate responsibility among themselves, and the Committee may designate other persons to carry out its fiduciary responsibilities under the Investment Fund, and, without in any manner limiting the generality of the foregoing, may, by a written instrument, (1) designate each or any of the Committee members and/or any other person or persons, severally or jointly, to execute, on behalf of the Committee, all documents and other instruments proper, necessary or desirable in order to effectuate the purposes of the Investment Fund and (2) revoke or change any such designation theretofore made. Any Committee member, acting by himself, may similarly revoke any such designation theretofore made. Any third party may rely upon the continued effectiveness of any such designation until such third party shall have notice of the change or revocation thereof. D. Each Committee member who shall not be an Employee shall be entitled to receive, as compensation for his services hereunder, such fees as he and CBS may from time to time agree. CBS shall pay such compensation and shall also pay (and/or reimburse the Committee for) the reasonable expenses incurred by it in the administration of the Investment Fund, including the fees and compensation of the persons referred to in Paragraphs A and B of this Article VIII. E. To the extent that the Employers and/or the Committee shall prescribe forms for use by the participants, the former participants and their respective beneficiaries in communicating with any Employer, the Committee or the Trustee, the Committee shall establish periods during which communications may be received or shall designate representatives to whom communications shall be delivered, and the Employer, the Committee and the Trustee shall respectively be protected in disregarding any notice or communication for which a form shall so have been prescribed and which shall not be made in such form, and any notice or communication for the receipt of which a period shall so have been established and which shall not be received during such period, and any notice or communication for the receipt of which a representative shall have been designated and which shall not be received by such representative. Each Employer, the Committee and the Trustee shall respectively also be protected in acting upon any notice or other communication purporting to be signed by any person and reasonably believed to be genuine and accurate. F. To the extent permitted by law, all determinations hereunder by an Employer or the Committee shall be made in the sole and absolute discretion of such Employer or of the Committee, as the case may be. Neither any Employer nor the Committee, in making any determination, or in taking any action, in connection with the administration of the Investment Fund, shall - 32 - discriminate in favor of Employees who are officers or shareholders of any Employer or persons whose principal duties consist of supervising the work of other Employees or persons who are highly compensated Employees. G. Subject to the applicable provisions of paragraph H of this Article VIII, in the event that any disputed matter shall arise hereunder, including, without in any manner limiting the generality of the foregoing, any matter relating to the eligibility of any person to participate in the Investment Fund, the participation of any person therein, the amounts payable to any person hereunder and the applicability and interpretation of the provisions hereof, the decision of the Committee upon such matter shall be binding and conclusive upon all persons, including, without in any manner limiting the generality of the foregoing, the Employers, the Trustee, all persons at any time in the employ of any of the Employers and the participants, the former participants and their respective beneficiaries, and upon the respective successors, assigns, executors and administrators of all of the foregoing. H. All claims for benefits under the Investment Fund by a participant or his beneficiary shall be made in writing to a person designated by the Committee for such purpose. If the designated person receiving a claim for benefits believes that the claim should be denied, he shall notify the claimant in writing of the denial of the claim within 90 days after his receipt thereof unless he shall prior to the end of such 90-day period notify the claimant of any special circumstances requiring an extension of time, not to exceed an additional 90-day period, to respond to such claim and the date by which it is expected a decision will be rendered. Such notice shall (1) set forth the specific reason or reasons for the denial, making reference to the pertinent provisions of the Investment Fund or of Investment Fund documents on which the denial is based, (2) describe any additional material or information that must be received before the claim request may be reconsidered and explain the reason why such material or information, if any, is needed and (3) inform the claimant of his right pursuant to this Paragraph H to request review of the decision by the Committee. A claimant who believes that he has submitted all available and relevant information may appeal the denial of a claim to the Committee by submitting a written request for review to the Committee within 60 days after the date on which such denial is received. Such period may be extended by the Committee for good cause shown. The person making the request for review may examine pertinent Investment Fund documents and the request for review may discuss any issues relevant to the claim. The Committee shall decide whether or not to grant the claim within 60 days after receipt of the request for review, but this period may be extended by the Committee for up to an additional 60 days in special circumstances. The Committee's decision shall be in writing, shall include specific reasons for the decision and shall refer to pertinent provisions of the Investment Fund or of Investment Fund documents on which the decision is based. I. Notwithstanding anything in the Trust Agreement to the contrary, the Board of Directors of CBS shall have the sole power to (1) appoint the Trustee, (2) remove any Trustee then acting hereunder by giving written notice of such removal to such Trustee, to the other Employers and to the Committee and (3) approve or disapprove the accounting by a retiring Trustee referred to in the Trust Agreement. The Trustee shall have sole - 33 - responsibility for the Trust Fund, except as may otherwise be designated by the Board of Directors of CBS in accordance with law. J. Each fiduciary under the Investment Fund shall discharge his duties with respect to the Investment Fund solely in the interests of the participants and their beneficiaries with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. No fiduciary under the Investment Fund shall be liable for an act or omission of another person in carrying out any fiduciary responsibility where such fiduciary responsibility is allocated to such other person by the Investment Fund or pursuant to a procedure established in the Investment Fund except as otherwise provided in Section 405 of the Act. CBS hereby indemnifies each member of the Committee, each officer, and each Employee of the Employers against any liabilities or expenses, including attorneys' fees, reasonably incurred by him in connection with any actual or threatened legal action to which he might become a party by reason of being a fiduciary with respect to the Investment Fund except to the extent that he shall be adjudged in such action to be liable for gross negligence or willful misconduct in the performance of his duties as a fiduciary. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Investment Fund. K. The sole interest of each participant, each former participant and each beneficiary of a participant or former participant hereunder shall be to receive the benefits provided for herein as and when the same shall become due and payable in accordance with the terms hereof, and neither any participant nor any former participant nor any beneficiary of a participant or former participant shall have any right, title or interest in or to the Trust Fund or to any other monies or other properties at any time held by or receivable by the Trustee. The right of any participant or any former participant and of any beneficiary of any participant or former participant to receive or have applied to his use any payment becoming due hereunder shall not be subject to alienation or assignment, and, if any such participant or former participant or beneficiary shall attempt to assign, transfer or otherwise dispose of any such right, or if any such right shall be subjected to attachment, execution, garnishment, sequestration or other seizure under any legal, equitable or other process, it shall, if and to the extent that the Committee shall so determine, pass and be transferred to such one or more as may be appointed by the Committee from among the beneficiaries of such participant or former participant and the spouse and blood relatives of such participant, former participant or beneficiary, and in such proportions as the Committee shall determine. Nothing contained in the foregoing paragraph shall prohibit the payment of benefits to an "alternate payee" pursuant to a "qualified domestic relations order", as said quoted terms are defined in, and in accordance with, Section 206(d) of the Act. L. 1. All CBS Stock (including fractional shares) representing D units credited to a participant's D account and/or C units credited to a participant's C account as of the valuation date preceding by the shortest practicable interval a record date established generally for fixing the right of holders of CBS Stock to vote shall be voted by the Trustee in - 34 - accordance with instructions from such participant. CBS shall provide participants with notices and proxy or information statements when voting rights are to be exercised, the content of which must be generally the same as that provided to record holders of CBS Stock. Fractional shares shall be voted by the Trustee on a combined basis, so as to reflect the instructions of the participants with respect to such shares. The Trustee shall vote all CBS Stock for which it has not received participants' instructions, including all CBS Stock held by it as of such record date but which is not as of that date allocated to participants' accounts, in the same manner as a majority of the CBS Stock representing all of the D units and C units, together, credited to the D accounts and C accounts of participants who have submitted voting instructions is voted. 2. In the event that a tender or exchange offer or other offer to purchase CBS Stock is made by an individual or entity for all or a portion of the outstanding CBS Stock or the CBS Stock held in the Trust Fund, the Trustee shall not tender or sell any CBS Stock held by it in the D Fund or the C Fund except upon specific written instructions from each participant directing that the CBS Stock representing D units credited to the participant's D account and/or C units credited to the participant's C account be so tendered or sold. CBS shall provide participants with notices and information with respect to any such offer in a timely fashion so as to permit each participant an opportunity to submit instructions to the Trustee with respect to his tendering or not tendering the CBS Stock representing such D units and/or C units credited to such participant's D account and/or C account. IX. Definitions. A. As used herein and in the Trust Agreement, the following terms shall have the following respective meanings: 1. "A account", as used with respect to a participant, shall mean the separate account which is required to be established with respect to such participant as provided in Paragraph A of Article III hereof. 2. "Account", as used with respect to a participant, shall mean each of his A account, his B account, his D account, his E account and his C account, including any loans made to the participant under Article VI, Paragraph G, the funds of which are attributable to such accounts, and, as used with respect to an Employer, shall mean its C account. 2B. "Act" shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. 2C. "Affiliated company" shall mean a member with CBS of a controlled group of corporations within the meaning of Section 1563(a) of the Internal Revenue Code (the "Code"), determined without regard to Sections 1563(a)(4) and (e)(3)(C) of the Code, or a member with CBS of a group of trades or businesses (whether or not incorporated) under common control as determined by the Secretary of the Treasury pursuant to Regulations issued under Section 414(c) of the Code. - 35 - 2D. "After-tax subaccount", as used with respect to a participant, shall mean the subaccount established within such participant's A, B, D and E accounts, respectively, to account for contributions thereto made as after-tax contributions. 3. "A Fund" shall mean the separate fund established pursuant to the provisions of the Trust Agreement. 3B. "Anniversary year". The anniversary year of any Employee shall be each 12-month period commencing on the first day of the calendar month in which his employment commences. 4. "A unit" shall mean a unit in the A Fund. 5. "B account", as used with respect to a participant, shall mean the separate account which is required to be established with respect to such participant as provided in Paragraph B of Article III hereof. 5B. "Before-tax subaccount", as used with respect to a participant, shall mean the subaccount established within such participant's A, B, D and E accounts, respectively, to account for contributions thereto made as before-tax contributions. 6. "Beneficiaries", as used with respect to a participant or a former participant, shall mean the surviving spouse of such participant or, if such participant has no spouse or if the spouse of such participant shall have consented thereto in a writing acknowledging that such spouse is thereby waiving in favor of such other beneficiaries the right to receive the amount payable hereunder upon the death of such participant, and such consent is witnessed by a notary public, the person or persons designated by such participant or former participant to receive any payments provided for in Paragraph F of Article VI hereof, and, if and to the extent that such a designation shall not be in force at the time of such payment, his spouse, or if he has no spouse, his executors or administrators. 7. "B Fund" shall mean the separate fund established pursuant to the provisions of the Trust Agreement. 8. "Board" shall mean both the Board of Directors of CBS and any committee which shall be designated by said Board of Directors from among its members and which shall have the authority of said Board of Directors with respect to the Investment Fund and the Trust. 8B. "Break in service", as used with respect to an Employee, shall mean any calendar year in which he completes less than 501 hours of service. Solely for purposes of determining whether a break in service has occurred, if an Employee is absent from work by reason of her pregnancy, the birth of a child of the Employee, or the placement of a child with the Employee in connection with the adoption of such child by the Employee or for purposes of caring for such child for a period beginning immediately following such birth or placement, the Employee - 36 - shall be credited with the hours of service which otherwise would normally have been credited to the Employee but for such absence, but in no event less than eight hours of service per day of such absence and more than 501 hours with respect to any one such pregnancy, birth or placement. Such hours of service shall be credited to the calendar year in which the absence from work begins only if the effect of so doing would be to prevent the occurrence of a break in service in such calendar year, and in any other case to the immediately following calendar year. 9. "B unit" shall mean a unit in the B Fund. 10. "Business day" shall mean a day which is not a Saturday, a Sunday or a legal holiday. 11. "C account", as used with respect to a participant, shall mean the separate account which is required to be established with respect to such participant as provided in Paragraphs C and (except as such term is used in Article V) E of Article III hereof, and, as used with respect to an Employer, shall mean the separate account which the Trustee is required to establish with respect to such Employer as provided in Paragraph D of said Article III. 12. "CBS" shall mean CBS Inc. 13. "CBS fiscal year" shall mean the period of 12 consecutive monthly accounting periods used by CBS in the maintenance of its accounts. 14. "CBS Pension Plan" shall mean the pension plan adopted by CBS on December 16, 1942, as amended prior to December 26, 1968, and the pension plan adopted by CBS stockholders on April 20, 1960, as amended prior to December 26, 1968, as said pension plans were further amended and combined, effective December 26, 1968, as in effect at the time with respect to which said term is used. 15. "CBS Stock" shall mean the common stock of CBS, $2.50 par value, or any other common stock which CBS is authorized to issue at the time with respect to which such term is used. 16. "C Fund" shall mean the separate fund established pursuant to the provisions of the Trust Agreement and (except as such term is used in Article V) shall include any and all C-# Funds. 17. "Code" shall mean the Internal Revenue Code of 1954 as in effect at the time with respect to which such term is used. 18. "Committee" shall mean the administrative committee provided for in Paragraph A of Article VII hereof. 19. "Continuous employment period", as used with respect to a participant, shall mean such participant's total years of service. 19B. "Contribution" shall mean, unless the context shall otherwise clearly require, each of (a) a participant's contribution in any - 37 - category, (b) an Employer contribution and (c) an Employer's matching contribution. In particular, a participant's "required basic contribution" shall mean that contribution described in subparagraph 1 of Paragraph A of Part (i) of Article IV hereof; a participant's "voluntary supplemental contribution" shall mean that contribution described in subparagraph 2 of Paragraph A of Part (i) of Article IV hereof; and a participant's "periodic special contribution" shall mean that contribution described in Part (ii) of Article IV hereof. 20. "Contribution election", as used with respect to a participant and with respect to any time, shall mean such participant's election referred to in Article IV hereof. 21. "Conversion direction", as used with respect to a participant and with respect to any time, shall mean such participant's conversion direction referred to in Part (iv) of Article IV hereof, as modified prior to the time with respect to which such term is used. 22. "C unit" shall mean a unit in the C Fund and (except as such term is used in Article V) shall include any and all C-# units. 22B. "C unit conversion election", as used with respect to a participant, shall mean such participant's election referred to in subparagraph 3 of Paragraph E of Article VI hereof. 22C. "D account", as used with respect to a participant, shall mean the separate account which is required to be established with respect to such participant as provided in Paragraph E of Article III hereof. 22D. "D Fund" shall mean the separate fund established pursuant to the provisions of the Trust Agreement and shall include any and all D-# Funds. 22E. "Disability" shall mean a state of physical or mental incapacity of a participant such that, in the opinion of the Committee based upon a certificate from a physician or physicians satisfactory to the Committee, such participant, by reason of injury, illness or disease, is unable to fulfill the requirements of his position as an Employee of his Employer. 22F. "Distribution election", as used with respect to a participant, shall mean such participant's election referred to in subparagraph 1 of Paragraph E of Article VI hereof or a determination of the Committee not inconsistent with law in lieu thereof. 23. "D unit" shall mean a unit in the D Fund and shall include any and all D-# units. 24. "D unit conversion election", as used with respect to a participant, shall mean such participant's election referred to in subparagraph 3 of Paragraph E of Article VI hereof. 25. "E account", as used with respect to a participant, shall mean the separate account which is required to be established with - 38 - respect to such participant as provided in Paragraph F of Article III hereof. 25B. "Earnings and profits" shall have the same meaning as when used in Section 316(a) of the Code. 25C. "E Fund" shall mean the separate fund established pursuant to the provisions of the Trust Agreement. 26. "Employee" shall mean a person who (a) is principally employed in the United States and/or is a citizen of the United States, (b) is not included in a group determined by the Board not to be eligible for participation in the Investment Fund and (c) is either (i) employed by one or more of the Employers as an executive or an office employee or as an employee in a classification of hourly employees specified by the Board whose terms and conditions of employment are not subject to the provisions of a collective bargaining agreement and who (in any such category of employment) is a participant under the CBS Pension Plan or would have been such but for his failure to meet the age requirements thereof or (ii) employed by one or more of the Employers as an employee whose principal terms and conditions of employment are subject to the provisions of a collective bargaining agreement which provides for eligibility for participation in the Investment Fund or (iii) employed by one or more of the Employers in a group determined by the Board to be eligible for participation in the Investment Fund. "Employee" shall also mean a person (i) who is employed by any foreign subsidiary of CBS to which U.S. Social Security coverage has been extended by an agreement entered into by CBS under Section 3121(1) of the Internal Revenue Code, (ii) as to whom no contributions under any other funded plan of deferred compensation are being provided by any other person with respect to the remuneration paid to such individual by the foreign subsidiary and (iii) who is a citizen of the United States; for the purposes of the Investment Fund only, CBS shall be deemed to be the Employer of such Employees, provided, however, that "Employee" shall not include "leased employees" as defined in Section 414(n) of the Code. 27. "Employer" shall mean each of (a) CBS, (b) each subsidiary which executes the Trust Agreement as of June 29, 1969 and (c) each subsidiary which adopts the Investment Fund and becomes a party to the Trust Agreement as provided in Paragraphs A and B of Article X hereof. 27B. "Employer contributions", as used with respect to a participant, shall mean those contributions made to such participant's A account and/or B account and/or D account and/or E account on a before-tax basis pursuant to a salary deferral agreement with his Employer forming part of his contribution election as in effect from time to time. 28. "Employer's matching contribution" shall mean a payment made to the Trustee by an Employer as provided in Article V hereof. 28B. "E unit" shall mean a unit in the E Fund. - 39 - 28C. "Fiduciary" shall mean any person to the extent that he (a) exercises any discretionary authority or discretionary control respecting management of the Investment Fund or exercises any authority or control respecting management or disposition of its assets, (b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Investment Fund, or has any authority or responsibility to do so, or (c) has any discretionary authority or discretionary responsibility in the administration of the Investment Fund. 29. "Former participant" shall mean a person whose participation in the Investment Fund shall have terminated as provided in Paragraph A of Article VI hereof. 30. "Fund" shall mean each of the A Fund, the B Fund, the D Fund, the E Fund and the C Fund. 30B. "Hour of service", as used with respect to any person employed in regularly scheduled part-time employment, shall mean each hour for which he shall be directly or indirectly paid or entitled to payment (a) for services he performs for CBS; or, except as expressly provided in the Investment Fund, solely for purposes of determining eligibility to participate therein and the extent to which his C units shall have vested, and subject to the provisions of this Section 30A, (b) for services he performs for any affiliated company, or any predecessor corporation of CBS, or corporation merged, consolidated, or liquidated into CBS or its predecessor, or a corporation substantially all of the assets of which were acquired by CBS to the extent the Board of Directors of CBS so directs consistent with Regulations issued by the Secretary of the Treasury. With respect to every person employed on a full-time basis, 190 hours of service shall be credited for each calendar month in which he has actually performed at least one hour of service. In addition to the foregoing, the following provisions shall apply, where appropriate, to the computation of hours of service. Any Employee may be credited with hours of service for each calendar month in which he has a leave of absence of at least one calendar day. Any Employee may be credited with years of service for any period for which back pay, irrespective of mitigation of damages, may be awarded or agreed to by CBS or an affiliated company, in which event such hours of service shall be credited to each anniversary year to which each such award pertains. An Employee shall be credited with hours of service for any period for which he is directly or indirectly paid or entitled to payment by CBS or any affiliated company for reasons (such as vacations, sickness or disability) other than for his performance of services, and such hours of service and the computation period or periods to which such hours shall be credited shall be determined in accordance with Section 2530.200b-2 of the Regulations prescribed by the Secretary of - 40 - Labor. Notwithstanding any other provision of the Investment Fund, in no event shall any person be credited with hours of service for any period prior to January 1, 1976 during which he was employed on other than a full-time basis. 31. "Investment direction", as used with respect to a participant and with respect to any time, shall mean such participant's direction referred to in subparagraph 1 of Paragraph B of Part (i) or in subparagraph 3 of Paragraph A of Part (ii) of Article IV hereof, as modified prior to the time with respect to which such term is used. 32. "Investment Fund" shall mean the plan embodied herein. 32B. "Investment manager" shall mean a fiduciary appointed by the Board of Directors of CBS who (a) has the authority to direct the investment and reinvestment of all or any part of the Trust Fund under the Trust Agreement; (b) is registered as an investment adviser under the Investment Advisers Act of 1940, is a bank as defined in the Investment Advisers Act of 1940 or is an insurance company qualified to perform services described in clause (a) above under the laws of more than one state; and (c) has acknowledged in writing that it is a fiduciary with respect to the Investment Fund. 33. "Leave of absence" shall mean a leave of absence from the employ of one or more of the Employers granted, prospectively or retroactively, to an Employee at any time for a specific purpose. 34. "Monthly accounting period" shall mean each calendar month. 35. "Non-Fund subsidiary" shall mean a subsidiary which is not an Employer. 36. "Participant", as used with respect to the Investment Fund, shall mean an Employee of one or more of the Employers who shall have become a participant in the Investment Fund as provided in Paragraph B of Article II hereof and whose participation shall not have terminated as provided in Paragraph A of Article VI hereof. Such term shall, if the context shall permit, include a former participant. 37. "Participant's contributions", as used with respect to a participant, shall mean the amount of such participant's salary withheld and/or deferred by his Employer pursuant to such participant's contribution election and paid to the Trustee by such Employer as provided in Paragraph C of Part (i) of Article IV hereof. 38. "Participation election" shall mean the election of an Employee to become a participant. 39. "Participation period", as used with respect to a participant, shall mean the period during which such participant shall be a participant in the Investment Fund. 40. "Payroll period", as used with respect to a participant, shall mean the regular period (whether weekly or biweekly or semimonthly - 41 - or otherwise) on the basis of which such participant's Employer pays such participant's salary. 41. "Plan year" shall mean a calendar year. 42. "Salary", as used with respect to a participant, with respect to an Employer and with respect to a payroll period, shall mean the regular compensation paid by such Employer to such participant for such payroll period, inclusive of all amounts of regular compensation deferred by such participant in accordance with his contribution election which are contributed to such participant's A account and/or B account and/or D account and/or E account on a before-tax basis as Employer contributions, but excluding bonus payments, overtime compensation, deferred compensation and additional compensation of every other kind so paid, or, in the case of certain categories of Employees whose regular compensation is not payable entirely on a weekly or biweekly or semimonthly salary basis, such other compensation as, and to the extent that, the Board shall determine. In no event shall the amount of salary taken into account under the Investment Fund for any plan year beginning after December 31, 1988, and prior to January 1, 1994, exceed $200,000 or, for any plan year beginning after December 31, 1993, $150,000 (or, with respect to either such dollar amount, such larger amount as the Secretary of the Treasury may determine for such plan year under Section 401(a)(17) of the Internal Revenue Code). For purposes of this limitation only, in determining the salary of any Employee, the rules of Section 414(q)(6) of the Internal Revenue Code shall apply, except that in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the year. 43. "Stock election", as used with respect to a participant, shall mean such participant's election referred to in subparagraph 3 of Paragraph E of Article VI hereof. 44. "Subsidiary" shall mean a corporation which is controlled by CBS, directly or indirectly. 45. "Taxable year" shall have the same meaning as when used in Section 441(b) of the Code. 46. "Termination benefit", as used with respect to a participant, shall mean the benefit which such participant shall be entitled to receive by reason of the termination of his participation (as provided in Paragraphs C, E and F of Article VI hereof). 47. "Termination date", as used with respect to a participant, shall mean the date of the termination of such participant's participation as provided in Paragraph A of Article VI hereof. 48. "Trust" shall mean the trust created by and under the Trust Agreement. 49. "Trust Agreement" shall mean the trust agreement by and among the Employers and the Trustee, dated as of June 29, 1969, including the - 42 - successor Trust Agreement dated September 1, 1986, as the same may at any time and from time to time be amended. 50. "Trustee", as used with respect to any time, shall mean the Trustee acting under the Trust Agreement at such time. 51. "Trust Fund" shall mean all property which shall be held by the Trustee, as trustee under the Trust Agreement, at the time with respect to which such term is used. 52. "Unit" shall mean each of an A unit, a B unit, a D unit, an E unit and a C unit. 53. "Unvested C units", as used with respect to a participant and with respect to any time, shall mean those of the C units credited to such participant's C account as of such time which shall not be vested C units. 54. "Valuation date" shall mean the last business day of a calendar month. 55. "Value", as used generally, shall mean fair market value, as used with respect to a unit and as of July 31, 1969, shall mean $1.00 and as used with respect to a unit and as of a date subsequent to July 31, 1969, shall mean the value of the Fund in which such unit is held at such date divided by the number of units which are then held in said Fund. 56. "Vested C units", as used as of a valuation date or a termination date with respect to (a) a participant whose continuous employment period on such date is three or more years of service or (b) a participant whose 65th birthday is not subsequent to such date or (c) a former participant whose participation shall have terminated by reason of his death or his disability, shall mean all of the C units credited to such participant's C account as of such date; said term, as so used with respect to a participant whose continuous employment period on such date is less than three full years, whose 65th birthday is subsequent to such date and whose participation shall not have terminated by reason of his death or his disability, shall mean 33-1/3 percent of the C units credited to such participant's C account as of such date multiplied by the number of years of service included in his continuous employment period on such date. 57. "Withdrawal" shall mean a payment made to a participant as provided in subparagraph 1 of Paragraph B of Article VI hereof. 58. "Year" shall mean any period of 12 consecutive monthly accounting periods. 59. "Year of service", as used with respect to an Employee or a participant, as the case may be, shall mean each anniversary year in which he shall complete at least 1,000 hours of service, subject, however, to the following: - 43 - (a) Solely with respect to eligibility of an Employee employed on other than a full-time basis, such Employee shall be credited with a year of service if he completes 1,000 hours of service in his first anniversary year following December 31, 1975. (b) Solely for the purpose of determining the extent to which such participant shall have a vested interest in the C units, if such participant shall not have completed a year of service in the anniversary year in which he became a participant, or in the preceding plan year, he shall nevertheless be credited with one year of service for the anniversary year in which he became a participant. (c) The period in which services shall have been performed by an Employee prior to a break in service shall not be included in determining his years of service unless (i) such services shall have been performed prior to January 1, 1976, in which event the period in which such services shall have been performed shall be included in determining such Employee's years of service in accordance with the break in service rules under the Investment Fund in effect prior to such date or (ii) such services shall have been performed after December 31, 1975 by an Employee who shall have a vested interest in the C units prior to such break in service, or, if no C units shall have vested, the number of consecutive anniversary years during which such break in service shall have continued shall be less than the greater of five or the number of years of service that shall have been accumulated immediately preceding such break in service. (d) The period in which services shall have been performed by an Employee after five or more consecutive one-year breaks in service shall not be included in determining years of service for the purpose of causing his vested interest in the C units, as of the date immediately preceding such a break in service, to be increased. 60. The terms "C-# account", "C-# Fund" and "C-# units" shall mean the account, Fund and units provided for and described in Paragraph G of Article III. 61. The terms "D-# account", "D-# Fund" and "D-# units" shall mean the account, Fund and units provided for and described in Paragraph G of Article III. B. For the purposes hereof: 1. To the extent that the context shall permit, any masculine pronoun used herein shall be construed to include also the similar feminine pronoun, any singular word so used shall be construed to include also the similar plural word and any plural word so used shall be construed to include also the similar singular word. 2. Any reference herein to any date or day shall be deemed to be a reference to the close of business on such date or day. - 44 - 3. Terms used herein with respect to a participant which are defined in Paragraph A of this Article IX shall have the same respective meanings when used with respect to an Employee. 4. If any Employer shall at any time grant (or shall at any time have granted) to an Employee a leave of absence from his employment by such Employer, whether such leave shall commence (or shall have commenced) and/or shall be granted (or shall have been granted) prior to, at the time of, or subsequent to such Employee's having become a participant, such Employee shall be deemed to be (or to have been) in the employ of such Employer during such leave of absence. That portion of the period of such leave of absence which shall commence on the actual commencement of such leave of absence shall not be deemed to interrupt the continuity of such participant's participation period, but shall not be included therein unless such Employee shall receive a salary from his Employer during all or a portion of such leave of absence and shall make contributions during such period. 5. In order to convert an amount to a number of units as of any date, such amount shall be divided by the value of one such unit on such date, in order to convert a number of units to an amount as of any date, such number shall be multiplied by the value of one such unit on such date, and in order to convert a number of units of one classification, whether A, B, D, E or C, into a number of units of another classification as of any date, such first-mentioned number shall be multiplied by the value of one unit of such classification first referred to on such date and the product thus determined shall be divided by the value of one unit of such other classification on such date. X. Adoption by Subsidiaries. A. Any subsidiary may, pursuant to a resolution of its board of directors, with the consent of the Board, adopt the Investment Fund for the exclusive benefit of its employees eligible to participate therein. Such adoption shall be effective as of the first day of any monthly accounting period specified by such subsidiary and consented to by the Board. B. Each subsidiary adopting the Investment Fund as provided in Paragraph A of this Article X shall enter into an agreement with the other Employers and the Trustee pursuant to which such subsidiary shall become a party to the Trust Agreement. XI. Amendment; Termination. A. CBS may, at any time and from time to time, pursuant to a resolution of the Board, by a written instrument delivered to the Trustee and to the other Employers, amend the Investment Fund, and any Employer may, pursuant to a resolution of its board of directors, by a written instrument delivered to the Trustee and to the other Employers, terminate the Investment Fund with respect to its Employees; provided, however, that (1) no such amendment or termination shall adversely affect the units credited to any participant's or former participant's accounts on the date - 45 - of such amendment or termination, nor shall, to the extent prohibited under Section 411(d)(6) of the Code, any amendment result in depriving a participant of the right to elect an optional form of benefit which, but for the provisions of such amendment, such participant (or his or her beneficiaries) would have been entitled to elect with respect to his or her vested benefit, (2) no such amendment shall adversely affect any participant's or former participant's interest in those of the C units credited to his C account on the date of such amendment which would be vested C units if the date of such amendment were his termination date, (3) no such amendment shall result in a change in the substance of Paragraph B of this Article XI with respect to participants who are such on the date of such amendment, (4) notwithstanding any such amendment and notwithstanding any such termination, it shall be impossible, whether by operation or natural termination of the Trust or pursuant to the provisions of this Paragraph A, or by the happening of a contingency or by arrangement or by any other means, for any part of the corpus of or the income from the Trust to be used for, or diverted to, purposes other than the exclusive benefit of the participants, the former participants and their respective beneficiaries, (5) no such amendment shall increase the duties, responsibilities or obligations of any Committee member unless he shall consent thereto, (6) no such amendment shall increase the duties, responsibilities or obligations of the Trustee unless it shall consent thereto and (7) no such amendment shall increase the duties, responsibilities or obligations of an Employer unless it shall consent thereto. B. In the event of, and upon, an Employer's termination of the Investment Fund or permanent discontinuance of contributions other than by reason of being merged into, or consolidated with, another Employer, whether or not the Trust shall also terminate concurrently therewith, (1) the interest in his C account of each participant who shall be or shall have been an Employee of such Employer shall vest and CBS or its designee shall, as of and as promptly as shall be practicable after the valuation date concurrent with, or next succeeding, the date of such termination or permanent discontinuance, allocate the C units in such Employer's C account pro rata to the C units in the C accounts of the participants who shall have been Employees of such Employer on the date of such termination or permanent discontinuance, and (2) the Trustee shall, as of and as promptly as shall be practicable after the valuation date next succeeding whichever shall occur first of such participant ceasing to be an Employee of CBS and all subsidiaries and the termination of the Trust, pay or distribute to such participant (or his beneficiaries) in the manner provided in Paragraph F of Article VI hereof the benefits to which he is (or they are) entitled. In the event of, and upon, the termination of the Investment Fund by an Employer with respect to some but less than all of the Employees of such Employer (a "partial termination"), (1) the interest in the C account of each participant affected by such partial termination shall vest and (2) as of and as promptly as shall be practicable after the valuation date concurrent with, or next succeeding, the date of such partial termination, (a) CBS or its designee shall allocate the C units in such Employer's C account pro rata to the C units in the C accounts of the participants affected by such partial termination and (b) the Trustee shall pay or distribute to each such participant (or his beneficiaries) in the manner provided in Paragraph F of Article VI hereof the benefits to which he is (or they are) entitled. - 46 - C. In the event of any merger or consolidation of the Investment Fund and/or the Trust hereunder with, or transfer of the assets or liabilities of the Investment Fund and/or Trust to, any other plan, the terms of such merger, consolidation or transfer shall be such that each participant would receive (in the event of termination of the Investment Fund or its successor immediately thereafter) a benefit which is no less than he would have received in the event of termination of the Investment Fund immediately prior to such merger, consolidation or transfer. 1. Anything herein to the contrary notwithstanding, the Committee shall direct the Trustee to transfer, as of January 1, 1991, to the trustee of the trust established under the CBS News Special Projects Inc. Employee Investment Fund maintained by CBS News Special Projects Inc. for the benefit of employees of CBS News Special Projects Inc. who were Employees of CBS Inc. participating in the Investment Fund immediately prior to employ with CBS News Special Projects Inc. an amount from the Trust equal to the balance in such participants' accounts determined as of the transfer date. After December 31, 1990, the former CBS Inc. Employees described above shall be entitled to no further allocations under this Investment Fund. 2. Anything herein to the contrary notwithstanding, the Committee shall direct the Trustee to transfer, as of the transfer date, to the trustee of the trust established under the CBS News Special Projects Inc. Employee Investment Fund maintained by CBS News Special Projects Inc. for the benefit of employees of CBS News Special Projects Inc. who were Employees of CBS Inc. participating in the Investment Fund immediately prior to employ with CBS News Special Projects Inc., an amount from the Trust equal to the balance in such participants' accounts determined as of the transfer date. Effective with the transfer date, the former CBS Inc. Employees described above shall be entitled to no further allocations under this Investment Fund. 3. Subject to the approval of the Plans Administration Committee, the Trustee shall accept a transfer of assets and liabilities accrued by a participant under any other plan which transfer shall be in accordance with the requirements of Section 414(1) of the Code. In no event shall the accrued benefit of any such participant under this Investment Fund immediately after such transfer be less than the accrued benefit of such participant under the transferor plan immediately prior to such transfer. In addition, any distribution, withdrawal, or other rights available to each affected participant under the terms of the transferor plan as of the date of such transfer which are protected under Section 411(d)(6) of the Code shall continue to be available with respect to such transferred account balances. D. Notwithstanding anything hereinbefore to the contrary, a matching contribution hereunder by any Employer which (1) was made under a mistake of fact or (2) was conditioned upon deduction of such contribution under Section 404 of the Internal Revenue Code (the "Code) and such deduction is disallowed, shall be returned to the Employer within one year after the payment of the contribution or the disallowance of the deduction (to the extent disallowed), whichever may be applicable. - 47 - XII. Limitations. A. Subject to the adjustments hereinafter set forth, the maximum annual addition to a participant's account shall in no event exceed the lesser of (1) $30,000 (adjusted annually, effective January 1, 1988, to reflect increases in the cost of living, in accordance with Regulations issued by the Secretary of the Treasury under Section 415 of the Internal Revenue Code ("Code")) or (2) 25 percent of his annual compensation. For purposes of this Article XII, "annual compensation" shall mean wages within the meaning of Section 3401(a) of the Code and all other payments of compensation to an Employee by his Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Section 6041(d), Section 6051(a)(3) and Section 6052 of the Code, determined without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code), and excluding amounts paid or reimbursed by the Employer for moving expenses incurred by the Employee (but only to the extent that at the time of such payment it is reasonable to believe that these amounts are deductible by the Employee under Section 217 of the Code). B. For the purpose of Paragraph A of this Article XII: 1. "Annual addition" shall mean, as used with respect to a participant, the sum for any calendar year of (1) the Employer's contributions (including before-tax required basic contributions, before-tax voluntary supplemental contributions and Employer matching contributions); (2) any forfeitures under the applicable terms, if any, of the Investment Fund; (3) the participant's after-tax contributions; and (4) amounts described in Section 415(l)(1) and Section 419(d)(2) of the Internal Revenue Code. Notwithstanding the foregoing, annual additions for any calendar year beginning before January 1, 1987 shall include a participant's after-tax contributions only to the extent greater than the lesser of (a) such participant's after-tax contributions in excess of six percent of his compensation or (b) one-half of such participant's after-tax contributions; provided, however, with respect to calendar years prior to January 1, 1976, the amount of a participant's contributions for each year shall be deemed to be an amount equal to the excess of the aggregate of the participant's contributions prior to January 1, 1976 (without regard to such contributions made on or after October 1, 1973 under the terms of the Investment Fund in effect as of such date) over 10 percent of his compensation for each calendar year of his participation in the Investment Fund prior to such date, multiplied by a fraction, the numerator of which shall be 1 and the denominator of which shall be the number of calendar years during which he was a participant prior to January 1, 1976. 2. "Annual compensation" shall mean a participant's total annual compensation as determined in accordance with Treasury Regulations Section 1.415-2(d)(2) and (d)(3). C. The limitations set forth in this Article with respect to any participant who at any time participates in any other defined contribution plan maintained by the Employer or in more than one defined benefit plan maintained by the Employer shall apply as if the total annual addition - 48 - allocated to the participant under all such defined contribution plans in which the participant so participates are allocated under a single plan and as if the total benefits payable to the participant under all defined benefit plans maintained by the Employer are payable from a single plan. For purposes of this Article, the term "Employer" shall include any affiliated company as defined in Paragraph 2B. of Article IX hereof and modified by Section 415(h) of the Code. D. In the case of a person who is a participant both in the Investment Fund and the CBS Pension Plan or any other applicable defined plan, the sum of the defined benefit plan fraction and the defined contribution plan fraction (as each such term is hereinafter defined) for any calendar year shall not exceed 1.0. E. For the purpose of determining the sum referred to in Paragraph D of this Article XII, the following shall apply: (1) "Defined benefit plan fraction" shall mean a fraction, (i) the numerator of which shall be the annual benefit payable with respect to a participant under the CBS Pension Plan and any other applicable defined benefit plan determined without regard to the limitation provisions required by Section 415(b) of the Code and (ii) the denominator of which shall be the maximum benefit payable under such Section, increased as provided by Section 415(e)(2)(B) of the Code as amended by the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"); provided, however, that in the case of any participant in the CBS Pension Plan whose benefit is described in Section 6.04C thereof prior to increasing the denominator of the fraction pursuant to Section 415(e)(2)(B) of the Code, the numerator of the defined benefit plan fraction shall be deemed not to exceed the denominator of such fraction. (2) "Defined contribution plan fraction" shall mean a fraction, (i) the numerator of which shall be the aggregate annual additions (as hereinafter defined), with respect to a participant in the Investment Fund or any other defined contribution plan maintained by an Employer, determined as of the close of the calendar year in which such additions accrued, determined without regard to the limitation provisions required by Section 415(c) of the Code, and (ii) the denominator of which shall be the aggregate maximum annual additions determined by applying the provisions of said Section 415(c) for each calendar year of the participant's service, taking into account the transition rules for years ending prior to January 1, 1983 prescribed under the Investment Fund or other applicable plans and under the Act and TEFRA, including the rules of Section 415(e)(3) of the Code as amended by TEFRA, unless the Committee elects to apply the rules of Section 415(e)(6) of the Code, as added by TEFRA; provided, however, that in the case of calendar years prior to January 1, 1976 prior to increasing the denominator of the fraction pursuant to Section 415(e)(3)(B) or Section 415(e)(6)(B) of the Code, the numerator of the defined contribution plan factor shall be deemed not to exceed the denominator of such fraction. F. The limitation referred to in Paragraph D of this Article XII shall not apply with respect to any participant who on September 2, 1974 was a participant both in the Investment Fund and the CBS Pension Plan if the defined benefit fraction with respect to such a person shall not be - 49 - increased, by amendment or otherwise, after September 2, 1974 and no contributions to his account are made under the Investment Fund after such date. G. If, prior to the allocation of contributions on behalf of any participant, it is determined that the limitation on annual additions prescribed under Paragraph A hereof or the limitation applicable to a combination of plans prescribed under Paragraph D hereof would be exceeded in any year, contributions shall be reduced, in the following order, but only to the extent necessary to satisfy the limitations: (1) First, periodic special contributions shall be reduced; (2) Second, after-tax voluntary supplemental contributions shall be reduced; (3) Third, before-tax voluntary supplemental contributions shall be reduced; (4) Fourth, after-tax required basic contributions shall be reduced; (5) Fifth, before-tax required basic contributions shall be reduced; (6) Sixth, Employer matching contributions shall be reduced. Any amount which may not be allocated to the account of a participant by reason of (2), (3), (4) or (5) hereof shall not be withheld and/or deferred from his salary but shall be paid to him. Any amount which may not be allocated to the account of a participant by reason of (6) hereof shall be retained in the general assets of the Employer, if the Board of Directors of CBS so directs, or paid to such participant upon such terms and conditions as the Board of Directors of CBS may from time to time prescribe. H. Notwithstanding the provisions of Paragraph G, in the event that the limitations prescribed under Paragraph D would be exceeded with respect to any participant who participates in the Investment Fund and the CBS Pension Plan or any other applicable defined benefit plan, the benefits under the defined benefit plan shall be reduced or frozen prior to making any adjustments under the Investment Fund. I. In the event that, notwithstanding Paragraph G hereof, the limitations with respect to annual additions prescribed hereunder are exceeded with respect to any participant and such excess arises as a consequence of the crediting of forfeitures to the participant's account or a reasonable error in estimating the participant's compensation or a reasonable error in determining the amount of before-tax contributions that may be made with respect to any individual within the limits of Section 415 of the Code, such excess shall be disposed of by returning to the participant his after-tax contributions, if any, for the year in which the excess arose, together with the earnings thereon, but only to the extent necessary to cause the annual additions to the participant's account to equal, but not exceed, the limitations prescribed hereunder. In the event that after such contributions and earnings are returned there remains an excess, before-tax contributions, if any, for the year in which the excess arose, shall be returned to the participant, but only to the extent - 50 - necessary to cause the annual additions to the participant's account to equal, but not exceed, the limitations prescribed hereunder. In the event that after such contributions are returned there remains an excess, such excess shall be held in a suspense account and allocated to the account of the participant in succeeding years or, if his employment has terminated and there remains an amount standing to his credit in a suspense account, among the accounts of all participants. Any before-tax or after-tax contributions that are returned to the participant in accordance with this Paragraph shall not be taken into account in applying the limitations of Paragraphs (iii)(A), (iii)(C) and (iii) (D) of Article IV. XIII. Interpretation; Construction. Anything in the Investment Fund or the Trust Agreement to the contrary notwithstanding, no provision thereof shall be so construed as to violate the requirements of the Act. To the extent that state law shall not be preempted by the provisions of the Act or any other laws of the United States heretofore or hereafter enacted, as the same may be amended from time to time, the Investment Fund shall be administered, construed and enforced according to the laws of the State of New York. XIV. Top-Heavy Plan. A. Effective January 1, 1984, the Investment Fund shall meet the requirements of this Article XIV in the event that the Investment Fund is or becomes a top-heavy plan. B. 1. Subject to the aggregation rules set forth in subparagraph 2 of this Paragraph B, the Investment Fund shall be considered a top-heavy plan pursuant to Section 416(g) of the Code in any plan year beginning after December 31, 1983 if, as of the determination date, the present value of the cumulative accrued benefits of all Key Employees exceeds 60 percent of the present value of the cumulative accrued benefits of all of the Employees as of such date, excluding former Key Employees and, except for the plan year beginning January 1, 1984, excluding any Employee who has not received compensation from the Employer during the five consecutive plan year period ending on the determination date, but taking into account in computing the ratio any distributions made during the five consecutive plan year period ending on the determination date. For purposes of the above ratio, the present value of a Key Employee's accrued benefit shall be counted only once each plan year, notwithstanding the fact that an individual may be considered a Key Employee for more than one reason in any plan year. 2. For purposes of determining whether the Investment Fund is a top-heavy plan and for purposes of meeting the requirements of this Article XIV, the Investment Fund shall be aggregated and coordinated with other qualified plans in a required aggregation group and may be aggregated or coordinated with other qualified plans in a permissive aggregation group. If such required aggregation group is top-heavy, this Investment Fund shall be considered a top-heavy plan. If such permissive aggregation group is not top-heavy, this Investment Fund shall not be a top-heavy plan. - 51 - C. For the purpose of determining whether the Investment Fund is top-heavy, the following definitions shall be applicable: 1. Determination and Valuation Dates. The term "determination date" shall mean, in the case of any plan year, the last day of the preceding plan year. The amount of an individual's accrued benefit and the present value thereof shall be determined as of the valuation date and shall include any contribution actually made after such valuation date but on or before the determination date. The term "valuation date" means the most recent value determination date defined in subparagraph 54 of Paragraph A of Article IX hereof occurring within a 12-month period ending on the determination date. 2. Key Employee. An individual shall be considered a Key Employee if he is an Employee or former Employee who at any time during the current plan year or any of the four preceding plan years: (a) was an officer of the Employer who has annual compensation from the Employer in the applicable plan year in excess of 150 percent of the dollar limitation under Section 415(c)(1)(A) of the Code; provided, however, that the number of individuals treated as Key Employees by reason of being officers hereunder shall not exceed the lesser of 50 or 10 percent of all Employees, and provided further that if the number of Employees treated as officers is limited to 50 hereunder, the individuals treated as Key Employees shall be those who, while officers, received the greatest annual compensation in the applicable plan year and any of the four preceding plan years (without regard to the limitation set forth in Section 416(d) of the Code); or (b) was one of the 10 Employees owning or considered as owning the largest interests in the Employer who has annual compensation from the Employer in the applicable plan year in excess of the dollar limitation under Section 415(c)(1)(A) of the Code as increased under Section 415(d) of the Code; or (c) was a more than five percent owner of the Employer; or (d) was a more than one percent owner of the Employer whose annual compensation from the Employer in the applicable plan year exceeded $150,000. For purposes of determining who is a Key Employee, ownership shall mean ownership of the outstanding stock of the Employer or of the total combined voting power of all stock of the Employer, taking into account the constructive ownership rules of Section 318 of the Code, as modified by Section 416(i)(1) of the Code. For purposes of section (a) of this subparagraph but not for purposes of sections (b), (c) and (d) of this subparagraph (except for purposes of determining compensation under section (d) of this subparagraph), the term "Employer" shall include any entity aggregated with an Employer pursuant to Section 414(b), (c) or (m) of the Code. For purposes of section (b) of this subparagraph, an Employee (or former Employee) who has some ownership interest is considered to be one of - 52 - the top 10 owners unless at least 10 other Employees (or former Employees) own a greater interest than such Employee (or former Employee); provided that if an Employee has the same ownership interest as another Employee, the Employee having greater annual compensation from the Employer is considered to have the larger ownership interest. 3. Non-Key Employee. The term "Non-Key Employee" shall mean any Employee who is a participant and who is not a Key Employee. 4. Beneficiary. Whenever the term "Key Employee", "former Key Employee", or "Non-Key Employee" is used herein, it includes the beneficiary or beneficiaries of such individual. If an individual is a Key Employee by reason of the foregoing sentence as well as a Key Employee in his own right, both the present value of his inherited accrued benefit and the present value of his own accrued benefit will be considered his accrued benefit for purposes of determining whether the Investment Fund is a top-heavy plan. 5. Compensation and Compensation Limitation. For purposes of this Article XIV, except as otherwise specifically provided, the term "compensation" means the amount stated on an Employee's Form W-2 for the calendar year that ends with or within the plan year; provided that the annual compensation of a Key Employee taken into account under the Investment Fund shall not exceed $200,000, for plan years beginning before January 1, 1994, or $150,000, for plan years beginning after December 31, 1993, and in either case adjusted for increases in the cost of living pursuant to regulations issued under Section 401(a)(17) of the Code. 6. Required Aggregation Group. The term "required aggregation group" shall mean all other qualified defined benefit and defined contribution plans, including terminated plans, maintained by the Employer in which a Key Employee participates, and each other plan of the Employer which enables any plan in which a Key Employee participates to meet the requirements of Section 401(a)(4) or 410 of the Code. 7. Permissive Aggregation Group. The term "permissive aggregation group" shall mean all other qualified defined benefit and defined contribution plans maintained by the Employer that meet the requirements of Sections 401(a)(4) and 410 of the Internal Revenue Code when considered with a required aggregation group. 8. Present Value of Accrued Benefit. The present value of an individual's accrued benefit shall mean the sum of the value as of the most recent valuation date of the A units credited to his A account, the B units credited to his B account, the D units credited to his D account, the E units credited to his E account and the C units credited to his C account as of the determination date and contributions due as of the determination date. D. In the event the Investment Fund is determined to be top-heavy for any plan year, the following requirements shall be applicable. 1. Minimum Allocation. (a) In the case of a Non-Key Employee who is covered under this Investment Fund but does not participate in any qualified defined benefit plan maintained by the Employer, the minimum allocation of contributions plus forfeitures allocated to the account of each such Non-Key Employee who has not separated from service at the end of - 53 - a plan year in which the Investment Fund is top-heavy shall equal the lesser of three percent of compensation for such plan year or the largest percentage of compensation provided on behalf of any Key Employee for such plan year. The minimum allocation provided hereunder may not be suspended or forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the Code. The minimum allocation shall be made for a Non-Key Employee for each plan year in which the Investment Fund is top-heavy, even if he has not completed a year of service in such plan year or if he has declined to elect to have salary reduction contributions made on his behalf. (b) A Non-Key Employee who is covered under this Investment Fund and under a qualified defined benefit plan maintained by the Employer shall not be entitled to the minimum allocation under this Investment Fund but shall receive the minimum benefit provided under the terms of the qualified defined benefit plan. 2. Limitations on Annual Additions and Benefits. For purposes of computing the defined benefit plan fraction and defined contribution plan fraction as set forth in Sections 415(e)(2)(B) and 415(e)(3)(B) of the Code, the dollar limitations on benefits and annual additions applicable to a limitation year shall be multiplied by 1.0 rather than by 1.25. XV. Midwest Communications, Inc. Transaction. A. Transfer of Accounts from the Midwest Communications, Inc. Retirement Savings Plan to Investment Fund: 1. All individuals who were salaried, nonunion employees of Midwest Communications, Inc. and who were eligible to participate in the Midwest Communications, Inc. Retirement Savings Plan as of February 5, 1992, shall be eligible to participate in the Investment Fund with respect to compensation earned after April 5, 1992. Amounts credited to the accounts of such Participants of the Midwest Communications, Inc. Retirement Savings Plan who are participants under the Investment Fund shall be transferred to the Investment Fund effective April 30, 1992 ("Transferred Amount(s)"). 2. All individuals who were union employees of Midwest Communications, Inc. and who were eligible to participate in the Midwest Communications, Inc. Retirement Savings Plan shall be eligible to participate in the Investment Fund as of the date specified by the individual collective bargaining agreement with respect to compensation earned after the date specified in such agreement. Amounts credited to the accounts of such Participants of the Midwest Communications, Inc. Retirement Savings Plan who are participants under the Investment Fund shall be transferred to the Investment Fund effective as of the valuation date following the date specified in the particular collective bargaining agreement for their eligibility to participate in the Investment Fund ("Transferred Amount(s)"). 3. Transferred Amounts shall be subject to the following procedures: (i) Allocation and Accounting for Transferred Amounts: The portion of a participant's Transferred Amount representing before-tax - 54 - contributions shall be allocated to his Before-Tax Account; the portion representing rollover contributions shall be allocated to his Rollover Contribution Account; and the remaining portion shall be allocated to the participant's Employer Matching Contribution Account. (ii) Investment of Transferred Amounts: Transferred Amounts shall be invested in Funds A, B, D and E as directed by the participant in accordance with the investment provisions of Article III and IV. In the event the participant fails to issue an investment direction, the Transferred Amounts shall be invested in Fund B. (iii) Vesting in Transferred Amounts: A participant's vested interest in his Transferred Amount shall be determined in accordance with the rules of subparagraph 56 of Paragraph A of Article IX hereof, provided that all prior service credit with Midwest Communications, Inc. shall be treated as service with CBS Inc., and further provided that a participant's vested interest in the Transferred Amounts under the Investment Fund shall be no less than his vested interest under the Transferor Plan determined as of the date such amounts are transferred to this Investment Fund. (iv) Distribution and Withdrawals of Transferred Amounts: The requirements of Article VI shall govern the withdrawal and distribution of Transferred Amounts in the same manner as if such amounts were originally contributed to this Investment Fund, provided that in the event former Participants in the Midwest Communications, Inc. Retirement Savings Plan had Rollover Contribution Accounts thereunder, these amounts will be available for withdrawal under the withdrawal rules of Section 7.1 of that Plan, to wit: "Withdrawals from Rollover Account: A Participant may withdraw from his Rollover Account an amount not less than the lesser of One Thousand Dollars or the balance of such Account and not in excess of the amount of such Account balance as of the Valuation Date that next follows by at least thirty days (or such shorter period as the Administrator may by uniform rule allow) the date on which the Administrator receives a complete and accurate written withdrawal application from the Participant in form prescribed by the Administrator. Such withdrawal distribution shall be made by the Trustee as soon as administratively practicable following such Valuation Date." Section 2.28 of the Midwest Communications, Inc. Retirement Savings Plan provides that the Valuation Date is the last day of each calendar month and such interim dates as the Administrator may from time to time specify pursuant to Section 5.2(B). B. Merger of WCCO Television, Inc. AFTRA 401(k) Plan into Investment Fund: 1. All individuals who were Participants in the WCCO Television, Inc. AFTRA 401(k) Plan as of August 21, 1992 shall be eligible to participate in the Investment Fund with respect to compensation earned after August 23, 1992. Amounts credited to the accounts of such Participants of the WCCO Television, Inc. AFTRA 401(k) Plan who are participants under the Investment Fund shall be transferred to the Investment Fund effective September 2, 1992 ("Transferred Amount(s)"). - 55 - Effective August 31, 1992, the participants shall direct the Trustee of the CBS Employee Investment Fund to transfer the total of their account balance(s) in the WCCO Television, Inc. AFTRA 401(k) Plan to the designated Fund account(s) under the Investment Fund. 2. Transferred Amounts shall be subject to the following procedures: (i) Allocation and Accounting for Transferred Amounts: The portion of a participant's Transferred Amount representing before-tax contributions shall be allocated to his Before-Tax Account; the portion representing rollover contributions shall be allocated to his Rollover Contribution Account. (ii) Investment of Transferred Amounts: Transferred Amounts shall be invested in Funds A, B and D as directed by the participant in accordance with the investment provisions of Article III and IV. In the event the participant fails to issue an investment direction, the Transferred Amounts shall be invested in Fund B. (iii) Vesting in Transferred Amounts: A participant's vested interest in his Transferred Amount shall be determined in accordance with the rules of subparagraph 56 of Paragraph A of Article IX hereof, provided that all prior service credit with Midwest Communications, Inc. shall be treated as service with CBS Inc., and further provided that a participant's vested interest in the Transferred Amounts under the Investment Fund shall be no less than his vested interest under the Transferor Plan determined as of the date such amounts are transferred to this Investment Fund. (iv) Distribution and Withdrawals of Transferred Amounts: The requirements of Article VI shall govern the withdrawal and distribution of Transferred Amounts in the same manner as if such amounts were originally contributed to this Investment Fund, provided that in the event former Participants in the WCCO Television, Inc. AFTRA 401(k) Plan had Rollover Contribution Accounts thereunder, these amounts will be available for withdrawal under the withdrawal rules of Section 7.1 of that Plan, to wit: "Withdrawals from Rollover Account: A Participant may withdraw from his Rollover Account an amount not less than the lesser of One Thousand Dollars or the balance of such Account and not in excess of the amount of such Account balance as of the Valuation Date that next follows by at least thirty days (or such shorter period as the Administrator may by uniform rule allow) the date on which the Administrator receives a complete and accurate written withdrawal application from the Participant in form prescribed by the Administrator. Such withdrawal distribution shall be made by the Trustee as soon as administratively practicable following such Valuation Date." Section 2.27 of the WCCO Television, Inc. AFTRA 401(k) Plan provides that the Valuation Date is the last day of each calendar month and such interim dates as the Administrator may from time to time specify pursuant to Section 5.2(B). - 56 - EX-10.J 6 DIRECTORS' RESTRICTED STOCK PLAN CBS INC. RESTRICTED STOCK PLAN FOR ELIGIBLE DIRECTORS The Restricted Stock Plan (the "Plan") of CBS Inc. ("CBS" or the "Company") is for the purpose of providing each eligible Director, who shall so elect, with the opportunity to receive deferred compensation after termination of service as a Director. The Plan is also intended to establish a method of paying Directors' deferred compensation by giving to electing Directors the opportunity to purchase and acquire shares of Common Stock, $2.50 par value per share, of CBS Inc. ("Common Stock") with the proceeds of their directors fees and retainers in accordance with the terms of the Plan. It is believed that this will aid CBS in attracting and retaining, as members of its Board of Directors, persons whose abilities, experience and judgment can contribute to the continued progress of CBS. Section 1. Definitions (a) "Board" means the Board of Directors of CBS. (b) "Committee" means the Committee appointed to administer this Plan, as provided in Section 3 thereof. (c) "Committee Fees" means the fees payable to a Director for service on, as a member or chairman of, a Committee of the Board. (d) "Deferred Compensation" means compensation previously deferred by electing Directors pursuant to the Company's Deferred Additional Compensation Plan for Directors established November 2, 1981, as amended. (e) "Deferred Compensation Account" means the account or accounting entry which signifies the total amount of Deferred Compensation with respect to each Participant who shall elect to have all or a portion of his or her Deferred Compensation, if any, used to acquire shares of Common Stock pursuant to the Plan. (f) "Director" or "Directors" means a member or members of the Board of the Company. (g) "Director's Retainers" means each of the quarterly retainer payments which are payable to Eligible Directors for service as a member of the Board of Directors. - 2 - (h) "Eligible Director" means a Director who is not in the Company's employ. (i) "Election Form" mean the form by which an Eligible Director elects to become a Participant. (j) "Election Requirements" means the period of six months and one day which is required (i) in the case of an Eligible Director, before any election to commence participation in the Plan shall become effective or (ii) in the case of a Participant, before any election to cease or change the percentage of a Participant's participation in the Plan shall become effective. If the applicable six months and one day period ends on a date other than a Valuation Date, the event contemplated by the relevant Election Form shall be effective as of the first Valuation Date following the end of the Election Requirements period. (k) "Market Value" of a share of Common Stock shall mean the closing sale price for the Company's Common Stock on the New York Stock Exchange (or if such Common Stock is no longer listed on such exchange on the over-the-counter market) on each Valuation Date or, if no sale occurred on such date, on the date prior thereto on which a sale last occurred, all as determined in good faith by the Committee. (l) "Participant" means an Eligible Director who has complied with the Election Requirements and has elected to participate in the Plan on the terms and conditions set forth herein. (m) "Restricted Period" means the period of time commencing on the date on which an Eligible Director becomes a Participant and ending on the date on which he or she ceases to be a director under circumstances described in Section 6.2(ii) that would not result in the forfeiture of Restricted Shares. (n) "Restricted Shares" means shares of Common Stock acquired by a Participant which are subject to the re- strictions and other provision of Article 6 hereof. (o) "Total Disability" shall mean a mental or physical disability of a Participant that the Committee, in its sole and reasonable discretion and based upon such information as it reasonably deems appropriate, determines willpermanently prevent such Participant from performing his or her duties as a Director of the Company. - 3 - (p) "Valuation Date" means the 15th day of February, May, August or November (or if any such day shall not be a business day the next following business day) on which date Committee Fees and director's Retainers for the previously ended quarter are paid to Directors. Section 2. Term; Amendment of the Plan. The Plan shall be effective upon its approval by a majority of the Stockholders of CBS present and voting at CBS's 1993 Annual Meeting of Shareholders and shall, unless otherwise terminated, be in effect until December 31, 2013 (or if such date shall not be a business day, the next following business day). The Plan may be terminated, modified or amended by the CBS shareholders, and the Board of Directors may also terminate the Plan, or modify or amend the Plan in such respects as the Board shall deem advisable, except that no change or modification can be made by the Board which will result in (i) accelerating the vesting of any Restricted Shares on behalf of a Participant, (ii) permitting a Participant to elect to commence or terminate his participation other than in conformity with the Election Requirements, or (iii) increasing the number of shares available for purchase by Participants under the Plan. No amendment or termination of the Plan shall adversely affect or alter any rights or restrictions relating to Restricted Shares acquired under to the Plan prior to such amendment or termination. Section 3. Administration of the Plan - the Committee. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company. To the extent permitted by law, members of the Committee shall not be precluded from becoming Participants in accordance with the terms of the Plan. Section 4. Participation. In order to participate in the Plan, an Eligible Director must make a valid election by executing and filing an Election Form with the Committee. Such election shall become effective in conformity with the terms of such form and in no event before the satisfaction of the Election Requirements. Each Election Form shall: (a) be valid if and only if it contains a statement that the Eligible Director elects to defer on a quarterly basis on each Valuation Date all or a stated percentage equal to not less than 50% (in 10% increments of 50% or more) of the aggregate amount due to him or her as Committee Fees and Directors Retainers; - 4 - (b) provide a one time opportunity to elect, within 60 days following the Plan's effective date, to have a stated percentage (in increments of 10%) of Deferred Compensation used to acquire Restricted Shares on the Valuation Date following the expiration of the Election Requirements as to such election; (c) apply to such period of time during which the Participant continues to be an Eligible Director or until the Participant files with the Committee a revised Election Form or a written revocation of election (which in either case shall become effective upon the first Valuation Date to occur after the expiration of six months and one day after such filing); (d) with respect to such period of time to which it applies pursuant to paragraph (c) above, shall be irrevocable as to all matters described in paragraph (a) above upon the election having become effective and while the election is in effect; and (e) shall be irrevocable for a period of six months and one day. Section 5. Available Shares. 100,000 shares of Common Stock shall be available for purchase by Participants under the Plan from time to time. These shares may be either treasury shares or authorized but unissued shares. The Board of Directors may from time to time reduce the number of shares of Common Stock available for issuance pursuant to the Plan or terminate the Plan but no such reduction in the number of shares of Common Stock available under the Plan shall affect any Restricted Shares previously issued under the Plan. The number of shares available for issuance under the Plan may be increased only pursuant to the affirmative vote of the Company's shareholders. If any change is made in the number of shares of Common Stock outstanding or in the rights of such outstanding shares (such as by stock dividend, stock split, or stock consolidation), the Committee may make such adjustments in the number of or rights relating to Restricted Shares previously issued pursuant to the Plan as the Committee determines is equitable to preserve the respective rights of the participants in the Plan. Section 6. Restricted Stock. Section 6.1 Acquisition of Restricted Shares. (a) On each Valuation Date a Participant shall be credited with the number of full Restricted Shares that results - 5 - from dividing the aggregate amount of Director's Retainers and Committee Fees that would have been paid to him or her on such Valuation Date but which such Participant has elected to defer under the Plan plus any amount held in the Director's suspense account by the Market Value on such Valuation Date of one share of Common Stock. Any cash not so used to acquire Restricted Shares, together with cash dividends as provided in Section 6.2, shall be held in a suspense account and funds so held in the suspense account shall be added to the aggregate amount of the Participant's Director's Retainers and Committee Fees deferred under the Plan on the next Valuation Date and used to acquire additional full Restricted Shares on such date. (b) In the case of a Participant who has elected to have a percentage of his Deferred Compensation used to acquire Restricted Shares pursuant to Section 4(b), such Participant shall be credited with the number of full Restricted Shares that results from dividing the amount of his Deferred Compensation elected to be converted into Restricted Shares by the Market Value of one share of Common Stock on the applicable Valuation Date. Any cash not so used to acquire Restricted Shares shall continue to be held as Deferred Compensation under the provision of the Plan described in subparagraph (d) of Section 1. (c) On each Valuation Date, there shall be issued on behalf of each Participant a stock certificate representing a number of shares of Common Stock equal to the number of Restricted Shares acquired by the Participant. Such certificate shall be registered in the Participant's name but shall be held in custody by the Company for the Participant's account. Section 6.2. Provisions Relating to Restricted Shares. The Participant shall generally have the rights and privileges of a stockholder as to Restricted Shares, including the right to vote and receive dividends, except that the following restrictions are applicable to Restricted Shares: (i) the Participant shall not be entitled to delivery of any certificate(s) until the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee; and (ii) all Restricted Shares shall be forfeited and all rights of the Participant to such shares shall terminate without further obligation on the part of the Company if the Participant shall cease to be a Director prior to the later of attaining age 72 or serving not less than five years from the effective date of this Plan, unless - 6 - a Director's ceasing to serve is triggered by (y) death, Total Disability or the Company's shareholders failing to reelect such Participant to the Board, or (z) resignation from the Board after furnishing the Board with an opinion of counsel, reasonably satisfactory to the Company, to the effect that continued membership on the Board by the Participant will result in the Participant having a conflict of interest or suffering some other significant legal infirmity. It is expressly acknowledged that, as to a Participant who satisfies any of the requirements of subparagraph (ii) above, the Restricted Period shall terminate. Cash dividends and the proceeds of any non-stock dividends paid on a Participant's Restricted Shares shall be held on behalf of such Participant in a suspense account until the next Valuation Date, and on the next Valuation Date, such aggregate amount (and any other cash in such account) shall be used to acquire additional full Restricted Shares as provided in Section 6.1(a). Stock dividends (whether in Common Stock or in the stock of any other company) paid on Restricted Shares of a Participant shall be subject to the same restrictions as the Restricted Shares with respect to which the stock dividend was paid. Section 6.3. Lapse of Restrictions. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the Restricted Shares shall lapse and one or more stock certificates for the number aggregate of shares of Restricted Shares shall be delivered, free and clear of all restrictions, except that may be imposed by law, to the Participant or the Participant's beneficiary or estate, as the case may be. Certificate(s) for Restricted Shares shall bear such legends, if any, as the Committee, on the advice of counsel, shall deem necessary or appropriate. The Company shall not be required to deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value (determined as of the date the Restricted Period ends) of such fractional share to the Participant or the Participant's beneficiary or estate, as the may be. At the time of such delivery, the amount of any cash in a Participant's suspense account shall be simultaneously delivered. No payment will be required from the Participant upon the issuance or delivery of any shares of Restricted Stock, except that any amount necessary to satisfy applicable federal, state or local tax requirements shall be withheld - 7 - or paid promptly upon notification of the amount due and prior to or concurrently with the issuance or delivery of certificate(s) representing Restricted Shares. The Participants and their beneficiaries, distributors and personal representation will bear any and all federal, state, local or other income or other taxes imposed on Restricted Shares (or any cash) distributed to them pursuant to this Plan. Section 7. Consent. By electing to become a Participant, each Director shall be deemed conclusively to have accepted and consented to all terms of the Plan and all actions or decisions made by the Company, the Company's shareholders, the Board or the Committee with regard to the Plan. Such terms and consent shall also apply to and be binding upon the beneficiaries, distributees and personal representatives and other successors in interest of each Participant. Section 8. Miscellaneous. Section 8.1. Additional Conditions. Any shares of Common Stock issued or transferred under any provision of the Plan as Restricted Shares may be issued or transferred subject to such conditions, in addition to those specifically provided in the Plan, as the Committee or the Company may reasonably impose. Section 8.2. No Right to Continue to Serve. Nothing in the Plan or in any instrument executed pursuant hereto shall confer upon any Director any right to continue as a member of the Company's Board or shall affect the right of the Board, to remove a Participant from the Board or the Company's shareholders to not re-elect any Participant to the Board. Section 8.3. Legal Restrictions. The Company will not be obligated to transfer to a Participant (or his or her representative) Restricted Shares if counsel to the Company determines that such issuance would violate any law or regulation of any governmental authority or any agreement between the Company and any national securities exchange upon which the Company's Common Stock is listed. In connection with any stock issuance or transfer, the person acquiring the shares shall, if requested by the Company, give assurances satisfactory to counsel to the Company regarding such matters as the Company may deem desirable to assure compliance with all legal requirements. - 8 - Section 8.4. Alienation. (a) Subject to the provisions of paragraph (b) of this Section 8, no Restricted Shares (or cash in the suspense account) held in custody under this Plan, shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, levy or charge, and any attempt so to alienate, sell, transfer, assign, pledge, encumber, levy or charge the same shall be void. No such amount shall be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefit. (b) The restraints in paragraph (a) of this Section 8.4 shall not apply to a Participant's personal representative. Section 8.5. Severability. In the event any provision of this Plan would serve to invalidate the Plan, that provision shall be deemed to be null and void, and the Plan shall be construed as if it did not contain the particular provision that would make it invalid. EX-10.L 7 EMPLOYMENT AGREEMENT - GREBOW CBS Inc. 51 West 52 St. New York, NY 10019 Mr. Edward Grebow 30 Waterside Plaza New York, New York 10010 As of November 8, 1993 Dear Ed: This letter confirms the arrangements we have discussed concerning your employment by CBS. 1. CBS agrees to continue to employ you as a senior executive, with the title Senior Vice President for the period beginning November 8, 1993 and ending December 31, 1995. 2. During your employment, CBS will pay you base salary at an annual rate of not less than $350,000. In February of each of the years 1994, 1995 and 1996, CBS will pay you as a bonus the greater of A) $110,000 or B) the award granted to you under the CBS Executive Incentive Plan relating to the preceding calendar year. 3. If CBS shall have terminated your employment prior to December 31, 1995 other than for "cause", it will thereupon pay you the greater of your salary through December 31, 1995 or a severance payment calculated in accordance with the CBS severance policy in effect on this date. (If your employment continues beyond December 31, 1995 only the CBS severance policy then in effect will be applicable.) For purposes of this paragraph 3, "cause" means (i) fraud, - 2 - misappropriation or embezzlement by you, (ii) your willful failure to devote all of your customary business time and attention to the affairs of CBS or (iii) your intentional breach of your obligations to comply in all material respects with the provisions of CBS policy, including but not limited to the Policy Concerning Conflicts of Interest. 4. You shall be a participant in the CBS Pension Plan, and shall, in accordance with the terms of that Plan, be paid such amounts, to the extent that you become entitled to the same, at such times as are therein provided generally to its participants. In addition, CBS will provide you supplemental nonqualified payments equal to the difference between (A) those pension benefits you would have received had you remained employed by Morgan Guaranty Trust Company and been covered under its plan as it applied to you and existed on October 1, 1985 and (B) the sum of (a) your vested accrued benefit as of the date of your termination of employment with Morgan Guaranty Trust Company ($16,755), (b) your accrued benefit as of the date of your termination of employment with Bowery Savings Bank calculated in accordance with the supplemental non-qualified arrangement between you and the Bowery Savings Bank in effect on that date ($36,264) and (c) any vested benefit under the CBS - 3 - Pension Plan. The attached schedule prepared by TPF&C demonstrates the methodology to be utilized in calculating your supplemental payments hereunder. You shall have the option to receive the then equivalent value of such supplemental payments in cash upon the termination of your CBS employment. The value is to be based on the interest rate in the CBS Pension Plan in effect at that time. This agreement supersedes all terms and conditions of our prior letter dated "As of August 5, 1991." If the foregoing correctly states the understanding between us, kindly so confirm by countersigning this letter and returning a copy of it, which thereupon will become effective as the agreement between us. Sincerely, Laurence A. Tisch Laurence A. Tisch Chairman, President and Chief Executive Officer AGREED TO AND APPROVED: Edward Grebow EDWARD GREBOW Date: As of November 8, 1993 EX-10.P 8 EMPLOYMENT AGREEMENT - LUND AGREEMENT made as of the 31st day of January, 1994, by and between CBS Inc. ("CBS"), a New York corporation, having its principal office at 51 West 52 Street, New York, New York 10019, and PETER LUND ("Executive"). W I T N E S S E T H: WHEREAS, Executive has been retained to perform services as an executive of the CBS Broadcast Group ("CBG") of CBS; and WHEREAS, CBS desires to secure the services of Executive as an executive of CBG, and Executive is willing to perform such services, upon the terms, provisions and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter contained, it is agreed upon between CBS and Executive as follows: 1. CBS hereby employs Executive, and Executive hereby accepts employment, as an executive of CBG, currently as President of the CBS Television Network ("CTN") and Executive Vice President of the CBS Broadcast Group, for a four-year term commencing January 3, 1994 and ending January 2, 1998. Currently, the following Divisions and Departments report, or shortly after execution of this agreement shall report, to the President of CTN: CBS Marketing, CBS Promotion, CBS Radio, CBS Television Stations, Affiliate Relations and other responsibilities as may be assigned. Executive shall perform such services as may from time to time be assigned to him by the President, CBS/Broadcast Group. 2.a. CBS agrees to pay Executive, and Executive agrees to accept from CBS, for his services hereunder base salary at the rate of five hundred fifty thousand dollars ($550,000) per - 2 - annum for the period January 3, 1994 through January 2, 1996 and six hundred fifty thousand dollars ($650,000) per annum for the period January 3, 1996 through January 2, 1998. Base salary shall be payable bi-weekly or in such other manner as CBS may designate for employees generally. b. In addition to the base salary set forth above, Executive shall receive a minimum bonus consisting of a payment from the CBS Executive Incentive Plan and, if necessary to reach the minimum, an additional amount. The bonuses shall be payable in February of each of the years 1995, 1996, 1997 and 1998. The minimum bonuses payable shall be two hundred fifty thousand dollars ($250,000), payable no later than March 1, 1995 and March 1, 1996, respectively, and two hundred seventy-five thousand dollars ($275,000) payable no later than March 1, 1997 and March 1, 1998 respectively. The bonus payable to Executive in 1994 with respect to 1993 shall be $350,000. 3. The Company, as an inducement to execute this agreement, will grant to Executive, deferred compensation totalling $1,000,000. Such deferred compensation shall be granted, credited with interest, and paid in a series of installments under the specific terms outlined below. Executive shall not, at any time, have a right to accelerate any payments related to this deferred compensation, and future installment payments of such deferred compensation shall not be funded and the Company shall make such payments out of general corporate assets. - 3 - The Company shall grant Executive the deferred compensation of $1,000,000 at contract execution. Interest will accrue on the $1,000,000 from the date granted, calculated initially at the rate in effect on the date of grant for 13-week United States Treasury Bills and thereafter adjusted on the first date of each succeeding calendar quarter to be, for the following quarter, the rate in effect on that date for the 13-week United States Treasury Bills. The Company shall pay the Executive, on each of the following dates, the specified portion of the then total of the above-described deferred compensation and interest accrued to that date: January 2, 1999 one fifth January 2, 2000 one fourth January 2, 2001 one third January 2, 2002 one half January 2, 2003 all that remains. 4. If prior to January 2, 1998: a.) Executive's employment should terminate by reason of his voluntary action (except as specified under paragraph #4c. below) or the Company terminates Executive for Cause, as specified in paragraph #8a. below, then Executive shall thereupon forfeit all rights to such deferred compensation and accrued interest previously credited to him, and the Company's obligations to make future payments shall thereupon terminate. b.) Executive's employment should be terminated by - 4 - the Company other than for Cause, then the Company shall continue to be obligated to make payments in accordance with the schedule in paragraph #3 hereof. c.) Executive should terminate his employment by reason of his voluntary action as a direct result of the Company's decision to substantially reduce Executive's duties, notwithstanding Executive continuing to be ready, willing and able to perform his duties, then the Company shall continue to be obligated to make payments in accordance with the schedule in paragraph #3 hereof. d.) Executive's employment should terminate by reason of death or disability, then payments shall be payable to Executive's estate in accordance with the schedule in paragraph #3 hereof. 5. Executive shall be included in all plans now existing or hereafter adopted for the general benefit of CBS employees, such as pension plans, investment funds and group or other insurance plans and benefits, if and to the extent that he is and remains eligible to participate thereunder, and subject to the provisions of such plans as the same may be in effect from time to time. Executive will also be eligible to be considered for participation in other CBS benefit plans, including the Executive Incentive Plan, Supplemental Executive Retirement Plan (SERP) and the Stock Rights Plan or any successor plans thereto, in which participation is limited to CBS executives in positions comparable to Executive's. To the extent Executive - 5 - participates in any benefit plan, such participation shall be based upon Executive's base salary. Since plans in this latter category are administered under procedures that are not subject to contractual arrangements, eligibility for consideration is no guarantee of actual participation because the CBS Board of Directors' discretion, or that of the appropriate committee of such Board, in granting participation, is absolute. 6. Executive agrees to devote all of his business time and attention to the affairs of CBG, except during vacation periods and reasonable periods of illness or other incapacity consistent with the practices of CBS for executives in comparable positions, and agrees that his services shall be completely exclusive to CBS during the term hereof. 7. Executive acknowledges that he has been furnished a copy of the Policy Notes from the President concerning Conflicts of Interest ("Conflicts Policy") dated December 13, 1989, and a copy of the "CBS Policy Summary" issued in January 1979. Executive further acknowledges that he has read and fully understands all of the requirements thereof, and acknowledges that at all times during the term hereof, he shall perform his services hereunder in full compliance with the Conflicts Policy and the CBS Policy Summary and with any revisions thereof or additions thereto. 8.a. If, during the term of this Agreement, the employment of Executive by CBS should be terminated by CBS for Cause, which for these purposes is defined as (i) fraud, - 6 - misappropriation or embezzlement on the part of Executive, (ii) Executive's willful failure to perform services hereunder or (iii) Executive's intentional breach of the provisions of paragraph 6 or of paragraph 7 hereof, then CBS's obligations hereunder shall immediately thereupon terminate. b. If, during the term of this Agreement, the employment of Executive by CBS should be terminated by CBS other than for cause, Executive shall be entitled to receive severance pay in accordance with Company policy in effect at the time of termination or one year's base salary plus bonus, whichever is greater. 9. This Agreement contains the entire understanding of the parties with respect to the subject matter thereof, supersedes any and all prior agreements of the parties with respect to the subject matter thereof, and cannot be changed or extended except by a writing signed by both parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, executors, heirs, administrators, successors and assigns. This Agreement and all matters and issues collateral thereto shall be governed by the laws of the State of New York applicable to contracts performed entirely therein. If any provision of this Agreement, as applied to either party or to any circumstance, shall be adjudged by a court to be void or unenforceable, the same shall in no way affect any other provision of this Agreement or the validity or enforceability thereof. - 7 - 10. All notices or other communications hereunder shall be given in writing and shall be deemed given if served personally or mailed by registered or certified mail, return receipt requested, to the parties at their addresses above indicated, or at such other addresses as they may hereafter designate in writing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. CBS INC. By Howard Stringer Howard Stringer Peter Lund Peter Lund (Executive) EX-11 9 COMPUTATION OF PER SHARE INCOME EXHIBIT 11 (page 1 of 2) CBS INC. and Subsidiaries COMPUTATION OF EARNINGS PER COMMON SHARE (In thousands, except per share amounts) ___________________ PRIMARY Year Ended December 31 1993 1992 1991 Earnings: Income (loss) from continuing operations $326,188 $162,479 $(98,634) Post-tax interest on convertible debentures* 3,288 12,259 12,277 Dividends on preference stock (12,500) (12,500) (12,500) Accretion on series B preference stock (188) (188) (188) Income (loss) from continuing operations applicable to common shares 316,788 162,050 (99,045) Gain from discontinued operations 12,871 Cumulative effects of changes in accounting principles (81,472) Net income (loss) applicable to common shares $316,788 $ 80,578 $(86,174) Shares: Weighted average number of common shares outstanding 14,797 13,423 14,217 Common stock equivalents: Conversion of debentures* 649 1,953 1,953 Other 92 40 35 Adjusted shares 15,538 15,416 16,205 Per share: Continuing operations $20.39 $10.51 $(6.11) Discontinued operations .79 Cumulative effects of changes in accounting principles (5.28) Net income (loss) $20.39 $ 5.23 $(5.32) *The debentures were converted in May 1993. Conversion was assumed for all prior periods. EXHIBIT 11 (page 2 of 2) CBS INC. and Subsidiaries COMPUTATION OF EARNINGS PER COMMON SHARE (In thousands, except per share amounts) ____________________ FULLY DILUTED Year Ended December 31 1993 1992 1991 Earnings: Income (loss) from continuing operations $326,188 $162,479 $(98,634) Post-tax interest on convertible debentures* 3,288 12,259 12,277 Income (loss) from continuing operations applicable to common shares 329,476 174,738 (86,357) Gain from discontinued operations 12,871 Cumulative effects of changes in accounting principles (81,472) Net income (loss) applicable to common shares $329,476 $ 93,266 $(73,486) Shares: Weighted average number of common shares outstanding 14,797 13,423 14,217 Common stock equivalents: Conversion of debentures* 649 1,953 1,953 Other 92 40 35 Assumed conversion of preference B stock 864 864 864 Adjusted shares 16,402 16,280 17,069 Per share: Continuing operations $20.09 $10.73 $(5.06) Discontinued operations .75 Cumulative effects of changes in accounting principles (5.00) Net income (loss) $20.09(a) $ 5.73(b) $(4.31)(b) *The debentures were converted in May 1993. Conversion was assumed for all prior periods. (a) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although it is not required by APB Opinion No. 15 because it results in dilution of less than 3%. (b) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although it is contrary to APB Opinion No. 15 because it produces an anti-dilutive effect. EX-12 10 COMPUTATION OF RATIOS EXHIBIT 12 CBS Inc. CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (Dollars in millions) YEAR ENDED DECEMBER 31, 1993 1992 1991 1990(1) 1989 Income from Continuing Operations before Income Taxes $479.3 $227.0 ($178.6) $102.4 $455.7 Add: Fixed charges 65.6 89.8 78.3 88.2 90.9 Amortization of Capitalized Interest 4.3 3.4 3.7 4.3 6.1 Less: Capitalized Interest (6.4) (10.2) (8.4) (8.3) (5.6) Adjusted Earnings $542.8 $310.0 ($105.0) $186.6 $547.1 Interest Cost (2) $48.8 $71.9 $58.8 $68.5 $72.6 Interest Factor Portion of Rentals 16.8 17.9 19.5 19.7 18.3 Fixed Charges $65.6 $89.8 $78.3 $88.2 $90.9 Ratio of Earnings to Fixed Charges 8.27:1 3.45:1 * 2.12:1 6.02:1 (1) In connection with its $2 billion common stock repurchase, consummated on February 4, 1991, the Company included a 1990 Unaudited Pro Forma Condensed Consolidated Income Statement in footnote 15 to its 1990 Annual Report. The Ratio of Earnings to Fixed Charges for this income statement was .35 to 1. (2) Includes amortization of debt discount and amortization of debt issue expenses. (*) The ratio of earnings to fixed charges is less than a one-to-one coverage and the earnings are inadequate to cover fixed charges. The amount of coverage deficiency is $183.3. EX-21 11 SUBSIDIARIES SUBSIDIARIES OF CBS INC.* % of Voting Shares Held by Immediate State or Country Controlling of Incorporation Parent ________________ ___________ Amadea Film Productions, Inc. Texas l00 Aspenfair Music, Inc. California l00 Bala Cynwyd Associates** Pennsylvania 50 Beverlyfax Music, Inc. California l00 Black Rock Enterprises Inc. New York 100 Caroline Film Productions, Inc. California 100 CBS Broadcast International of Canada Limited Canada 100 CBS Broadcast Services Ltd. England 100 CBS Pension Trustees U.K. Limited England 100 CBS FMX Stereo Inc. New York l00 CBS/FOX Company, The** New York 50 CBS News Communications Inc. New York 100 CBS News Special Projects Inc. New York 100 CBS Overseas Inc. New York 100 CBS Urban Renewal Corporation New Jersey l00 Columbia Television, Inc. New York l00 Granite Holdings Inc. New York 100 Katy Film Productions, Inc. North Carolina 100 Lauren Film Productions, Inc. New York 100 Meadowlands Parkway Associates** New Jersey 50 Midwest Sports Channel Inc. Minnesota l00 Network Television Association*** Delaware 33.33 Radford Productions Limited England 100 Radford Studio Center Inc. California 100 * Inactive subsidiaries of the Registrant are not included in this listing. ** General partnership *** Non-profit trade association EX-99 12 UNDERTAKINGS To Be Incorporated By Reference Into Form S-8 Registration Statements Nos. 2-87270, 2-58540 and 2-33-2098 UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. - 2 - (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -----END PRIVACY-ENHANCED MESSAGE-----