<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-K/A

[ X ]  AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 1996

[   ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number 0-7898

                              GREY ADVERTISING INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                       13-0802840
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

777 Third Avenue, New York, New York                          10017
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number,                             212-546-2000
   including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class                    Name of each exchange on which registered
         None                                             None

Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock, par value $1 per share
                                (Title of Class)

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 the 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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

Yes  X    No
<PAGE>   2
The aggregate market value of the voting stock held by non-affiliates of
registrant was $194,248,241 as at March 1, 1997.

The registrant had 890,021 shares of its common stock, par value $1 per share,
and 292,907 shares of its Limited Duration Class B Common Stock, par value $1
per share, outstanding as at March 1, 1997.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual proxy statement to be furnished in connection with the
registrant's 1997 annual meeting of stockholders are incorporated by reference
into Part III.

--------------------------------------------------------------------------------

 .      The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for the year ended
December 31, 1996 on Form 10-K as set forth in the pages attached hereto:

                                    PART III

Item 10.        Directors and Executive Officers of the Registrant.
Item 11.        Executive Compensation.
Item 12.        Security Ownership of certain Beneficial owners and management.
Item 13.        Certain relationships and related transactions.

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                             Grey Advertising Inc.
                                             ---------------------
                                                   (Registrant)



Dated: April 29, 1997                           By /s/ Steven G. Felsher
                                                   ---------------------
                                                Executive Vice President
                                                Secretary and Treasurer

                                       -2-
<PAGE>   3
Item 10.    Directors and Executive Officers of the Registrant ("Company").

            Set forth below is certain information concerning the Company's
directors:

<TABLE>
<CAPTION>
                                                              Term     No. of Shares of      Percent of
                                                             Office      Voting Stock        Votes Cast
                                                Director      Will           Owned           by Voting
     Name(a)       Age     Occupation(b)         Since       Expire      Beneficially(c)      Shares
     -------       ---     ------------         --------     ------      ---------------     ----------
<S>               <C>    <C>                    <C>          <C>        <C>                  <C>
Mark N. Kaplan ... 67     Partner, Skadden,       1973        1999            2,200(e)         -(f)
                          Arps, Slate,
                          Meagher & Flom,
                          law firm(d)

Edward H. Meyer... 70     Chairman of the         1961        1997          574,500(g)        70.75%
                          Board, President
                          and Chief
                          Executive Officer

Richard R. Shinn.. 79     Retired Chairman        1990        -(h)            1,000(i)         -(f)
                          of Metropolitan
                          Life Insurance
                          Company

John Shannon...... 60     President,              1991        1998            1,000            -(f)
                          Grey-International
</TABLE>


         (a) There is no family relationship between any director and any other
         director or executive officer of the Company.

         (b) The positions of Messrs. Meyer and Shannon are with the Company,
         and each has served the Company for more than the past five years.

             Mr. Kaplan also serves on the boards of directors of American
         Biltrite Inc., Congoleum, Inc., Diagnostic/Retrieval Systems, Inc.,
         MovieFone Inc., REFAC Technology Development Corporation and Volt
         Information Sciences, Inc.

             Mr. Meyer is also a director of Bowne & Co., Inc., Ethan Allen
         Interiors, Inc., Harman International Industries, Inc. and The May
         Department Stores Company. Mr. Meyer also serves as director or trustee
         of thirty-six mutual funds advised by Merrill Lynch Asset Management,
         Inc. or its wholly-owned subsidiary, Fund Asset Management, Inc.

             Mr. Shinn is also a director of Union Texas Petroleum, Inc.

                                       -3-
<PAGE>   4

         (c) Represents beneficial interests in shares of the Company's Common
         Stock, Class B Stock, and Series I, II and III Preferred Stock.
         Information is as of March 1, 1997.

         (d) Skadden, Arps, Slate, Meagher & Flom, a law firm in which Mr.
         Kaplan is a partner, has provided certain legal services to the Company
         in 1996 and 1997.

         (e) Mr. Kaplan owns 1,100 shares of each of Common Stock and Class B
         Stock.

         (f) Represents less than 1.0% of the votes entitled to be cast.

         (g) Mr. Meyer beneficially owns 105,953 shares of Common Stock and
         110,053 shares of Class B Stock, as to which he, as the Voting Trustee
         under the Voting Trust Agreement (as hereinafter defined),
         exercises voting power, and 20,000 shares of the Series I Preferred
         Stock, and 5,000 shares of each of the Series II and of the Series III
         Preferred Stock, representing approximately 11.9%, 37.6%, 100%, 100%
         and 100% of each class, respectively. Also includes shares held
         pursuant to the Voting Trust Agreement, as to which Mr. Meyer, as the 
         Voting Trustee, exercises voting power, and shares of Common Stock and
         Class B Stock held in the Company's Employee Stock Ownership Plan as
         to which Mr. Meyer exercises shared voting power by virtue of his
         membership on the committee charged with its administration. Also
         includes shares of Common Stock (2.9%) and Class B Stock (8.7%)
         issuable upon conversion of the Company's 8-1/2% Convertible
         Subordinated Debentures owned by Mr. Meyer after giving effect to the
         assumed conversion thereof and shares of Common Stock (5.2%) issuable 
         upon exercise of currently exercisable stock options owned by Mr.
         Meyer after giving effect to the assumed exercise thereof. Does not
         include 7,500 shares of each of the Common Stock and the Class B
         Stock held in trust for Mr. Meyer's children, as to which Mr. Meyer,
         as the Voting Trustee under the Voting Trust Agreement, exercises
         voting power.

         (h) Mr. Shinn had been elected by the holder of the Series I Preferred
         Stock and serves until the election of his successor.

         (i) Mr. Shinn owns 1,000 shares of Common Stock.

         Information concerning the Company's executive officers is included in
Part I of this report.


Item 11.    Executive Compensation.

         The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of its Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company with respect to the three most recently completed fiscal
years of the Company.

                                       -4-

<PAGE>   5
<TABLE>
<CAPTION>
                          Annual Compensation                               Long Term Compensation
                          -------------------                               ----------------------
                                                                                                   All
Name and                                                             Rest.(1)    Stock             Other
Position                  Year         Salary(2)         Bonus(2)    Stock($)    Options(#)        Comp.(1)
--------                  ----         ---------         --------    ---------   -----------       ---------

<S>                       <C>         <C>               <C>          <C>         <C>             <C>
Edward H.Meyer            1996        $2,300,000        $325,000        -0-        20,000        $1,519,957
Chairman,                 1995         2,058,333         591,667        -0-        40,000         1,278,954
President                 1994         1,725,000         400,833        -0-           -0-         1,058,160
and Chief
Executive Officer


Robert L. Berenson        1996        $  540,000        $240,000        -0-           -0-        $  339,466
President                 1995           485,000         200,000        -0-         5,000           310,838
Grey-N.Y                  1994           485,000         180,000        -0-           -0-           277,113


Barbara S. Feigin         1996        $  376,000        $160,000        -0-           -0-        $  188,843
Executive                 1995           376,000         150,000        -0-         2,000           181,085
Vice President            1994           342,250         130,000        -0-           -0-           175,989


Stephen A. Novick         1996        $  775,000        $125,000        -0-           -0-        $  419,345
Executive                 1995           737,500         125,000        -0-         3,500           385,439
Vice President            1994           667,500          95,000        -0-           -0-           400,638


John Shannon              1996        $  555,022        $240,000        -0-           -0-        $   51,498
President                 1995           476,500         201,500        -0-         2,000            49,889
Grey-International        1994           473,616         168,300        -0-           -0-            56,031
</TABLE>


(1)      All Other Compensation includes: (i) contributions of $14,650 in 1996, 
         to the Company's qualified defined contribution plans on behalf of the 
         named executives other than Mr. Shannon, who, as a United Kingdom 
         resident, participated in local pension programs to which he 
         contributed funds out of his salary compensation; (ii) amounts shown
         for Mr. Shannon represent deferred compensation pursuant to a
         subsidiary-sponsored program for United Kingdom executives; (iii)
         respective insurance premium expense coverage or reimbursement of
         $58,217,  $16,232, $21,111 and $25,050 in 1996, for Messrs. Meyer,
         Berenson and Novick, and Ms. Feigin; (iv) accruals in the respective
    

                                       -5-

<PAGE>   6
         amounts of $215,000 for Mr. Meyer  and $15,559 for Ms. Feigin in 1996,
         respectively, generally in respect of amounts which would have been
         allocated to Mr. Meyer's and Ms. Feigin's accounts under the Company's
         qualified defined contribution programs for such years but for certain
         limitations determined under the federal tax laws; (v) respective
         allocations under the Company's Senior Management Incentive Plan
         ("SMIP") in 1996, respectively, for Messrs. Berenson, Meyer and
         Novick, and Ms. Feigin of $208,584, 1,232,090, $183,584, and $133,584;
         and (vi) $100,000, and $200,000 respectively of loan forgiveness in
         1996 in respect of Messrs. Berenson's and Novick's indebtedness to the
         Company. 
       
(2)      Includes amounts paid into a deferred compensation trust on Mr. Meyer's
         behalf in 1996. (See "Employment Agreement and Transactions.")


AGGREGATE OPTIONS EXERCISED IN 1996 AND STOCK OPTION VALUES AS AT DECEMBER 31,
1996(1)

<TABLE>
<CAPTION>
                                                                           Value of
                                                      Number of            Unexercised
                                                      Unexercised          In-the-Money
                                                      Options at           Options at
                                                      December 31, 1996    December 31, 1996
                         Shares
                         Acquired      Value          Exercisable/         Exercisable/
      Name               On Exercise   Realized(2)    Unexercisable        Unexercisable
      ----               -----------   -----------    -------------        -------------

<S>                      <C>           <C>            <C>                  <C>
Edward H. Meyer              --             --        46,666/13,332        $2,492,147/$1,059,494

Robert L. Berenson           --             --              0/5,000          0/$258,100

Barbara S. Feigin            --             --              0/2,000          0/$103,240

Stephen A. Novick         5,000        467,500              0/3,500          0/$180,670

John Shannon                 --             --              0/2,000          0/$103,240
</TABLE>


(1)   All options relate to shares of Common Stock.

(2)   "Value Realized" represents the market price of the Common Stock on the
      date of exercise less the exercise price paid.

                                       -6-
<PAGE>   7


                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                           Grant Date
                                        Individual Grants                                   Value(2)
                 ----------------------------------------------------------------           --------

                   Number of          % of Total
                 Shares Under-     Options Granted      Exercise
                 lying Options      to Employees          Price                            Grant Date
Name                Granted           in 1996           ($/share)        Exp.Date          Present Value
----                -------           -------           ---------        --------          -------------

<S>               <C>               <C>                 <C>              <C>               <C>
Edward H. Meyer    20,000(1)             50.0            $235.00          11/26/05           $1,589,400
</TABLE>


(1)      Options granted to acquire Common Stock at market price on the date of
         grant under the Grey Advertising Inc. 1994 Stock Incentive Plan. The
         options are exercisable at a rate of one-third per year beginning with
         the date of grant which is November 26, 1996.

(2)      Amounts based on the modified Black-Scholes option pricing model with
         the following assumptions: exercise price equal to fair market value on
         the date of grant, nine year option term, interest rate of 6.22% and a
         dividend rate of 1.7%. There is no assurance that the value realized by
         an optionee will be at or near the value estimated by this pricing
         model. Should the stock price not rise above the option price, the
         optionee will realize no gain.

                                       -7-

<PAGE>   8

Senior Executive Officer Post-Employment Compensation Plan

         The Senior Executive Officer Post-Employment Compensation Plan provides
that certain qualified officers of the Company and its subsidiaries will be
entitled upon retirement at or after the age of 60 to a lifetime supplemental
pension of a maximum of $50,000 per year. Persons who are executive vice
presidents of the Company, or more senior, or are designated senior executive
officers of certain of the Company's subsidiaries, and who have met certain age
and length of service requirements, and have been designated by the Board of
Directors of the Company, are participants under the plan. In addition, a
surviving spouse of a recipient of a pension under the plan is entitled to an
annual pension equal to a maximum of $25,000 for the shorter of such spouse's
life and 20 years. Each of the named executives (other than Mr. Shannon) were
participants under the plan. In addition, the Company has certain understandings
whereby certain additional pension amounts may be paid to Messrs. Berenson and
Novick, and Ms. Feigin.

Item 12.    Security Ownership of Certain Beneficial Owners and Management.

         As of March 1, 1997, the Company had outstanding 890,021 shares of
Common Stock and 292,907 shares of Class B Stock.

<TABLE>
<CAPTION>
                                                       Amount of
                                                       Shares and
                                                       Nature of
                        Name and address               Beneficial
                        of Record or                   or Record         Percentage
Title of Class          Beneficial Owner               Ownership          of Class
--------------          ----------------               ---------          --------

<S>                 <C>                                <C>                <C>
Common Stock.....   Edward H. Meyer, a                  166,177(a)          18.7
                    Trustee under a Voting Trust
                    Agreement, dated as of
                    February  24, 1986, and as
                    subsequently amended
                    ("Voting Trust Agreement"),
                    among the Voting Trustee,
                    the Company and the
                    Beneficiaries of the
                    Voting Trust Agreement
                    777 Third Avenue
                    New York, New York 10017

                    Edward H. Meyer                     178,065(b)          20.0
                    777 Third Avenue
                    New York, New York 10017

                    The committee administering          50,136(c)           5.6
                    the Company's Employee Stock
                    Ownership Plan
                    777 Third Avenue
                    New York, New York 10017
</TABLE>

                                       -8-
<PAGE>   9
<TABLE>
<S>                 <C>                                         <C>                      <C>
                    Southeastern Asset Management, Inc.         62,711(d)                7.1
                    6075 Poplar Avenue, Suite 900
                    Memphis, Tennessee 38119

                    Tweedy Browne Company L.P.                  58,504(e)                6.6
                    52 Vanderbilt Avenue
                    New York, New York 10017

                    T. Rowe Price Associates, Inc.              54,565(f)                6.1
                    100 E. Pratt Street
                    Baltimore, Maryland 21202

                    All executive officers and                 294,748(g)               30.6
                       directors as a group

Class B Stock ......Edward H. Meyer, as Voting                 172,285(a)               58.8
                    Trustee under the Voting Trust
                    Agreement
                    777 Third Avenue
                    New York, New York  10017

                    Edward H. Meyer                            135,499(b)               46.3
                    777 Third Avenue
                    New York, New York 10017

                    The committee administering                 56,944(c)               19.4
                    the Company's Employee Stock
                    Ownership Plan
                    777 Third Avenue
                    New York, New York  10017

                    All executive officers and                 257,275(g)               80.8
                       directors as a group

Series I, 
Series II
and Series III    
Preferred Stock ....Edward H. Meyer                             30,000(h)              100.0
                    777 Third Avenue
                    New York, New York  10017
</TABLE>


         (a) Represents voting power only and includes certain shares subject to
a voting agreement pursuant to which shares owned by an executive officer of the
Company will be voted in the same manner as the Voting Trustee votes. Does not
include shares issuable upon exercise of options which are contractually bound
to be deposited pursuant to the Voting Trust Agreement. In general, investment
power over the shares deposited in the voting trust established pursuant to the
Voting Trust Agreement is retained by the several beneficiaries of the Voting
Trust Agreement. (See "Employment Agreements and Other Transactions" below.)

                                   -9-

<PAGE>   10

         (b) Includes shares of Common Stock and of Class B Stock, as the case
may be, issuable upon conversion of the Company's 8-1/2% Convertible
Subordinated Debentures owned by Mr. Meyer, and shares of Common Stock issuable
upon exercise of stock options which are currently exercisable (after giving
effect to the assumed conversion and exercise thereof) and Mr. Meyer's
beneficial interest in shares of Common Stock and Class B Stock deposited by him
pursuant to the Voting Trust Agreement as to which he retains investment power.
Does not include shares of Common Stock (5.6% of such class) and Class B Stock
(19.4%) held in the Company's Employee Stock Ownership Plan as to which Mr.
Meyer exercises shared voting power by virtue of his membership on the committee
charged with its administration. Does not include shares of Common Stock and
Class B Stock held in trust for Mr. Meyer's children which have been deposited
with the Voting Trust under the Voting Trust Agreement, or shares of Common
Stock or of Class B Stock as to which Mr. Meyer exercises voting power by virtue
of being the Voting Trustee under the Voting Trust Agreement.

         (c) The committee which administers the Company's Employee Stock
Ownership Plan exercises voting power over shares held in such plan, and is
comprised of Mr. Meyer and Steven G. Felsher.

         (d) Information based on the Company's understanding of publicly-filed
material. Southeastern Asset Management, Inc., a registered investment advisor,
which, together with a related entity, on behalf of its clients, has been a
long-term investor in the Company, has sole or shared dispositive and voting
power with respect to the shares listed, except with respect to 4,400 such
shares as to which it exercises no voting authority.

         (e) Information based on the Company's understanding of publicly-filed
material. Tweedy Browne Company L.P., a registered investment advisor, which
together with related entities, on behalf of its clients, has been a long-term
investor in the Company, has sole or shared dispositive and voting power with
respect to the shares listed.

         (f) Information based on the Company's understanding of publicly-filed
material. T. Rowe Price Associates, Inc., a registered investment advisor, which
together with a related entity, on behalf of its clients, has been a long-term
investor in the Company, has sole dispositive and voting power with respect to
the shares listed.                                                  

         (g) Includes shares of Common Stock (5.6% of such class) and of Class B
Stock (19.4%), as the case may be, as to which certain executive officers
exercise shared voting power by virtue of their membership on the committee
administering the Company's Employee Stock Ownership Plan. Includes shares of
Common Stock and Class B Stock as to which the Voting Trustee (Mr. Meyer) under
the Voting Trust Agreement exercises voting power. Includes shares of Common
Stock and of Class B Stock issuable upon conversion of the Company's 8-1/2%

                                      -10-

<PAGE>   11
Convertible Subordinated Debentures owned by Mr. Meyer and shares of Common
Stock issuable upon exercise of stock options which are exercisable by
beneficiaries under the Voting Trust Agreement, who are obliged, under the
terms of the Voting Trust Agreement, to deposit shares in the Voting Trust
acquired subsequent to the execution of the Voting Trust Agreement, after
giving effect to the assumed conversion and exercise thereof. Does not include
shares of Common Stock issuable to beneficiaries under the Voting Trust
Agreement upon exercise of stock options which are not presently exercisable. 

         (h) Represents 20,000 of Series I Preferred Stock, and 5,000 shares of
each of the Company's Series II and Series III Preferred Stock, of which classes
Mr. Meyer owns 100% of the outstanding shares.


Item 13.    Certain Relationships and Related Transactions.

         Messrs. Meyer and Novick, and Ms. Feigin have employment agreements
with the Company. The Company has an agreement with Mr. Berenson providing for
his continued employment with the Company through December 31, 1999 at an annual
salary of $540,000 per year. In addition, understandings with Mr. Berenson
provided that the Company would advance him a compensatory loan in an amount not
to exceed $500,000 to facilitate the purchase of a primary residence which would
secure the loan. Such loan was to be repayable five years after it was made or
upon termination of Mr. Berenson's employment with the Company under certain
circumstances (with the Company having agreed to forgive 20% of the original
amount thereof each December 31 on which Mr. Berenson was employed after the
closing of the loan). During 1993, in lieu of making the loan to Mr. Berenson
and forgiving it as contemplated, the Company assisted Mr. Berenson in securing
a loan from a commercial bank by agreeing to amortize up to $100,000 per year
for up to five years of the principal on the mortgage loan Mr. Berenson took
from such bank. The Company's obligation to reimburse the bank is essentially
parallel to the obligation it would have had to Mr. Berenson to forgive the loan
the agreement with him contemplated being made to him and, therefore, it is
considered the equivalent of a loan forgiveness. In addition, in early 1994, the
Company loaned Mr. Berenson $50,000 which is forgivable by the Company assuming
his continued employment through 1998. In 1995, the Company loaned Mr. Berenson
$125,000 which is forgivable by the Company assuming Mr. Berenson's continued
employment through 1999. During 1996, the Company loaned Mr. Berenson $700,000,
$200,000 of which is to be repaid with accrued interest in May 1999 and
$500,000 of which is to be repaid with accrued interest in December 2003.
                                                                               
         In 1984, the Company entered into an employment agreement, which has
been amended subsequently, with Mr. Meyer, which provides for Mr. Meyer's
employment with the Company through December 31, 2002. The agreement also
provides for a minimum annual salary of $2,575,000 for Mr. Meyer's services as
Chief Executive Officer. If the Company terminates Mr. Meyer's full-time
employment as Chief Executive Officer without cause (as defined in the
agreement), or if Mr. Meyer effects such termination due to a change of control
of the Company or other good reason specified in the agreement, Mr. Meyer will
receive $3,000,000 in consideration of his employment. The agreement further
provides

                                      -11-
<PAGE>   12
that the Company will defray premiums on life insurance policies on Mr. Meyer's
life payable to a beneficiary designated by him; the Company paid $42,217 in
premiums in respect of these policies in 1996. The employment agreement also
provides that Mr. Meyer may, for a period subsequent to his termination of
full-time employment as Chief Executive Officer, provide the Company with
consulting services for compensation at the rate of $10,000 per month. If the
Company terminates Mr. Meyer's full-time employment as Chief Executive Officer
without cause, or if Mr. Meyer effects such termination due to a change in
control of the Company or for other good reason, Mr. Meyer will receive a lump
sum payment equal to his then current aggregate remuneration multiplied by the
greater of the number of years remaining in the term of the employment
agreement and the number three. In such event, Mr. Meyer will also have an
option to sell to the Company each share of the Common Stock and the Class B
Stock which he then owns at the per share market value of the Common Stock. Mr.
Meyer's agreement also provides that, for the ten year period (subject to
reduction or suspension in the event Mr. Meyer becomes disabled or is in breach
of his agreement) following his termination of employment, the Company will,
among other things, provide Mr. Meyer with an office, and related office staff
and facilities, and the continued use of a car and driver. The Company has also
agreed to reimburse Mr. Meyer for certain business expenses incurred by him
following termination of his employment up to $100,000 per year during the
first five years of such period and $50,000 per year during the remainder of
such period, with such amounts being adjusted for increases in the consumer's
price index until the date of termination of his employment. During such ten
year period, Mr. Meyer has also been charged with the responsibility of
overseeing a certain portion of the Company's charitable contributions and,
thus, will see to the contribution to charities of $100,000 per year of the
Company's funds during the first five years of the period and of $50,000 per
year during the remainder of the period.                           

         In the context of the agreement extending the term of Mr. Meyer's
employment agreement through the date hereinabove mentioned, the Company and Mr.
Meyer also reached agreement providing for the deferral of certain compensation
otherwise payable to him and the payment of such deferred compensation into a
trust, commonly referred to as a rabbi trust, established with United States
Trust Company of New York. The purpose of the trust arrangement is to enhance
the Company's ability to deduct compensation paid to Mr. Meyer without the
application of Section 162(m) of the Internal Revenue Code ("Section") at such
times as the monies are paid to Mr. Meyer from the trust. The Section, under
certain circumstances, denies a tax deduction to an employer for certain
compensation expenses in excess of $1,000,000 per year paid by a publicly held
corporation to certain of its executives. For 1996, all of cash compensation
payable to Mr. Meyer in excess of $930,000 was deferred and paid into the trust.
In 1997 and subsequent years, such compensation as shall be timely elected by
Mr. Meyer shall be deferred and paid into the trust provided that no such
election shall cause any compensation paid to Mr. Meyer to be non-deductible by
reason of the Section. Amounts deferred and paid into the trust shall be paid
to Mr. Meyer or to his estate, as the case may be, upon the expiration of Mr.
Meyer's employment agreement, or the termination of his employment by reason of
death or disability. For the purpose of the presentation of Mr. Meyer's
compensation in the Summary Compensation Table hereinabove provided, the
amounts deferred and paid into the trust are deemed having been paid to Mr.
Meyer.                  

                                      -12-

<PAGE>   13
         In 1983, the Company sold and issued $3,025,000 principal amount of its
8-1/2% Convertible Subordinated Debentures, due December 10, 1996, to Mr. Meyer
in consideration of a purchase price of equal amount, of which $25,000 was paid
in cash and the remainder by delivery of Mr. Meyer's long-term 9% full recourse
promissory note in the principal amount of $3,000,000. During 1996 the Company 
and Mr. Meyer amended the Debentures and related promissory note extending the
maturity date of the Debentures to December 31, 2003 and the maturity date of
thepromissory note to December 31, 2004. The Debentures are convertible at any
time into one share of Common Stock and one share of Class B Stock, at a
current conversion price of $118.88, subject to adjustment upon the occurrence
of certain events. During 1992, Mr. Meyer exercised certain stock options which
had been granted to him in 1984, and, in connection therewith pursuant to the
stock option agreement, issued to the Company his promissory note in the amount
of $3,169,690, representing the exercise price in excess of the par value of
the shares issued on exercise, which amount was paid in cash, and his
promissory note in the amount of $2,339,998, representing the amount of tax
required to be withheld in connection with such option exercise. The promissory
notes are each full recourse, mature on December 22, 2001 and bear interest at
the rate of 6.06% per year. Mr. Meyer is also indebted to the Company in the
aggregate amount of $762,950 pursuant to long-term 9%, full recourse promissory
notes delivered to the Company in 1981, 1982 and 1983 as part payment for Mr.
Meyer's purchase of shares of Series 1, 2 and Series 3 Preferred Stock
(collectively, "Original Preferred Stock"). In 1994, the Company and Mr. Meyer
entered into an Exchange Agreement pursuant to which Mr. Meyer exchanged the
Original Preferred Stock for a like number of shares of new Preferred Stock,
designated Series I Preferred Stock, Series II Preferred Stock and Series III
Preferred Stock (collectively, the "New Preferred Stock"). The  redemption date
of the three series of new preferred stock is fixed at April 7, 2004 rather
than on a date determined by reference to Mr. Meyer's termination of full-time
employment with the Company. The terms of the New Preferred Stock also give Mr.
Meyer or his estate, as the case may be, the option to require the Company to
redeem his Preferred Stock for a period of 12 months following his (i) death,
(ii) permanent disability or permanent mental disability, (iii) termination of
full-time employment for good reason or (iv) termination of full-time
employment by the Company without cause.                                       

         During 1994, the Company entered into an agreement with Mr. Novick
pursuant to which his employment by the Company was continued at a minimum
annual compensation of $825,000 per year. The agreement provides that, Mr.
Novick shall remain employed with the Company through 1998, and that, during the
term of his agreement, he shall have an annual allocation pursuant to the SMIP
of not less than $150,000 and an annual bonus of not less than $75,000. The
agreement also provided for the Company to lend to Mr. Novick $600,000 to
acquire a new residence intended to be used, in part, for business entertaining.
This loan is forgivable in three annual installments of $200,000 at the end of
each of 1996, 1997 and 1998, provided Mr. Novick is still employed by the
Company.  During 1996 the Company forgave $200,000 of this loan.

                                      -13-

<PAGE>   14

         In 1993, the Company entered into an employment agreement with Ms.
Feigin providing for her continued employment by the Company at least through
December 31, 1997, at a minimum annual compensation of $400,000 per year. The
agreement also provides that the Company will pay for certain life and
disability insurance coverages for Ms. Feigin.

         If Mr. Meyer had been terminated effective December 31, 1996 under
circumstances which would have resulted in payment of the special severance
detailed in the foregoing description of his agreement, the amount then payable
to him would have been $36,655,230. Other than pursuant to the loans described
above in connection with Mr. Meyer's securities, and Messrs. Berenson's and
Novick's arrangements, no executive named above is indebted to the Company for
more than $60,000. Certain key employees of the Company, including the named
executives and certain members of their immediate families ("Beneficiaries"),
have entered into the Voting Trust Agreement, as amended in 1987 and 1994,
pursuant to which the Beneficiaries have deposited the shares of Common Stock
and Class B Stock owned by them into a voting trust. The Beneficiaries have also
agreed to deposit into the voting trust shares of Common Stock or Class B Stock
hereafter acquired by them. The trust was extended in 1994 and will continue
until 2004. Mr. Meyer has been designated the sole Voting Trustee. Beneficiaries
retain the sole authority to receive dividends and, in general, to dispose of
their shares held in the voting trust. The Company has entered into
indemnification agreements with each of the members of the Board of Directors
providing, generally, for the fullest indemnification permitted by law.

                                      -14-