<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, 1998

[ ] 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 / /

The aggregate market value of the voting stock held by non-affiliates of
registrant was $284,696,802 as at March 1, 1999.
<PAGE>   2
The registrant had 988,734 shares of its common stock, par value $1 per share,
and 253,544 shares of its Limited Duration Class B Common Stock, par value $1
per share, outstanding as at March 1, 1999.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual proxy statement to be furnished in connection with the
registrant's 1999 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, 1998 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, 1999                                  By /s/ Steven G. Felsher
                                                       -------------------------
                                                       Executive Vice President,
                                                       Secretary and Treasurer

Item 10. Directors and Executive Officers of the Registrant ("Company").

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

<TABLE>
<CAPTION>
                                                                         NO. OF     
                                                                       SHARES OF      PERCENT OF
                                                        TERM/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 ....    69   Partner,           1973         1999          2,200(e)           -(f)
                            Skadden, Arps, 
                            Slate, Meagher 
                            & Flom, LLP 
                            law firm (d)

Edward H. Meyer ...    72   Chairman of the    1961         2000        553,779(g)       69.63%
                            Board, 
                            President and 
                            Chief Executive
                            Officer

John Shannon .....    62    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.,
Autobytel.com Inc., Congoleum, Inc., DRS Technologies, 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-one mutual funds
advised by Merrill Lynch Asset 


                                       2
<PAGE>   3
Management, Inc. or its wholly-owned subsidiary, Fund Asset Management, Inc.

(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, 1999.

(d) Skadden, Arps, Slate, Meagher & Flom, LLP a law firm in which Mr. Kaplan is
a partner, has provided certain legal services to the Company in 1998 and 1999.

(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 104,684 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 10.6%,
43.4%, 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 (2.6%) and
Class B Stock (10.1%) 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 (6.6%) issuable upon
exercise of currently exercisable stock options owned by Mr. Meyer after giving
effect to the assumed exercise thereof. Does not include 7,000 shares of the
Common Stock and 7,500 shares of 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, and 15,000 shares of Common Stock issuable
upon exercise of stock options held in trust for Mr. Meyer's children.
                                              
    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:

<TABLE>
<CAPTION>
                        ANNUAL COMPENSATION            LONG-TERM COMPENSATION              
                        -------------------            ----------------------      ALL     
NAME AND                                                 REST.       STOCK        OTHER    
POSITION                  YEAR   SALARY(2)   BONUS(2)   STOCK($)   OPTIONS(#)    COMP.(1)  
--------                  ----   ---------   --------   --------   ----------    --------  
<S>                     <C>     <C>          <C>       <C>         <C>          <C>        
Edward H. Meyer ......    1998  $2,900,000   $400,000     -0-        30,000     $1,395,597 
Chairman, President       1997   2,575,000    475,000     -0-           -0-      1,584,347 
And Chief Executive       1996   2,300,000    325,000     -0-        20,000      1,519,957 
Officer                 

Robert L. Berenson ...    1998  $  625,000   $220,000     -0-           -0-     $  356,597
President                 1997     540,000    310,000     -0-           -0-        380,854
Grey-N.Y.                 1996     540,000    240,000     -0-           -0-        339,466

J. Alec Gerster ......    1998  $  400,000   $170,000     -0-           500     $  191,119
Executive                 1997     400,000    175,000     -0-           -0-        219,140
Vice President            1996     350,000    160,000     -0-           -0-        189,140

Stephen A. Novick ....    1998  $  825,000   $125,000     -0-           -0-     $  432,401
Executive                 1997     825,000    150,000     -0-           -0-        495,207
Vice President            1996     775,000    125,000     -0-           -0-        419,345

John Shannon .........    1998  $  600,730   $220,320     -0-           500     $   82,492
President                 1997     568,898    262,400     -0-           -0-         65,982
Grey-International        1996     555,022    240,000     -0-           -0-         51,498
</TABLE>


                                       3
<PAGE>   4
(1) All Other Compensation includes: (i) contributions of $9,400 in 1998 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) amount shown for Mr. Shannon represents
    deferred compensation pursuant to a subsidiary-sponsored program for United
    Kingdom executives; (iii) respective insurance premium expense coverage or
    reimbursement of $81,797, $17,197, $23,001 and $6,719 in 1998, for Messrs.
    Meyer, Berenson, Gerster and Novick; (iv) accruals in the amounts of
    $164,400 for Mr. Meyer in 1998 generally in respect of amounts which would
    have been allocated to Mr. Meyer's accounts under the Company's qualified
    defined contribution programs for such year but for certain limitations
    determined under the federal tax laws; (v) respective allocations under the
    Company's Senior Management Incentive Plan ("SMIP") in 1998 for Messrs.
    Berenson, Meyer, Gerster and Novick of $180,000, $1,140,000, $175,000 and
    $200,000; and (vi) $150,000 of loan forgiveness in 1998 in respect of Mr.
    Berenson's indebtedness to the Company and $200,000 of loan forgiveness
    effected in early 1999, in respect to Mr. Novick's indebtedness to the
    Company.

(2)  Includes amounts paid into a deferred compensation trust on Mr. Meyer's
     behalf in 1998. (See "Certain Relationships and Related Transactions.")

AGGREGATE OPTIONS EXERCISED IN 1998 AND STOCK OPTION VALUES AS AT DECEMBER 31,
1998(1)

<TABLE>
<CAPTION>
                                                                              VALUE OF
                                                       NUMBER OF            UNEXERCISED
                                                      UNEXERCISED          IN-THE-MONEY
                                                       OPTIONS AT            OPTIONS AT
                                                   DECEMBER 31, 1998     DECEMBER 31, 1998
                          SHARES                   -----------------     -----------------
                         ACQUIRED      VALUE          EXERCISABLE/          EXERCISABLE/
NAME                   ON EXERCISE   REALIZED(2)     UNEXERCISABLE         UNEXERCISABLE
----                   -----------   -----------   -----------------     -----------------
<S>                    <C>           <C>           <C>                 <C>     
Edward H. Meyer ....        --           --          60,000/15,000     $11,200,000/$472,500
Robert L. Berenson..        --           --                0/5,000             0/$1,077,500
J. Alec Gerster ....        --           --                0/3,000               0/$554,500
Stephen A. Novick...        --           --                0/3,500               0/$754,250
John Shannon .......        --           --                0/2,500               0/$446,750
</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.

OPTION GRANTS IN THE LAST FISCAL YEAR

<TABLE>
<CAPTION>
                         INDIVIDUAL GRANTS
------------------------------------------------------------------------------
                                           % OF  TOTAL
                                             OPTIONS
                                             GRANTED
                       NUMBER OF SHARES         TO        EXERCISE                       
                      UNDERLYING OPTIONS    EMPLOYEES      PRICE                   GRANT DATE
NAME                      GRANTED(1)         IN 1998     ($/SHARE)   EXP. DATE   PRESENT VALUE
----                      ----------        ---------    ---------   ---------   -------------
<S>                   <C>                  <C>           <C>         <C>         <C>
Edward H. Meyer ...         30,000             65.9        332.50     1/23/07      $3,044,400
John Shannon ......            500              1.1        332.50     1/23/08          60,335
J. Alec Gerster ...            500              1.1        332.50     1/23/08          60,335
</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 on the
     initial exercise date, which for Messrs. Shannon and Gerster is January 23,
     2003, and January 23, 1998 for Mr. Meyer.

(2)  Amounts based on the modified Black-Scholes option price model with the
     following assumptions: exercise price equal to fair market value on the
     date of grant, ten year option term (nine year option term in the case of
     Mr. Meyer), interest rate of 5.48% for Messrs. Shannon and Gerster, (5.55%
     for Mr. Meyer) and a dividend rate of 1.18%. 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 


                                       4
<PAGE>   5
     above the option price, the optionee will realize no gain.


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 $60,000 per year depending, in part, upon the date of retirement.
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 $30,000, depending, in
part, upon the date of retirement of the deceased participant, 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. Furthermore, in 1998 the Company agreed to make certain
payments ("pension deposits") to a rabbi trust established with the United
States Trust Company of New York which would be used to fund a pension
obligation to be payable to Mr. Meyer over the eleven year period following the
normal expiration of his current employment agreement ("pension period"). The
initial pension deposit, made with respect to 1997, was $1,040,000 and annual
pension deposits of $360,000 are scheduled to be made in 1998 through 2002,
inclusive. The amount of the pension to be paid to Mr. Meyer will depend on, and
be limited to, the funds in the rabbi trust during the pension period. In
addition, upon termination of Mr. Meyer's employment prior to the commencement
of the pension period or upon his death, any undistributed funds in the rabbi
trust would be paid to Mr. Meyer or his estate, as the case may be, in
satisfaction of any future obligations with respect to this pension.

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

     As of March 1, 1999, the Company had outstanding 988,734 shares of Common
Stock and 253,544 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, as Voting     155,778(a)    15.8
                    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                              

Common Stock......  Edward H. Meyer                 195,204(b)    19.7
                    777 Third Avenue                            
                    New York, New York 10017                    

                    The committee administering      45,994(c)     4.7
                    the Company's Employee Stock                
                    Ownership Plan                              
                    777 Third Avenue                            
                    New York, New York 10017                    

                    Tweedy Browne Company L.P.       59,474(d)     6.0
                    52 Vanderbilt Avenue                        
                    New York, New York 10017                    

                    T. Rowe Price Associates,        69,070(e)     7.0
                    Inc.
                    100 E. Pratt Street                         
                    Baltimore, Maryland 21202                   

                    All executive officers and      296,792(f)    30.0
                    directors as a group                        

Class B Stock.....  Edward H. Meyer, as Voting      147,623(a)    58.2
</TABLE>


                                       5
<PAGE>   6
<TABLE>
<S>                 <C>                            <C>         <C>
                    Trustee under the Voting                    
                    Trust
                    Agreement                                   
                    777 Third Avenue                            
                    New York, New York 10017                    

                    Edward H. Meyer                 135,573(b)    53.5
                    777 Third Avenue                            
                    New York, New York 10017                    

                    The committee administering      56,944(c)    22.5
                    the Company's Employee Stock                
                    Ownership Plan                              
                    777 Third Avenue                            
                    New York, New York 10017                    

                    All executive officers and      231,187(f)    91.2
                    directors as a group                        

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

    (a) Represents voting power only. Does not include shares issuable upon
exercise of options which are, however, 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). 

    (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 (4.7% of such class) and of Class B Stock (22.5%) 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 (other than shares deposited in the
Voting Trust by Mr. Meyer).

    (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. 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.

    (e) 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.

    (f) Includes shares of Common Stock (4.7% of such class) and of Class B
Stock (22.5%), 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%
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 in the Voting Trust shares 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.


                                       6
<PAGE>   7
    (g) Represents 20,000 shares 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.

    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
$625,000 per year. Pursuant to an earlier employment arrangement with Mr.
Berenson, the Company agreed to 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 forgivable by the Company assuming Mr. Berenson's continued
employment through 2003 and $500,000 of which is forgivable by the Company
assuming Mr. Berenson's employment through 2004.

    In 1994 the Company agreed to lend to Mr. Novick $600,000 to acquire a new
residence intended to be used, in part, for business entertaining. This loan
was forgivable in three installments of $200,000 at the end of each of 1996,
1997, and 1998, provided Mr. Novick was then employed by the Company. During
1998 the Company forgave $200,000 of this loan.

    The Company has an employment agreement 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 $2,900,000 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 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
$39,578 in premiums in respect of these policies in 1998. 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 1998, all cash compensation
payable to Mr. Meyer in excess of $938,000 was deferred and paid into the trust.
In 1999 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 


                                       7
<PAGE>   8
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.

    In 1983, the Company sold and issued $3,025,000 principal amount of its
8-1/2% Convertible Subordinated Debentures, due December 10, 2003, 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, due 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 $118.58, 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
connection with Mr. Meyer's purchase of shares of Series I Preferred Stock,
Series II Preferred Stock and Series III Preferred Stock (collectively, the
"Preferred Stock"). The redemption date of the Preferred Stock is fixed at April
7, 2004. The terms of the 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.

    If Mr. Meyer had been terminated effective December 31, l998 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 $30,907,429. 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.


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