PRODUCERS ENTERTAINMENT GROUP LTD
8-K, 1997-11-04
MOTION PICTURE & VIDEO TAPE PRODUCTION
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<PAGE>   1
================================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              ___________________

                                    FORM 8-K
                              ___________________


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


       Date of Report (Date of earliest event reported) October 20, 1997


                     THE PRODUCERS ENTERTAINMENT GROUP LTD.
             (Exact name of registrant as specified in its charter)


                                    Delaware
                        (State or other jurisdiction of
                         incorporation or organization)



Commission File Number: 0-18410                               95-4233050
                                                           (I.R.S. Employer
                                                          Identification No.)


5757 Wilshire Blvd. - Penthouse One                              90036
Los, Angeles, California                                       (Zip Code)
(Address of principal executive offices)




                                 (213) 634-8634
               Registrant's telephone number, including area code

                                 NOT APPLICABLE
         (Former name or former address, if changed since last report)


================================================================================

This report comprises eight pages.  The exhibit index appears at page seven.



                                                                Page No. 1 of 8

<PAGE>   2
ITEMS 1. AND 2.  CHANGES IN CONTROL OF REGISTRANT; ACQUISITION OR DISPOSITION
OF ASSETS

THE GROSSO-JACOBSON MERGERS

         On October 20, 1997, the Registrant consummated a transaction whereby
it acquired 100% of the outstanding capital stock of three entities that
comprise the New York, Los Angeles and Toronto based Grosso-Jacobson Companies
which are engaged in the business of producing television series and other
entertainment products (the "Grosso-Jacobson Mergers").  The acquired companies
are: The Grosso-Jacobson Entertainment Corporation, Grosso-Jacobson
Productions, Inc. and Grosso-Jacobson Music Company, Inc. (the "Grosso-Jacobson
Companies").  To implement the Grosso-Jacobson Mergers, the Registrant formed
three new subsidiaries which merged with and into the Grosso-Jacobson Companies
pursuant to three substantially identical merger agreements (the "Merger
Agreements"which are filed herewith as Exhibits 10.25, 10.26 & 10.27).  The
total consideration paid to Salvatore Grosso and Lawrence S. Jacobson, the sole
shareholders of the Grosso-Jacobson Companies, pursuant to the Merger
Agreements was $8,000,000, which amount was paid through the issuance of an
aggregate of 6,666,666 shares of the Registrant's Common Stock valued at an
issue price of $1.20 per share (the "Merger Shares").

         The Merger Agreements were negotiated at arms' length between the
Registrant and the principals of the Grosso-Jacobson Companies.  The merger
consideration of $8,000,000, payable solely in shares of Common Stock of the
Registrant, reflected, among other factors, the value which the Registrant and
such principals placed upon the Grosso-Jacobson Companies in light of the value
of such Companies' television production series inventory, libraries,
participations in future revenues to be derived from their distribution and
licensing, current projects under development as well as the likely synergies
which management of the Registrant and the Grosso-Jacobson principals believed
could be derived by the combination of business accomplished by the
Grosso-Jacobson Mergers.  Pursuant to the Merger Agreements, the number of
shares of the Registrant's Common Stock issuable by the Registrant was based on
the average closing prices of such shares for 30 days prior to the closing of
the Mergers, subject to a maximum price per share of $1.50 and a minimum price
per share of $1.20. (The 6,666,666 shares ultimately issued upon consummation
of the Grosso-Jacobson Mergers were valued at the minimum price per share).

         These Merger Shares were issued to Messrs. Grosso and Jacobson in a
private transaction exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").    Pursuant to the
Merger Agreements, Messrs. Grosso and Jacobson have been granted certain
registration rights under the Securities Act with respect to the Merger Shares
and they have also agreed to certain contractual restrictions on their ability
to sell or otherwise dispose of designated percentages of the Merger Shares
during the next two years.

         The Grosso-Jacobson Companies will function as wholly owned
subsidiaries of the Registrant responsible for the Registrant's television
production projects and activities.  Grosso-Jacobson Productions, Inc. was
founded in 1980 and (along with the other Grosso-Jacobson Companies) has
produced more than 750 hours of television programming, including "The Big
Easy," the made-for-television series based on the hit movie and created for
the USA Network.  Known for their wide variety of prime time series and
made-for-television movies, the Grosso-Jacobson Companies have offices in New
York and Los Angeles and operate a 70,000 sq. ft.





                                                                 Page No. 2 of 8
<PAGE>   3


production facility and office complex in Toronto, Canada.  Included in the
Toronto studio is a wardrobe business containing approximately 37,000 costumes
and an extensive prop inventory.

         Management of the Registrant plans to combine the Grosso-Jacobson
Companies' business of producing primarily television series with the
Registrant's business of producing theatrical feature and television movies in
order for the Registrant to enlarge its operations in the entertainment
industry.  Management of the Registrant intends to expand the Registrant's
movie-of-the-week and series production for television by utilizing
recognizable name talent and experienced creative personnel, and continue to
explore new areas of business and expand its corporate operations into other
synergistic enterprises.

         While management of the Registrant believes that the acquisition of
the Grosso-Jacobson Companies will significantly increase its revenues and
enable the Registrant to derive net income from its operations, there can be no
assurance that such positive revenue and earnings results will be achieved as a
result of the Grosso-Jacobson Mergers.

         In accordance with the Merger Agreements, Messrs. Grosso and Jacobson
have entered into substantially identical executive employment agreements with
the Registrant for a period of five years (the "Executive Employment
Agreements"which are filed herewith as Exhibits 10.28 & 10.29).  In addition,
the Registrant has extended the executive employment agreements of both Irwin
Meyer and Arthur Bernstein for a additional periods of five years each (the
"Employment Extension Agreements"which are filed herewith as Exhibits 10.30 &
10.31).  The Registrant has engaged Lawrence Jacobson Associates, Inc. (an
affiliate of Lawrence S. Jacobson) and S.A.G. Productions, Inc. (an affiliate
of Salvatore Grosso) pursuant to two substantially identical production
agreements to provide production services to the Registrant for a period of
five years (the "Production Agreements"which are filed herewith as Exhibits
10.32 & 10.33).  Furthermore, the Registrant has extended, for a period of five
years, its existing production agreement with Mountaingate Productions, LLC (an
affiliate of Irwin Meyer, "Mountaingate") (the "Mountaingate Extension
Agreement" which is filed herewith as Exhibit 10.34).

         In accordance with the Merger Agreements, Messrs. Grosso and Jacobson
were elected to the Board of Directors of the Registrant.  The Board of
Directors of the Registrant (the "Board") then increased the number of
directorships to seven as required by the Merger Agreements and in accordance
with the Registrant's By-laws.  (Messrs. Michael Dempsey and Benjamin
Lichtenberg tendered their resignations as Directors of the Registrant on or
about the date of the consummation of the Grosso-Jacobson Mergers).  By the
terms of the Merger Agreements, Messrs. Grosso and Jacobson were entitled to
designate one additional Board member and, reciprocally, Messrs. Meyer and
Bernstein were entitled to designate one additional Board member. The three
Grosso-Jacobson designated Board members and the three Meyer-Bernstein
designated Board members together designated and elected a seventh Board
member.  Mr. Grosso was elected to serve as the Registrant's Chief Operating
Officer and Co-Chairman of the Board, Mr. Jacobson  elected to serve as the
Registrant's President and Co-Chairman of the Board, Mr. Meyer remained the
Registrant's Chief Executive Officer and was also elected to serve as a
Co-Chairman of the Board and Mr. Bernstein was elected to serve as the
Registrant's Executive Vice President.

         Contemporaneously with the consummation of the Grosso-Jacobson
Mergers, on October 20, 1997, Messrs. Grosso, Jacobson, Meyer and Bernstein and
Mountaingate entered into the





                                                                 Page No. 3 of 8
<PAGE>   4


Stockholders Voting Agreement for a term of five years (the "Stockholders
Voting Agreement" which is filed herewith as Exhibit 10.35) whereby Mr. Grosso
and Mr. Jacobson agreed to vote their shares of Common Stock for the election
as Directors of the Registrant of Messrs. Meyer and Bernstein or their
designees.  In accordance with the Stockholders Voting Agreement, Messrs.
Grosso and Jacobson executed a Proxy and Power of Attorney, appointing Messrs.
Meyer and Bernstein their attorneys-in-fact.  Under the Stockholders Voting
Agreement, Messrs. Meyer and Bernstein agreed to vote their shares of Common
Stock for the election as Directors of the Registrant of Messrs. Grosso and
Jacobson, or their designees, and executed an identical instrument appointing
Messrs. Grosso and Jacobson their attorneys-in-fact.  Mountaingate is a
signatory to the Stockholders Voting Agreement but did not execute any proxy or
power of attorney in favor of any other signatory, nor was a proxy or power of
attorney executed by any other signatory in favor of Mountaingate.

         Prior to the consummation of the Grosso-Jacobson Mergers, effective
operational control of the Registrant was exercised by Messrs.  Meyer and
Bernstein, who comprised 50% of the Board of Directors and were the principal
Executive Officers of the Registrant.  As a result of (a) the Grosso-Jacobson
Mergers and (b) Messrs. Meyer, Bernstein, Grosso and Jacobson entering into the
Stockholders Voting Agreement, by application of the SEC rules defining
"beneficial ownership", control of the Registrant may now be deemed to be
shared among Messrs. Meyer, Bernstein, Grosso and Jacobson.

         In connection with the foregoing and in response to Item 1 of Form 8-K
(Changes in Control of Registrant), the following information is provided in
this Report:

         (a)     Mr. Salvatore Grosso is the beneficial owner of 3,752,083
                 shares of Common Stock, or 20% of the Registrant's Common
                 Stock outstanding, calculated in accordance with Regulation
                 13d-3(a) and (d).

                 Of such 3,752,083 shares of Common Stock, (i) 3,333,333 shares
                 are held directly by Mr. Grosso and as to which Mr. Grosso has
                 sole dispositive and voting power; and (ii) 418,750 shares are
                 beneficially owned indirectly by Mr. Grosso by virtue of the
                 operation of the Stockholders Voting Agreement.  Mr. Grosso
                 has shared voting power with respect to these shares but has
                 no power to dispose of or to direct their disposition.

         (Except for the shared voting power described above, Mr. Grosso does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares or shares underlying options that Mr. Grosso, as
calculated in accordance with Regulation 13d-(3)(a) and (d), may be deemed to
beneficially own by reason of the shared voting power arising under the
Stockholders Voting Agreement.)


         (b)     Mr. Lawrence S. Jacobson is the beneficial owner of 3,752,083
                 shares of Common Stock, or 20% of the Registrant's Common
                 Stock outstanding, calculated in accordance with Regulation
                 13d-3(a) and (d).





                                                                 Page No. 4 of 8
<PAGE>   5


                 Of such 3,752,083 shares of Common Stock, (i) 3,333,333 shares
                 are held directly by Mr. Jacobson and as to which Mr. Jacobson
                 has sole dispositive and voting power; and (ii) 418,750 shares
                 are beneficially owned indirectly by Mr. Jacobson by virtue of
                 the operation of the Stockholders Voting Agreement.  Mr.
                 Jacobson has shared voting power with respect to these shares
                 but has no power to dispose of or to direct their disposition.

         (Except for the shared voting power described above, Mr. Jacobson does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares or shares underlying options that Mr. Jacobson, as
calculated in accordance with Regulation 13d- (3)(a) and (d), may be deemed to
beneficially own by reason of the shared voting power arising under the
Stockholders Voting Agreement.)


         (c)     Mr. Irwin Meyer is the beneficial owner of 6,666,666 shares of
                 Common Stock, or 35% of the Registrant's Common Stock
                 outstanding, calculated in accordance with Regulation
                 13d-3(a).

                 Of such 6,666,666 shares of Common Stock, (i) none is held
                 directly or indirectly by Mr. Meyer nor has Mr. Meyer any sole
                 dispositive or voting power with respect thereto; and (ii)
                 6,666,666 shares are beneficially owned indirectly by Mr.
                 Meyer by virtue of the operation of the Stockholders Voting
                 Agreement.   Mr. Meyer has shared voting power with respect to
                 these shares but has no power to dispose of or to direct their
                 disposition.

         (Except for the shared voting power described above, Mr. Meyer does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares that Mr. Meyer, as calculated in accordance with
Regulation 13d-(3)(a), may be deemed to beneficially own by reason of the
shared voting power arising under the Stockholders Voting Agreement.)


         (d)     Mr. Arthur H. Bernstein is the beneficial owner of 7,085,416
                 shares of Common Stock, or 37% of the Registrant's Common
                 Stock outstanding, calculated in accordance with Regulation
                 13d-3(a) and (d).

                 Of such 7,085,416 shares of Common Stock, (i) 418,750 shares
                 are held directly by Mr. Bernstein and as to which Mr.
                 Bernstein has sole dispositive and voting power; and (ii)
                 6,666,666 shares are beneficially owned indirectly by Mr.
                 Bernstein by virtue of the operation of the Stockholders
                 Voting Agreement.   Mr. Bernstein has shared voting power with
                 respect to these shares but has no power to to dispose of or
                 to direct their disposition.

         (Except for the shared voting power described above, Mr. Bernstein
does not have, and expressly disclaims, any direct or indirect economic or
financial interest in any shares that Mr. Bernstein, as calculated in
accordance with Regulation 13d-(3)(a), may be deemed to beneficially own by
reason of the shared voting power arising under the Stockholders Voting
Agreement.)





                                                                 Page No. 5 of 8
<PAGE>   6


         (e)     Mountaingate  is the beneficial owner of 6,666,666 shares of
                 Common Stock, or 35% of the Registrant's Common Stock
                 outstanding, calculated in accordance with Regulation
                 13d-3(a).

                 Of such 6,666,666 shares of Common Stock, (i) none is held
                 directly or indirectly by Mountaingate nor has Mountaingate
                 any sole dispositive or voting power with respect thereto; and
                 (ii) 6,666,666 shares are beneficially owned indirectly by
                 Mountaingate by virtue of the operation of the Stockholders
                 Voting Agreement.   Mountaingate has shared voting power with
                 respect to these shares but has no power to to dispose of or
                 to direct their disposition.

         (Except for the shared voting power described above, Mountaingate does
not have, and expressly disclaims, any direct or indirect economic or financial
interest in any shares that Mountaingate, as calculated in accordance with
Regulation 13d-(3)(a), may be deemed to beneficially own by reason of the
shared voting power arising under the Stockholders Voting Agreement.)

         In addition to the foregoing beneficial stock ownership percentages
and voting arrangements and as indicated elsewhere in this Report, Messrs.
Meyer, Bernstein, Grosso and Jacobson constitute a majority of the Board of
Directors of the Registrant and also serve as its principal Executive Officers.
Accordingly, control of the Registrant resides in, and is shared among, the
above-named persons as of the date hereof.

         THE FOREGOING INFORMATION CONCERNING THE GROSSO-JACOBSON MERGERS,
CONSUMMATED ON OCTOBER 20, 1997 BY THE REGISTRANT, IS SET FORTH HEREIN IN
RESPONSE TO ITEM 1 "CHANGES IN CONTROL OF REGISTRANT" AND ITEM 2 "ACQUISITION
OR DISPOSITION OF ASSETS" OF FORM 8-K.  AS OF THE DATE HEREOF, IT IS
IMPRACTICABLE FOR THE REGISTRANT TO FILE WITH THIS REPORT THE FINANCIAL
STATEMENTS OF THE BUSINESS OF THE ACQUIRED GROSSO- JACOBSON COMPANIES AS
REQUIRED BY ITEM 7 OF FORM 8-K.  PURSUANT TO THE PROVISIONS OF ITEMS 7(a)(4)
AND 7(b) OF FORM 8-K, THE REGISTRANT SHALL FILE THE REQUIRED FINANCIAL
STATEMENTS AND THE PRO FORMA FINANCIAL INFORMATION REQUIRED THEREBY (TO THE
EXTENT REQUIRED UNDER THE RELEVANT PROVISIONS OF ITEM 310(c) OF REGULATION S-B)
AS AN AMENDMENT TO THIS FORM 8-K REPORT AS SOON AS PRACTICABLE, BUT NO LATER
THAN SIXTY (60) DAYS AFTER THE DATE HEREOF.






















                                                                 Page No. 6 of 8
<PAGE>   7

                                 EXHIBIT INDEX

Exhibit No.                              Description


10.25            Agreement and Plan of Merger, dated September 15, 1997, by and
                 among The Producers Entertainment Group Ltd., TPEG Acquisition
                 I Corp., The Grosso-Jacobson Entertainment Corporation,
                 Salvatore Grosso and Lawrence S. Jacobson.

10.26            Agreement and Plan of Merger, dated September 15, 1997, by and
                 among The Producers Entertainment Group Ltd., TPEG Acquisition
                 II Corp., Grosso-Jacobson Productions, Inc., Salvatore Grosso
                 and Lawrence S. Jacobson.

10.27            Agreement and Plan of Merger, dated September 15, 1997, by and
                 among The Producers Entertainment Group Ltd., TPEG Acquisition
                 III Corp., Grosso-Jacobson Music Company, Inc., Salvatore
                 Grosso and Lawrence S. Jacobson.

10.28            Executive Employment Agreement, dated October 20, 1997,
                 between The Producers Entertainment Group Ltd. and Salvatore
                 Grosso.

10.29            Executive Employment Agreement, dated October 20, 1997,
                 between The Producers Entertainment Group Ltd. and Lawrence
                 Jacobson.

10.30            Employment Extension Agreement, dated October 20, 1997,
                 between The Producers Entertainment Group Ltd. and Irwin
                 Meyer.

10.31            Employment Extension Agreement, dated October 20, 1997,
                 between The Producers Entertainment Group Ltd. and Arthur
                 Bernstein.

10.32            Production Agreement, dated October 20, 1997, between The
                 Producers Entertainment Group Ltd. and Lawrence Jacobson
                 Associates, Inc..

10.33            Production Agreement, dated October 20, 1997, between The
                 Producers Entertainment Group Ltd. and S.A.G. Productions,
                 Inc..

10.34            Mountaingate Extension Agreement, dated October 20, 1997,
                 between The Producers Entertainment Group Ltd. and
                 Mountaingate Productions, LLC.

10.35            Stockholders Voting Agreement, dated October 20, 1997, by and
                 among, Irwin Meyer, Arthur Bernstein, Salvatore Grosso,
                 Lawrence Jacobson and Mountaingate Productions, LLC.





                                                                Page No. 7 of 8

<PAGE>   8

                                   SIGNATURES


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


                                            THE PRODUCERS ENTERTAINMENT
                                            GROUP LTD.



Date:  November 3, 1997                 By: /s/ ARTHUR H. BERNSTEIN
                                            -----------------------------------
                                            Arthur H. Bernstein,
                                            Executive Vice President



























                                                                 Page No. 8 of 8

<PAGE>   1







                          AGREEMENT AND PLAN OF MERGER


                                     AMONG


                    THE PRODUCERS ENTERTAINMENT GROUP LTD.,


                           TPEG ACQUISITION I CORP.,


                 THE GROSSO-JACOBSON ENTERTAINMENT CORPORATION


                                SALVATORE GROSSO

                                      AND

                              LAWRENCE S. JACOBSON

                            _______________________



                           DATED:  SEPTEMBER __, 1997







<PAGE>   2

                          AGREEMENT AND PLAN OF MERGER



                 AGREEMENT AND PLAN OF MERGER, dated September __, 1997, by and
among The Producers Entertainment Group Ltd., a Delaware corporation ("TPEG"),
TPEG Acquisition I Corp., a New York corporation ("TPEG Sub I"), The
Grosso-Jacobson Entertainment Corporation, a New York corporation ("GJE"),
Salvatore Grosso and Lawrence S. Jacobson (hereinafter referred to severally by
their respective surnames and collectively as "Stockholders").

                 WHEREAS, TPEG owns of record and beneficially all of the
issued and outstanding shares of capital stock of TPEG Sub I;

                 WHEREAS, Grosso and Jacobson own of record and beneficially
all of the issued and outstanding capital stock of GJE;

                 WHEREAS, TPEG Sub I desires to merge with and into GJE and
TPEG desires to have TPEG Sub I merge with and into GJE in consideration of the
issuance by TPEG of shares of TPEG Common Stock (as hereinafter defined) in
exchange for all of the capital stock of GJE issued and outstanding at the
effective time of the merger; and

                 WHEREAS, for federal income tax purposes,  it is intended that
the contemplated merger transaction shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), all upon the terms and subject to the conditions set forth herein and
in accordance with the Business Corporation Law of the State of New York, as
the same may be amended from time to time (the "BCL"); and

                 WHEREAS, TPEG and certain other subsidiaries of TPEG are
entering into separate agreements and plans of merger of even date with
Grosso-Jacobson Productions, Inc. ("GJP"), a Delaware corporation, and
Grosso-Jacobson Music, Inc. ("GJM"), a New York corporation, (each such
corporation being hereinafter referred to as "GJP" and "GJM", respectively, and
collectively as the "Other GJ Companies" and collectively with GJE, the "GJ
Entities"; and such other mergers and agreements being referred to collectively
as the "Other Mergers" and the "Other Merger Agreements") upon substantially
the same terms and conditions hereinafter set forth except for the Merger
Consideration (as hereinafter defined) to be paid to the holders of the capital
stock of each of GJP and GJM,

                 NOW, THEREFORE, the parties hereto agree as follows:












                                       1
<PAGE>   3

                             ARTICLE 1.  THE MERGER

                 1.1      Merger; Surviving Corporation.  In accordance with
the provisions of this Agreement and the BCL, at the Effective Time (as defined
in Section 1.5 hereof), TPEG Sub I shall be merged with and into GJE (the
"Merger"), and GJE shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of New York, under the name "The Grosso Jacobson
Entertainment Corporation".  At the Effective Time, the separate existence of
TPEG Sub I shall cease.  All properties, franchises and rights belonging to
TPEG Sub I, by virtue of the Merger and without further act or deed, shall be
vested in the Surviving Corporation, which shall assume and be solely
responsible for all the liabilities and obligations of each of TPEG Sub I and
GJE. The Merger will otherwise also have the effects set forth in Section 906
of the BCL.

                 It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.

                 1.2      Certificate of Incorporation.  The Certificate of
Incorporation of TPEG Sub I in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
altered or amended as provided by law or by such Certificate of Incorporation.
The Certificate of Incorporation of TPEG Sub I has been delivered by TPEG Sub I
to GJE.

                 1.3      By-laws.  (a)  The By-laws of TPEG Sub I in effect
immediately prior to the Effective Time (as defined in Section 1.5 hereof)
shall be the By-laws of the Surviving Corporation until altered, amended or
repealed, in whole or in part, as provided by law, by the Certificate of
Incorporation of the Surviving Corporation or by such By-laws.  The TPEG Sub I
By-laws have been delivered by TPEG Sub I to GJE.


                          (b)  The By-laws of TPEG in effect immediately prior
to the Effective Time (and as set forth on Schedule 1.3(b)) shall be the
By-laws of TPEG until altered, amended or repealed, in whole or in part, as
provided by law, by the Certificate of Incorporation of TPEG or by the TPEG
By-laws.  The TPEG By-laws have been delivered by TPEG to GJE.

                 1.4      Directors and Officers.  (a)  GJE and the
Stockholders shall cause the directors of GJE to tender their written
resignations as directors, effective as of the Effective Time, and TPEG, as the
sole stockholder of the Surviving Corporation, shall designate and elect, as of
the Effective Time, a new Board of Directors of the Surviving Corporation.
Commencing at the Effective Time, the directors and officers of the Surviving
Corporation shall be as set forth on Schedule 1.4.  Each of the directors and
officers of the Surviving Corporation shall hold their respective offices in
accordance with the By-laws of the Surviving Corporation.







                                       2
<PAGE>   4

                          (b)   At or prior to the Effective Time, TPEG will
take all steps necessary and appropriate to reconstitute its Board of Directors
so that, as of the Effective Time, the Board of Directors of TPEG shall consist
of seven persons (the "TPEG Board Designees") designated as follows:

                                (i)    three of the TPEG Board Designees will
                          be the designees of the pre-Merger TPEG Board of
                          Directors;

                                (ii)   three of the TPEG Board Designees will
                          be the designees of the pre-Merger GJE Board of
                          Directors; and

                                (iii)  the remaining TPEG Board Designee will
                          be the joint designee of the pre-Merger TPEG Board of
                          Directors and the pre-Merger GJE Board of Directors.

                                (iv)   The names of the designees referred to
                          in clauses (i) through (iii) of this Section 1.4(b)
                          will be delivered by the parties to each other and,
                          where required, mutually agreed upon as required by
                          Section 7.1(e) hereof.  After the Effective Time, the
                          TPEG Board Designees shall serve as members of the
                          Board of Directors of TPEG in accordance with the
                          TPEG By-Laws.

                          (c)   At the Effective Time, the Board of Directors
of TPEG shall appoint four members to its Executive Committee who shall consist
of two designees of the pre-Merger TPEG Board of Directors and two designees of
the pre-Merger GJE Board of Directors.

                 1.5      Effective Time.  The Merger shall become effective at
the time of filing of a certificate of merger in the form attached as Exhibit
"A" to this Agreement with the Secretary of State of the State of New York in
accordance with the provisions of Section 904 of the BCL (the "Certificate of
Merger").  Subject to the fulfillment of the conditions set forth in Article 7,
the Certificate of Merger shall be so filed immediately after obtaining the
requisite approval of the stockholders of GJE contemplated by Section 7.1(a)
hereof.  The date and time when the Merger shall become effective are referred
to herein as the "Effective Time."

                 1.6      Consideration for Merger.  The total consideration to
be paid by TPEG to the holders of the outstanding Common Stock, no par value,
of GJE (the "GJE Common Stock") in connection with the Merger of TPEG Sub I
into GJE shall equal four million ($4,000,000) dollars (the "Merger
Consideration"). The Merger Consideration shall be paid by TPEG through the
issuance by TPEG to the Stockholders of GJE of such number of shares of TPEG
Common Stock, $.001 par value (the "TPEG Common Stock") as shall be determined
by dividing the Merger Consideration by the average of the (a) quoted closing
prices of the TPEG Common Stock on the NASDAQ SmallCap Market during the thirty
(30) consecutive trading days immediately preceding the Effective Time and (b)
if there is no trading in the TPEG Common Stock on the NASDAQ SmallCap Market
on any one or more of such trading days, by the average mean between the quoted









                                       3

<PAGE>   5

closing bid and asked prices for the TPEG Common Stock on such Market on any of
such days, subject to a maximum price of one dollar and forty cents ($1.40) per
share of TPEG Common Stock (or a minimum of 2,857,143  shares of TPEG Common
Stock) or a minimum price of one dollar and twenty cents ($1.20) per share of
TPEG Common Stock, (or a maximum of 3,333,333 shares of TPEG Common Stock).

                 1.7      Conversion of Securities.

                          (a)   Each share of GJE Common Stock issued and
outstanding immediately prior to the Effective Time (except for shares of GJE
Common Stock then held in its treasury, which shares shall be canceled upon the
Merger), shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and become such number of shares of TPEG
Common Stock as shall have been determined pursuant to Section 1.6 hereof
divided by the total number of shares of GJE Common Stock issued and
outstanding immediately prior to the Effective Time.

                          (b)   As of the Effective Time, the holders of
certificates representing shares of issued and outstanding GJE Common Stock
shall cease to have any rights as stockholders of GJE, except such rights, if
any, as they may have pursuant to the BCL, and, except as otherwise expressly
set forth herein, their sole and exclusive right shall be the right to receive
shares of TPEG Common Stock in accordance with the provisions of this
Agreement.

                          (c)   Each share of Common Stock of TPEG Sub I ("TPEG
Sub I Common Stock") issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation.  Each
certificate evidencing ownership of TPEG Sub I Common Stock shall continue to
evidence ownership of the same number of shares of the same class of the
Surviving Corporation.  From and after the Effective Time, each outstanding
certificate theretofore representing TPEG Sub I Common Stock shall be deemed
for all purposes to evidence ownership of and to represent the number of shares
of Common Stock of the Surviving Corporation into which such TPEG Sub I Common
Stock shall have been converted.  Promptly after the Effective Time, the
Surviving Corporation shall issue to TPEG, the holder of the TPEG Sub I Common
Stock, one or more certificates representing a like number of shares of Common
Stock of the Surviving Corporation in exchange for the certificates that
formerly represented TPEG Sub I Common Stock, which shall thereupon be
canceled.

                 1.8      Surrender and Payment.  Promptly after the Effective
Time, TPEG shall deliver or cause to be delivered to each holder of record of
one or more certificates representing GJE Common Stock (collectively, the "GJE
Certificates"), certificates representing such number of shares of TPEG Common
Stock as each such holder shall be entitled to receive per share of GJE Common
Stock pursuant to Section 1.7(a) of this Agreement in exchange for the
surrender to TPEG or its transfer agent ("TPEG Transfer Agent") of such GJE
Certificates.  If any Shares of TPEG Common Stock  are to be issued in a name
other than that in which a GJE Certificate so surrendered is then














                                       4
<PAGE>   6

registered, it shall be a condition of such exchange that the GJE Certificate
surrendered be accompanied by payment of any applicable transfer taxes and
documents required for a valid transfer or assignment of title to such shares
of TPEG Common Stock in the reasonable judgment of TPEG and its counsel.  From
and after the Effective Time, until so surrendered, each GJE Certificate shall
be deemed for all purposes, except as set forth below, to evidence the number
of shares of TPEG Common Stock into which the GJE Common Stock represented by
such GJE Certificate shall have been converted.  Upon surrender of a GJE
Certificate, the holder of record thereof shall receive, together with one or
more certificates representing the number of shares of TPEG Common Stock to
which he shall be entitled in accordance with Section 1.7(a),  all dividends
and other distributions which shall have theretofore been paid or made to
holders of record of TPEG Common Stock after the Effective Time with respect to
such shares.  TPEG shall be authorized to deliver certificates for shares of
TPEG Common Stock attributable to any GJE Certificate theretofore issued which
has been lost or destroyed upon receipt of satisfactory evidence of ownership
of the shares of GJE Common Stock formerly represented thereby and of
appropriate indemnification of TPEG in form satisfactory to TPEG and its
counsel.

                 1.9      Fractional Shares.  No fractional shares shall be
issued by TPEG in the Merger.  Each fractional interest in a share of TPEG
Common Stock which would otherwise be issued as a result of the Merger shall be
rounded to the nearest whole share of TPEG Common Stock.

                 1.10     No Further Transfers.  At the Effective Time, the
stock transfer books of GJE shall be closed, and no further transfers of shares
of GJE Common Stock shall thereafter be made or be effective.

                 1.11     Other Mergers with Other GJ Companies.
Notwithstanding any other provision of this Agreement, the consummation of both
of the Other Mergers among TPEG, other TPEG subsidiaries, each of GJP and GJM
and Grosso and Jacobson at the Effective Time shall constitute conditions
precedent to the Merger and the consummation of the Merger at the Effective
Time shall constitute a condition precedent to the consummation of the Other
Mergers.



    ARTICLE 2.  REPRESENTATIONS AND WARRANTIES OF GJE, GROSSO AND JACOBSON.

                 GJE, Grosso and Jacobson hereby jointly and severally
represent and warrant to TPEG and TPEG Sub I as follows:

                 2.1      Organization and Authorization.  GJE (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, (ii) has the corporate power and authority
to own or lease and operate the properties and assets now owned or leased and
operated by it and to carry on its business as it is now being conducted, and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which













                                       5
<PAGE>   7

the nature of its business or the ownership of its properties or both makes
such qualification necessary.  GJE has delivered to TPEG complete and correct
copies of its Certificate Incorporation and By-laws, as amended and in effect
on the date of this Agreement.  GJE has full and unrestricted corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder.  The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of GJE and, except for the approval of GJE's
stockholders, no other corporate proceedings on the part of GJE are necessary
to authorize this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement has been duly and validly executed and
delivered by GJE and constitutes the legal, valid and binding agreement of GJE,
enforceable against GJE in accordance with its terms.  GJE has no wholly-owned
or majority-owned subsidiaries and has no record or beneficial title or
interest in any capital stock or equity interest in any firm, corporation,
partnership, other entity or individual (each, a "Person")  Neither Grosso nor
Jacobson has any direct or indirect record or beneficial title or interest in
any captital stock or other equity interest of any Person (other than GJE, the
Other GJ Companies and 1037300 Ontario Limited (the "Ontario Corporation"))
engaged directly or indirectly in the businesses of developing, producing,
distributing, licensing and/or exhibiting motion pictures or television
programs or series, other than holdings of less than five (5%) percent of
publicly held Persons by both Grosso and Jacobson, as a group.

                 2.2      Non-Contravention.  The execution and delivery by GJE
of this Agreement and, subject to the approval of this Agreement by GJE's
stockholders, the consummation by GJE of the transactions contemplated hereby
will not (a) violate any provision of the Certificate of Incorporation or
By-laws of GJE, (b) violate any material provision of or result in the breach
or the acceleration of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any material obligation of GJE under
any GJE Lease (as such term is defined in Section 2.12 hereof), or other
agreement, indenture, loan agreement, commitment, license, instrument, order,
arbitration award, judgment or decree to which GJE is a party or by which GJE
is bound, (c) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any asset or property of GJE or (d)
violate or conflict with in any respect any other material restriction or any
law, ordinance or rule to which GJE or the property or assets of GJE is
subject.

                 2.3      Governmental Consents and Approvals.  Except as set
forth in Schedule 2.3, no consent, approval, order or authorization of, or
registration or declaration with, any government  agency, court, tribunal or
arbitration board or panel (collectively "Gorvernmental Authority") is required
in  connection with the execution and delivery of this Agreement by GJE or the
consummation by GJE of the transactions contemplated hereby, except for the
filing of a Certificate of Merger with the Secretary of State of the State of
New York.

                 2.4      Capital Stock.  The authorized capital stock of GJE
consists of 200 shares of Common Stock, no par value, of which 100 shares are
issued and outstanding and no shares are issued and held in the treasury of
GJE.  As of the date hereof, GJE has no authorized class of capital stock other
than the GJE Common Stock.  All outstanding shares of GJE Common Stock are duly
authorized, validly issued, fully paid and nonassessable and all such
outstanding shares of GJE










                                       6
<PAGE>   8
Common Stock are held of record and beneficially solely by Grosso and Jacobson.
As of the date hereof, GJE has reserved no shares of GJE Common Stock for
issuance pursuant to any option,  warrant, subscription or other similar
agreement or commitment.  As of the date hereof, except as set forth herein, or
in Schedule 2.4, GJE neither has nor is a party to any outstanding written or
oral offers, subscriptions, options, warrants, rights or other agreements,
obligations or commitments obligating GJE to issue or sell, or cause to be
issued or sold, any shares of any class of capital stock of GJE (including GJE
Common Stock) or any securities or obligations convertible into or exchangeable
for or giving any Person any right to acquire any shares of such capital stock,
or obligating GJE to enter into any such agreement or commitment and no
obligation or commitment to authorize for issuance any shares of any other
class of capital stock.

                 2.5      Financial Statements.  (a)  The (a) balance sheet as
of November 30, 1996 of the GJ Entities and related statements of operations,
stockholders' equity and cash flows for each of November 30, 1995 and November
30, 1996, examined and reported upon by Rosenberg, Rich, Baker, Berman &
Company, independent accountants, complete copies of which have been delivered
toTPEG, and (b) the unaudited balance sheet as of May 31, 1997 of the GJ
Entities and the related statements of operations, stockholders' equity and
cash flows for the six-month period then ended, (collectively, the "GJ
Financial Statements"), have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis, and
fairly present the financial position of GJE at such dates and the results of
its operations and cash flows for such periods.  Except as disclosed or
provided for in the GJ Financial Statements (including the notes thereto) or in
Schedule 2.5, as of the date hereof, (i) GJE has no liabilities, commitments or
obligations of any kind, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, required to be reflected in any such
financial statements, including the notes thereto, under generally accepted
accounting principles that are material to the business or condition (financial
or otherwise) of GJE, and (ii) GJE owns the properties and assets reflected in
such financial statements free and clear of any liens, claims, charges,
pledges, security interests or other encumbrances, other than those described
in the GJ Financial Statements.

                 (b)      The books of account and other financial records of
GJE (i) reflect all material items of income and expense and all assets and
liabilities of GJE, (ii) are in all material respects complete and correct, and
do not contain or reflect any material inaccuracies or discrepancies, and (iii)
have been maintained in accordance with good business and accounting practices
in all material respects.

                 2.6      No Undisclosed Liabilities.  GJE has no liabilities
other than liabilities (i) reflected on the GJ Financial Statements, (ii)
disclosed in Schedule 2.5 hereof, or (iii) incurred in the ordinary course of
GJE's business consistent with its past practices.  Reserves are to be
established on the balance sheets included in the GJ Financial Statements in
amounts that have been established on a basis consistent with the past
practices of GJE and in accordance with GAAP.

                 2.7      Receivables.  Schedule 2.7 sets forth an aged list of
the accounts receivable of GJE as of July 31, 1997, showing separately those
receivables that, as of such date, had been due and outstanding (a) 30 days or
less, (b) 31 to 60 days, (c) 61 to 90 days, (d) 91 to 120 days and (e)











                                       7

<PAGE>   9
more than 120 days. Except as set forth on Schedule 2.7, all such receivables
arose from the sale of products or services to Persons not affiliated with GJE
and in the ordinary course of the business consistent with past practice and
custom of GJE and constitute or will constitute, as the case may be, only
valid, undisputed claims of GJE not subject to valid claims of set-off or other
defenses or counterclaims other than normal cash discounts granted in the
ordinary course of the business consistent with past practice. Subject to the
amounts of normal and customary reserves for doubtful accounts established by
GJE for prior periods, all such receivables outstanding as of July 31, 1997 are
good and collectible and have been or will be collected by GJE prior to, or
will be collected by the Surviving Corporation, without resort to litigation or
extraordinary collection activity, within one (1) year after, the Effective
Time.

                 2.8      TV Production Assets.

                          (a)   Subject to amounts reserved therefor in the GJ
Financial Statements and as adjusted for operations and transactions through
the Effective Time consistent with the past practice and custom of GJE, the
values at which all television production cameras and equipment,
post-production and editing equipment, costumes, wardrobe, props and similar
tangible assets (the "TV Production Assets") are carried on the GJ Financial
Statements reflect GJE's historical valuation policy of stating such TV
Production Assets at the lower of or market value.  GJE has good and marketable
title to the TV Production Assets free and clear of all liens and encumbrances.
Except as set forth on Schedule 2.8, the TV Production Assets do not consist of
items that are obsolete or damaged; and the Production Assets do not consist of
any items leased or held on consignment.  GJE has not acquired or become
committed to acquire any TV Production Assets which are not of a quality and
quantity usable in the ordinary course of their television production business.
Schedule 2.8 sets forth a complete list of the addresses of all warehouses and
other facilities in which the TV Production Assets are located (except for
those items in transit) and the individual and aggregate dollar amounts of all
Production Assets (listing by similar categories) which GJE is obligated to
purchase or lease as of the date hereof.

                          (b)   Subject to the reserve, the TV Production
Assets are in good operating condition, are suitable and usable for the
purposes for which they are intended and are in a condition such that they can
be used in the ordinary course of the television production business of GJE
consistent with past practice.

                 2.9      Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions.  Since May 31, 1997, except as disclosed on
Schedule 2.9 or specifically contemplated by this Agreement, the business of
GJE has been conducted in the ordinary course and consistent with past
practice.  As amplification and not in limitation of the foregoing, except as
disclosed in or specifically contemplated by this Agreement, or in the ordinary
course of business consistent with past practice of GJE since such date, GJE
has not:

                          (a)   amended or terminated any contract, lease or
license, or the rights thereunder;
















                                       8
<PAGE>   10
                          (b)   caused, permitted or allowed any material
assets or properties (whether tangible or intangible) to be subjected to any
lien or encumbrance;

                          (c)   discharged or otherwise obtained the release of
any encumbrance or paid or otherwise discharged any material liability;

                          (d)   suffered any material adverse effect on the
business, business prospects or financial condition of or the occurrence of any
event or events which, individually, or in the aggregate, has or have had, or
could reasonably be expected to have, such a material adverse effect;

                          (e)   made any loan to, guaranteed any indebtedness
of or otherwise incurred any indebtedness on behalf of any Person;

                          (f)   failed to pay any creditor any material amount
owed to such creditor upon the later of when such amount became due or within
any applicable grace period;

                          (g)   made any material changes in the customary
methods of operations, including, without limitation, practices and policies
relating to the acquisition, development, production, selling, licensing, or
distribution of television movies, series or mini-series for network TV, cable
TV or other markets;

                          (h)   made any capital expenditure or commitment for
any capital expenditure in excess of Ten Thousand ($10,000) Dollars
individually or Twenty Five Thousand ($25,000) Dollars in the aggregate;

                          (i)   sold, transferred, leased, subleased, licensed
or otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets);

                          (j)   entered into any agreement, arrangement or
transaction with any of its directors, officers, employees or shareholders or
with any relative, beneficiary, spouse or any other Affiliate of such Person
("Affiliate" shall mean, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person);

                          (k)   (i) granted any material increase, or announced
any material increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by GJE to any of its employees,
including, without limitation, any increase or change pursuant to any employee
compensation or bonus plan or (ii) established or increased or promised to
increase any material benefits under any such employee plan, in either case
except as required by law;











                                       9
<PAGE>   11
                          (l)   written down or written up (or failed to write
down or write up in accordance with GAAP consistent with past practice) the
value of any tangible or intangible assets or any receivables;

                          (m)   amended, terminated, canceled or compromised
any material claims or waived any other material rights;

                          (n)   made any change in any method of accounting or
accounting practice or policy other than such changes as are required by GAAP;

                          (o)   accelerated or discounted the collection of
accounts receivable, or delayed the payment of accounts payable; and the
collection and payment of all such receivables and accounts payable,
respectively, have at all times been made in the ordinary course of business
consistent with past practice;

                          (p)   failed, in any material respect, to maintain
the TV Production Assets in accordance with good business practice and in good
operating condition and repair;

                          (q)   failed to renew any insurance policy that is
scheduled to terminate or expire within forty-five (45) calendar days of the
Effective Time;

                          (r)   incurred any indebtedness for borrowed money;

                          (s)   terminated, discontinued, closed or disposed of
any facility or other material business operation, or laid off employees;

                          (t)   suffered any casualty loss or damage with
respect to any of the TV Production Assets which in the aggregate have a
replacement cost of more than Ten Thousand ($10,000) Dollars whether or not
such loss or damage shall have been covered by insurance;

                          (u)   entered into or amended in any material respect
any employment agreement or adopted, or amended in any material respect, any
collective bargaining agreement or any employee benefit plan (as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA");

                          (v)   incurred any damage, destruction or similar
loss, whether or not covered by insurance, materially affecting the business,
assets, properties or business prospects of GJE;

                          (w)   entered into any other transaction of a
material nature other than in the ordinary course of business;








                                       10
<PAGE>   12
                          (x)   entered into any agreement or understanding
with any of its directors, officers or beneficial owners of more than 5% of the
outstanding GJE Common Stock or any of their respective Affiliates;

                          (y)   issued or sold any Common Stock or shares or
units of capital stock of any other class, notes, bonds, or other equity or
debt securities, or any options warrants or other rights to purchase or which
are convertible into the same, or entered into any written or oral agreement,
commitment or understanding with respect to the issuance and/or sale thereof,
except as contemplated by this Agreement;

                          (z)   declared, set aside or paid any dividend, or
made any other distribution on its capital stock or redeemed, purchased or
acquired any shares or units thereof or entered into any agreement in respect
of any of the foregoing;

                          (aa)  amended its Certificate of Incorporation or
By-laws;

                          (bb)  (i) purchased, sold, assigned or transferred
any material tangible or intangible assets or any material patent, trademark,
trade name, copyright, license, franchise, design or other intangible assets or
property, (ii) mortgaged, pledged or granted or suffered to exist any lien or
other encumbrance or charge on any material assets or properties, tangible or
intangible, or (iii) waived any rights of material value or canceled any
material debts or claims;

                          (cc)  incurred any contractual obligation or
liability (absolute or contingent) in excess of $100,000 in the aggregate in
one or a series of related transactions, except current liabilities and
obligations incurred in the ordinary course of business or paid any liability
or obligation (absolute or contingent) in excess of $100,000 other than current
liabilities and obligations incurred in the ordinary course of business
consistent with and in accordance with past practices; or

                          (dd)  agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 2.9 or granted any options to
purchase, rights of first refusal, rights of first offer or any other similar
rights or commitments with respect to any of the actions specified in this
Section 2.9, except as expressly contemplated by this Agreement.

                 2.10     Tax Matters.  (a) GJE has duly filed all federal,
state, county, local, foreign and other income, excise, sales, customs,
franchise, use, license, real and personal property, withholding, social
security and other tax and information returns and reports required to have
been filed by GJE to the date hereof, other than income tax returns or reports
for the year ending November 30, 1997, and has paid (or, in the case of
withholding taxes and obligations, has withheld and paid over as required) all
taxes, assessments, duties and other governmental charges (collectively,
"Taxes") (including interest, penalties and additions thereto, if any) shown on
such returns or reports to be due or claimed to be due prior to the date hereof
to any federal, state, county, local, foreign or other Governmental Authority.
GJE has paid, or has made adequate provision in the GJ Financial Statements
for, all Taxes (including interest, penalties and additions thereto, if any)





                                       11
<PAGE>   13

payable by GJE with respect to all periods to and including May 31, 1997.  GJE
does not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected on
the GJ Financial Statements and, to the best knowledge of GJE, there is no
basis for any additional material claims or assessments for Taxes other than
with respect to liabilities for Taxes that may have accrued since November 30,
1996 in the ordinary course of business of GJE or liabilities for Taxes
contested in good faith and with respect to which adequate reserve has been
reflected in the GJ Financial Statements, which are described on Schedule 2.10.
Except as set forth in Schedule 2.10, no federal income tax returns of GJE have
been examined by the Internal Revenue Service (the "IRS") and no proposed
additional Taxes, interest or penalties have been asserted with respect to
years not examined.  True copies of the federal, state and local income tax
returns of GJE for the years ended November 30, 1995 and November 30, 1996 have
been heretofore delivered or made available to TPEG.

                          (b)   In furtherance of the representations and
warranties set forth in paragraph (a) of this Section 2.10 and, except as
otherwise set forth in Schedule 2.10:

                                (i)    Filing of Returns.  As of the time of
                          filing, GJE's tax returns correctly reflected the
                          facts regarding GJE's income, business, assets,
                          operations, activities, status, other matters or any
                          other information shown or required to be shown
                          thereon.  No claim has ever been made by a taxing
                          authority in a jurisdiction where GJE does not file
                          tax returns with respect to a particular tax that it
                          is or may be subject to taxation by that jurisdiction
                          with respect to such tax.

                                (ii)   Liens.  There are no liens for taxes
                          other than for current taxes not yet due and payable
                          for which adequate provision shall have been made in
                          the GJ Financial Statements on the assets of GJE.

                                (iii)  Foreign Person.  GJE is not a person
                          other than a United States person within the meaning
                          of the Code.

                                (iv)   Audit History.  No issues have been
                          raised and no requests for information have been made
                          by any taxing authority in connection with any of the
                          GJE tax returns or with respect to any taxes to which
                          GJE is or may be subject.  No waivers of statutes of
                          limitation with respect to the tax returns or any
                          taxes to which GJE may be subject have been given by
                          or requested from GJE.  Schedule 2.10 sets forth by
                          Tax, taxing authority and taxable period (A) each tax
                          return filed by, or with respect to, any predecessor
                          for any taxable period ending on or after November
                          30, 1994, (B) the taxable periods of GJE as to which
                          the statute of limitations with respect to such Taxes
                          have not expired, and (c) with respect to such
                          taxable periods,  those years for which





                                       12
<PAGE>   14


                          examinations have been completed, those years for
                          which for which examinations are presently being
                          conducted, those years for which examinations have
                          not been initiated, and those years for which
                          required tax returns have not yet been filed.  GJE
                          has delivered to TPEG correct and complete copies of
                          all such tax returns and all examination reports,
                          statements of deficiencies or other notices from or
                          correspondence with, taxing authorities with respect
                          thereto.  Except to the extent shown on Schedule
                          2.10, all deficiencies asserted or assessments made
                          as a result of any examinations have been fully paid,
                          or will be fully reflected as a liability in the GJ
                          Financial Statements, or are being contested and an
                          adequate reserve therefor has been established and
                          will be fully reflected in the GJ Financial
                          Statements.  No power of attorney has been granted
                          with respect to any matter relating to Taxes that
                          could affect GJE.


                                (v)    Tax-Sharing or Allocation Agreements.
                          GJE is not a party to or bound by any tax-indemnity,
                          tax-sharing, or tax-allocation agreements.

                                (vi)   Prior Affiliated Groups.  GJE has never
                          been a member of an Affiliated Group (within the
                          meaning of the Code) nor has ever been included in
                          any group, consolidated or unitary Return.  GJE does
                          not have any liability for the Taxes of any Person
                          under Treas. Reg. Section  1.1502-6 (or any similar
                          provision of law), or as a transferee or successor,
                          by contract or otherwise.

                                (vii)  Tax Elections.  All material elections
                          with respect to Taxes affecting GJE are set forth in
                          Schedule 2.10.

                                (viii)     Section 341(f) Consent.  GJE has not
                          filed a consent pursuant to the collapsible
                          corporation provisions of Section 341(f) of the Code
                          (or any similar provision of law) or agreed to have
                          Section 341(f)(2) of the Code (or any similar
                          provision of law) apply to any disposition of any
                          asset owned by it.

                                (ix)   Doing Business: Taxable Nexus.  GJE is
                          not doing business in or engaged in a trade or
                          business in, or has a taxable nexus with, any
                          jurisdiction in which it has not filed all applicable
                          Tax Returns.

                                (xi)   Records.  GJE has maintained such
                          records in reasonable detail in respect of
                          transactions, events and items (including those
                          required to support otherwise allowable deductions,
                          losses and credits) as are required under applicable
                          laws in respect of Taxes.

                                (xii)  Unpaid Tax.  The unpaid Taxes of GJE
                          shall not exceed the reserve for tax liability
                          (excluding any reserve for deferred Taxes established
                          to reflect timing differences between book and Tax
                          income) set forth on the





                                       13
<PAGE>   15

                          face of the Balance Sheets included in the GJ
                          Financial Statements (rather than in any notes
                          thereto).

                                (xiii)     Carryover of Unabsorbed Losses.
                          Except as set forth in Schedule 2.10, or as may
                          result or arise by reason of the Merger and other
                          transactions contemplated by this Agreement, neither
                          GJE nor either of the Stockholders has taken any
                          actions or filed any Tax Returns which restricted
                          GJE's utilization of any unabsorbed losses sustained
                          in prior periods to offset income to be earned by GJE
                          after the Effective Time in the lines of business
                          conducted by GJE as of the date hereof.

                 2.11     Material Contracts.  Attached as Schedule 2.11 is a
list which is complete and correct in all material respects as of the date of
this Agreement of all material agreements, contracts and commitments of GJE,
including all agreements, contracts and commitments of the following types,
written or oral, to which GJE is a party or by which the properties or assets
of GJE are bound as of the date of this Agreement:  (i) options to acquire
television scripts and similar prospective television production agreements and
co-production agreements for television series, made-for-television-movies and
mini-series and licensing and distribution agreements; (ii) indentures,
security agreements and other agreements and instruments relating to the
borrowing of money by or extension of credit to GJE; (iii) employment and
consulting agreements; (iv) collective bargaining agreements; (v) agreements,
orders or commitments not cancelable by GJE (without penalty) on not more than
30 days notice; (vi) motor vehicle, equipment and other personal property
leases; (vii) licenses of material patent, trademark and other proprietary
rights; (viii) agreements or commitments for capital expenditures in excess of
Twenty Five Thousand ($25,000) Dollars in the aggregate for all facilities;
(ix) brokerage or finder's agreements (excluding the "Sirius Agreement" defined
and described in Section 2.21 hereof); (x) surety bonds and letters of credit;
and (xi) agreements, contracts and commitments of a type other than those
described in the foregoing clauses (i) through (xi) which in any case involve
payments or receipts of more than Ten Thousand ($10,000) Dollars in the
aggregate.  GJE has delivered or made available to TPEG and TPEG Sub I complete
and correct copies of all written agreements, contracts and commitments,
together with all amendments thereto, and accurate descriptions of all oral
agreements, set forth on said Schedule 2.11.  Except as set forth in Schedule
2.11 and except for defaults or failures to perform that do not and will not
materially adversely affect the financial condition, business or operations of
GJE, or title to or use of any of the assets or properties of GJE, such
agreements, contracts and commitments are in full force and effect and, to the
best knowledge of GJE, all parties thereto have performed all material
obligations required to be performed by them to date and are not in default in
any material respect thereunder.  Except as set forth in Schedule 2.11 and
except for claims, defaults or events that in the aggregate do not and will not
materially adversely affect the financial condition, business, operations or
prospects of GJE or title to or use of the assets or properties of GJE, no
claim of default by any party has been made or is now pending under any such
agreement, contract or commitment and, to the best knowledge of GJE, no event
has occurred and is continuing that with notice or the passage of time or both
would constitute a material default thereunder or would excuse performance by
any party thereto.  No such agreement, contract or commitment materially
adversely affects or in the





                                       14
<PAGE>   16

future may (so far as GJE can now reasonably foresee) materially adversely
affect the business, condition, properties, assets, liabilities or operations
of GJE or of the Surviving Corporation.

                 2.12     Real Property.  (a) Schedule 2.12 sets forth a true,
complete and correct listing of all leases covering the real property in which
GJE holds the lessee's interest (collectively, the "GJE Leases").  Except as
set forth in Schedule 2.12, GJE holds the lessee's interest in all of the GJE
Leases, free and clear of all liens, claims and encumbrances.  GJE does not own
any real property.

                          (b)   Schedule 2.12 sets forth a true, complete and
correct listing of (i) all leases to which any of the GJE Leases are
subordinated (collectively, the "Underlying GJE Leases"), and (ii) all
Subleases of any of the GJE Leases (collectively, the "GJE Subleases").  True,
complete and correct copies of each GJE Lease, Underlying GJE Lease and GJE
Sublease have been delivered or made available by GJE to TPEG.

                          (c)   Except as set forth in Schedule 2.12, GJE has
no knowledge of and has not received any notice of default from the holder of
the lessor's interest in any GJE Leases or Underlying GJE Leases or the holder
of the lessee's interest in any GJE Subleases that has not heretofore been
cured.

                          (d)   Except as set forth in Schedule 2.12, neither
the premises leased under any GJE Lease, the use thereof by GJE nor any
condition existing with respect thereto, violates any laws, ordinances,
regulations or requirements (including, without limitation, zoning and use
regulations and building department requirements) affecting the same, which
violation would materially interfere with the operation or use of such premises
or materially diminish the value thereof.

                          (e)   Except as set forth in Schedule 2.12, to the
best knowledge of GJE, no Person has any interest in the lessee's interest
under any GJE Lease, Underlying GJE Lease or GJE Sublease or has any right or
option to acquire same or any part thereof.

                          (f)   As of the date of this Agreement, GJE has no
knowledge that any Person has paid or been paid any money, or has made or
contemplated making any agreement, written or oral, with respect to the
premises leased under any GJE Lease, Underlying GJE Lease or GJE Sublease or
portion thereof which would preclude, be in competition with or otherwise
interfere with the continued use and occupancy of such property by the
Surviving Corporation or could adversely affect the ability of the lessee
thereof to renew any GJE Lease.

                          (g)   Hazardous materials (as such term is defined in
any law applicable to GJE or its properties or assets) have not been released
or treated on any property leased, or, to the best knowledge of GJE, occupied
or used by GJE in its television production or other business activities  and
have not been generated, used, handled or stored on, or transported to or from,
any such property.  GJE has disposed of all wastes, including those wastes
containing hazardous materials, in compliance with all applicable laws and the
Permits.  There are no past, pending or, to





                                       15
<PAGE>   17

GJE's knowledge, threatened claims against GJE or any property covered by any
GJE Lease which relate to any environmental matters and GJE has not received
any notice of such claims.  No property leased, or occupied or used from time
to time by GJE in its production or other activities by GJE and, to the best
knowledge of GJE, no property adjoining any such property, is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA") or on
the Comprehensive Environmental Response, Compensation and Liability
Information System, as updated through the date hereof ("CERCLIS") or any
analogous state list of sites requiring investigation or cleanup and GJE has
not transported or arranged for the transportation of any hazardous materials
to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the CERCLIS or any analogous state list.

                          (h)   There are not now and never have been any
underground storage tanks located on any real property leased or, to the best
knowledge of GJE, occupied or used by GJE from time to time in its television
production or other activities.  GJE has never installed any such underground
storage tanks on any real property leased or applied by it.

                 2.13     Permits.  GJE currently holds all material health and
safety and other permits, licenses, authorizations, certificates, exemptions
and approvals of governmental authorities (collectively, "Permits"), including,
without limitation, environmental Permits, necessary or proper for the current
use, occupancy and operation of the real property occupied or used by GJE
pursuant to the GJE Leases.  All such Permits are currently valid and in full
force and effect.  There is no existing practice, action or activity of GJE and
no existing condition of the assets or business of GJE which is reasonably
likely to give rise to any civil or criminal liability under, or violate or
prevent compliance with, any health or occupational safety or other similar
applicable law.  GJE has not received any notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying or refusing to
renew any Permit or providing written notice of violations under any law.  GJE
is in all material respects in compliance with the requirements of the Permits.
No consent of any Governmental Authority will be required with respect to any
Permit in the event of the consummation of the transactions contemplated by
this Agreement.

                 2.14     Litigation.  Schedule 2.14 sets forth a true,
complete and correct listing of all pending actions, suits or proceedings to
which GJE is a party.  Except as disclosed in Schedule 2.14, there are no
actions, suits or proceedings or investigations pending or, to the best
knowledge of GJE, threatened against or adversely affecting the business,
operations or financial condition of GJE at law or in equity in any court or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality or any arbitrator.  GJE is
not in default in respect of any judgment, order, writ, injunction or decree of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, authority, agency or instrumentality.

                 2.15     Certain Interests.  Except as disclosed in Schedule
2.15, neither GJE nor any Affiliate, nor any officer or director of GJE, no
relative or spouse (or relative of such spouse) who





                                       16
<PAGE>   18

resides with, or is a dependent of , any such Person: (a) has any direct or
indirect financial interest in any competitor, supplier or customer of GJE or
(b) owns, directly or indirectly, in whole or in part, or has any other
interest in any tangible or intangible property which GJE uses or has used in
the conduct of their respective businesses or otherwise.

                 2.16     Labor Relations.  Schedule 2.16 contains a correct
and complete list of all collective  bargaining, employment, labor and similar
agreements (other than the "GJE Benefit Plans" defined and described in Section
2.18),  whether written or oral, to which GJE is a party or by which it is or
they are bound.  True and correct copies of all such agreements have been
supplied to TPEG.  GJE has complied with its obligations related to, and is not
in default under, any written or oral employment agreements, collective
bargaining agreements and any written or oral personnel policies to which they
are parties or by which they are bound.  GJE is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not and have not engaged
in any unfair labor practices.  Except as set forth in Schedule 2.16:

                 (a)      there is no unfair labor practice charge or complaint
against GJE pending or, to the best knowledge of GJE, threatened before the
National Labor Relations Board or any other Governmental Authority;

                 (b)      there has not occurred nor, to the best knowledge of
GJE, has there been threatened, a labor strike, request for representation,
work slowdown or stoppage or lockout;

                 (c)      there has not been any representation claim or
petition pending before the National Labor Relations Board respecting any
employees of GJE during the past five (5) years;

                 (d)      no grievance nor any arbitration proceeding arising
out of any collective bargaining agreement to which GJE is a party is pending;

                 (e)      no charges with respect to or relating to GJE are
pending before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices;

                 (f)      no claim relating to employment or loss of employment
with GJE is pending in any federal, state or local court or in or before any
other adjudicatory body and, to the best knowledge of GJE, no such claims has
been threatened;

                 (g)      GJE has not received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of
labor or employment laws, rules or regulations to conduct an investigation of
or relating to GJE, and no such investigation is in progress;














                                       17
<PAGE>   19
                 (h)      GJE has paid in full to all of its employees, or
adequately accrued for in accordance with GAAP, all wages, salaries,
commissions, bonuses, benefits and other compensation due to or on behalf of
such employees;

                 (i)      there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or, to the best
knowledge of GJE, threatened before any Governmental Authority with respect to
any Persons currently or formerly employed by GJE; and

                 (j)      GJE is not a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices.

                 2.17     Compliance with Laws. GJE has all material Permits,
licenses, orders and approvals of all federal, state or local governmental or
regulatory authorities which are required to conduct the business of GJE as
presently conducted.  All such Permits, licenses, orders and approvals are in
full force and effect and, to the best knowledge of GJE, no suspension or
cancellation of any of them is threatened.  Except as set forth in Schedule
2.17, none of such Permits, licenses, orders or approvals will be adversely
affected by the consummation of the Merger.  GJE is in compliance in all
material respects with the rules and regulations of all governmental agencies
having authority over it, including, without limitation, agencies concerned
with occupational, safety, environmental protection and employment practices,
and GJE has not received notice of violation of or failure to comply with any
such rules or regulations within the last three years, the failure to comply
with which could have a material adverse effect on the financial condition,
business or operations of GJE.

                 2.18     Employee Benefit Plans.  (a) Schedule 2.18 sets forth
a true, complete and correct listing of all employee benefit plans (as defined
in Section 3(3) of ERISA) maintained by GJE (the "GJE Benefit Plans").  True,
correct and complete copies of the GJE Benefit Plans have heretofore been
delivered to TPEG.

                          (b)   None of the GJE Benefit Plans is a
multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) subject to Title IV of ERISA.  None of the GJE Benefit
Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates GJE to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control" within the meaning of such term under Section 280G of the Code.  None
of the GJE Benefit Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of GJE.  Each of the GJE Benefit Plans is subject only to the laws of
the United States or a political subdivision thereof.  GJE does not sponsor,
maintain or contribute to a voluntary employees' beneficiary association
intended to be exempt under Section 501(c)(9) of the Code.













                                       18
<PAGE>   20
                          (c)   Each GJE Benefit Plan is now and always has
been operated in all material respects in accordance with the requirements of
all applicable laws, including, without limitation, ERISA and the Code, and all
persons who participate in the operation of such GJE Benefit Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with all applicable laws, including, without limitation, ERISA
and the Code.  GJE has performed all obligations required to be performed by it
under, is not in any respect in material default under or in violation of, and
has no knowledge of any default or violation by any party to, any GJE Benefit
Plan.  No legal action, suit or claim is pending or threatened with respect to
any GJE Benefit Plan (other than claims for benefits in the ordinary course)
and no fact or event is known that could give rise to any such action, suit or
claim.

                          (d)   Each GJE Benefit Plan, which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code, has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any GJE Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event is known to have occurred since the date of such determination
letter from the IRS to materially adversely affect the qualified status of any
such GJE Benefit Plan or the exempt status of any such trust.

                          (e)   There has been no material prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any GJE Benefit Plan.  GJE has not incurred any material
liability for any penalty or tax arising under Section 4971, 4972, 4980, 4980B
or 6652 of the Code or any liability under Section 502 of ERISA, and no fact or
event exists which could give rise to any such material liability. GJE has not
incurred any liability under, arising out of or by operation of Title IV of
ERISA including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any multi-employer plan, and no fact or
event exists which could give rise to any such liability.  No complete or
partial termination has occurred within the five years preceding the date
hereof with respect to any GJE Benefit Plan.

                          (f)   All contributions, premiums or payments
required to be made with respect to any GJE Benefit Plan have been made on or
before their due dates and GJE has no unfunded liabilities or obligations with
respect to or arising out of any GJE Benefit Plan.  All such contributions have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and no fact or event is known
to exist which could give rise to any such challenge or disallowance.

                          (g)   Each of the guaranteed investment contracts and
other funding contracts with any insurance company that are held by any of the
GJE Benefit Plans and any annuity contracts purchased by (i) any of the GJE
Benefit Plans or (ii) any pension benefit plan (as defined in Section 3(2) of
ERISA) that provided benefits to any current or former employees of GJE was
issued by an insurance company which carried the highest rating from each of
the nationally recognized rating agencies, as of the date such contract was
issued, the date hereof and the Effective Time.

















                                       19
<PAGE>   21

                          (h)   GJE is in material compliance with the
requirements of the Americans With Disabilities Act and the Workers Adjustment
and Retraining Notification Act and, as of the date hereof, GJE has incurred no
liabilities under either such statutes..

                 2.19     Patents, Copyrights, Trademarks, Etc.  Schedule 2.19
sets forth a true, complete and correct listing of all material patents, trade
names, trademarks, service marks, copyrights, pending applications for any of
the foregoing, and other proprietary rights of GJE and all agreements for the
licensing thereof by, or to and in favor of, GJE.  Except as set forth in
Schedule 2.19, GJE owns, or possesses adequate rights to use, all material
patents, trade names, trademarks, service marks, copyrights, inventions,
processes, designs, formulae, trade secrets, know how and other proprietary
rights necessary for the conduct of their business, with no known infringement
by GJE of the rights (asserted or unasserted) of any Person arising by reason
of any of the foregoing.  GJE has no knowledge of any infringement by any third
party upon any patent, trade name, trademark, service mark or copyright owned
or used by GJE, and GJE has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of
operations of GJE.

                 2.20     Insurance.  GJE has made available to TPEG complete
and correct copies of all insurance policies maintained by GJE, together with
all riders, endorsements and amendments thereto.  All such policies are in full
force and effect and all premiums due thereon as of the date have been paid.
Such insurance policies provide GJE with adequate insurance (both as to type
and amount) with respect to risks and perils of a business of the size and type
carried on by GJE as of the date hereof.  GJE has complied in all material
respects with the provisions of all such policies.

                 2.21     Compensation to be Paid in Connection With the
Merger.  Attached as Schedule 2.21 is a true copy of an agreement, dated July
14, 1997  Sirius Corporate Finance Inc. ("Sirius") and TPEG pursuant to which
Sirius is to receive compensation for its services in connection with the
Merger (the "Sirius Agreement").  Except for the engagement of Sirius pursuant
to the Sirius Agreement, neither GJE nor any of the Other GJ Companies, nor
Grosso or Jacobson or any of their respective Affiliates has engaged or
employed any investment banking firm, broker, finder or intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee, commission or other compensation in connection with or
upon consummation of the Merger.  GJE and the Stockholders hereby jointly and
severally indemnify, defend and hold TPEG and all of its subsidiaries,
including TPEG Sub I, harmless from and against any and all claims, liabilities
or obligations with respect to any additional or other finder's or similar
fees, commissions or expenses asserted or claimed by Sirius, other than
pursuant to the Sirius Agreement,  or by any other Person on the basis of any
act or statement alleged to have been taken or made by GJE, either of the Other
GJ Companies or either of Grosso or Jacobson.

                 2.22     BCL Section 912 Not Applicable.  The provisions of
Section 912 of the BCL will not, prior to the termination of this Agreement,
apply to this Agreement or the Merger or any of the transactions contemplated
hereby.
















                                       20
<PAGE>   22

                 2.23     Disclosure.  The representations and warranties of
GJE, and each of Grosso and Jacobson set forth in this Agreement, the
certificates, statements and other information furnished to TPEG and TPEG Sub I
in writing by or on behalf of GJE and each of Grosso and Jacobson in connection
with the transactions contemplated hereby, including the Schedules hereto, do
not as of the date of this Agreement, and as of the Effective Time shall not,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.  As of the date hereof, neither GJE
nor Grosso or Jacobson knows of any fact or condition which materially
adversely affects, or in the future may (so far as GJE, or Grosso or Jacobson
can now reasonably foresee) materially adversely affect the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or business prospects of GJE which has not been set forth herein or disclosed
to TPEG in writing with reference to this Agreement.



               ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF TPEG

                 TPEG represents and warrants to GJE, Grosso and Jacobson as
follows:

                 3.1      Organization and Authorization.  TPEG and each of the
subsidiaries of TPEG, including TPEG Sub I, (i) is a corporation duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation, (ii) has the corporate power and authority
to own or lease and operate the properties and assets now owned or leased and
operated by it and to carry on its business as it is now being conducted, and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership of its properties or both makes such qualification necessary.  TPEG
has delivered to GJE complete and correct copies of its Certificate
Incorporation and By-laws, as amended and in effect on the date of this
Agreement.  TPEG has the corporate power to enter into this Agreement and to
carry out its obligations hereunder.  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of TPEG and no other
corporate proceedings on the part of TPEG are necessary to authorize this
Agreement and the consummation of the transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by TPEG and
constitutes the legal, valid and binding agreement of TPEG, enforceable against
TPEG in accordance with its terms subject to the laws of bankruptcy,
insolvency, or creditor rights and equitable remedies.  Schedule 3.1 contains a
complete list of the subsidiaries of TPEG, including TPEG Sub I, each of which
is wholly-owned by TPEG except as noted therein.

                 3.2      Non-Contravention.  Except as set forth in Schedule
3.2, the execution and delivery by TPEG of this Agreement and the consummation
by TPEG of the transactions contemplated hereby will not (a) violate any
provision of the Certificate of Incorporation or By-laws of TPEG or any
subsidiary of TPEG, (b) subject to receipt of the Consents referred to in
Section 7.1(c), violate any material provision of or result in the breach or
the acceleration of or entitle any
















                                       21
<PAGE>   23

party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation of TPEG under any TPEG Lease (as such term is
defined in Section 3.10 hereof), or other material agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which TPEG or any subsidiary of TPEG is a party or by which TPEG
or any subsidiary of TPEG is bound, (c) result in the creation or imposition of
any material lien, charge, pledge, security interest or other encumbrance upon
any asset or property of TPEG or any subsidiary of TPEG or (d) violate or
conflict with in any material respect any other material restriction or any
law, ordinance or rule to which TPEG or any subsidiary of TPEG, or the property
or assets of TPEG or any subsidiary of TPEG, is subject.

                 3.3      Consents and Approvals.  Except for the filing of a
Certificate of Merger with the Secretary of State of the State of New York and
except as set forth in Schedule 3.3, no consent, approval, order or
authorization of, or registration or declaration with, any Governmental
Authority or agency is required in connection with the execution and delivery
of this Agreement by TPEG or the consummation by TPEG of the transactions
contemplated hereby.

                 3.4      Capital Stock.  The authorized capital stock of TPEG
consists of 50,000,000  Shares of TPEG Common Stock, par value $.001 per share,
of which 12,912,761 shares were issued and outstanding as of September 12,
1997, and 10,000,000 Shares of Series A Preferred Stock, $.001 par value per
share (the "Series A Stock"), of which 1,000,000 shares were issued and
outstanding as of June 30, 1997.  All outstanding Shares of TPEG Common Stock
are duly authorized, validly issued, fully paid and nonassessable.  Schedule
3.4 sets forth the total number of Shares of TPEG Common Stock reserved for
issuance pursuant to outstanding stock options, warrants of all series, and
Series A Stock.  As of the date hereof, except as contemplated by this
Agreement and the agreements governing the Other Mergers or as set forth in
Schedule 3.4, neither TPEG nor any of subsidiary of TPEG has or is a party to
any outstanding offers, subscriptions, options, warrants, rights or other
agreements or commitments obligating TPEG or any such subsidiary to issue or
sell, or cause to be issued or sold, any shares of capital stock of TPEG
(including TPEG Common Stock) or of any such subsidiary or any securities or
obligations convertible into or exchangeable for or giving any Person any right
to acquire any such shares, or obligating TPEG or any such subsidiary to enter
into any such agreement or commitment.

                 3.5      Financial Statements.  The consolidated balance sheet
as of June 30, 1996 of TPEG and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period then ended, examined and reported upon by Kellogg & Andelson,
independent accountants, complete copies of which have previously been
delivered to GJE (plus the unaudited financial statements included in its
Quarterly Reports on Form 10-Q through the quarter ended March 31, 1997, which
are described in Section 3.6 hereof, the "TPEG Financial Statements"), have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis and fairly present the financial position of TPEG
at such date and the results of its operations and cash flows for such periods.
Except as disclosed or provided for in such TPEG Financial Statements
(including the notes thereto) or in Schedule 3.5, (i) TPEG had no liabilities,
commitments or obligations of any kind, whether accrued, absolute, contingent
or















                                       22
<PAGE>   24

otherwise, and whether due or to become due, required to be reflected in any
such financial statements, including the notes thereto, under generally
accepted accounting principles that are material to the business or condition
(financial or otherwise) of TPEG as of March 31, 1997, and (ii) TPEG owns the
properties and assets reflected in such TPEG Financial Statements free and
clear of any liens, charges, pledges, security interests or other encumbrances,
other than those (a) described in the TPEG Financial Statements, (b) which do
not have a material adverse effect on the business, financial condition or
results of operations of TPEG and its subsidiaries, taken as a whole, or (c)
which do not adversely affect title to or the use of such properties or assets.

                 3.6      Periodic SEC Filings.  TPEG has heretofore delivered
or made available to GJE, receipt of which is hereby acknowledged by GJE, (i)
its Annual Reports on Form 10-K for the years ended June 30, 1995 and June 30,
1996 as filed with the U.S. Securities and Exchange Commission (the "SEC");
(ii) all Quarterly Reports on Form 10-Q for the quarterly periods commencing
with the quarter ended September 30, 1995 through the quarter ended March 31,
1997; and  (iii) any other reports or registration statements filed by TPEG
with the SEC since March 31, 1997.  As of their respective dates, such reports
and statements did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  3.7     Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions.  Since March 31, 1997, except as disclosed on
Schedule 3.7 or specifically contemplated by this Agreement, the business of
TPEG and of its subsidiaries has been conducted in the ordinary course and
consistent with past practice.  As amplification and not in limitation of the
foregoing, except as disclosed in or specifically contemplated by this
Agreement or the agreements governing the Other Mergers, or in the ordinary
course of business consistent with past practice of TPEG and its subsidiaries
since such date, neither TPEG nor its subsidiaries have:

                          (a)   amended or terminated any contract, lease or
license, or the rights thereunder;

                          (b)   caused, permitted or allowed any material
assets or properties (whether tangible or intangible) to be subjected to any
lien or encumbrance;

                          (c)   discharged or otherwise obtained the release of
any encumbrance or paid or otherwise discharged any material liability;

                          (d)   suffered any material adverse effect on the
business, business prospects or financial condition of or the occurrence of any
event or events which, individually, or in the aggregate, has or have had, or
could reasonably be expected to have, such a material adverse effect;

                          (e)   made any loan to, guaranteed any indebtedness
of or otherwise incurred any Indebtedness on behalf of any Person or
individual;














                                       23
<PAGE>   25
                          (f)   failed to pay any creditor any material amount
owed to such creditor upon the later of when such amount became due or within
any applicable grace period;

                          (g)   made any material changes in the customary
methods of operations, including, without limitation, practices and policies
relating to the acquisition, development, production, selling, licensing, or
distribution of television movies, series or mini-series for network TV, cable
TV or other markets;

                          (h)   made any capital expenditure or commitment for
any capital expenditure in excess of Ten Thousand ($10,000) Dollars
individually or Twenty Five Thousand ($25,000) Dollars in the aggregate;

                          (i)   sold, transferred, leased, subleased, licensed
or otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets);

                          (j)   entered into any agreement, arrangement or
transaction with any of its directors, officers, employees or shareholders (or
with any relative, beneficiary, spouse or Affiliate of such Person);

                          (k)   (i) granted any material increase, or announced
any material increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by TPEG to any of its employees,
including, without limitation, any increase or change pursuant to any employee
compensation or bonus plan or (ii) established or increased or promised to
increase any material benefits under any such employee plan, in either case
except as required by Law;

                          (l)   written down or written up (or failed to write
down or write up in accordance with GAAP consistent with past practice) the
value of any tangible or intangible assets or any receivables;

                          (m)   amended, terminated, canceled or compromised
any material claims or waived any other material rights;

                          (n)   made any change in any method of accounting or
accounting practice or policy other than such changes as are required by GAAP;

                          (o)   accelerated or discounted the collection of
accounts receivable, or delayed the payment of accounts payable; and the
collection and payment of all such receivables and accounts payable,
respectively, have at all times been made in the ordinary course of business
consistent with past practice;

                          (p)   failed, in any material respect, to maintain
the TV Production Assets in accordance with good business practice and in good
operating condition and repair;










                                       24
<PAGE>   26
                          (q)   failed to renew any insurance policy that is
scheduled to terminate or expire within forty-five (45) calendar days of the
Effective Time;

                          (r)   incurred any indebtedness for borrowed money;

                          (s)   terminated, discontinued, closed or disposed of
any facility or other material business operation, or laid off employees;

                          (t)   suffered any casualty loss or damage with
respect to any of the TV Production Assets which, in the aggregate, have a
replacement cost of more than Ten Thousand ($10,000) Dollars whether or not
such loss or damage shall have been covered by insurance;

                          (u)   except as contemplated by this Agreement,
entered into or amended in any material respect any employment agreement or
adopted, or amended in any material respect, any collective bargaining
agreement or any employee benefit plan (as such term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA");

                          (v)   incurred any damage, destruction or similar
loss, whether or not covered by insurance, materially affecting the business,
assets, properties or business prospects of TPEG or of any of its subsidiaries;

                          (w)   entered into any other transaction of a
material nature other than in the ordinary course of business;

                          (x)   entered into any agreement or understanding
with any of its directors, officers or beneficial owners of more than 5% of the
outstanding TPEG Common Stock or any of their respective Affiliates (as defined
below);

                          (y)   issued or sold any Common Stock or shares or
units of capital stock of any other class, notes, bonds, or other equity or
debt securities, or any options, warrants or other rights to purchase or which
are convertible into the same, or entered into any written or oral agreement,
commitment or understanding with respect to the issuance and/or sale thereof,
except as contemplated by this Agreement and the Other Merger Agreements; or

                          (z)   declared, set aside or paid any dividend
(except for quarterly dividends required to be paid by TPEG on its outstanding
Series A Stock), or made any other distribution on its capital stock or
redeemed, purchased or acquired any shares or units thereof or entered into any
agreement in respect of any of the foregoing;

                          (aa)  amended its Certificate of Incorporation or
By-laws;

                          (bb)  (i) purchased, sold, assigned or transferred
any material tangible or intangible assets or any material patent, trademark,
trade name, copyright, license, franchise, design











                                       25
<PAGE>   27

or other intangible assets or property, (ii) mortgaged, pledged or granted or
suffered to exist any lien or other encumbrance or charge on any material
assets or properties, tangible or intangible, or (iii) waived any rights of
material value or canceled any material debts or claims;

                          (cc)  incurred any contractual obligation or
liability (absolute or contingent) in excess of One Hundred Thousand ($100,000)
Dollars in the aggregate in one or a series of related transactions, except
current liabilities and obligations incurred in the ordinary course of
business, made any capital improvement in excess of One Hundred Thousand
($100,000) Dollars or paid any liability or obligation (absolute or contingent)
in excess of One Hundred Thousand ($100,000) Dollars, other than current
liabilities and obligations incurred in the ordinary course of business
consistent with and in accordance with past practices; or

                          (dd)  agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 3.7 or granted any options to
purchase, rights of first refusal, rights of first offer or any other similar
rights or commitments with respect to any of the actions specified in this
Section 3.7, except as expressly contemplated by this Agreement.

                 3.8      Taxes.  TPEG has duly filed all federal, state,
county, local, foreign and other income, excise, sales, customs, franchise,
use, license, real and personal property, withholding, social security and
other tax (the "Taxes") and information returns and reports required to have
been filed by TPEG and its Subsidiaries to the date hereof, other than income
tax returns for the year ended June 30, 1997, and has paid (or, in the case of
withholding taxes and obligations, has withheld and paid over as required) all
Taxes (including interest, penalties and additions thereto, if any) shown on
such returns or reports to be due or claimed to be due prior to the date hereof
to any federal, state, county, local, foreign or other Governmental Authority.
TPEG has paid or made adequate provision in the TPEG Financial Statements for
all Taxes (including interest, penalties and additions thereto, if any) payable
by TPEG with respect to all periods to and including March 31, 1997.  TPEG does
not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected in
the TPEG Financial Statements and, to the best knowledge of TPEG, there is no
basis for any additional material claims or assessments for Taxes other than
with respect to liabilities for Taxes that may have accrued since March 31,
1997 in the ordinary course of business of TPEG and its subsidiaries or
liabilities for Taxes contested in good faith, which are described on Schedule
3.8.  No federal income tax returns of TPEG have been examined by the IRS and
no proposed additional Taxes, interest or penalties have been asserted with
respect to years not examined.  True copies of the federal, state and local
income tax returns of TPEG for the years ended June 30, 1996 and June 30, 1995
have been heretofore delivered or made available to GJE.  No consent has been
filed by TPEG pursuant to Section 341(f) of the Code.

                 3.9      Real Property.  (a) Schedule 3.9 sets forth a true,
complete and correct listing of  all leases covering the real property in which
TPEG or any subsidiary of TPEG holds the lessee's interest (collectively, the
"TPEG Leases").  Except as set forth in Schedule 3.9, TPEG or a subsidiary of
TPEG holds the lessee's interest in all of the TPEG Leases, free and clear of
all











                                       26
<PAGE>   28

material liens and encumbrances.  Neither TPEG nor any of its subsidiaries owns
any real property.

                          (b)   Schedule 3.9 sets forth a true, complete and
correct listing in all material respects of (i) all leases to which any of the
TPEG Leases are subordinated (collectively, the "Underlying TPEG Leases"), and
(ii) all subleases of any of the TPEG Leases (collectively, the "TPEG
Subleases").  True, complete and correct copies of each TPEG Lease, Underlying
TPEG Lease and TPEG Subleases have been delivered or made available by TPEG to
GJE.

                          (c)   Except as set forth in Schedule 3.9, TPEG has
no knowledge of and has not received any notice of default from the holder of
the lessor's interest in any TPEG Lease or Underlying TPEG Lease or the holder
of the lessee's interest in any TPEG Subleases that has not heretofore been
cured.

                          (d)   Except as set forth in Schedule 3.9, neither
the premises leased under any TPEG Lease, the use thereof by TPEG or a
subsidiary of TPEG, nor any condition existing with respect thereto, violates
any laws, ordinances, regulations or requirements (including, without
limitation, zoning and use regulations and building department requirements)
affecting the same, which violation would materially interfere with the
operation or use of such premises or materially diminish the value thereof.

                          (e)   Except as set forth in Schedule 3.9, to the
best knowledge of TPEG, no Person has any interest in the lessee's interest
under any TPEG Lease, Underlying TPEG Lease or TPEG Sublease or has any right
or option to acquire same or any part thereof.

                          (f)   Except as set forth in Schedule 3.9, TPEG has
no knowledge and has received no notice of any condemnation proceeding
affecting any premises leased under any TPEG Lease.

                          (g)   As of the date of this Agreement, TPEG has no
knowledge that any Person has paid or been paid any money, or has made or
contemplated making any agreement, written or oral, with respect to premises
leased under any TPEG Lease, Underlying TPEG Lease or TPEG Sublease or portion
thereof which would preclude, be in competition with or otherwise interfere
with the continued use and occupancy of such property by TPEG or could
adversely affect the ability of the lessee thereof to renew any TPEG Lease.

                          (h)   Hazardous materials (as such term is defined in
any law applicable to TPEG or its properties or assets) have not been released
or treated on any property leased, or, to the best of TPEG's knowledge,
occupied or used by TPEG in its television production or other business
activities  and have not been generated, used, handled or stored on, or
transported to or from, any such property.  TPEG has disposed of all wastes,
including those wastes containing hazardous materials, in compliance with all
applicable laws and the Permits.  There are no past, pending or, to the best of
TPEG's knowledge, threatened claims against TPEG or any property covered by any
TPEG Lease which relate to any environmental matters and TPEG has not received
any written













                                       27
<PAGE>   29

notice of such claims.  No property leased, or occupied or used from time to
time by TPEG in its production or other activities by TPEG and, to the best of
TPEG's knowledge, no property adjoining any such property, is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA") or on
the Comprehensive Environmental Response, Compensation and Liability
Information System, as updated through the date hereof ("CERCLIS") or any
analogous state list of sites requiring investigation or cleanup and TPEG has
not transported or arranged for the transportation of any hazardous materials
to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the CERCLIS or any analogous state list.

                          (i)   There are not now and never have been any
underground storage tanks located on any real property leased or, to the best
knowledge of TPEG, occupied or used by TPEG from time to time in its television
production or other activities.  TPEG has not installed any such underground
storage tanks on any real property leased or occupied by it.

                 3.10     Litigation.  Schedule 3.10 sets forth a true,
complete and correct listing of all pending actions, suits or proceedings to
which TPEG or any subsidiary of TPEG is a party.  Except as disclosed in
Schedule 3.10, there are no actions, suits or proceedings or investigations
pending or, to the best knowledge of TPEG, threatened against or adversely
affecting the business, operations or financial condition of TPEG and its
subsidiaries, taken as a whole, at law or in equity in any court or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality or any arbitrator.  Neither TPEG nor
any subsidiary of TPEG is in default in respect of any judgment, order, writ,
injunction or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency, authority or
instrumentality.

                 3.11     Labor Relations.  Schedule 3.11 contains a correct
and complete list of all collective  bargaining, employment, labor and similar
agreements (other than the "TPEG Benefit Plans" defined and described in
Section 3.13),  whether written or oral, to which TPEG or any subsidiary of
TPEG is a party or by which it is or they are bound.  True and correct copies
of all such agreements have been supplied to GJE.  TPEG and each subsidiary of
TPEG have complied with their respective obligations related to, and are not in
default under, any written or oral employment agreements, collective bargaining
agreements or any written or oral personnel policies to which they are parties
or by which they are bound.  TPEG and each subsidiary of TPEG are in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and are not and have not
engaged in any unfair labor practices.  Except as set forth in Schedule 3.11:

                 (a)      there is no unfair labor practice charge or complaint
against TPEG or any subsidiary of TPEG pending or, to the best knowledge of
TPEG, threatened before the National Labor Relations Board or any other
Governmental Authority;














                                       28
<PAGE>   30

                 (b)      there has not occurred nor, to the best knowledge of
TPEG, has there been threatened, a labor strike, request for representation,
work slowdown or stoppage or lockout;

                 (c)      there has not been any representation claim or
petition pending before the National Labor Relations Board respecting any
employees of TPEG or any subsidiary of TPEG during the past five (5) years;

                 (d)      no grievance nor any arbitration proceeding arising
out of any collective bargaining agreement to which TPEG or any TPEG subsidiary
is a party is pending;

                 (e)      no charges with respect to or relating to TPEG or any
TPEG subsidiary are pending before the Equal Employment Opportunity Commission
or any state, local or foreign agency responsible for the prevention of
unlawful employment practices;

                 (f)      no claim relating to employment or loss of employment
with TPEG or any TPEG subsidiary is pending in any federal, state or local
court or in or before any other adjudicatory body and, to the best knowledge of
TPEG, no such claims has been threatened;

                 (g)      neither TPEG nor any TPEG subsidiary has received
written notice of the intent of any federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws, rules or
regulations to conduct an investigation of or relating to TPEG, and, to the
best knowledge of TPEG, no such investigation is in progress;

                 (h)      TPEG and each subsidiary of TPEG have paid in full to
all of its employees, or adequately accrued for in accordance with GAAP, all
wages, salaries, commissions, bonuses, benefits and other compensation due to
or on behalf of such employees;

                 (i)      there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or, to the best
knowledge of TPEG, threatened before any Governmental Authority with respect to
any Persons currently or formerly employed by TPEG or any subsidiary of TPEG;
and

                 (j)      neither TPEG nor any subsidiary of TPEG is a party
to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices.

                 3.12     Permits; Compliance with Laws.  TPEG has all material
permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory authorities which are required to conduct the
business of TPEG and its subsidiaries as presently conducted.  All such
permits, licenses, orders and approvals are in full force and effect and, to
the best knowledge of TPEG, no suspension or cancellation of any of them is
threatened.  Except as set forth in Schedule 3.12, none of such permits,
licenses, orders or approvals will be adversely affected by the consummation of
the Merger.  TPEG and its subsidiaries are in compliance in all material
respects





                                       29
<PAGE>   31

with the rules and regulations of all governmental agencies having authority
over TPEG and its subsidiaries, including, without limitation, agencies
concerned with occupational safety, environmental protection and employment
practices, and neither TPEG nor any subsidiary of TPEG has received notice of
violation of or failure to comply with any such rules or regulations within the
last three years, the failure to comply with which could have a material
adverse effect on the financial condition, business or operations of TPEG and
its subsidiaries, taken as a whole.

                 3.13     Employee Benefit Plans.  (a) Schedule 3.13 sets forth
a true, complete and correct listing of all employees benefit plans (as defined
in Section 3(3) of ERISA) maintained by TPEG or any subsidiary of TPEG (the
"TPEG Benefit Plans").  True, correct and complete copies of the TPEG Benefit
Plans have heretofore been delivered to GJE.

                          (b)   None of the TPEG Benefit Plans is a
multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) Subject to Title IV of ERISA.  None of the TPEG Benefit
Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates TPEG to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control" within the meaning of such term under Section 280G of the Code.  None
of the TPEG Benefit Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of TPEG.  Each of the TPEG Benefit Plans is Subject only to the laws
of the United States or a political Subdivision thereof.  TPEG does not
sponsor, maintain or contribute to a voluntary employees' beneficiary
association intended to be exempt under Section 501(c)(9) of the Code.

                          (c)   Each TPEG Benefit Plan is now and always has
been operated in all material respects in accordance with the requirements of
all applicable laws, including, without limitation, ERISA and the Code, and all
persons who participate in the operation of such TPEG Benefit Plans and all
Plan "fiduciaries" (within the meaning of Section 3(21) of ERISA) have always
acted in accordance with all applicable laws, including, without limitation,
ERISA and the Code.  TPEG has performed all obligations required to be
performed by it under, is not in any respect in material default under or in
violation of, and has no knowledge of any default or violation by any party to,
any TPEG Benefit Plan.  No legal action, suit or claim is pending or threatened
with respect to any TPEG Benefit Plan (other than claims for benefits in the
ordinary course) and no fact or event is known that could give rise to any such
action, suit or claim.

                          (d)   Each TPEG Benefit Plan which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any TPEG Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event is known to have occurred since the date of such determination
letter from the IRS to materially adversely affect the qualified status of any
such TPEG Benefit Plan or the exempt status of any such trust.





                                       30
<PAGE>   32
                          (e)   There has been no material prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any TPEG Benefit Plan.  TPEG has not incurred any
material liability for any penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the Code or any liability under Section 502 of ERISA,
and no fact or event exists which could give rise to any such material
liability. TPEG has not incurred any liability under, arising out of or by
operation of Title IV of ERISA including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan Subject to Title IV of ERISA or (ii) the withdrawal from any
multi-employer plan, and no fact or event exists which could give rise to any
such liability.  No complete or partial termination has occurred within the
five years preceding the date hereof with respect to any TPEG Benefit Plan.

                          (f)   All contributions, premiums or payments
required to be made with respect to any TPEG Benefit Plan have been made on or
before their due dates and TPEG has no unfunded liabilities or obligations with
respect to or arising out of any TPEG Benefit Plan.  All such contributions
have been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and no fact or event is known
to exist which could give rise to any such challenge or disallowance.

                          (g)   Each of the guaranteed investment contracts and
other funding contracts with any insurance company that are held by any of the
TPEG Benefit Plans and any annuity contracts purchased by (i) any of the TPEG
Benefit Plans or (ii) any pension benefit plan (as defined in Section 3(2) of
ERISA) that provided benefits to any current or former employees of TPEG was
issued by an insurance company which carried the highest rating from each of
the nationally recognized rating agencies, as of the date such contract was
issued, the date hereof and the Effective Time.

                 3.14     Patents, Trademarks, Etc.  Schedule 3.14 sets forth a
true, complete and correct listing of all material patents, trade names,
trademarks, service marks, copyrights, pending applications for any of the
foregoing, and other proprietary rights of TPEG and its subsidiaries and all
agreements for the licensing thereof.  Except as set forth in Schedule 3.14,
TPEG and/or its subsidiaries own, or possess adequate rights to use, all
material patents, trade names, trademarks, copyrights, inventions, processes,
designs, formulae, trade secrets, know how and other proprietary rights
necessary for the conduct of its business, with no known infringement by TPEG
or any of its subsidiaries of the rights (asserted or unasserted) of any Person
arising by reason of any of the foregoing.  TPEG has no knowledge of any
infringement by any third party upon any patent, trade name, trademark or
copyright owned or used by TPEG or any of its subsidiaries, and TPEG has not
taken or omitted to take any action which would have the effect of waiving any
of its rights thereunder, in each case, except where such infringement or
waiver would not have a material adverse effect on the business, prospects,
condition (financial or other) or results of operations of TPEG and its
subsidiaries, taken as a whole.

                 3.15     Insurance.  TPEG has made available to GJE complete
and correct copies of all insurance policies maintained by TPEG, together with
all riders, endorsements and amendments





                                       31
<PAGE>   33

thereto.  All such policies are in full force and effect, and all premiums due
thereon have been paid.  Such insurance policies provide TPEG and its
subsidiaries with adequate insurance (both as to type and amount) with respect
to risks and perils of business of the size and type carried on by TPEG and its
subsidiaries as of the date hereof.  TPEG and its subsidiaries have complied in
all material respects with the provisions of all such policies.

                 3.16     Compensation to be Paid In Connection With the
Merger.   Except for the engagement of Sirius pursuant to the Sirius Agreement,
neither TPEG nor any subsidiary or Affiliate of TPEG has engaged or employed
any investment banking firm, broker, finder or intermediary in connection with
the transactions contemplated by this Agreement who might be entitled to any
fee, commission or other compensation in connection with or upon consummation
of the Merger.  TPEG and all subsidiaries of TPEG hereby, jointly and severally
agree to indemnify, defend and hold GJE and the Stockholders harmless from and
against any and all claims, liabilities or obligations with respect to any
additional or other finder's or similar fees, commissions or expenses asserted
or claimed by Sirius, other than pursuant to the Sirius Agreement,  or by any
other Person on the basis of any act or statement alleged to have been taken or
made by TPEG or any of its officers, directors or other Affiliates.

                 3.17     Disclosure.  The representations and warranties of
TPEG set forth in this Agreement, the certificates, statements and other
information furnished to GJE, Grosso and Jacobson in writing by or on behalf of
TPEG in connection with the transactions contemplated hereby, including the
Schedules hereto, do not as of the date of this Agreement, and as of the
Effective Time shall not, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.  TPEG
knows of no fact or condition which materially adversely affects, or in the
future may (so far as TPEG can now reasonably foresee) materially adversely
affect the condition (financial or otherwise), properties, assets, liabilities,
business or operations of TPEG which has not been set forth herein or disclosed
to GJE in writing with reference to this Agreement.



                          ARTICLE 4.  REPRESENTATIONS AND WARRANTIES
                                      REGARDING TPEG SUB I

                 TPEG and TPEG Sub I jointly and severally represent and
warrant to GJE, Grosso and Jacobson as follows:

                 4.1      Organization.  TPEG Sub I is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and is a wholly owned subsidiary of TPEG.

                 4.2      Authority Relative to this Agreement.  TPEG Sub I has
the requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder.  The





                                       32
<PAGE>   34

execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by TPEG Sub I's
Board of Directors and approved by its sole stockholder, TPEG, and no other
corporate proceedings on the part of TPEG Sub I are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby.

                 4.3      Binding Agreement.  This Agreement has been duly and
validly executed and delivered by TPEG Sub I and constitutes the valid and
binding agreement of TPEG Sub I, enforceable against TPEG Sub I in accordance
with its terms subject to the laws of bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors generally or limitations upon
equitable remedies.

                 4.4      Special Purpose Subsidiary.  TPEG Sub I has been
organized by TPEG solely for the purpose of entering into this Agreement and
consummating the Merger.  TPEG Sub I has not engaged, and prior to the Merger
will not engage, in any other business or activity.


             ARTICLE 5.  COVENANTS RELATING TO CONDUCT OF BUSINESS

                 Covenants of GJE, Grosso and Jacobson  and TPEG and TPEG Sub
I.  During the period from the date of this Agreement and continuing until the
Effective Time, GJE, and Grosso and Jacobson hereby further jointly and
severally agree and TPEG, and TPEG Sub I hereby further jointly and severally
agree that, except as expressly contemplated or permitted by this Agreement or
the agreements governing the Other Mergers, or to the extent that the other
party or parties shall otherwise consent in writing:

                 5.1      Ordinary Course.  GJE, TPEG and TPEG Sub I shall each
carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all reasonable
efforts to preserve intact its present business organization, maintain its
rights and franchises and preserve its relationships with writers, directors,
producers and others involved in developing and/or producing television movies,
series or mini-series and licensors or licensees or distributors or purchasers
of such television movies, series or mini-series, (including networks,
distributors and other purchasers of such products) and others having business
dealings with GJE or TPEG or any of its subsidiaries, as the case may be, to
the end that their respective goodwill and ongoing businesses shall not be
impaired in any material respect at or after the Effective Time.  No party
shall (i) enter into any new material line of business or acquire any other
Person engaged in any such new line of business, (ii) change its business
policies in any respect which is material to such party, (iii) enter into any
new lease or materially modify any existing lease or close any existing office
or other facility without giving the other party prior written notice thereof,
or (iv) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities incurred or committed to in the ordinary course of
business consistent with past practice and not exceeding, in any case, the sum
of One Hundred Thousand ($100,000) Dollars.












                                       33
<PAGE>   35
                 5.2      Dividends; Changes in Stock.  Neither GJE, TPEG, TPEG
Sub I or any other subsidiary of TPEG shall, or shall propose to, (i) declare
or pay any dividends on, or make other distributions in respect of, any shares
of its capital stock of any class, except for required quarterly dividends on
TPEG's outstanding Series A Stock, (ii) reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire, any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.

                 5.3      Issuance of Securities.  Other than as contemplated
by this Agreement, or the agreements governing the Other Mergers, neither TPEG,
TPEG Sub I or GJE shall issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect
to any of the foregoing, other than the issuance by TPEG of shares of TPEG
Common Stock, upon the exercise of outstanding stock options or warrants or
conversion of outstanding shares of Series A Stock referred to elsewhere in
this Agreement, in each case outstanding on the date of this Agreement and in
each case in accordance with their existing terms and conditions.

                 5.4      Governing Documents.  Except as contemplated by this
Agreement or the agreements governing the Other Mergers, neither GJE, TPEG,
TPEG Sub I or any other subsidiary of TPEG shall amend or propose to amend its
Certificate of Incorporation or By-laws as in effect as of the date hereof.

                 5.5      No Solicitations.  From the date hereof through
September 30, 1997, none of GJE, Grosso, Jacobson, TPEG, TPEG Sub I or any
other subsidiary of TPEG shall, or shall authorize or permit any of its
respective officers, directors, employees or Affiliates or any investment
banking firms, financial advisors, attorneys, accountants or other
representatives or agents retained by any of such parties to, solicit or
encourage (including by way of furnishing nonpublic information), or take any
other action to facilitate any inquiries or the making of any proposals which
constitute, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or agree to or endorse any Competing Transaction, or
participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal.  Each of
GJE, Grosso, Jacobson and TPEG shall promptly advise the other or others both
orally and in writing of any such inquiries or proposals.  As used in this
Agreement, "Competing Transaction" shall mean any proposed tender or exchange
offer, sale of assets, proposal for merger, consolidation or other business
combination involving GJE, TPEG or TPEG Sub I or any other subsidiary of TPEG
or any proposal or offer to acquire directly or through the sale or grant of
any option, convertible security or any other right to purchase (by way of
exercise, exchange or conversion of such option, convertible security or right)
more than five (5%) percent of the total outstanding capital stock, or any
substantial portion of the assets, of GJE, TPEG,  TPEG Sub I or any other
subsidiary of TPEG, as the case may be, other than pursuant to the transactions
contemplated by this Agreement.  This Section 5.5 shall not prohibit disclosure
by TPEG that is required in any filing by TPEG with the SEC or the NASDAQ
SmallCap Market or as otherwise under applicable law, in the opinion of the



















                                       34
<PAGE>   36

Board of Directors of TPEG, as of the date of such filing or such other
required disclosure as to the transactions contemplated hereby or as to any
Competing Transaction.  Notwithstanding the foregoing, the executive officers
and directors of TPEG, as the case may be, shall have the right, in the
exercise of their fiduciary duties, solely to respond to unsolicited bona fide
written offers submitted by any third party with respect to any potential
Competing Transaction by furnishing information and data concerning TPEG and
its subsidiaries, as the case may be.

                 5.6      No Dispositions.  Neither TPEG, TPEG Sub I or GJE
shall sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (other than the sale or
license or distribution of television movies, series or mini-series, or
performance of services in the ordinary course of business) which are material,
individually or in the aggregate, to such party.

                 5.7      Indebtedness.  Neither TPEG, TPEG Sub I, or GJE shall
incur any short or long-term indebtedness for borrowed money or guarantee any
such short or long-term indebtedness or issue or sell any short or long-term
debt securities or warrants, options or other rights to acquire any short or
long-term debt securities of such party or guarantee any short or long-term
debt securities other than (i) in replacement of existing or maturing debt or
(ii) in the ordinary course of business consistent with past practice.

                 5.8      Other Actions.  Neither TPEG, TPEG Sub I or GJE shall
take any action that would or reasonably might be expected to, result in any of
their respective representations and warranties set forth in this Agreement
being or becoming untrue in any material respect or in any of the conditions to
the Merger set forth in Article 7 hereof not being satisfied.

                 5.9      Advice of Changes; Government Filings.  Each of the
parties shall confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a material adverse effect on such party or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of such party contained herein.  TPEG shall (i) file all reports
required to be filed with the SEC between the date of this Agreement and the
Effective Time and (ii) and shall deliver to the other party copies of all such
reports promptly after the same are filed.  Each party shall promptly provide
the other (or its counsel) with copies of all other filings made by such party
with any state or federal governmental agency or authority in connection with
this Agreement, the Merger or the transactions contemplated hereby or thereby.

                 5.10     Accounting Methods.  Neither TPEG, TPEG Sub I  or GJE
shall change their respective methods of accounting in effect at the date
hereof except as required by changes in generally accepted accounting
principles as concurred in by the independent auditors of GJE or TPEG, as the
case may be.  Neither GJE nor TPEG will change their respective fiscal years
without the consent of the other party.

















                                       35


<PAGE>   37
                 5.11     Benefit Plans.  Without the prior written consent of
the other party or parties, neither GJE, TPEG, TPEG Sub I or any other
subsidiary of TPEG shall (i) enter into, adopt, amend (except as may be
required by law) or terminate any employee benefit plan or any agreement,
arrangement, plan or policy between such party and one or more of its directors
or officers, (ii) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to such party, increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement as in
effect on the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock units or performance units
or shares) or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing, or (iii) except for the employment agreements between
the Surviving Corporation and each of Grosso and Jacobson and the extension of
the duration of the employment agreements between TPEG and Irwin Meyer and
Arthur Bernstein and grants of stock options to GJE employees at the Effective
Time described in Section 6.8 hereof, enter into or renew any contract,
agreement, commitment or arrangement providing for the payment to any director,
officer or employee of such party of compensation or benefits contingent, or
the terms of which are materially altered, upon the occurrence of any of the
transactions contemplated by this Agreement.

                 5.12     Publicity.  Except as otherwise required by law or
the rules of the NASDAQ SmallCap Market, so long as this Agreement is in
effect, neither GJE, Grosso, Jacobson or TPEG shall issue or cause the
publication of any press releases or other public announcements with respect to
the transactions contemplated by this Agreement without the consent of the
other party or parties, which consent shall not be unreasonably withheld or
delayed.

















                                       36
<PAGE>   38
                       ARTICLE 6.  ADDITIONAL AGREEMENTS

GJE and Grosso and Jacobson hereby further jointly and severally agree, and
TPEG and TPEG Sub I, hereby further jointly and severally agree as follows:

                 6.1      Appraisals.  The Board of Directors of TPEG (the
"TPEG Board") shall has received appraisals from the following reputable,
independent appraisers with respect to the contracts, assets and other
properties of GJE as follows:

                          (a)   The aggregate value of the right, title and
interest of GJE in the television movies series and mini-series as appraised by
Abrams Consultants, Inc.; and

                          (b)   The aggregate value of GJE in costumes, props
and related tangible properties as appraised by Abrams Consultants, Inc.

                 6.2      GJ Financial Statements.  GJE shall deliver to TPEG
the GJ Financial Statements, including the audited financial statements
prepared and reported upon by Rosenberg, Rich, Baker, Berman & Company and the
unaudited comparative GJ Financial statements for the six months ended May 31,
1997 by not later than September 30, 1997 so as to enable TPEG to comply in a
timely manner with its reporting obligations under the Securities Exchange Act
of 1934, as amended, and rules and regulations of the SEC thereunder.  The GJ
Financial Statements shall (a) be prepared and presented in accordance with
GAAP and shall fairly present the financial condition of GJE as of the dates
therein set forth and GJE's results of operations for the periods reported
upon, and (b) be presented in such form as shall comply with relevant
provisions of Item 2 of SEC Form 8-K, Item 310 of SEC Regulation S-B and such
other SEC regulations as are relevant to and govern the content, form and
filing by TPEG of such GJ Financial Statements.

                 6.3      Access to Information; Confidentiality.  Upon
reasonable notice, GJE and TPEG shall each afford to the officers, employees,
accountants, counsel and other representatives of the other during normal
business hours during the period prior to the Effective Time, access to all its
properties, books, contracts, commitments and records and, during such period,
each of GJE and TPEG shall make available to the other all other information
concerning the business, properties and personnel as such other party may
reasonably request.  Each of the parties will hold any such information
obtained from the other which is nonpublic in confidence except to the extent
that such information (a) is or becomes publicly known through sources other
than any of the parties to the Agreement or (b) is required to be disclosed in
response to legal process or pursuant to the requirements of federal securities
or other law.  No investigation by either GJE, Grosso or Jacobson or by TPEG
shall affect the representations and warranties of the other or others, except
to the extent such representations and warranties are by their terms qualified
by disclosures made to such other party.

















                                       37

<PAGE>   39
                 6.4      Further Covenants of Grosso and/or Jacobson

                          (a)   Lawrence S. Jacobson shall not directly or
indirectly divert any television, video or other film production, distribution
or related business activities or operations to Ontario Corporation or to any
successor or assignee thereof except as set forth in the employment agreement
between TPEG and Jacobson in the form annexed hereto as Exhibit "F2"  and the
production agreement between TPEG and Lawrence S. Jacobson Associates, Inc. in
the form annexed hereto as Exhibit "B2 "; and

                          (b)   In the event that both Grosso and Jacobson
cease to be employed by TPEG or by any of its subsidiaries, but continue to
own, beneficially, and as a group at least twenty-five (25%) percent of the
total number of Shares of TPEG Common Stock issued to both of them pursuant to
the Merger and the Other Mergers TPEG shall cause one (1) designee of both
Grosso and Jacobson (who may be either Grosso or Jacobson) to continue to serve
as a member of the TPEG Board subject to the condition that both Grosso and
Jacobson shall (i) remain subject to the obligation to retain on a confidential
basis all non-public information and data concerning TPEG and/or any of its
subsidiaries of which Grosso or Jacobson, as the case may be, becomes apprised
in his capacity as a member of the TPEG Board and (ii) not directly or
indirectly appropriate or seek to appropriate, personally or for the benefit of
any Person in which Grosso and/or Jacobson has any equity interest or by which
either Grosso or Jacobson is employed, any business opportunities of which
Grosso or Jacobson, as the case may be, shall become apprised in his capacity
as a member of the TPEG Board, all as more fully described in the
Confidentiality and Standstill Agreement annexed hereto as  Exhibit "C".

                 6.5      Further Covenants of TPEG.

                          (a)   Subject to the indemnification of TPEG by GJE,
Grosso and Jacobson set forth in Section 2.21 hereof, TPEG shall pay the Sirius
fee pursuant to the Sirius Agreement;

                          (b)   Upon the consummation of the Merger and subject
to the provisions of Articles 9 and 10 hereof, TPEG shall bear the expense of
all legal fees, accounting and auditing fees and disbursements incurred by TPEG
and by each of GJE, Grosso and Jacobson in connection with this Agreement and
the Other Mergers;

                          (c)   TPEG shall extend through the fifth (5th)
anniverssary of the Effective Time the respective employment agreements of
Irwin Meyer, Chief Executive Officer of TPEG ("Meyer") and Arthur Bernstein,
Senior Vice President of TPEG ("Bernstein"), such extentions shall be in the
form of Exhibits "D1" and "D2" annexed hereto; and

                          (d)   TPEG shall extend through the fifth (5th)
anniverssary of the Effective Time the existing production agreement between
TPEG and Mountaingate Productions LLC ("Mountaingate"), such extension shall be
in the form of Exhibit "E" annexed hereto.




















                                       38
<PAGE>   40

                 6.6      Stockholders Meeting; Approval by Stockholders.  (a)
GJE shall call a meeting of its stockholders (the "GJE Stockholders Meeting"),
to be held by not later than September 30, 1997 for the purpose of voting upon
the approval of this Agreement and of the Merger and the other transactions
contemplated hereby.  GJE will, through its Board of Directors, recommend to
its stockholders approval of such matters.

                          (b)  Each of Messrs. Grosso and Jacobson shall vote,
or cause to be voted, all shares of GJE Common Stock held by each of them, of
record and/or beneficially, as of the record date for the determination of GJE
stockholders entitled to notice of and to vote at the GJE Stockholders'
Meeting, for the approval of this Agreement, the Merger and all of the other
transactions contemplated hereby.

                 6.7      Conditions Precedent; Agreements and Other Mergers.
The parties named in Article 7 of this Agreement shall execute and deliver the
agreements which constitute conditions precedent to the Merger at or prior to
the Effective Time, and both of the Other Mergers shall have been consummated
at or prior to the Effective Time.

                 6.8      Legal Conditions to Merger.  Each of TPEG, TPEG Sub
I, GJE and Grosso and Jacobson shall use all reasonable efforts (i) to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Merger and
to consummate the transactions contemplated by this Agreement, (including the
satisfaction of all of the conditions precedent set forth in Article 7 hereof),
and (ii) to obtain (and to cooperate with the other party in order to obtain)
any consent, authorization, order or approval of, or any exemption by, any
governmental entity and or any other public or private third party which is
required to be obtained or made by such party in connection with the Merger and
the transactions contemplated by this Agreement.

                 6.9      TPEG Stock Options.  (a) At the Effective Time, the
TPEG Board shall grant new incentive stock options (within the meaning of
Section 422 of the Code) to purchase shares of TPEG Common Stock to the
executives and key employees of GJE identified in Schedule 6.9 hereto  in
connection with their continuing employment relationships with the Surviving
Corporation following the Merger.

                          (b)   TPEG shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of TPEG Common Stock for
delivery upon exercise of the TPEG stock options described in paragraph (a) of
this Section 6.9.

                 6.10     NASDAQ and BSE Listing.  TPEG shall use its best
efforts to have the shares of TPEG Common Stock to be issued pursuant to the
Merger listed on the NASDAQ SmallCap Market and the Boston Stock Exchange as of
the Effective Time or as soon thereafter as practicable.  TPEG shall file with
the NASDAQ SmallCap Market, the Boston Stock Exchange and with the SEC such
applications, reports and such other documents and shall take such other
actions as are reasonably required to effect such listing of such shares of
TPEG Common Stock on the NASDAQ















                                       39

<PAGE>   41
SmallCap Market and the Boston Stock Exchange.

                        ARTICLE 7.  CONDITIONS PRECEDENT

                 7.1      Conditions to Each Party's Obligation to Effect the
Merger.  The respective obligations of each of the parties to effect the Merger
shall be subject to the satisfaction prior to or at the Effective Time of the
following conditions:

                          (a)   Stockholder Approval.  This Agreement shall
have been approved and adopted by the affirmative vote of the holders of all of
the outstanding shares of GJE Common Stock entitled to vote thereon.

                          (b)   The Other Mergers among TPEG, the other
subsidiaries of TPEG and GJP and GJM, respectively, shall each have been
consummated in accordance with the Other Merger Agreements.

                          (c)   Other Approvals.  All authorizations, consents,
or approvals of, and all expirations or waiting periods imposed by, any third
parties, including the consent of Joseph Stevens & Company L.P. (collectively,
the "Consents"), which are necessary for the consummation of the Merger, other
than immaterial Consents, the failure to obtain which would have no material
adverse effect on the business, business prospects or financial condition of
GJE, the Surviving Corporation, TPEG, TPEG Sub I or any other subsidiary of
TPEG shall have been received.  TPEG shall have received all state securities
or blue sky permits and other authorizations required, if any, to issue the
shares of TPEG Common Stock to be issued in exchange for the GJE Common Stock
and to consummate the Merger.

                          (d)   No Injunctions or Restraints; Illegality.  No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding by any governmental entity seeking any of the foregoing
shall be pending.  There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.

                          (e)   Burdensome Conditions.  There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, by any federal or state
governmental entity which imposes any condition or restriction upon GJE, the
Surviving Corporation or TPEG which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable, in the reasonable judgment of such party,
the consummation of the Merger.

                          (f)   Board Designees.  The respective Boards of
Directors of GJE and TPEG shall have each submitted their list of TPEG Board
Designees and shall have agreed in writing to their joint TPEG Board Designee
in accordance with the provisions of Section 1.4 by not less than three (3)
days prior to the Effective Time.


















                                       40

<PAGE>   42

                          (g)   Executive Employment Agreements.  Each of
Grosso and Jacobson shall have executed and delivered to TPEG employment
agreements with the Surviving Corporation in the forms Exhibits "F1" and "F2,"
annexed hereto (the "Employment Agreements").

                          (h)   Production Agreements.  Each of Grosso and
Jacobson and their respective Affiliates shall have executed and delivered to
TPEG production agreements with the Surviving Corporation in the forms Exhibits
"B1" and "B2," annexed hereto (the "Production Agreements").

                          (i)   Confidentiality and Standstill Agreement.  Each
of Grosso and Jacobson shall have executed and delivered to TPEG the
Confidentiality and Standstill Agreement in the form of Exhibit "C" annexed
hereto.

                          (j)   Registration Rights and Stock Disposition
Agreement.  TPEG and each of Grosso and Jacobson shall enter into a
Registration Rights and Stock Dispostion Agreement (the "Stock Disposition
Agreement") whereby (i) Grosso and Jacobson will be entitled to have TPEG
include their respective shares of TPEG Common Stock in registration statements
to be filed by TPEG under the Securities Act of 1933, as amended, and (ii)
Grosso and Jacobson shall each agree not to sell or otherwise dispose of any
shares of TPEG Common Stock issued to each of them pursuant to the Merger
through June 30, 1998, which Stock Disposition Agreement shall be in the form
of Exhibit G annexed hereto.

                 7.2      Conditions to Obligations of TPEG and TPEG Sub I.
The obligations of TPEG and TPEG Sub I to effect the Merger are subject to the
satisfaction of the following conditions by GJE, Grosso and Jacobson unless
waived by TPEG and TPEG Sub I:

                          (a)   Consummation of the Other Mergers.  The Other
Mergers among TPEG, the other subsidiaries of TPEG and GJP and GJM,
respectively, shall each have been consummated in accordance with the Other
Merger Agreements.

                          (b)   Representations and Warranties.  The joint and
several representations and warranties of GJE, Grosso and Jacobson set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the
Effective Time, except as otherwise contemplated by this Agreement, and TPEG
and TPEG Sub I shall have received a certificate signed on behalf of GJE by the
President and Chief Financial Officer of GJE and by each of Grosso and Jacobson
to such effect.

                          (c)   Performance of Obligations of GJE and
Stockholders .  GJE, Grosso and Jacobson shall have performed in all material
respects all of their joint and several obligations required to be performed by
them or any of them under this Agreement, at or prior to the Effective Time,
and TPEG and TPEG Sub I shall have received a certificate signed on behalf of
GJE by the President and Chief Financial Officer of GJE and by each of Grosso
and Jacobson to such effect.















                                       41

<PAGE>   43
                          (d)   Consents Under Agreements.  GJE shall have
obtained the consent or approval of each person (other than the Consents) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of GJE under any loan or credit agreement, note, mortgage, indenture,
lease, license, production, distribution or other agreement (including the
consent of Joseph Stevens & Co., L.P.) or instrument, except those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of TPEG and TPEG Sub I, individually or in the aggregate, have a
material adverse effect on the Surviving Corporation or TPEG or upon the
consummation of the transactions contemplated hereby.

                          (e)   Appraisals.  The Appraisals delivered to the
Board of Directors of TPEG pursuant to the provisions of Section 6.1 hereof
shall not have been withdrawn or so modified, in whole or in part, as to cast
doubt in any material respect upon the valuations set forth in such appraisals.

                          (f)   "Cold Comfort Letter".  GJE shall have
delivered or shall cause to be delivered to TPEG  a "cold comfort" letter of
Rosenberg, Rich, Baker, Berman & Company, GJE's independent accountants, dated
as of a date within two business days prior to the Effective Time and addressed
to TPEG, in form and substance reasonably satisfactory to TPEG and setting
forth the substance and scope of the information set forth in Schedule 7.2(f).

                          (g)   Employment Agreements.  Simultaneous with and
upon the execution of this Agreement, each of Grosso and Jacobson shall have
executed and delivered the Employment Agreements in the forms annexed hereto as
Exhibits "F1" and "F2," respectively, with the Surviving Corporation.

                          (h)   Production Agreements.  Simultaneous with and
upon the execution of this Agreement, each of Grosso and Jacobson and their
respective Affiliates shall have executed and delivered the Production
Agreements in the forms annexed hereto as Exhibits "B1" and "B2," respectively,
with the Surviving Corporation.

                          (i)   Stock Disposition Agreement.  Each of Grosso
and Jacobson shall have executed and delivered the Stock Dispostion Agreement
in the form of Exhibit "G" annexed hereto.

                          (j)   Confidentiality and Standstill Agreement.  Each
of Grosso and Jacobson shall have executed and delivered the Confidentiality
and Standstill Agreement in the form of Exhibit "C" annexed hereto.

                          (k)   No Material Adverse Change.  There shall have
been no material adverse change in the financial condition, results of
operations, assets, liabilities, properties, business or business prospects of
GJE between the date of this Agreement and the Effective Time.
















                                       42

<PAGE>   44
                          (l)   Opinion.  TPEG shall have received the opinion
of Messrs. Kay, Collyer and Boose, LLP, counsel to GJE, Grosso and Jacobson,
dated the Effective Time, substantially in the form of Exhibit "H" annexed
hereto.

                          (m)  TPEG shall have received from GJE any and all
clearance or similar certificates required by any jurisdictions in order
lawfully to consummate the Merger and the transfer of the shares of GJE Common
Stock pursuant thereto

                 7.3      Conditions to Obligations of GJE, Grosso and
Jacobson.  The joint and several obligations of GJE, Grosso and Jacobson to
effect the Merger are subject to the satisfaction of the following conditions
by TPEG and TPEG Sub I unless waived by GJE, Grosso and Jacobson:

                          (a)   Consummation of the Other Mergers.  The Other
Mergers among TPEG, the other subsidiaries of TPEG and GJP and GJM,
respectively, shall each have been consummated in accordance with the Other
Merger Agreements.

                          (b)   Representations and Warranties.  The
representations and warranties of TPEG and of TPEG Sub I set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the
Effective Time, except as otherwise contemplated by this Agreement, and GJE,
Grosso and Jacobson shall have received a certificate signed on behalf of TPEG
by the Chief Executive Officers and Chief Financial Officers of TPEG and TPEG
Sub I to such effect.

                          (c)   Performance of Obligations of TPEG.  TPEG and
TPEG Sub I shall have performed in all material respects all obligations
required to be performed by each of them under this Agreement, at or prior to
the Effective Time, and GJE, Grosso and Jacobson shall have received a
certificate signed on behalf of TPEG and TPEG Sub I by the Chief Executive
Officers and Chief Financial Officers of TPEG and TPEG Sub I to such effect.

                          (d)   Consents Under Agreements.  TPEG shall have
obtained the consent or approval of each person (other than the Consents) whose
consent or approval shall be required with respect to the Merger and in order
to permit the succession by the Surviving Corporation pursuant to the Merger to
any obligation, right or interest of TPEG Sub I under any loan or credit
agreement, note, mortgage, indenture, lease, license, production, distribution
or other agreement (including the consent of Joseph Stevens & Company, L.P.) or
instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of GJE, individually or in the
aggregate, have a material adverse effect on the Surviving Corporation or TPEG
or upon the consummation of the transactions contemplated hereby.

                          (e)   Employment Agreements.  The Surviving
Corporation shall have executed and delivered the Employment Agreements with
each of Grosso and Jacobson in the forms annexed hereto as Exhibits "F1" and
"F2," respectively.




















                                       43

<PAGE>   45
                          (f)   Production Agreements.  The Surviving
Corporation shall have executed and delivered the Production Agreements with
each of Grosso, Jacobson and their respective Affiliates in the forms annexed
hereto as Exhibits "B1" and "B2," respectively.

                          (g)   Extension Agreements.  TPEG and each of Meyer
and Bernstein shall have executed extensions of their respective existing
employment agreements and TPEG and Mountaingate shall have executed an
extension of the existing production agreement as required by Section 6.5
hereof.

                          (h)   Stock Disposition Agreement.  TPEG shall have
executed and delivered the Stock Disposition Agreement with Grosso and Jacobson
in the form of Exhibit "G" annexed hereto.

                          (i)   Confidentiality and Standstill Agreement.  TPEG
shall have executed and delivered the Confidentiality and Standstill Agreement
in the form of Exhibit "C" annexed hereto.

                          (j)   Options for GJE Employees.  At the Effective
Time, TPEG shall grant incentive stock options to purchase an aggregate of
20,000 shares of TPEG Common Stock to the GJE executives and key employees who
will become employed by the Surviving Corporation and whose names are set forth
on Schedule 6.9 annexed hereto.  Schedule 6.9 also sets forth the number of
such stock options to be granted to each such employee.

                          (k)   Opinion.  GJE shall have received the opinion
of Maloney, Mehlman & Katz, counsel to TPEG, dated the Effective Time,
substantially in the form of Exhibit "I" annexed hereto.

                          (l)   No Material Adverse Change.  There shall have
been no material adverse change in the financial condition, results of
operations, assets, liabilities, properties or business of TPEG or any
subsidiary of TPEG between the date of this Agreement and the Effective Time.

                 7.4      Condition Subsequent to Merger.  GJE shall deliver,
and Grosso and Jacobson shall cause GJE to deliver to TPEG, the GJ Financial
Statements on or before such date and in such form for filing by TPEG in
accordance with such SEC regulations as are required by the provisions of
Section 6.2 hereof.



















                                       44

<PAGE>   46
                          ARTICLE 8.  INDEMNIFICATION

                 8.1      Survival of Representations and Warranties.  (a)  The
joint and several representations and warranties of GJE, Grosso and Jacobson
(the "GJE Parties") contained in this Agreement, and all statements made by any
or all of the GJE Parties which are contained in this Agreement, the Schedules
and the Exhibits to this Agreement, or any certificate, financial statement,
report or other document delivered pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement (collectively, the
"Transaction Documents"), shall survive the Merger for a period terminating at
the close of business on the first (1st) anniversary of the Effective Time,
except that (i) the joint and several representations and warranties of the GJP
Parties contained in each of Sections 2.1, 2.2, 2.4 2.10 2.12(g) and (h) and
2.21 and the representations and warranties (including, without limitation, the
representations and warranties contained in Sections 2.5(a)(ii) and the second
sentence of Sections 2.8 and 2.11) of the GJP Parties relating to title to the
assets, properties and contractual rights of GJP shall survive the Merger for a
period terminating at the close of business on the sixth (6th) anniversary of
the Effective Time, and (ii) notwithstanding anything contained herein to the
contrary, any representation, warranty, covenant or agreement by the GJE
Parties contained in this Agreement with respect to which there shall occur any
fraudulent or intentional misrepresentation (including any intentional failure
to disclose a material fact) or intentional breach of covenant or agreement
shall survive the Merger indefinitely, notwithstanding any applicable statute
of limitations (each such period described in clauses (i) through (iii) above
is referred to herein as a "Survival Period").  Neither any Survival Period,
nor the liability of the GJE Parties under or in connection with the
Transaction Documents, shall be reduced by any investigation made at any time
by or on behalf of TPEG.

                          (b)   The representations and warranties of TPEG
contained in the Transaction Documents shall survive the Mergers for a period
terminating at the close of  business on the first (1st) anniversary of the
Effective Time.  Neither the Survival Period specified in this Section 8.1(b),
nor the liability of TPEG under or in connection with the Transaction Documents
shall be reduced by any investigation made at any time by or on behalf of the
GJE Parties.

                          (c)   Notwithstanding anything contained in this
Article 8 to the contrary, any matter with respect to which a claim has been
asserted by notice by any indemnified party to the GJE Parties or TPEG, as the
case may be, that is pending or unresolved at the end of the applicable
Survival Period shall continue to be covered by this Article 8 notwithstanding
the termination or expiration of such Survival Period until such claim is
finally and fully satisfied or otherwise resolved by the parties under this
Agreement or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid by the GJE Parties or TPEG, as the
case may be, to such Indemnified Party.

















                                       45

<PAGE>   47

                 8.2      Indemnification by the GJE Parties.

                          (a)   The GJE Parties shall jointly and severally
indemnify and hold harmless TPEG and its subsidiaries (including TPEG Sub I)
and the Surviving Corporation and their Affiliates, officers, directors,
employees, agents, attorneys, successors and assigns (each a "TPEG Indemnified
Party") from and against any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' and consultants' fees and expenses)
suffered or incurred by them (including, without limitation, in connection with
any action brought or otherwise initiated by any of them or required to enforce
the provisions hereunder) (hereinafter collectively referred to as the
"Losses"), arising out of or resulting from any or all of the following:

                          (i)   the breach of any representation or warranty
                 made by any of the GJE Parties contained in this Agreement or
                 in any of the other Transaction Documents;

                          (ii)  the breach of any covenant or agreement by any
                 of the GJE Parties contained in this Agreement or in any of
                 the other Transaction Documents;

                          (iii) Indemnification with respect to tax liabilities
                 and assessments for periods in accordance with the provisions
                 of Section 8.3 hereof; or

                          (iv)  any other matter as to which the GJE Parties,
                 pursuant to any other provision of this Agreement or of any of
                 the other Transaction Documents, have agreed to indemnify a
                 TPEG Indemnified Party.

                          (b)   A TPEG Indemnified Party shall give the GJE
Parties notice of any matter which such TPEG Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement,
promptly, but in any event within thirty (30) days of such determination,
stating the amount of the Losses, if known, and the method of computation
thereof, and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises; provided,
however, that the failure to provide such notice shall not release the GJE
Parties from any of their joint and several obligations or reduce the amount of
the GJE Parties liabilities under this Article 8 except to the extent that the
GJE Parties are materially prejudiced by such failure, as determined by a court
of competent jurisdiction, and shall not relieve the GJE Parties from any other
obligation or liability that they may have to any TPEG Indemnified Party
otherwise than under this Article 8. The obligations and liabilities of the GJE
Parties under this Article 8 with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for in this
Article 8 ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions: If a TPEG Indemnified Party shall
receive actual notice of any Third Party Claim, the TPEG Indemnified Party shall
give the GJE Parties notice of such Third Party Claim promptly, but in any event
within thirty (30) days of the receipt by the TPEG Indemnified Party of such
notice; provided, however, that the failure to provide such notice shall not
release the 










                                       46
<PAGE>   48

GJE Parties from any of their obligations under this Article 8 except to the
extent the GJE Parties are materially prejudiced by such failure, as determined
by a court of competent jurisdiction, and shall not relieve the GJE Parties from
any other obligation or liability that they may have to any TPEG Indemnified
Party otherwise than under this Article 8. If the GJE Parties acknowledge in
writing their obligation to indemnify a TPEG Indemnified Party hereunder against
any Losses that may result from a Third Party Claim, then the GJE Parties shall
be entitled to assume and control the defense of such Third Party Claim, at
their expense and through counsel of their choice, if the GJE Parties give
notice of their intention to do so to such TPEG Indemnified Party within thirty
(30) days of the receipt of such notice from such TPEG Indemnified Party;
provided, however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment of the
TPEG Indemnified Party, in its or his reasonably exercised discretion, for the
same counsel to represent both the TPEG Indemnified Party and the GJE Parties,
then such TPEG Indemnified Party shall be entitled to retain its or his own
counsel, in each jurisdiction for which such TPEG Indemnified Party determines
counsel is required, at the expense of the GJE Parties. In the event the GJE
Parties exercise the right to undertake the defense against a Third Party Claim
as provided above, the TPEG Indemnified Party shall cooperate with the GJE
Parties in such defense and make available to the GJE Parties, at the GJE
Parties' expense, all witnesses, pertinent records, materials and information in
the TPEG Indemnified Party's possession or under the TPEG Indemnified Party's
control relating thereto as is reasonably required by the GJE Parties.
Similarly, in the event the TPEG Indemnified Party is, directly or indirectly,
conducting the defense of a Third Party Claim, the GJE Parties shall cooperate
with the TPEG Indemnified Party in such defense and make available to such TPEG
Indemnified Party, at the GJE Parties' expense, all such witnesses, records,
materials and information in the GJE Parties' possession or under the GJE
Parties' control relating thereto as is reasonably required by the TPEG
Indemnified Party. In furtherance of the foregoing, the GJE Parties shall be
obligated to keep the TPEG Indemnified Party fully informed in a timely fashion
of all developments pertaining to a Third Party Claim and to furnish the TPEG
Indemnified Party with true copies of all pleadings, judgments, papers and
settlement agreements in connection therewith. No Third Party Claim may be
settled by the GJE Parties without the prior written consent of the TPEG
Indemnified Party unless the settlement provides for a full and unconditional
release of the TPEG Indemnified Party.

                 8.3  Indemnification by GJE Parties as to Tax Matters.

                          (a)   The GJE Parties shall jointly and severally
indemnify and hold harmless TPEG and its subsidiaries from and against the
following Taxes (except to the extent of amounts, including deferred taxes to
take into account of timing differences between Tax income and financial
income, as have been specifically identified and reserved therefor as taxes in
the GJ Financial Statements) and, except as otherwise provided in Section
8.3(b) hereof, against any loss, damage, liability or expense (including
reasonable fees for attorneys and other outside consultants) incurred in
contesting or otherwise in connection with any such Taxes or pursuing any claim
hereunder; (i) Taxes imposed on GJE with respect to periods ending at or prior
to the Effective Time; (ii) with respect to taxable periods beginning before
the Effective Time and





                                       47
<PAGE>   49

ending after the Effective Time, Taxes imposed which are allocable, pursuant to
Section 8.3(b), to the portion of such period ending at the Effective Time;
(iii) Taxes imposed on TPEG as a result of any breach of warranty or
misrepresentation under Section 2.10 or the failure by GJE to fulfill its
obligations under this Section 8.3(a)(i); and (iv) unpaid Taxes of any Person
(including GJE) under Treas. Reg. Section  1.1502- 6 (or any similar provision
of law), or as a transferee or successor, by contract or otherwise.

                          (b)   In the case of Taxes that are payable with
respect to a taxable period that begins before the Effective Time and ends
after the Effective Time, the portion of any such Tax that is allocable to the
portion of the period ending on the Effective Time shall be:

                                (i)   in the case of Taxes that are either (x)
                          based upon or related to income or receipts, or (y)
                          imposed in connection with any sale or other transfer
                          or assignment of property (other than pursuant to the
                          Merger contemplated by the Agreement), deemed equal
                          to the amount which would be payable if the taxable
                          year ended at the Effective Time; and

                                (ii)  in the case of Taxes not described in
                          subparagraph (i) of this Section 8.3(b) that are
                          imposed on a periodic basis and measured by the level
                          of any item, deemed to be the amount of such Taxes
                          for the entire period (or, in the case of such Taxes
                          determined on an arrears basis, the amount of such
                          Taxes for the immediately preceding period)
                          multiplied by a fraction the numerator of which is
                          the number of calendar days in the period ending on
                          the date of the Effective Time and the denominator of
                          which is the number of calendar days in the entire
                          period.

                          (c)   Tax Returns.  Tax Returns not yet filed for any
taxable period that commences prior to the Effective Time shall be prepared,
and each item thereon treated, in a manner consistent with past practices of
GJE.

                          (d)   Refunds.  Any Tax refund (or comparable benefit
resulting from a reduction in Tax liability) for a period ending as of or prior
to the Effective Time arising out of the carryback of a loss or credit incurred
by GJE in a taxable period ending after the Effective Time shall be the
property of TPEG or the Surviving Corporation, as the case may be, but the
amount of any such refunds received by TPEG or the Surviving Corporation shall
be offset against any claims by TPEG or the Surviving Corporation against the
GJE Parties pursuant to Article 8 hereof.

                          (e)  Contests.

                               (i)   In the case of an audit or administrative
                          or judicial proceeding that relates to periods ending
                          at or before the Effective Time, the GJE Parties shall
                          have the right, at their expense, to participate in 
                          and control





                                       48
<PAGE>   50

                        the conduct of such audit or proceeding but only to the
                        extent that such audit or proceeding relates solely to
                        a potential adjustment for which the GJE Parties have
                        acknowledged GJE's liability in writing and the issue
                        underlying the potential adjustment does not recur for
                        any period ending subsequent to the Effective Time.
                        The GJE Parties shall keep TPEG fully informed of the
                        progress of any such audit or proceeding and, if it
                        appears in the sole discretion of TPEG, that such audit
                        or proceeding may adversely affect TPEG or TPEG Sub I,
                        TPEG also may participate in any such audit or
                        proceeding.  If the GJE Parties do not assume the
                        defense of any such audit or proceeding promptly, TPEG
                        may defend and settle the same (for the GJE Parties'
                        account) in such reasonable manner as it may deem
                        appropriate.  In the event that a potential adjustment
                        as to which the GJE Parties would be liable is present
                        in the same proceeding as a potential adjustment for
                        which TPEG or TPEG Sub I would be liable, TPEG shall
                        have the right, at its expense, to control the audit or
                        proceeding with respect to the latter potential
                        adjustment.

                               (ii)  With respect to a potential adjustment for
                        which both GJE and TPEG and/or TPEG Sub I could be
                        liable, or which involves an issue that recurs for any
                        period ending after the Effective Time (whether or not
                        the subject of audit at such time), (i) both the GJE
                        Parties and TPEG may participate in the audit or
                        proceeding, and (ii) the audit or proceeding shall be
                        controlled by that party which would bear the burden of
                        the greater portion of the dollar amount of the
                        adjustment and any corresponding adjustments that may
                        reasonably be anticipated for future Tax periods.  The
                        principle set forth in the preceding sentence shall
                        also govern for purposes of deciding any issue that
                        must be decided jointly (in particular, choice of
                        judicial forum) in circumstances in which separate
                        issues are otherwise controlled hereunder by TPEG and
                        the GJE Parties.

                               (iii) Except as provided in clause (i) of this
                        Section 6(e), neither TPEG nor the GJE Parties shall
                        enter into any compromise or agree to settle any claim
                        pursuant to any Tax audit or proceeding which would
                        adversely affect the other party for such year or a
                        subsequent year without the written consent of the
                        other party, which consent may not be unreasonably
                        withheld.

                        (f)    Miscellaneous.

                               (i)   The GJE Parties and TPEG agree to treat
                        all payments made by either to or for the benefit of
                        the other under this Article 8, under other
                        indemnification provisions of this Agreement and for
                        any misrepresentations or breaches of warranties or
                        covenants as adjustments





                                       49
<PAGE>   51

                        to the Merger Consideration to be paid by TPEG to the
                        Stockholders of GJE pursuant to the Merger or as
                        capital contributions for Tax purposes and that such
                        treatment shall govern for purposes hereof.

                               (ii)  Notwithstanding any provision herein to
                        the contrary, the obligation of the GJE Parties to
                        indemnify and hold harmless TPEG and TPEG Sub I
                        pursuant  to the provisions of this Section 8.3, and
                        the representations and warranties contained in Section
                        2.10 hereof, shall terminate as of the close of
                        business on the 120th day following expiration of the
                        applicable statutes of limitations with respect to the
                        Tax liabilities in question (after giving effect,
                        however, to any waiver, mitigation or extension of  any
                        such statutes).

                        (g)    Additional Tax Agreements.

                               (i)   Tax Elections.  The GJE Parties jointly
                        and severally covenant and agree that no new elections
                        with respect to Taxes or any changes in current
                        elections with respect to Taxes affecting GJE shall be
                        made after the date of this Agreement without the prior
                        written consent of TPEG.

                               (ii)  Nonforeign Affidavit.  GJE shall furnish
                        TPEG an affidavit stating that the indicated number is
                        the transferor's United States taxpayer identification
                        number and that the transferor is not a foreign person,
                        pursuant to Section 1445(b)(2) of the Code.

                               (iii) Cooperation and Records Retention.  The
                        GJE Parties and TPEG shall (A) each provide the other
                        with such assistance as may reasonably be requested by
                        any of them in connection with the preparation of any
                        Tax Return, audit, or other examination by any taxing
                        authority or judicial or administrative proceedings
                        relating to liability for Taxes, provided, however,
                        that TPEG shall cause its officers who are serving as
                        duly authorized officers of the Surviving Corporation
                        to sign and file any such Returns unless such officers
                        consist of any of the GJE Parties; (B) each retain and
                        provide the other, and TPEG shall retain and cause TPEG
                        Sub I to retain and provide the GJE Parties with, any
                        records or other information that may be relevant to
                        such Tax Return, audit or examination, proceeding, or
                        determination, and (C) each provide the other with any
                        final determination of any such audit or examination,
                        proceeding, or determination that affects any amount
                        required to be shown on any Tax Return of the other for
                        any period.  Without limiting the generality of the
                        foregoing, TPEG shall retain, and shall cause TPEG Sub
                        I to retain, and the GJE Parties shall retain, until
                        the applicable statutes of limitations (including any
                        extensions) have expired, copies of all Tax Returns,





                                       50
<PAGE>   52

                        supporting work schedules, and other records or
                        information that may be relevant to such returns for
                        all tax periods or portions thereof ending before or
                        including the Effective Time and shall not destroy or
                        otherwise dispose of any such records without first
                        providing the other party with a reasonable opportunity
                        to review and copy the same.

                               (iv)  Transfer Taxes.  GJE or the Stockholders,
                        as the case may be, shall pay any sales, stock transfer
                        and/or documentary taxes applicable to the Merger at
                        the Effective Time, provided, however, that TPEG shall
                        promptly reimburse GJE and/or the Stockholders for the
                        cost thereof;

                               (v)   Preparation of W-2's, etc.  Pursuant to
                        Revenue Procedure 84-77 (1984-2 C.B. 753), provided
                        that GJE provides TPEG with all necessary payroll
                        records for the calendar year which includes the
                        Effective Time, TPEG shall furnish a Form W-2 to each
                        employee employed by TPEG or any of its subsidiaries
                        (including TPEG Sub I) after the Effective Time who had
                        been employed by GJE disclosing all wages and other
                        compensation paid for such calendar year, and taxes
                        withheld therefrom, and the GJE Parties shall be
                        relieved of the responsibility to do so.

                8.4         Indemnification by TPEG.

                        (a)    The GJE Parties (each a "GJE Indemnified Party")
shall be indemnified and held harmless by TPEG from and against for any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, reasonable attorneys'
and consultants' fees and expenses) suffered or incurred by them (including,
without limitation, in connection with any action brought or otherwise
initiated by any of them or required to enforce the provisions hereunder)
(hereinafter collectively referred to as the "Losses"), arising out of or
resulting from:

                               (i)   the breach of any representation or
                        warranty made by TPEG or by TPEG Sub I contained in
                        this Agreement or any of the other Transaction
                        Documents; and

                               (ii)  the breach of any covenant or agreement by
                        TPEG contained in this Agreement or any of the other
                        Transaction Documents.

                        (b)     A GJE Indemnified Party shall give TPEG notice
of any matter which a GJE Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement, promptly, but in
any event within thirty (30) days of such determination, stating the amount of
the Losses, if known, and method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such





                                       51
<PAGE>   53

right of indemnification is claimed or arises; provided, however, that the
failure to provide such notice shall not release TPEG from any of its
obligations or reduce the amount of TPEG's liabilities under this Article 8
except to the extent that TPEG is materially prejudiced by such failure, as
determined by a court of competent jurisdiction, and shall not relieve TPEG
from any other obligation or liability that it may have to a GJE Indemnified
Party otherwise than under this Article 8.  The obligations and liabilities of
TPEG under this Article 8 with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for in this
Article 8 ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions:  If a GJE Indemnified Party shall
receive actual notice of any Third Party Claim, the GJE Indemnified Party shall
give TPEG notice of a Third Party Claim promptly, but in any event within
thirty (30) days of the receipt by such GJE Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not release
TPEG from any of its obligations under this Article 8 except to the extent TPEG
is materially prejudiced by such failure, as determined by a court of competent
jurisdiction, and shall not relieve TPEG from any other obligation or liability
that it may have to any GJE Indemnified Party otherwise than under this Article
8.  If TPEG acknowledges in writing its obligation to indemnify a GJE
Indemnified Party hereunder against any Losses that may result from a Third
Party Claim, then TPEG shall be entitled to assume and control the defense of a
Third Party Claim, at its expense and through counsel of its choice, if it
gives notice of its intention to do so to the GJE Indemnified Party within
thirty (30) days of the receipt of such notice from such GJE Indemnified Party;
provided, however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment of the
GJE Indemnified Party, in its or his reasonably exercised discretion, for the
same counsel to represent both such GJE Indemnified Party and TPEG, then the
GJE Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the GJE Indemnified Party determines counsel is
required, at the expense of TPEG.  In the event TPEG exercises the right to
undertake any such defense of a Third Party Claim as provided above, the GJE
Indemnified Party shall cooperate with TPEG in such defense and make available
to TPEG, at TPEG's expense, all witnesses, pertinent records, materials and
information in the GJE Indemnified Party's possession or under the GJE
Indemnified Party's control relating thereto as is reasonably required by TPEG.
Similarly, in the event the GJE Indemnified Party is, directly or indirectly,
conducting the defense of a Third Party Claim, TPEG shall cooperate with the
GJE Indemnified Party in such defense and make available to the GJE Indemnified
Party, at TPEG's expense, all such witnesses, records, materials and
information in TPEG's possession or under TPEG's control relating thereto as is
reasonably required by the GJE Indemnified Party.  No Third Party Claim may be
settled by TPEG without the prior written consent of the GJE Indemnified Party
unless the settlement provides for the full and unconditional release of the
GJE Indemnified Party.

                8.5     Payment of Indemnification Liability.  All
indemnification obligations or liabilities of the GJE Parties or of TPEG, as
the case may be, shall be payable to the Indemnified Parties within ten (10)
days (the "Indemnification Payment Date") after the date that such obligation
or liability has been determined by written stipulation or agreement between or





                                       52
<PAGE>   54

among the parties, by a final non-appealable judgment or arbitration award or,
in the case of liabilities for any Taxes, the receipt by TPEG and/or the
Surviving Corporation from any Govenmental Authority of an assessment, claim or
lien for Taxes which is subject to the indemnification provisions of Section
8.3 hereof.

                8.6     Form of Payment of Indemnification  Liability.  The GJE
Parties or TPEG, as the case may be, shall be permitted to satisfy their
respective indemnification obligations under this Article 8 by paying the full
dollar amount of the indemnified Losses (the "Loss Amount") to the Indemnified
Parties in the form of Shares of TPEG Common Stock, the number of  which, for
purposes of this Article 8, shall be determined by dividing the Loss Amount by
the average of the closing prices of the (a) quoted closing price of the TPEG
Common Stock on the NASDAQ SmallCap Market during the thirty (30) consecutive
trading days immediately preceding the Indemnification Payment Date or (b) if
there is no trading in the TPEG Common Stock on the NASDAQ SmallCap Market on
any one or more of such trading days, by the average mean between the quoted
closing bid and asked prices for the TPEG Common Stock on such market on any of
such days, subject to a discount of ten percent (10%) from the price of the
Shares of the TPEG Common Stock so determined and further subject to a minimum
price of one dollar twenty cents ($1.20) per share; provided, however, that
with respect to the GJE Parties' liabilities for Taxes which are the subject of
the representations and warranties set forth in Section 2.10 hereof and the
indemnification provisions of Section 8.3 hereof and/or liabilities for
environmental matters which are the subject of the representations and
warranties set forth in Section 2.12(g) and (h) hereof, the GJE Parties shall
pay the Loss Amount by certified check (or other form of cash payment or
transfer mutually acceptable to the parties) payable directly to the order of
the Governmental Authority assessing or otherwise claiming or levying such
Taxes or to TPEG as TPEG may direct on or before the Indemnification Date.

                8.7     Joint and Several Liability of GJE Parties.  Each
reference in this Article 8 to the "GJE Parties" shall mean each of GJE, Grosso
and Jacobson, and all of them, individually and collectively, jointly and
severally, and the GJE Parties shall be jointly and severally liable for all
present and future indebtedness, liabilities and obligations to each TPEG
Indemnified Party pursuant to or in connection with Section 8.2.
Notwithstanding the joint and several liability of the GJE Parties as
aforesaid, each of Grosso and Jacobson hereby irrevocably waives any right to
seek or obtain from GJE and/or the Surviving Corporation after the Effective
Time, whether by contribution, reimbursement, joinder of parties, cross-claim
or otherwise, any amounts paid or payable by Grosso and/or Jacobson pursuant to
or in connection with Section 8.2.

                8.8     Cross-Indemnification With Other Mergers.
Notwithstanding any other provisions of this Agreement, all of the
indemnification provisions set forth in this Article 8 shall be deemed
applicable to and may be invoked against the GJE Parties or TPEG, as the case
may be, in the event that:





                                       53
<PAGE>   55
                               (i)   any of the parties to the Other Mergers
                        breaches any representations and warranties set forth
                        in the agreements or other Transaction Documents
                        governing either of such Other Mergers;

                               (ii)  any of the parties to the Other Mergers
                        breaches any covenants or agreements by any of such
                        parties set forth in any of the agreements or other
                        Transaction Documents governing either of such Other
                        Mergers;

                               (iii) the indemnification provisions with
                        respect to tax liabilities and assessments of GJP or
                        GJM, respectively, under the agreements governing the
                        Other Mergers are invoked; or

                               (iv)  any other matters to which the parties to
                        either of the Other Mergers have agreed to indemnify
                        any of the other parties to such Other Mergers; it
                        being expressly understood and agreed by the GJE
                        Parties and by TPEG that (A) any claims for
                        indemnification arising under either or both of the
                        Other Mergers shall invoke all of the indemnification
                        and other remedies provided for in this Agreement, and
                        (B) the GJE Parties shall be jointly and severally
                        liable for any indebtedness, obligations or liabilities
                        of the GJP Parties (as defined in the agreement
                        governing the Other Merger to which GJP is a Party) and
                        or the GJM Parties (as defined in the agreement
                        governing the Other Merger to which GJM is a Party) to
                        the TPEG Indemnified Parties, and the TPEG Parties
                        shall be jointly and severally liable for any
                        indebtedness, obligations or liabilities of the TPEG
                        Parties (as defined in the agreement governing the
                        Other Mergers with GJP and GJM, respectively) to the
                        GJE Indemnified Party, in each case without offset,
                        deduction, defense or counterclaim available to the GJE
                        Parties or the TPEG Parties, as the case may be, under
                        this Agreement.

                8.9     Minimum Claim.  Anything in this Article 8 to the
contrary notwithstanding, the TPEG Indemnified Parties, as a group, shall not
have any claims for indemnification against the GJE Parties, and the GJE
Indemnified Parties, as a group, shall not have any claims for indemnification
against TPEG unless the amount of such individual claims for Losses, or the
amount of such claim when added to all other claims for Losses for which such
party could have sought indemnification hereunder and under the Other Merger
Agreements but for the provisions of this Section 8.9, exceeds, in the
aggregate, Forty Thousand ($40,000) Dollars  (the "Indemnification Minimum
Amount"); provided, however, that in determining amounts to be included in the
Indemnification Minimum Amount, if any, but for no other purpose, all
representations, warranties and covenants in this Agreement, made by the GJE
Parties or by TPEG, as the case may be, shall be read without regard to any
materiality standard or any knowledge qualification set forth in this
Agreement.





                                       54
<PAGE>   56
                8.10    Maximum Claim.  Anything in this Article 8 to the
contrary notwithstanding, neither TPEG nor the GJE Parties shall have any
liability under this Article 8 in respect of any Losses to the extent the
aggregate of such Losses under this Article 8 and under the Other Merger
Agreements, exceeds, in the aggregate, the sum of Four Million ($4,000,000)
Dollars.

                8.11    Other Remedies.  The indemnification provisions of this
Article 8 are in addition to, and not in derogation of, any statutory,
equitable, or common law remedies which any party hereto may have for breach of
any representation, warranty or covenant set forth in this Agreement, any
Schedule or Exhibit annexed hereto or in any of the other Transaction
Documents.





























                                       55

<PAGE>   57
                     ARTICLE 9.  TERMINATION AND AMENDMENT

                9.1     Termination.  This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the GJE Stockholders :

                        (a)    by the mutual consent of GJE, Grosso and
Jacobson and TPEG;

                        (b)    by either GJE or TPEG upon written notice to the
other party if any governmental entity of competent jurisdiction shall have
issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement, and in any
such case the time for appeal or petition for reconsideration of such order
shall have expired without such appeal or petition being granted;

                        (c)    by either GJE or TPEG if the Merger shall not
have been consummated on or before October 31, 1997.

                9.2     Effect of Termination.  In the event of termination of
this Agreement by either GJE or TPEG as provided in Section 9.1 hereof, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party or parties hereto to the other party or
parties and each of GJE (on its own behalf and on behalf of Grosso and
Jacobson) and TPEG shall bear and be solely responsible for their respective
professional fees, expenses and other costs incurred in the negotiation and
execution of the Agreement and any other matters undertaken with respect to the
transactions contemplated hereby, except (i) with respect to or by reason of
the application of the provisions of Article 10 of this Agreement, and (ii)
with respect to any liabilities or damages incurred or suffered by a party or
parties as a result of the breach in any material respect by the other party or
parties of any of its or their representations, warranties, covenants or
agreements set forth in this Agreement.

                9.3     Amendment.  This Agreement may be amended by the
parties hereto, at any time before or after approval of the matters presented
in connection with the Merger by the GJE Stockholders, but, after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without seeking such further approval.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

                9.4     Extension; Waiver.  At any time prior to the Effective
Time, the parties hereto, may, to the extent legally permitted, (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein.  Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed by or on
behalf of such party.









                                       56
<PAGE>   58

                    ARTICLE 10.  REMEDIES IN EVENT OF THIRD
                                 PARTY COMPETING TRANSACTION

                Notwithstanding any provision to the contrary set forth in this
Agreement or in any other agreements, instruments or other documents delivered
by the parties pursuant hereto,

                10.1    Remedies for Competing Transaction.  TPEG and TPEG Sub
I further agree and GJE, Grosso and Jacobson further jointly and severally
agree that, in the event that any of TPEG, TPEG Sub I, GJE, Grosso and/or
Jacobson elects or elect to execute a letter of intent or become a party to or
make a written or an oral commitment with respect to a Competing Transaction
(all such actions, collectively, the "Competing Transaction Commitment") prior
to the Effective Time or the earlier termination of this Agreement in
accordance with Article 9 hereof, whichever sooner occurs, then such party or
parties shall be legally obligated, promptly upon the written demand of the
other party or parties, to promptly reimburse the other party for all of its
reasonable legal, accounting  and other professional costs and related
disbursements, upon submission of reasonably itemized bills, vouchers and/or
statements therefor plus such monetary damages as a court of competent
jurisdiction may award.

                10.2    Procedure for Exercising Remedies.  If any of TPEG,
GJE, Grosso and/or Jacobson as the case may be, undertakes a Competing
Transaction Commitment, it, he or they shall be required to give prompt written
notice thereof to the other party or parties and its or their counsel,
whereupon the other party or parties shall submit as promptly as practicable
reasonably itemized bills, vouchers and/or statements with respect to its
reasonable legal, accounting and other professional costs and related
disbursements incurred in connection with this Agreement and the transactions
contemplated hereby.  The party undertaking the Competing Transaction
Commitment shall be required, within seven (7) days after receipt of such
bills, vouchers and/or statements, to reimburse the other party in full for all
of such fees, costs and expenses plus such monetary damages as a court of
competent jurisdiction may award.

                10.3    Other Remedies for Competing Transaction.  The
reimbursement of fees and expenses plus such monetary damages as a court of
competent jurisdiction may award, if the other party or parties undertakes a
Competing Transaction Commitment prior to the Effective Time or to the earlier
termination of this Agreement in accordance with Article 9 hereof, whichever
sooner occurs, shall not constitute sole and exclusive remedy available to the
other party or parties in consequence of TPEG, GJE, Grosso or Jacobson, as the
case may be, having undertaken such Competing Transaction Commitment or having
engaged in a Competing Transaction.

                        ARTICLE 11.  GENERAL PROVISIONS

                11.1    Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation) or





                                       57
<PAGE>   59

mailed (postage prepaid) by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

                        (a)    if to TPEG, TPEG subsidiaries or the Surviving
                               Corporation, to

                               The Producers Entertainment Group Ltd.
                               5757 Wilshire Boulevard - Penthouse One
                               Los Angeles, CA 90036
                               Telecopy No. (310) 634-8635
                               Attn:  Irwin Meyer, CEO
                               with a copy to

                               Dempsey & Johnson, P.C.
                               1925 Century Park East
                               Suite 2350
                               Los Angeles, CA  90067
                               Attn: Michael D. Dempsey, Esq.

                and

                               Maloney, Mehlman & Katz
                               405 Lexington Avenue
                               New York, New York  10174
                               Telecopy No. (212) 972-0111
                               Attn:  Melvin Katz, Esq.

                and

                        (b)    if to GJE, Grosso or Jacobson, to or c/o

                               The Grosso-Jacobson Entertainment Corporation
                               767 Third Avenue
                               New York, NY  10017
                               Telecopy No. (212) 355-3178
                               Attn:  Lawrence S. Jacobson, President





                                       58
<PAGE>   60
                               with a copy to

                               Kay, Collyer & Boose, LLP
                               One Dag Hammarskjold Plaza
                               New York, NY  10017
                               Telecopy No. (212) 755-0921
                               Attn:  Michael Collyer, Esq.

                Any notice sent by registered or certified mail as aforesaid
shall be deemed delivered to the party or parties to whom it is addressed on
the third (3rd) business day following the date upon which each notice has been
deposited in the U.S. mail.

                11.2    Interpretation.  (a) When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the naming or
interpretation of this Agreement.  Whenever the words "include",  "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".  The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party or parties to whom such information is to be made
available.  The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to September __, 1997.

                        (b)    All references in this Agreement to "the
knowledge of" or "to the best knowledge of" of any party shall mean "actual
knowledge" of the party charged with such knowledge or "constructive knowledge"
which such party should have obtained, in the reasonable exercise of his or its
duties, after reasonable inquiry.

                        (c)    All references herein to any joint and several
agreements or obligations of Grosso and Jacobson pertaining to actions or
transactions to be taken, or not to be taken, by GJE, in accordance with the
terms of this Agreement shall constitute, and be deemed to constitute, the
agreements and obligations of Grosso and Jacobson to cause GJE to take or not
to take any such actions or transactions.

                11.3    Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.

                11.4    Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership.  This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements (including the letter of intent between GJE, GJP, Grosso and
Jacobson and TPEG dated April 25, 1997) and understandings, both written and
oral, among the parties with respect to the subject matter hereof, provided
that the relevant provisions of Articles hereof relating to Confidentiality
shall survive the execution and





                                       59
<PAGE>   61

delivery of this Agreement and (b) except as expressly provided herein, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.  The parties hereby acknowledge that, except as hereinafter
agreed to in writing, no party shall have the right to acquire or shall be
deemed to have acquired shares of common stock of the other party pursuant to
the Merger until consummation thereof.

                11.5    Governing Law.  This Agreement shall be governed and
construed in accordance with the internal laws of the State of New York,
without regard to any applicable conflicts of law.

                11.6    Publicity.  Except as otherwise required by law
(including federal securities law including regulations of the SEC) or the
rules and regulations of the NASDAQ SmallCap Market, so long as this Agreement
is in effect, neither GJE, Grosso or Jacobson nor TPEG shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld or delayed.

                11.7    Assignment.  Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

                11.8    Disclosure Schedules.  The Schedules annexed hereto and
referred to herein are a part of this Agreement for all purposes.  The
inclusion of an item in any Schedule does not necessarily imply that such item
or matter is material or significant.  Terms which are defined in this
Agreement shall have the same meanings when used in the Schedules hereto.
Disclosure of any item or matter on (a) any one Schedule hereto shall be deemed
to constitute disclosure of such item or matter for each of the other Schedules
hereto with respect to which disclosure of such item or matter is required and
(b) any schedule required to be delivered by GJP or GJM or by TPEG or the other
TPEG subsidiaries, as the case may be, pursuant to or under the agreements
governing the Other Mergers shall be deemed to constitute disclosure of such
item or matter with respect to which disclosure of such item or matter is
required hereunder.





                                       60
<PAGE>   62
                IN WITNESS WHEREOF, GJE, TPEG and TPEG Sub I each have caused
this Agreement to be signed by their respective officers thereunto duly
authorized and Grosso and Jacobson each have signed this Agreement on and as of
the date and year first above written.

Attest:                                       THE PRODUCERS ENTERTAINMENT
                                              GROUP LTD.



_____________________________                 By:_____________________________
Name:                                            Title:
Title:


Attest:                                       TPEG ACQUISITION I CORP.



_____________________________                 By:_____________________________
Name:                                            Title:
Title:


Attest:                                       The Grosso-Jacobson Entertainment
Corporation                                   Company



_____________________________                 By:_____________________________
Name:                                            Title:
Title:


                                              ________________________________
                                              SALVATORE GROSSO



                                              ________________________________
                                              LAWRENCE S. JACOBSON





                                       61

<PAGE>   1





                          AGREEMENT AND PLAN OF MERGER


                                     AMONG


                    THE PRODUCERS ENTERTAINMENT GROUP LTD.,


                           TPEG ACQUISITION II CORP.,


                       GROSSO-JACOBSON PRODUCTIONS, INC.


                                SALVATORE GROSSO

                                      AND

                              LAWRENCE S. JACOBSON

                            _______________________



                           DATED:  SEPTEMBER 15, 1997






<PAGE>   2
                          AGREEMENT AND PLAN OF MERGER



                 AGREEMENT AND PLAN OF MERGER, dated September 15, 1997, by and
among The Producers Entertainment Group Ltd., a Delaware corporation ("TPEG"),
TPEG Acquisition II Corp., a Delaware corporation ("TPEG Sub II"),
Grosso-Jacobson Productions, Inc., a Delaware corporation ("GJP"), Salvatore
Grosso and Lawrence S. Jacobson (hereinafter referred to severally by their
respective surnames and collectively as "Stockholders").

                 WHEREAS, TPEG owns of record and beneficially all of the
issued and outstanding shares of capital stock of TPEG Sub II;

                 WHEREAS, Grosso and Jacobson own of record and beneficially
all of the issued and outstanding capital stock of GJP;

                 WHEREAS, TPEG Sub II desires to merge with and into GJP and
TPEG desires to have TPEG Sub II merge with and into GJP in consideration of
the issuance by TPEG of shares of TPEG Common Stock (as hereinafter defined) in
exchange for all of the capital stock of GJP issued and outstanding at the
effective time of the merger; and

                 WHEREAS, for federal income tax purposes,  it is intended that
the contemplated merger transaction shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), all upon the terms and subject to the conditions set forth herein and
in accordance with the General Corporation Law of the State of Delaware, as the
same may be amended from time to time (the "GCL"); and

                 WHEREAS, TPEG and certain other subsidiaries of TPEG are
entering into separate agreements and plans of merger of even date with The
Grosso-Jacobson Entertainment Corporation ("GJE"), a New York corporation, and
Grosso-Jacobson Music, Inc. ("GJM"), a New York corporation, (each such
corporation being hereinafter referred to as "GJE" and "GJM", respectively, and
collectively as the "Other GJ Companies" and collectively with GJP, the "GJ
Entities"; and such other mergers and agreements being referred to collectively
as the "Other Mergers" and the "Other Merger Agreements") upon substantially
the same terms and conditions hereinafter set forth except for the Merger
Consideration (as hereinafter defined) to be paid to the holders of the capital
stock of each of GJE and GJM,

                 NOW, THEREFORE, the parties hereto agree as follows:





                                       1
<PAGE>   3

                             ARTICLE 1.  THE MERGER

                 1.1      Merger; Surviving Corporation.  In accordance with
the provisions of this Agreement and the GCL, at the Effective Time (as defined
in Section 1.5 hereof), TPEG Sub II shall be merged with and into GJP (the
"Merger"), and GJP shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Delaware, under the name "Grosso Jacobson
Productions, Inc.".  At the Effective Time, the separate existence of TPEG Sub
II shall cease.  All properties, franchises and rights belonging to TPEG Sub
II, by virtue of the Merger and without further act or deed, shall be vested in
the Surviving Corporation, which shall assume and be solely responsible for all
the liabilities and obligations of each of TPEG Sub II and GJP. The Merger will
otherwise also have the effects set forth in Section 251 of the GCL.

                 It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.

                 1.2      Certificate of Incorporation.  The Certificate of
Incorporation of TPEG Sub II in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
altered or amended as provided by law or by such Certificate of Incorporation.
The Certificate of Incorporation of TPEG Sub II has been delivered by TPEG Sub
II to GJP.

                 1.3      By-laws.  (a)  The By-laws of TPEG Sub II in effect
immediately prior to the Effective Time (as defined in Section 1.5 hereof)
shall be the By-laws of the Surviving Corporation until altered, amended or
repealed, in whole or in part, as provided by law, by the Certificate of
Incorporation of the Surviving Corporation or by such By-laws.  The TPEG Sub II
By-laws have been delivered by TPEG Sub II to GJP.

                          (b)  The By-laws of TPEG in effect immediately prior
to the Effective Time (and as set forth on Schedule 1.3(b)) shall be the
By-laws of TPEG until altered, amended or repealed, in whole or in part, as
provided by law, by the Certificate of Incorporation of TPEG or by the TPEG
By-laws.  The TPEG By-laws have been delivered by TPEG to GJP.

                 1.4      Directors and Officers.  (a)  GJP and the
Stockholders shall cause the directors of GJP to tender their written
resignations as directors, effective as of the Effective Time, and TPEG, as the
sole stockholder of the Surviving Corporation, shall designate and elect, as of
the Effective Time, a new Board of Directors of the Surviving Corporation.
Commencing at the Effective Time, the directors and officers of the Surviving
Corporation shall be as set forth on Schedule 1.4.  Each of the directors and
officers of the Surviving Corporation shall hold their respective offices in
accordance with the By-laws of the Surviving Corporation.





                                       2
<PAGE>   4
                          (b)   At or prior to the Effective Time, TPEG will
take all steps necessary and appropriate to reconstitute its Board of Directors
so that, as of the Effective Time, the Board of Directors of TPEG shall consist
of seven persons (the "TPEG Board Designees") designated as follows:

                                (i)    three of the TPEG Board Designees will
                          be the designees of the pre-Merger TPEG Board of
                          Directors;

                                (ii)   three of the TPEG Board Designees will
                          be the designees of the pre-Merger GJP Board of
                          Directors; and

                                (iii)  the remaining TPEG Board Designee will
                          be the joint designee of the pre-Merger TPEG Board of
                          Directors and the pre-Merger GJP Board of Directors.

                                (iv)   The names of the designees referred to
                          in clauses (i) through (iii) of this Section 1.4(b)
                          will be delivered by the parties to each other and,
                          where required, mutually agreed upon as required by
                          Section 7.1(e) hereof.  After the Effective Time, the
                          TPEG Board Designees shall serve as members of the
                          Board of Directors of TPEG in accordance with the
                          TPEG By-Laws.

                          (c)   At the Effective Time, the Board of Directors
of TPEG shall appoint four members to its Executive Committee who shall consist
of two designees of the pre-Merger TPEG Board of Directors and two designees of
the pre-Merger GJP Board of Directors.

                 1.5      Effective Time.  The Merger shall become effective at
the time of filing of a certificate of merger in the form attached as Exhibit
"A" to this Agreement with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the GCL (the "Certificate of
Merger").  Subject to the fulfillment of the conditions set forth in Article 7,
the Certificate of Merger shall be so filed immediately after obtaining the
requisite approval of the stockholders of GJP contemplated by Section 7.1(a)
hereof.  The date and time when the Merger shall become effective are referred
to herein as the "Effective Time."

                 1.6      Consideration for Merger.  The total consideration to
be paid by TPEG to the holders of the outstanding Common Stock, no par value,
of GJP (the "GJP Common Stock") in connection with the Merger of TPEG Sub II
into GJP shall equal three million ($3,000,000) dollars (the "Merger
Consideration"). The Merger Consideration shall be paid by TPEG through the
issuance by TPEG to the Stockholders of GJP of such number of shares of TPEG
Common Stock, $.001 par value (the "TPEG Common Stock") as shall be determined
by dividing the Merger Consideration by the average of the (a) quoted closing
prices of the TPEG Common Stock on the NASDAQ SmallCap Market during the thirty
(30) consecutive trading days immediately preceding the Effective Time and (b)
if there is no trading in the TPEG Common Stock on the NASDAQ SmallCap Market
on any one or more of such trading days, by the average mean between the quoted





                                       3
<PAGE>   5

closing bid and asked prices for the TPEG Common Stock on such Market on any of
such days, subject to a maximum price of one dollar and forty cents ($1.40) per
share of TPEG Common Stock (or a minimum of 2,142,857  shares of TPEG Common
Stock) or a minimum price of one dollar and twenty cents ($1.20) per share of
TPEG Common Stock, (or a maximum of 2,500,000 shares of TPEG Common Stock).

                 1.7      Conversion of Securities.

                          (a)   Each share of GJP Common Stock issued and
outstanding immediately prior to the Effective Time (except for shares of GJP
Common Stock then held in its treasury, which shares shall be canceled upon the
Merger), shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and become such number of shares of TPEG
Common Stock as shall have been determined pursuant to Section 1.6 hereof
divided by the total number of shares of GJP Common Stock issued and
outstanding immediately prior to the Effective Time.

                          (b)   As of the Effective Time, the holders of
certificates representing shares of issued and outstanding GJP Common Stock
shall cease to have any rights as stockholders of GJP, except such rights, if
any, as they may have pursuant to the GCL, and, except as otherwise expressly
set forth herein, their sole and exclusive right shall be the right to receive
shares of TPEG Common Stock in accordance with the provisions of this
Agreement.

                          (c)   Each share of Common Stock of TPEG Sub II
("TPEG Sub II Common Stock") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one validly issued,
fully paid and nonassessable share of Common Stock of the Surviving
Corporation.  Each certificate evidencing ownership of TPEG Sub II Common Stock
shall continue to evidence ownership of the same number of shares of the same
class of the Surviving Corporation.  From and after the Effective Time, each
outstanding certificate theretofore representing TPEG Sub II Common Stock shall
be deemed for all purposes to evidence ownership of and to represent the number
of shares of Common Stock of the Surviving Corporation into which such TPEG Sub
II Common Stock shall have been converted.  Promptly after the Effective Time,
the Surviving Corporation shall issue to TPEG, the holder of the TPEG Sub II
Common Stock, one or more certificates representing a like number of shares of
Common Stock of the Surviving Corporation in exchange for the certificates that
formerly represented TPEG Sub II Common Stock, which shall thereupon be
canceled.

                 1.8      Surrender and Payment.  Promptly after the Effective
Time, TPEG shall deliver or cause to be delivered to each holder of record of
one or more certificates representing GJP Common Stock (collectively, the "GJP
Certificates"), certificates representing such number of shares of TPEG Common
Stock as each such holder shall be entitled to receive per share of GJP Common
Stock pursuant to Section 1.7(a) of this Agreement in exchange for the
surrender to TPEG or its transfer agent ("TPEG Transfer Agent") of such GJP
Certificates.  If any Shares of TPEG Common Stock  are to be issued in a name
other than that in which a GJP Certificate so surrendered is then





                                       4
<PAGE>   6

registered, it shall be a condition of such exchange that the GJP Certificate
surrendered be accompanied by payment of any applicable transfer taxes and
documents required for a valid transfer or assignment of title to such shares
of TPEG Common Stock in the reasonable judgment of TPEG and its counsel.  From
and after the Effective Time, until so surrendered, each GJP Certificate shall
be deemed for all purposes, except as set forth below, to evidence the number
of shares of TPEG Common Stock into which the GJP Common Stock represented by
such GJP Certificate shall have been converted.  Upon surrender of a GJP
Certificate, the holder of record thereof shall receive, together with one or
more certificates representing the number of shares of TPEG Common Stock to
which he shall be entitled in accordance with Section 1.7(a),  all dividends
and other distributions which shall have theretofore been paid or made to
holders of record of TPEG Common Stock after the Effective Time with respect to
such shares.  TPEG shall be authorized to deliver certificates for shares of
TPEG Common Stock attributable to any GJP Certificate theretofore issued which
has been lost or destroyed upon receipt of satisfactory evidence of ownership
of the shares of GJP Common Stock formerly represented thereby and of
appropriate indemnification of TPEG in form satisfactory to TPEG and its
counsel.

                 1.9      Fractional Shares.  No fractional shares shall be
issued by TPEG in the Merger.  Each fractional interest in a share of TPEG
Common Stock which would otherwise be issued as a result of the Merger shall be
rounded to the nearest whole share of TPEG Common Stock.

                 1.10     No Further Transfers.  At the Effective Time, the
stock transfer books of GJP shall be closed, and no further transfers of shares
of GJP Common Stock shall thereafter be made or be effective.

                 1.11     Other Mergers with Other GJ Companies.
Notwithstanding any other provision of this Agreement, the consummation of both
of the Other Mergers among TPEG, other TPEG subsidiaries, each of GJE and GJM
and Grosso and Jacobson at the Effective Time shall constitute conditions
precedent to the Merger and the consummation of the Merger at the Effective
Time shall constitute a condition precedent to the consummation of the Other
Mergers.



    ARTICLE 2.  REPRESENTATIONS AND WARRANTIES OF GJP, GROSSO AND JACOBSON.

                 GJP, Grosso and Jacobson hereby jointly and severally
represent and warrant to TPEG and TPEG Sub II as follows:

                 2.1      Organization and Authorization.  GJP (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, (ii) has the corporate power and authority
to own or lease and operate the properties and assets now owned or leased and
operated by it and to carry on its business as it is now being conducted, and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which





                                       5
<PAGE>   7

the nature of its business or the ownership of its properties or both makes
such qualification necessary.  GJP has delivered to TPEG complete and correct
copies of its Certificate Incorporation and By-laws, as amended and in effect
on the date of this Agreement.  GJP has full and unrestricted corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder.  The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of GJP and, except for the approval of GJP's
stockholders, no other corporate proceedings on the part of GJP are necessary
to authorize this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement has been duly and validly executed and
delivered by GJP and constitutes the legal, valid and binding agreement of GJP,
enforceable against GJP in accordance with its terms.  GJP has no wholly-owned
or majority-owned subsidiaries and has no record or beneficial title or
interest in any capital stock or equity interest in any firm, corporation,
partnership, other entity or individual (each, a "Person")  Neither Grosso nor
Jacobson has any direct or indirect record or beneficial title or interest in
any captital stock or other equity interest of any Person (other than GJP, the
Other GJ Companies and 1037300 Ontario Limited (the "Ontario Corporation"))
engaged directly or indirectly in the businesses of developing, producing,
distributing, licensing and/or exhibiting motion pictures or television
programs or series, other than holdings of less than five (5%) percent of
publicly held Persons by both Grosso and Jacobson, as a group.

                 2.2      Non-Contravention.  The execution and delivery by GJP
of this Agreement and, subject to the approval of this Agreement by GJP's
stockholders, the consummation by GJP of the transactions contemplated hereby
will not (a) violate any provision of the Certificate of Incorporation or
By-laws of GJP, (b) violate any material provision of or result in the breach
or the acceleration of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any material obligation of GJP under
any GJP Lease (as such term is defined in Section 2.12 hereof), or other
agreement, indenture, loan agreement, commitment, license, instrument, order,
arbitration award, judgment or decree to which GJP is a party or by which GJP
is bound, (c) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any asset or property of GJP or (d)
violate or conflict with in any respect any other material restriction or any
law, ordinance or rule to which GJP or the property or assets of GJP is
subject.

                 2.3      Governmental Consents and Approvals.  Except as set
forth in Schedule 2.3, no consent, approval, order or authorization of, or
registration or declaration with, any government  agency, court, tribunal or
arbitration board or panel (collectively "Gorvernmental Authority") is required
in  connection with the execution and delivery of this Agreement by GJP or the
consummation by GJP of the transactions contemplated hereby, except for the
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware.

                 2.4      Capital Stock.  The authorized capital stock of GJP
consists of 1000 shares of Common Stock, no par value, of which 500 shares are
issued and outstanding and no shares are issued and held in the treasury of
GJP.  As of the date hereof, GJP has no authorized class of capital stock other
than the GJP Common Stock.  All outstanding shares of GJP





                                       6
<PAGE>   8
Common Stock are duly authorized, validly issued, fully paid and nonassessable
and all such outstanding shares of GJP Common Stock are held of record and
beneficially solely by Grosso and Jacobson.  As of the date hereof, GJP has
reserved no shares of GJP Common Stock for issuance pursuant to any option,
warrant, subscription or other similar agreement or commitment.  As of the date
hereof, except as set forth herein, or in Schedule 2.4, GJP neither has nor is
a party to any outstanding written or oral offers, subscriptions, options,
warrants, rights or other agreements, obligations or commitments obligating GJP
to issue or sell, or cause to be issued or sold, any shares of any class of
capital stock of GJP (including GJP Common Stock) or any securities or
obligations convertible into or exchangeable for or giving any Person any right
to acquire any shares of such capital stock, or obligating GJP to enter into
any such agreement or commitment and no obligation or commitment to authorize
for issuance any shares of any other class of capital stock.

                 2.5      Financial Statements.  (a)  The (a) balance sheet as
of November 30, 1996 of the GJ Entities and related statements of operations,
stockholders' equity and cash flows for each of November 30, 1995 and November
30, 1996, examined and reported upon by Rosenberg, Rich, Baker, Berman &
Company, independent accountants, complete copies of which have been delivered
toTPEG, and (b) the unaudited balance sheet as of May 31, 1997 of the GJ
Entities and the related statements of operations, stockholders' equity and
cash flows for the six-month period then ended, (collectively, the "GJ
Financial Statements"), have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis, and
fairly present the financial position of GJP at such dates and the results of
its operations and cash flows for such periods.  Except as disclosed or
provided for in the GJ Financial Statements (including the notes thereto) or in
Schedule 2.5, as of the date hereof, (i) GJP has no liabilities, commitments or
obligations of any kind, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, required to be reflected in any such
financial statements, including the notes thereto, under generally accepted
accounting principles that are material to the business or condition (financial
or otherwise) of GJP, and (ii) GJP owns the properties and assets reflected in
such financial statements free and clear of any liens, claims, charges,
pledges, security interests or other encumbrances, other than those described
in the GJ Financial Statements.

                 (b)      The books of account and other financial records of
GJP (i) reflect all material items of income and expense and all assets and
liabilities of GJP, (ii) are in all material respects complete and correct, and
do not contain or reflect any material inaccuracies or discrepancies, and (iii)
have been maintained in accordance with good business and accounting practices
in all material respects.

                 2.6      No Undisclosed Liabilities.  GJP has no liabilities
other than liabilities (i) reflected on the GJ Financial Statements, (ii)
disclosed in Schedule 2.5 hereof, or (iii) incurred in the ordinary course of
GJP's business consistent with its past practices.  Reserves are to be
established on the balance sheets included in the GJ Financial Statements in
amounts that have been established on a basis consistent with the past
practices of GJP and in accordance with GAAP.

                 2.7      Receivables.  Schedule 2.7 sets forth an aged list of
the accounts receivable of GJP as of July 31, 1997, showing separately those
receivables that, as of such date, had been due and outstanding (a) 30 days or
less, (b) 31 to 60 days, (c) 61 to 90 days, (d) 91 to 120 days and (e)





                                       7
<PAGE>   9
more than 120 days. Except as set forth on Schedule 2.7, all such receivables
arose from the sale of products or services to Persons not affiliated with GJP
and in the ordinary course of the business consistent with past practice and
custom of GJP and constitute or will constitute, as the case may be, only
valid, undisputed claims of GJP not subject to valid claims of set-off or other
defenses or counterclaims other than normal cash discounts granted in the
ordinary course of the business consistent with past practice. Subject to the
amounts of normal and customary reserves for doubtful accounts established by
GJP for prior periods, all such receivables outstanding as of July 31, 1997 are
good and collectible and have been or will be collected by GJP prior to, or
will be collected by the Surviving Corporation, without resort to litigation or
extraordinary collection activity, within one (1) year after, the Effective
Time.

                 2.8      TV Production Assets.

                          (a)   Subject to amounts reserved therefor in the GJ
Financial Statements and as adjusted for operations and transactions through
the Effective Time consistent with the past practice and custom of GJP, the
values at which all television production cameras and equipment,
post-production and editing equipment, costumes, wardrobe, props and similar
tangible assets (the "TV Production Assets") are carried on the GJ Financial
Statements reflect GJP's historical valuation policy of stating such TV
Production Assets at the lower of or market value.  GJP has good and marketable
title to the TV Production Assets free and clear of all liens and encumbrances.
Except as set forth on Schedule 2.8, the TV Production Assets do not consist of
items that are obsolete or damaged; and the Production Assets do not consist of
any items leased or held on consignment.  GJP has not acquired or become
committed to acquire any TV Production Assets which are not of a quality and
quantity usable in the ordinary course of their television production business.
Schedule 2.8 sets forth a complete list of the addresses of all warehouses and
other facilities in which the TV Production Assets are located (except for
those items in transit) and the individual and aggregate dollar amounts of all
Production Assets (listing by similar categories) which GJP is obligated to
purchase or lease as of the date hereof.

                          (b)   Subject to the reserve, the TV Production
Assets are in good operating condition, are suitable and usable for the
purposes for which they are intended and are in a condition such that they can
be used in the ordinary course of the television production business of GJP
consistent with past practice.

                 2.9      Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions.  Since May 31, 1997, except as disclosed on
Schedule 2.9 or specifically contemplated by this Agreement, the business of
GJP has been conducted in the ordinary course and consistent with past
practice.  As amplification and not in limitation of the foregoing, except as
disclosed in or specifically contemplated by this Agreement, or in the ordinary
course of business consistent with past practice of GJP since such date, GJP
has not:

                          (a)   amended or terminated any contract, lease or
license, or the rights thereunder;





                                       8
<PAGE>   10
                          (b)   caused, permitted or allowed any material
assets or properties (whether tangible or intangible) to be subjected to any
lien or encumbrance;

                          (c)   discharged or otherwise obtained the release of
any encumbrance or paid or otherwise discharged any material liability;

                          (d)   suffered any material adverse effect on the
business, business prospects or financial condition of or the occurrence of any
event or events which, individually, or in the aggregate, has or have had, or
could reasonably be expected to have, such a material adverse effect;

                          (e)   made any loan to, guaranteed any indebtedness
of or otherwise incurred any indebtedness on behalf of any Person;

                          (f)   failed to pay any creditor any material amount
owed to such creditor upon the later of when such amount became due or within
any applicable grace period;

                          (g)   made any material changes in the customary
methods of operations, including, without limitation, practices and policies
relating to the acquisition, development, production, selling, licensing, or
distribution of television movies, series or mini-series for network TV, cable
TV or other markets;

                          (h)   made any capital expenditure or commitment for
any capital expenditure in excess of Ten Thousand ($10,000) Dollars
individually or Twenty Five Thousand ($25,000) Dollars in the aggregate;

                          (i)   sold, transferred, leased, subleased, licensed
or otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets);

                          (j)   entered into any agreement, arrangement or
transaction with any of its directors, officers, employees or shareholders or
with any relative, beneficiary, spouse or any other Affiliate of such Person
("Affiliate" shall mean, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person);

                          (k)   (i) granted any material increase, or announced
any material increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by GJP to any of its employees,
including, without limitation, any increase or change pursuant to any employee
compensation or bonus plan or (ii) established or increased or promised to
increase any material benefits under any such employee plan, in either case
except as required by law;





                                       9
<PAGE>   11
                          (l)   written down or written up (or failed to write
down or write up in accordance with GAAP consistent with past practice) the
value of any tangible or intangible assets or any receivables;

                          (m)   amended, terminated, canceled or compromised
any material claims or waived any other material rights;

                          (n)   made any change in any method of accounting or
accounting practice or policy other than such changes as are required by GAAP;

                          (o)   accelerated or discounted the collection of
accounts receivable, or delayed the payment of accounts payable; and the
collection and payment of all such receivables and accounts payable,
respectively, have at all times been made in the ordinary course of business
consistent with past practice;

                          (p)   failed, in any material respect, to maintain
the TV Production Assets in accordance with good business practice and in good
operating condition and repair;

                          (q)   failed to renew any insurance policy that is
scheduled to terminate or expire within forty-five (45) calendar days of the
Effective Time;

                          (r)   incurred any indebtedness for borrowed money;

                          (s)   terminated, discontinued, closed or disposed of
any facility or other material business operation, or laid off employees;

                          (t)   suffered any casualty loss or damage with
respect to any of the TV Production Assets which in the aggregate have a
replacement cost of more than Ten Thousand ($10,000) Dollars whether or not
such loss or damage shall have been covered by insurance;

                          (u)   entered into or amended in any material respect
any employment agreement or adopted, or amended in any material respect, any
collective bargaining agreement or any employee benefit plan (as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA");

                          (v)   incurred any damage, destruction or similar
loss, whether or not covered by insurance, materially affecting the business,
assets, properties or business prospects of GJP;

                          (w)   entered into any other transaction of a
material nature other than in the ordinary course of business;





                                       10
<PAGE>   12
                          (x)   entered into any agreement or understanding
with any of its directors, officers or beneficial owners of more than 5% of the
outstanding GJP Common Stock or any of their respective Affiliates;

                          (y)   issued or sold any Common Stock or shares or
units of capital stock of any other class, notes, bonds, or other equity or
debt securities, or any options warrants or other rights to purchase or which
are convertible into the same, or entered into any written or oral agreement,
commitment or understanding with respect to the issuance and/or sale thereof,
except as contemplated by this Agreement;

                          (z)   declared, set aside or paid any dividend, or
made any other distribution on its capital stock or redeemed, purchased or
acquired any shares or units thereof or entered into any agreement in respect
of any of the foregoing;

                          (aa)  amended its Certificate of Incorporation or
By-laws;

                          (bb)  (i) purchased, sold, assigned or transferred
any material tangible or intangible assets or any material patent, trademark,
trade name, copyright, license, franchise, design or other intangible assets or
property, (ii) mortgaged, pledged or granted or suffered to exist any lien or
other encumbrance or charge on any material assets or properties, tangible or
intangible, or (iii) waived any rights of material value or canceled any
material debts or claims;

                          (cc)  incurred any contractual obligation or
liability (absolute or contingent) in excess of $100,000 in the aggregate in
one or a series of related transactions, except current liabilities and
obligations incurred in the ordinary course of business or paid any liability
or obligation (absolute or contingent) in excess of $100,000 other than current
liabilities and obligations incurred in the ordinary course of business
consistent with and in accordance with past practices; or

                          (dd)  agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 2.9 or granted any options to
purchase, rights of first refusal, rights of first offer or any other similar
rights or commitments with respect to any of the actions specified in this
Section 2.9, except as expressly contemplated by this Agreement.

                 2.10     Tax Matters.  (a) GJP has duly filed all federal,
state, county, local, foreign and other income, excise, sales, customs,
franchise, use, license, real and personal property, withholding, social
security and other tax and information returns and reports required to have
been filed by GJP to the date hereof, other than income tax returns or reports
for the year ending November 30, 1997, and has paid (or, in the case of
withholding taxes and obligations, has withheld and paid over as required) all
taxes, assessments, duties and other governmental charges (collectively,
"Taxes") (including interest, penalties and additions thereto, if any) shown on
such returns or reports to be due or claimed to be due prior to the date hereof
to any federal, state, county, local, foreign or other Governmental Authority.
GJP has paid, or has made adequate provision in the GJ Financial Statements
for, all Taxes (including interest, penalties and additions thereto, if any)





                                       11
<PAGE>   13
payable by GJP with respect to all periods to and including May 31, 1997.  GJP
does not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected on
the GJ Financial Statements and, to the best knowledge of GJP, there is no
basis for any additional material claims or assessments for Taxes other than
with respect to liabilities for Taxes that may have accrued since November 30,
1996 in the ordinary course of business of GJP or liabilities for Taxes
contested in good faith and with respect to which adequate reserve has been
reflected in the GJ Financial Statements, which are described on Schedule 2.10.
Except as set forth in Schedule 2.10, no federal income tax returns of GJP have
been examined by the Internal Revenue Service (the "IRS") and no proposed
additional Taxes, interest or penalties have been asserted with respect to
years not examined.  True copies of the federal, state and local income tax
returns of GJP for the years ended November 30, 1995 and November 30, 1996 have
been heretofore delivered or made available to TPEG.

                          (b)   In furtherance of the representations and
warranties set forth in paragraph (a) of this Section 2.10 and, except as
otherwise set forth in Schedule 2.10:

                                (i)    Filing of Returns.  As of the time of
                          filing, GJP's tax returns correctly reflected the
                          facts regarding GJP's income, business, assets,
                          operations, activities, status, other matters or any
                          other information shown or required to be shown
                          thereon.  No claim has ever been made by a taxing
                          authority in a jurisdiction where GJP does not file
                          tax returns with respect to a particular tax that it
                          is or may be subject to taxation by that jurisdiction
                          with respect to such tax.

                                (ii)   Liens.  There are no liens for taxes
                          other than for current taxes not yet due and payable
                          for which adequate provision shall have been made in
                          the GJ Financial Statements on the assets of GJP.

                                (iii)  Foreign Person.  GJP is not a person
                          other than a United States person within the meaning
                          of the Code.

                                (iv)   Audit History.  No issues have been
                          raised and no requests for information have been made
                          by any taxing authority in connection with any of the
                          GJP tax returns or with respect to any taxes to which
                          GJP is or may be subject.  No waivers of statutes of
                          limitation with respect to the tax returns or any
                          taxes to which GJP may be subject have been given by
                          or requested from GJP.  Schedule 2.10 sets forth by
                          Tax, taxing authority and taxable period (A) each tax
                          return filed by, or with respect to, any predecessor
                          for any taxable period ending on or after November
                          30, 1994, (B) the taxable periods of GJP as to which
                          the statute of limitations with respect to such Taxes
                          have not expired, and (c) with respect to such
                          taxable periods,  those years for which examinations 
                          have been completed, those years for which for which 
                          examinations are presently being conducted, those 
                          years for which



                                       12
<PAGE>   14

                          examinations have not been initiated, and those years
                          for which required tax returns have not yet been
                          filed.  GJP has delivered to TPEG correct and complete
                          copies of all such tax returns and all examination
                          reports, statements of deficiencies or other notices
                          from or correspondence with, taxing authorities with
                          respect thereto.  Except to the extent shown on
                          Schedule 2.10, all deficiencies asserted or
                          assessments made as a result of any examinations have
                          been fully paid, or will be fully reflected as a
                          liability in the GJ Financial Statements, or are being
                          contested and an adequate reserve therefor has been
                          established and will be fully reflected in the GJ
                          Financial Statements.  No power of attorney has been
                          granted with respect to any matter relating to Taxes
                          that could affect GJP.

                                (v)    Tax-Sharing or Allocation Agreements.
                          GJP is not a party to or bound by any tax-indemnity,
                          tax-sharing, or tax-allocation agreements.

                                (vi)   Prior Affiliated Groups.  GJP has never
                          been a member of an Affiliated Group (within the
                          meaning of the Code) nor has ever been included in
                          any group, consolidated or unitary Return.  GJP does
                          not have any liability for the Taxes of any Person
                          under Treas. Reg. Section  1.1502-6 (or any similar
                          provision of law), or as a transferee or successor,
                          by contract or otherwise.

                                (vii)  Tax Elections.  All material elections
                          with respect to Taxes affecting GJP are set forth in
                          Schedule 2.10.

                                (viii) Section 341(f) Consent.  GJP has not
                          filed a consent pursuant to the collapsible
                          corporation provisions of Section 341(f) of the Code
                          (or any similar provision of law) or agreed to have
                          Section 341(f)(2) of the Code (or any similar
                          provision of law) apply to any disposition of any
                          asset owned by it.

                                (ix)   Doing Business: Taxable Nexus.  GJP is
                          not doing business in or engaged in a trade or
                          business in, or has a taxable nexus with, any
                          jurisdiction in which it has not filed all applicable
                          Tax Returns.

                                (xi)   Records.  GJP has maintained such
                          records in reasonable detail in respect of
                          transactions, events and items (including those
                          required to support otherwise allowable deductions,
                          losses and credits) as are required under applicable
                          laws in respect of Taxes.

                                (xii)  Unpaid Tax.  The unpaid Taxes of GJP
                          shall not exceed the reserve for tax liability
                          (excluding any reserve for deferred Taxes established
                          to reflect timing differences between book and Tax
                          income) set forth on the





                                       13
<PAGE>   15

                          face of the Balance Sheets included in the GJ
                          Financial Statements (rather than in any notes
                          thereto).

                                (xiii)     Carryover of Unabsorbed Losses.
                          Except as set forth in Schedule 2.10, or as may
                          result or arise by reason of the Merger and other
                          transactions contemplated by this Agreement, neither
                          GJP nor either of the Stockholders has taken any
                          actions or filed any Tax Returns which restricted
                          GJP's utilization of any unabsorbed losses sustained
                          in prior periods to offset income to be earned by GJP
                          after the Effective Time in the lines of business
                          conducted by GJP as of the date hereof.

                 2.11     Material Contracts.  Attached as Schedule 2.11 is a
list which is complete and correct in all material respects as of the date of
this Agreement of all material agreements, contracts and commitments of GJP,
including all agreements, contracts and commitments of the following types,
written or oral, to which GJP is a party or by which the properties or assets
of GJP are bound as of the date of this Agreement:  (i) options to acquire
television scripts and similar prospective television production agreements and
co-production agreements for television series, made-for-television-movies and
mini-series and licensing and distribution agreements; (ii) indentures,
security agreements and other agreements and instruments relating to the
borrowing of money by or extension of credit to GJP; (iii) employment and
consulting agreements; (iv) collective bargaining agreements; (v) agreements,
orders or commitments not cancelable by GJP (without penalty) on not more than
30 days notice; (vi) motor vehicle, equipment and other personal property
leases; (vii) licenses of material patent, trademark and other proprietary
rights; (viii) agreements or commitments for capital expenditures in excess of
Twenty Five Thousand ($25,000) Dollars in the aggregate for all facilities;
(ix) brokerage or finder's agreements (excluding the "Sirius Agreement" defined
and described in Section 2.21 hereof); (x) surety bonds and letters of credit;
and (xi) agreements, contracts and commitments of a type other than those
described in the foregoing clauses (i) through (xi) which in any case involve
payments or receipts of more than Ten Thousand ($10,000) Dollars in the
aggregate.  GJP has delivered or made available to TPEG and TPEG Sub II
complete and correct copies of all written agreements, contracts and
commitments, together with all amendments thereto, and accurate descriptions of
all oral agreements, set forth on said Schedule 2.11.  Except as set forth in
Schedule 2.11 and except for defaults or failures to perform that do not and
will not materially adversely affect the financial condition, business or
operations of GJP, or title to or use of any of the assets or properties of
GJP, such agreements, contracts and commitments are in full force and effect
and, to the best knowledge of GJP, all parties thereto have performed all
material obligations required to be performed by them to date and are not in
default in any material respect thereunder.  Except as set forth in Schedule
2.11 and except for claims, defaults or events that in the aggregate do not and
will not materially adversely affect the financial condition, business,
operations or prospects of GJP or title to or use of the assets or properties
of GJP, no claim of default by any party has been made or is now pending under
any such agreement, contract or commitment and, to the best knowledge of GJP,
no event has occurred and is continuing that with notice or the passage of time
or both would constitute a material default thereunder or would excuse
performance by any party thereto.  No such agreement, contract or commitment
materially adversely affects or in the





                                       14
<PAGE>   16

future may (so far as GJP can now reasonably foresee) materially adversely
affect the business, condition, properties, assets, liabilities or operations
of GJP or of the Surviving Corporation.

                 2.12     Real Property.  (a) Schedule 2.12 sets forth a true,
complete and correct listing of all leases covering the real property in which
GJP holds the lessee's interest (collectively, the "GJP Leases").  Except as
set forth in Schedule 2.12, GJP holds the lessee's interest in all of the GJP
Leases, free and clear of all liens, claims and encumbrances.  GJP does not own
any real property.

                          (b)   Schedule 2.12 sets forth a true, complete and
correct listing of (i) all leases to which any of the GJP Leases are
subordinated (collectively, the "Underlying GJP Leases"), and (ii) all
Subleases of any of the GJP Leases (collectively, the "GJP Subleases").  True,
complete and correct copies of each GJP Lease, Underlying GJP Lease and GJP
Sublease have been delivered or made available by GJP to TPEG.

                          (c)   Except as set forth in Schedule 2.12, GJP has
no knowledge of and has not received any notice of default from the holder of
the lessor's interest in any GJP Leases or Underlying GJP Leases or the holder
of the lessee's interest in any GJP Subleases that has not heretofore been
cured.

                          (d)   Except as set forth in Schedule 2.12, neither
the premises leased under any GJP Lease, the use thereof by GJP nor any
condition existing with respect thereto, violates any laws, ordinances,
regulations or requirements (including, without limitation, zoning and use
regulations and building department requirements) affecting the same, which
violation would materially interfere with the operation or use of such premises
or materially diminish the value thereof.

                          (e)   Except as set forth in Schedule 2.12, to the
best knowledge of GJP, no Person has any interest in the lessee's interest
under any GJP Lease, Underlying GJP Lease or GJP Sublease or has any right or
option to acquire same or any part thereof.

                          (f)   As of the date of this Agreement, GJP has no
knowledge that any Person has paid or been paid any money, or has made or
contemplated making any agreement, written or oral, with respect to the
premises leased under any GJP Lease, Underlying GJP Lease or GJP Sublease or
portion thereof which would preclude, be in competition with or otherwise
interfere with the continued use and occupancy of such property by the
Surviving Corporation or could adversely affect the ability of the lessee
thereof to renew any GJP Lease.

                          (g)   Hazardous materials (as such term is defined in
any law applicable to GJP or its properties or assets) have not been released
or treated on any property leased, or, to the best knowledge of GJP, occupied
or used by GJP in its television production or other business activities  and
have not been generated, used, handled or stored on, or transported to or from,
any such property.  GJP has disposed of all wastes, including those wastes
containing hazardous materials, in compliance with all applicable laws and the
Permits.  There are no past, pending or, to





                                       15
<PAGE>   17

GJP's knowledge, threatened claims against GJP or any property covered by any
GJP Lease which relate to any environmental matters and GJP has not received
any notice of such claims.  No property leased, or occupied or used from time
to time by GJP in its production or other activities by GJP and, to the best
knowledge of GJP, no property adjoining any such property, is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA") or on
the Comprehensive Environmental Response, Compensation and Liability
Information System, as updated through the date hereof ("CERCLIS") or any
analogous state list of sites requiring investigation or cleanup and GJP has
not transported or arranged for the transportation of any hazardous materials
to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the CERCLIS or any analogous state list.

                          (h)   There are not now and never have been any
underground storage tanks located on any real property leased or, to the best
knowledge of GJP, occupied or used by GJP from time to time in its television
production or other activities.  GJP has never installed any such underground
storage tanks on any real property leased or applied by it.

                 2.13     Permits.  GJP currently holds all material health and
safety and other permits, licenses, authorizations, certificates, exemptions
and approvals of governmental authorities (collectively, "Permits"), including,
without limitation, environmental Permits, necessary or proper for the current
use, occupancy and operation of the real property occupied or used by GJP
pursuant to the GJP Leases.  All such Permits are currently valid and in full
force and effect.  There is no existing practice, action or activity of GJP and
no existing condition of the assets or business of GJP which is reasonably
likely to give rise to any civil or criminal liability under, or violate or
prevent compliance with, any health or occupational safety or other similar
applicable law.  GJP has not received any notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying or refusing to
renew any Permit or providing written notice of violations under any law.  GJP
is in all material respects in compliance with the requirements of the Permits.
No consent of any Governmental Authority will be required with respect to any
Permit in the event of the consummation of the transactions contemplated by
this Agreement.

                 2.14     Litigation.  Schedule 2.14 sets forth a true,
complete and correct listing of all pending actions, suits or proceedings to
which GJP is a party.  Except as disclosed in Schedule 2.14, there are no
actions, suits or proceedings or investigations pending or, to the best
knowledge of GJP, threatened against or adversely affecting the business,
operations or financial condition of GJP at law or in equity in any court or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality or any arbitrator.  GJP is
not in default in respect of any judgment, order, writ, injunction or decree of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, authority, agency or instrumentality.

                 2.15     Certain Interests.  Except as disclosed in Schedule
2.15, neither GJP nor any Affiliate, nor any officer or director of GJP, no
relative or spouse (or relative of such spouse) who





                                       16
<PAGE>   18

resides with, or is a dependent of , any such Person: (a) has any direct or
indirect financial interest in any competitor, supplier or customer of GJP or
(b) owns, directly or indirectly, in whole or in part, or has any other
interest in any tangible or intangible property which GJP uses or has used in
the conduct of their respective businesses or otherwise.

                 2.16     Labor Relations.  Schedule 2.16 contains a correct
and complete list of all collective  bargaining, employment, labor and similar
agreements (other than the "GJP Benefit Plans" defined and described in Section
2.18),  whether written or oral, to which GJP is a party or by which it is or
they are bound.  True and correct copies of all such agreements have been
supplied to TPEG.  GJP has complied with its obligations related to, and is not
in default under, any written or oral employment agreements, collective
bargaining agreements and any written or oral personnel policies to which they
are parties or by which they are bound.  GJP is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not and have not engaged
in any unfair labor practices.  Except as set forth in Schedule 2.16:

                 (a)      there is no unfair labor practice charge or complaint
against GJP pending or, to the best knowledge of GJP, threatened before the
National Labor Relations Board or any other Governmental Authority;

                 (b)      there has not occurred nor, to the best knowledge of
GJP, has there been threatened, a labor strike, request for representation,
work slowdown or stoppage or lockout;

                 (c)      there has not been any representation claim or
petition pending before the National Labor Relations Board respecting any
employees of GJP during the past five (5) years;

                 (d)      no grievance nor any arbitration proceeding arising
out of any collective bargaining agreement to which GJP is a party is pending;

                 (e)      no charges with respect to or relating to GJP are
pending before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices;

                 (f)      no claim relating to employment or loss of employment
with GJP is pending in any federal, state or local court or in or before any
other adjudicatory body and, to the best knowledge of GJP, no such claims has
been threatened;

                 (g)      GJP has not received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of
labor or employment laws, rules or regulations to conduct an investigation of
or relating to GJP, and no such investigation is in progress;





                                       17
<PAGE>   19
                 (h)      GJP has paid in full to all of its employees, or
adequately accrued for in accordance with GAAP, all wages, salaries,
commissions, bonuses, benefits and other compensation due to or on behalf of
such employees;

                 (i)      there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or, to the best
knowledge of GJP, threatened before any Governmental Authority with respect to
any Persons currently or formerly employed by GJP; and

                 (j)      GJP is not a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices.

                 2.17     Compliance with Laws. GJP has all material Permits,
licenses, orders and approvals of all federal, state or local governmental or
regulatory authorities which are required to conduct the business of GJP as
presently conducted.  All such Permits, licenses, orders and approvals are in
full force and effect and, to the best knowledge of GJP, no suspension or
cancellation of any of them is threatened.  Except as set forth in Schedule
2.17, none of such Permits, licenses, orders or approvals will be adversely
affected by the consummation of the Merger.  GJP is in compliance in all
material respects with the rules and regulations of all governmental agencies
having authority over it, including, without limitation, agencies concerned
with occupational, safety, environmental protection and employment practices,
and GJP has not received notice of violation of or failure to comply with any
such rules or regulations within the last three years, the failure to comply
with which could have a material adverse effect on the financial condition,
business or operations of GJP.

                 2.18     Employee Benefit Plans.  (a) Schedule 2.18 sets forth
a true, complete and correct listing of all employee benefit plans (as defined
in Section 3(3) of ERISA) maintained by GJP (the "GJP Benefit Plans").  True,
correct and complete copies of the GJP Benefit Plans have heretofore been
delivered to TPEG.

                          (b)   None of the GJP Benefit Plans is a
multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) subject to Title IV of ERISA.  None of the GJP Benefit
Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates GJP to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control" within the meaning of such term under Section 280G of the Code.  None
of the GJP Benefit Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of GJP.  Each of the GJP Benefit Plans is subject only to the laws of
the United States or a political subdivision thereof.  GJP does not sponsor,
maintain or contribute to a voluntary employees' beneficiary association
intended to be exempt under Section 501(c)(9) of the Code.

                          (c)   Each GJP Benefit Plan is now and always has
been operated in all material respects in accordance with the requirements of
all applicable laws, including, without





                                       18
<PAGE>   20

limitation, ERISA and the Code, and all persons who participate in the
operation of such GJP Benefit Plans and all Plan "fiduciaries" (within the
meaning of Section 3(21) of ERISA) have always acted in accordance with all
applicable laws, including, without limitation, ERISA and the Code.  GJP has
performed all obligations required to be performed by it under, is not in any
respect in material default under or in violation of, and has no knowledge of
any default or violation by any party to, any GJP Benefit Plan.  No legal
action, suit or claim is pending or threatened with respect to any GJP Benefit
Plan (other than claims for benefits in the ordinary course) and no fact or
event is known that could give rise to any such action, suit or claim.

                          (d)   Each GJP Benefit Plan, which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code, has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any GJP Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event is known to have occurred since the date of such determination
letter from the IRS to materially adversely affect the qualified status of any
such GJP Benefit Plan or the exempt status of any such trust.

                          (e)   There has been no material prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any GJP Benefit Plan.  GJP has not incurred any material
liability for any penalty or tax arising under Section 4971, 4972, 4980, 4980B
or 6652 of the Code or any liability under Section 502 of ERISA, and no fact or
event exists which could give rise to any such material liability. GJP has not
incurred any liability under, arising out of or by operation of Title IV of
ERISA including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any multi-employer plan, and no fact or
event exists which could give rise to any such liability.  No complete or
partial termination has occurred within the five years preceding the date
hereof with respect to any GJP Benefit Plan.

                          (f)   All contributions, premiums or payments
required to be made with respect to any GJP Benefit Plan have been made on or
before their due dates and GJP has no unfunded liabilities or obligations with
respect to or arising out of any GJP Benefit Plan.  All such contributions have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and no fact or event is known
to exist which could give rise to any such challenge or disallowance.

                          (g)   Each of the guaranteed investment contracts and
other funding contracts with any insurance company that are held by any of the
GJP Benefit Plans and any annuity contracts purchased by (i) any of the GJP
Benefit Plans or (ii) any pension benefit plan (as defined in Section 3(2) of
ERISA) that provided benefits to any current or former employees of GJP was
issued by an insurance company which carried the highest rating from each of
the nationally recognized rating agencies, as of the date such contract was
issued, the date hereof and the Effective Time.





                                       19
<PAGE>   21
                          (h)   GJP is in material compliance with the
requirements of the Americans With Disabilities Act and the Workers Adjustment
and Retraining Notification Act and, as of the date hereof, GJP has incurred no
liabilities under either such statutes.

                 2.19     Patents, Copyrights, Trademarks, Etc.  Schedule 2.19
sets forth a true, complete and correct listing of all material patents, trade
names, trademarks, service marks, copyrights, pending applications for any of
the foregoing, and other proprietary rights of GJP and all agreements for the
licensing thereof by, or to and in favor of, GJP.  Except as set forth in
Schedule 2.19, GJP owns, or possesses adequate rights to use, all material
patents, trade names, trademarks, service marks, copyrights, inventions,
processes, designs, formulae, trade secrets, know how and other proprietary
rights necessary for the conduct of their business, with no known infringement
by GJP of the rights (asserted or unasserted) of any Person arising by reason
of any of the foregoing.  GJP has no knowledge of any infringement by any third
party upon any patent, trade name, trademark, service mark or copyright owned
or used by GJP, and GJP has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of
operations of GJP.

                 2.20     Insurance.  GJP has made available to TPEG complete
and correct copies of all insurance policies maintained by GJP, together with
all riders, endorsements and amendments thereto.  All such policies are in full
force and effect and all premiums due thereon as of the date have been paid.
Such insurance policies provide GJP with adequate insurance (both as to type
and amount) with respect to risks and perils of a business of the size and type
carried on by GJP as of the date hereof.  GJP has complied in all material
respects with the provisions of all such policies.

                 2.21     Compensation to be Paid in Connection With the
Merger.  Attached as Schedule 2.21 is a true copy of an agreement, dated July
14, 1997  Sirius Corporate Finance Inc. ("Sirius") and TPEG pursuant to which
Sirius is to receive compensation for its services in connection with the
Merger (the "Sirius Agreement").  Except for the engagement of Sirius pursuant
to the Sirius Agreement, neither GJP nor any of the Other GJ Companies, nor
Grosso or Jacobson or any of their respective Affiliates has engaged or
employed any investment banking firm, broker, finder or intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee, commission or other compensation in connection with or
upon consummation of the Merger.  GJP and the Stockholders hereby jointly and
severally indemnify, defend and hold TPEG and all of its subsidiaries,
including TPEG Sub II, harmless from and against any and all claims,
liabilities or obligations with respect to any additional or other finder's or
similar fees, commissions or expenses asserted or claimed by Sirius, other than
pursuant to the Sirius Agreement,  or by any other Person on the basis of any
act or statement alleged to have been taken or made by GJP, either of the Other
GJ Companies or either of Grosso or Jacobson.

                 2.22     GCL Section 203 Not Applicable.  The provisions of
Section 203 of the GCL will not, prior to the termination of this Agreement,
apply to this Agreement or the Merger or any of the transactions contemplated
hereby.





                                       20
<PAGE>   22
                 2.23     Disclosure.  The representations and warranties of
GJP, and each of Grosso and Jacobson set forth in this Agreement, the
certificates, statements and other information furnished to TPEG and TPEG Sub
II in writing by or on behalf of GJP and each of Grosso and Jacobson in
connection with the transactions contemplated hereby, including the Schedules
hereto, do not as of the date of this Agreement, and as of the Effective Time
shall not, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  As of the date
hereof, neither GJP nor Grosso or Jacobson knows of any fact or condition which
materially adversely affects, or in the future may (so far as GJP, or Grosso or
Jacobson can now reasonably foresee) materially adversely affect the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or business prospects of GJP which has not been set forth herein or disclosed
to TPEG in writing with reference to this Agreement.



               ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF TPEG

                 TPEG represents and warrants to GJP, Grosso and Jacobson as
follows:

                 3.1      Organization and Authorization.  TPEG and each of the
subsidiaries of TPEG, including TPEG Sub II, (i) is a corporation duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation, (ii) has the corporate power and authority
to own or lease and operate the properties and assets now owned or leased and
operated by it and to carry on its business as it is now being conducted, and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership of its properties or both makes such qualification necessary.  TPEG
has delivered to GJP complete and correct copies of its Certificate
Incorporation and By-laws, as amended and in effect on the date of this
Agreement.  TPEG has the corporate power to enter into this Agreement and to
carry out its obligations hereunder.  The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of TPEG and no other
corporate proceedings on the part of TPEG are necessary to authorize this
Agreement and the consummation of the transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by TPEG and
constitutes the legal, valid and binding agreement of TPEG, enforceable against
TPEG in accordance with its terms subject to the laws of bankruptcy,
insolvency, or creditor rights and equitable remedies.  Schedule 3.1 contains a
complete list of the subsidiaries of TPEG, including TPEG Sub II, each of which
is wholly-owned by TPEG except as noted therein.

                 3.2      Non-Contravention.  Except as set forth in Schedule
3.2, the execution and delivery by TPEG of this Agreement and the consummation
by TPEG of the transactions contemplated hereby will not (a) violate any
provision of the Certificate of Incorporation or By-laws of TPEG or any
subsidiary of TPEG, (b) subject to receipt of the Consents referred to in
Section 7.1(c), violate any material provision of or result in the breach or
the acceleration of or entitle any





                                       21
<PAGE>   23

party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation of TPEG under any TPEG Lease (as such term is
defined in Section 3.10 hereof), or other material agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which TPEG or any subsidiary of TPEG is a party or by which TPEG
or any subsidiary of TPEG is bound, (c) result in the creation or imposition of
any material lien, charge, pledge, security interest or other encumbrance upon
any asset or property of TPEG or any subsidiary of TPEG or (d) violate or
conflict with in any material respect any other material restriction or any
law, ordinance or rule to which TPEG or any subsidiary of TPEG, or the property
or assets of TPEG or any subsidiary of TPEG, is subject.

                 3.3      Consents and Approvals.  Except for the filing of a
Certificate of Merger with the Secretary of State of the State of Delaware and
except as set forth in Schedule 3.3, no consent, approval, order or
authorization of, or registration or declaration with, any Governmental
Authority or agency is required in connection with the execution and delivery
of this Agreement by TPEG or the consummation by TPEG of the transactions
contemplated hereby.

                 3.4      Capital Stock.  The authorized capital stock of TPEG
consists of 50,000,000  Shares of TPEG Common Stock, par value $.001 per share,
of which 12,912,761 shares were issued and outstanding as of September 12,
1997, and 10,000,000 Shares of Series A Preferred Stock, $.001 par value per
share (the "Series A Stock"), of which 1,000,000 shares were issued and
outstanding as of June 30, 1997.  All outstanding Shares of TPEG Common Stock
are duly authorized, validly issued, fully paid and nonassessable.  Schedule
3.4 sets forth the total number of Shares of TPEG Common Stock reserved for
issuance pursuant to outstanding stock options, warrants of all series, and
Series A Stock.  As of the date hereof, except as contemplated by this
Agreement and the agreements governing the Other Mergers or as set forth in
Schedule 3.4, neither TPEG nor any of subsidiary of TPEG has or is a party to
any outstanding offers, subscriptions, options, warrants, rights or other
agreements or commitments obligating TPEG or any such subsidiary to issue or
sell, or cause to be issued or sold, any shares of capital stock of TPEG
(including TPEG Common Stock) or of any such subsidiary or any securities or
obligations convertible into or exchangeable for or giving any Person any right
to acquire any such shares, or obligating TPEG or any such subsidiary to enter
into any such agreement or commitment.

                 3.5      Financial Statements.  The consolidated balance sheet
as of June 30, 1996 of TPEG and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period then ended, examined and reported upon by Kellogg & Andelson,
independent accountants, complete copies of which have previously been
delivered to GJP (plus the unaudited financial statements included in its
Quarterly Reports on Form 10-Q through the quarter ended March 31, 1997, which
are described in Section 3.6 hereof, the "TPEG Financial Statements"), have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis and fairly present the financial position of TPEG
at such date and the results of its operations and cash flows for such periods.
Except as disclosed or provided for in such TPEG Financial Statements
(including the notes thereto) or in Schedule 3.5, (i) TPEG had no liabilities,
commitments or obligations of any kind, whether accrued, absolute, contingent
or





                                       22
<PAGE>   24

otherwise, and whether due or to become due, required to be reflected in any
such financial statements, including the notes thereto, under generally
accepted accounting principles that are material to the business or condition
(financial or otherwise) of TPEG as of March 31, 1997, and (ii) TPEG owns the
properties and assets reflected in such TPEG Financial Statements free and
clear of any liens, charges, pledges, security interests or other encumbrances,
other than those (a) described in the TPEG Financial Statements, (b) which do
not have a material adverse effect on the business, financial condition or
results of operations of TPEG and its subsidiaries, taken as a whole, or (c)
which do not adversely affect title to or the use of such properties or assets.

                 3.6      Periodic SEC Filings.  TPEG has heretofore delivered
or made available to GJP, receipt of which is hereby acknowledged by GJP, (i)
its Annual Reports on Form 10-K for the years ended June 30, 1995 and June 30,
1996 as filed with the U.S. Securities and Exchange Commission (the "SEC");
(ii) all Quarterly Reports on Form 10-Q for the quarterly periods commencing
with the quarter ended September 30, 1995 through the quarter ended March 31,
1997; and  (iii) any other reports or registration statements filed by TPEG
with the SEC since March 31, 1997.  As of their respective dates, such reports
and statements did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  3.7     Conduct in the Ordinary Course; Absence of Certain
Changes, Events and Conditions.  Since March 31, 1997, except as disclosed on
Schedule 3.7 or specifically contemplated by this Agreement, the business of
TPEG and of its subsidiaries has been conducted in the ordinary course and
consistent with past practice.  As amplification and not in limitation of the
foregoing, except as disclosed in or specifically contemplated by this
Agreement or the agreements governing the Other Mergers, or in the ordinary
course of business consistent with past practice of TPEG and its subsidiaries
since such date, neither TPEG nor its subsidiaries have:

                          (a)   amended or terminated any contract, lease or
license, or the rights thereunder;

                          (b)   caused, permitted or allowed any material
assets or properties (whether tangible or intangible) to be subjected to any
lien or encumbrance;

                          (c)   discharged or otherwise obtained the release of
any encumbrance or paid or otherwise discharged any material liability;

                          (d)   suffered any material adverse effect on the
business, business prospects or financial condition of or the occurrence of any
event or events which, individually, or in the aggregate, has or have had, or
could reasonably be expected to have, such a material adverse effect;

                          (e)   made any loan to, guaranteed any indebtedness
of or otherwise incurred any Indebtedness on behalf of any Person or
individual;





                                       23
<PAGE>   25
                          (f)   failed to pay any creditor any material amount
owed to such creditor upon the later of when such amount became due or within
any applicable grace period;

                          (g)   made any material changes in the customary
methods of operations, including, without limitation, practices and policies
relating to the acquisition, development, production, selling, licensing, or
distribution of television movies, series or mini-series for network TV, cable
TV or other markets;

                          (h)   made any capital expenditure or commitment for
any capital expenditure in excess of Ten Thousand ($10,000) Dollars
individually or Twenty Five Thousand ($25,000) Dollars in the aggregate;

                          (i)   sold, transferred, leased, subleased, licensed
or otherwise disposed of any properties or assets, real, personal or mixed
(including, without limitation, leasehold interests and intangible assets);

                          (j)   entered into any agreement, arrangement or
transaction with any of its directors, officers, employees or shareholders (or
with any relative, beneficiary, spouse or Affiliate of such Person);

                          (k)   (i) granted any material increase, or announced
any material increase, in the wages, salaries, compensation, bonuses,
incentives, pension or other benefits payable by TPEG to any of its employees,
including, without limitation, any increase or change pursuant to any employee
compensation or bonus plan or (ii) established or increased or promised to
increase any material benefits under any such employee plan, in either case
except as required by Law;

                          (l)   written down or written up (or failed to write
down or write up in accordance with GAAP consistent with past practice) the
value of any tangible or intangible assets or any receivables;

                          (m)   amended, terminated, canceled or compromised
any material claims or waived any other material rights;

                          (n)   made any change in any method of accounting or
accounting practice or policy other than such changes as are required by GAAP;

                          (o)   accelerated or discounted the collection of
accounts receivable, or delayed the payment of accounts payable; and the
collection and payment of all such receivables and accounts payable,
respectively, have at all times been made in the ordinary course of business
consistent with past practice;

                          (p)   failed, in any material respect, to maintain
the TV Production Assets in accordance with good business practice and in good
operating condition and repair;





                                       24
<PAGE>   26
                          (q)   failed to renew any insurance policy that is
scheduled to terminate or expire within forty-five (45) calendar days of the
Effective Time;

                          (r)   incurred any indebtedness for borrowed money;

                          (s)   terminated, discontinued, closed or disposed of
any facility or other material business operation, or laid off employees;

                          (t)   suffered any casualty loss or damage with
respect to any of the TV Production Assets which, in the aggregate, have a
replacement cost of more than Ten Thousand ($10,000) Dollars whether or not
such loss or damage shall have been covered by insurance;

                          (u)   except as contemplated by this Agreement,
entered into or amended in any material respect any employment agreement or
adopted, or amended in any material respect, any collective bargaining
agreement or any employee benefit plan (as such term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA");

                          (v)   incurred any damage, destruction or similar
loss, whether or not covered by insurance, materially affecting the business,
assets, properties or business prospects of TPEG or of any of its subsidiaries;

                          (w)   entered into any other transaction of a
material nature other than in the ordinary course of business;

                          (x)   entered into any agreement or understanding
with any of its directors, officers or beneficial owners of more than 5% of the
outstanding TPEG Common Stock or any of their respective Affiliates (as defined
below);

                          (y)   issued or sold any Common Stock or shares or
units of capital stock of any other class, notes, bonds, or other equity or
debt securities, or any options, warrants or other rights to purchase or which
are convertible into the same, or entered into any written or oral agreement,
commitment or understanding with respect to the issuance and/or sale thereof,
except as contemplated by this Agreement and the Other Merger Agreements; or

                          (z)   declared, set aside or paid any dividend
(except for quarterly dividends required to be paid by TPEG on its outstanding
Series A Stock), or made any other distribution on its capital stock or
redeemed, purchased or acquired any shares or units thereof or entered into any
agreement in respect of any of the foregoing;

                          (aa)  amended its Certificate of Incorporation or
By-laws;

                          (bb)  (i) purchased, sold, assigned or transferred
any material tangible or intangible assets or any material patent, trademark,
trade name, copyright, license, franchise, design





                                       25
<PAGE>   27

or other intangible assets or property, (ii) mortgaged, pledged or granted or
suffered to exist any lien or other encumbrance or charge on any material
assets or properties, tangible or intangible, or (iii) waived any rights of
material value or canceled any material debts or claims;

                          (cc)  incurred any contractual obligation or
liability (absolute or contingent) in excess of One Hundred Thousand ($100,000)
Dollars in the aggregate in one or a series of related transactions, except
current liabilities and obligations incurred in the ordinary course of
business, made any capital improvement in excess of One Hundred Thousand
($100,000) Dollars or paid any liability or obligation (absolute or contingent)
in excess of One Hundred Thousand ($100,000) Dollars, other than current
liabilities and obligations incurred in the ordinary course of business
consistent with and in accordance with past practices; or

                          (dd)  agreed, whether in writing or otherwise, to
take any of the actions specified in this Section 3.7 or granted any options to
purchase, rights of first refusal, rights of first offer or any other similar
rights or commitments with respect to any of the actions specified in this
Section 3.7, except as expressly contemplated by this Agreement.

                 3.8      Taxes.  TPEG has duly filed all federal, state,
county, local, foreign and other income, excise, sales, customs, franchise,
use, license, real and personal property, withholding, social security and
other tax (the "Taxes") and information returns and reports required to have
been filed by TPEG and its Subsidiaries to the date hereof, other than income
tax returns for the year ended June 30, 1997, and has paid (or, in the case of
withholding taxes and obligations, has withheld and paid over as required) all
Taxes (including interest, penalties and additions thereto, if any) shown on
such returns or reports to be due or claimed to be due prior to the date hereof
to any federal, state, county, local, foreign or other Governmental Authority.
TPEG has paid or made adequate provision in the TPEG Financial Statements for
all Taxes (including interest, penalties and additions thereto, if any) payable
by TPEG with respect to all periods to and including March 31, 1997.  TPEG does
not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected in
the TPEG Financial Statements and, to the best knowledge of TPEG, there is no
basis for any additional material claims or assessments for Taxes other than
with respect to liabilities for Taxes that may have accrued since March 31,
1997 in the ordinary course of business of TPEG and its subsidiaries or
liabilities for Taxes contested in good faith, which are described on Schedule
3.8.  No federal income tax returns of TPEG have been examined by the IRS and
no proposed additional Taxes, interest or penalties have been asserted with
respect to years not examined.  True copies of the federal, state and local
income tax returns of TPEG for the years ended June 30, 1996 and June 30, 1995
have been heretofore delivered or made available to GJP.  No consent has been
filed by TPEG pursuant to Section 341(f) of the Code.

                 3.9      Real Property.  (a) Schedule 3.9 sets forth a true,
complete and correct listing of  all leases covering the real property in which
TPEG or any subsidiary of TPEG holds the lessee's interest (collectively, the
"TPEG Leases").  Except as set forth in Schedule 3.9, TPEG or a subsidiary of
TPEG holds the lessee's interest in all of the TPEG Leases, free and clear of
all





                                       26
<PAGE>   28

material liens and encumbrances.  Neither TPEG nor any of its subsidiaries owns
any real property.

                          (b)   Schedule 3.9 sets forth a true, complete and
correct listing in all material respects of (i) all leases to which any of the
TPEG Leases are subordinated (collectively, the "Underlying TPEG Leases"), and
(ii) all subleases of any of the TPEG Leases (collectively, the "TPEG
Subleases").  True, complete and correct copies of each TPEG Lease, Underlying
TPEG Lease and TPEG Subleases have been delivered or made available by TPEG to
GJP.

                          (c)   Except as set forth in Schedule 3.9, TPEG has
no knowledge of and has not received any notice of default from the holder of
the lessor's interest in any TPEG Lease or Underlying TPEG Lease or the holder
of the lessee's interest in any TPEG Subleases that has not heretofore been
cured.

                          (d)   Except as set forth in Schedule 3.9, neither
the premises leased under any TPEG Lease, the use thereof by TPEG or a
subsidiary of TPEG, nor any condition existing with respect thereto, violates
any laws, ordinances, regulations or requirements (including, without
limitation, zoning and use regulations and building department requirements)
affecting the same, which violation would materially interfere with the
operation or use of such premises or materially diminish the value thereof.

                          (e)   Except as set forth in Schedule 3.9, to the
best knowledge of TPEG, no Person has any interest in the lessee's interest
under any TPEG Lease, Underlying TPEG Lease or TPEG Sublease or has any right
or option to acquire same or any part thereof.

                          (f)   Except as set forth in Schedule 3.9, TPEG has
no knowledge and has received no notice of any condemnation proceeding
affecting any premises leased under any TPEG Lease.

                          (g)   As of the date of this Agreement, TPEG has no
knowledge that any Person has paid or been paid any money, or has made or
contemplated making any agreement, written or oral, with respect to premises
leased under any TPEG Lease, Underlying TPEG Lease or TPEG Sublease or portion
thereof which would preclude, be in competition with or otherwise interfere
with the continued use and occupancy of such property by TPEG or could
adversely affect the ability of the lessee thereof to renew any TPEG Lease.

                          (h)   Hazardous materials (as such term is defined in
any law applicable to TPEG or its properties or assets) have not been released
or treated on any property leased, or, to the best of TPEG's knowledge,
occupied or used by TPEG in its television production or other business
activities  and have not been generated, used, handled or stored on, or
transported to or from, any such property.  TPEG has disposed of all wastes,
including those wastes containing hazardous materials, in compliance with all
applicable laws and the Permits.  There are no past, pending or, to the best of
TPEG's knowledge, threatened claims against TPEG or any property covered by any





                                       27
<PAGE>   29

TPEG Lease which relate to any environmental matters and TPEG has not received
any written notice of such claims.  No property leased, or occupied or used
from time to time by TPEG in its production or other activities by TPEG and, to
the best of TPEG's knowledge, no property adjoining any such property, is
listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") or on the Comprehensive Environmental Response, Compensation and
Liability Information System, as updated through the date hereof ("CERCLIS") or
any analogous state list of sites requiring investigation or cleanup and TPEG
has not transported or arranged for the transportation of any hazardous
materials to any location that is listed or proposed for listing on the
National Priorities List under CERCLA or on the CERCLIS or any analogous state
list.

                          (i)   There are not now and never have been any
underground storage tanks located on any real property leased or, to the best
knowledge of TPEG, occupied or used by TPEG from time to time in its television
production or other activities.  TPEG has not installed any such underground
storage tanks on any real property leased or occupied by it.

                 3.10     Litigation.  Schedule 3.10 sets forth a true,
complete and correct listing of all pending actions, suits or proceedings to
which TPEG or any subsidiary of TPEG is a party.  Except as disclosed in
Schedule 3.10, there are no actions, suits or proceedings or investigations
pending or, to the best knowledge of TPEG, threatened against or adversely
affecting the business, operations or financial condition of TPEG and its
subsidiaries, taken as a whole, at law or in equity in any court or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality or any arbitrator.  Neither TPEG nor
any subsidiary of TPEG is in default in respect of any judgment, order, writ,
injunction or decree of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency, authority or
instrumentality.

                 3.11     Labor Relations.  Schedule 3.11 contains a correct
and complete list of all collective  bargaining, employment, labor and similar
agreements (other than the "TPEG Benefit Plans" defined and described in
Section 3.13),  whether written or oral, to which TPEG or any subsidiary of
TPEG is a party or by which it is or they are bound.  True and correct copies
of all such agreements have been supplied to GJP.  TPEG and each subsidiary of
TPEG have complied with their respective obligations related to, and are not in
default under, any written or oral employment agreements, collective bargaining
agreements or any written or oral personnel policies to which they are parties
or by which they are bound.  TPEG and each subsidiary of TPEG are in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and are not and have not
engaged in any unfair labor practices.  Except as set forth in Schedule 3.11:

                 (a)      there is no unfair labor practice charge or complaint
against TPEG or any subsidiary of TPEG pending or, to the best knowledge of
TPEG, threatened before the National Labor Relations Board or any other
Governmental Authority;





                                       28
<PAGE>   30

                 (b)      there has not occurred nor, to the best knowledge of
TPEG, has there been threatened, a labor strike, request for representation,
work slowdown or stoppage or lockout;

                 (c)      there has not been any representation claim or
petition pending before the National Labor Relations Board respecting any
employees of TPEG or any subsidiary of TPEG during the past five (5) years;

                 (d)      no grievance nor any arbitration proceeding arising
out of any collective bargaining agreement to which TPEG or any TPEG subsidiary
is a party is pending;

                 (e)      no charges with respect to or relating to TPEG or any
TPEG subsidiary are pending before the Equal Employment Opportunity Commission
or any state, local or foreign agency responsible for the prevention of
unlawful employment practices;

                 (f)      no claim relating to employment or loss of employment
with TPEG or any TPEG subsidiary is pending in any federal, state or local
court or in or before any other adjudicatory body and, to the best knowledge of
TPEG, no such claims has been threatened;

                 (g)      neither TPEG nor any TPEG subsidiary has received
written notice of the intent of any federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws, rules or
regulations to conduct an investigation of or relating to TPEG, and, to the
best knowledge of TPEG, no such investigation is in progress;

                 (h)      TPEG and each subsidiary of TPEG have paid in full to
all of its employees, or adequately accrued for in accordance with GAAP, all
wages, salaries, commissions, bonuses, benefits and other compensation due to
or on behalf of such employees;

                 (i)      there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or, to the best
knowledge of TPEG, threatened before any Governmental Authority with respect to
any Persons currently or formerly employed by TPEG or any subsidiary of TPEG;
and

                 (j)      neither TPEG nor any subsidiary of TPEG is a party
to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices.

                 3.12     Permits; Compliance with Laws.  TPEG has all material
permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory authorities which are required to conduct the
business of TPEG and its subsidiaries as presently conducted.  All such
permits, licenses, orders and approvals are in full force and effect and, to
the best knowledge of TPEG, no suspension or cancellation of any of them is
threatened.  Except as set forth in Schedule 3.12, none of such permits,
licenses, orders or approvals will be adversely affected by the consummation of
the Merger.  TPEG and its subsidiaries are in compliance in all material
respects





                                       29
<PAGE>   31

with the rules and regulations of all governmental agencies having authority
over TPEG and its subsidiaries, including, without limitation, agencies
concerned with occupational safety, environmental protection and employment
practices, and neither TPEG nor any subsidiary of TPEG has received notice of
violation of or failure to comply with any such rules or regulations within the
last three years, the failure to comply with which could have a material
adverse effect on the financial condition, business or operations of TPEG and
its subsidiaries, taken as a whole.

                 3.13     Employee Benefit Plans.  (a) Schedule 3.13 sets forth
a true, complete and correct listing of all employees benefit plans (as defined
in Section 3(3) of ERISA) maintained by TPEG or any subsidiary of TPEG (the
"TPEG Benefit Plans").  True, correct and complete copies of the TPEG Benefit
Plans have heretofore been delivered to GJP.

                          (b)   None of the TPEG Benefit Plans is a
multi-employer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) Subject to Title IV of ERISA.  None of the TPEG Benefit
Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates TPEG to pay separation,
severance, termination or similar-type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control" within the meaning of such term under Section 280G of the Code.  None
of the TPEG Benefit Plans provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of TPEG.  Each of the TPEG Benefit Plans is Subject only to the laws
of the United States or a political Subdivision thereof.  TPEG does not
sponsor, maintain or contribute to a voluntary employees' beneficiary
association intended to be exempt under Section 501(c)(9) of the Code.

                          (c)   Each TPEG Benefit Plan is now and always has
been operated in all material respects in accordance with the requirements of
all applicable laws, including, without limitation, ERISA and the Code, and all
persons who participate in the operation of such TPEG Benefit Plans and all
Plan "fiduciaries" (within the meaning of Section 3(21) of ERISA) have always
acted in accordance with all applicable laws, including, without limitation,
ERISA and the Code.  TPEG has performed all obligations required to be
performed by it under, is not in any respect in material default under or in
violation of, and has no knowledge of any default or violation by any party to,
any TPEG Benefit Plan.  No legal action, suit or claim is pending or threatened
with respect to any TPEG Benefit Plan (other than claims for benefits in the
ordinary course) and no fact or event is known that could give rise to any such
action, suit or claim.

                          (d)   Each TPEG Benefit Plan which is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any TPEG Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event is known to have occurred since the date of such determination
letter from the IRS to materially adversely affect the qualified status of any
such TPEG Benefit Plan or the exempt status of any such trust.





                                       30
<PAGE>   32

                          (e)   There has been no material prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any TPEG Benefit Plan.  TPEG has not incurred any
material liability for any penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the Code or any liability under Section 502 of ERISA,
and no fact or event exists which could give rise to any such material
liability. TPEG has not incurred any liability under, arising out of or by
operation of Title IV of ERISA including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan Subject to Title IV of ERISA or (ii) the withdrawal from any
multi-employer plan, and no fact or event exists which could give rise to any
such liability.  No complete or partial termination has occurred within the
five years preceding the date hereof with respect to any TPEG Benefit Plan.

                          (f)   All contributions, premiums or payments
required to be made with respect to any TPEG Benefit Plan have been made on or
before their due dates and TPEG has no unfunded liabilities or obligations with
respect to or arising out of any TPEG Benefit Plan.  All such contributions
have been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and no fact or event is known
to exist which could give rise to any such challenge or disallowance.

                          (g)   Each of the guaranteed investment contracts and
other funding contracts with any insurance company that are held by any of the
TPEG Benefit Plans and any annuity contracts purchased by (i) any of the TPEG
Benefit Plans or (ii) any pension benefit plan (as defined in Section 3(2) of
ERISA) that provided benefits to any current or former employees of TPEG was
issued by an insurance company which carried the highest rating from each of
the nationally recognized rating agencies, as of the date such contract was
issued, the date hereof and the Effective Time.

                 3.14     Patents, Trademarks, Etc.  Schedule 3.14 sets forth a
true, complete and correct listing of all material patents, trade names,
trademarks, service marks, copyrights, pending applications for any of the
foregoing, and other proprietary rights of TPEG and its subsidiaries and all
agreements for the licensing thereof.  Except as set forth in Schedule 3.14,
TPEG and/or its subsidiaries own, or possess adequate rights to use, all
material patents, trade names, trademarks, copyrights, inventions, processes,
designs, formulae, trade secrets, know how and other proprietary rights
necessary for the conduct of its business, with no known infringement by TPEG
or any of its subsidiaries of the rights (asserted or unasserted) of any Person
arising by reason of any of the foregoing.  TPEG has no knowledge of any
infringement by any third party upon any patent, trade name, trademark or
copyright owned or used by TPEG or any of its subsidiaries, and TPEG has not
taken or omitted to take any action which would have the effect of waiving any
of its rights thereunder, in each case, except where such infringement or
waiver would not have a material adverse effect on the business, prospects,
condition (financial or other) or results of operations of TPEG and its
subsidiaries, taken as a whole.

                 3.15     Insurance.  TPEG has made available to GJP complete
and correct copies of all insurance policies maintained by TPEG, together with
all riders, endorsements and amendments





                                       31
<PAGE>   33

thereto.  All such policies are in full force and effect, and all premiums due
thereon have been paid.  Such insurance policies provide TPEG and its
subsidiaries with adequate insurance (both as to type and amount) with respect
to risks and perils of business of the size and type carried on by TPEG and its
subsidiaries as of the date hereof.  TPEG and its subsidiaries have complied in
all material respects with the provisions of all such policies.

                 3.16     Compensation to be Paid In Connection With the
Merger.   Except for the engagement of Sirius pursuant to the Sirius Agreement,
neither TPEG nor any subsidiary or Affiliate of TPEG has engaged or employed
any investment banking firm, broker, finder or intermediary in connection with
the transactions contemplated by this Agreement who might be entitled to any
fee, commission or other compensation in connection with or upon consummation
of the Merger.  TPEG and all subsidiaries of TPEG hereby, jointly and severally
agree to indemnify, defend and hold GJP and the Stockholders harmless from and
against any and all claims, liabilities or obligations with respect to any
additional or other finder's or similar fees, commissions or expenses asserted
or claimed by Sirius, other than pursuant to the Sirius Agreement,  or by any
other Person on the basis of any act or statement alleged to have been taken or
made by TPEG or any of its officers, directors or other Affiliates.

                 3.17     Disclosure.  The representations and warranties of
TPEG set forth in this Agreement, the certificates, statements and other
information furnished to GJP, Grosso and Jacobson in writing by or on behalf of
TPEG in connection with the transactions contemplated hereby, including the
Schedules hereto, do not as of the date of this Agreement, and as of the
Effective Time shall not, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.  TPEG
knows of no fact or condition which materially adversely affects, or in the
future may (so far as TPEG can now reasonably foresee) materially adversely
affect the condition (financial or otherwise), properties, assets, liabilities,
business or operations of TPEG which has not been set forth herein or disclosed
to GJP in writing with reference to this Agreement.



                          ARTICLE 4.  REPRESENTATIONS AND WARRANTIES
                                      REGARDING TPEG SUB II

                 TPEG and TPEG Sub II jointly and severally represent and
warrant to GJP, Grosso and Jacobson as follows:

                 4.1      Organization.  TPEG Sub II is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is a wholly owned subsidiary of TPEG.

                 4.2      Authority Relative to this Agreement.  TPEG Sub II
has the requisite corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder.





                                       32
<PAGE>   34

The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by TPEG Sub II's
Board of Directors and approved by its sole stockholder, TPEG, and no other
corporate proceedings on the part of TPEG Sub II are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby.

                 4.3      Binding Agreement.  This Agreement has been duly and
validly executed and delivered by TPEG Sub II and constitutes the valid and
binding agreement of TPEG Sub II, enforceable against TPEG Sub II in accordance
with its terms subject to the laws of bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors generally or limitations upon
equitable remedies.

                 4.4      Special Purpose Subsidiary.  TPEG Sub II has been
organized by TPEG solely for the purpose of entering into this Agreement and
consummating the Merger.  TPEG Sub II has not engaged, and prior to the Merger
will not engage, in any other business or activity.


             ARTICLE 5.  COVENANTS RELATING TO CONDUCT OF BUSINESS

                 Covenants of GJP, Grosso and Jacobson  and TPEG and TPEG Sub
II.  During the period from the date of this Agreement and continuing until the
Effective Time, GJP, and Grosso and Jacobson hereby further jointly and
severally agree and TPEG, and TPEG Sub II hereby further jointly and severally
agree that, except as expressly contemplated or permitted by this Agreement or
the agreements governing the Other Mergers, or to the extent that the other
party or parties shall otherwise consent in writing:

                 5.1      Ordinary Course.  GJP, TPEG and TPEG Sub II shall
each carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all reasonable
efforts to preserve intact its present business organization, maintain its
rights and franchises and preserve its relationships with writers, directors,
producers and others involved in developing and/or producing television movies,
series or mini-series and licensors or licensees or distributors or purchasers
of such television movies, series or mini-series, (including networks,
distributors and other purchasers of such products) and others having business
dealings with GJP or TPEG or any of its subsidiaries, as the case may be, to
the end that their respective goodwill and ongoing businesses shall not be
impaired in any material respect at or after the Effective Time.  No party
shall (i) enter into any new material line of business or acquire any other
Person engaged in any such new line of business, (ii) change its business
policies in any respect which is material to such party, (iii) enter into any
new lease or materially modify any existing lease or close any existing office
or other facility without giving the other party prior written notice thereof,
or (iv) incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities incurred or committed to in the ordinary course of
business consistent with past practice and not exceeding, in any case, the sum
of One Hundred Thousand ($100,000) Dollars.













                                       33
<PAGE>   35
                 5.2      Dividends; Changes in Stock.  Neither GJP, TPEG, TPEG
Sub II or any other subsidiary of TPEG shall, or shall propose to, (i) declare
or pay any dividends on, or make other distributions in respect of, any shares
of its capital stock of any class, except for required quarterly dividends on
TPEG's outstanding Series A Stock, (ii) reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire, any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.

                 5.3      Issuance of Securities.  Other than as contemplated
by this Agreement, or the agreements governing the Other Mergers, neither TPEG,
TPEG Sub II or GJP shall issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect
to any of the foregoing, other than the issuance by TPEG of shares of TPEG
Common Stock, upon the exercise of outstanding stock options or warrants or
conversion of outstanding shares of Series A Stock referred to elsewhere in
this Agreement, in each case outstanding on the date of this Agreement and in
each case in accordance with their existing terms and conditions.

                 5.4      Governing Documents.  Except as contemplated by this
Agreement or the agreements governing the Other Mergers, neither GJP, TPEG,
TPEG Sub II or any other subsidiary of TPEG shall amend or propose to amend its
Certificate of Incorporation or By-laws as in effect as of the date hereof.

                 5.5      No Solicitations.  From the date hereof through
September 30, 1997, none of GJP, Grosso, Jacobson, TPEG, TPEG Sub II or any
other subsidiary of TPEG shall, or shall authorize or permit any of its
respective officers, directors, employees or Affiliates or any investment
banking firms, financial advisors, attorneys, accountants or other
representatives or agents retained by any of such parties to, solicit or
encourage (including by way of furnishing nonpublic information), or take any
other action to facilitate any inquiries or the making of any proposals which
constitute, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or agree to or endorse any Competing Transaction, or
participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal.  Each of
GJP, Grosso, Jacobson and TPEG shall promptly advise the other or others both
orally and in writing of any such inquiries or proposals.  As used in this
Agreement, "Competing Transaction" shall mean any proposed tender or exchange
offer, sale of assets, proposal for merger, consolidation or other business
combination involving GJP, TPEG or TPEG Sub II or any other subsidiary of TPEG
or any proposal or offer to acquire directly or through the sale or grant of
any option, convertible security or any other right to purchase (by way of
exercise, exchange or conversion of such option, convertible security or right)
more than five (5%) percent of the total outstanding capital stock, or any
substantial portion of the assets, of GJP, TPEG,  TPEG Sub II or any other
subsidiary of TPEG, as the case may be, other than pursuant to the transactions
contemplated by this Agreement.  This Section 5.5 shall not prohibit disclosure
by TPEG that is required in any filing by TPEG with the SEC or the NASDAQ
SmallCap Market or as otherwise under applicable law, in the





                                       34
<PAGE>   36
opinion of the Board of Directors of TPEG, as of the date of such filing or
such other required disclosure as to the transactions contemplated hereby or as
to any Competing Transaction.  Notwithstanding the foregoing, the executive
officers and directors of TPEG, as the case may be, shall have the right, in
the exercise of their fiduciary duties, solely to respond to unsolicited bona
fide written offers submitted by any third party with respect to any potential
Competing Transaction by furnishing information and data concerning TPEG and
its subsidiaries, as the case may be.

                 5.6      No Dispositions.  Neither TPEG, TPEG Sub II or GJP
shall sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (other than the sale or
license or distribution of television movies, series or mini-series, or
performance of services in the ordinary course of business) which are material,
individually or in the aggregate, to such party.

                 5.7      Indebtedness.  Neither TPEG, TPEG Sub II, or GJP
shall incur any short or long-term indebtedness for borrowed money or guarantee
any such short or long-term indebtedness or issue or sell any short or
long-term debt securities or warrants, options or other rights to acquire any
short or long-term debt securities of such party or guarantee any short or
long-term debt securities other than (i) in replacement of existing or maturing
debt or (ii) in the ordinary course of business consistent with past practice.

                 5.8      Other Actions.  Neither TPEG, TPEG Sub II or GJP
shall take any action that would or reasonably might be expected to, result in
any of their respective representations and warranties set forth in this
Agreement being or becoming untrue in any material respect or in any of the
conditions to the Merger set forth in Article 7 hereof not being satisfied.

                 5.9      Advice of Changes; Government Filings.  Each of the
parties shall confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a material adverse effect on such party or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of such party contained herein.  TPEG shall (i) file all reports
required to be filed with the SEC between the date of this Agreement and the
Effective Time and (ii) and shall deliver to the other party copies of all such
reports promptly after the same are filed.  Each party shall promptly provide
the other (or its counsel) with copies of all other filings made by such party
with any state or federal governmental agency or authority in connection with
this Agreement, the Merger or the transactions contemplated hereby or thereby.

                 5.10     Accounting Methods.  Neither TPEG, TPEG Sub II  or
GJP shall change their respective methods of accounting in effect at the date
hereof except as required by changes in generally accepted accounting
principles as concurred in by the independent auditors of GJP or TPEG, as the
case may be.  Neither GJP nor TPEG will change their respective fiscal years
without the consent of the other party.





                                       35
<PAGE>   37
                 5.11     Benefit Plans.  Without the prior written consent of
the other party or parties, neither GJP, TPEG, TPEG Sub II or any other
subsidiary of TPEG shall (i) enter into, adopt, amend (except as may be
required by law) or terminate any employee benefit plan or any agreement,
arrangement, plan or policy between such party and one or more of its directors
or officers, (ii) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not result in
a material increase in benefits or compensation expense to such party, increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or arrangement as in
effect on the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock units or performance units
or shares) or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing, or (iii) except for the employment agreements between
the Surviving Corporation and each of Grosso and Jacobson and the extension of
the duration of the employment agreements between TPEG and Irwin Meyer and
Arthur Bernstein and grants of stock options to GJP employees at the Effective
Time described in Section 6.8 hereof, enter into or renew any contract,
agreement, commitment or arrangement providing for the payment to any director,
officer or employee of such party of compensation or benefits contingent, or
the terms of which are materially altered, upon the occurrence of any of the
transactions contemplated by this Agreement.

                 5.12     Publicity.  Except as otherwise required by law or
the rules of the NASDAQ SmallCap Market, so long as this Agreement is in
effect, neither GJP, Grosso, Jacobson or TPEG shall issue or cause the
publication of any press releases or other public announcements with respect to
the transactions contemplated by this Agreement without the consent of the
other party or parties, which consent shall not be unreasonably withheld or
delayed.

                       ARTICLE 6.  ADDITIONAL AGREEMENTS

GJP and Grosso and Jacobson hereby further jointly and severally agree, and
TPEG and TPEG Sub II, hereby further jointly and severally agree as follows:

                 6.1      Appraisals.  The Board of Directors of TPEG (the
"TPEG Board") shall has received appraisals from the following reputable,
independent appraisers with respect to the contracts, assets and other
properties of GJP as follows:

                          (a)   The aggregate value of the right, title and
interest of GJP in the television movies series and mini-series as appraised by
Abrams Consultants, Inc.; and

                          (b)   The aggregate value of GJP in costumes, props
and related tangible properties as appraised by Abrams Consultants, Inc.

                 6.2      GJ Financial Statements.  GJP shall deliver to TPEG
the GJ Financial Statements, including the audited financial statements
prepared and reported upon by Rosenberg, Rich, Baker, Berman & Company and the
unaudited comparative GJ Financial statements for the





                                       36
<PAGE>   38
six months ended May 31, 1997 by not later than September 30, 1997 so as to
enable TPEG to comply in a timely manner with its reporting obligations under
the Securities Exchange Act of 1934, as amended, and rules and regulations of
the SEC thereunder.  The GJ Financial Statements shall (a) be prepared and
presented in accordance with GAAP and shall fairly present the financial
condition of GJP as of the dates therein set forth and GJP's results of
operations for the periods reported upon, and (b) be presented in such form as
shall comply with relevant provisions of Item 2 of SEC Form 8-K, Item 310 of
SEC Regulation S-B and such other SEC regulations as are relevant to and govern
the content, form and filing by TPEG of such GJ Financial Statements.

                 6.3      Access to Information; Confidentiality.  Upon
reasonable notice, GJP and TPEG shall each afford to the officers, employees,
accountants, counsel and other representatives of the other during normal
business hours during the period prior to the Effective Time, access to all its
properties, books, contracts, commitments and records and, during such period,
each of GJP and TPEG shall make available to the other all other information
concerning the business, properties and personnel as such other party may
reasonably request.  Each of the parties will hold any such information
obtained from the other which is nonpublic in confidence except to the extent
that such information (a) is or becomes publicly known through sources other
than any of the parties to the Agreement or (b) is required to be disclosed in
response to legal process or pursuant to the requirements of federal securities
or other law.  No investigation by either GJP, Grosso or Jacobson or by TPEG
shall affect the representations and warranties of the other or others, except
to the extent such representations and warranties are by their terms qualified
by disclosures made to such other party.




























                                       37
<PAGE>   39
                 6.4      Further Covenants of Grosso and/or Jacobson

                          (a)   Lawrence S. Jacobson shall not directly or
indirectly divert any television, video or other film production, distribution
or related business activities or operations to Ontario Corporation or to any
successor or assignee thereof except as set forth in the employment agreement
between TPEG and Jacobson in the form annexed hereto as Exhibit "F2"  and the
production agreement between TPEG and Lawrence S. Jacobson Associates, Inc. in
the form annexed hereto as Exhibit "B2 "; and

                          (b)   In the event that both Grosso and Jacobson
cease to be employed by TPEG or by any of its subsidiaries, but continue to
own, beneficially, and as a group at least twenty-five (25%) percent of the
total number of Shares of TPEG Common Stock issued to both of them pursuant to
the Merger and the Other Mergers TPEG shall cause one (1) designee of both
Grosso and Jacobson (who may be either Grosso or Jacobson) to continue to serve
as a member of the TPEG Board subject to the condition that both Grosso and
Jacobson shall (i) remain subject to the obligation to retain on a confidential
basis all non-public information and data concerning TPEG and/or any of its
subsidiaries of which Grosso or Jacobson, as the case may be, becomes apprised
in his capacity as a member of the TPEG Board and (ii) not directly or
indirectly appropriate or seek to appropriate, personally or for the benefit of
any Person in which Grosso and/or Jacobson has any equity interest or by which
either Grosso or Jacobson is employed, any business opportunities of which
Grosso or Jacobson, as the case may be, shall become apprised in his capacity
as a member of the TPEG Board, all as more fully described in the
Confidentiality and Standstill Agreement annexed hereto as  Exhibit "C".

                 6.5      Further Covenants of TPEG.

                          (a)   Subject to the indemnification of TPEG by GJP,
Grosso and Jacobson set forth in Section 2.21 hereof, TPEG shall pay the Sirius
fee pursuant to the Sirius Agreement;

                          (b)   Upon the consummation of the Merger and subject
to the provisions of Articles 9 and 10 hereof, TPEG shall bear the expense of
all legal fees, accounting and auditing fees and disbursements incurred by TPEG
and by each of GJP, Grosso and Jacobson in connection with this Agreement and
the Other Mergers;

                          (c)   TPEG shall extend through the fifth (5th)
anniverssary of the Effective Time the respective employment agreements of
Irwin Meyer, Chief Executive Officer of TPEG ("Meyer") and Arthur Bernstein,
Senior Vice President of TPEG ("Bernstein"), such extentions shall be in the
form of Exhibits "D1" and "D2" annexed hereto; and

                          (d)   TPEG shall extend through the fifth (5th)
anniverssary of the Effective Time the existing production agreement between
TPEG and Mountaingate Productions LLC ("Mountaingate"), such extension shall be
in the form of Exhibit "E" annexed hereto.





                                       38
<PAGE>   40
                 6.6      Stockholders Meeting; Approval by Stockholders.  (a)
GJP shall call a meeting of its stockholders (the "GJP Stockholders Meeting"),
to be held by not later than September 30, 1997 for the purpose of voting upon
the approval of this Agreement and of the Merger and the other transactions
contemplated hereby.  GJP will, through its Board of Directors, recommend to
its stockholders approval of such matters.

                          (b)  Each of Messrs. Grosso and Jacobson shall vote,
or cause to be voted, all shares of GJP Common Stock held by each of them, of
record and/or beneficially, as of the record date for the determination of GJP
stockholders entitled to notice of and to vote at the GJP Stockholders'
Meeting, for the approval of this Agreement, the Merger and all of the other
transactions contemplated hereby.

                 6.7      Conditions Precedent; Agreements and Other Mergers.
The parties named in Article 7 of this Agreement shall execute and deliver the
agreements which constitute conditions precedent to the Merger at or prior to
the Effective Time, and both of the Other Mergers shall have been consummated
at or prior to the Effective Time.

                 6.8      Legal Conditions to Merger.  Each of TPEG, TPEG Sub
II, GJP and Grosso and Jacobson shall use all reasonable efforts (i) to take,
or cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party with respect to the Merger and
to consummate the transactions contemplated by this Agreement, (including the
satisfaction of all of the conditions precedent set forth in Article 7 hereof),
and (ii) to obtain (and to cooperate with the other party in order to obtain)
any consent, authorization, order or approval of, or any exemption by, any
governmental entity and or any other public or private third party which is
required to be obtained or made by such party in connection with the Merger and
the transactions contemplated by this Agreement.

                 6.9      TPEG Stock Options.  (a) At the Effective Time, the
TPEG Board shall grant new incentive stock options (within the meaning of
Section 422 of the Code) to purchase shares of TPEG Common Stock to the
executives and key employees of GJP identified in Schedule 6.9 hereto  in
connection with their continuing employment relationships with the Surviving
Corporation following the Merger.

                          (b)   TPEG shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of TPEG Common Stock for
delivery upon exercise of the TPEG stock options described in paragraph (a) of
this Section 6.9.




















                                       39
<PAGE>   41
                 6.10     NASDAQ and BSE Listing.  TPEG shall use its best
efforts to have the shares of TPEG Common Stock to be issued pursuant to the
Merger listed on the NASDAQ SmallCap Market and the Boston Stock Exchange as of
the Effective Time or as soon thereafter as practicable.  TPEG shall file with
the NASDAQ SmallCap Market, the Boston Stock Exchange and with the SEC such
applications, reports and such other documents and shall take such other
actions as are reasonably required to effect such listing of such shares of
TPEG Common Stock on the NASDAQ SmallCap Market and the Boston Stock Exchange.

                        ARTICLE 7.  CONDITIONS PRECEDENT

                 7.1      Conditions to Each Party's Obligation to Effect the
Merger.  The respective obligations of each of the parties to effect the Merger
shall be subject to the satisfaction prior to or at the Effective Time of the
following conditions:

                          (a)   Stockholder Approval.  This Agreement shall
have been approved and adopted by the affirmative vote of the holders of all of
the outstanding shares of GJP Common Stock entitled to vote thereon.

                          (b)   The Other Mergers among TPEG, the other
subsidiaries of TPEG and GJE and GJM, respectively, shall each have been
consummated in accordance with the Other Merger Agreements.

                          (c)   Other Approvals.  All authorizations, consents,
or approvals of, and all expirations or waiting periods imposed by, any third
parties, including the consent of Joseph Stevens & Company L.P. (collectively,
the "Consents"), which are necessary for the consummation of the Merger, other
than immaterial Consents, the failure to obtain which would have no material
adverse effect on the business, business prospects or financial condition of
GJP, the Surviving Corporation, TPEG, TPEG Sub II or any other subsidiary of
TPEG shall have been received.  TPEG shall have received all state securities
or blue sky permits and other authorizations required, if any, to issue the
shares of TPEG Common Stock to be issued in exchange for the GJP Common Stock
and to consummate the Merger.

                          (d)   No Injunctions or Restraints; Illegality.  No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding by any governmental entity seeking any of the foregoing
shall be pending.  There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.

                          (e)   Burdensome Conditions.  There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, by any federal or state
governmental entity which imposes any condition or restriction upon GJP, the
Surviving Corporation or TPEG which would so materially adversely impact the
economic or


















                                       40
<PAGE>   42

business benefits of the transactions contemplated by this Agreement as to
render inadvisable, in the reasonable judgment of such party, the consummation
of the Merger.

                          (f)   Board Designees.  The respective Boards of
Directors of GJP and TPEG shall have each submitted their list of TPEG Board
Designees and shall have agreed in writing to their joint TPEG Board Designee
in accordance with the provisions of Section 1.4 by not less than three (3)
days prior to the Effective Time.

                          (g)   Executive Employment Agreements.  Each of
Grosso and Jacobson shall have executed and delivered to TPEG employment
agreements with the Surviving Corporation in the forms Exhibits "F1" and "F2,"
annexed hereto (the "Employment Agreements").

                          (h)   Production Agreements.  Each of Grosso and
Jacobson and their respective Affiliates shall have executed and delivered to
TPEG production agreements with the Surviving Corporation in the forms Exhibits
"B1" and "B2," annexed hereto (the "Production Agreements").

                          (i)   Confidentiality and Standstill Agreement.  Each
of Grosso and Jacobson shall have executed and delivered to TPEG the
Confidentiality and Standstill Agreement in the form of Exhibit "C" annexed
hereto.

                          (j)   Registration Rights and Stock Disposition
Agreement.  TPEG and each of Grosso and Jacobson shall enter into a
Registration Rights and Stock Dispostion Agreement (the "Stock Disposition
Agreement") whereby (i) Grosso and Jacobson will be entitled to have TPEG
include their respective shares of TPEG Common Stock in registration statements
to be filed by TPEG under the Securities Act of 1933, as amended, and (ii)
Grosso and Jacobson shall each agree not to sell or otherwise dispose of any
shares of TPEG Common Stock issued to each of them pursuant to the Merger
through June 30, 1998, which Stock Disposition Agreement shall be in the form
of Exhibit G annexed hereto.

                 7.2      Conditions to Obligations of TPEG and TPEG Sub II.
The obligations of TPEG and TPEG Sub II to effect the Merger are subject to the
satisfaction of the following conditions by GJP, Grosso and Jacobson unless
waived by TPEG and TPEG Sub II:

                          (a)   Consummation of the Other Mergers.  The Other
Mergers among TPEG, the other subsidiaries of TPEG and GJE and GJM,
respectively, shall each have been consummated in accordance with the Other
Merger Agreements.

                          (b)   Representations and Warranties.  The joint and
several representations and warranties of GJP, Grosso and Jacobson set forth in
this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the
Effective Time, except as otherwise contemplated by this Agreement, and TPEG
and TPEG Sub II shall have received a





                                       41
<PAGE>   43

certificate signed on behalf of GJP by the President and Chief Financial
Officer of GJP and by each of Grosso and Jacobson to such effect.

                          (c)   Performance of Obligations of GJP and
Stockholders .  GJP, Grosso and Jacobson shall have performed in all material
respects all of their joint and several obligations required to be performed by
them or any of them under this Agreement, at or prior to the Effective Time,
and TPEG and TPEG Sub II shall have received a certificate signed on behalf of
GJP by the President and Chief Financial Officer of GJP and by each of Grosso
and Jacobson to such effect.

                          (d)   Consents Under Agreements.  GJP shall have
obtained the consent or approval of each person (other than the Consents) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of GJP under any loan or credit agreement, note, mortgage, indenture,
lease, license, production, distribution or other agreement (including the
consent of Joseph Stevens & Co., L.P.) or instrument, except those for which
failure to obtain such consents and approvals would not, in the reasonable
opinion of TPEG and TPEG Sub II, individually or in the aggregate, have a
material adverse effect on the Surviving Corporation or TPEG or upon the
consummation of the transactions contemplated hereby.

                          (e)   Appraisals.  The Appraisals delivered to the
Board of Directors of TPEG pursuant to the provisions of Section 6.1 hereof
shall not have been withdrawn or so modified, in whole or in part, as to cast
doubt in any material respect upon the valuations set forth in such appraisals.

                          (f)   "Cold Comfort Letter".  GJP shall have
delivered or shall cause to be delivered to TPEG  a "cold comfort" letter of
Rosenberg, Rich, Baker, Berman & Company, GJP's independent accountants, dated
as of a date within two business days prior to the Effective Time and addressed
to TPEG, in form and substance reasonably satisfactory to TPEG and setting
forth the substance and scope of the information set forth in Schedule 7.2(f).

                          (g)   Employment Agreements.  Simultaneous with and
upon the execution of this Agreement, each of Grosso and Jacobson shall have
executed and delivered the Employment Agreements in the forms annexed hereto as
Exhibits "F1" and "F2," respectively, with the Surviving Corporation.

                          (h)   Production Agreements.  Simultaneous with and
upon the execution of this Agreement, each of Grosso and Jacobson and their
respective Affiliates shall have executed and delivered the Production
Agreements in the forms annexed hereto as Exhibits "B1" and "B2," respectively,
with the Surviving Corporation.

                          (i)   Stock Disposition Agreement.  Each of Grosso
and Jacobson shall have executed and delivered the Stock Dispostion Agreement
in the form of Exhibit "G" annexed hereto.














                                       42

<PAGE>   44
                          (j)   Confidentiality and Standstill Agreement.  Each
of Grosso and Jacobson shall have executed and delivered the Confidentiality
and Standstill Agreement in the form of  Exhibit "C" annexed hereto.

                          (k)   No Material Adverse Change.  There shall have
been no material adverse change in the financial condition, results of
operations, assets, liabilities, properties, business or business prospects of
GJP between the date of this Agreement and the Effective Time.

                          (l)   Opinion.  TPEG shall have received the opinion
of Messrs. Kay, Collyer and Boose, LLP, counsel to GJP, Grosso and Jacobson,
dated the Effective Time, substantially in the form of Exhibit "H" annexed
hereto.

                          (m)  TPEG shall have received from GJP any and all
clearance or similar certificates required by any jurisdictions in order
lawfully to consummate the Merger and the transfer of the shares of GJP Common
Stock pursuant thereto

                 7.3      Conditions to Obligations of GJP, Grosso and
Jacobson.  The joint and several obligations of GJP, Grosso and Jacobson to
effect the Merger are subject to the satisfaction of the following conditions
by TPEG and TPEG Sub II unless waived by GJP, Grosso and Jacobson:

                          (a)   Consummation of the Other Mergers.  The Other
Mergers among TPEG, the other subsidiaries of TPEG and GJE and GJM,
respectively, shall each have been consummated in accordance with the Other
Merger Agreements.

                          (b)   Representations and Warranties.  The
representations and warranties of TPEG and of TPEG Sub II set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time as though made on and as of the
Effective Time, except as otherwise contemplated by this Agreement, and GJP,
Grosso and Jacobson shall have received a certificate signed on behalf of TPEG
by the Chief Executive Officers and Chief Financial Officers of TPEG and TPEG
Sub II to such effect.

                          (c)   Performance of Obligations of TPEG.  TPEG and
TPEG Sub II shall have performed in all material respects all obligations
required to be performed by each of them under this Agreement, at or prior to
the Effective Time, and GJP, Grosso and Jacobson shall have received a
certificate signed on behalf of TPEG and TPEG Sub II by the Chief Executive
Officers and Chief Financial Officers of TPEG and TPEG Sub II to such effect.

                          (d)   Consents Under Agreements.  TPEG shall have
obtained the consent or approval of each person (other than the Consents) whose
consent or approval shall be required with respect to the Merger and in order
to permit the succession by the Surviving Corporation pursuant to the Merger to
any obligation, right or interest of TPEG Sub II under any loan or credit
agreement, note, mortgage, indenture, lease, license, production, distribution
or other agreement











                                       43
<PAGE>   45

(including the consent of Joseph Stevens & Company, L.P.) or instrument, except
those for which failure to obtain such consents and approvals would not, in the
reasonable opinion of GJP, individually or in the aggregate, have a material
adverse effect on the Surviving Corporation or TPEG or upon the consummation of
the transactions contemplated hereby.

                          (e)   Employment Agreements.  The Surviving
Corporation shall have executed and delivered the Employment Agreements with
each of Grosso and Jacobson in the forms annexed hereto as Exhibits "F1" and
"F2," respectively.

                          (f)   Production Agreements.  The Surviving
Corporation shall have executed and delivered the Production Agreements with
each of Grosso, Jacobson and their respective Affiliates in the forms annexed
hereto as Exhibits "B1" and "B2," respectively.

                          (g)   Extension Agreements.  TPEG and each of Meyer
and Bernstein shall have executed extensions of their respective existing
employment agreements and TPEG and Mountaingate shall have executed an
extension of the existing production agreement as required by Section 6.5
hereof.

                          (h)   Stock Disposition Agreement.  TPEG shall have
executed and delivered the Stock Disposition Agreement with Grosso and Jacobson
in the form of Exhibit "G" annexed hereto.

                          (i)   Confidentiality and Standstill Agreement.  TPEG
shall have executed and delivered the Confidentiality and Standstill Agreement
in the form of Exhibit "C" annexed hereto.

                          (j)   Options for GJP Employees.  At the Effective
Time, TPEG shall grant incentive stock options to purchase an aggregate of
20,000 shares of TPEG Common Stock to the GJP executives and key employees who
will become employed by the Surviving Corporation and whose names are set forth
on Schedule 6.9 annexed hereto.  Schedule 6.9 also sets forth the number of
such stock options to be granted to each such employee.

                          (k)   Opinion.  GJP shall have received the opinion
of Maloney, Mehlman & Katz, counsel to TPEG, dated the Effective Time,
substantially in the form of Exhibit "I" annexed hereto.

                          (l)   No Material Adverse Change.  There shall have
been no material adverse change in the financial condition, results of
operations, assets, liabilities, properties or business of TPEG or any
subsidiary of TPEG between the date of this Agreement and the Effective Time.

                 7.4      Condition Subsequent to Merger.  GJP shall deliver,
and Grosso and Jacobson shall cause GJP to deliver to TPEG, the GJ Financial
Statements on or before such date and in such










                                       44

<PAGE>   46
form for filing by TPEG in accordance with such SEC regulations as are required
by the provisions of Section 6.2 hereof.

                          ARTICLE 8.  INDEMNIFICATION

                 8.1      Survival of Representations and Warranties.  (a)  The
joint and several representations and warranties of GJP, Grosso and Jacobson
(the "GJP Parties") contained in this Agreement, and all statements made by any
or all of the GJP Parties which are contained in this Agreement, the Schedules
and the Exhibits to this Agreement, or any certificate, financial statement,
report or other document delivered pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement (collectively, the
"Transaction Documents"), shall survive the Merger for a period terminating at
the close of business on the first (1st) anniversary of the Effective Time,
except that (i) the joint and several representations and warranties of the GJP
Parties contained in each of Sections 2.1, 2.2, 2.4 2.10 2.12(g) and (h) and
2.21 and the representations and warranties (including, without limitation, the
representations and warranties contained in Sections 2.5(a)(ii) and the second
sentence of Sections 2.8 and 2.11) of the GJP Parties relating to title to the
assets, properties and contractual rights of GJP shall survive the Merger for a
period terminating at the close of business on the sixth (6th) anniversary of
the Effective Time, and (ii) notwithstanding anything contained herein to the
contrary, any representation, warranty, covenant or agreement by the GJP
Parties contained in this Agreement with respect to which there shall occur any
fraudulent or intentional misrepresentation (including any intentional failure
to disclose a material fact) or intentional breach of covenant or agreement
shall survive the Merger indefinitely, notwithstanding any applicable statute
of limitations (each such period described in clauses (i) through (iii) above
is referred to herein as a "Survival Period").  Neither any Survival Period,
nor the liability of the GJP Parties under or in connection with the
Transaction Documents, shall be reduced by any investigation made at any time
by or on behalf of TPEG.

                          (b)   The representations and warranties of TPEG
contained in the Transaction Documents shall survive the Mergers for a period
terminating at the close of  business on the first (1st) anniversary of the
Effective Time.  Neither the Survival Period specified in this Section 8.1(b),
nor the liability of TPEG under or in connection with the Transaction Documents
shall be reduced by any investigation made at any time by or on behalf of the
GJP Parties.

                          (c)   Notwithstanding anything contained in this
Article 8 to the contrary, any matter with respect to which a claim has been
asserted by notice by any indemnified party to the GJP Parties or TPEG, as the
case may be, that is pending or unresolved at the end of the applicable
Survival Period shall continue to be covered by this Article 8 notwithstanding
the termination or expiration of such Survival Period until such claim is
finally and fully satisfied or otherwise resolved by the parties under this
Agreement or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid by the GJP Parties or TPEG, as the
case may be, to such Indemnified Party.















                                       45
<PAGE>   47

                 8.2      Indemnification by the GJP Parties.

                          (a)   The GJP Parties shall jointly and severally
indemnify and hold harmless TPEG and its subsidiaries (including TPEG Sub II)
and the Surviving Corporation and their Affiliates, officers, directors,
employees, agents, attorneys, successors and assigns (each a "TPEG Indemnified
Party") from and against any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' and consultants' fees and expenses)
suffered or incurred by them (including, without limitation, in connection with
any action brought or otherwise initiated by any of them or required to enforce
the provisions hereunder) (hereinafter collectively referred to as the
"Losses"), arising out of or resulting from any or all of the following:

                          (i)   the breach of any representation or warranty
                 made by any of the GJP Parties contained in this Agreement or
                 in any of the other Transaction Documents;

                          (ii)  the breach of any covenant or agreement by any
                 of the GJP Parties contained in this Agreement or in any of
                 the other Transaction Documents;

                          (iii) Indemnification with respect to tax liabilities
                 and assessments for periods in accordance with the provisions
                 of Section 8.3 hereof; or

                          (iv)  any other matter as to which the GJP Parties,
                 pursuant to any other provision of this Agreement or of any of
                 the other Transaction Documents, have agreed to indemnify a
                 TPEG Indemnified Party.

                          (b)   A TPEG Indemnified Party shall give the GJP
Parties notice of any matter which such TPEG Indemnified Party has determined
has given or could give rise to a right of indemnification under this
Agreement, promptly, but in any event within thirty (30) days of such
determination, stating the amount of the Losses, if known, and the method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, however, that the failure to provide such notice shall not
release the GJP Parties from any of their joint and several obligations or
reduce the amount of the GJP Parties liabilities under this Article 8 except to
the extent that the GJP Parties are materially prejudiced by such failure, as
determined by a court of competent jurisdiction, and shall not relieve the GJP
Parties from any other obligation or liability that they may have to any TPEG
Indemnified Party otherwise than under this Article 8.  The obligations and
liabilities of the GJP Parties under this Article 8 with respect to Losses
arising from claims of any third party which are subject to the indemnification
provided for in this Article 8 ("Third Party Claims") shall be governed by and
contingent upon the following additional terms and conditions:  If a TPEG
Indemnified Party shall receive actual notice of any Third Party Claim, the
TPEG Indemnified Party shall give the GJP Parties notice of such Third Party
Claim promptly, but in any event within thirty (30) days of the receipt by the
TPEG Indemnified Party of such notice; provided, however, that the failure to
provide such notice shall not release the



















                                       46
<PAGE>   48

GJP Parties from any of their obligations under this Article 8 except to the
extent the GJP Parties are materially prejudiced by such failure, as determined
by a court of competent jurisdiction, and shall not relieve the GJP Parties
from any other obligation or liability that they may have to any TPEG
Indemnified Party otherwise than under this Article 8.  If the GJP Parties
acknowledge in writing their obligation to indemnify a TPEG Indemnified Party
hereunder against any Losses that may result from a Third Party Claim, then the
GJP Parties shall be entitled to assume and control the defense of such Third
Party Claim, at their expense and through counsel of their choice, if the GJP
Parties give notice of their intention to do so to such TPEG Indemnified Party
within thirty (30) days of the receipt of such notice from such TPEG
Indemnified Party; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would make it inappropriate in the
judgment of the TPEG Indemnified Party, in its or his reasonably exercised
discretion, for the same counsel to represent both the TPEG Indemnified Party
and the GJP Parties, then such TPEG Indemnified Party shall be entitled to
retain its or his own counsel, in each jurisdiction for which such TPEG
Indemnified Party determines counsel is required, at the expense of the GJP
Parties.  In the event the GJP Parties exercise the right to undertake the
defense against a Third Party Claim as provided above, the TPEG Indemnified
Party shall cooperate with the GJP Parties in such defense and make available
to the GJP Parties, at the GJP Parties' expense, all witnesses, pertinent
records, materials and information in the TPEG Indemnified Party's possession
or under the TPEG Indemnified Party's control relating thereto as is reasonably
required by the GJP Parties.  Similarly, in the event the TPEG Indemnified
Party is, directly or indirectly, conducting the defense of a Third Party
Claim, the GJP Parties shall cooperate with the TPEG Indemnified Party in such
defense and make available to such TPEG Indemnified Party, at the GJP Parties'
expense, all such witnesses, records, materials and information in the GJP
Parties' possession or under the GJP Parties' control relating thereto as is
reasonably required by the TPEG Indemnified Party.  In furtherance of the
foregoing, the GJP Parties shall be obligated to keep the TPEG Indemnified
Party fully informed in a timely fashion of all developments pertaining to a
Third Party Claim and to furnish the TPEG Indemnified Party with true copies of
all pleadings, judgments, papers and settlement agreements in connection
therewith.  No Third Party Claim may be settled by the GJP Parties without the
prior written consent of the TPEG Indemnified Party unless the settlement
provides for a full and unconditional release of the TPEG Indemnified Party.

                 8.3  Indemnification by GJP Parties as to Tax Matters.

                          (a)   The GJP Parties shall jointly and severally
indemnify and hold harmless TPEG and its subsidiaries from and against the
following Taxes (except to the extent of amounts, including deferred taxes to
take into account of timing differences between Tax income and financial
income, as have been specifically identified and reserved therefor as taxes in
the GJ Financial Statements) and, except as otherwise provided in Section
8.3(b) hereof, against any loss, damage, liability or expense (including
reasonable fees for attorneys and other outside consultants) incurred in
contesting or otherwise in connection with any such Taxes or pursuing any claim
hereunder; (i) Taxes imposed on GJP with respect to periods ending at or prior
to the Effective Time; (ii) with respect to taxable periods beginning before
the Effective Time and












                                       47
<PAGE>   49

ending after the Effective Time, Taxes imposed which are allocable, pursuant to
Section 8.3(b), to the portion of such period ending at the Effective Time;
(iii) Taxes imposed on TPEG as a result of any breach of warranty or
misrepresentation under Section 2.10 or the failure by GJP to fulfill its
obligations under this Section 8.3(a)(i); and (iv) unpaid Taxes of any Person
(including GJP) under Treas. Reg. Section  1.1502- 6 (or any similar provision
of law), or as a transferee or successor, by contract or otherwise.

                          (b)   In the case of Taxes that are payable with
respect to a taxable period that begins before the Effective Time and ends
after the Effective Time, the portion of any such Tax that is allocable to the
portion of the period ending on the Effective Time shall be:

                                (i)   in the case of Taxes that are either (x)
                          based upon or related to income or receipts, or (y)
                          imposed in connection with any sale or other transfer
                          or assignment of property (other than pursuant to the
                          Merger contemplated by the Agreement), deemed equal
                          to the amount which would be payable if the taxable
                          year ended at the Effective Time; and

                                (ii)  in the case of Taxes not described in
                          subparagraph (i) of this Section 8.3(b) that are
                          imposed on a periodic basis and measured by the level
                          of any item, deemed to be the amount of such Taxes
                          for the entire period (or, in the case of such Taxes
                          determined on an arrears basis, the amount of such
                          Taxes for the immediately preceding period)
                          multiplied by a fraction the numerator of which is
                          the number of calendar days in the period ending on
                          the date of the Effective Time and the denominator of
                          which is the number of calendar days in the entire
                          period.

                          (c)   Tax Returns.  Tax Returns not yet filed for any
taxable period that commences prior to the Effective Time shall be prepared,
and each item thereon treated, in a manner consistent with past practices of
GJP.

                          (d)   Refunds.  Any Tax refund (or comparable benefit
resulting from a reduction in Tax liability) for a period ending as of or prior
to the Effective Time arising out of the carryback of a loss or credit incurred
by GJP in a taxable period ending after the Effective Time shall be the
property of TPEG or the Surviving Corporation, as the case may be, but the
amount of any such refunds received by TPEG or the Surviving Corporation shall
be offset against any claims by TPEG or the Surviving Corporation against the
GJP Parties pursuant to Article 8 hereof.

                          (e)  Contests.

                               (i)   In the case of an audit or administrative
                        or judicial proceeding that relates to periods ending
                        at or before the Effective Time, the GJP Parties shall
                        have the right, at their expense, to participate in and
                        control










                                       48


<PAGE>   50

                        the conduct of such audit or proceeding but only to the
                        extent that such audit or proceeding relates solely to
                        a potential adjustment for which the GJP Parties have
                        acknowledged GJP's liability in writing and the issue
                        underlying the potential adjustment does not recur for
                        any period ending subsequent to the Effective Time.
                        The GJP Parties shall keep TPEG fully informed of the
                        progress of any such audit or proceeding and, if it
                        appears in the sole discretion of TPEG, that such audit
                        or proceeding may adversely affect TPEG or TPEG Sub II,
                        TPEG also may participate in any such audit or
                        proceeding.  If the GJP Parties do not assume the
                        defense of any such audit or proceeding promptly, TPEG
                        may defend and settle the same (for the GJP Parties'
                        account) in such reasonable manner as it may deem
                        appropriate.  In the event that a potential adjustment
                        as to which the GJP Parties would be liable is present
                        in the same proceeding as a potential adjustment for
                        which TPEG or TPEG Sub II would be liable, TPEG shall
                        have the right, at its expense, to control the audit or
                        proceeding with respect to the latter potential
                        adjustment.

                               (ii)  With respect to a potential adjustment for
                        which both GJP and TPEG and/or TPEG Sub II could be
                        liable, or which involves an issue that recurs for any
                        period ending after the Effective Time (whether or not
                        the subject of audit at such time), (i) both the GJP
                        Parties and TPEG may participate in the audit or
                        proceeding, and (ii) the audit or proceeding shall be
                        controlled by that party which would bear the burden of
                        the greater portion of the dollar amount of the
                        adjustment and any corresponding adjustments that may
                        reasonably be anticipated for future Tax periods.  The
                        principle set forth in the preceding sentence shall
                        also govern for purposes of deciding any issue that
                        must be decided jointly (in particular, choice of
                        judicial forum) in circumstances in which separate
                        issues are otherwise controlled hereunder by TPEG and
                        the GJP Parties.

                               (iii) Except as provided in clause (i) of this
                        Section 6(e), neither TPEG nor the GJP Parties shall
                        enter into any compromise or agree to settle any claim
                        pursuant to any Tax audit or proceeding which would
                        adversely affect the other party for such year or a
                        subsequent year without the written consent of the
                        other party, which consent may not be unreasonably
                        withheld.

                        (f)    Miscellaneous.

                               (i)   The GJP Parties and TPEG agree to treat
                        all payments made by either to or for the benefit of
                        the other under this Article 8, under other
                        indemnification provisions of this Agreement and for
                        any misrepresentations or breaches of warranties or
                        covenants as adjustments








                                       49


<PAGE>   51

                        to the Merger Consideration to be paid by TPEG to the
                        Stockholders of GJP pursuant to the Merger or as
                        capital contributions for Tax purposes and that such
                        treatment shall govern for purposes hereof.

                               (ii)  Notwithstanding any provision herein to
                        the contrary, the obligation of the GJP Parties to
                        indemnify and hold harmless TPEG and TPEG Sub II
                        pursuant  to the provisions of this Section 8.3, and
                        the representations and warranties contained in Section
                        2.10 hereof, shall terminate as of the close of
                        business on the 120th day following expiration of the
                        applicable statutes of limitations with respect to the
                        Tax liabilities in question (after giving effect,
                        however, to any waiver, mitigation or extension of  any
                        such statutes).

                        (g)    Additional Tax Agreements.

                               (i)   Tax Elections.  The GJP Parties jointly
                        and severally covenant and agree that no new elections
                        with respect to Taxes or any changes in current
                        elections with respect to Taxes affecting GJP shall be
                        made after the date of this Agreement without the prior
                        written consent of TPEG.

                               (ii)  Nonforeign Affidavit.  GJP shall furnish
                        TPEG an affidavit stating that the indicated number is
                        the transferor's United States taxpayer identification
                        number and that the transferor is not a foreign person,
                        pursuant to Section 1445(b)(2) of the Code.

                               (iii) Cooperation and Records Retention.  The
                        GJP Parties and TPEG shall (A) each provide the other
                        with such assistance as may reasonably be requested by
                        any of them in connection with the preparation of any
                        Tax Return, audit, or other examination by any taxing
                        authority or judicial or administrative proceedings
                        relating to liability for Taxes, provided, however,
                        that TPEG shall cause its officers who are serving as
                        duly authorized officers of the Surviving Corporation
                        to sign and file any such Returns unless such officers
                        consist of any of the GJP Parties; (B) each retain and
                        provide the other, and TPEG shall retain and cause TPEG
                        Sub II to retain and provide the GJP Parties with, any
                        records or other information that may be relevant to
                        such Tax Return, audit or examination, proceeding, or
                        determination, and (C) each provide the other with any
                        final determination of any such audit or examination,
                        proceeding, or determination that affects any amount
                        required to be shown on any Tax Return of the other for
                        any period.  Without limiting the generality of the
                        foregoing, TPEG shall retain, and shall cause TPEG Sub
                        II to retain, and the GJP Parties shall retain, until
                        the applicable statutes of limitations (including any
                        extensions) have expired, copies of all Tax Returns,





                                       50
<PAGE>   52

                        supporting work schedules, and other records or
                        information that may be relevant to such returns for
                        all tax periods or portions thereof ending before or
                        including the Effective Time and shall not destroy or
                        otherwise dispose of any such records without first
                        providing the other party with a reasonable opportunity
                        to review and copy the same.

                               (iv)  Transfer Taxes.  GJP or the Stockholders,
                        as the case may be, shall pay any sales, stock transfer
                        and/or documentary taxes applicable to the Merger at
                        the Effective Time, provided, however, that TPEG shall
                        promptly reimburse GJP and/or the Stockholders for the
                        cost thereof;

                               (v)   Preparation of W-2's, etc.  Pursuant to
                        Revenue Procedure 84-77 (1984-2 C.B. 753), provided
                        that GJP provides TPEG with all necessary payroll
                        records for the calendar year which includes the
                        Effective Time, TPEG shall furnish a Form W-2 to each
                        employee employed by TPEG or any of its subsidiaries
                        (including TPEG Sub II) after the Effective Time who
                        had been employed by GJP disclosing all wages and other
                        compensation paid for such calendar year, and taxes
                        withheld therefrom, and the GJP Parties shall be
                        relieved of the responsibility to do so.

                8.4         Indemnification by TPEG.

                        (a)    The GJP Parties (each a "GJP Indemnified Party")
shall be indemnified and held harmless by TPEG from and against for any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, reasonable attorneys'
and consultants' fees and expenses) suffered or incurred by them (including,
without limitation, in connection with any action brought or otherwise
initiated by any of them or required to enforce the provisions hereunder)
(hereinafter collectively referred to as the "Losses"), arising out of or
resulting from:

                               (i)   the breach of any representation or
                        warranty made by TPEG or by TPEG Sub II contained in
                        this Agreement or any of the other Transaction
                        Documents; and

                               (ii)  the breach of any covenant or agreement by
                        TPEG contained in this Agreement or any of the other
                        Transaction Documents.

                        (b)     A GJP Indemnified Party shall give TPEG notice
of any matter which a GJP Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement, promptly, but in
any event within thirty (30) days of such determination, stating the amount of
the Losses, if known, and method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such








                                       51
<PAGE>   53

right of indemnification is claimed or arises; provided, however, that the
failure to provide such notice shall not release TPEG from any of its
obligations or reduce the amount of TPEG's liabilities under this Article 8
except to the extent that TPEG is materially prejudiced by such failure, as
determined by a court of competent jurisdiction, and shall not relieve TPEG
from any other obligation or liability that it may have to a GJP Indemnified
Party otherwise than under this Article 8.  The obligations and liabilities of
TPEG under this Article 8 with respect to Losses arising from claims of any
third party which are subject to the indemnification provided for in this
Article 8 ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions:  If a GJP Indemnified Party shall
receive actual notice of any Third Party Claim, the GJP Indemnified Party shall
give TPEG notice of a Third Party Claim promptly, but in any event within
thirty (30) days of the receipt by such GJP Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not release
TPEG from any of its obligations under this Article 8 except to the extent TPEG
is materially prejudiced by such failure, as determined by a court of competent
jurisdiction, and shall not relieve TPEG from any other obligation or liability
that it may have to any GJP Indemnified Party otherwise than under this Article
8.  If TPEG acknowledges in writing its obligation to indemnify a GJP
Indemnified Party hereunder against any Losses that may result from a Third
Party Claim, then TPEG shall be entitled to assume and control the defense of a
Third Party Claim, at its expense and through counsel of its choice, if it
gives notice of its intention to do so to the GJP Indemnified Party within
thirty (30) days of the receipt of such notice from such GJP Indemnified Party;
provided, however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment of the
GJP Indemnified Party, in its or his reasonably exercised discretion, for the
same counsel to represent both such GJP Indemnified Party and TPEG, then the
GJP Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the GJP Indemnified Party determines counsel is
required, at the expense of TPEG.  In the event TPEG exercises the right to
undertake any such defense of a Third Party Claim as provided above, the GJP
Indemnified Party shall cooperate with TPEG in such defense and make available
to TPEG, at TPEG's expense, all witnesses, pertinent records, materials and
information in the GJP Indemnified Party's possession or under the GJP
Indemnified Party's control relating thereto as is reasonably required by TPEG.
Similarly, in the event the GJP Indemnified Party is, directly or indirectly,
conducting the defense of a Third Party Claim, TPEG shall cooperate with the
GJP Indemnified Party in such defense and make available to the GJP Indemnified
Party, at TPEG's expense, all such witnesses, records, materials and
information in TPEG's possession or under TPEG's control relating thereto as is
reasonably required by the GJP Indemnified Party.  No Third Party Claim may be
settled by TPEG without the prior written consent of the GJP Indemnified Party
unless the settlement provides for the full and unconditional release of the
GJP Indemnified Party.

                8.5     Payment of Indemnification Liability.  All
indemnification obligations or liabilities of the GJP Parties or of TPEG, as
the case may be, shall be payable to the Indemnified Parties within ten (10)
days (the "Indemnification Payment Date") after the date that such obligation
or liability has been determined by written stipulation or agreement between or








                                       52
<PAGE>   54

among the parties, by a final non-appealable judgment or arbitration award or,
in the case of liabilities for any Taxes, the receipt by TPEG and/or the
Surviving Corporation from any Govenmental Authority of an assessment, claim or
lien for Taxes which is subject to the indemnification provisions of Section
8.3 hereof.

                8.6     Form of Payment of Indemnification  Liability.  The GJP
Parties or TPEG, as the case may be, shall be permitted to satisfy their
respective indemnification obligations under this Article 8 by paying the full
dollar amount of the indemnified Losses (the "Loss Amount") to the Indemnified
Parties in the form of Shares of TPEG Common Stock, the number of  which, for
purposes of this Article 8, shall be determined by dividing the Loss Amount by
the average of the closing prices of the (a) quoted closing price of the TPEG
Common Stock on the NASDAQ SmallCap Market during the thirty (30) consecutive
trading days immediately preceding the Indemnification Payment Date or (b) if
there is no trading in the TPEG Common Stock on the NASDAQ SmallCap Market on
any one or more of such trading days, by the average mean between the quoted
closing bid and asked prices for the TPEG Common Stock on such market on any of
such days, subject to a discount of ten percent (10%) from the price of the
Shares of the TPEG Common Stock so determined and further subject to a minimum
price of one dollar twenty cents ($1.20) per share; provided, however, that
with respect to the GJP Parties' liabilities for Taxes which are the subject of
the representations and warranties set forth in Section 2.10 hereof and the
indemnification provisions of Section 8.3 hereof and/or liabilities for
environmental matters which are the subject of the representations and
warranties set forth in Section 2.12(g) and (h) hereof, the GJP Parties shall
pay the Loss Amount by certified check (or other form of cash payment or
transfer mutually acceptable to the parties) payable directly to the order of
the Governmental Authority assessing or otherwise claiming or levying such
Taxes or to TPEG as TPEG may direct on or before the Indemnification Date.

                8.7     Joint and Several Liability of GJP Parties.  Each
reference in this Article 8 to the "GJP Parties" shall mean each of GJP, Grosso
and Jacobson, and all of them, individually and collectively, jointly and
severally, and the GJP Parties shall be jointly and severally liable for all
present and future indebtedness, liabilities and obligations to each TPEG
Indemnified Party pursuant to or in connection with Section 8.2.
Notwithstanding the joint and several liability of the GJP Parties as
aforesaid, each of Grosso and Jacobson hereby irrevocably waives any right to
seek or obtain from GJP and/or the Surviving Corporation after the Effective
Time, whether by contribution, reimbursement, joinder of parties, cross-claim
or otherwise, any amounts paid or payable by Grosso and/or Jacobson pursuant to
or in connection with Section 8.2.

                8.8     Cross-Indemnification With Other Mergers.
Notwithstanding any other provisions of this Agreement, all of the
indemnification provisions set forth in this Article 8 shall be deemed
applicable to and may be invoked against the GJP Parties or TPEG, as the case
may be, in the event that:














                                       53
<PAGE>   55
                               (i)   any of the parties to the Other Mergers
                        breaches any representations and warranties set forth
                        in the agreements or other Transaction Documents
                        governing either of such Other Mergers;

                               (ii)  any of the parties to the Other Mergers
                        breaches any covenants or agreements by any of such
                        parties set forth in any of the agreements or other
                        Transaction Documents governing either of such Other
                        Mergers;

                               (iii) the indemnification provisions with
                        respect to tax liabilities and assessments of GJE or
                        GJM, respectively, under the agreements governing the
                        Other Mergers are invoked; or

                               (iv)  any other matters to which the parties to
                        either of the Other Mergers have agreed to indemnify
                        any of the other parties to such Other Mergers; it
                        being expressly understood and agreed by the GJP
                        Parties and by TPEG that (A) any claims for
                        indemnification arising under either or both of the
                        Other Mergers shall invoke all of the indemnification
                        and other remedies provided for in this Agreement, and
                        (B) the GJP Parties shall be jointly and severally
                        liable for any indebtedness, obligations or liabilities
                        of the GJE Parties (as defined in the agreement
                        governing the Other Merger to which GJE is a Party) and
                        or the GJM Parties (as defined in the agreement
                        governing the Other Merger to which GJM is a Party) to
                        the TPEG Indemnified Parties, and the TPEG Parties
                        shall be jointly and severally liable for any
                        indebtedness, obligations or liabilities of the TPEG
                        Parties (as defined in the agreement governing the
                        Other Mergers with GJE and GJM, respectively) to the
                        GJP Indemnified Party, in each case without offset,
                        deduction, defense or counterclaim available to the GJP
                        Parties or the TPEG Parties, as the case may be, under
                        this Agreement.

                8.9     Minimum Claim.  Anything in this Article 8 to the
contrary notwithstanding, the TPEG Indemnified Parties, as a group, shall not
have any claims for indemnification against the GJP Parties, and the GJP
Indemnified Parties, as a group, shall not have any claims for indemnification
against TPEG unless the amount of such individual claims for Losses, or the
amount of such claim when added to all other claims for Losses for which such
party could have sought indemnification hereunder and under the Other Merger
Agreements but for the provisions of this Section 8.9, exceeds, in the
aggregate, Thirty Thousand ($30,000) Dollars  (the "Indemnification Minimum
Amount"); provided, however, that in determining amounts to be included in the
Indemnification Minimum Amount, if any, but for no other purpose, all
representations, warranties and covenants in this Agreement, made by the GJP
Parties or by TPEG, as the case may be, shall be read without regard to any
materiality standard or any knowledge qualification set forth in this
Agreement.









                                       54

<PAGE>   56
                8.10    Maximum Claim.  Anything in this Article 8 to the
contrary notwithstanding, neither TPEG nor the GJP Parties shall have any
liability under this Article 8 in respect of any Losses to the extent the
aggregate of such Losses under this Article 8 and under the Other Merger
Agreements, exceeds, in the aggregate, the sum of Three Million ($3,000,000)
Dollars.

                8.11    Other Remedies.  The indemnification provisions of this
Article 8 are in addition to, and not in derogation of, any statutory,
equitable, or common law remedies which any party hereto may have for breach of
any representation, warranty or covenant set forth in this Agreement, any
Schedule or Exhibit annexed hereto or in any of the other Transaction
Documents.






































                                       55

<PAGE>   57
                     ARTICLE 9.  TERMINATION AND AMENDMENT

                9.1     Termination.  This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the GJP Stockholders :

                        (a)    by the mutual consent of GJP, Grosso and
Jacobson and TPEG;

                        (b)    by either GJP or TPEG upon written notice to the
other party if any governmental entity of competent jurisdiction shall have
issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement, and in any
such case the time for appeal or petition for reconsideration of such order
shall have expired without such appeal or petition being granted;

                        (c)    by either GJP or TPEG if the Merger shall not
have been consummated on or before October 31, 1997.

                9.2     Effect of Termination.  In the event of termination of
this Agreement by either GJP or TPEG as provided in Section 9.1 hereof, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party or parties hereto to the other party or
parties and each of GJP (on its own behalf and on behalf of Grosso and
Jacobson) and TPEG shall bear and be solely responsible for their respective
professional fees, expenses and other costs incurred in the negotiation and
execution of the Agreement and any other matters undertaken with respect to the
transactions contemplated hereby, except (i) with respect to or by reason of
the application of the provisions of Article 10 of this Agreement, and (ii)
with respect to any liabilities or damages incurred or suffered by a party or
parties as a result of the breach in any material respect by the other party or
parties of any of its or their representations, warranties, covenants or
agreements set forth in this Agreement.

                9.3     Amendment.  This Agreement may be amended by the
parties hereto, at any time before or after approval of the matters presented
in connection with the Merger by the GJP Stockholders, but, after any such
stockholder approval, no amendment shall be made which by law requires further
approval by such stockholders without seeking such further approval.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

                9.4     Extension; Waiver.  At any time prior to the Effective
Time, the parties hereto, may, to the extent legally permitted, (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein.  Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed by or on
behalf of such party.














                                       56

<PAGE>   58

                               ARTICLE 10.  REMEDIES IN EVENT OF THIRD
                                            PARTY COMPETING TRANSACTION

                Notwithstanding any provision to the contrary set forth in this
Agreement or in any other agreements, instruments or other documents delivered
by the parties pursuant hereto,

                10.1    Remedies for Competing Transaction.  TPEG and TPEG Sub
II further agree and GJP, Grosso and Jacobson further jointly and severally
agree that, in the event that any of TPEG, TPEG Sub II, GJP, Grosso and/or
Jacobson elects or elect to execute a letter of intent or become a party to or
make a written or an oral commitment with respect to a Competing Transaction
(all such actions, collectively, the "Competing Transaction Commitment") prior
to the Effective Time or the earlier termination of this Agreement in
accordance with Article 9 hereof, whichever sooner occurs, then such party or
parties shall be legally obligated, promptly upon the written demand of the
other party or parties, to promptly reimburse the other party for all of its
reasonable legal, accounting  and other professional costs and related
disbursements, upon submission of reasonably itemized bills, vouchers and/or
statements therefor plus such monetary damages as a court of competent
jurisdiction may award.

                10.2    Procedure for Exercising Remedies.  If any of TPEG,
GJP, Grosso and/or Jacobson as the case may be, undertakes a Competing
Transaction Commitment, it, he or they shall be required to give prompt written
notice thereof to the other party or parties and its or their counsel,
whereupon the other party or parties shall submit as promptly as practicable
reasonably itemized bills, vouchers and/or statements with respect to its
reasonable legal, accounting and other professional costs and related
disbursements incurred in connection with this Agreement and the transactions
contemplated hereby.  The party undertaking the Competing Transaction
Commitment shall be required, within seven (7) days after receipt of such
bills, vouchers and/or statements, to reimburse the other party in full for all
of such fees, costs and expenses plus such monetary damages as a court of
competent jurisdiction may award.

                10.3    Other Remedies for Competing Transaction.  The
reimbursement of fees and expenses plus such monetary damages as a court of
competent jurisdiction may award, if the other party or parties undertakes a
Competing Transaction Commitment prior to the Effective Time or to the earlier
termination of this Agreement in accordance with Article 9 hereof, whichever
sooner occurs, shall not constitute sole and exclusive remedy available to the
other party or parties in consequence of TPEG, GJP, Grosso or Jacobson, as the
case may be, having undertaken such Competing Transaction Commitment or having
engaged in a Competing Transaction.















                                       57
<PAGE>   59
                        ARTICLE 11.  GENERAL PROVISIONS

                11.1    Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation) or mailed (postage prepaid) by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):

                        (a)    if to TPEG, TPEG subsidiaries or the
                                      Surviving Corporation, to

                               The Producers Entertainment Group Ltd.
                               5757 Wilshire Boulevard - Penthouse One
                               Los Angeles, CA 90036
                               Telecopy No. (310) 634-8635
                               Attn:  Irwin Meyer, CEO
                               with a copy to

                               Dempsey & Johnson, P.C.
                               1925 Century Park East
                               Suite 2350
                               Los Angeles, CA  90067
                               Attn: Michael D. Dempsey, Esq.

                and

                               Maloney, Mehlman & Katz
                               405 Lexington Avenue
                               New York, New York  10174
                               Telecopy No. (212) 972-0111
                               Attn:  Melvin Katz, Esq.

                and

                        (b)    if to GJP, Grosso or Jacobson, to or c/o

                               Grosso-Jacobson Productions, Inc.
                               767 Third Avenue
                               New York, New York  10017
                               Telecopy No. (212) 355-3178
                               Attn:  Lawrence S. Jacobson, President





                                       58
<PAGE>   60
                               with a copy to

                               Kay, Collyer & Boose, LLP
                               One Dag Hammarskjold Plaza
                               New York, New York  10017
                               Telecopy No. (212) 755-0921
                               Attn:  Michael Collyer, Esq.

                Any notice sent by registered or certified mail as aforesaid
shall be deemed delivered to the party or parties to whom it is addressed on
the third (3rd) business day following the date upon which each notice has been
deposited in the U.S. mail.

                11.2    Interpretation.  (a) When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the naming or
interpretation of this Agreement.  Whenever the words "include",  "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".  The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party or parties to whom such information is to be made
available.  The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to September 15, 1997.

                        (b)    All references in this Agreement to "the
knowledge of" or "to the best knowledge of" of any party shall mean "actual
knowledge" of the party charged with such knowledge or "constructive knowledge"
which such party should have obtained, in the reasonable exercise of his or its
duties, after reasonable inquiry.

                        (c)    All references herein to any joint and several
agreements or obligations of Grosso and Jacobson pertaining to actions or
transactions to be taken, or not to be taken, by GJP, in accordance with the
terms of this Agreement shall constitute, and be deemed to constitute, the
agreements and obligations of Grosso and Jacobson to cause GJP to take or not
to take any such actions or transactions.

                11.3    Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.

                11.4    Entire Agreement; No Third Party Beneficiaries; Rights
of Ownership.  This Agreement (including the documents and the instruments
referred to herein) (a) constitutes the entire agreement and supersedes all
prior agreements (including the letter of intent between GJP, GJE, Grosso and
Jacobson and TPEG dated April 25, 1997) and understandings, both










                                       59


<PAGE>   61

written and oral, among the parties with respect to the subject matter hereof,
provided that the relevant provisions of Articles hereof relating to
Confidentiality shall survive the execution and delivery of this Agreement and
(b) except as expressly provided herein, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.  The
parties hereby acknowledge that, except as hereinafter agreed to in writing, no
party shall have the right to acquire or shall be deemed to have acquired
shares of common stock of the other party pursuant to the Merger until
consummation thereof.

                11.5    Governing Law.  This Agreement shall be governed and
construed in accordance with the internal laws of the State of Delaware,
without regard to any applicable conflicts of law.

                11.6    Publicity.  Except as otherwise required by law
(including federal securities law including regulations of the SEC) or the
rules and regulations of the NASDAQ SmallCap Market, so long as this Agreement
is in effect, neither GJP, Grosso or Jacobson nor TPEG shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld or delayed.

                11.7    Assignment.  Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

                11.8    Disclosure Schedules.  The Schedules annexed hereto and
referred to herein are a part of this Agreement for all purposes.  The
inclusion of an item in any Schedule does not necessarily imply that such item
or matter is material or significant.  Terms which are defined in this
Agreement shall have the same meanings when used in the Schedules hereto.
Disclosure of any item or matter on (a) any one Schedule hereto shall be deemed
to constitute disclosure of such item or matter for each of the other Schedules
hereto with respect to which disclosure of such item or matter is required and
(b) any schedule required to be delivered by GJE or GJM or by TPEG or the other
TPEG subsidiaries, as the case may be, pursuant to or under the agreements
governing the Other Mergers shall be deemed to constitute disclosure of such
item or matter with respect to which disclosure of such item or matter is
required hereunder.
















                                       60
<PAGE>   62
                IN WITNESS WHEREOF, GJP, TPEG and TPEG Sub II each have caused
this Agreement to be signed by their respective officers thereunto duly
authorized and Grosso and Jacobson each have signed this Agreement on and as of
the date and year first above written.

Attest:                                     THE PRODUCERS ENTERTAINMENT
                                            GROUP LTD.



_____________________________               By:_____________________________
Name:                                          Title:
Title:


Attest:                                     TPEG ACQUISITION II CORP.



_____________________________               By:_____________________________
Name:                                          Title:
Title:


Attest:                                     GROSSO-JACOBSON PRODUCTIONS, INC.



_____________________________               By:_____________________________
Name:                                          Title:
Title:



                                            ________________________________
                                            SALVATORE GROSSO



                                            ________________________________
                                            LAWRENCE S. JACOBSON















                                       61

<PAGE>   1
                                                                   EXHIBIT 10.27


                          AGREEMENT AND PLAN OF MERGER


                                      AMONG


                     THE PRODUCERS ENTERTAINMENT GROUP LTD.,


                           TPEG ACQUISITION III CORP.,


                       GROSSO-JACOBSON MUSIC COMPANY, INC.


                                SALVATORE GROSSO

                                       AND

                              LAWRENCE S. JACOBSON

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



                            DATED: SEPTEMBER 15, 1997


<PAGE>   2
                          AGREEMENT AND PLAN OF MERGER



      AGREEMENT AND PLAN OF MERGER, dated September 15, 1997, by and among The
Producers Entertainment Group Ltd., a Delaware corporation ("TPEG"), TPEG
Acquisition III Corp., a New York corporation ("TPEG Sub III"), Grosso-Jacobson
Music Company, Inc., a New York corporation ("GJM"), Salvatore Grosso and
Lawrence S. Jacobson (hereinafter referred to severally by their respective
surnames and collectively as the "Stockholders").

      WHEREAS, TPEG owns of record and beneficially all of the issued and
outstanding shares of capital stock of TPEG Sub III;

      WHEREAS, Grosso and Jacobson own of record and beneficially all of the
issued and outstanding capital stock of GJM;

      WHEREAS, TPEG Sub III desires to merge with and into GJM and TPEG desires
to have TPEG Sub III merge with and into GJM in consideration of the issuance by
TPEG of shares of TPEG Common Stock (as hereinafter defined) in exchange for all
of the capital stock of GJM issued and outstanding at the effective time of the
merger; and

      WHEREAS, for federal income tax purposes, it is intended that the
contemplated merger transaction shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), all upon the terms and subject to the conditions set forth herein and
in accordance with the Business Corporation Law of the State of New York, as the
same may be amended from time to time (the "BCL"); and

      WHEREAS, TPEG and certain other subsidiaries of TPEG are entering into
separate agreements and plans of merger of even date with Grosso-Jacobson
Productions, Inc. ("GJP"), a Delaware corporation, and The Grosso-Jacobson
Entertainment Corporation, Inc. ("GJE"), a New York corporation, (each such
corporation being hereinafter referred to as "GJP" and "GJE", respectively, and
collectively as the "Other GJ Companies" and collectively with GJM, the "GJ
Entities"; and such other mergers and agreements being referred to collectively
as the "Other Mergers" and the "Other Merger Agreements") upon substantially the
same terms and conditions hereinafter set forth except for the Merger
Consideration (as hereinafter defined) to be paid to the holders of the capital
stock of each of GJP and GJE,

      NOW, THEREFORE, the parties hereto agree as follows:


                                       1
<PAGE>   3
                              ARTICLE 1. THE MERGER

      1.1   Merger; Surviving Corporation. In accordance with the provisions of
this Agreement and the BCL, at the Effective Time (as defined in Section 1.5
hereof), TPEG Sub III shall be merged with and into GJM (the "Merger"), and GJM
shall be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of New York, under the name "Grosso Jacobson Music Company, Inc.". At the
Effective Time, the separate existence of TPEG Sub III shall cease. All
properties, franchises and rights belonging to TPEG Sub III, by virtue of the
Merger and without further act or deed, shall be vested in the Surviving
Corporation, which shall assume and be solely responsible for all the
liabilities and obligations of each of TPEG Sub III and GJM. The Merger will
otherwise also have the effects set forth in Section 906 of the BCL.

      It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368 of the Code and that this Agreement shall constitute
a "plan of reorganization" for purposes of the Code.

      1.2   Certificate of Incorporation. The Certificate of Incorporation of
TPEG Sub III in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until altered or
amended as provided by law or by such Certificate of Incorporation. The
Certificate of Incorporation of TPEG Sub III has been delivered by TPEG Sub III
to GJM.

      1.3   By-laws. (a) The By-laws of TPEG Sub III in effect immediately prior
to the Effective Time (as defined in Section 1.5 hereof) shall be the By-laws of
the Surviving Corporation until altered, amended or repealed, in whole or in
part, as provided by law, by the Certificate of Incorporation of the Surviving
Corporation or by such By-laws. The TPEG Sub III By-laws have been delivered by
TPEG Sub III to GJM.

            (b)   The By-laws of TPEG in effect immediately prior to the
Effective Time (and as set forth on Schedule 1.3(b)) shall be the By-laws of
TPEG until altered, amended or repealed, in whole or in part, as provided by
law, by the Certificate of Incorporation of TPEG or by the TPEG By-laws. The
TPEG By-laws have been delivered by TPEG to GJM.

      1.4   Directors and Officers. (a) GJM and the Stockholders shall cause the
directors of GJM to tender their written resignations as directors, effective as
of the Effective Time, and TPEG, as the sole stockholder of the Surviving
Corporation, shall designate and elect, as of the Effective Time, a new Board of
Directors of the Surviving Corporation. Commencing at the Effective Time, the
directors and officers of the Surviving Corporation shall be as set forth on
Schedule 1.4. Each of the directors and officers of the Surviving Corporation
shall hold their respective offices in accordance with the By-laws of the
Surviving Corporation.


                                       2
<PAGE>   4
            (b)   At or prior to the Effective Time, TPEG will take all steps
necessary and appropriate to reconstitute its Board of Directors so that, as of
the Effective Time, the Board of Directors of TPEG shall consist of seven
persons (the "TPEG Board Designees") designated as follows:

                  (i)   three of the TPEG Board Designees will be the designees
            of the pre-Merger TPEG Board of Directors;

                  (ii)  three of the TPEG Board Designees will be the designees
            of the pre-Merger GJM Board of Directors; and

                  (iii) the remaining TPEG Board Designee will be the joint
            designee of the pre-Merger TPEG Board of Directors and the
            pre-Merger GJM Board of Directors.

                  (iv)  The names of the designees referred to in clauses (i)
            through (iii) of this Section 1.4(b) will be delivered by the
            parties to each other and, where required, mutually agreed upon as
            required by Section 7.1(e) hereof. After the Effective Time, the
            TPEG Board Designees shall serve as members of the Board of
            Directors of TPEG in accordance with the TPEG By-Laws.

            (c)   At the Effective Time, the Board of Directors of TPEG shall
appoint four members to its Executive Committee who shall consist of two
designees of the pre-Merger TPEG Board of Directors and two designees of the
pre-Merger GJM Board of Directors.

      1.5   Effective Time. The Merger shall become effective at the time of
filing of a certificate of merger in the form attached as Exhibit "A" to this
Agreement with the Secretary of State of the State of New York in accordance
with the provisions of Section 904 of the BCL (the "Certificate of Merger").
Subject to the fulfillment of the conditions set forth in Article 7, the
Certificate of Merger shall be so filed immediately after obtaining the
requisite approval of the stockholders of GJM contemplated by Section 7.1(a)
hereof. The date and time when the Merger shall become effective are referred to
herein as the "Effective Time."

      1.6   Consideration for Merger. The total consideration to be paid by TPEG
to the holders of the outstanding Common Stock, no par value, of GJM (the "GJM
Common Stock") in connection with the Merger of TPEG Sub III into GJM shall
equal one million ($1,000,000) dollars (the "Merger Consideration"). The Merger
Consideration shall be paid by TPEG through the issuance by TPEG to the
Stockholders of GJM of such number of shares of TPEG Common Stock, $.001 par
value (the "TPEG Common Stock") as shall be determined by dividing the Merger
Consideration by the average of the (a) quoted closing prices of the TPEG Common
Stock on the NASDAQ SmallCap Market during the thirty (30) consecutive trading
days immediately preceding the Effective Time and (b) if there is no trading in
the TPEG Common Stock on the NASDAQ SmallCap Market on any one or more of such
trading days, by the average mean between the quoted 


                                       3
<PAGE>   5
closing bid and asked prices for the TPEG Common Stock on such Market on any of
such days, subject to a maximum price of one dollar and forty cents ($1.40) per
share of TPEG Common Stock (or a minimum of 714,286 shares of TPEG Common Stock)
or a minimum price of one dollar and twenty cents ($1.20) per share of TPEG
Common Stock, (or a maximum of 833,333 shares of TPEG Common Stock).

      1.7   Conversion of Securities.

            (a)   Each share of GJM Common Stock issued and outstanding
immediately prior to the Effective Time (except for shares of GJM Common Stock
then held in its treasury, which shares shall be canceled upon the Merger),
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become such number of shares of TPEG Common Stock
as shall have been determined pursuant to Section 1.6 hereof divided by the
total number of shares of GJM Common Stock issued and outstanding immediately
prior to the Effective Time.

            (b)   As of the Effective Time, the holders of certificates
representing shares of issued and outstanding GJM Common Stock shall cease to
have any rights as stockholders of GJM, except such rights, if any, as they may
have pursuant to the BCL, and, except as otherwise expressly set forth herein,
their sole and exclusive right shall be the right to receive shares of TPEG
Common Stock in accordance with the provisions of this Agreement.

            (c)   Each share of Common Stock of TPEG Sub III ("TPEG Sub III
Common Stock") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each
certificate evidencing ownership of TPEG Sub III Common Stock shall continue to
evidence ownership of the same number of shares of the same class of the
Surviving Corporation. From and after the Effective Time, each outstanding
certificate theretofore representing TPEG Sub III Common Stock shall be deemed
for all purposes to evidence ownership of and to represent the number of shares
of Common Stock of the Surviving Corporation into which such TPEG Sub III Common
Stock shall have been converted. Promptly after the Effective Time, the
Surviving Corporation shall issue to TPEG, the holder of the TPEG Sub III Common
Stock, one or more certificates representing a like number of shares of Common
Stock of the Surviving Corporation in exchange for the certificates that
formerly represented TPEG Sub III Common Stock, which shall thereupon be
canceled.

      1.8   Surrender and Payment. Promptly after the Effective Time, TPEG shall
deliver or cause to be delivered to each holder of record of one or more
certificates representing GJM Common Stock (collectively, the "GJM
Certificates"), certificates representing such number of shares of TPEG Common
Stock as each such holder shall be entitled to receive per share of GJM Common
Stock pursuant to Section 1.7(a) of this Agreement in exchange for the surrender
of TPEG or its transfer agent ("TPEG Transfer Agent") of such GJM Certificates.
If any Shares of TPEG

                                       4
<PAGE>   6
Common Stock are to be issued in a name other than that in which a GJM
Certificate so surrendered is then registered, it shall be a condition of such
exchange that the GJM Certificate surrendered be accompanied by payment of any
applicable transfer taxes and documents required for a valid transfer or
assignment of title to such shares of TPEG Common Stock in the reasonable
judgment of TPEG and its counsel. From and after the Effective Time, until so
surrendered, each GJM Certificate shall be deemed for all purposes, except as
set forth below, to evidence the number of shares of TPEG Common Stock into
which the GJM Common Stock represented by such GJM Certificate shall have been
converted. Upon surrender of a GJM Certificate, the holder of record thereof
shall receive, together with one or more certificates representing the number of
shares of TPEG Common Stock to which he shall be entitled in accordance with
Section 1.7(a), all dividends and other distributions which shall have
theretofore been paid or made to holders of record of TPEG Common Stock after
the Effective Time with respect to such shares. TPEG shall be authorized to
deliver certificates for shares of TPEG Common Stock attributable to any GJM
Certificate theretofore issued which has been lost or destroyed upon receipt of
satisfactory evidence of ownership of the shares of GJM Common Stock formerly
represented thereby and of appropriate indemnification of TPEG in form
satisfactory to TPEG and its counsel.

      1.9   Fractional Shares. No fractional shares shall be issued by TPEG in
the Merger. Each fractional interest in a share of TPEG Common Stock which would
otherwise be issued as a result of the Merger shall be rounded to the nearest
whole share of TPEG Common Stock.

      1.10  No Further Transfers. At the Effective Time, the stock transfer
books of GJM shall be closed, and no further transfers of shares of GJM Common
Stock shall thereafter be made or be effective.

      1.11  Other Mergers with Other GJ Companies. Notwithstanding any other
provision of this Agreement, the consummation of both of the Other Mergers among
TPEG, other TPEG subsidiaries, each of GJP and GJE and Grosso and Jacobson at
the Effective Time shall constitute conditions precedent to the Merger and the
consummation of the Merger at the Effective Time shall constitute a condition
precedent to the consummation of the Other Mergers.



     ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF GJM, GROSSO AND JACOBSON.

      GJM, Grosso and Jacobson hereby jointly and severally represent and
warrant to TPEG and TPEG Sub III as follows:

      2.1   Organization and Authorization. GJM (i) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (ii) has the corporate power and authority to own or lease and
operate the properties and assets now owned or leased and operated by it and to
carry on its business as it is now being conducted, and (iii) is duly 


                                       5
<PAGE>   7
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of its business or the ownership of its
properties or both makes such qualification necessary. GJM has delivered to TPEG
complete and correct copies of its Certificate Incorporation and By-laws, as
amended and in effect on the date of this Agreement. GJM has full and
unrestricted corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of GJM and, except for the
approval of GJM's stockholders, no other corporate proceedings on the part of
GJM are necessary to authorize this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by GJM and constitutes the legal, valid and binding
agreement of GJM, enforceable against GJM in accordance with its terms. GJM has
no wholly-owned or majority-owned subsidiaries and has no record or beneficial
title or interest in any capital stock or equity interest in any firm,
corporation, partnership, other entity or individual (each, a "Person") Neither
Grosso nor Jacobson has any direct or indirect record or beneficial title or
interest in any captital stock or other equity interest of any Person (other
than GJM, the Other GJ Companies and 1037300 Ontario Limited (the "Ontario
Corporation")) engaged directly or indirectly in the businesses of developing,
producing, distributing, licensing and/or exhibiting motion pictures or
television programs or series, other than holdings of less than five (5%)
percent of publicly held Persons by both Grosso and Jacobson, as a group.

      2.2   Non-Contravention. The execution and delivery by GJM of this
Agreement and, subject to the approval of this Agreement by GJM's stockholders,
the consummation by GJM of the transactions contemplated hereby will not (a)
violate any provision of the Certificate of Incorporation or By-laws of GJM, (b)
violate any material provision of or result in the breach or the acceleration of
or entitle any party to accelerate (whether after the giving of notice or lapse
of time or both) any material obligation of GJM under any GJM Lease (as such
term is defined in Section 2.12 hereof), or other agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which GJM is a party or by which GJM is bound, (c) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon any asset or property of GJM or (d) violate or conflict with in
any respect any other material restriction or any law, ordinance or rule to
which GJM or the property or assets of GJM is subject.

      2.3   Governmental Consents and Approvals. Except as set forth in Schedule
2.3, no consent, approval, order or authorization of, or registration or
declaration with, any government agency, court, tribunal or arbitration board or
panel (collectively "Gorvernmental Authority") is required in connection with
the execution and delivery of this Agreement by GJM or the consummation by GJM
of the transactions contemplated hereby, except for the filing of a Certificate
of Merger with the Secretary of State of the State of New York.

      2.4   Capital Stock. The authorized capital stock of GJM consists of 200
shares of Common Stock, no par value, of which 100 shares are issued and
outstanding and no shares are issued and held in the treasury of GJM. As of the
date hereof, GJM has no authorized class of capital stock other than the GJM
Common Stock. All outstanding shares of GJM Common Stock 


                                       6
<PAGE>   8
are duly authorized, validly issued, fully paid and nonassessable and all such
outstanding shares of GJM Common Stock are held of record and beneficially
solely by Grosso and Jacobson. As of the date hereof, GJM has reserved no shares
of GJM Common Stock for issuance pursuant to any


                                       7
<PAGE>   9
option, warrant, subscription or other similar agreement or commitment. As of
the date hereof, except as set forth herein, or in Schedule 2.4, GJM neither has
nor is a party to any outstanding written or oral offers, subscriptions,
options, warrants, rights or other agreements, obligations or commitments
obligating GJM to issue or sell, or cause to be issued or sold, any shares of
any class of capital stock of GJM (including GJM Common Stock) or any securities
or obligations convertible into or exchangeable for or giving any Person any
right to acquire any shares of such capital stock, or obligating GJM to enter
into any such agreement or commitment and no obligation or commitment to
authorize for issuance any shares of any other class of capital stock.

      2.5   Financial Statements. (a) The (a) balance sheet as of November 30,
1996 of the GJ Entities and related statements of operations, stockholders'
equity and cash flows for each of November 30, 1995 and November 30, 1996,
examined and reported upon by Rosenberg, Rich, Baker, Berman & Company,
independent accountants, complete copies of which have been delivered toTPEG,
and (b) the unaudited balance sheet as of May 31, 1997 of the GJ Entities and
the related statements of operations, stockholders' equity and cash flows for
the six-month period then ended, (collectively, the "GJ Financial Statements"),
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis, and fairly present the financial
position of GJM at such dates and the results of its operations and cash flows
for such periods. Except as disclosed or provided for in the GJ Financial
Statements (including the notes thereto) or in Schedule 2.5, as of the date
hereof, (i) GJM has no liabilities, commitments or obligations of any kind,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, required to be reflected in any such financial statements, including the
notes thereto, under generally accepted accounting principles that are material
to the business or condition (financial or otherwise) of GJM, and (ii) GJM owns
the properties and assets reflected in such financial statements free and clear
of any liens, claims, charges, pledges, security interests or other
encumbrances, other than those described in the GJ Financial Statements.

            (b)   The books of account and other financial records of GJM (i)
reflect all material items of income and expense and all assets and liabilities
of GJM, (ii) are in all material respects complete and correct, and do not
contain or reflect any material inaccuracies or discrepancies, and (iii) have
been maintained in accordance with good business and accounting practices in all
material respects.

      2.6   No Undisclosed Liabilities. GJM has no liabilities other than
liabilities (i) reflected on the GJ Financial Statements, (ii) disclosed in
Schedule 2.5 hereof, or (iii) incurred in the ordinary course of GJM's business
consistent with its past practices. Reserves are to be established on the
balance sheets included in the GJ Financial Statements in amounts that have been
established on a basis consistent with the past practices of GJM and in
accordance with GAAP.

      2.7   Receivables. Schedule 2.7 sets forth an aged list of the accounts
receivable of GJM as of July 31, 1997, showing separately those receivables
that, as of such date, had been due and outstanding (a) 30 days or less, (b) 31
to 60 days, (c) 61 to 90 days, (d) 91 to 120 days and (e)


                                       8
<PAGE>   10
more than 120 days. Except as set forth on Schedule 2.7, all such receivables
arose from the sale of products or services to Persons not affiliated with GJM
and in the ordinary course of the business consistent with past practice and
custom of GJM and constitute or will constitute, as the case may be, only valid,
undisputed claims of GJM not subject to valid claims of set-off or other
defenses or counterclaims other than normal cash discounts granted in the
ordinary course of the business consistent with past practice. Subject to the
amounts of normal and customary reserves for doubtful accounts established by
GJM for prior periods, all such receivables outstanding as of July 31, 1997 are
good and collectible and have been or will be collected by GJM prior to, or will
be collected by the Surviving Corporation, without resort to litigation or
extraordinary collection activity, within one (1) year after, the Effective
Time.

      2.8   TV Production Assets.

            (a)   Subject to amounts reserved therefor in the GJ Financial
Statements and as adjusted for operations and transactions through the Effective
Time consistent with the past practice and custom of GJM, the values at which
all television production cameras and equipment, post-production and editing
equipment, costumes, wardrobe, props and similar tangible assets (the "TV
Production Assets") are carried on the GJ Financial Statements reflect GJM's
historical valuation policy of stating such TV Production Assets at the lower of
or market value. GJM has good and marketable title to the TV Production Assets
free and clear of all liens and encumbrances. Except as set forth on Schedule
2.8, the TV Production Assets do not consist of items that are obsolete or
damaged; and the Production Assets do not consist of any items leased or held on
consignment. GJM has not acquired or become committed to acquire any TV
Production Assets which are not of a quality and quantity usable in the ordinary
course of their television production business. Schedule 2.8 sets forth a
complete list of the addresses of all warehouses and other facilities in which
the TV Production Assets are located (except for those items in transit) and the
individual and aggregate dollar amounts of all Production Assets (listing by
similar categories) which GJM is obligated to purchase or lease as of the date
hereof.

            (b)   Subject to the reserve, the TV Production Assets are in good
operating condition, are suitable and usable for the purposes for which they are
intended and are in a condition such that they can be used in the ordinary
course of the television production business of GJM consistent with past
practice.

      2.9   Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Since May 31, 1997, except as disclosed on Schedule 2.9 or
specifically contemplated by this Agreement, the business of GJM has been
conducted in the ordinary course and consistent with past practice. As
amplification and not in limitation of the foregoing, except as disclosed in or
specifically contemplated by this Agreement, or in the ordinary course of
business consistent with past practice of GJM since such date, GJM has not:

            (a)   amended or terminated any contract, lease or license, or the
rights thereunder;


                                       9
<PAGE>   11
            (b)   caused, permitted or allowed any material assets or properties
(whether tangible or intangible) to be subjected to any lien or encumbrance;

            (c)   discharged or otherwise obtained the release of any
encumbrance or paid or otherwise discharged any material liability;

            (d)   suffered any material adverse effect on the business, business
prospects or financial condition of or the occurrence of any event or events
which, individually, or in the aggregate, has or have had, or could reasonably
be expected to have, such a material adverse effect;

            (e)   made any loan to, guaranteed any indebtedness of or otherwise
incurred any indebtedness on behalf of any Person;

            (f)   failed to pay any creditor any material amount owed to such
creditor upon the later of when such amount became due or within any applicable
grace period;

            (g)   made any material changes in the customary methods of
operations, including, without limitation, practices and policies relating to
the acquisition, development, production, selling, licensing, or distribution of
television movies, series or mini-series for network TV, cable TV or other
markets;

            (h)   made any capital expenditure or commitment for any capital
expenditure in excess of Ten Thousand ($10,000) Dollars individually or Twenty
Five Thousand ($25,000) Dollars in the aggregate;

            (i)   sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets);

            (j)   entered into any agreement, arrangement or transaction with
any of its directors, officers, employees or shareholders or with any relative,
beneficiary, spouse or any other Affiliate of such Person ("Affiliate" shall
mean, with respect to any specified Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person);

            (k)   (i) granted any material increase, or announced any material
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by GJM to any of its employees, including, without
limitation, any increase or change pursuant to any employee compensation or
bonus plan or (ii) established or increased or promised to increase any material
benefits under any such employee plan, in either case except as required by law;


                                       10
<PAGE>   12
            (l)   written down or written up (or failed to write down or write
up in accordance with GAAP consistent with past practice) the value of any
tangible or intangible assets or any receivables;

            (m)   amended, terminated, canceled or compromised any material
claims or waived any other material rights;

            (n)   made any change in any method of accounting or accounting
practice or policy other than such changes as are required by GAAP;

            (o)   accelerated or discounted the collection of accounts
receivable, or delayed the payment of accounts payable; and the collection and
payment of all such receivables and accounts payable, respectively, have at all
times been made in the ordinary course of business consistent with past
practice;

            (p)   failed, in any material respect, to maintain the TV Production
Assets in accordance with good business practice and in good operating condition
and repair;

            (q)   failed to renew any insurance policy that is scheduled to
terminate or expire within forty-five (45) calendar days of the Effective Time;

            (r)   incurred any indebtedness for borrowed money;

            (s)   terminated, discontinued, closed or disposed of any facility
or other material business operation, or laid off employees;

            (t)   suffered any casualty loss or damage with respect to any of
the TV Production Assets which in the aggregate have a replacement cost of more
than Ten Thousand ($10,000) Dollars whether or not such loss or damage shall
have been covered by insurance;

            (u)   entered into or amended in any material respect any employment
agreement or adopted, or amended in any material respect, any collective
bargaining agreement or any employee benefit plan (as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA");

            (v)   incurred any damage, destruction or similar loss, whether or
not covered by insurance, materially affecting the business, assets, properties
or business prospects of GJM;

            (w)   entered into any other transaction of a material nature other
than in the ordinary course of business;


                                       11
<PAGE>   13
            (x)   entered into any agreement or understanding with any of its
directors, officers or beneficial owners of more than 5% of the outstanding GJM
Common Stock or any of their respective Affiliates;

            (y)   issued or sold any Common Stock or shares or units of capital
stock of any other class, notes, bonds, or other equity or debt securities, or
any options warrants or other rights to purchase or which are convertible into
the same, or entered into any written or oral agreement, commitment or
understanding with respect to the issuance and/or sale thereof, except as
contemplated by this Agreement;

            (z)   declared, set aside or paid any dividend, or made any other
distribution on its capital stock or redeemed, purchased or acquired any shares
or units thereof or entered into any agreement in respect of any of the
foregoing;

            (aa)  amended its Certificate of Incorporation or By-laws;

            (bb)  (i) purchased, sold, assigned or transferred any material
tangible or intangible assets or any material patent, trademark, trade name,
copyright, license, franchise, design or other intangible assets or property,
(ii) mortgaged, pledged or granted or suffered to exist any lien or other
encumbrance or charge on any material assets or properties, tangible or
intangible, or (iii) waived any rights of material value or canceled any
material debts or claims;

            (cc)  incurred any contractual obligation or liability (absolute or
contingent) in excess of $100,000 in the aggregate in one or a series of related
transactions, except current liabilities and obligations incurred in the
ordinary course of business or paid any liability or obligation (absolute or
contingent) in excess of $100,000 other than current liabilities and obligations
incurred in the ordinary course of business consistent with and in accordance
with past practices; or

            (dd)  agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 2.9 or granted any options to purchase, rights
of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 2.9,
except as expressly contemplated by this Agreement.

      2.10  Tax Matters. (a) GJM has duly filed all federal, state, county,
local, foreign and other income, excise, sales, customs, franchise, use,
license, real and personal property, withholding, social security and other tax
and information returns and reports required to have been filed by GJM to the
date hereof, other than income tax returns or reports for the year ending
November 30, 1997, and has paid (or, in the case of withholding taxes and
obligations, has withheld and paid over as required) all taxes, assessments,
duties and other governmental charges (collectively, "Taxes") (including
interest, penalties and additions thereto, if any) shown on such returns or
reports to be due or claimed to be due prior to the date hereof to any federal,
state, county, local, foreign or other Governmental Authority. GJM has paid, or
has made adequate provision in the GJ Financial Statements for, all Taxes
(including interest, penalties and additions thereto, if any) 


                                       12
<PAGE>   14
payable by GJM with respect to all periods to and including May 31, 1997. GJM
does not have any liability for any Taxes (including interest, penalties and
additions thereto, if any) of any nature whatsoever other than as reflected on
the GJ Financial Statements and, to the best knowledge of GJM, there is no basis
for any additional material claims or assessments for Taxes other than with
respect to liabilities for Taxes that may have accrued since November 30, 1996
in the ordinary course of business of GJM or liabilities for Taxes contested in
good faith and with respect to which adequate reserve has been reflected in the
GJ Financial Statements, which are described on Schedule 2.10. Except as set
forth in Schedule 2.10, no federal income tax returns of GJM have been examined
by the Internal Revenue Service (the "IRS") and no proposed additional Taxes,
interest or penalties have been asserted with respect to years not examined.
True copies of the federal, state and local income tax returns of GJM for the
years ended November 30, 1995 and November 30, 1996 have been heretofore
delivered or made available to TPEG.

            (b)   In furtherance of the representations and warranties set forth
in paragraph (a) of this Section 2.10 and, except as otherwise set forth in
Schedule 2.10:

                  (i)   Filing of Returns. As of the time of filing, GJM's tax
            returns correctly reflected the facts regarding GJM's income,
            business, assets, operations, activities, status, other matters or
            any other information shown or required to be shown thereon. No
            claim has ever been made by a taxing authority in a jurisdiction
            where GJM does not file tax returns with respect to a particular tax
            that it is or may be subject to taxation by that jurisdiction with
            respect to such tax.

                  (ii)  Liens. There are no liens for taxes other than for
            current taxes not yet due and payable for which adequate provision
            shall have been made in the GJ Financial Statements on the assets of
            GJM.

                  (iii) Foreign Person. GJM is not a person other than a United
            States person within the meaning of the Code.

                  (iv)  Audit History. No issues have been raised and no
            requests for information have been made by any taxing authority in
            connection with any of the GJM tax returns or with respect to any
            taxes to which GJM is or may be subject. No waivers of statutes of
            limitation with respect to the tax returns or any taxes to which GJM
            may be subject have been given by or requested from GJM. Schedule
            2.10 sets forth by Tax, taxing authority and taxable period (A) each
            tax return filed by, or with respect to, any predecessor for any
            taxable period ending on or after November 30, 1994, (B) the taxable
            periods of GJM as to which the statute of limitations with respect
            to such Taxes have not expired, and (c) with respect to such taxable
            periods, those years for which 


                                       13
<PAGE>   15
            examinations have been completed, those years for which for which
            examinations are presently being conducted, those years for which
            examinations have not been initiated, and those years for which
            required tax returns have not yet been filed. GJM has delivered to
            TPEG correct and complete copies of all such tax returns and all
            examination reports, statements of deficiencies or other notices
            from or correspondence with, taxing authorities with respect
            thereto. Except to the extent shown on Schedule 2.10, all
            deficiencies asserted or assessments made as a result of any
            examinations have been fully paid, or will be fully reflected as a
            liability in the GJ Financial Statements, or are being contested and
            an adequate reserve therefor has been established and will be fully
            reflected in the GJ Financial Statements. No power of attorney has
            been granted with respect to any matter relating to Taxes that could
            affect GJM.

                  (v)   Tax-Sharing or Allocation Agreements. GJM is not a party
            to or bound by any tax-indemnity, tax-sharing, or tax-allocation
            agreements.

                  (vi)  Prior Affiliated Groups. GJM has never been a member of
            an Affiliated Group (within the meaning of the Code) nor has ever
            been included in any group, consolidated or unitary Return. GJM does
            not have any liability for the Taxes of any Person under Treas. Reg.
            Section 1.1502-6 (or any similar provision of law), or as a
            transferee or successor, by contract or otherwise.

                  (vii) Tax Elections. All material elections with respect to
            Taxes affecting GJM are set forth in Schedule 2.10.

                  (viii) Section 341(f) Consent. GJM has not filed a consent
            pursuant to the collapsible corporation provisions of Section 341(f)
            of the Code (or any similar provision of law) or agreed to have
            Section 341(f)(2) of the Code (or any similar provision of law)
            apply to any disposition of any asset owned by it.

                  (ix)  Doing Business: Taxable Nexus. GJM is not doing business
            in or engaged in a trade or business in, or has a taxable nexus
            with, any jurisdiction in which it has not filed all applicable Tax
            Returns.

                  (xi)  Records. GJM has maintained such records in reasonable
            detail in respect of transactions, events and items (including those
            required to support otherwise allowable deductions, losses and
            credits) as are required under applicable laws in respect of Taxes.

                  (xii) Unpaid Tax. The unpaid Taxes of GJM shall not exceed the
            reserve for tax liability (excluding any reserve for deferred Taxes
            established to reflect timing differences between book and Tax
            income) set forth on the


                                       14
<PAGE>   16
            face of the Balance Sheets included in the GJ Financial Statements
            (rather than in any notes thereto).

                  (xiii) Carryover of Unabsorbed Losses. Except as set forth in
            Schedule 2.10, or as may result or arise by reason of the Merger and
            other transactions contemplated by this Agreement, neither GJM nor
            either of the Stockholders has taken any actions or filed any Tax
            Returns which restricted GJM's utilization of any unabsorbed losses
            sustained in prior periods to offset income to be earned by GJM
            after the Effective Time in the lines of business conducted by GJM
            as of the date hereof.

      2.11  Material Contracts. Attached as Schedule 2.11 is a list which is
complete and correct in all material respects as of the date of this Agreement
of all material agreements, contracts and commitments of GJM, including all
agreements, contracts and commitments of the following types, written or oral,
to which GJM is a party or by which the properties or assets of GJM are bound as
of the date of this Agreement: (i) options to acquire television scripts and
similar prospective television production agreements and co-production
agreements for television series, made-for- television-movies and mini-series
and licensing and distribution agreements; (ii) indentures, security agreements
and other agreements and instruments relating to the borrowing of money by or
extension of credit to GJM; (iii) employment and consulting agreements; (iv)
collective bargaining agreements; (v) agreements, orders or commitments not
cancelable by GJM (without penalty) on not more than 30 days notice; (vi) motor
vehicle, equipment and other personal property leases; (vii) licenses of
material patent, trademark and other proprietary rights; (viii) agreements or
commitments for capital expenditures in excess of Twenty Five Thousand ($25,000)
Dollars in the aggregate for all facilities; (ix) brokerage or finder's
agreements (excluding the "Sirius Agreement" defined and described in Section
2.21 hereof); (x) surety bonds and letters of credit; and (xi) agreements,
contracts and commitments of a type other than those described in the foregoing
clauses (i) through (xi) which in any case involve payments or receipts of more
than Ten Thousand ($10,000) Dollars in the aggregate. GJM has delivered or made
available to TPEG and TPEG Sub III complete and correct copies of all written
agreements, contracts and commitments, together with all amendments thereto, and
accurate descriptions of all oral agreements, set forth on said Schedule 2.11.
Except as set forth in Schedule 2.11 and except for defaults or failures to
perform that do not and will not materially adversely affect the financial
condition, business or operations of GJM, or title to or use of any of the
assets or properties of GJM, such agreements, contracts and commitments are in
full force and effect and, to the best knowledge of GJM, all parties thereto
have performed all material obligations required to be performed by them to date
and are not in default in any material respect thereunder. Except as set forth
in Schedule 2.11 and except for claims, defaults or events that in the aggregate
do not and will not materially adversely affect the financial condition,
business, operations or prospects of GJM or title to or use of the assets or
properties of GJM, no claim of default by any party has been made or is now
pending under any such agreement, contract or commitment and, to the best
knowledge of GJM, no event has occurred and is continuing that with notice or
the passage of time or both would constitute a material default thereunder or
would excuse performance by any party thereto. No such agreement, contract or
commitment materially adversely affects or in the 


                                       15
<PAGE>   17
future may (so far as GJM can now reasonably foresee) materially adversely
affect the business, condition, properties, assets, liabilities or operations of
GJM or of the Surviving Corporation.

      2.12  Real Property. (a) Schedule 2.12 sets forth a true, complete and
correct listing of all leases covering the real property in which GJM holds the
lessee's interest (collectively, the "GJM Leases"). Except as set forth in
Schedule 2.12, GJM holds the lessee's interest in all of the GJM Leases, free
and clear of all liens, claims and encumbrances. GJM does not own any real
property.

            (b)   Schedule 2.12 sets forth a true, complete and correct listing
of (i) all leases to which any of the GJM Leases are subordinated (collectively,
the "Underlying GJM Leases"), and (ii) all Subleases of any of the GJM Leases
(collectively, the "GJM Subleases"). True, complete and correct copies of each
GJM Lease, Underlying GJM Lease and GJM Sublease have been delivered or made
available by GJM to TPEG.

            (c)   Except as set forth in Schedule 2.12, GJM has no knowledge of
and has not received any notice of default from the holder of the lessor's
interest in any GJM Leases or Underlying GJM Leases or the holder of the
lessee's interest in any GJM Subleases that has not heretofore been cured.

            (d)   Except as set forth in Schedule 2.12, neither the premises
leased under any GJM Lease, the use thereof by GJM nor any condition existing
with respect thereto, violates any laws, ordinances, regulations or requirements
(including, without limitation, zoning and use regulations and building
department requirements) affecting the same, which violation would materially
interfere with the operation or use of such premises or materially diminish the
value thereof.

            (e)   Except as set forth in Schedule 2.12, to the best knowledge of
GJM, no Person has any interest in the lessee's interest under any GJM Lease,
Underlying GJM Lease or GJM Sublease or has any right or option to acquire same
or any part thereof.

            (f)   As of the date of this Agreement, GJM has no knowledge that
any Person has paid or been paid any money, or has made or contemplated making
any agreement, written or oral, with respect to the premises leased under any
GJM Lease, Underlying GJM Lease or GJM Sublease or portion thereof which would
preclude, be in competition with or otherwise interfere with the continued use
and occupancy of such property by the Surviving Corporation or could adversely
affect the ability of the lessee thereof to renew any GJM Lease.

            (g)   Hazardous materials (as such term is defined in any law
applicable to GJM or its properties or assets) have not been released or treated
on any property leased, or, to the best knowledge of GJM, occupied or used by
GJM in its television production or other business activities and have not been
generated, used, handled or stored on, or transported to or from, any such
property. GJM has disposed of all wastes, including those wastes containing
hazardous 


                                       16
<PAGE>   18
materials, in compliance with all applicable laws and the Permits. There are no
past, pending or, to GJM's knowledge, threatened claims against GJM or any
property covered by any GJM Lease which relate to any environmental matters and
GJM has not received any notice of such claims. No property leased, or occupied
or used from time to time by GJM in its production or other activities by GJM
and, to the best knowledge of GJM, no property adjoining any such property, is
listed or proposed for listing on the National Priorities List under the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") or on the Comprehensive Environmental Response, Compensation and
Liability Information System, as updated through the date hereof ("CERCLIS") or
any analogous state list of sites requiring investigation or cleanup and GJM has
not transported or arranged for the transportation of any hazardous materials to
any location that is listed or proposed for listing on the National Priorities
List under CERCLA or on the CERCLIS or any analogous state list.

            (h)   There are not now and never have been any underground storage
tanks located on any real property leased or, to the best knowledge of GJM,
occupied or used by GJM from time to time in its television production or other
activities. GJM has never installed any such underground storage tanks on any
real property leased or applied by it.

      2.13  Permits. GJM currently holds all material health and safety and
other permits, licenses, authorizations, certificates, exemptions and approvals
of governmental authorities (collectively, "Permits"), including, without
limitation, environmental Permits, necessary or proper for the current use,
occupancy and operation of the real property occupied or used by GJM pursuant to
the GJM Leases. All such Permits are currently valid and in full force and
effect. There is no existing practice, action or activity of GJM and no existing
condition of the assets or business of GJM which is reasonably likely to give
rise to any civil or criminal liability under, or violate or prevent compliance
with, any health or occupational safety or other similar applicable law. GJM has
not received any notice from any Governmental Authority revoking, canceling,
rescinding, materially modifying or refusing to renew any Permit or providing
written notice of violations under any law. GJM is in all material respects in
compliance with the requirements of the Permits. No consent of any Governmental
Authority will be required with respect to any Permit in the event of the
consummation of the transactions contemplated by this Agreement.

      2.14  Litigation. Schedule 2.14 sets forth a true, complete and correct
listing of all pending actions, suits or proceedings to which GJM is a party.
Except as disclosed in Schedule 2.14, there are no actions, suits or proceedings
or investigations pending or, to the best knowledge of GJM, threatened against
or adversely affecting the business, operations or financial condition of GJM at
law or in equity in any court or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality or any arbitrator. GJM is not in default in respect of any
judgment, order, writ, injunction or decree of any court or any federal, state,
municipal or other governmental department, commission, board, bureau,
authority, agency or instrumentality.


                                       17
<PAGE>   19
      2.15  Certain Interests. Except as disclosed in Schedule 2.15, neither GJM
nor any Affiliate, nor any officer or director of GJM, no relative or spouse (or
relative of such spouse) who resides with, or is a dependent of , any such
Person: (a) has any direct or indirect financial interest in any competitor,
supplier or customer of GJM or (b) owns, directly or indirectly, in whole or in
part, or has any other interest in any tangible or intangible property which GJM
uses or has used in the conduct of their respective businesses or otherwise.

      2.16  Labor Relations. Schedule 2.16 contains a correct and complete list
of all collective bargaining, employment, labor and similar agreements (other
than the "GJM Benefit Plans" defined and described in Section 2.18), whether
written or oral, to which GJM is a party or by which it is or they are bound.
True and correct copies of all such agreements have been supplied to TPEG. GJM
has complied with its obligations related to, and is not in default under, any
written or oral employment agreements, collective bargaining agreements and any
written or oral personnel policies to which they are parties or by which they
are bound. GJM is in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and are not and have not engaged in any unfair labor practices. Except as
set forth in Schedule 2.16:

            (a)   there is no unfair labor practice charge or complaint against
GJM pending or, to the best knowledge of GJM, threatened before the National
Labor Relations Board or any other Governmental Authority;

            (b)   there has not occurred nor, to the best knowledge of GJM, has
there been threatened, a labor strike, request for representation, work slowdown
or stoppage or lockout;

            (c)   there has not been any representation claim or petition
pending before the National Labor Relations Board respecting any employees of
GJM during the past five (5) years;

            (d)   no grievance nor any arbitration proceeding arising out of any
collective bargaining agreement to which GJM is a party is pending;

            (e)   no charges with respect to or relating to GJM are pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment practices;

            (f)   no claim relating to employment or loss of employment with GJM
is pending in any federal, state or local court or in or before any other
adjudicatory body and, to the best knowledge of GJM, no such claims has been
threatened;

            (g)   GJM has not received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws, rules or regulations to conduct an investigation of or relating
to GJM, and no such investigation is in progress;


                                       18
<PAGE>   20
            (h)   GJM has paid in full to all of its employees, or adequately
accrued for in accordance with GAAP, all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees;

            (i)   there is no claim with respect to payment of wages, salary or
overtime pay that has been asserted or is now pending or, to the best knowledge
of GJM, threatened before any Governmental Authority with respect to any Persons
currently or formerly employed by GJM; and

            (j)   GJM is not a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices.

      2.17  Compliance with Laws. GJM has all material Permits, licenses, orders
and approvals of all federal, state or local governmental or regulatory
authorities which are required to conduct the business of GJM as presently
conducted. All such Permits, licenses, orders and approvals are in full force
and effect and, to the best knowledge of GJM, no suspension or cancellation of
any of them is threatened. Except as set forth in Schedule 2.17, none of such
Permits, licenses, orders or approvals will be adversely affected by the
consummation of the Merger. GJM is in compliance in all material respects with
the rules and regulations of all governmental agencies having authority over it,
including, without limitation, agencies concerned with occupational, safety,
environmental protection and employment practices, and GJM has not received
notice of violation of or failure to comply with any such rules or regulations
within the last three years, the failure to comply with which could have a
material adverse effect on the financial condition, business or operations of
GJM.

      2.18  Employee Benefit Plans. (a) Schedule 2.18 sets forth a true,
complete and correct listing of all employee benefit plans (as defined in
Section 3(3) of ERISA) maintained by GJM (the "GJM Benefit Plans"). True,
correct and complete copies of the GJM Benefit Plans have heretofore been
delivered to TPEG.

            (b)   None of the GJM Benefit Plans is a multi-employer plan (within
the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single employer
pension plan (within the meaning of Section 4001(a)(15) of ERISA) subject to
Title IV of ERISA. None of the GJM Benefit Plans provides for the payment of
separation, severance, termination or similar-type benefits to any Person or
obligates GJM to pay separation, severance, termination or similar-type benefits
solely as a result of any transaction contemplated by this Agreement or as a
result of a "change in control" within the meaning of such term under Section
280G of the Code. None of the GJM Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of GJM. Each of the GJM Benefit Plans is subject
only to the laws of the United States or a political subdivision thereof. GJM
does not sponsor, maintain or contribute to a voluntary employees' beneficiary
association intended to be exempt under Section 501(c)(9) of the Code.


                                       19
<PAGE>   21
            (c)   Each GJM Benefit Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
laws, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such GJM Benefit Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with all applicable laws, including, without limitation, ERISA and
the Code. GJM has performed all obligations required to be performed by it
under, is not in any respect in material default under or in violation of, and
has no knowledge of any default or violation by any party to, any GJM Benefit
Plan. No legal action, suit or claim is pending or threatened with respect to
any GJM Benefit Plan (other than claims for benefits in the ordinary course) and
no fact or event is known that could give rise to any such action, suit or
claim.

            (d)   Each GJM Benefit Plan, which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code, has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any GJM Benefit Plan which is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event is known to have occurred since the date of such determination letter
from the IRS to materially adversely affect the qualified status of any such GJM
Benefit Plan or the exempt status of any such trust.

            (e)   There has been no material prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
GJM Benefit Plan. GJM has not incurred any material liability for any penalty or
tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such material liability. GJM has not incurred any liability
under, arising out of or by operation of Title IV of ERISA including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any multi-employer plan, and no fact or event exists which
could give rise to any such liability. No complete or partial termination has
occurred within the five years preceding the date hereof with respect to any GJM
Benefit Plan.

            (f)   All contributions, premiums or payments required to be made
with respect to any GJM Benefit Plan have been made on or before their due dates
and GJM has no unfunded liabilities or obligations with respect to or arising
out of any GJM Benefit Plan. All such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any government entity and no fact or event is known to exist which could give
rise to any such challenge or disallowance.

            (g)   Each of the guaranteed investment contracts and other funding
contracts with any insurance company that are held by any of the GJM Benefit
Plans and any annuity contracts purchased by (i) any of the GJM Benefit Plans or
(ii) any pension benefit plan (as defined in Section 3(2) of ERISA) that
provided benefits to any current or former employees of GJM was issued by an
insurance company which carried the highest rating from each of the nationally
recognized rating agencies, as of the date such contract was issued, the date
hereof and the Effective Time.


                                       20
<PAGE>   22
            (h)   GJM is in material compliance with the requirements of the
Americans With Disabilities Act and the Workers Adjustment and Retraining
Notification Act and, as of the date hereof, GJM has incurred no liabilities
under either such statutes..

      2.19  Patents, Copyrights, Trademarks, Etc. Schedule 2.19 sets forth a
true, complete and correct listing of all material patents, trade names,
trademarks, service marks, copyrights, pending applications for any of the
foregoing, and other proprietary rights of GJM and all agreements for the
licensing thereof by, or to and in favor of, GJM. Except as set forth in
Schedule 2.19, GJM owns, or possesses adequate rights to use, all material
patents, trade names, trademarks, service marks, copyrights, inventions,
processes, designs, formulae, trade secrets, know how and other proprietary
rights necessary for the conduct of their business, with no known infringement
by GJM of the rights (asserted or unasserted) of any Person arising by reason of
any of the foregoing. GJM has no knowledge of any infringement by any third
party upon any patent, trade name, trademark, service mark or copyright owned or
used by GJM, and GJM has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of operations
of GJM.

      2.20  Insurance. GJM has made available to TPEG complete and correct
copies of all insurance policies maintained by GJM, together with all riders,
endorsements and amendments thereto. All such policies are in full force and
effect and all premiums due thereon as of the date have been paid. Such
insurance policies provide GJM with adequate insurance (both as to type and
amount) with respect to risks and perils of a business of the size and type
carried on by GJM as of the date hereof. GJM has complied in all material
respects with the provisions of all such policies.

      2.21  Compensation to be Paid in Connection With the Merger. Attached as
Schedule 2.21 is a true copy of an agreement, dated July 14, 1997 Sirius
Corporate Finance Inc. ("Sirius") and TPEG pursuant to which Sirius is to
receive compensation for its services in connection with the Merger (the "Sirius
Agreement"). Except for the engagement of Sirius pursuant to the Sirius
Agreement, neither GJM nor any of the Other GJ Companies, nor Grosso or Jacobson
or any of their respective Affiliates has engaged or employed any investment
banking firm, broker, finder or intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to any fee, commission or
other compensation in connection with or upon consummation of the Merger. GJM
and the Stockholders hereby jointly and severally indemnify, defend and hold
TPEG and all of its subsidiaries, including TPEG Sub III, harmless from and
against any and all claims, liabilities or obligations with respect to any
additional or other finder's or similar fees, commissions or expenses asserted
or claimed by Sirius, other than pursuant to the Sirius Agreement, or by any
other Person on the basis of any act or statement alleged to have been taken or
made by GJM, either of the Other GJ Companies or either of Grosso or Jacobson.

      2.22  BCL Section 912 Not Applicable. The provisions of Section 912 of the
BCL will not, prior to the termination of this Agreement, apply to this
Agreement or the Merger or any of the transactions contemplated hereby.


                                       21
<PAGE>   23
      2.23  Disclosure. The representations and warranties of GJM, and each of
Grosso and Jacobson set forth in this Agreement, the certificates, statements
and other information furnished to TPEG and TPEG Sub III in writing by or on
behalf of GJM and each of Grosso and Jacobson in connection with the
transactions contemplated hereby, including the Schedules hereto, do not as of
the date of this Agreement, and as of the Effective Time shall not, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of the date hereof, neither GJM nor Grosso or
Jacobson knows of any fact or condition which materially adversely affects, or
in the future may (so far as GJM, or Grosso or Jacobson can now reasonably
foresee) materially adversely affect the condition (financial or otherwise),
properties, assets, liabilities, business, operations or business prospects of
GJM which has not been set forth herein or disclosed to TPEG in writing with
reference to this Agreement.

                ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF TPEG

      TPEG represents and warrants to GJM, Grosso and Jacobson as follows:

      3.1   Organization and Authorization. TPEG and each of the subsidiaries of
TPEG, including TPEG Sub III, (i) is a corporation duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation, (ii) has the corporate power and authority to own or lease and
operate the properties and assets now owned or leased and operated by it and to
carry on its business as it is now being conducted, and (iii) is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of its business or the ownership of its
properties or both makes such qualification necessary. TPEG has delivered to GJM
complete and correct copies of its Certificate Incorporation and By-laws, as
amended and in effect on the date of this Agreement. TPEG has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of TPEG and no other corporate proceedings on the part of
TPEG are necessary to authorize this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by TPEG and constitutes the legal, valid and binding
agreement of TPEG, enforceable against TPEG in accordance with its terms subject
to the laws of bankruptcy, insolvency, or creditor rights and equitable
remedies. Schedule 3.1 contains a complete list of the subsidiaries of TPEG,
including TPEG Sub III, each of which is wholly-owned by TPEG except as noted
therein.

      3.2   Non-Contravention. Except as set forth in Schedule 3.2, the
execution and delivery by TPEG of this Agreement and the consummation by TPEG of
the transactions contemplated hereby will not (a) violate any provision of the
Certificate of Incorporation or By-laws of TPEG or any subsidiary of TPEG, (b)
subject to receipt of the Consents referred to in Section 7.1(c), violate any
material provision of or result in the breach or the acceleration of or entitle
any 


                                       22
<PAGE>   24
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation of TPEG under any TPEG Lease (as such term is
defined in Section 3.10 hereof), or other material agreement, indenture, loan
agreement, commitment, license, instrument, order, arbitration award, judgment
or decree to which TPEG or any subsidiary of TPEG is a party or by which TPEG or
any subsidiary of TPEG is bound, (c) result in the creation or imposition of any
material lien, charge, pledge, security interest or other encumbrance upon any
asset or property of TPEG or any subsidiary of TPEG or (d) violate or conflict
with in any material respect any other material restriction or any law,
ordinance or rule to which TPEG or any subsidiary of TPEG, or the property or
assets of TPEG or any subsidiary of TPEG, is subject.

      3.3   Consents and Approvals. Except for the filing of a Certificate of
Merger with the Secretary of State of the State of New York and except as set
forth in Schedule 3.3, no consent, approval, order or authorization of, or
registration or declaration with, any Governmental Authority or agency is
required in connection with the execution and delivery of this Agreement by TPEG
or the consummation by TPEG of the transactions contemplated hereby.

      3.4   Capital Stock. The authorized capital stock of TPEG consists of
50,000,000 Shares of TPEG Common Stock, par value $.001 per share, of which
12,912,761 shares were issued and outstanding as of September 12, 1997, and
10,000,000 Shares of Series A Preferred Stock, $.001 par value per share (the
"Series A Stock"), of which 1,000,000 shares were issued and outstanding as of
June 30, 1997. All outstanding Shares of TPEG Common Stock are duly authorized,
validly issued, fully paid and nonassessable. Schedule 3.4 sets forth the total
number of Shares of TPEG Common Stock reserved for issuance pursuant to
outstanding stock options, warrants of all series, and Series A Stock. As of the
date hereof, except as contemplated by this Agreement and the agreements
governing the Other Mergers or as set forth in Schedule 3.4, neither TPEG nor
any of subsidiary of TPEG has or is a party to any outstanding offers,
subscriptions, options, warrants, rights or other agreements or commitments
obligating TPEG or any such subsidiary to issue or sell, or cause to be issued
or sold, any shares of capital stock of TPEG (including TPEG Common Stock) or of
any such subsidiary or any securities or obligations convertible into or
exchangeable for or giving any Person any right to acquire any such shares, or
obligating TPEG or any such subsidiary to enter into any such agreement or
commitment.

      3.5   Financial Statements. The consolidated balance sheet as of June 30,
1996 of TPEG and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
then ended, examined and reported upon by Kellogg & Andelson, independent
accountants, complete copies of which have previously been delivered to GJM
(plus the unaudited financial statements included in its Quarterly Reports on
Form 10-Q through the quarter ended March 31, 1997, which are described in
Section 3.6 hereof, the "TPEG Financial Statements"), have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and fairly present the financial position of TPEG at such date and the
results of its operations and cash flows for such periods. Except as disclosed
or provided for in such TPEG Financial Statements (including the notes thereto)
or in Schedule 3.5, (i) TPEG had no liabilities, commitments or obligations of
any kind, whether accrued, absolute, contingent 


                                       23
<PAGE>   25
or otherwise, and whether due or to become due, required to be reflected in any
such financial statements, including the notes thereto, under generally accepted
accounting principles that are material to the business or condition (financial
or otherwise) of TPEG as of March 31, 1997, and (ii) TPEG owns the properties
and assets reflected in such TPEG Financial Statements free and clear of any
liens, charges, pledges, security interests or other encumbrances, other than
those (a) described in the TPEG Financial Statements, (b) which do not have a
material adverse effect on the business, financial condition or results of
operations of TPEG and its subsidiaries, taken as a whole, or (c) which do not
adversely affect title to or the use of such properties or assets.

      3.6   Periodic SEC Filings. TPEG has heretofore delivered or made
available to GJM, receipt of which is hereby acknowledged by GJM, (i) its Annual
Reports on Form 10-K for the years ended June 30, 1995 and June 30, 1996 as
filed with the U.S. Securities and Exchange Commission (the "SEC"); (ii) all
Quarterly Reports on Form 10-Q for the quarterly periods commencing with the
quarter ended September 30, 1995 through the quarter ended March 31, 1997; and
(iii) any other reports or registration statements filed by TPEG with the SEC
since March 31, 1997. As of their respective dates, such reports and statements
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

      3.7   Conduct in the Ordinary Course; Absence of Certain Changes, Events
and Conditions. Since March 31, 1997, except as disclosed on Schedule 3.7 or
specifically contemplated by this Agreement, the business of TPEG and of its
subsidiaries has been conducted in the ordinary course and consistent with past
practice. As amplification and not in limitation of the foregoing, except as
disclosed in or specifically contemplated by this Agreement or the agreements
governing the Other Mergers, or in the ordinary course of business consistent
with past practice of TPEG and its subsidiaries since such date, neither TPEG
nor its subsidiaries have:

            (a)   amended or terminated any contract, lease or license, or the
rights thereunder;

            (b)   caused, permitted or allowed any material assets or properties
(whether tangible or intangible) to be subjected to any lien or encumbrance;

            (c)   discharged or otherwise obtained the release of any
encumbrance or paid or otherwise discharged any material liability;

            (d)   suffered any material adverse effect on the business, business
prospects or financial condition of or the occurrence of any event or events
which, individually, or in the aggregate, has or have had, or could reasonably
be expected to have, such a material adverse effect;

            (e)   made any loan to, guaranteed any indebtedness of or otherwise
incurred any Indebtedness on behalf of any Person or individual;


                                       24
<PAGE>   26
            (f)   failed to pay any creditor any material amount owed to such
creditor upon the later of when such amount became due or within any applicable
grace period;

            (g)   made any material changes in the customary methods of
operations, including, without limitation, practices and policies relating to
the acquisition, development, production, selling, licensing, or distribution of
television movies, series or mini-series for network TV, cable TV or other
markets;

            (h)   made any capital expenditure or commitment for any capital
expenditure in excess of Ten Thousand ($10,000) Dollars individually or Twenty
Five Thousand ($25,000) Dollars in the aggregate;

            (i)   sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets);

            (j)   entered into any agreement, arrangement or transaction with
any of its directors, officers, employees or shareholders (or with any relative,
beneficiary, spouse or Affiliate of such Person);

            (k)   (i) granted any material increase, or announced any material
increase, in the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by TPEG to any of its employees, including, without
limitation, any increase or change pursuant to any employee compensation or
bonus plan or (ii) established or increased or promised to increase any material
benefits under any such employee plan, in either case except as required by Law;

            (l)   written down or written up (or failed to write down or write
up in accordance with GAAP consistent with past practice) the value of any
tangible or intangible assets or any receivables;

            (m)   amended, terminated, canceled or compromised any material
claims or waived any other material rights;

            (n)   made any change in any method of accounting or accounting
practice or policy other than such changes as are required by GAAP;

            (o)   accelerated or discounted the collection of accounts
receivable, or delayed the payment of accounts payable; and the collection and
payment of all such receivables and accounts payable, respectively, have at all
times been made in the ordinary course of business consistent with past
practice;

            (p)   failed, in any material respect, to maintain the TV Production
Assets in accordance with good business practice and in good operating condition
and repair;


                                       25
<PAGE>   27
            (q)   failed to renew any insurance policy that is scheduled to
terminate or expire within forty-five (45) calendar days of the Effective Time;

            (r)   incurred any indebtedness for borrowed money;

            (s)   terminated, discontinued, closed or disposed of any facility
or other material business operation, or laid off employees;

            (t)   suffered any casualty loss or damage with respect to any of
the TV Production Assets which, in the aggregate, have a replacement cost of
more than Ten Thousand ($10,000) Dollars whether or not such loss or damage
shall have been covered by insurance;

            (u)   except as contemplated by this Agreement, entered into or
amended in any material respect any employment agreement or adopted, or amended
in any material respect, any collective bargaining agreement or any employee
benefit plan (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");

            (v)   incurred any damage, destruction or similar loss, whether or
not covered by insurance, materially affecting the business, assets, properties
or business prospects of TPEG or of any of its subsidiaries;

            (w)   entered into any other transaction of a material nature other
than in the ordinary course of business;

            (x)   entered into any agreement or understanding with any of its
directors, officers or beneficial owners of more than 5% of the outstanding TPEG
Common Stock or any of their respective Affiliates (as defined below);

            (y)   issued or sold any Common Stock or shares or units of capital
stock of any other class, notes, bonds, or other equity or debt securities, or
any options, warrants or other rights to purchase or which are convertible into
the same, or entered into any written or oral agreement, commitment or
understanding with respect to the issuance and/or sale thereof, except as
contemplated by this Agreement and the Other Merger Agreements; or

            (z)   declared, set aside or paid any dividend (except for quarterly
dividends required to be paid by TPEG on its outstanding Series A Stock), or
made any other distribution on its capital stock or redeemed, purchased or
acquired any shares or units thereof or entered into any agreement in respect of
any of the foregoing;

            (aa)  amended its Certificate of Incorporation or By-laws;

            (bb)  (i) purchased, sold, assigned or transferred any material
tangible or intangible assets or any material patent, trademark, trade name,
copyright, license, franchise, design 


                                       26
<PAGE>   28
or other intangible assets or property, (ii) mortgaged, pledged or granted or
suffered to exist any lien or other encumbrance or charge on any material assets
or properties, tangible or intangible, or (iii) waived any rights of material
value or canceled any material debts or claims;

            (cc)  incurred any contractual obligation or liability (absolute or
contingent) in excess of One Hundred Thousand ($100,000) Dollars in the
aggregate in one or a series of related transactions, except current liabilities
and obligations incurred in the ordinary course of business, made any capital
improvement in excess of One Hundred Thousand ($100,000) Dollars or paid any
liability or obligation (absolute or contingent) in excess of One Hundred
Thousand ($100,000) Dollars, other than current liabilities and obligations
incurred in the ordinary course of business consistent with and in accordance
with past practices; or

            (dd)  agreed, whether in writing or otherwise, to take any of the
actions specified in this Section 3.7 or granted any options to purchase, rights
of first refusal, rights of first offer or any other similar rights or
commitments with respect to any of the actions specified in this Section 3.7,
except as expressly contemplated by this Agreement.

      3.8   Taxes. TPEG has duly filed all federal, state, county, local,
foreign and other income, excise, sales, customs, franchise, use, license, real
and personal property, withholding, social security and other tax (the "Taxes")
and information returns and reports required to have been filed by TPEG and its
Subsidiaries to the date hereof, other than income tax returns for the year
ended June 30, 1997, and has paid (or, in the case of withholding taxes and
obligations, has withheld and paid over as required) all Taxes (including
interest, penalties and additions thereto, if any) shown on such returns or
reports to be due or claimed to be due prior to the date hereof to any federal,
state, county, local, foreign or other Governmental Authority. TPEG has paid or
made adequate provision in the TPEG Financial Statements for all Taxes
(including interest, penalties and additions thereto, if any) payable by TPEG
with respect to all periods to and including March 31, 1997. TPEG does not have
any liability for any Taxes (including interest, penalties and additions
thereto, if any) of any nature whatsoever other than as reflected in the TPEG
Financial Statements and, to the best knowledge of TPEG, there is no basis for
any additional material claims or assessments for Taxes other than with respect
to liabilities for Taxes that may have accrued since March 31, 1997 in the
ordinary course of business of TPEG and its subsidiaries or liabilities for
Taxes contested in good faith, which are described on Schedule 3.8. No federal
income tax returns of TPEG have been examined by the IRS and no proposed
additional Taxes, interest or penalties have been asserted with respect to years
not examined. True copies of the federal, state and local income tax returns of
TPEG for the years ended June 30, 1996 and June 30, 1995 have been heretofore
delivered or made available to GJM. No consent has been filed by TPEG pursuant
to Section 341(f) of the Code.

      3.9   Real Property. (a) Schedule 3.9 sets forth a true, complete and
correct listing of all leases covering the real property in which TPEG or any
subsidiary of TPEG holds the lessee's interest (collectively, the "TPEG
Leases"). Except as set forth in Schedule 3.9, TPEG or a subsidiary of TPEG
holds the lessee's interest in all of the TPEG Leases, free and clear of all


                                       27
<PAGE>   29
material liens and encumbrances. Neither TPEG nor any of its subsidiaries owns
any real property.


            (b)   Schedule 3.9 sets forth a true, complete and correct listing
in all material respects of (i) all leases to which any of the TPEG Leases are
subordinated (collectively, the "Underlying TPEG Leases"), and (ii) all
subleases of any of the TPEG Leases (collectively, the "TPEG Subleases"). True,
complete and correct copies of each TPEG Lease, Underlying TPEG Lease and TPEG
Subleases have been delivered or made available by TPEG to GJM.

            (c)   Except as set forth in Schedule 3.9, TPEG has no knowledge of
and has not received any notice of default from the holder of the lessor's
interest in any TPEG Lease or Underlying TPEG Lease or the holder of the
lessee's interest in any TPEG Subleases that has not heretofore been cured.

            (d)   Except as set forth in Schedule 3.9, neither the premises
leased under any TPEG Lease, the use thereof by TPEG or a subsidiary of TPEG,
nor any condition existing with respect thereto, violates any laws, ordinances,
regulations or requirements (including, without limitation, zoning and use
regulations and building department requirements) affecting the same, which
violation would materially interfere with the operation or use of such premises
or materially diminish the value thereof.

            (e)   Except as set forth in Schedule 3.9, to the best knowledge of
TPEG, no Person has any interest in the lessee's interest under any TPEG Lease,
Underlying TPEG Lease or TPEG Sublease or has any right or option to acquire
same or any part thereof.

            (f)   Except as set forth in Schedule 3.9, TPEG has no knowledge and
has received no notice of any condemnation proceeding affecting any premises
leased under any TPEG Lease.

            (g)   As of the date of this Agreement, TPEG has no knowledge that
any Person has paid or been paid any money, or has made or contemplated making
any agreement, written or oral, with respect to premises leased under any TPEG
Lease, Underlying TPEG Lease or TPEG Sublease or portion thereof which would
preclude, be in competition with or otherwise interfere with the continued use
and occupancy of such property by TPEG or could adversely affect the ability of
the lessee thereof to renew any TPEG Lease.

            (h)   Hazardous materials (as such term is defined in any law
applicable to TPEG or its properties or assets) have not been released or
treated on any property leased, or, to the best of TPEG's knowledge, occupied or
used by TPEG in its television production or other business activities and have
not been generated, used, handled or stored on, or transported to or from, any
such property. TPEG has disposed of all wastes, including those wastes
containing hazardous materials, in compliance with all applicable laws and the
Permits. There are no past, pending or, to the best of TPEG's knowledge,
threatened claims against TPEG or any property covered by any 


                                       28
<PAGE>   30
TPEG Lease which relate to any environmental matters and TPEG has not received
any written notice of such claims. No property leased, or occupied or used from
time to time by TPEG in its production or other activities by TPEG and, to the
best of TPEG's knowledge, no property adjoining any such property, is listed or
proposed for listing on the National Priorities List under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA") or on
the Comprehensive Environmental Response, Compensation and Liability Information
System, as updated through the date hereof ("CERCLIS") or any analogous state
list of sites requiring investigation or cleanup and TPEG has not transported or
arranged for the transportation of any hazardous materials to any location that
is listed or proposed for listing on the National Priorities List under CERCLA
or on the CERCLIS or any analogous state list.

            (i)   There are not now and never have been any underground storage
tanks located on any real property leased or, to the best knowledge of TPEG,
occupied or used by TPEG from time to time in its television production or other
activities. TPEG has not installed any such underground storage tanks on any
real property leased or occupied by it.

      3.10  Litigation. Schedule 3.10 sets forth a true, complete and correct
listing of all pending actions, suits or proceedings to which TPEG or any
subsidiary of TPEG is a party. Except as disclosed in Schedule 3.10, there are
no actions, suits or proceedings or investigations pending or, to the best
knowledge of TPEG, threatened against or adversely affecting the business,
operations or financial condition of TPEG and its subsidiaries, taken as a
whole, at law or in equity in any court or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any arbitrator. Neither TPEG nor any subsidiary of TPEG is in
default in respect of any judgment, order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency, authority or instrumentality.

      3.11  Labor Relations. Schedule 3.11 contains a correct and complete list
of all collective bargaining, employment, labor and similar agreements (other
than the "TPEG Benefit Plans" defined and described in Section 3.13), whether
written or oral, to which TPEG or any subsidiary of TPEG is a party or by which
it is or they are bound. True and correct copies of all such agreements have
been supplied to GJM. TPEG and each subsidiary of TPEG have complied with their
respective obligations related to, and are not in default under, any written or
oral employment agreements, collective bargaining agreements or any written or
oral personnel policies to which they are parties or by which they are bound.
TPEG and each subsidiary of TPEG are in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not and have not engaged in any unfair
labor practices. Except as set forth in Schedule 3.11:

            (a)   there is no unfair labor practice charge or complaint against
TPEG or any subsidiary of TPEG pending or, to the best knowledge of TPEG,
threatened before the National Labor Relations Board or any other Governmental
Authority;


                                       29
<PAGE>   31
            (b)   there has not occurred nor, to the best knowledge of TPEG, has
there been threatened, a labor strike, request for representation, work slowdown
or stoppage or lockout;

            (c)   there has not been any representation claim or petition
pending before the National Labor Relations Board respecting any employees of
TPEG or any subsidiary of TPEG during the past five (5) years;

            (d)   no grievance nor any arbitration proceeding arising out of any
collective bargaining agreement to which TPEG or any TPEG subsidiary is a party
is pending;

            (e)   no charges with respect to or relating to TPEG or any TPEG
subsidiary are pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices;

            (f)   no claim relating to employment or loss of employment with
TPEG or any TPEG subsidiary is pending in any federal, state or local court or
in or before any other adjudicatory body and, to the best knowledge of TPEG, no
such claims has been threatened;

            (g)   neither TPEG nor any TPEG subsidiary has received written
notice of the intent of any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws, rules or regulations to conduct
an investigation of or relating to TPEG, and, to the best knowledge of TPEG, no
such investigation is in progress;

            (h)   TPEG and each subsidiary of TPEG have paid in full to all of
its employees, or adequately accrued for in accordance with GAAP, all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees;

            (i)   there is no claim with respect to payment of wages, salary or
overtime pay that has been asserted or is now pending or, to the best knowledge
of TPEG, threatened before any Governmental Authority with respect to any
Persons currently or formerly employed by TPEG or any subsidiary of TPEG; and

            (j)   neither TPEG nor any subsidiary of TPEG is a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to employees or employment practices.

      3.12  Permits; Compliance with Laws. TPEG has all material permits,
licenses, orders and approvals of all federal, state or local governmental or
regulatory authorities which are required to conduct the business of TPEG and
its subsidiaries as presently conducted. All such permits, licenses, orders and
approvals are in full force and effect and, to the best knowledge of TPEG, no
suspension or cancellation of any of them is threatened. Except as set forth in
Schedule 3.12, none of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the Merger. TPEG and its subsidiaries
are in compliance in all material respects 


                                       30
<PAGE>   32
with the rules and regulations of all governmental agencies having authority
over TPEG and its subsidiaries, including, without limitation, agencies
concerned with occupational safety, environmental protection and employment
practices, and neither TPEG nor any subsidiary of TPEG has received notice of
violation of or failure to comply with any such rules or regulations within the
last three years, the failure to comply with which could have a material adverse
effect on the financial condition, business or operations of TPEG and its
subsidiaries, taken as a whole.

      3.13  Employee Benefit Plans. (a) Schedule 3.13 sets forth a true,
complete and correct listing of all employees benefit plans (as defined in
Section 3(3) of ERISA) maintained by TPEG or any subsidiary of TPEG (the "TPEG
Benefit Plans"). True, correct and complete copies of the TPEG Benefit Plans
have heretofore been delivered to GJM.

            (b)   None of the TPEG Benefit Plans is a multi-employer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA)
Subject to Title IV of ERISA. None of the TPEG Benefit Plans provides for the
payment of separation, severance, termination or similar-type benefits to any
Person or obligates TPEG to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated by this
Agreement or as a result of a "change in control" within the meaning of such
term under Section 280G of the Code. None of the TPEG Benefit Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of TPEG. Each of the TPEG
Benefit Plans is Subject only to the laws of the United States or a political
Subdivision thereof. TPEG does not sponsor, maintain or contribute to a
voluntary employees' beneficiary association intended to be exempt under Section
501(c)(9) of the Code.

            (c)   Each TPEG Benefit Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
laws, including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such TPEG Benefit Plans and all Plan
"fiduciaries" (within the meaning of Section 3(21) of ERISA) have always acted
in accordance with all applicable laws, including, without limitation, ERISA and
the Code. TPEG has performed all obligations required to be performed by it
under, is not in any respect in material default under or in violation of, and
has no knowledge of any default or violation by any party to, any TPEG Benefit
Plan. No legal action, suit or claim is pending or threatened with respect to
any TPEG Benefit Plan (other than claims for benefits in the ordinary course)
and no fact or event is known that could give rise to any such action, suit or
claim.

            (d)   Each TPEG Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any TPEG Benefit Plan which is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event is known to have occurred since the date of such determination letter
from the IRS to materially adversely affect the qualified status of any such
TPEG Benefit Plan or the exempt status of any such trust.


                                       31
<PAGE>   33
            (e)   There has been no material prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
TPEG Benefit Plan. TPEG has not incurred any material liability for any penalty
or tax arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such material liability. TPEG has not incurred any liability
under, arising out of or by operation of Title IV of ERISA including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan Subject to Title IV of ERISA or (ii)
the withdrawal from any multi-employer plan, and no fact or event exists which
could give rise to any such liability. No complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
TPEG Benefit Plan.

            (f)   All contributions, premiums or payments required to be made
with respect to any TPEG Benefit Plan have been made on or before their due
dates and TPEG has no unfunded liabilities or obligations with respect to or
arising out of any TPEG Benefit Plan. All such contributions have been fully
deducted for income tax purposes and no such deduction has been challenged or
disallowed by any government entity and no fact or event is known to exist which
could give rise to any such challenge or disallowance.

            (g)   Each of the guaranteed investment contracts and other funding
contracts with any insurance company that are held by any of the TPEG Benefit
Plans and any annuity contracts purchased by (i) any of the TPEG Benefit Plans
or (ii) any pension benefit plan (as defined in Section 3(2) of ERISA) that
provided benefits to any current or former employees of TPEG was issued by an
insurance company which carried the highest rating from each of the nationally
recognized rating agencies, as of the date such contract was issued, the date
hereof and the Effective Time.

      3.14 Patents, Trademarks, Etc. Schedule 3.14 sets forth a true, complete
and correct listing of all material patents, trade names, trademarks, service
marks, copyrights, pending applications for any of the foregoing, and other
proprietary rights of TPEG and its subsidiaries and all agreements for the
licensing thereof. Except as set forth in Schedule 3.14, TPEG and/or its
subsidiaries own, or possess adequate rights to use, all material patents, trade
names, trademarks, copyrights, inventions, processes, designs, formulae, trade
secrets, know how and other proprietary rights necessary for the conduct of its
business, with no known infringement by TPEG or any of its subsidiaries of the
rights (asserted or unasserted) of any Person arising by reason of any of the
foregoing. TPEG has no knowledge of any infringement by any third party upon any
patent, trade name, trademark or copyright owned or used by TPEG or any of its
subsidiaries, and TPEG has not taken or omitted to take any action which would
have the effect of waiving any of its rights thereunder, in each case, except
where such infringement or waiver would not have a material adverse effect on
the business, prospects, condition (financial or other) or results of operations
of TPEG and its subsidiaries, taken as a whole.

      3.15  Insurance. TPEG has made available to GJM complete and correct
copies of all insurance policies maintained by TPEG, together with all riders,
endorsements and amendments 


                                       32
<PAGE>   34
thereto. All such policies are in full force and effect, and all premiums due
thereon have been paid. Such insurance policies provide TPEG and its
subsidiaries with adequate insurance (both as to type and amount) with respect
to risks and perils of business of the size and type carried on by TPEG and its
subsidiaries as of the date hereof. TPEG and its subsidiaries have complied in
all material respects with the provisions of all such policies.

      3.16  Compensation to be Paid In Connection With the Merger. Except for
the engagement of Sirius pursuant to the Sirius Agreement, neither TPEG nor any
subsidiary or Affiliate of TPEG has engaged or employed any investment banking
firm, broker, finder or intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to any fee, commission or
other compensation in connection with or upon consummation of the Merger. TPEG
and all subsidiaries of TPEG hereby, jointly and severally agree to indemnify,
defend and hold GJM and the Stockholders harmless from and against any and all
claims, liabilities or obligations with respect to any additional or other
finder's or similar fees, commissions or expenses asserted or claimed by Sirius,
other than pursuant to the Sirius Agreement, or by any other Person on the basis
of any act or statement alleged to have been taken or made by TPEG or any of its
officers, directors or other Affiliates.

      3.17  Disclosure. The representations and warranties of TPEG set forth in
this Agreement, the certificates, statements and other information furnished to
GJM, Grosso and Jacobson in writing by or on behalf of TPEG in connection with
the transactions contemplated hereby, including the Schedules hereto, do not as
of the date of this Agreement, and as of the Effective Time shall not, contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. TPEG knows of no fact or condition which
materially adversely affects, or in the future may (so far as TPEG can now
reasonably foresee) materially adversely affect the condition (financial or
otherwise), properties, assets, liabilities, business or operations of TPEG
which has not been set forth herein or disclosed to GJM in writing with
reference to this Agreement.


                    ARTICLE 4. REPRESENTATIONS AND WARRANTIES
                             REGARDING TPEG SUB III

      TPEG and TPEG Sub III jointly and severally represent and warrant to GJM,
Grosso and Jacobson as follows:

      4.1   Organization. TPEG Sub III is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is a
wholly owned subsidiary of TPEG.

      4.2   Authority Relative to this Agreement. TPEG Sub III has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. 


                                       33
<PAGE>   35
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by TPEG Sub III's
Board of Directors and approved by its sole stockholder, TPEG, and no other
corporate proceedings on the part of TPEG Sub III are necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby.

      4.3   Binding Agreement. This Agreement has been duly and validly executed
and delivered by TPEG Sub III and constitutes the valid and binding agreement of
TPEG Sub III, enforceable against TPEG Sub III in accordance with its terms
subject to the laws of bankruptcy, insolvency, moratorium or other laws
affecting the rights of creditors generally or limitations upon equitable
remedies.

      4.4   Special Purpose Subsidiary. TPEG Sub III has been organized by TPEG
solely for the purpose of entering into this Agreement and consummating the
Merger. TPEG Sub III has not engaged, and prior to the Merger will not engage,
in any other business or activity.


              ARTICLE 5. COVENANTS RELATING TO CONDUCT OF BUSINESS

      Covenants of GJM, Grosso and Jacobson and TPEG and TPEG Sub III. During
the period from the date of this Agreement and continuing until the Effective
Time, GJM, and Grosso and Jacobson hereby further jointly and severally agree
and TPEG, and TPEG Sub III hereby further jointly and severally agree that,
except as expressly contemplated or permitted by this Agreement or the
agreements governing the Other Mergers, or to the extent that the other party or
parties shall otherwise consent in writing:

      5.1   Ordinary Course. GJM, TPEG and TPEG Sub III shall each carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all reasonable efforts to preserve intact
its present business organization, maintain its rights and franchises and
preserve its relationships with writers, directors, producers and others
involved in developing and/or producing television movies, series or mini-series
and licensors or licensees or distributors or purchasers of such television
movies, series or mini-series, (including networks, distributors and other
purchasers of such products) and others having business dealings with GJM or
TPEG or any of its subsidiaries, as the case may be, to the end that their
respective goodwill and ongoing businesses shall not be impaired in any material
respect at or after the Effective Time. No party shall (i) enter into any new
material line of business or acquire any other Person engaged in any such new
line of business, (ii) change its business policies in any respect which is
material to such party, (iii) enter into any new lease or materially modify any
existing lease or close any existing office or other facility without giving the
other party prior written notice thereof, or (iv) incur or commit to any capital
expenditures or any obligations or liabilities in connection therewith other
than capital expenditures and obligations or liabilities incurred or committed
to in the ordinary course of business consistent with past practice and not
exceeding, in any case, the sum of One Hundred Thousand ($100,000) Dollars.


                                       34
<PAGE>   36
      5.2   Dividends; Changes in Stock. Neither GJM, TPEG, TPEG Sub III or any
other subsidiary of TPEG shall, or shall propose to, (i) declare or pay any
dividends on, or make other distributions in respect of, any shares of its
capital stock of any class, except for required quarterly dividends on TPEG's
outstanding Series A Stock, (ii) reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) repurchase,
redeem or otherwise acquire, any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.

      5.3   Issuance of Securities. Other than as contemplated by this
Agreement, or the agreements governing the Other Mergers, neither TPEG, TPEG Sub
III or GJM shall issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than the issuance by TPEG of shares of TPEG Common
Stock, upon the exercise of outstanding stock options or warrants or conversion
of outstanding shares of Series A Stock referred to elsewhere in this Agreement,
in each case outstanding on the date of this Agreement and in each case in
accordance with their existing terms and conditions.

      5.4   Governing Documents. Except as contemplated by this Agreement or the
agreements governing the Other Mergers, neither GJM, TPEG, TPEG Sub III or any
other subsidiary of TPEG shall amend or propose to amend its Certificate of
Incorporation or By-laws as in effect as of the date hereof.

      5.5   No Solicitations. From the date hereof through September 30, 1997,
none of GJM, Grosso, Jacobson, TPEG, TPEG Sub III or any other subsidiary of
TPEG shall, or shall authorize or permit any of its respective officers,
directors, employees or Affiliates or any investment banking firms, financial
advisors, attorneys, accountants or other representatives or agents retained by
any of such parties to, solicit or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate any inquiries or
the making of any proposals which constitute, or may reasonably be expected to
lead to, any Competing Transaction (as defined below), or agree to or endorse
any Competing Transaction, or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any such
inquiry or proposal. Each of GJM, Grosso, Jacobson and TPEG shall promptly
advise the other or others both orally and in writing of any such inquiries or
proposals. As used in this Agreement, "Competing Transaction" shall mean any
proposed tender or exchange offer, sale of assets, proposal for merger,
consolidation or other business combination involving GJM, TPEG or TPEG Sub III
or any other subsidiary of TPEG or any proposal or offer to acquire directly or
through the sale or grant of any option, convertible security or any other right
to purchase (by way of exercise, exchange or conversion of such option,
convertible security or right) more than five (5%) percent of the total
outstanding capital stock, or any substantial portion of the assets, of GJM,
TPEG, TPEG Sub III or any other subsidiary of TPEG, as the case may be, other
than pursuant to the transactions contemplated by this Agreement. This Section
5.5 shall not prohibit disclosure by TPEG that is required in any filing by 


                                       35
<PAGE>   37
TPEG with the SEC or the NASDAQ SmallCap Market or as otherwise under applicable
law, in the opinion of the Board of Directors of TPEG, as of the date of such
filing or such other required disclosure as to the transactions contemplated
hereby or as to any Competing Transaction. Notwithstanding the foregoing, the
executive officers and directors of TPEG, as the case may be, shall have the
right, in the exercise of their fiduciary duties, solely to respond to
unsolicited bona fide written offers submitted by any third party with respect
to any potential Competing Transaction by furnishing information and data
concerning TPEG and its subsidiaries, as the case may be.

      5.6   No Dispositions. Neither TPEG, TPEG Sub III or GJM shall sell,
lease, encumber or otherwise dispose of, or agree to sell, lease, encumber or
otherwise dispose of, any of its assets (other than the sale or license or
distribution of television movies, series or mini-series, or performance of
services in the ordinary course of business) which are material, individually or
in the aggregate, to such party.

      5.7   Indebtedness. Neither TPEG, TPEG Sub III, or GJM shall incur any
short or long-term indebtedness for borrowed money or guarantee any such short
or long-term indebtedness or issue or sell any short or long-term debt
securities or warrants, options or other rights to acquire any short or
long-term debt securities of such party or guarantee any short or long-term debt
securities other than (i) in replacement of existing or maturing debt or (ii) in
the ordinary course of business consistent with past practice.

      5.8   Other Actions. Neither TPEG, TPEG Sub III or GJM shall take any
action that would or reasonably might be expected to, result in any of their
respective representations and warranties set forth in this Agreement being or
becoming untrue in any material respect or in any of the conditions to the
Merger set forth in Article 7 hereof not being satisfied.

      5.9   Advice of Changes; Government Filings. Each of the parties shall
confer on a regular and frequent basis with the other, report on operational
matters and promptly advise the other orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen, could have, a
material adverse effect on such party or which would cause or constitute a
material breach of any of the representations, warranties or covenants of such
party contained herein. TPEG shall (i) file all reports required to be filed
with the SEC between the date of this Agreement and the Effective Time and (ii)
and shall deliver to the other party copies of all such reports promptly after
the same are filed. Each party shall promptly provide the other (or its counsel)
with copies of all other filings made by such party with any state or federal
governmental agency or authority in connection with this Agreement, the Merger
or the transactions contemplated hereby or thereby.

      5.10  Accounting Methods. Neither TPEG, TPEG Sub III or GJM shall change
their respective methods of accounting in effect at the date hereof except as
required by changes in generally accepted accounting principles as concurred in
by the independent auditors of GJM or TPEG, as the case may be. Neither GJM nor
TPEG will change their respective fiscal years without the consent of the other
party.


                                       36
<PAGE>   38
      5.11  Benefit Plans. Without the prior written consent of the other party
or parties, neither GJM, TPEG, TPEG Sub III or any other subsidiary of TPEG
shall (i) enter into, adopt, amend (except as may be required by law) or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between such party and one or more of its directors or officers, (ii)
except for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to such party, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or arrangement as in effect on the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock units or performance units or shares) or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing, or (iii) except for the employment agreements between the Surviving
Corporation and each of Grosso and Jacobson and the extension of the duration of
the employment agreements between TPEG and Irwin Meyer and Arthur Bernstein and
grants of stock options to GJM employees at the Effective Time described in
Section 6.8 hereof, enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
such party of compensation or benefits contingent, or the terms of which are
materially altered, upon the occurrence of any of the transactions contemplated
by this Agreement.

      5.12  Publicity. Except as otherwise required by law or the rules of the
NASDAQ SmallCap Market, so long as this Agreement is in effect, neither GJM,
Grosso, Jacobson or TPEG shall issue or cause the publication of any press
releases or other public announcements with respect to the transactions
contemplated by this Agreement without the consent of the other party or
parties, which consent shall not be unreasonably withheld or delayed.


                        ARTICLE 6. ADDITIONAL AGREEMENTS

GJM and Grosso and Jacobson hereby further jointly and severally agree, and TPEG
and TPEG Sub III, hereby further jointly and severally agree as follows:

      6.1   Appraisals. The Board of Directors of TPEG (the "TPEG Board") shall
has received appraisals from the following reputable, independent appraisers
with respect to the contracts, assets and other properties of GJM as follows:

            (a)   The aggregate value of the right, title and interest of GJM in
the television movies series and mini-series as appraised by Abrams Consultants,
Inc.; and

            (b)   The aggregate value of GJM in costumes, props and related
tangible properties as appraised by Abrams Consultants, Inc.

      6.2   GJ Financial Statements. GJM shall deliver to TPEG the GJ Financial
Statements, including the audited financial statements prepared and reported
upon by Rosenberg, Rich, Baker, Berman & Company and the unaudited comparative
GJ Financial statements for the 


                                       37
<PAGE>   39
six months ended May 31, 1997 by not later than September 30, 1997 so as to
enable TPEG to comply in a timely manner with its reporting obligations under
the Securities Exchange Act of 1934, as amended, and rules and regulations of
the SEC thereunder. The GJ Financial Statements shall (a) be prepared and
presented in accordance with GAAP and shall fairly present the financial
condition of GJM as of the dates therein set forth and GJM's results of
operations for the periods reported upon, and (b) be presented in such form as
shall comply with relevant provisions of Item 2 of SEC Form 8-K, Item 310 of SEC
Regulation S-B and such other SEC regulations as are relevant to and govern the
content, form and filing by TPEG of such GJ Financial Statements.

      6.3   Access to Information; Confidentiality. Upon reasonable notice, GJM
and TPEG shall each afford to the officers, employees, accountants, counsel and
other representatives of the other during normal business hours during the
period prior to the Effective Time, access to all its properties, books,
contracts, commitments and records and, during such period, each of GJM and TPEG
shall make available to the other all other information concerning the business,
properties and personnel as such other party may reasonably request. Each of the
parties will hold any such information obtained from the other which is
nonpublic in confidence except to the extent that such information (a) is or
becomes publicly known through sources other than any of the parties to the
Agreement or (b) is required to be disclosed in response to legal process or
pursuant to the requirements of federal securities or other law. No
investigation by either GJM, Grosso or Jacobson or by TPEG shall affect the
representations and warranties of the other or others, except to the extent such
representations and warranties are by their terms qualified by disclosures made
to such other party.


                                       38
<PAGE>   40
      6.4   Further Covenants of Grosso and/or Jacobson

            (a)   Lawrence S. Jacobson shall not directly or indirectly divert
any television, video or other film production, distribution or related business
activities or operations to Ontario Corporation or to any successor or assignee
thereof except as set forth in the employment agreement between TPEG and
Jacobson in the form annexed hereto as Exhibit "F2" and the production agreement
between TPEG and Lawrence S. Jacobson Associates, Inc. in the form annexed
hereto as Exhibit "B2 "; and

            (b)   In the event that both Grosso and Jacobson cease to be
employed by TPEG or by any of its subsidiaries, but continue to own,
beneficially, and as a group at least twenty-five (25%) percent of the total
number of Shares of TPEG Common Stock issued to both of them pursuant to the
Merger and the Other Mergers TPEG shall cause one (1) designee of both Grosso
and Jacobson (who may be either Grosso or Jacobson) to continue to serve as a
member of the TPEG Board subject to the condition that both Grosso and Jacobson
shall (i) remain subject to the obligation to retain on a confidential basis all
non-public information and data concerning TPEG and/or any of its subsidiaries
of which Grosso or Jacobson, as the case may be, becomes apprised in his
capacity as a member of the TPEG Board and (ii) not directly or indirectly
appropriate or seek to appropriate, personally or for the benefit of any Person
in which Grosso and/or Jacobson has any equity interest or by which either
Grosso or Jacobson is employed, any business opportunities of which Grosso or
Jacobson, as the case may be, shall become apprised in his capacity as a member
of the TPEG Board, all as more fully described in the Confidentiality and
Standstill Agreement annexed hereto as Exhibit "C".

      6.5   Further Covenants of TPEG.

            (a)   Subject to the indemnification of TPEG by GJM, Grosso and
Jacobson set forth in Section 2.21 hereof, TPEG shall pay the Sirius fee
pursuant to the Sirius Agreement;

            (b)   Upon the consummation of the Merger and subject to the
provisions of Articles 9 and 10 hereof, TPEG shall bear the expense of all legal
fees, accounting and auditing fees and disbursements incurred by TPEG and by
each of GJM, Grosso and Jacobson in connection with this Agreement and the Other
Mergers;

            (c)   TPEG shall extend through the fifth (5th) anniverssary of the
Effective Time the respective employment agreements of Irwin Meyer, Chief
Executive Officer of TPEG ("Meyer") and Arthur Bernstein, Senior Vice President
of TPEG ("Bernstein"), such extentions shall be in the form of Exhibits "D1" and
"D2" annexed hereto; and

            (d)   TPEG shall extend through the fifth (5th) anniverssary of the
Effective Time the existing production agreement between TPEG and Mountaingate
Productions LLC ("Mountaingate"), such extension shall be in the form of Exhibit
"E" annexed hereto.


                                       39
<PAGE>   41
      6.6   Stockholders Meeting; Approval by Stockholders. (a) GJM shall call a
meeting of its stockholders (the "GJM Stockholders Meeting"), to be held by not
later than September 30, 1997 for the purpose of voting upon the approval of
this Agreement and of the Merger and the other transactions contemplated hereby.
GJM will, through its Board of Directors, recommend to its stockholders approval
of such matters.

            (b)   Each of Messrs. Grosso and Jacobson shall vote, or cause to be
voted, all shares of GJM Common Stock held by each of them, of record and/or
beneficially, as of the record date for the determination of GJM stockholders
entitled to notice of and to vote at the GJM Stockholders' Meeting, for the
approval of this Agreement, the Merger and all of the other transactions
contemplated hereby.

      6.7   Conditions Precedent; Agreements and Other Mergers. The parties
named in Article 7 of this Agreement shall execute and deliver the agreements
which constitute conditions precedent to the Merger at or prior to the Effective
Time, and both of the Other Mergers shall have been consummated at or prior to
the Effective Time.

      6.8   Legal Conditions to Merger. Each of TPEG, TPEG Sub III, GJM and
Grosso and Jacobson shall use all reasonable efforts (i) to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and to consummate
the transactions contemplated by this Agreement, (including the satisfaction of
all of the conditions precedent set forth in Article 7 hereof), and (ii) to
obtain (and to cooperate with the other party in order to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and or any other public or private third party which is required to be
obtained or made by such party in connection with the Merger and the
transactions contemplated by this Agreement.

      6.9   TPEG Stock Options. (a) At the Effective Time, the TPEG Board shall
grant new incentive stock options (within the meaning of Section 422 of the
Code) to purchase shares of TPEG Common Stock to the executives and key
employees of GJM identified in Schedule 6.9 hereto in connection with their
continuing employment relationships with the Surviving Corporation following the
Merger.

            (b)   TPEG shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of TPEG Common Stock for delivery upon
exercise of the TPEG stock options described in paragraph (a) of this Section
6.9.

      6.10  NASDAQ and BSE Listing. TPEG shall use its best efforts to have the
shares of TPEG Common Stock to be issued pursuant to the Merger listed on the
NASDAQ SmallCap Market and the Boston Stock Exchange as of the Effective Time or
as soon thereafter as practicable. TPEG shall file with the NASDAQ SmallCap
Market, the Boston Stock Exchange and with the SEC such applications, reports
and such other documents and shall take such other actions as are reasonably
required to effect such listing of such shares of TPEG Common Stock on the
NASDAQ 


                                       40
<PAGE>   42
SmallCap Market and the Boston Stock Exchange.

                         ARTICLE 7. CONDITIONS PRECEDENT

      7.1   Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each of the parties to effect the Merger shall be
subject to the satisfaction prior to or at the Effective Time of the following
conditions:

            (a)   Stockholder Approval. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of all of the outstanding
shares of GJM Common Stock entitled to vote thereon.

            (b)   The Other Mergers among TPEG, the other subsidiaries of TPEG
and GJP and GJE, respectively, shall each have been consummated in accordance
with the Other Merger Agreements.

            (c)   Other Approvals. All authorizations, consents, or approvals
of, and all expirations or waiting periods imposed by, any third parties,
including the consent of Joseph Stevens & Company L.P. (collectively, the
"Consents"), which are necessary for the consummation of the Merger, other than
immaterial Consents, the failure to obtain which would have no material adverse
effect on the business, business prospects or financial condition of GJM, the
Surviving Corporation, TPEG, TPEG Sub III or any other subsidiary of TPEG shall
have been received. TPEG shall have received all state securities or blue sky
permits and other authorizations required, if any, to issue the shares of TPEG
Common Stock to be issued in exchange for the GJM Common Stock and to consummate
the Merger.

            (d)   No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any governmental entity seeking any of the foregoing shall be
pending. There shall not be any action taken, or any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal.

            (e)   Burdensome Conditions. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state governmental entity which
imposes any condition or restriction upon GJM, the Surviving Corporation or TPEG
which would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable, in the
reasonable judgment of such party, the consummation of the Merger.

            (f)   Board Designees. The respective Boards of Directors of GJM and
TPEG shall have each submitted their list of TPEG Board Designees and shall have
agreed in writing to their joint TPEG Board Designee in accordance with the
provisions of Section 1.4 by not less than three (3) days prior to the Effective
Time.


                                       41
<PAGE>   43
            (g)   Executive Employment Agreements. Each of Grosso and Jacobson
shall have executed and delivered to TPEG employment agreements with the
Surviving Corporation in the forms Exhibits "F1" and "F2," annexed hereto (the
"Employment Agreements").

            (h)   Production Agreements. Each of Grosso and Jacobson and their
respective Affiliates shall have executed and delivered to TPEG production
agreements with the Surviving Corporation in the forms Exhibits "B1" and "B2,"
annexed hereto (the "Production Agreements").

            (i)   Confidentiality and Standstill Agreement. Each of Grosso and
Jacobson shall have executed and delivered to TPEG the Confidentiality and
Standstill Agreement in the form of Exhibit "C" annexed hereto.

            (j)   Registration Rights and Stock Disposition Agreement. TPEG and
each of Grosso and Jacobson shall enter into a Registration Rights and Stock
Dispostion Agreement (the "Stock Disposition Agreement") whereby (i) Grosso and
Jacobson will be entitled to have TPEG include their respective shares of TPEG
Common Stock in registration statements to be filed by TPEG under the Securities
Act of 1933, as amended, and (ii) Grosso and Jacobson shall each agree not to
sell or otherwise dispose of any shares of TPEG Common Stock issued to each of
them pursuant to the Merger through June 30, 1998, which Stock Disposition
Agreement shall be in the form of Exhibit G annexed hereto.

      7.2   Conditions to Obligations of TPEG and TPEG Sub III. The obligations
of TPEG and TPEG Sub III to effect the Merger are subject to the satisfaction of
the following conditions by GJM, Grosso and Jacobson unless waived by TPEG and
TPEG Sub III:

            (a)   Consummation of the Other Mergers. The Other Mergers among
TPEG, the other subsidiaries of TPEG and GJP and GJE, respectively, shall each
have been consummated in accordance with the Other Merger Agreements.

            (b)   Representations and Warranties. The joint and several
representations and warranties of GJM, Grosso and Jacobson set forth in this
Agreement shall be true and correct as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date)
as of the Effective Time as though made on and as of the Effective Time, except
as otherwise contemplated by this Agreement, and TPEG and TPEG Sub III shall
have received a certificate signed on behalf of GJM by the President and Chief
Financial Officer of GJM and by each of Grosso and Jacobson to such effect.

            (c)   Performance of Obligations of GJM and Stockholders . GJM,
Grosso and Jacobson shall have performed in all material respects all of their
joint and several obligations required to be performed by them or any of them
under this Agreement, at or prior to the Effective Time, and TPEG and TPEG Sub
III shall have received a certificate signed on behalf of GJM by the President
and Chief Financial Officer of GJM and by each of Grosso and Jacobson to such
effect.


                                       42
<PAGE>   44
            (d)   Consents Under Agreements. GJM shall have obtained the consent
or approval of each person (other than the Consents) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
pursuant to the Merger to any obligation, right or interest of GJM under any
loan or credit agreement, note, mortgage, indenture, lease, license, production,
distribution or other agreement (including the consent of Joseph Stevens & Co.,
L.P.) or instrument, except those for which failure to obtain such consents and
approvals would not, in the reasonable opinion of TPEG and TPEG Sub III,
individually or in the aggregate, have a material adverse effect on the
Surviving Corporation or TPEG or upon the consummation of the transactions
contemplated hereby.

            (e)   Appraisals. The Appraisals delivered to the Board of Directors
of TPEG pursuant to the provisions of Section 6.1 hereof shall not have been
withdrawn or so modified, in whole or in part, as to cast doubt in any material
respect upon the valuations set forth in such appraisals.

            (f)   "Cold Comfort Letter". GJM shall have delivered or shall cause
to be delivered to TPEG a "cold comfort" letter of Rosenberg, Rich, Baker,
Berman & Company, GJM's independent accountants, dated as of a date within two
business days prior to the Effective Time and addressed to TPEG, in form and
substance reasonably satisfactory to TPEG and setting forth the substance and
scope of the information set forth in Schedule 7.2(f).

            (g)   Employment Agreements. Simultaneous with and upon the
execution of this Agreement, each of Grosso and Jacobson shall have executed and
delivered the Employment Agreements in the forms annexed hereto as Exhibits "F1"
and "F2," respectively, with the Surviving Corporation.

            (h)   Production Agreements. Simultaneous with and upon the
execution of this Agreement, each of Grosso and Jacobson and their respective
Affiliates shall have executed and delivered the Production Agreements in the
forms annexed hereto as Exhibits "B1" and "B2," respectively, with the Surviving
Corporation.

            (i)   Stock Disposition Agreement. Each of Grosso and Jacobson shall
have executed and delivered the Stock Dispostion Agreement in the form of
Exhibit "G" annexed hereto.

            (j)   Confidentiality and Standstill Agreement. Each of Grosso and
Jacobson shall have executed and delivered the Confidentiality and Standstill
Agreement in the form of Exhibit "C" annexed hereto.

            (k)   No Material Adverse Change. There shall have been no material
adverse change in the financial condition, results of operations, assets,
liabilities, properties, business or business prospects of GJM between the date
of this Agreement and the Effective Time.


                                       43
<PAGE>   45
            (l)   Opinion. TPEG shall have received the opinion of Messrs. Kay,
Collyer and Boose, LLP, counsel to GJM, Grosso and Jacobson, dated the Effective
Time, substantially in the form of Exhibit "H" annexed hereto.

            (m)   TPEG shall have received from GJM any and all clearance or
similar certificates required by any jurisdictions in order lawfully to
consummate the Merger and the transfer of the shares of GJM Common Stock
pursuant thereto

      7.3   Conditions to Obligations of GJM, Grosso and Jacobson. The joint and
several obligations of GJM, Grosso and Jacobson to effect the Merger are subject
to the satisfaction of the following conditions by TPEG and TPEG Sub III unless
waived by GJM, Grosso and Jacobson:

            (a)   Consummation of the Other Mergers. The Other Mergers among
TPEG, the other subsidiaries of TPEG and GJP and GJE, respectively, shall each
have been consummated in accordance with the Other Merger Agreements.

            (b)   Representations and Warranties. The representations and
warranties of TPEG and of TPEG Sub III set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time as though made on and as of the Effective Time, except as otherwise
contemplated by this Agreement, and GJM, Grosso and Jacobson shall have received
a certificate signed on behalf of TPEG by the Chief Executive Officers and Chief
Financial Officers of TPEG and TPEG Sub III to such effect.

            (c)   Performance of Obligations of TPEG. TPEG and TPEG Sub III
shall have performed in all material respects all obligations required to be
performed by each of them under this Agreement, at or prior to the Effective
Time, and GJM, Grosso and Jacobson shall have received a certificate signed on
behalf of TPEG and TPEG Sub III by the Chief Executive Officers and Chief
Financial Officers of TPEG and TPEG Sub III to such effect.

            (d)   Consents Under Agreements. TPEG shall have obtained the
consent or approval of each person (other than the Consents) whose consent or
approval shall be required with respect to the Merger and in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of TPEG Sub III under any loan or credit
agreement, note, mortgage, indenture, lease, license, production, distribution
or other agreement (including the consent of Joseph Stevens & Company, L.P.) or
instrument, except those for which failure to obtain such consents and approvals
would not, in the reasonable opinion of GJM, individually or in the aggregate,
have a material adverse effect on the Surviving Corporation or TPEG or upon the
consummation of the transactions contemplated hereby.


                                       44
<PAGE>   46
            (e)   Employment Agreements. The Surviving Corporation shall have
executed and delivered the Employment Agreements with each of Grosso and
Jacobson in the forms annexed hereto as Exhibits "F1" and "F2," respectively.

            (f)   Production Agreements. The Surviving Corporation shall have
executed and delivered the Production Agreements with each of Grosso, Jacobson
and their respective Affiliates in the forms annexed hereto as Exhibits "B1" and
"B2," respectively.

            (g)   Extension Agreements. TPEG and each of Meyer and Bernstein
shall have executed extensions of their respective existing employment
agreements and TPEG and Mountaingate shall have executed an extension of the
existing production agreement as required by Section 6.5 hereof.

            (h)   Stock Disposition Agreement. TPEG shall have executed and
delivered the Stock Disposition Agreement with Grosso and Jacobson in the form
of Exhibit "G" annexed hereto.

            (i)   Confidentiality and Standstill Agreement. TPEG shall have
executed and delivered the Confidentiality and Standstill Agreement in the form
of Exhibit "C" annexed hereto.

            (j)   Options for GJM Employees. At the Effective Time, TPEG shall
grant incentive stock options to purchase an aggregate of 20,000 shares of TPEG
Common Stock to the GJM executives and key employees who will become employed by
the Surviving Corporation and whose names are set forth on Schedule 6.9 annexed
hereto. Schedule 6.9 also sets forth the number of such stock options to be
granted to each such employee.

            (k)   Opinion. GJM shall have received the opinion of Maloney,
Mehlman & Katz, counsel to TPEG, dated the Effective Time, substantially in the
form of Exhibit "I" annexed hereto.

            (l)   No Material Adverse Change. There shall have been no material
adverse change in the financial condition, results of operations, assets,
liabilities, properties or business of TPEG or any subsidiary of TPEG between
the date of this Agreement and the Effective Time.

      7.4   Condition Subsequent to Merger. GJM shall deliver, and Grosso and
Jacobson shall cause GJM to deliver to TPEG, the GJ Financial Statements on or
before such date and in such form for filing by TPEG in accordance with such SEC
regulations as are required by the provisions of Section 6.2 hereof.


                           ARTICLE 8. INDEMNIFICATION



                                       45
<PAGE>   47
      8.1   Survival of Representations and Warranties. (a) The joint and
several representations and warranties of GJM, Grosso and Jacobson (the "GJM
Parties") contained in this Agreement, and all statements made by any or all of
the GJM Parties which are contained in this Agreement, the Schedules and the
Exhibits to this Agreement, or any certificate, financial statement, report or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement (collectively, the "Transaction
Documents"), shall survive the Merger for a period terminating at the close of
business on the first (1st) anniversary of the Effective Time, except that (i)
the joint and several representations and warranties of the GJP Parties
contained in each of Sections 2.1, 2.2, 2.4 2.10 2.12(g) and (h) and 2.21 and
the representations and warranties (including, without limitation, the
representations and warranties contained in Sections 2.5(a)(ii) and the second
sentence of Sections 2.8 and 2.11) of the GJP Parties relating to title to the
assets, properties and contractual rights of GJP shall survive the Merger for a
period terminating at the close of business on the sixth (6th) anniversary of
the Effective Time, and (ii) notwithstanding anything contained herein to the
contrary, any representation, warranty, covenant or agreement by the GJM Parties
contained in this Agreement with respect to which there shall occur any
fraudulent or intentional misrepresentation (including any intentional failure
to disclose a material fact) or intentional breach of covenant or agreement
shall survive the Merger indefinitely, notwithstanding any applicable statute of
limitations (each such period described in clauses (i) through (iii) above is
referred to herein as a "Survival Period"). Neither any Survival Period, nor the
liability of the GJM Parties under or in connection with the Transaction
Documents, shall be reduced by any investigation made at any time by or on
behalf of TPEG.

            (b)   The representations and warranties of TPEG contained in the
Transaction Documents shall survive the Mergers for a period terminating at the
close of business on the first (1st) anniversary of the Effective Time. Neither
the Survival Period specified in this Section 8.1(b), nor the liability of TPEG
under or in connection with the Transaction Documents shall be reduced by any
investigation made at any time by or on behalf of the GJM Parties.

            (c)   Notwithstanding anything contained in this Article 8 to the
contrary, any matter with respect to which a claim has been asserted by notice
by any indemnified party to the GJM Parties or TPEG, as the case may be, that is
pending or unresolved at the end of the applicable Survival Period shall
continue to be covered by this Article 8 notwithstanding the termination or
expiration of such Survival Period until such claim is finally and fully
satisfied or otherwise resolved by the parties under this Agreement or by a
court of competent jurisdiction and any amounts payable hereunder are finally
determined and paid by the GJM Parties or TPEG, as the case may be, to such
Indemnified Party.


                                       46
<PAGE>   48
      8.2   Indemnification by the GJM Parties.

            (a)   The GJM Parties shall jointly and severally indemnify and hold
harmless TPEG and its subsidiaries (including TPEG Sub III) and the Surviving
Corporation and their Affiliates, officers, directors, employees, agents,
attorneys, successors and assigns (each a "TPEG Indemnified Party") from and
against any and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable attorneys' and consultants' fees and expenses) suffered or incurred
by them (including, without limitation, in connection with any action brought or
otherwise initiated by any of them or required to enforce the provisions
hereunder) (hereinafter collectively referred to as the "Losses"), arising out
of or resulting from any or all of the following:

                  (i)   the breach of any representation or warranty made by any
            of the GJM Parties contained in this Agreement or in any of the
            other Transaction Documents;

                  (ii)  the breach of any covenant or agreement by any of the
            GJM Parties contained in this Agreement or in any of the other
            Transaction Documents;

                  (iii) Indemnification with respect to tax liabilities and
            assessments for periods in accordance with the provisions of Section
            8.3 hereof; or

                  (iv)  any other matter as to which the GJM Parties, pursuant
            to any other provision of this Agreement or of any of the other
            Transaction Documents, have agreed to indemnify a TPEG Indemnified
            Party.

            (b)   A TPEG Indemnified Party shall give the GJM Parties notice of
any matter which such TPEG Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement, promptly, but in
any event within thirty (30) days of such determination, stating the amount of
the Losses, if known, and the method of computation thereof, and containing a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided, however, that the failure to
provide such notice shall not release the GJM Parties from any of their joint
and several obligations or reduce the amount of the GJM Parties liabilities
under this Article 8 except to the extent that the GJM Parties are materially
prejudiced by such failure, as determined by a court of competent jurisdiction,
and shall not relieve the GJM Parties from any other obligation or liability
that they may have to any TPEG Indemnified Party otherwise than under this
Article 8. The obligations and liabilities of the GJM Parties under this Article
8 with respect to Losses arising from claims of any third party which are
subject to the indemnification provided for in this Article 8 ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: If a TPEG Indemnified Party shall receive actual notice of any
Third Party Claim, the TPEG Indemnified Party shall give the GJM Parties notice
of such Third Party Claim promptly, but in any event within thirty (30) days of
the receipt by the TPEG Indemnified Party 


                                       47
<PAGE>   49
of such notice; provided, however, that the failure to provide such notice shall
not release the GJM Parties from any of their obligations under this Article 8
except to the extent the GJM Parties are materially prejudiced by such failure,
as determined by a court of competent jurisdiction, and shall not relieve the
GJM Parties from any other obligation or liability that they may have to any
TPEG Indemnified Party otherwise than under this Article 8. If the GJM Parties
acknowledge in writing their obligation to indemnify a TPEG Indemnified Party
hereunder against any Losses that may result from a Third Party Claim, then the
GJM Parties shall be entitled to assume and control the defense of such Third
Party Claim, at their expense and through counsel of their choice, if the GJM
Parties give notice of their intention to do so to such TPEG Indemnified Party
within thirty (30) days of the receipt of such notice from such TPEG Indemnified
Party; provided, however, that if there exists or is reasonably likely to exist
a conflict of interest that would make it inappropriate in the judgment of the
TPEG Indemnified Party, in its or his reasonably exercised discretion, for the
same counsel to represent both the TPEG Indemnified Party and the GJM Parties,
then such TPEG Indemnified Party shall be entitled to retain its or his own
counsel, in each jurisdiction for which such TPEG Indemnified Party determines
counsel is required, at the expense of the GJM Parties. In the event the GJM
Parties exercise the right to undertake the defense against a Third Party Claim
as provided above, the TPEG Indemnified Party shall cooperate with the GJM
Parties in such defense and make available to the GJM Parties, at the GJM
Parties' expense, all witnesses, pertinent records, materials and information in
the TPEG Indemnified Party's possession or under the TPEG Indemnified Party's
control relating thereto as is reasonably required by the GJM Parties.
Similarly, in the event the TPEG Indemnified Party is, directly or indirectly,
conducting the defense of a Third Party Claim, the GJM Parties shall cooperate
with the TPEG Indemnified Party in such defense and make available to such TPEG
Indemnified Party, at the GJM Parties' expense, all such witnesses, records,
materials and information in the GJM Parties' possession or under the GJM
Parties' control relating thereto as is reasonably required by the TPEG
Indemnified Party. In furtherance of the foregoing, the GJM Parties shall be
obligated to keep the TPEG Indemnified Party fully informed in a timely fashion
of all developments pertaining to a Third Party Claim and to furnish the TPEG
Indemnified Party with true copies of all pleadings, judgments, papers and
settlement agreements in connection therewith. No Third Party Claim may be
settled by the GJM Parties without the prior written consent of the TPEG
Indemnified Party unless the settlement provides for a full and unconditional
release of the TPEG Indemnified Party.

      8.3   Indemnification by GJM Parties as to Tax Matters.

            (a)   The GJM Parties shall jointly and severally indemnify and hold
harmless TPEG and its subsidiaries from and against the following Taxes (except
to the extent of amounts, including deferred taxes to take into account of
timing differences between Tax income and financial income, as have been
specifically identified and reserved therefor as taxes in the GJ Financial
Statements) and, except as otherwise provided in Section 8.3(b) hereof, against
any loss, damage, liability or expense (including reasonable fees for attorneys
and other outside consultants) incurred in contesting or otherwise in connection
with any such Taxes or pursuing 


                                       48
<PAGE>   50
any claim hereunder; (i) Taxes imposed on GJM with respect to periods ending at
or prior to the Effective Time; (ii) with respect to taxable periods beginning
before the Effective Time and ending after the Effective Time, Taxes imposed
which are allocable, pursuant to Section 8.3(b), to the portion of such period
ending at the Effective Time; (iii) Taxes imposed on TPEG as a result of any
breach of warranty or misrepresentation under Section 2.10 or the failure by GJM
to fulfill its obligations under this Section 8.3(a)(i); and (iv) unpaid Taxes
of any Person (including GJM) under Treas. Reg. Section 1.1502-6 (or any similar
provision of law), or as a transferee or successor, by contract or otherwise.

            (b)   In the case of Taxes that are payable with respect to a
taxable period that begins before the Effective Time and ends after the
Effective Time, the portion of any such Tax that is allocable to the portion of
the period ending on the Effective Time shall be:

                  (i)   in the case of Taxes that are either (x) based upon or
            related to income or receipts, or (y) imposed in connection with any
            sale or other transfer or assignment of property (other than
            pursuant to the Merger contemplated by the Agreement), deemed equal
            to the amount which would be payable if the taxable year ended at
            the Effective Time; and

                  (ii)  in the case of Taxes not described in subparagraph (i)
            of this Section 8.3(b) that are imposed on a periodic basis and
            measured by the level of any item, deemed to be the amount of such
            Taxes for the entire period (or, in the case of such Taxes
            determined on an arrears basis, the amount of such Taxes for the
            immediately preceding period) multiplied by a fraction the numerator
            of which is the number of calendar days in the period ending on the
            date of the Effective Time and the denominator of which is the
            number of calendar days in the entire period.

            (c)   Tax Returns. Tax Returns not yet filed for any taxable period
that commences prior to the Effective Time shall be prepared, and each item
thereon treated, in a manner consistent with past practices of GJM.

            (d)   Refunds. Any Tax refund (or comparable benefit resulting from
a reduction in Tax liability) for a period ending as of or prior to the
Effective Time arising out of the carryback of a loss or credit incurred by GJM
in a taxable period ending after the Effective Time shall be the property of
TPEG or the Surviving Corporation, as the case may be, but the amount of any
such refunds received by TPEG or the Surviving Corporation shall be offset
against any claims by TPEG or the Surviving Corporation against the GJM Parties
pursuant to Article 8 hereof.

            (e)   Contests.


                                       49
<PAGE>   51
                  (i)   In the case of an audit or administrative or judicial
            proceeding that relates to periods ending at or before the Effective
            Time, the GJM Parties shall have the right, at their expense, to
            participate in and control the conduct of such audit or proceeding
            but only to the extent that such audit or proceeding relates solely
            to a potential adjustment for which the GJM Parties have
            acknowledged GJM's liability in writing and the issue underlying the
            potential adjustment does not recur for any period ending subsequent
            to the Effective Time. The GJM Parties shall keep TPEG fully
            informed of the progress of any such audit or proceeding and, if it
            appears in the sole discretion of TPEG, that such audit or
            proceeding may adversely affect TPEG or TPEG Sub III, TPEG also may
            participate in any such audit or proceeding. If the GJM Parties do
            not assume the defense of any such audit or proceeding promptly,
            TPEG may defend and settle the same (for the GJM Parties' account)
            in such reasonable manner as it may deem appropriate. In the event
            that a potential adjustment as to which the GJM Parties would be
            liable is present in the same proceeding as a potential adjustment
            for which TPEG or TPEG Sub III would be liable, TPEG shall have the
            right, at its expense, to control the audit or proceeding with
            respect to the latter potential adjustment.

                  (ii)  With respect to a potential adjustment for which both
            GJM and TPEG and/or TPEG Sub III could be liable, or which involves
            an issue that recurs for any period ending after the Effective Time
            (whether or not the subject of audit at such time), (i) both the GJM
            Parties and TPEG may participate in the audit or proceeding, and
            (ii) the audit or proceeding shall be controlled by that party which
            would bear the burden of the greater portion of the dollar amount of
            the adjustment and any corresponding adjustments that may reasonably
            be anticipated for future Tax periods. The principle set forth in
            the preceding sentence shall also govern for purposes of deciding
            any issue that must be decided jointly (in particular, choice of
            judicial forum) in circumstances in which separate issues are
            otherwise controlled hereunder by TPEG and the GJM Parties.

                  (iii) Except as provided in clause (i) of this Section 6(e),
            neither TPEG nor the GJM Parties shall enter into any compromise or
            agree to settle any claim pursuant to any Tax audit or proceeding
            which would adversely affect the other party for such year or a
            subsequent year without the written consent of the other party,
            which consent may not be unreasonably withheld.


                                       50
<PAGE>   52
            (f)   Miscellaneous.

                  (i)   The GJM Parties and TPEG agree to treat all payments
            made by either to or for the benefit of the other under this Article
            8, under other indemnification provisions of this Agreement and for
            any misrepresentations or breaches of warranties or covenants as
            adjustments to the Merger Consideration to be paid by TPEG to the
            Stockholders of GJM pursuant to the Merger or as capital
            contributions for Tax purposes and that such treatment shall govern
            for purposes hereof.

                  (ii)  Notwithstanding any provision herein to the contrary,
            the obligation of the GJM Parties to indemnify and hold harmless
            TPEG and TPEG Sub III pursuant to the provisions of this Section
            8.3, and the representations and warranties contained in Section
            2.10 hereof, shall terminate as of the close of business on the
            120th day following expiration of the applicable statutes of
            limitations with respect to the Tax liabilities in question (after
            giving effect, however, to any waiver, mitigation or extension of
            any such statutes).

            (g)   Additional Tax Agreements.

                  (i)   Tax Elections. The GJM Parties jointly and severally
            covenant and agree that no new elections with respect to Taxes or
            any changes in current elections with respect to Taxes affecting GJM
            shall be made after the date of this Agreement without the prior
            written consent of TPEG.

                  (ii)  Nonforeign Affidavit. GJM shall furnish TPEG an
            affidavit stating that the indicated number is the transferor's
            United States taxpayer identification number and that the transferor
            is not a foreign person, pursuant to Section 1445(b)(2) of the Code.

                  (iii)Cooperation and Records Retention. The GJM Parties and
            TPEG shall (A) each provide the other with such assistance as may
            reasonably be requested by any of them in connection with the
            preparation of any Tax Return, audit, or other examination by any
            taxing authority or judicial or administrative proceedings relating
            to liability for Taxes, provided, however, that TPEG shall cause its
            officers who are serving as duly authorized officers of the
            Surviving Corporation to sign and file any such Returns unless such
            officers consist of any of the GJM Parties; (B) each retain and
            provide the other, and TPEG shall retain and cause TPEG Sub III to
            retain and provide the GJM Parties with, any records or other
            information that may be relevant to such Tax Return, audit or
            examination, proceeding, or determination, and (C) each provide the
            other with any 


                                       51
<PAGE>   53
            final determination of any such audit or examination, proceeding, or
            determination that affects any amount required to be shown on any
            Tax Return of the other for any period. Without limiting the
            generality of the foregoing, TPEG shall retain, and shall cause TPEG
            Sub III to retain, and the GJM Parties shall retain, until the
            applicable statutes of limitations (including any extensions) have
            expired, copies of all Tax Returns, supporting work schedules, and
            other records or information that may be relevant to such returns
            for all tax periods or portions thereof ending before or including
            the Effective Time and shall not destroy or otherwise dispose of any
            such records without first providing the other party with a
            reasonable opportunity to review and copy the same.

                  (iv)  Transfer Taxes. GJM or the Stockholders, as the case may
            be, shall pay any sales, stock transfer and/or documentary taxes
            applicable to the Merger at the Effective Time, provided, however,
            that TPEG shall promptly reimburse GJM and/or the Stockholders for
            the cost thereof;

                  (v)   Preparation of W-2's, etc. Pursuant to Revenue Procedure
            84-77 (1984-2 C.B. 753), provided that GJM provides TPEG with all
            necessary payroll records for the calendar year which includes the
            Effective Time, TPEG shall furnish a Form W-2 to each employee
            employed by TPEG or any of its subsidiaries (including TPEG Sub III)
            after the Effective Time who had been employed by GJM disclosing all
            wages and other compensation paid for such calendar year, and taxes
            withheld therefrom, and the GJM Parties shall be relieved of the
            responsibility to do so.

      8.4   Indemnification by TPEG.

            (a)   The GJM Parties (each a "GJM Indemnified Party") shall be
indemnified and held harmless by TPEG from and against for any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, reasonable attorneys'
and consultants' fees and expenses) suffered or incurred by them (including,
without limitation, in connection with any action brought or otherwise initiated
by any of them or required to enforce the provisions hereunder) (hereinafter
collectively referred to as the "Losses"), arising out of or resulting from:

                  (i)   the breach of any representation or warranty made by
            TPEG or by TPEG Sub III contained in this Agreement or any of the
            other Transaction Documents; and

                  (ii)  the breach of any covenant or agreement by TPEG
            contained in this Agreement or any of the other Transaction
            Documents.


                                       52
<PAGE>   54
            (b)   A GJM Indemnified Party shall give TPEG notice of any matter
which a GJM Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, promptly, but in any event within
thirty (30) days of such determination, stating the amount of the Losses, if
known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises; provided, however, that the failure to provide such notice
shall not release TPEG from any of its obligations or reduce the amount of
TPEG's liabilities under this Article 8 except to the extent that TPEG is
materially prejudiced by such failure, as determined by a court of competent
jurisdiction, and shall not relieve TPEG from any other obligation or liability
that it may have to a GJM Indemnified Party otherwise than under this Article 8.
The obligations and liabilities of TPEG under this Article 8 with respect to
Losses arising from claims of any third party which are subject to the
indemnification provided for in this Article 8 ("Third Party Claims") shall be
governed by and contingent upon the following additional terms and conditions:
If a GJM Indemnified Party shall receive actual notice of any Third Party Claim,
the GJM Indemnified Party shall give TPEG notice of a Third Party Claim
promptly, but in any event within thirty (30) days of the receipt by such GJM
Indemnified Party of such notice; provided, however, that the failure to provide
such notice shall not release TPEG from any of its obligations under this
Article 8 except to the extent TPEG is materially prejudiced by such failure, as
determined by a court of competent jurisdiction, and shall not relieve TPEG from
any other obligation or liability that it may have to any GJM Indemnified Party
otherwise than under this Article 8. If TPEG acknowledges in writing its
obligation to indemnify a GJM Indemnified Party hereunder against any Losses
that may result from a Third Party Claim, then TPEG shall be entitled to assume
and control the defense of a Third Party Claim, at its expense and through
counsel of its choice, if it gives notice of its intention to do so to the GJM
Indemnified Party within thirty (30) days of the receipt of such notice from
such GJM Indemnified Party; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the GJM Indemnified Party, in its or his
reasonably exercised discretion, for the same counsel to represent both such GJM
Indemnified Party and TPEG, then the GJM Indemnified Party shall be entitled to
retain its own counsel, in each jurisdiction for which the GJM Indemnified Party
determines counsel is required, at the expense of TPEG. In the event TPEG
exercises the right to undertake any such defense of a Third Party Claim as
provided above, the GJM Indemnified Party shall cooperate with TPEG in such
defense and make available to TPEG, at TPEG's expense, all witnesses, pertinent
records, materials and information in the GJM Indemnified Party's possession or
under the GJM Indemnified Party's control relating thereto as is reasonably
required by TPEG. Similarly, in the event the GJM Indemnified Party is, directly
or indirectly, conducting the defense of a Third Party Claim, TPEG shall
cooperate with the GJM Indemnified Party in such defense and make available to
the GJM Indemnified Party, at TPEG's expense, all such witnesses, records,
materials and information in TPEG's possession or under TPEG's control relating
thereto as is reasonably required by the GJM Indemnified Party. No Third Party
Claim may be settled by TPEG without the prior written consent of the GJM
Indemnified Party unless the settlement provides for the full and unconditional
release of the GJM Indemnified Party.


                                       53
<PAGE>   55
      8.5   Payment of Indemnification Liability. All indemnification
obligations or liabilities of the GJM Parties or of TPEG, as the case may be,
shall be payable to the Indemnified Parties within ten (10) days (the
"Indemnification Payment Date") after the date that such obligation or liability
has been determined by written stipulation or agreement between or among the
parties, by a final non-appealable judgment or arbitration award or, in the case
of liabilities for any Taxes, the receipt by TPEG and/or the Surviving
Corporation from any Govenmental Authority of an assessment, claim or lien for
Taxes which is subject to the indemnification provisions of Section 8.3 hereof.

      8.6   Form of Payment of Indemnification Liability. The GJM Parties or
TPEG, as the case may be, shall be permitted to satisfy their respective
indemnification obligations under this Article 8 by paying the full dollar
amount of the indemnified Losses (the "Loss Amount") to the Indemnified Parties
in the form of Shares of TPEG Common Stock, the number of which, for purposes of
this Article 8, shall be determined by dividing the Loss Amount by the average
of the closing prices of the (a) quoted closing price of the TPEG Common Stock
on the NASDAQ SmallCap Market during the thirty (30) consecutive trading days
immediately preceding the Indemnification Payment Date or (b) if there is no
trading in the TPEG Common Stock on the NASDAQ SmallCap Market on any one or
more of such trading days, by the average mean between the quoted closing bid
and asked prices for the TPEG Common Stock on such market on any of such days,
subject to a discount of ten percent (10%) from the price of the Shares of the
TPEG Common Stock so determined and further subject to a minimum price of one
dollar twenty cents ($1.20) per share; provided, however, that with respect to
the GJM Parties' liabilities for Taxes which are the subject of the
representations and warranties set forth in Section 2.10 hereof and the
indemnification provisions of Section 8.3 hereof and/or liabilities for
environmental matters which are the subject of the representations and
warranties set forth in Section 2.12(g) and (h) hereof, the GJM Parties shall
pay the Loss Amount by certified check (or other form of cash payment or
transfer mutually acceptable to the parties) payable directly to the order of
the Governmental Authority assessing or otherwise claiming or levying such Taxes
or to TPEG as TPEG may direct on or before the Indemnification Date.

      8.7   Joint and Several Liability of GJM Parties. Each reference in this
Article 8 to the "GJM Parties" shall mean each of GJM, Grosso and Jacobson, and
all of them, individually and collectively, jointly and severally, and the GJM
Parties shall be jointly and severally liable for all present and future
indebtedness, liabilities and obligations to each TPEG Indemnified Party
pursuant to or in connection with Section 8.2. Notwithstanding the joint and
several liability of the GJM Parties as aforesaid, each of Grosso and Jacobson
hereby irrevocably waives any right to seek or obtain from GJM and/or the
Surviving Corporation after the Effective Time, whether by contribution,
reimbursement, joinder of parties, cross-claim or otherwise, any amounts paid or
payable by Grosso and/or Jacobson pursuant to or in connection with Section 8.2.


                                       54
<PAGE>   56
      8.8   Cross-Indemnification With Other Mergers. Notwithstanding any other
provisions of this Agreement, all of the indemnification provisions set forth in
this Article 8 shall be deemed applicable to and may be invoked against the GJM
Parties or TPEG, as the case may be, in the event that:

                  (i)   any of the parties to the Other Mergers breaches any
            representations and warranties set forth in the agreements or other
            Transaction Documents governing either of such Other Mergers;

                  (ii)  any of the parties to the Other Mergers breaches any
            covenants or agreements by any of such parties set forth in any of
            the agreements or other Transaction Documents governing either of
            such Other Mergers;

                  (iii)the indemnification provisions with respect to tax
            liabilities and assessments of GJP or GJE, respectively, under the
            agreements governing the Other Mergers are invoked; or

                  (iv)  any other matters to which the parties to either of the
            Other Mergers have agreed to indemnify any of the other parties to
            such Other Mergers; it being expressly understood and agreed by the
            GJM Parties and by TPEG that (A) any claims for indemnification
            arising under either or both of the Other Mergers shall invoke all
            of the indemnification and other remedies provided for in this
            Agreement, and (B) the GJM Parties shall be jointly and severally
            liable for any indebtedness, obligations or liabilities of the GJP
            Parties (as defined in the agreement governing the Other Merger to
            which GJP is a Party) and or the GJE Parties (as defined in the
            agreement governing the Other Merger to which GJE is a Party) to the
            TPEG Indemnified Parties, and the TPEG Parties shall be jointly and
            severally liable for any indebtedness, obligations or liabilities of
            the TPEG Parties (as defined in the agreement governing the Other
            Mergers with GJP and GJE, respectively) to the GJM Indemnified
            Party, in each case without offset, deduction, defense or
            counterclaim available to the GJM Parties or the TPEG Parties, as
            the case may be, under this Agreement.

      8.9   Minimum Claim. Anything in this Article 8 to the contrary
notwithstanding, the TPEG Indemnified Parties, as a group, shall not have any
claims for indemnification against the GJM Parties, and the GJM Indemnified
Parties, as a group, shall not have any claims for indemnification against TPEG
unless the amount of such individual claims for Losses, or the amount of such
claim when added to all other claims for Losses for which such party could have
sought indemnification hereunder and under the Other Merger Agreements but for
the provisions of this Section 8.9, exceeds, in the aggregate, Ten Thousand
($10,000) Dollars (the "Indemnification Minimum Amount"); provided, however,
that in determining amounts to be included in the Indemnification Minimum
Amount, if any, but for no 


                                       55
<PAGE>   57
other purpose, all representations, warranties and covenants in this Agreement,
made by the GJM Parties or by TPEG, as the case may be, shall be read without
regard to any materiality standard or any knowledge qualification set forth in
this Agreement.

      8.10  Maximum Claim. Anything in this Article 8 to the contrary
notwithstanding, neither TPEG nor the GJM Parties shall have any liability under
this Article 8 in respect of any Losses to the extent the aggregate of such
Losses under this Article 8 and under the Other Merger Agreements, exceeds, in
the aggregate, the sum of One Million ($1,000,000) Dollars.

      8.11  Other Remedies. The indemnification provisions of this Article 8 are
in addition to, and not in derogation of, any statutory, equitable, or common
law remedies which any party hereto may have for breach of any representation,
warranty or covenant set forth in this Agreement, any Schedule or Exhibit
annexed hereto or in any of the other Transaction Documents.


                                       56
<PAGE>   58
                      ARTICLE 9. TERMINATION AND AMENDMENT

      9.1   Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the GJM Stockholders :

            (a)   by the mutual consent of GJM, Grosso and Jacobson and TPEG;

            (b)   by either GJM or TPEG upon written notice to the other party
if any governmental entity of competent jurisdiction shall have issued a final
permanent order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement, and in any such case the time for
appeal or petition for reconsideration of such order shall have expired without
such appeal or petition being granted;

            (c)   by either GJM or TPEG if the Merger shall not have been
consummated on or before October 31, 1997.

      9.2   Effect of Termination. In the event of termination of this Agreement
by either GJM or TPEG as provided in Section 9.1 hereof, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party or parties hereto to the other party or parties and each of GJM (on
its own behalf and on behalf of Grosso and Jacobson) and TPEG shall bear and be
solely responsible for their respective professional fees, expenses and other
costs incurred in the negotiation and execution of the Agreement and any other
matters undertaken with respect to the transactions contemplated hereby, except
(i) with respect to or by reason of the application of the provisions of Article
10 of this Agreement, and (ii) with respect to any liabilities or damages
incurred or suffered by a party or parties as a result of the breach in any
material respect by the other party or parties of any of its or their
representations, warranties, covenants or agreements set forth in this
Agreement.

      9.3   Amendment. This Agreement may be amended by the parties hereto, at
any time before or after approval of the matters presented in connection with
the Merger by the GJM Stockholders, but, after any such stockholder approval, no
amendment shall be made which by law requires further approval by such
stockholders without seeking such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.

      9.4   Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, may, to the extent legally permitted, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by or on behalf of such
party.


                                       57
<PAGE>   59
                     ARTICLE 10. REMEDIES IN EVENT OF THIRD
                                 PARTY COMPETING TRANSACTION

      Notwithstanding any provision to the contrary set forth in this Agreement
or in any other agreements, instruments or other documents delivered by the
parties pursuant hereto,

      10.1  Remedies for Competing Transaction. TPEG and TPEG Sub III further
agree and GJM, Grosso and Jacobson further jointly and severally agree that, in
the event that any of TPEG, TPEG Sub III, GJM, Grosso and/or Jacobson elects or
elect to execute a letter of intent or become a party to or make a written or an
oral commitment with respect to a Competing Transaction (all such actions,
collectively, the "Competing Transaction Commitment") prior to the Effective
Time or the earlier termination of this Agreement in accordance with Article 9
hereof, whichever sooner occurs, then such party or parties shall be legally
obligated, promptly upon the written demand of the other party or parties, to
promptly reimburse the other party for all of its reasonable legal, accounting
and other professional costs and related disbursements, upon submission of
reasonably itemized bills, vouchers and/or statements therefor plus such
monetary damages as a court of competent jurisdiction may award.

      10.2  Procedure for Exercising Remedies. If any of TPEG, GJM, Grosso
and/or Jacobson as the case may be, undertakes a Competing Transaction
Commitment, it, he or they shall be required to give prompt written notice
thereof to the other party or parties and its or their counsel, whereupon the
other party or parties shall submit as promptly as practicable reasonably
itemized bills, vouchers and/or statements with respect to its reasonable legal,
accounting and other professional costs and related disbursements incurred in
connection with this Agreement and the transactions contemplated hereby. The
party undertaking the Competing Transaction Commitment shall be required, within
seven (7) days after receipt of such bills, vouchers and/or statements, to
reimburse the other party in full for all of such fees, costs and expenses plus
such monetary damages as a court of competent jurisdiction may award.

      10.3  Other Remedies for Competing Transaction. The reimbursement of fees
and expenses plus such monetary damages as a court of competent jurisdiction may
award, if the other party or parties undertakes a Competing Transaction
Commitment prior to the Effective Time or to the earlier termination of this
Agreement in accordance with Article 9 hereof, whichever sooner occurs, shall
not constitute sole and exclusive remedy available to the other party or parties
in consequence of TPEG, GJM, Grosso or Jacobson, as the case may be, having
undertaken such Competing Transaction Commitment or having engaged in a
Competing Transaction.


                                       58
<PAGE>   60
                         ARTICLE 11. GENERAL PROVISIONS

      11.1  Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed (postage prepaid) by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

            (a)   if to TPEG, TPEG subsidiaries or the Surviving Corporation, to

                  The Producers Entertainment Group Ltd.
                  5757 Wilshire Boulevard - Penthouse One
                  Los Angeles, CA 90036
                  Telecopy No. (310) 634-8635
                  Attn:  Irwin Meyer, CEO
                  with a copy to

                  Dempsey & Johnson, P.C.
                  1925 Century Park East
                  Suite 2350
                  Los Angeles, CA  90067
                  Attn: Michael D. Dempsey, Esq.

            and

                  Maloney, Mehlman & Katz
                  405 Lexington Avenue
                  New York, New York  10174
                  Telecopy No. (212) 972-0111
                  Attn:  Melvin Katz, Esq.

            and

            (b)   if to GJM, Grosso or Jacobson, to or c/o

                  Grosso-Jacobson Music Company, Inc.
                  767 Third Avenue
                  New York, NY  10017
                  Telecopy No. (212) 355-3178
                  Attn:  Lawrence S. Jacobson, President


                                       59
<PAGE>   61
                  with a copy to

                  Kay, Collyer & Boose, LLP
                  One Dag Hammarskjold Plaza
                  New York, NY  10017
                  Telecopy No. (212) 755-0921
                  Attn:  Michael Collyer, Esq.

      Any notice sent by registered or certified mail as aforesaid shall be
deemed delivered to the party or parties to whom it is addressed on the third
(3rd) business day following the date upon which each notice has been deposited
in the U.S. mail.

      11.2  Interpretation. (a) When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section or Exhibit
or Schedule to this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the naming or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party or
parties to whom such information is to be made available. The phrases "the date
of this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to September 15, 1997.

            (b)   All references in this Agreement to "the knowledge of" or "to
the best knowledge of" of any party shall mean "actual knowledge" of the party
charged with such knowledge or "constructive knowledge" which such party should
have obtained, in the reasonable exercise of his or its duties, after reasonable
inquiry.

            (c)   All references herein to any joint and several agreements or
obligations of Grosso and Jacobson pertaining to actions or transactions to be
taken, or not to be taken, by GJM, in accordance with the terms of this
Agreement shall constitute, and be deemed to constitute, the agreements and
obligations of Grosso and Jacobson to cause GJM to take or not to take any such
actions or transactions.

      11.3  Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

      11.4  Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements
(including the letter of intent between GJM, GJP, Grosso and Jacobson and TPEG
dated April 25, 1997) and understandings, both written and oral, among the
parties with respect to the subject matter hereof, provided that the relevant
provisions of Articles hereof relating to Confidentiality shall survive the
execution and


                                       60
<PAGE>   62
delivery of this Agreement and (b) except as expressly provided herein, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that, except as hereinafter
agreed to in writing, no party shall have the right to acquire or shall be
deemed to have acquired shares of common stock of the other party pursuant to
the Merger until consummation thereof.

      11.5  Governing Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of New York, without regard to
any applicable conflicts of law.

      11.6  Publicity. Except as otherwise required by law (including federal
securities law including regulations of the SEC) or the rules and regulations of
the NASDAQ SmallCap Market, so long as this Agreement is in effect, neither GJM,
Grosso or Jacobson nor TPEG shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.

      11.7  Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.

      11.8  Disclosure Schedules. The Schedules annexed hereto and referred to
herein are a part of this Agreement for all purposes. The inclusion of an item
in any Schedule does not necessarily imply that such item or matter is material
or significant. Terms which are defined in this Agreement shall have the same
meanings when used in the Schedules hereto. Disclosure of any item or matter on
(a) any one Schedule hereto shall be deemed to constitute disclosure of such
item or matter for each of the other Schedules hereto with respect to which
disclosure of such item or matter is required and (b) any schedule required to
be delivered by GJP or GJE or by TPEG or the other TPEG subsidiaries, as the
case may be, pursuant to or under the agreements governing the Other Mergers
shall be deemed to constitute disclosure of such item or matter with respect to
which disclosure of such item or matter is required hereunder.


                                       61
<PAGE>   63
      IN WITNESS WHEREOF, GJM, TPEG and TPEG Sub III each have caused this
Agreement to be signed by their respective officers thereunto duly authorized
and Grosso and Jacobson each have signed this Agreement on and as of the date
and year first above written.

 Attest:                               THE PRODUCERS ENTERTAINMENT
                                       GROUP LTD.



 _____________________________         By: _____________________________________
 Name:                                     Title:
 Title:


 Attest:                               TPEG ACQUISITION III CORP.



 _____________________________         By: _____________________________________
 Name:                                     Title:
 Title:


 Attest:                               GROSSO-JACOBSON MUSIC
                                       COMPANY, INC.



 _____________________________         By: _____________________________________
 Name:                                     Title:
 Title:


                                           _____________________________________
                                                    SALVATORE GROSSO



                                           _____________________________________
                                                  LAWRENCE S. JACOBSON


                                       62

<PAGE>   1
                                                                   EXHIBIT 10.28


                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT by and among THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Company"), a Delaware corporation, and SALVATORE GROSSO ("Executive"), dated as
of the ____ day of October, 1997.

                               W I T N E S S E T H

      WHEREAS, the Company wishes to employ the Executive for the period
provided in this Agreement, and the Executive is willing to serve in the employ
of the Company on the terms and subject to the conditions set forth herein;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:

      1.    Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue his employment with the
Company, on the terms and subject to the conditions set forth herein.

      2.    Term of Employment. The term of the Executive's employment under
this Agreement (the "Employment Period") shall commence as of October 20, 1997
and shall end on October 31, 2002 unless terminated earlier in accordance with
Section 5 (the "Term").

      3.    Titles and Responsibilities.

            (a)   Titles. During the Employment Period, the Executive shall
serve as the Chief Operating Officer of the Company. The Executive shall report
and be responsible to the Board of Directors of the Company (the "Board").

            (b)   Responsibilities. Company hereby engages Executive to provide
his exclusive services to supervise the development and production of motion
pictures and television programs for the Company and the exploitation and sale
of such motion pictures and television programs to financiers, distributors,
television networks, syndicator, cable systems, motion picture studios and other
buyers or licensees of such product throughout the world. Pursuant to the terms
and conditions hereof, Executive hereby accepts such engagement. Executive shall
render all services usually and customarily rendered by and required of
executives similarly employed in the entertainment industry. Executive shall
report only to the Board of Directors of the Company.


                                       1
<PAGE>   2
            (c)   Place of Performance. During the Employment Period, the
Executive's office shall be located at the offices of the Company, which shall
be in the New York and Los Angeles metropolitan areas, except for required
business travel consistent with the Executive's position. The Company shall
provide the Executive with an office reasonably acceptable to him, and other
support reasonably appropriate to his duties.

            (d)   Business Time. During the Employment Period, the Executive
agrees to devote his full business time during normal business hours to the
business and affairs of the Company and to use his best efforts to perform
faithfully, diligently and competently the responsibilities assigned to him
hereunder, to the extent necessary to discharge such responsibilities, except
for (i) time spent serving on corporate, civic or charitable boards or
committees only if and to the extent not substantially interfering with the
performance of such responsibilities, (ii) periods of vacation, disability and
sick leave to which he is entitled, and (iii) reasonable activities having a
charitable, educational or other public interest purpose.

      4.    Compensation.

            (a)   Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Base Salary") equal to $50,000.00 , payable in
accordance with the customary payroll procedures as in effect from time to time
for senior executives of the Company.

            (b)   Vacation. During the Employment Period, the Executive shall be
entitled to four (4) weeks paid vacation per year, to be accrued and taken in
accordance with the Company's vacation policy.

            (c)   Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable and required
business-related expenses incurred by the Executive in accordance with the
policies and procedures of the Company as applicable to its senior executives.

            (d)   Other Executive Benefits. Without limiting the foregoing
provisions of this Section 4, during the Employment Period the Executive shall
be entitled to participate in or be covered under all compensation, bonus,
pension, retirement and welfare and fringe benefit plans, programs and policies
of the Company applicable to senior executives of the Company.


                                       2
<PAGE>   3
      5.    Termination.

            (a)   Death or Disability. The Executive's employment pursuant to
this Agreement shall terminate automatically upon the Executive's death. The
Company may terminate the Executive's employment for Disability by giving to the
Executive notice of its intention in accordance with Section 5(e) unless
Executive returns to the performance of the essential functions of his
employment within 30 days after receipt of such notice. For purposes of this
Agreement, "Disability" means any physical or mental condition that renders the
Executive unable to perform the essential functions of his employment for 90
consecutive days or for a total of 180 days in any period of 360 consecutive
days.

            (b)   Voluntary Termination After Change in Control. Notwithstanding
anything in this Agreement to the contrary, the Executive may voluntarily
terminate his employment at any time, after a Change in Control, (i) for any
reason upon six months' written notice to the Company, or (ii) if termination is
for Good Reason or on account of the Executive's serious illness, upon written
notice pursuant to Section 5(e) but without any notice period. In the event of
any termination pursuant to this Section 5(b), the Executive shall have no
further obligation to the Company under this Agreement, except as provided in
Section 9.

            (c)   Cause. The Company may terminate the Executive's employment
for Cause. For purposes of this Agreement, "Cause" means:

Executive's engaging in gross misconduct materially and demonstrably injurious
to the Company; material failure to perform the services required hereunder
after written notice and an opportunity to cure, if curable; or conviction by
final judgment of a felony constituting fraud, theft, embezzlement or homicide.

            (d)   Good Reason. The Executive may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" means (i) a material
reduction in the nature or scope of the Executive's position, title, status,
authority, duties, powers or functions on the date of this Agreement; (ii) the
assignment to the Executive of any material duties which are not commensurate
with or at least as prestigious as the Executive's duties and responsibilities
as contemplated by this Agreement; (iii) a material breach by the Company of any
of the provisions of this Agreement; or (iv) the failure by the Company to
obtain an agreement, reasonably satisfactory to the Executive, from any
successor to assume and agree to perform this Agreement, as contemplated by
Section 12(b). After a Change in Control, in addition to items (i) through (iv),
"Good Reason" shall include (v) a determination by the Executive, in his sole
discretion, during the 30-day period commencing 180 days following a Change in
Control, that due to the Change in Control he can no longer effectively perform
his duties.


                                       3
<PAGE>   4
            (e)   Notice of Termination. Any termination by the Company for
Cause or Disability or by the Executive for Good Reason shall be communicated by
a written notice (a "Notice of Termination") to the other party hereto given in
accordance with Section 13(d). A "Notice of Termination" shall set forth in
reasonable detail the events giving rise to such termination.

            (f)   Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) in the case of termination for Disability, 30
days after Notice of Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties during such 30-day
period); (ii) in the case of termination for Cause, a date specified in the
Notice of Termination (which shall not be less than 30 days nor more than 60
days from the date such Notice of Termination is given); (iii) in the case of
any other termination for which a Notice of Termination is required, the date of
receipt of such Notice of Termination or, if later, the date specified therein,
as the case may be; and (iv) in all other cases, the actual date on which the
Executive's employment terminates during the Employment Period.

      6.    Obligations of the Company Upon Termination.

            (a)   Death, Disability, Cause and Voluntary Termination. If at any
time before or after a Change in Control the Executive's employment is
terminated by the Company during the Employment Period by reason of the
Executive's death, Disability or for Cause, or is voluntarily terminated by the
Executive (other than for Good Reason), the Company shall have no further
obligation to the Executive or the Executive's legal representatives other than
(i) those obligations earned for Base Salary and payments under any Company
bonus plan which may have accrued at the Date of Termination (the "Accrued
Obligations"), (ii) those obligations expressly provided under any of the plans
referred to in Section 4(e) (the "Benefit Rights") and (iii) upon a termination
of the Executive's employment by reason of his death, the payment provided in
Section 6(a)(iii), if applicable, shall be paid to the Executive or the
Executive's estate, as the case may be, in a lump sum in cash within 15 days of
the Date of Termination.

            (b)   Prior to Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the Executive
                  for Good Reason.

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

                  (i)   Lump Sum Payments. If during the Employment Period and
prior to a Change in Control, the Company terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Company shall provide the Benefit Rights and shall pay to
the Executive in a lump sum in cash within 15 days of the Date of Termination
the sum of the following amounts: (A) the Accrued Obligations; plus (B) an
amount equal to the product of (1) one-twelfth times (2) the sum of the
Executive's Base


                                       4
<PAGE>   5
Salary plus the Executive's average bonus which was received for the three years
ended before the Date of Termination, times (3) the number full or partial of
months remaining in the unexpired term of the Employment Period, but in no event
less than twelve months (such period being the "Severance Period").

                  (ii)  Welfare Benefits. The Company shall provide or cause to
be provided to the Executive and his family for the Severance Period continued
life, medical and dental and disability insurance benefits at least equal to
those which the Executive was receiving or entitled to receive immediately prior
to the termination of employment described in Section 6(b)(i).

                  (iii) Office. For the Severance Period, the Company shall
provide the Executive with an office reasonably acceptable to him.

                  (iv)  Discharge of the Company's Obligations. The Company
shall have no further obligations to the Executive in respect of any termination
described in this Section 6(b).

            (c)   Following Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the Executive
                  for Good Reason.

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

                  (i)   Lump Sum Payments. If during the Employment Period and
following a Change in Control, the Company terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Company shall provide the Benefits Rights and shall pay to
the Executive in a lump sum in cash within 15 days of the Date of Termination
the sum of the following amounts: (a) the Accrued Obligations; and (B) an amount
equal to 2.99 times the sum of the amounts described in clause (2) of Section
6(b)(i)(B).

                  (ii)  Welfare Benefits. The Company shall provide or cause to
be provided to the Executive and his family for a period of 36 months following
such termination continued life, medical and dental and disability insurance
benefits at least equal to those which the Executive was receiving or entitled
to receive immediately prior to the termination of employment described in
Section 6(c)(i).

                  (iii) Office. For a period of 36 months following such
termination, the Company shall provide the Executive with an office and an
executive secretary reasonably acceptable to him and other support services
reasonably appropriate to an executive of a public corporation.


                                       5
<PAGE>   6
                  (iv)  Discharge of the Company's Obligations. The Company
shall have no further obligations to the Executive in respect of any termination
described in this Section 6(c).

            (d)   Change in Control. A Change in Control shall be deemed to have
                  occurred:

            (1)   the shareholders of the Company shall approve (i) any merger,
                  consolidation or recapitalization of the Company (or, if the
                  capital stock of the Company is affected, any subsidiary of
                  the Company) or any sale, lease, or other transfer (in one
                  transaction or a series of transactions contemplated or
                  arranged by any party as a single plan) of all or
                  substantially all of the assets of the Company (each of the
                  foregoing being an "Acquisition Transaction") where (x) the
                  shareholders of the Company immediately prior to such
                  Acquisition Transaction would not immediately after such
                  Acquisition Transaction beneficially own, directly or
                  indirectly, shares representing in the aggregate more than 65%
                  of (A) the then outstanding common stock of the corporation
                  surviving or resulting from such merger, consolidation or
                  recapitalization or acquiring such assets of the Company, as
                  the case may be (the "Surviving Corporation") (or of its
                  ultimate parent corporation, if any) and (B) the Combined
                  Voting Power (as defined below) of the then outstanding Voting
                  Securities (as defined below) of the Surviving Corporation (or
                  of its ultimate parent corporation, if any) or (y) the
                  Incumbent Directors at the time of the initial approval of
                  such Acquisition Transaction would not immediately after such
                  Acquisition Transaction constitute a majority of the Board of
                  Directors of the Surviving Corporation (or of its ultimate
                  parent corporation, if any) or (ii) any plan or proposal for
                  the liquidation or dissolution of the Company; or

            (2)   any Person (as defined below) shall become the beneficial
                  owner (as defined in Rule 13d-3 and 13-d-5 under the Exchange
                  Act), directly or indirectly, of securities of the Company
                  representing in the aggregate 20% or more of either (i) the
                  then outstanding shares of Stock, or (ii) the Combined Voting
                  Power of all then outstanding Voting Securities of the
                  Company; provided; however that notwithstanding the foregoing,
                  a Change in Control of the Company shall not be deemed to have
                  occurred for purposes of this subsection (2) solely as the
                  result of:

                  (i)   an acquisition of securities by the Company which, by
                        reducing the number of shares of Stock or other Voting
                        Securities outstanding, increases (i) the proportionate
                        number of shares of Stock 


                                       6
<PAGE>   7
                        beneficially owned by any Person to 20% or more of the
                        shares of Stock then outstanding or (ii) the
                        proportionate voting power represented by the Voting
                        Securities beneficially owned by any Person to 20% or
                        more of the Combined Voting Power of all then
                        outstanding Voting Securities; or

                  (ii)  an acquisition of securities directly from the Company
                        except that this subsection (ii) shall not apply to:

                        (A)   any conversion of a security that was not acquired
                              directly from the Company; or

                        (B)   any acquisition of securities if the Incumbent
                              Directors at the time of the initial approval of
                              such acquisition would not immediately after (or
                              otherwise as a result of) such acquisition
                              constitute a majority of the Board;

                        provided, however, that if any Person referred to in
                        subsections (i) or (ii) of this clause (2) shall
                        thereafter become the beneficial owner of any additional
                        shares of Stock or other Voting Securities of the
                        Company (other than pursuant to a stock split, stock
                        dividend or similar transaction or an acquisition exempt
                        under such subsection (ii), then a Change in Control
                        shall be deemed to have occurred for purposes of this
                        clause (2). For purposes of this Agreement:

                        (A)   "Person" shall mean any individual, entity
                              (including, without limitation, any corporation,
                              partnership, trust, joint venture, association or
                              governmental body and any successor to any such
                              entity) or group (as defined in Sections 13(d)(3)
                              or 14(d)(2) of the Exchange Act and the rules and
                              regulations thereunder); provided, however, that
                              Person shall not include Executive, the Company,
                              any of its majority-


                                       7
<PAGE>   8
                              owned subsidiaries, any executive benefit plan of
                              the Company or any of its majority-owned
                              subsidiaries or any entity organized, appointed or
                              established by Executive, the Company or any of
                              its majority-owned subsidiaries for or pursuant to
                              the terms of any such plan, or any of their
                              affiliates;

                        (B)   "Voting Securities" shall mean all securities of a
                              corporation having the right under ordinary
                              circumstances to vote in an election of the board
                              of directors of such corporation; and

                        (C)   "Combined Voting Power" shall mean the aggregate
                              votes entitled to be cast generally in the
                              election of directors of a corporation by holders
                              of then outstanding Voting Securities of such
                              corporation.

      7.    No Mitigation: No Offset. In no event shall the Executive be
obligated to seek other employment by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Any amounts that
may be earned by the Executive other than from the Company after the Date of
Termination shall not reduce the Company's obligation to make any payments
hereunder. The amounts payable by the Company hereunder shall not be subject to
any right of set-off that the Company may assert against the Executive.

      8.    Noncompetition.

            (a)   Scope. In the case of the Executive's termination of
employment, including due to the expiration of the Employment Period, the
Executive shall not, during the Employment Period and for one year following the
Date of Termination (collectively, "Executive Restricted Period"), (a) divert to
any competitor of the Company in the business conducted by the Company (the
"Designated Industry") any active project of the Company; or (b) solicit or
encourage any officer, employee or consultant of the Company to leave their
employ for employment by or with any competitor of the Company in the Designated
Industry. If at any 


                                       8
<PAGE>   9
time the provisions of this Section 8 shall be determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 8 shall be considered divisible and shall become
and be immediately amended to apply only to such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; Employee agrees that this
Section 8 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. Nothing in this Section 8
shall prevent or restrict Employee from engaging in any business or industry in
the Designated Industry in any capacity.

            (b)   Irreparable Harm. The Executive agrees that the remedy at law
for any breach of this Section 8 shall be inadequate and that the Company shall
be entitled to injunctive relief.

            (c)   Covenant Regarding Confidentiality. All information about the
business and affairs of the Company which is not generally available to the
public or disclosed by the Company, and any information about the Company which
becomes generally available to the public as a result of a breach by any person
of any confidentiality obligation to the Company (including, without limitation,
its secrets and information about its business, financial condition and
performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Confidential Information, and that improper use or revelation of same by
Executive, whether during or after the termination of his employment by the
Company, could cause serious injury to the business of the Company. Accordingly,
Executive agrees that, except as required to perform his duties under this
Agreement, or as required by law, rule, regulation or pre-existing contract, he
will forever keep secret and inviolate, and will not at any time, reveal,
divulge or make known, any Confidential Information, whether or not such
Confidential Information was developed, devised or otherwise created in whole or
in party by the efforts of Executive. Executive further agrees that he will not
use any Confidential Information for his own benefit or directly or indirectly
for the benefit or any person or organization other than the Company or its
affiliates.

      9.    Indemnification. The Company shall indemnify and hold harmless the
Executive, his heirs and personal representatives to the fullest extent
permitted by applicable law, as now or hereafter in effect, with respect to any
acts, omissions or events that occurred while the Executive is or was an
employee of the Company or serves or served the Company or any other corporation
or other enterprise of any kind in any capacity at the request of the Company
(an "Enterprise"). Without limiting the generality of the foregoing, the Company
shall promptly pay, or reimburse the Executive for, or advance to the Executive
amounts for the payment of (a) all of the Executive's reasonable expenses,
including attorneys' fees and court costs, actually and 


                                       9
<PAGE>   10
reasonably incurred in connection with the defense of any action, suit or
proceeding, including any suit seeking recovery under any Company director's and
officer's liability policy, or in connection with any appeal thereof, to which
the Executive may be a party by reason of any action taken or failure to act
under or in connection with his service for the Company or an Enterprise; and
(b) all amounts required to be paid in settlement of or in satisfaction of a
judgment in connection with any such action, suit or proceeding; provided,
however, that the Company shall not be required to indemnify or hold harmless
the Executive, his heirs or personal representatives in any manner whatsoever in
the event and to the extent there is a final and nonappealable judgment by a
court of competent jurisdiction that the liability incurred by the Executive
resulted from his gross negligence, fraud or willful malfeasance.

      10.   Arbitration. If a dispute arises between the parties respecting the
terms of this Agreement or Executive's employment with the Company, including,
without limitation, any dispute with respect to the validity of this Agreement
or this arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two parties
shall choose a third arbitrator who shall act as chairman and shall be an
attorney and a member of the panel of the American Arbitration Association. Each
party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of arbitration shall be Los Angeles,
California. Notwithstanding anything to the contrary contained herein, no
discovery shall be permitted in the arbitration proceeding.

      11.   Successors.

            (a)   This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

            (b)   This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement.

      12.   Miscellaneous.


                                       10
<PAGE>   11
            (a)   Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed.

            (b)   Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.

            (c)   Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

            (d)   Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered or
mailed to the other party by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

            If to the Executive:

                  Salvatore Grosso
                  767 Third Ave., 15th Floor
                  New York, NY 10017

            If to the Company:

                  The Producers Entertainment Group Ltd.
                  9150 Wilshire Boulevard, Suite 205
                  Beverly Hills, CA  90212

or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.

            (e)   Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            (f)   Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.


                                       11
<PAGE>   12
            (g)   Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as between
the parties unless it is in writing and signed by the party against whom
enforcement is sought. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement.

            (h)   Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

            (i)   Captions and References. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. References
in this Agreement to a section number are references to sections of the
Agreement unless otherwise specified.

            (j)   Consent to Jurisdiction. Each of the parties to this Agreement
hereby submits to the exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States of America located in
such state solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation and enforcement
of this Agreement, that it is not subject thereto; that such action, suit or
proceeding may not be brought or is not maintainable in said courts; that this
Agreement may not be enforced in or by said courts; that its property is exempt
or immune from execution; that the suit, action or proceeding is brought in an
inconvenient forum; or that the venue of the suit, action or proceeding is
improper. Each of the parties agrees that service of process in any such action,
suit or proceeding shall be deemed in every respect effective service of process
upon it if given in the manner set forth in Section 13(d).


                                       12
<PAGE>   13
      IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.

                                       THE PRODUCERS ENTERTAINMENT GROUP LTD.


                                       By: _________________________________
                                    
                                       Its: ________________________________
                                    
                                    
                                       SALVATORE GROSSO
                                    
                                       _____________________________________


                                       13

<PAGE>   1
                                                                   EXHIBIT 10.29


                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT by and among THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Company"), a Delaware corporation, and LAWRENCE S. JACOBSON ("Executive"),
dated as of the ____ day of October, 1997.

                               W I T N E S S E T H

      WHEREAS, the Company wishes to employ the Executive for the period
provided in this Agreement, and the Executive is willing to serve in the employ
of the Company on the terms and subject to the conditions set forth herein;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:

      1.    Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue his employment with the
Company, on the terms and subject to the conditions set forth herein.

      2.    Term of Employment. The term of the Executive's employment under
this Agreement (the "Employment Period") shall commence as of October 20, 1997
and shall end on October 31, 2002 unless terminated earlier in accordance with
Section 5 (the "Term").

      3.    Titles and Responsibilities.

            (a)   Titles. During the Employment Period, the Executive shall
serve as the President of the Company. The Executive shall report and be
responsible to the Board of Directors of the Company (the "Board").

            (b)   Responsibilities. Company hereby engages Executive to provide
his exclusive services to supervise the development and production of motion
pictures and television programs for the Company and the exploitation and sale
of such motion pictures and television programs to financiers, distributors,
television networks, syndicator, cable systems, motion picture studios and other
buyers or licensees of such product throughout the world. Pursuant to the terms
and conditions hereof, Executive hereby accepts such engagement. Executive shall
render all services usually and customarily rendered by and required of
executives similarly employed in the entertainment industry. Executive shall
report only to the Board of Directors of the Company.


                                       1
<PAGE>   2
            (c)   Place of Performance. During the Employment Period, the
Executive's office shall be located at the offices of the Company, which shall
be in the New York and Los Angeles metropolitan areas, except for required
business travel consistent with the Executive's position. The Company shall
provide the Executive with an office reasonably acceptable to him, and other
support reasonably appropriate to his duties.

            (d)   Business Time. During the Employment Period, the Executive
agrees to devote his full business time during normal business hours to the
business and affairs of the Company and to use his best efforts to perform
faithfully, diligently and competently the responsibilities assigned to him
hereunder, to the extent necessary to discharge such responsibilities, except
for (i) time spent serving on corporate, civic or charitable boards or
committees only if and to the extent not substantially interfering with the
performance of such responsibilities, (ii) periods of vacation, disability and
sick leave to which he is entitled, and (iii) reasonable activities having a
charitable, educational or other public interest purpose.

      4.    Compensation.

            (a)   Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Base Salary") equal to $50,000.00 , payable in
accordance with the customary payroll procedures as in effect from time to time
for senior executives of the Company.

            (b)   Vacation. During the Employment Period, the Executive shall be
entitled to four (4) weeks paid vacation per year, to be accrued and taken in
accordance with the Company's vacation policy.

            (c)   Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable and required
business-related expenses incurred by the Executive in accordance with the
policies and procedures of the Company as applicable to its senior executives.

            (d)   Other Executive Benefits. Without limiting the foregoing
provisions of this Section 4, during the Employment Period the Executive shall
be entitled to participate in or be covered under all compensation, bonus,
pension, retirement and welfare and fringe benefit plans, programs and policies
of the Company applicable to senior executives of the Company.


                                       2
<PAGE>   3
      5.    Termination.

            (a)   Death or Disability. The Executive's employment pursuant to
this Agreement shall terminate automatically upon the Executive's death. The
Company may terminate the Executive's employment for Disability by giving to the
Executive notice of its intention in accordance with Section 5(e) unless
Executive returns to the performance of the essential functions of his
employment within 30 days after receipt of such notice. For purposes of this
Agreement, "Disability" means any physical or mental condition that renders the
Executive unable to perform the essential functions of his employment for 90
consecutive days or for a total of 180 days in any period of 360 consecutive
days.

            (b)   Voluntary Termination After Change in Control. Notwithstanding
anything in this Agreement to the contrary, the Executive may voluntarily
terminate his employment at any time, after a Change in Control, (i) for any
reason upon six months' written notice to the Company, or (ii) if termination is
for Good Reason or on account of the Executive's serious illness, upon written
notice pursuant to Section 5(e) but without any notice period. In the event of
any termination pursuant to this Section 5(b), the Executive shall have no
further obligation to the Company under this Agreement, except as provided in
Section 9.

            (c)   Cause. The Company may terminate the Executive's employment
for Cause. For purposes of this Agreement, "Cause" means:

Executive's engaging in gross misconduct materially and demonstrably injurious
to the Company; material failure to perform the services required hereunder
after written notice and an opportunity to cure, if curable; or conviction by
final judgment of a felony constituting fraud, theft, embezzlement or homicide.

            (d)   Good Reason. The Executive may terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" means (i) a material
reduction in the nature or scope of the Executive's position, title, status,
authority, duties, powers or functions on the date of this Agreement; (ii) the
assignment to the Executive of any material duties which are not commensurate
with or at least as prestigious as the Executive's duties and responsibilities
as contemplated by this Agreement; (iii) a material breach by the Company of any
of the provisions of this Agreement; or (iv) the failure by the Company to
obtain an agreement, reasonably satisfactory to the Executive, from any
successor to assume and agree to perform this Agreement, as contemplated by
Section 12(b). After a Change in Control, in addition to items (i) through (iv),
"Good Reason" shall include (v) a determination by the Executive, in his sole
discretion, during the 30-day period commencing 180 days following a Change in
Control, that due to the Change in Control he can no longer effectively perform
his duties.


                                       3
<PAGE>   4
            (e)   Notice of Termination. Any termination by the Company for
Cause or Disability or by the Executive for Good Reason shall be communicated by
a written notice (a "Notice of Termination") to the other party hereto given in
accordance with Section 13(d). A "Notice of Termination" shall set forth in
reasonable detail the events giving rise to such termination.

            (f)   Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) in the case of termination for Disability, 30
days after Notice of Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties during such 30-day
period); (ii) in the case of termination for Cause, a date specified in the
Notice of Termination (which shall not be less than 30 days nor more than 60
days from the date such Notice of Termination is given); (iii) in the case of
any other termination for which a Notice of Termination is required, the date of
receipt of such Notice of Termination or, if later, the date specified therein,
as the case may be; and (iv) in all other cases, the actual date on which the
Executive's employment terminates during the Employment Period.

      6.    Obligations of the Company Upon Termination.

            (a)   Death, Disability, Cause and Voluntary Termination. If at any
time before or after a Change in Control the Executive's employment is
terminated by the Company during the Employment Period by reason of the
Executive's death, Disability or for Cause, or is voluntarily terminated by the
Executive (other than for Good Reason), the Company shall have no further
obligation to the Executive or the Executive's legal representatives other than
(i) those obligations earned for Base Salary and payments under any Company
bonus plan which may have accrued at the Date of Termination (the "Accrued
Obligations"), (ii) those obligations expressly provided under any of the plans
referred to in Section 4(e) (the "Benefit Rights") and (iii) upon a termination
of the Executive's employment by reason of his death, the payment provided in
Section 6(a)(iii), if applicable, shall be paid to the Executive or the
Executive's estate, as the case may be, in a lump sum in cash within 15 days of
the Date of Termination.

            (b)   Prior to Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the Executive
                  for Good Reason.

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

                  (i)   Lump Sum Payments. If during the Employment Period and
prior to a Change in Control, the Company terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Company shall provide the Benefit Rights and shall pay to
the Executive in a lump sum in cash within 15 days of the Date of Termination
the sum of the following amounts: (A) the Accrued Obligations; plus (B) an
amount equal to the product of (1) one-twelfth times (2) the sum of the
Executive's Base


                                       4
<PAGE>   5
Salary plus the Executive's average bonus which was received for the three years
ended before the Date of Termination, times (3) the number full or partial of
months remaining in the unexpired term of the Employment Period, but in no event
less than twelve months (such period being the "Severance Period").

                  (ii)  Welfare Benefits. The Company shall provide or cause to
be provided to the Executive and his family for the Severance Period continued
life, medical and dental and disability insurance benefits at least equal to
those which the Executive was receiving or entitled to receive immediately prior
to the termination of employment described in Section 6(b)(i).

                  (iii) Office. For the Severance Period, the Company shall
provide the Executive with an office reasonably acceptable to him.

                  (iv)  Discharge of the Company's Obligations. The Company
shall have no further obligations to the Executive in respect of any termination
described in this Section 6(b).

            (c)   Following Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the Executive
                  for Good Reason.
 
                  --------------------------------------------------------------

                  (i)   Lump Sum Payments. If during the Employment Period and
following a Change in Control, the Company terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Company shall provide the Benefits Rights and shall pay to
the Executive in a lump sum in cash within 15 days of the Date of Termination
the sum of the following amounts: (a) the Accrued Obligations; and (B) an amount
equal to 2.99 times the sum of the amounts described in clause (2) of Section
6(b)(i)(B).

                  (ii)  Welfare Benefits. The Company shall provide or cause to
be provided to the Executive and his family for a period of 36 months following
such termination continued life, medical and dental and disability insurance
benefits at least equal to those which the Executive was receiving or entitled
to receive immediately prior to the termination of employment described in
Section 6(c)(i).

                  (iii) Office. For a period of 36 months following such
termination, the Company shall provide the Executive with an office and an
executive secretary reasonably acceptable to him and other support services
reasonably appropriate to an executive of a public corporation.

                  (iv)  Discharge of the Company's Obligations. The Company
shall have no 


                                       5
<PAGE>   6
further obligations to the Executive in respect of any termination described in
this Section 6(c).

            (d)   Change in Control. A Change in Control shall be deemed to have
occurred:

            (1)   the shareholders of the Company shall approve (i) any merger,
                  consolidation or recapitalization of the Company (or, if the
                  capital stock of the Company is affected, any subsidiary of
                  the Company) or any sale, lease, or other transfer (in one
                  transaction or a series of transactions contemplated or
                  arranged by any party as a single plan) of all or
                  substantially all of the assets of the Company (each of the
                  foregoing being an "Acquisition Transaction") where (x) the
                  shareholders of the Company immediately prior to such
                  Acquisition Transaction would not immediately after such
                  Acquisition Transaction beneficially own, directly or
                  indirectly, shares representing in the aggregate more than 65%
                  of (A) the then outstanding common stock of the corporation
                  surviving or resulting from such merger, consolidation or
                  recapitalization or acquiring such assets of the Company, as
                  the case may be (the "Surviving Corporation") (or of its
                  ultimate parent corporation, if --------------------- any) and
                  (B) the Combined Voting Power (as defined below) of the then
                  outstanding Voting Securities (as defined below) of the
                  Surviving Corporation (or of its ultimate parent corporation,
                  if any) or (y) the Incumbent Directors at the time of the
                  initial approval of such Acquisition Transaction would not
                  immediately after such Acquisition Transaction constitute a
                  majority of the Board of Directors of the Surviving
                  Corporation (or of its ultimate parent corporation, if any) or
                  (ii) any plan or proposal for the liquidation or dissolution
                  of the Company; or

            (2)   any Person (as defined below) shall become the beneficial
                  owner (as defined in Rule 13d-3 and 13-d-5 under the Exchange
                  Act), directly or indirectly, of securities of the Company
                  representing in the aggregate 20% or more of either (i) the
                  then outstanding shares of Stock, or (ii) the Combined Voting
                  Power of all then outstanding Voting Securities of the
                  Company; provided; however that notwithstanding the foregoing,
                  a Change in Control of the Company shall not be deemed to have
                  occurred for purposes of this subsection (2) solely as the
                  result of:

                  (i)   an acquisition of securities by the Company which, by
                        reducing the number of shares of Stock or other Voting
                        Securities outstanding, increases (i) the proportionate
                        number of shares of Stock beneficially owned by any
                        Person to 20% or more of the shares of Stock then
                        outstanding or (ii) the proportionate voting power


                                       6
<PAGE>   7
                        represented by the Voting Securities beneficially owned
                        by any Person to 20% or more of the Combined Voting
                        Power of all then outstanding Voting Securities; or

                  (ii)  an acquisition of securities directly from the Company
                        except that this subsection (ii) shall not apply to:

                        (A)   any conversion of a security that was not acquired
                              directly from the Company; or

                        (B)   any acquisition of securities if the Incumbent
                              Directors at the time of the initial approval of
                              such acquisition would not immediately after (or
                              otherwise as a result of) such acquisition
                              constitute a majority of the Board;

                        provided, however, that if any Person referred to in
                        subsections (i) or (ii) of this clause (2) shall
                        thereafter become the beneficial owner of any additional
                        shares of Stock or other Voting Securities of the
                        Company (other than pursuant to a stock split, stock
                        dividend or similar transaction or an acquisition exempt
                        under such subsection (ii), then a Change in Control
                        shall be deemed to have occurred for purposes of this
                        clause (2). For purposes of this Agreement:

                        (A)   "Person" shall mean any individual, entity
                              (including, without limitation, any corporation,
                              partnership, trust, joint venture, association or
                              governmental body and any successor to any such
                              entity) or group (as defined in Sections 13(d)(3)
                              or 14(d)(2) of the Exchange Act and the rules and
                              regulations thereunder); provided, however, that
                              Person shall not include Executive, the Company,
                              any of its majority-owned subsidiaries, any
                              executive benefit plan of the Company or any of
                              its majority-owned subsidiaries or 


                                       7
<PAGE>   8
                              any entity organized, appointed or established by
                              Executive, the Company or any of its
                              majority-owned subsidiaries for or pursuant to the
                              terms of any such plan, or any of their
                              affiliates;

                        (B)   "Voting Securities" shall mean all securities of a
                              corporation having the right under ordinary
                              circumstances to vote in an election of the board
                              of directors of such corporation; and

                        (C)   "Combined Voting Power" shall mean the aggregate
                              votes entitled to be cast generally in the
                              election of directors of a corporation by holders
                              of then outstanding Voting Securities of such
                              corporation.


      7.    No Mitigation: No Offset. In no event shall the Executive be
obligated to seek other employment by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Any amounts that
may be earned by the Executive other than from the Company after the Date of
Termination shall not reduce the Company's obligation to make any payments
hereunder. The amounts payable by the Company hereunder shall not be subject to
any right of set-off that the Company may assert against the Executive.

      8.    Noncompetition.

            (a)   Scope. In the case of the Executive's termination of
employment, including due to the expiration of the Employment Period, the
Executive shall not, during the Employment Period and for one year following the
Date of Termination (collectively, "Executive Restricted Period"), (a) divert to
any competitor of the Company in the business conducted by the Company (the
"Designated Industry") any active project of the Company; or (b) solicit or
encourage any officer, employee or consultant of the Company to leave their
employ for employment by or with any competitor of the Company in the Designated
Industry. If at any time the provisions of this Section 8 


                                       8
<PAGE>   9
shall be determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 8 shall be
considered divisible and shall become and be immediately amended to apply only
to such area, duration and scope of activity as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction over
the matter; Employee agrees that this Section 8 as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein. Nothing in this Section 8 shall prevent or restrict Employee from
engaging in any business or industry in the Designated Industry in any capacity.

            (b)   Irreparable Harm. The Executive agrees that the remedy at law
for any breach of this Section 8 shall be inadequate and that the Company shall
be entitled to injunctive relief.

            (c)   Covenant Regarding Confidentiality. All information about the
business and affairs of the Company which is not generally available to the
public or disclosed by the Company, and any information about the Company which
becomes generally available to the public as a result of a breach by any person
of any confidentiality obligation to the Company (including, without limitation,
its secrets and information about its business, financial condition and
performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Confidential Information, and that improper use or revelation of same by
Executive, whether during or after the termination of his employment by the
Company, could cause serious injury to the business of the Company. Accordingly,
Executive agrees that, except as required to perform his duties under this
Agreement, or as required by law, rule, regulation or pre-existing contract, he
will forever keep secret and inviolate, and will not at any time, reveal,
divulge or make known, any Confidential Information, whether or not such
Confidential Information was developed, devised or otherwise created in whole or
in party by the efforts of Executive. Executive further agrees that he will not
use any Confidential Information for his own benefit or directly or indirectly
for the benefit or any person or organization other than the Company or its
affiliates.

            (d)   Covenant Regarding Canadian Corporations. Through the third
(3rd) anniversary of the Effective Time (as such term is defined in the certain
Merger Agreement dated as of ________) or such other period that the Executive
remains employed by Company or any of its subsidiaries, the Executive shall not
directly or indirectly divert any television, video or other film production,
distribution or related business activities or operations of 1037300 Ontario
Limited, or any successor or assignee thereof, to any other corporation or other
entity in Canada.

      Furthermore, in the event of a termination of this Agreement, and/or the
Production Agreement between Lawrence Jacobson Associates, Inc. ("LJA") and the
Company, dated as of the same date, the Executive shall not engage in any act
which may have the effect of disrupting, frustrating or otherwise interfering
with the development, production or distribution of any 


                                       9
<PAGE>   10
project of the Company or any project in which the Company participates or
benefits by, for a period of not less than three (3) years following the
termination of the aforementioned agreement(s) . Additionally, the Company shall
have the continued and uninterrupted right to produce or participate in the
production of any projects, including, without limitation, projects involving
1037300 Ontario Limited or any other Canadian corporation or entity, which were
developed or produced during the term of the aforementioned agreements or those
projects for which the Company entered into license, production or distribution
agreements with third parties whereby the Company is required, or may be
required, to render continuous services based on its ability to provide
programming which was intended to be produced by the Executive or LJA .

      9.    Indemnification. The Company shall indemnify and hold harmless the
Executive, his heirs and personal representatives to the fullest extent
permitted by applicable law, as now or hereafter in effect, with respect to any
acts, omissions or events that occurred while the Executive is or was an
employee of the Company or serves or served the Company or any other corporation
or other enterprise of any kind in any capacity at the request of the Company
(an "Enterprise"). Without limiting the generality of the foregoing, the Company
shall promptly pay, or reimburse the Executive for, or advance to the Executive
amounts for the payment of (a) all of the Executive's reasonable expenses,
including attorneys' fees and court costs, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, including any
suit seeking recovery under any Company director's and officer's liability
policy, or in connection with any appeal thereof, to which the Executive may be
a party by reason of any action taken or failure to act under or in connection
with his service for the Company or an Enterprise; and (b) all amounts required
to be paid in settlement of or in satisfaction of a judgment in connection with
any such action, suit or proceeding; provided, however, that the Company shall
not be required to indemnify or hold harmless the Executive, his heirs or
personal representatives in any manner whatsoever in the event and to the extent
there is a final and nonappealable judgment by a court of competent jurisdiction
that the liability incurred by the Executive resulted from his gross negligence,
fraud or willful malfeasance.

      10.   Arbitration. If a dispute arises between the parties respecting the
terms of this Agreement or Executive's employment with the Company, including,
without limitation, any dispute with respect to the validity of this Agreement
or this arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two parties
shall choose a third arbitrator who shall act as chairman and shall be an
attorney and a member of the panel of the American Arbitration Association. Each
party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of 


                                       10
<PAGE>   11
arbitration shall be Los Angeles, California. Notwithstanding anything to the
contrary contained herein, no discovery shall be permitted in the arbitration
proceeding.

      11.   Successors.

            (a)   This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.


            (b)   This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement.

      12.   Miscellaneous.

            (a)   Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed.

            (b)   Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.

            (c)   Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

            (d)   Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered or
mailed to the other party by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

            If to the Executive:

                  Lawrence Jacobson
                  767 Third Ave., 15th Floor
                  New York, NY 10017


                                       11
<PAGE>   12
            If to the Company:

                  The Producers Entertainment Group Ltd.
                  9150 Wilshire Boulevard, Suite 205
                  Beverly Hills, CA  90212

or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.

            (e)   Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            (f)   Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.

            (g)   Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as between
the parties unless it is in writing and signed by the party against whom
enforcement is sought. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement.

            (h)   Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

            (i)   Captions and References. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. References
in this Agreement to a section number are references to sections of the
Agreement unless otherwise specified.

            (j)   Consent to Jurisdiction. Each of the parties to this Agreement
hereby submits to the exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States of America located in
such state solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation and enforcement
of this Agreement, that it is not subject thereto; that such action, suit or
proceeding may not be brought 


                                       12
<PAGE>   13
or is not maintainable in said courts; that this Agreement may not be enforced
in or by said courts; that its property is exempt or immune from execution; that
the suit, action or proceeding is brought in an inconvenient forum; or that the
venue of the suit, action or proceeding is improper. Each of the parties agrees
that service of process in any such action, suit or proceeding shall be deemed
in every respect effective service of process upon it if given in the manner set
forth in Section 13(d).

      IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.

                                       THE PRODUCERS ENTERTAINMENT GROUP LTD.


                                       By: _________________________________
                                     
                                       Its: ________________________________
                                     
                                     
                                          LAWRENCE JACOBSON
                                     
                                          ______________________________________
                           

                                       13

<PAGE>   1
                                                                   EXHIBIT 10.30


September 12, 1997

Mr. Irwin Meyer
12610 Promontory Road
Los Angeles, CA90049

                           Re: AMENDMENT TO AGREEMENT

Dear Mr. Meyer:

      Reference is hereby made to the certain agreement by and among THE
PRODUCERS ENTERTAINMENT GROUP LTD. (the "Company"), a Delaware corporation, and
IRWIN MEYER, dated as of the 1st day of October, 1995 (the "Agreement").

      The parties hereby amend the Agreement to provide the following:

      The Term of this Agreement shall be and is extended through June 30, 2002.

      All other terms and conditions shall remain in full force and effect
unless and until modified in writing and signed by the parties.

      If the aforementioned is agreed and accepted, please acknowledge same by
executing as indicated below.


Sincerely,                                  ACCEPTED & AGREED:
THE PRODUCERS ENTERTAINMENT
GROUP LTD.                                  _____________________
                                            Irwin Meyer


<PAGE>   2

- --------------------------------
By: Arthur H. Bernstein
    Senior Vice President


<PAGE>   1
                                                                   EXHIBIT 10.31


September 12, 1997

Mr. Arthur Bernstein
8228 Fountain Avenue # 3
Los Angeles, CA  90046

                      Re: AMENDMENT TO EMPLOYMENT AGREEMENT

Dear Mr. Bernstein:

      The parties hereby amend that certain employment agreement dated June 22,
1992, as amended on August 15, 1994, March 7, 1995, January 25, 1996, and
October 4, 1997 to provide the following:

      The Term of this Agreement shall be and is extended through June 30, 2002.

      All other terms and conditions shall remain in full force and effect
unless and until modified in writing and signed by the parties.

      If the aforementioned is agreed and accepted, please acknowledge same by
executing as indicated below.


Sincerely,
THE PRODUCERS ENTERTAINMENT
GROUP LTD.



By: ____________________________________
    Irwin Meyer


<PAGE>   2
    Chief Executive Officer


ACCEPTED AND AGREED:


______________________________________
ARTHUR BERNSTEIN

<PAGE>   1
                                                                   EXHIBIT 10.32


                              PRODUCTION AGREEMENT

      THIS AGREEMENT by and among THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Company"), a Delaware corporation, and LAWRENCE JACOBSON ASSOCIATES, INC.
("LJA") F/S/O LAWRENCE S. JACOBSON ("EMPLOYEE") dated as of the _____ day of
October, 1997.


                               W I T N E S S E T H

      WHEREAS, the Company wishes to engage LJA for the services of employee for
the period provided in this Agreement, and LJA is willing to provide the
services of the Employee to the Company on the terms and subject to the
conditions set forth herein;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:

      1.    Engagement. The Company hereby agrees to engage LJA, and the LJA
hereby agrees to render the Employee's services with the Company, on the terms
and subject to the conditions set forth herein. LJA acknowledges that it is of
the essence of this Agreement that LJA provide the services of Employee.

      2.    Term of Engagement. The term of the LJA's engagement under this
Agreement (the "Term") shall commence as of October ____, 1997, and shall end on
October 31, 2002, unless terminated earlier in accordance with Section 5.

      3.    Duties and Responsibilities.

            (a)   Responsibilities. Company hereby engages LJA to provide the
exclusive and full time services of Employee as producer and/or executive
producer to develop and produce motion picture and television programs and sell
such programs to financiers, distributors, television networks, syndicators,
cable systems, motion picture studios and other buyers or licensees of such
product throughout the world. Pursuant to the terms and conditions hereof, LJA
hereby accepts such engagement. LJA shall cause Employee to render all services
usually and customarily rendered by and required of executives similarly
employed in the entertainment industry and such other services as may reasonably
required by the Company.

            (b)   Place of Performance. During the Term, however, except for any
period 


                                       1
<PAGE>   2
where Employee is in production on a project, LJA's office shall be located at
the principal executive offices of the Company, which shall be in the New York
and Los Angeles metropolitan area, except for required business travel
consistent with the Employee's position.

            (c)   Business Time. During the Term, LJA agrees to require Employee
to devote his full business time during normal business hours to the business
and affairs of the Company and to use his best efforts to perform faithfully,
diligently and competently the responsibilities assigned to him hereunder, to
the extent necessary to discharge such responsibilities, except for (i) time
spent serving on corporate, civic or charitable boards or committees only if and
to the extent not substantially interfering with the performance of such
responsibilities, (ii) periods of vacation, disability and sick leave to which
he is entitled, and (iii) reasonable activities having a charitable, educational
or other public interest purpose.

      4.    Compensation.

            (a)   Annual Guarantee. During the Term, LJA shall receive a minimum
annual guarantee ("Annual Guarantee") equal to $450,000, payable in accordance
with the customary payroll procedures as in effect from time to time for senior
executives of the Company.

            (b)   Expenses. During the Term, LJA shall be entitled to receive
prompt reimbursement for all reasonable and required business-related expenses
incurred by LJA or Employee in accordance with the policies and procedures of
the Company as applicable to its senior executives.

            (c)   Housing & Automobile Reimbursement. During the Term, LJA shall
be entitled to receive a monthly automobile and housing reimbursement in the
total amount of $2,000, payable monthly on the first day of each month and
pro-rated for the month of August , 1997.

            (d)   Bonus. Provided that neither LJA nor Employee are in material
breach of this Agreement, Company shall pay to LJA a bonus as follows:

                  (i) $25,000, on or before October 30, 1997;
                  (ii) $25,000, on or before December 31, 1997, and
                  (iii) $50,000, on or before July 1, 1998.

      5.    Termination.

            (a)   Death or Disability. LJA's engagement pursuant to this
Agreement shall terminate automatically upon the Employees's death. The Company
may terminate this Agreement in the event of the Disability of Employee by
giving to the LJA notice of its intention in accordance with Section 5(e) unless
Employee returns to the performance of the essential 


                                       2
<PAGE>   3
functions of his employment within 30 days after receipt of such notice. For
purposes of this Agreement, "Disability" means any physical or mental condition
that renders the Employee unable to perform the essential functions of his
employment for 90 consecutive days or for a total of 180 days in any period of
360 consecutive days.

            (b)   Voluntary Termination After Change in Control. Notwithstanding
anything in this Agreement to the contrary, the LJA may voluntarily terminate
this Agreement at any time, after a Change in Control, (i) for any reason upon
six months' written notice to the Company, or (ii) if termination is for Good
Reason or on account of the Employee's serious illness, upon written notice
pursuant to Section 5(e) but without any notice period. In the event of any
termination pursuant to this Section 5(b), neither LJA nor Employee shall have
any further obligation to the Company under this Agreement, except as provided
in Section 9.

            (c)   Cause. The Company may terminate this Agreement for Cause. For
purposes of this Agreement, "Cause" means:

Employee's engaging in gross misconduct materially and demonstrably injurious to
the Company; material failure to perform the services required hereunder after
written notice and an opportunity to cure, if curable; or conviction by final
judgment of a felony constituting fraud, theft, embezzlement or homicide.

            (d)   Good Reason. LJA may terminate this Agreement for Good Reason.
For purposes of this Agreement, "Good Reason" means (i) a material reduction in
the nature or scope of the Employee's position, title, status, authority,
duties, powers or functions on the date of this Agreement; (ii) the assignment
to Employee of any material duties which are not commensurate with or at least
as prestigious as the Employee's duties and responsibilities as contemplated by
this Agreement; (iii) a material breach by the Company of any of the provisions
of this Agreement; or (iv) the failure by the Company to obtain an agreement,
reasonably satisfactory to LJA, from any successor to assume and agree to
perform this Agreement, as contemplated by Section 12(b). After a Change in
Control, in addition to items (i) through (iv), "Good Reason" shall include (v)
a determination by the Employee, in his sole discretion, during the 30-day
period commencing 180 days following a Change in Control, that due to the Change
in Control neither he nor LJA can any longer effectively perform their duties.

            (e)   Notice of Termination. Any termination by the Company for
Cause or Disability or by LJA for Good Reason shall be communicated by a written
notice (a "Notice of Termination") to the other party hereto given in accordance
with Section 13(d). A "Notice of Termination" shall set forth in reasonable
detail the events giving rise to such termination.

            (f)   Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) in the case of termination for Disability, 30
days after Notice of Termination is given (provided that the Employee shall not
have returned to the full-time performance of his duties during such 30-day
period); (ii) in the case of termination for Cause, a 


                                       3
<PAGE>   4
date specified in the Notice of Termination (which shall not be less than 30
days nor more than 60 days from the date such Notice of Termination is given);
(iii) in the case of any other termination for which a Notice of Termination is
required, the date of receipt of such Notice of Termination or, if later, the
date specified therein, as the case may be; and (iv) in all other cases, the
actual date on which this Agreement terminates during the Term.

      6.    Obligations of the Company Upon Termination.

            (a)   Death, Disability, Cause and Voluntary Termination. If at any
time before or after a Change in Control that this Agreement is terminated by
the Company during the Term by reason of the Employee's death, Disability or for
Cause, or is voluntarily terminated by LJA (other than for Good Reason), the
Company shall have no further obligation to either LJA or the Employee or the
Employee's legal representatives other than (i) those obligations earned for
Annual Guarantee and payments under any Company bonus plan that have accrued at
the Date of Termination (the "Accrued Obligations"), (ii) those obligations
expressly provided under any of the plans referred to in Section 4(e) (the
"Benefit Rights") and (iii) upon a termination of the Executive's employment by
reason of Employee's death, the payment provided in Section 6(a)(iii), if
applicable, shall be paid to LJA, in a lump sum in cash within 15 days of the
Date of Termination.

            (b)   Prior to Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the LJA for
                  Good Reason.

                  (i)   Lump Sum Payments. If during the Term and prior to a
Change in Control, the Company terminates this Agreement other than for Cause or
Disability, or if LJA terminates this Agreement for Good Reason, the Company
shall provide the Benefit Rights and shall pay to LJA in a lump sum in cash
within 15 days of the Date of Termination the sum of the following amounts: (A)
the Accrued Obligations; plus (B) an amount equal to the product of (1)
one-twelfth times (2) the sum of the Annual Guarantee plus the average bonus (if
any) for the three years ended before the Date of Termination, times (3) the
number full or partial of months remaining in the unexpired term of the Term,
but in no event less than twelve months (such period being the "Severance
Period").

                  (ii)  Discharge of the Company's Obligations. The Company
shall have no further obligations to either LJA or the Employee in respect of
any termination described in this Section 6(b).

            (c)   Following Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by LJA for Good
                  Reason.

                  (i)   Lump Sum Payments. If during the Term and following a
Change in 


                                       4
<PAGE>   5
Control, the Company terminates this Agreement other than for Cause or
Disability, or LJA terminates this Agreement for Good Reason, the Company shall
provide the Benefits Rights and shall pay to LJA in a lump sum in cash within 15
days of the Date of Termination the sum of the following amounts: (a) the
Accrued Obligations; and (B) an amount equal to 2.99 times the sum of the
amounts described in clause (2) of Section 6(b)(i)(B).

                  (ii)  Discharge of the Company's Obligations. The Company
shall have no further obligations to either LJA or the Employee in respect of
any termination described in this Section 6(c).

            (d)   Change in Control. A Change in Control shall be deemed to have
occurred:

            (1)   the shareholders of the Company shall approve (i) any merger,
                  consolidation or recapitalization of the Company (or, if the
                  capital stock of the Company is affected, any subsidiary of
                  the Company) or any sale, lease, or other transfer (in one
                  transaction or a series of transactions contemplated or
                  arranged by any party as a single plan) of all or
                  substantially all of the assets of the Company (each of the
                  foregoing being an "Acquisition Transaction") where (x) the
                  shareholders of the Company immediately prior to such
                  Acquisition Transaction would not immediately after such
                  Acquisition Transaction beneficially own, directly or
                  indirectly, shares representing in the aggregate more than 65%
                  of (A) the then outstanding common stock of the corporation
                  surviving or resulting from such merger, consolidation or
                  recapitalization or acquiring such assets of the Company, as
                  the case may be (the "Surviving Corporation") (or of its
                  ultimate parent corporation, if any) and (B) the Combined
                  Voting Power (as defined below) of the then outstanding Voting
                  Securities (as defined below) of the Surviving Corporation (or
                  of its ultimate parent corporation, if any) or (y) the
                  Incumbent Directors at the time of the initial approval of
                  such Acquisition Transaction would not immediately after such
                  Acquisition Transaction constitute a majority of the Board of
                  Directors of the Surviving Corporation (or of its ultimate
                  parent corporation, if any) or (ii) any plan or proposal for
                  the liquidation or dissolution of the Company; or

            (2)   any Person (as defined below) shall become the beneficial
                  owner (as defined in Rule 13d-3 and 13-d-5 under the Exchange
                  Act), directly or indirectly, of securities of the Company
                  representing in the aggregate 20% or more of either (i) the
                  then outstanding shares of Stock, or (ii) the Combined Voting
                  Power of all then outstanding Voting Securities of the
                  Company; provided; however 


                                       5
<PAGE>   6
                  that notwithstanding the foregoing, a Change in Control of the
                  Company shall not be deemed to have occurred for purposes of
                  this subsection (2) solely as the result of:


                  (i)   an acquisition of securities by the Company which, by
                        reducing the number of shares of Stock or other Voting
                        Securities outstanding, increases (i) the proportionate
                        number of shares of Stock beneficially owned by any
                        Person to 20% or more of the shares of Stock then
                        outstanding or (ii) the proportionate voting power
                        represented by the Voting Securities beneficially owned
                        by any Person to 20% or more of the Combined Voting
                        Power of all then outstanding Voting Securities; or

                  (ii)  an acquisition of securities directly from the Company
                        except that this subsection (ii) shall not apply to:

                        (A)   any conversion of a security that was not acquired
                              directly from the Company; or

                        (B)   any acquisition of securities if the Incumbent
                              Directors at the time of the initial approval of
                              such acquisition would not immediately after (or
                              otherwise as a result of) such acquisition
                              constitute a majority of the Board;

                              provided, however, that if any Person referred to
                              in subsections (i) or (ii) of this clause (2)
                              shall thereafter become the beneficial owner of
                              any additional shares of Stock or other Voting
                              Securities of the Company (other than pursuant to
                              a stock split, stock dividend or similar
                              transaction or an acquisition exempt under such
                              subsection (ii), then a Change in Control shall be
                              deemed to have occurred for purposes of this
                              clause (2).


                                       6
<PAGE>   7
                        For purposes of this Agreement:

                        (A)   "Person" shall mean any individual, entity
                              (including, without limitation, any corporation,
                              partnership, trust, joint venture, association or
                              governmental body and any successor to any such
                              entity) or group (as defined in Sections 13(d)(3)
                              or 14(d)(2) of the Exchange Act and the rules and
                              regulations thereunder); provided, however, that
                              Person shall not include LJA, the Employee, the
                              Company, any of its majority-owned subsidiaries,
                              any executive benefit plan of the Company or any
                              of its majority-owned subsidiaries or any entity
                              organized, appointed or established by either LJA
                              or the Employee, the Company or any of its
                              majority-owned subsidiaries for or pursuant to the
                              terms of any such plan, or any of their
                              affiliates;

                        (B)   "Voting Securities" shall mean all securities of a
                              corporation having the right under ordinary
                              circumstances to vote in an election of the board
                              of directors of such corporation; and

                        (C)   "Combined Voting Power" shall mean the aggregate
                              votes entitled to be cast generally in the
                              election of directors of a corporation by holders
                              of then outstanding Voting Securities of such
                              corporation.

      7.    No Mitigation: No Offset. In no event shall either LJA and Employee
shall be obligated to seek other employment by way of mitigation of the amounts
payable to LJA under any of the provisions of this Agreement. Any amounts that
may be earned by either LJA or Employee other than from the Company after the
Date of Termination shall not reduce the Company's obligation to make any
payments hereunder. The amounts payable by the Company 


                                       7
<PAGE>   8
hereunder shall not be subject to any right of set-off that the Company may
assert against either LJA or Employee.

      8.    Noncompetition.

            (a)   Scope. In the case of the termination of this Agreement,
including due to the expiration of the Term, neither LJA nor Employee shall, for
one year following the Date of Termination, (a) divert to any competitor of the
Company in the business conducted by the Company (the "Designated Industry") any
active project of the Company; or (b) solicit or encourage any officer, employee
or consultant of the Company to leave their employ for employment by or with any
competitor of the Company in the Designated Industry. If at any time the
provisions of this Section 8 shall be determined to be invalid or unenforceable,
by reason of being vague or unreasonable as to area, duration or scope of
activity, this Section 8 shall be considered divisible and shall become and be
immediately amended to apply only to such area, duration and scope of activity
as shall be determined to be reasonable and enforceable by the court or other
body having jurisdiction over the matter; and both LJA and Employee agree that
this Section 8 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. Nothing in this Section 8
shall prevent or restrict either LJA or Employee from engaging in any business
or industry in the Designated Industry in any capacity.

            (b)   Irreparable Harm. LJA and Employee agree that the remedy at
law for any breach of this Section 8 shall be inadequate and that the Company
shall be entitled to injunctive relief.

            (c)   Covenant Regarding Confidentiality. All information about the
business and affairs of the Company which is not generally available to the
public or disclosed by the Company, and any information about the Company which
becomes generally available to the public as a result of a breach by any person
of any confidentiality obligation to the Company (including, without limitation,
its secrets and information about its business, financial condition and
performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Confidential Information, and that improper use or revelation of same by
Executive, whether during or after the termination of his employment by the
Company, could cause serious injury to the business of the Company. Accordingly,
Executive agrees that, except as required to perform his duties under this
Agreement, or as required by law, rule, regulation or pre-existing contract, he
will forever keep secret and inviolate, and will not at any time, reveal,
divulge or make known, any Confidential Information, whether or not such
Confidential Information was developed, devised or otherwise created in whole or
in party by the efforts of Executive. Executive further agrees that he will not
use any Confidential Information for his own benefit or directly or indirectly
for the benefit or any person or organization other than the Company or its
affiliates.


                                       8
<PAGE>   9
      9.    Indemnification. The Company shall indemnify and hold harmless LJA,
its officers, directors and shareholders, as well as, Employee his heirs and
personal representatives to the fullest extent permitted by applicable law, as
now or hereafter in effect, with respect to any acts, omissions or events that
occurred while either LJA or Employee was engaged to render services to the
Company or serves or served the Company or any other corporation or other
enterprise of any kind in any capacity at the request of the Company (an
"Enterprise"). Without limiting the generality of the foregoing, the Company
shall promptly pay, or reimburse LJA for, or advance to LJA amounts for the
payment of (a) all of the LJA's reasonable expenses, including attorneys' fees
and court costs, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, including any suit seeking recovery under any
Company director's and officer's liability policy, or in connection with any
appeal thereof, to which the either LJA or Employee may be a party by reason of
any action taken or failure to act under or in connection with his service for
the Company or an Enterprise; and (b) all amounts required to be paid in
settlement of or in satisfaction of a judgment in connection with any such
action, suit or proceeding; provided, however, that the Company shall not be
required to indemnify or hold harmless LJA, its officers directors or
shareholders, as well as, the Employee, his heirs or personal representatives in
any manner whatsoever in the event and to the extent there is a final and
nonappealable judgment by a court of competent jurisdiction that the liability
incurred by either LJA or Employee resulted from either of their gross
negligence, fraud or willful malfeasance.

      10.   Arbitration. If a dispute arises between the parties respecting the
terms of this Agreement or LJA's engagement with the Company, including, without
limitation, any dispute with respect to the validity of this Agreement or this
arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two parties
shall choose a third arbitrator who shall act as chairman and shall be an
attorney and a member of the panel of the American Arbitration Association. Each
party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of arbitration shall be Los Angeles,
California. Notwithstanding anything to the contrary contained herein, no
discovery shall be permitted in the arbitration proceeding.

      11.   Successors.

            (a)   This services provided to the Company pursuant to this
Agreement are personal to the Employee and, without the prior written consent of
the Company, shall not be assignable by either LJA or Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the LJA's shareholder or their legal
representatives.


                                       9
<PAGE>   10
            (b)   This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to LJA, expressly to assume and agree to perform this Agreement.

      12.   Miscellaneous.

            (a)   Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding (if any) required under federal, state or
local law and any additional withholding to which LJA has agreed.

            (b)   Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.

            (c)   Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

            (d)   Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered or
mailed to the other party by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

            If to LJA:

                  767 Third Avenue
                  15th Floor
                  New York, NY 10017


                                       10
<PAGE>   11
            If to the Company:

                  The Producers Entertainment Group Ltd.
                  5757 Wilshire Boulevard, Penthouse 1
                  Los Angeles, CA  90036

or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.

            (e)   Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            (f)   Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.

            (g)   Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as between
the parties unless it is in writing and signed by the party against whom
enforcement is sought. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement other than the Stock Purchase Agreement are superseded by this
Agreement.

            (h)   Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

            (i)   Captions and References. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. References
in this Agreement to a section number are references to sections of the
Agreement unless otherwise specified.

            (j)   Consent to Jurisdiction. Each of the parties to this Agreement
hereby submits to the exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States of America located in
such state solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation and enforcement
of this Agreement, that it is not subject thereto; that such action, suit or
proceeding may not be brought or is not maintainable in said courts; that this
Agreement may not be enforced in or by said courts; that its property is exempt
or immune from execution; that the suit, action or proceeding is brought in an
inconvenient forum; or that the venue of the suit, action or proceeding is


                                       11
<PAGE>   12
improper. Each of the parties agrees that service of process in any such action,
suit or proceeding shall be deemed in every respect effective service of process
upon it if given in the manner set forth in Section 13d).


      IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.

THE PRODUCERS ENTERTAINMENT GROUP LTD.


By: _________________________________

Its: ________________________________


LAWRENCE JACOBSON ASSOCIATES, INC.

By:__________________________________

Its:_________________________________


                                       12
<PAGE>   13
                           PERSONAL INDUCEMENT LETTER


      In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October ____, 1997 with
LAWRENCE JACOBSON ASSOCIATES, INC., ("Lender") for the services of Lawrence
Jacobson, and in consideration of the execution and delivery thereof by Company,
I hereby represent and warrant as follows:

      1.    I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.

      2.    I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.

      3.    I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.

      4.    I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against Lender.

      5.    All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.

      6.    I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree that I will look
solely to Lender for any and all compensation that I may become entitled to
receive for services rendered in connection with the Agreement.

                                       --------------------------
                                       LAWRENCE JACOBSON


                                       13

<PAGE>   1
                              PRODUCTION AGREEMENT

      THIS AGREEMENT by and among THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Company"), a Delaware corporation, and S.A.G. PRODUCTIONS, INC. ("SAG") F/S/O
SALVATORE GROSSO ("EMPLOYEE") dated as of the _____ day of October, 1997.


                               W I T N E S S E T H

      WHEREAS, the Company wishes to engage SAG for the services of employee for
the period provided in this Agreement, and SAG is willing to provide the
services of the Employee to the Company on the terms and subject to the
conditions set forth herein;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:

      1.    Engagement. The Company hereby agrees to engage SAG, and the SAG
hereby agrees to render the Employee's services with the Company, on the terms
and subject to the conditions set forth herein. SAG acknowledges that it is of
the essence of this Agreement that SAG provide the services of Employee.

      2.    Term of Engagement. The term of the SAG's engagement under this
Agreement (the "Term") shall commence as of October 20, 1997, and shall end on
October 31, 2002, unless terminated earlier in accordance with Section 5.

      3.    Duties and Responsibilities.

            (a)   Responsibilities. Company hereby engages SAG to provide the
exclusive and full time services of Employee as producer and/or executive
producer to develop and produce motion picture and television programs and sell
such programs to financiers, distributors, television networks, syndicators,
cable systems, motion picture studios and other buyers or licensees of such
product throughout the world. Pursuant to the terms and conditions hereof, SAG
hereby accepts such engagement. SAG shall cause Employee to render all services
usually and customarily rendered by and required of executives similarly
employed in the entertainment industry and such other services as may reasonably
required by the Company.


                                       1
<PAGE>   2
            (b)   Place of Performance. During the Term, however, except for any
period where Employee is in production on a project, SAG's office shall be
located at the principal executive offices of the Company, which shall be in the
New York and Los Angeles metropolitan area, except for required business travel
consistent with the Employee's position.

            (c)   Business Time. During the Term, SAG agrees to require Employee
to devote his full business time during normal business hours to the business
and affairs of the Company and to use his best efforts to perform faithfully,
diligently and competently the responsibilities assigned to him hereunder, to
the extent necessary to discharge such responsibilities, except for (i) time
spent serving on corporate, civic or charitable boards or committees only if and
to the extent not substantially interfering with the performance of such
responsibilities, (ii) periods of vacation, disability and sick leave to which
he is entitled, and (iii) reasonable activities having a charitable, educational
or other public interest purpose.

      4.    Compensation.

            (a)   Annual Guarantee. During the Term, SAG shall receive a minimum
annual guarantee ("Annual Guarantee") equal to $450,000, payable in accordance
with the customary payroll procedures as in effect from time to time for senior
executives of the Company.

            (b)   Expenses. During the Term, SAG shall be entitled to receive
prompt reimbursement for all reasonable and required business-related expenses
incurred by SAG or Employee in accordance with the policies and procedures of
the Company as applicable to its senior executives.

            (c)   Housing & Automobile Reimbursement. During the Term, SAG shall
be entitled to receive a monthly automobile and housing reimbursement in the
total amount of $2,000, payable monthly on the first day of each month and
pro-rated for the month of October , 1997.

            (d)   Bonus. Provided that neither SAG nor Employee are in material
breach of this Agreement, Company shall pay to SAG a bonus as follows:

                  (i) $25,000, on or before October 20, 1997;
                  (ii) $25,000, on or before December 31, 1997, and
                  (iii) $50,000, on or before July 1, 1998.

      5.    Termination.

            (a)   Death or Disability. SAG's engagement pursuant to this
Agreement shall terminate automatically upon the Employees's death. The Company
may terminate this


                                       2
<PAGE>   3
Agreement in the event of the Disability of Employee by giving to the SAG notice
of its intention in accordance with Section 5(e) unless Employee returns to the
performance of the essential functions of his employment within 30 days after
receipt of such notice. For purposes of this Agreement, "Disability" means any
physical or mental condition that renders the Employee unable to perform the
essential functions of his employment for 90 consecutive days or for a total of
180 days in any period of 360 consecutive days.

            (b)   Voluntary Termination After Change in Control. Notwithstanding
anything in this Agreement to the contrary, the SAG may voluntarily terminate
this Agreement at any time, after a Change in Control, (i) for any reason upon
six months' written notice to the Company, or (ii) if termination is for Good
Reason or on account of the Employee's serious illness, upon written notice
pursuant to Section 5(e) but without any notice period. In the event of any
termination pursuant to this Section 5(b), neither SAG nor Employee shall have
any further obligation to the Company under this Agreement, except as provided
in Section 9.

            (c)   Cause. The Company may terminate this Agreement for Cause. For
purposes of this Agreement, "Cause" means:

Employee's engaging in gross misconduct materially and demonstrably injurious to
the Company; material failure to perform the services required hereunder after
written notice and an opportunity to cure, if curable; or conviction by final
judgment of a felony constituting fraud, theft, embezzlement or homicide.

            (d)   Good Reason. SAG may terminate this Agreement for Good Reason.
For purposes of this Agreement, "Good Reason" means (i) a material reduction in
the nature or scope of the Employee's position, title, status, authority,
duties, powers or functions on the date of this Agreement; (ii) the assignment
to Employee of any material duties which are not commensurate with or at least
as prestigious as the Employee's duties and responsibilities as contemplated by
this Agreement; (iii) a material breach by the Company of any of the provisions
of this Agreement; or (iv) the failure by the Company to obtain an agreement,
reasonably satisfactory to SAG, from any successor to assume and agree to
perform this Agreement, as contemplated by Section 12(b). After a Change in
Control, in addition to items (i) through (iv), "Good Reason" shall include (v)
a determination by the Employee, in his sole discretion, during the 30-day
period commencing 180 days following a Change in Control, that due to the Change
in Control neither he nor SAG can any longer effectively perform their duties.

            (e)   Notice of Termination. Any termination by the Company for
Cause or Disability or by SAG for Good Reason shall be communicated by a written
notice (a "Notice of Termination") to the other party hereto given in accordance
with Section 13(d). A "Notice of Termination" shall set forth in reasonable
detail the events giving rise to such termination.

            (f)   Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) in the case of termination for Disability, 30
days after Notice of 


                                       3
<PAGE>   4
Termination is given (provided that the Employee shall not have returned to the
full-time performance of his duties during such 30-day period); (ii) in the case
of termination for Cause, a date specified in the Notice of Termination (which
shall not be less than 30 days nor more than 60 days from the date such Notice
of Termination is given); (iii) in the case of any other termination for which a
Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be; and
(iv) in all other cases, the actual date on which this Agreement terminates
during the Term.

      6.    Obligations of the Company Upon Termination.

            (a)   Death, Disability, Cause and Voluntary Termination. If at any
time before or after a Change in Control that this Agreement is terminated by
the Company during the Term by reason of the Employee's death, Disability or for
Cause, or is voluntarily terminated by SAG (other than for Good Reason), the
Company shall have no further obligation to either SAG or the Employee or the
Employee's legal representatives other than (i) those obligations earned for
Annual Guarantee and payments under any Company bonus plan that have accrued at
the Date of Termination (the "Accrued Obligations"), (ii) those obligations
expressly provided under any of the plans referred to in Section 4(e) (the
"Benefit Rights") and (iii) upon a termination of the Executive's employment by
reason of Employee's death, the payment provided in Section 6(a)(iii), if
applicable, shall be paid to SAG, in a lump sum in cash within 15 days of the
Date of Termination.

            (b)   Prior to Change in Control, Termination by the Company other
                  than for Cause or Disability and Termination by the SAG for
                  Good Reason.

                  (i)   Lump Sum Payments. If during the Term and prior to a
Change in Control, the Company terminates this Agreement other than for Cause or
Disability, or if SAG terminates this Agreement for Good Reason, the Company
shall provide the Benefit Rights and shall pay to SAG in a lump sum in cash
within 15 days of the Date of Termination the sum of the following amounts: (A)
the Accrued Obligations; plus (B) an amount equal to the product of (1)
one-twelfth times (2) the sum of the Annual Guarantee plus the average bonus (if
any) for the three years ended before the Date of Termination, times (3) the
number full or partial of months remaining in the unexpired term of the Term,
but in no event less than twelve months (such period being the "Severance
Period").

                  (ii)  Discharge of the Company's Obligations. The Company
shall have no further obligations to either SAG or the Employee in respect of
any termination described in this Section 6(b).

            (c)   Following Change in Control, Termination by the Company other
                  than for Cause or Disability and 


                                       4
<PAGE>   5
                  Termination by SAG for Good Reason.

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

                  (i)   Lump Sum Payments. If during the Term and following a
Change in Control, the Company terminates this Agreement other than for Cause or
Disability, or SAG terminates this Agreement for Good Reason, the Company shall
provide the Benefits Rights and shall pay to SAG in a lump sum in cash within 15
days of the Date of Termination the sum of the following amounts: (a) the
Accrued Obligations; and (B) an amount equal to 2.99 times the sum of the
amounts described in clause (2) of Section 6(b)(i)(B).

                  (ii)  Discharge of the Company's Obligations. The Company
shall have no further obligations to either SAG or the Employee in respect of
any termination described in this Section 6(c).

            (d)   Change in Control. A Change in Control shall be deemed to have
occurred:

            (1)   the shareholders of the Company shall approve (i) any merger,
                  consolidation or recapitalization of the Company (or, if the
                  capital stock of the Company is affected, any subsidiary of
                  the Company) or any sale, lease, or other transfer (in one
                  transaction or a series of transactions contemplated or
                  arranged by any party as a single plan) of all or
                  substantially all of the assets of the Company (each of the
                  foregoing being an "Acquisition Transaction") where (x) the
                  shareholders of the Company immediately prior to such
                  Acquisition Transaction would not immediately after such
                  Acquisition Transaction beneficially own, directly or
                  indirectly, shares representing in the aggregate more than 65%
                  of (A) the then outstanding common stock of the corporation
                  surviving or resulting from such merger, consolidation or
                  recapitalization or acquiring such assets of the Company, as
                  the case may be (the "Surviving Corporation") (or of its
                  ultimate parent corporation, if any) and (B) the Combined
                  Voting Power (as defined below) of the then outstanding Voting
                  Securities (as defined below) of the Surviving Corporation (or
                  of its ultimate parent corporation, if any) or (y) the
                  Incumbent Directors at the time of the initial approval of
                  such Acquisition Transaction would not immediately after such
                  Acquisition Transaction constitute a majority of the Board of
                  Directors of the Surviving Corporation (or of its ultimate
                  parent corporation, if any) or (ii) any plan or proposal for
                  the liquidation or dissolution of the Company; or

            (2)   any Person (as defined below) shall become the beneficial
                  owner (as defined in Rule 13d-3 and 13-d-5 under the Exchange
                  Act), 


                                       5
<PAGE>   6
                  directly or indirectly, of securities of the Company
                  representing in the aggregate 20% or more of either (i) the
                  then outstanding shares of Stock, or (ii) the Combined Voting
                  Power of all then outstanding Voting Securities of the
                  Company; provided; however that notwithstanding the foregoing,
                  a Change in Control of the Company shall not be deemed to have
                  occurred for purposes of this subsection (2) solely as the
                  result of:


                  (i)   an acquisition of securities by the Company which, by
                        reducing the number of shares of Stock or other Voting
                        Securities outstanding, increases (i) the proportionate
                        number of shares of Stock beneficially owned by any
                        Person to 20% or more of the shares of Stock then
                        outstanding or (ii) the proportionate voting power
                        represented by the Voting Securities beneficially owned
                        by any Person to 20% or more of the Combined Voting
                        Power of all then outstanding Voting Securities; or

                  (ii)  an acquisition of securities directly from the Company
                        except that this subsection (ii) shall not apply to:

                        (A)   any conversion of a security that was not acquired
                              directly from the Company; or

                        (B)   any acquisition of securities if the Incumbent
                              Directors at the time of the initial approval of
                              such acquisition would not immediately after (or
                              otherwise as a result of) such acquisition
                              constitute a majority of the Board;

                        provided, however, that if any Person referred to in
                        subsections (i) or (ii) of this clause (2) shall
                        thereafter become the beneficial owner of any additional
                        shares of Stock or other Voting Securities of the
                        Company (other than pursuant to a stock split, stock
                        dividend or similar transaction or an acquisition exempt
                        under such subsection (ii), then 


                                       6
<PAGE>   7
                        a Change in Control shall be deemed to have occurred for
                        purposes of this clause (2).

                        For purposes of this Agreement:

                        (A)   "Person" shall mean any individual, entity
                              (including, without limitation, any corporation,
                              partnership, trust, joint venture, association or
                              governmental body and any successor to any such
                              entity) or group (as defined in Sections 13(d)(3)
                              or 14(d)(2) of the Exchange Act and the rules and
                              regulations thereunder); provided, however, that
                              Person shall not include SAG, the Employee, the
                              Company, any of its majority-owned subsidiaries,
                              any executive benefit plan of the Company or any
                              of its majority-owned subsidiaries or any entity
                              organized, appointed or established by either SAG
                              or the Employee, the Company or any of its
                              majority-owned subsidiaries for or pursuant to the
                              terms of any such plan, or any of their
                              affiliates;

                        (B)   "Voting Securities" shall mean all securities of a
                              corporation having the right under ordinary
                              circumstances to vote in an election of the board
                              of directors of such corporation; and


                        (C)   "Combined Voting Power" shall mean the aggregate
                              votes entitled to be cast generally in the
                              election of directors of a corporation by holders
                              of then outstanding Voting Securities of such
                              corporation.


                                       7
<PAGE>   8
      7.    No Mitigation: No Offset. In no event shall either SAG and Employee
shall be obligated to seek other employment by way of mitigation of the amounts
payable to SAG under any of the provisions of this Agreement. Any amounts that
may be earned by either SAG or Employee other than from the Company after the
Date of Termination shall not reduce the Company's obligation to make any
payments hereunder. The amounts payable by the Company hereunder shall not be
subject to any right of set-off that the Company may assert against either SAG
or Employee.

      8.    Noncompetition.

            (a)   Scope. In the case of the termination of this Agreement,
including due to the expiration of the Term, neither SAG nor Employee shall, for
one year following the Date of Termination, (a) divert to any competitor of the
Company in the business conducted by the Company (the "Designated Industry") any
active project of the Company; or (b) solicit or encourage any officer, employee
or consultant of the Company to leave their employ for employment by or with any
competitor of the Company in the Designated Industry. If at any time the
provisions of this Section 8 shall be determined to be invalid or unenforceable,
by reason of being vague or unreasonable as to area, duration or scope of
activity, this Section 8 shall be considered divisible and shall become and be
immediately amended to apply only to such area, duration and scope of activity
as shall be determined to be reasonable and enforceable by the court or other
body having jurisdiction over the matter; and both SAG and Employee agree that
this Section 8 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. Nothing in this Section 8
shall prevent or restrict either SAG or Employee from engaging in any business
or industry in the Designated Industry in any capacity.

            (b)   Irreparable Harm. SAG and Employee agree that the remedy at
law for any breach of this Section 8 shall be inadequate and that the Company
shall be entitled to injunctive relief.

            (c)   Covenant Regarding Confidentiality. All information about the
business and affairs of the Company which is not generally available to the
public or disclosed by the Company, and any information about the Company which
becomes generally available to the public as a result of a breach by any person
of any confidentiality obligation to the Company (including, without limitation,
its secrets and information about its business, financial condition and
performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Confidential Information, and that improper use or revelation of same by
Executive, whether during or after the termination of his employment by the
Company, could cause serious injury to the business of the Company. Accordingly,
Executive agrees that, except as required to perform his duties under this
Agreement, or as required by law, rule, regulation or pre-existing contract, he
will forever keep secret and inviolate, and will not at 


                                       8
<PAGE>   9
any time, reveal, divulge or make known, any Confidential Information, whether
or not such Confidential Information was developed, devised or otherwise created
in whole or in party by the efforts of Executive. Executive further agrees that
he will not use any Confidential Information for his own benefit or directly or
indirectly for the benefit or any person or organization other than the Company
or its affiliates.

      9.    Indemnification. The Company shall indemnify and hold harmless SAG,
its officers, directors and shareholders, as well as, Employee his heirs and
personal representatives to the fullest extent permitted by applicable law, as
now or hereafter in effect, with respect to any acts, omissions or events that
occurred while either SAG or Employee was engaged to render services to the
Company or serves or served the Company or any other corporation or other
enterprise of any kind in any capacity at the request of the Company (an
"Enterprise"). Without limiting the generality of the foregoing, the Company
shall promptly pay, or reimburse SAG for, or advance to SAG amounts for the
payment of (a) all of the SAG's reasonable expenses, including attorneys' fees
and court costs, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, including any suit seeking recovery under any
Company director's and officer's liability policy, or in connection with any
appeal thereof, to which the either SAG or Employee may be a party by reason of
any action taken or failure to act under or in connection with his service for
the Company or an Enterprise; and (b) all amounts required to be paid in
settlement of or in satisfaction of a judgment in connection with any such
action, suit or proceeding; provided, however, that the Company shall not be
required to indemnify or hold harmless SAG, its officers directors or
shareholders, as well as, the Employee, his heirs or personal representatives in
any manner whatsoever in the event and to the extent there is a final and
nonappealable judgment by a court of competent jurisdiction that the liability
incurred by either SAG or Employee resulted from either of their gross
negligence, fraud or willful malfeasance.

      10.   Arbitration. If a dispute arises between the parties respecting the
terms of this Agreement or SAG's engagement with the Company, including, without
limitation, any dispute with respect to the validity of this Agreement or this
arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two parties
shall choose a third arbitrator who shall act as chairman and shall be an
attorney and a member of the panel of the American Arbitration Association. Each
party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of arbitration shall be Los Angeles,
California. Notwithstanding anything to the contrary contained herein, no
discovery shall be permitted in the arbitration proceeding.

      11.   Successors.


                                       9
<PAGE>   10
            (a)   This services provided to the Company pursuant to this
Agreement are personal to the Employee and, without the prior written consent of
the Company, shall not be assignable by either SAG or Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the SAG's shareholder or their legal
representatives.

            (b)   This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to SAG, expressly to assume and agree to perform this Agreement.

      12.   Miscellaneous.

            (a)   Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which SAG has agreed.

            (b)   Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.

            (c)   Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

            (d)   Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered or
mailed to the other party by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

            If to SAG:

                  767 Third Avenue
                  15th Floor
                  New York, NY 10017

            If to the Company:

                  The Producers Entertainment Group Ltd.
                  5757 Wilshire Boulevard, Penthouse 1
                  Los Angeles, CA  90036


                                       10
<PAGE>   11
or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.

            (e)   Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            (f)   Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.

            (g)   Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as between
the parties unless it is in writing and signed by the party against whom
enforcement is sought. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement other than the Stock Purchase Agreement are superseded by this
Agreement.

            (h)   Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

            (i)   Captions and References. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. References
in this Agreement to a section number are references to sections of the
Agreement unless otherwise specified.

            (j)   Consent to Jurisdiction. Each of the parties to this Agreement
hereby submits to the exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States of America located in
such state solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation and enforcement
of this Agreement, that it is not subject thereto; that such action, suit or
proceeding may not be brought or is not maintainable in said courts; that this
Agreement may not be enforced in or by said courts; that its property is exempt
or immune from execution; that the suit, action or proceeding is brought in an
inconvenient forum; or that the venue of the suit, action or proceeding is
improper. Each of the parties agrees that service of process in any such action,
suit or proceeding shall be deemed in every respect effective service of process
upon it if given in the manner set forth in Section 13d).

      IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.


                                       11
<PAGE>   12
THE PRODUCERS ENTERTAINMENT GROUP LTD.


By: _________________________________

Its: ________________________________


S.A.G. PRODUCTIONS, INC.

By:__________________________________

Its:_________________________________


                                       12
<PAGE>   13
                           PERSONAL INDUCEMENT LETTER


      In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October ____, 1997 with
S.A.G. PRODUCTIONS, INC., ("Lender") for the services of Salvatore Grosso, and
in consideration of the execution and delivery thereof by Company, I hereby
represent and warrant as follows:

      1.    I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.

      2.    I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.

      3.    I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.

      4.    I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against Lender.

      5.    All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.

      6.    I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree that I will look
solely to Lender for any and all compensation that I may become entitled to
receive for services rendered in connection with the Agreement.

                                       --------------------------
                                       SALVATORE GROSSO


                                       13

<PAGE>   1
                                                                   EXHIBIT 10.34


September 12, 1997

Mr. Irwin Meyer
Mountaingate Productions LLC
9150 Wilshire Blvd., Suite 205
Beverly Hills, CA 90212

                           Re: AMENDMENT TO AGREEMENT

Dear Mr. Meyer:

      Reference is hereby made to the certain agreement by and among THE
PRODUCERS ENTERTAINMENT GROUP LTD. (the "Company"), a Delaware corporation, and
MOUNTAINGATE PRODUCTIONS, LLC ("MOUNTAINGATE") F/S/O IRWIN MEYER ("EMPLOYEE")
and others, dated as of the 1st day of October, 1995 (the "Agreement").

      The parties hereby amend the Agreement to provide the following:

      The Term of this Agreement shall be and is extended through June 30, 2002.

      All other terms and conditions shall remain in full force and effect
unless and until modified in writing and signed by the parties.

      If the aforementioned is agreed and accepted, please acknowledge same by
executing as indicated below.


Sincerely,                                  ACCEPTED & AGREED:
THE PRODUCERS ENTERTAINMENT                 MOUNTAINGATE PRODS., LLC


<PAGE>   2
GROUP LTD.
                                                   BY:_____________________

                                                   ITS:____________________

- ----------------------------------------
By: Arthur H. Bernstein
Its: Senior Vice President

                           PERSONAL INDUCEMENT LETTER


      In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October 1, 1995, as
amended on September 12, 1997 with MOUNTAINGATE PRODUCTIONS LLC, ("Lender"), and
in consideration of the execution and delivery thereof by Company, I hereby
represent and warrant as follows:

      1.    I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.

      2.    I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.

      3.    I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.

      4.    I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against 


<PAGE>   3
Lender.

      5.    All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.

      6.    I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree that I will look
solely to Lender for any and all compensation that I may become entitled to
receive for services rendered in connection with the Agreement.


                                            --------------------------
                                            IRWIN MEYER


<PAGE>   4
                           PERSONAL INDUCEMENT LETTER


      In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October 1, 1995, as
amended on September 12, 1997 with MOUNTAINGATE PRODUCTIONS LLC, ("Lender"), and
in consideration of the execution and delivery thereof by Company, I hereby
represent and warrant as follows:

      1.    I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.

      2.    I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.

      3.    I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.

      4.    I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against Lender.

      5.    All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.

      6.    I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree 


<PAGE>   5
that I will look solely to Lender for any and all compensation that I may become
entitled to receive for services rendered in connection with the Agreement.


                                            --------------------------
                                            ALISON MEYER

<PAGE>   6
                           PERSONAL INDUCEMENT LETTER


      In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October 1, 1995, as
amended on September 12, 1997 with MOUNTAINGATE PRODUCTIONS LLC, ("Lender"), and
in consideration of the execution and delivery thereof by Company, I hereby
represent and warrant as follows:

      1.    I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.

      2.    I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.

      3.    I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.

      4.    I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against Lender.

      5.    All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.

      6.    I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree 


<PAGE>   7
that I will look solely to Lender for any and all compensation that I may become
entitled to receive for services rendered in connection with the Agreement.


                                            --------------------------
                                            PATRICIA MEYER

<PAGE>   1
                                                                   EXHIBIT 10.35


                          STOCKHOLDERS VOTING AGREEMENT

      THIS STOCKHOLDERS VOTING AGREEMENT (the "Agreement"), dated as of October
20, 1997, is made by and among IRWIN MEYER and his respective AFFILIATES
including MOUNTAINGATE PRODUCTIONS, LLC (collectively referred to herein as
"Meyer"), ARTHUR BERNSTEIN and his respective AFFILIATES ("Bernstein") (Meyer
and Bernstein together are sometimes herein referred to as the "M&B Group"),
LAWRENCE S. JACOBSON and his respective AFFILIATES ("Jacobson") AND SALVATORE
GROSSO and his respective AFFILIATES ("Grosso") (Grosso and Jacobson together
are sometimes herein referred to as the "G&J Group" and all of the parties
hereto are referred to herein collectively as the "Stockholders");

                              W I T N E S S E T H :

      WHEREAS, Meyer and Bernstein are currently members of the Board of
Directors (the "Board") of The Producers Entertainment Group Ltd. (the
"Company");

      WHEREAS, Meyer and Bernstein either own shares of Common Stock, $.001 par
value, of the Company ("Shares") or own options or other rights to acquire
Shares of the Company;

      WHEREAS, Grosso and Jacobson and the Company are each parties to
Agreements and Plans of Merger, dated as of September 15, 1997 among the
Company, Grosso, Jacobson and the constituent corporations named therein (the
"Merger Agreements") which set forth the terms of merger among the parties (the
"Merger Transactions");

      WHEREAS, the consideration to be paid to Grosso and Jacobson pursuant to
the Merger Agreements consists of the issuance by the Company of a minimum of
5,714,285 Shares and a maximum of 6,666,666 Shares (the "Merger Shares");

      WHEREAS, pursuant to the Merger Transactions, Grosso and Jacobson will
become executive employees of the Company and/or of certain of its subsidiaries
(the Company and all such subsidiaries being hereinafter referred to
collectively as the "Company") and will have the right to designate members of
the Board of Directors of the Company (the "Board"), which designees may include
Grosso and/or Jacobson;

      WHEREAS, Grosso and Jacobson and the Company are each parties to a
Confidentiality and Standstill Agreement, dated as of October 20, 1997 (the
"Confidentiality Agreement"), which, among other matters, sets forth conditions
and restrictions relating to the designation of members of the Board after the
executive employment of Grosso and/or Jacobson by the Company is terminated; and

      WHEREAS, the Stockholders desire to enter into this Agreement for the
purposes of assuring continuity in the composition of the management members of
the Board and in


                                       1
<PAGE>   2
establishing Board practices in the best interests of the Company and the
holders of the Company's capital stock.

      NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:

      1.    Board of Directors

            (a)   Subject to the provisions of the Confidentiality Agreement,
from and after the Effective Time (as defined in the Merger Agreements) and
until the provisions of this paragraph 1 cease to be effective, the Stockholders
shall vote all of their Shares which are voting shares and any other voting
securities of the Company over which such Stockholder has voting control and
shall take all other reasonably necessary or desirable actions within his
control (whether in his capacity as a stockholder, director, member of a board
committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), so
that:

                  (i)   subject to the provisions of paragraph (b), below, the
      following individuals shall be elected to the Board:

                        (A)   the three representatives who may be designated by
            the M&B Group (the "M&B Directors");

                        (B)   the three representatives who may be designated by
            the G&J Group (the "G&J Directors"); and

                        (C)   the one representative jointly designated by the
            M&B Group and the G&J Group (the "Independent Director").

                  (ii)  the removal from the Board (with or without cause) of
      any representative designated hereunder by the M&B Group (pursuant to
      subparagraph (i)(A) above), the G&J Group (pursuant to subparagraph (i)(B)
      above) or by the Stockholders jointly (pursuant to subparagraph (i)(C)
      above) shall be at the written request of the M&B Group, the G&J Group or
      the M&B Group and the G&J Group jointly, as the case may be, but only upon
      such written request and under no other circumstances; and

                  (iii) subject to paragraph (b) below, in the event that any
      representative designated hereunder by the M&B Group (pursuant to
      subparagraph (i)(A)), the G&J Group (pursuant to subparagraph (i)(B)) or
      the Stockholders jointly (pursuant to subparagraph (i)(C) ceases, by
      resignation or otherwise, to serve as a member of the Board during his
      term of office, the resulting vacancy on the Board shall be filled by a


                                       2
<PAGE>   3
      representative designated by the M&B Group, the G&J Group or the M&B Group
      and the G&J Group jointly, as the case may be, as provided herein.

            (b)   If any vacancy in a directorship shall exist (other than a
vacancy in a directorship to be filled by an Independent Director (which shall
be filled only pursuant to subparagraph (i)(C)) and if a representative is not
designated by either the M&B Group or the G&J Group, as the case may be, to fill
such directorship pursuant to the terms of this Section 1 within 30 days after
such vacancy shall exist, the election of an individual to such directorship
shall be accomplished in accordance with the Bylaws and applicable law. In the
event that either the M&B Group or the G&J Group has the right to fill a
directorship under this Section 1 but fails to do so and such directorship is
filled in accordance with the Bylaws and applicable law, if either such Group
has the right thereafter to fill a vacancy hereunder, such Group shall have the
right to remove the person who has filled such directorship and replace him or
her with a person chosen by such Group.

      2.    Termination of Obligations upon Disposition The duties and
obligations to be performed hereunder by any Stockholder shall terminate with
respect to any Shares sold or otherwise disposed of by such Stockholder upon the
sale or other disposition of such Shares unless such sale or other disposition
is made to one or more Affiliates (as hereinafter defined) of such Stockholder,
in which case any such Affiliate shall be obligated hereunder with the same
force and effect as if any such Affiliate were a signatory to this Agreement.

      3.    Irrevocable Proxy. In order to secure the obligation of each
Stockholder hereto to vote his Shares and other voting securities of the Company
in accordance with the provisions of Section 1 hereof, (i) the M&B Group hereby
appoints the G&J Group as their true and lawful proxies and attorneys-in-fact,
with full power of substitution, to vote all of their Shares and other voting
securities of the Company for the election and/or removal of directors and all
such other matters as expressly provided for in Section 1 and (ii) the G&J Group
hereby appoints the M&B Group as their true and lawful proxies and
attorneys-in-fact, with full power of substitution, to vote all of their Shares
and other voting securities of the Company for the election and/or removal of
directors and all such other matters as expressly provided for in Section 1. The
M&B Group and/or the G&J Group may exercise the irrevocable proxy granted to it
hereunder, in the form annexed hereto as Exhibit "A", at any time any
Stockholder fails to comply with the provisions of this Agreement. The proxies
and powers granted by each Stockholder pursuant to this Section 3 are given to
secure the performance of each Stockholder's obligations under this Agreement.
Such proxies and powers shall be irrevocable for the term of this Agreement, and
shall survive the death, incompetency, disability, bankruptcy or dissolution of
such Stockholder or his or its affiliates.

      4.    Representations and Warranties. Each Stockholder represents and
warrants that (i) such Stockholder and/or his Affiliates (for purposes of this
Agreement, Affiliate shall have the meaning set forth in Rule 144(a)(1) of the
Securities Act of 1933, as amended) is/are the record owner of the number of
Shares (or options to purchase Shares) set forth opposite his name on the
Schedule of Stockholders attached hereto, (ii) this Agreement has been duly
authorized, executed 


                                       3
<PAGE>   4
and delivered by such Stockholder and constitutes the valid and binding
obligation of such Stockholder, enforceable in accordance with its terms, and
(iii) such Stockholder has not granted and is not a party to any proxy, voting
trust or other agreement which is inconsistent with, conflicts with or violates
any provision of this Agreement. During the term hereof, no Stockholder shall
grant any proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.

      5.    Termination of Restrictions and Covenants. The restrictions set
forth in this Agreement shall continue with respect to each Stockholder until
the earlier of (i) five years from the Effective Date of the Merger Agreements,
(ii) such date as Grosso and/or Jacobson cease to hold any Shares of Common
Stock of the Company and (iii) such date as Meyer and/or Bernstein cease to hold
any Shares or options or other rights to purchase Shares of Common Stock of the
Company.

      6.    Legend. Each certificate evidencing Shares of the Stockholders shall
be stamped or otherwise imprinted with a legend in substantially the following
form:

            "The securities represented by this certificate are subject to a
            Stockholders Voting Agreement dated as of October 20, 1997, among
            certain of the Company's stockholders, as amended and modified from
            time to time. A copy of such Stockholders Agreement shall be
            furnished without charge by the Company to the holder hereof upon
            written request."

      7.    Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Stockholders unless such modification, amendment or waiver
is approved in writing by all of the Stockholders. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.

      8.    Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

      9.    Entire Agreement. Subject to the provisions of the Confidentiality
Agreement, this Agreement embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, 


                                       4
<PAGE>   5
agreements or representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.

      10.   Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Stockholders and any of their respective successors and assigns, so long as they
hold Shares of the Stockholders.

      11.   Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

      12.   Remedies. The Stockholders shall be entitled to enforce their
respective rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that the Stockholders may in their sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security and without the necessity of proving actual damage) in order to enforce
or prevent any violation of the provisions of this Agreement. Should any court
determine that any of the separate covenants of this Agreement shall be
unenforceable then such covenant shall be deemed eliminated for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants to be enforced. If any other provision of this Agreement shall be
deemed by an appropriate court to be unenforceable for any reason, then such
court shall be empowered to substitute, to the extent enforceable, provisions
similar thereto or other provisions so as to provide the non-breaching
Stockholders, to the fullest extent permitted by applicable law, the benefits
intended by this Agreement. The Stockholders jointly and severally acknowledge
that the covenants contained in this Section 12 are intended by the parties to
this Agreement to be in addition to and not in lieu of or in limitation of any
other agreement or covenant between the the Stockholders.

      13.   Notices. Any notice provided for in this agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to such address as indicated by the Stockholders, or at such address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party. Notices shall be deemed to have been
given hereunder when delivered personally, seven days after deposit in the U.S.
mail and one day after deposit with a reputable overnight courier service.

      14.   Governing Law. The general corporate law of the State of Delaware,
as hereafter amended, and all decisions of the Delaware Courts thereunder or
with respect thereto shall govern all issues and questions concerning the
relationships among the Company, its Board of Directors, and its stockholders
provided for in this Agreement. All other issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement and
the exhibits and schedules hereto shall also be governed by, and construed in
accordance with, the 


                                       5
<PAGE>   6
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. In furtherance of the foregoing,
the internal law of the State of Delaware shall control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even
though under that jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.

      15.   Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief-executive office is located, the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday.

      16.   Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.


                                       6
<PAGE>   7
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.





                                       ------------------------------
                                       IRWIN MEYER




                                       ------------------------------
                                       ARTHUR BERNSTEIN




                                       ------------------------------
                                       LAWRENCE S. JACOBSON




                                       ------------------------------
                                       SALVATORE GROSSO



                                       MOUNTAINGATE PRODUCTIONS, LLC




                                       By:____________________________
                                          Its:


                                       7
<PAGE>   8
                                                                       EXHIBIT A


                     THE PRODUCERS ENTERTAINMENT GROUP LTD.
                                IRREVOCABLE PROXY


      The undersigned hereby confers upon, and hereby grants to and in favor of,
Salvatore Grosso and Lawrence S. Jacobson, and each of them with full power of
substitution, an irrevocable proxy pursuant to the provisions of Section 212 of
the Delaware General Corporation Law to vote, or to execute and deliver written
consents or otherwise act with respect to, all shares of every class of capital
stock (the "Stock") of THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Corporation") now owned or hereafter acquired by the undersigned as fully, to
the same extent and with the same effect as the undersigned might or could do
under any applicable laws or regulations governing the rights and powers of
stockholders of a Delaware corporation in connection with any and all matters
submitted for approval, authorization, ratification or consent by the
stockholders of the Corporation, including without limitation the voting of all
such shares of Stock that are the subject of this Irrevocable Proxy in
accordance with the Stockholders Voting Agreement dated as of the date hereof
(the "Stockholders Agreement") by and among the undersigned and certain other
stockholders of the Corporation. The undersigned hereby affirms that this
Irrevocable Proxy is given as a condition of Salvatore Grosso and Lawrence S.
Jacobson, entering into the Stockholders Agreement and as such is coupled with
an interest and is irrevocable. It is further understood by the undersigned that
this Irrevocable Proxy may be exercised for the period beginning the date hereof
and ending on October 20, 2002.

      THIS PROXY SHALL REMAIN IN FULL FORCE AND EFFECT AND BE ENFORCEABLE
AGAINST ANY DONEE, TRANSFEREE OR ASSIGNEE OF THE STOCK.

Dated as of October 20, 1997.



                                       ---------------------------------
                                       IRWIN MEYER




                                       ---------------------------------
                                       ARTHUR BERNSTEIN
<PAGE>   9
                                                                       EXHIBIT A


                     THE PRODUCERS ENTERTAINMENT GROUP LTD.
                                IRREVOCABLE PROXY


      The undersigned hereby confers upon, and hereby grants to and in favor of,
Irwin Meyer and Arthur Bernstein, and each of them with full power of
substitution, an irrevocable proxy pursuant to the provisions of Section 212 of
the Delaware General Corporation Law to vote, or to execute and deliver written
consents or otherwise act with respect to, all shares of every class of capital
stock (the "Stock") of THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Corporation") now owned or hereafter acquired by the undersigned as fully, to
the same extent and with the same effect as the undersigned might or could do
under any applicable laws or regulations governing the rights and powers of
stockholders of a Delaware corporation in connection with any and all matters
submitted for approval, authorization, ratification or consent by the
stockholders of the Corporation, including without limitation the voting of all
such shares of Stock that are the subject of this Irrevocable Proxy in
accordance with the Stockholders Voting Agreement dated as of the date hereof
(the "Stockholders Agreement") by and among the undersigned and certain other
stockholders of the Corporation. The undersigned hereby affirms that this
Irrevocable Proxy is given as a condition of Irwin Meyer and Arthur Bernstein,
entering into the Stockholders Agreement and as such is coupled with an interest
and is irrevocable. It is further understood by the undersigned that this
Irrevocable Proxy may be exercised for the period beginning the date hereof and
ending on October 20, 2002.

      THIS PROXY SHALL REMAIN IN FULL FORCE AND EFFECT AND BE ENFORCEABLE
AGAINST ANY DONEE, TRANSFEREE OR ASSIGNEE OF THE STOCK.

                                       Dated as of October 20, 1997.



                                       ---------------------------------
                                       SALVATORE GROSSO




                                       ---------------------------------
                                       LAWRENCE S. JACOBSON




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