1373224 Ontario Limited

by Chell Group Corp
September 29th, 1999


                             1373224 ONTARIO LIMITED

                                                     September 10, 1999

Canadian Imperial Bank of Commerce
Special Loans, Head Office
Risk Management Division
Commerce Court West
Toronto, Ontario

Attention: Gerry Soucie, General Manager

Dear Sirs:

1. Offer

1.1 Irrevocable Offer to Purchase Assets

            Upon and subject to the terms and conditions set forth herein,
1373224 Ontario Limited (the "Purchaser") hereby offers (hereinafter referred to
as the "Offer") to purchase from the Receiver (as hereinafter defined), all of
the right, title and interest of GalaVu Entertainment Inc. ("GalaVu") in and to
the undertaking and all of the property and assets of the Purchased Business (as
hereinafter defined) of every kind and description and wheresoever situated,
other than the Excluded Assets (the "Purchased Assets").

1.2 Bank Acting as Recipient of this Offer

This Offer is delivered to Canadian Imperial Bank of Commerce (the "Bank"), as
the primary secured creditor of GalaVu. This Offer shall be irrevocable for
acceptance by the Bank until the close of business (5:00 p.m.) on Friday,
September 10, 1999, and irrevocable for acceptance by the Receiver until the
Time of Closing (as hereinafter defined) after which, unless accepted in writing
by the Receiver, this offer shall be revoked and shall then be null and void.

1.3 Acceptance Adopts this Offer

            The valid acceptance by the Receiver of this offer shall constitute
an agreement between the Receiver and the Purchaser and the Bank shall have no
liabilities, obligations and duties hereunder save as may be specifically
provided herein.


                                      -2-


2. Interpretation

2.1 Definition

            In this Offer, unless the subject matter or context is inconsistent
therewith, the following terms shall have the following meanings:

            "Accepted Assets" has the meaning ascribed to that term in section
            4.9 hereof;

            "Accounts Receivable" means all debts, accounts and claims for
            monetary amounts which are, or are accruing, due or owing to GalaVu,
            on the Closing Date, excluding all cash of GalaVu on deposit with
            the Bank;

            "Agreement" means the agreement arising out of the acceptance of
            this Offer and all amendments made thereto by written agreement
            executed by each of the parties hereto;

            "BIA" means the Bankruptcy and Insolvency Act (Canada);

            "Business Day" means a day other than a Saturday, Sunday or
            statutory holiday in Ontario;

            "Claims" means all losses, damages, expenses, liabilities (whether
            accrued, actual, contingent, latent or otherwise), claims and
            demands of whatever nature and kind including, without limitation,
            all legal fees and costs on a solicitor and client basis;

            "Closing Date" means September 13, 1999 or such other date as may be
            agreed to in writing between the Vendor and the Purchaser;

            "Encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
            mortgage, title retention agreement, or security interest of any
            nature;

            "Exchange Act" shall mean the Securities and Exchange Act of 1934,
            as amended, or any similar Federal statute, and the rules and
            regulations of the SEC promulgated thereunder, all as the same shall
            be in effect at the time;

            "Excluded Assets" mean GalaVu's right, title or interest in or to
            the items described in Schedule "F" attached hereto or as otherwise
            excluded pursuant to the Offer or which may be designated as
            Excluded Assets by notice from the Purchaser to the Vendor within 45
            days after the Closing Date;

            "Inventory" means all inventories of GalaVu wheresoever situated
            including, without limiting the generality of the foregoing, all
            finished goods, work in progress and raw materials;

            "Occupancy and Indemnity Agreement" means the occupancy and
            indemnity agreement in substantially the form attached hereto as
            Schedule "G";


                                      -3-


            "Permitted Encumbrances" means the interest of the lessor in
            machinery, equipment and vehicles leased by GalaVu for use in the
            Purchased Business;

            "Purchased Assets" has the meaning set out in sections 1. 1 and 3.
            1;

            "Purchased Business" means the business currently carried on by
            GalaVu and which includes providing pay for view movies in motels
            and hotels and software and hardware development;

            "Receiver" means that person appointed by a Court of competent
            jurisdiction as the receiver or receiver and manager of the
            property, assets and undertaking of GalaVu, including an interim
            receiver appointed pursuant to Section 47 of the BIA, in its
            capacity as receiver or interim receiver and not in any personal
            capacity.

            "SEC" shall mean the Securities and Exchange Commission, or any
            other federal agency then administering the Securities Act;

            "Securities Act" shall mean the Securities Act of 1993, as amended,
            or any similar Federal statute, and the rules and regulations of the
            SEC promulgated thereunder, all as the same shall be in effect at
            the time;

            "Shares" means the common shares in the capital of Networks North
            Inc. ("Networks") to be delivered to the Vendor pursuant to section
            3.2(iii);

            "Time of Closing" means 2:00 p.m. (Toronto time) on the Closing
            Date, or such other time on the Closing Date as the Vendor and the
            Purchaser may mutually determine; and

            "Vendor" means the Receiver.

2.2 Headings

            The division of this Offer into articles and sections and the
insertion of headings are for convenience of reference only and will not affect
the construction or interpretation of this Offer or of the Agreement. The terms
"hereof", "hereunder" and similar expressions refer to this Offer and Agreement
and not to any particular article, section or other portion hereof and include
any agreement supplemental hereto unless something in the subject matter or
context is inconsistent therewith, references herein to articles and sections
are to articles and sections of this Offer and Agreement.

2.3 Number, Gender and Persons

            In this Agreement, words importing the singular number only shall
include the plural and vice versa, words importing gender shall include all
genders and words importing persons shall include individuals, corporations,
partnerships, associations, trusts, unincorporated organizations, governmental
bodies and other legal or business entities of any kind whatsoever.


                                      -4-


2.4 Entire Agreement

            This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.

2.5 Time of Essence

            Time shall be of the essence of this Agreement.

2.6 Applicable Law

            This Agreement shall be construed, interpreted and enforced in
accordance with, and the respective rights and obligations of the parties shall
be governed by, the laws of the Province of Ontario and the federal laws of
Canada applicable therein, and each party irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.

2.7 Successors and Assigns

            This Agreement shall enure to the benefit of and shall be binding on
and enforceable by the parties and, where the context so permits, their
respective successors and permitted assigns. Except as explicitly provided
herein, neither the Vendor nor the Purchaser may assign any of its rights or
obligations hereunder without the prior written consent of the other party.

2.8 Severability

            If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.

2.9 Amendments and Waivers

            No amendment or waiver of any provision of this Agreement shall be
binding on either party unless consented to in writing by such party. No waiver
of any provisions of this Agreement shall constitute a waiver of any other
provision of this Agreement nor shall any waiver constitute a continuing waiver
unless otherwise provided.

2.10 Currency

            Unless otherwise expressly stated herein, all references to dollar
amounts in this Agreement are to Canadian dollars.


                                      -5-


3. Purchase and Sale

3.1 Purchased Assets

            Without limiting the generality of the provisions of Section 1.1
hereof, the Purchased Assets include the right, title and interest of GalaVu and
the Receiver, if any, in and to the following:

      (a)   all leasehold improvements at all of GalaVu's premises to which
            GalaVu is entitled;

      (b)   all machinery and equipment and all vehicles, tools, spare parts,
            handling equipment, furniture, fixtures, furnishings, supplies and
            accessories relating to or used in the Purchased Business;

      (c)   all leases of machinery and equipment relating to or used in the
            Purchased Business in respect of which GalaVu is lessee;

      (d)   the Inventory;

      (e)   all prepaid expenses and security deposits, including any amounts
            paid or held by supplier(s) of cable television, but excluding all
            security deposits held by any of GalaVu's landlords;

      (f)   all new and unused production, shipping and packaging supplies
            relating to or used in the Purchased Business;

      (g)   all Accounts Receivable, including all coins and bills or other
            medium of exchange wherever located;

      (h)   all Accepted Assets to which GalaVu is a party;

      (i)   all licences, registrations, permits and quotas required to carry on
            the Purchased Business in its usual and ordinary course;

      (j)   all copyrights, registered trade-marks, trade-mark licences, trade
            names, and patents; all unregistered trade-marks, trade-mark
            licenses, trade names, logos and all patent applications,
            trade-marks registration applications owned, used or made by GalaVu
            in connection with the Purchased Business including, without
            limitation, the right to use the name "GalaVu";

      (k)   all computer equipment, operating system software, tools and
            utilities, application software and databases including, without
            limitation, those providing accounting, inventory, as well as any
            other management information systems of the Purchased Business,
            including without limitation, all source code and object code,
            system documentation, instruction and use manuals and any other
            written material pertaining to the foregoing, and all intellectual
            property rights applicable thereto,


                                      -6-


            including, without limitation, all copyrights, licences and
            proprietary information relating thereto;

      (l)   the goodwill of the Purchased Business including, without limiting
            the generality of the foregoing:

            (i)   the exclusive right in favour of the Purchaser to represent
                  itself as carrying on the Purchased Business in continuation
                  of and in succession to GalaVu; and

            (ii)  all records of sales, customer lists and supplier lists of or
                  used in connection with the Purchased Business, including,
                  without limiting the generality of the foregoing, inventory
                  records, customers' inventory records, if any, accounts
                  receivable records, records pertaining to customers'
                  requirements, customer contracts, customer invoices,
                  suppliers' invoices and expense invoices; and

      (m)   all shares in the capital of GalaVu Entertainment Corp., GalaVu
            International Corp., and any other shares owned by GalaVu;

      (n)   all other property and assets owned by GalaVu or to which it is
            entitled in connection with the Purchased Business, but excluding
            the Excluded Assets.

3.2 Purchase Price

            The purchase price payable to the Vendor for the Purchased Assets
(the "Purchase Price"), shall be paid to the Vendor at the Time of Closing and
shall consist of (i) the sum of $1,200,000; (ii) the note of the Purchaser, in
the form attached as Schedule "A" (the "Note") secured by a general security
interest in all of the Purchaser's present and after-acquired assets, property
and undertaking in the form attached as Schedule "B" (the "GSA") and a guarantee
from Networks of the obligations of the Purchaser, recourse for which is limited
to a pledge of all of the shares of the Purchaser, in the form of the guarantee
and pledge agreement attached as Schedule "C" hereto (each of the foregoing
being collectively hereinafter referred to as the "Security"); and (iii) 100,000
Shares, issued from the treasury of Networks.

      (a)   At or prior to the delivery of this Offer, the Purchaser shall have
            delivered to Blake, Cassels & Graydon (the "Escrow Agent"), (i) a
            certified cheque payable to the Escrow Agent, in trust, in the
            amount of $1,200,000, (ii) the Note, (iii) a certificate executed by
            the Chief Executive Officer of Networks certifying that the 100,000
            Shares referred to in paragraph 3.2(iii) have been validly issued
            pursuant to duly authorized resolutions of the board of directors of
            Networks as fully paid and non-assessable shares in the capital of
            Networks free of any lien, encumbrance, or security interest, and
            that the issuance and allotment thereof pursuant to paragraph
            3.2(iii) hereof has been registered in the books and records of
            Networks, and (iv) the Security (items (i), (ii), (iii), and (iv)
            being collectively referred to as the "Escrow Funds").


                                      -7-


      (b)   The Escrow Agent shall hold the cash portion of the Escrow Funds in
            an interest bearing account or instrument pending the Time of
            Closing, to be distributed in accordance with the terms hereof.

      (c)   Upon receipt by the Escrow Agent of a certificate executed and
            delivered by both the Vendor and the Purchaser, substantially in the
            form of the certificate attached as Schedule "D" hereto, certifying
            that the conditions of closing set out in section 5 hereof have been
            satisfied or waived, the Escrow Agent shall, at the Time of Closing,
            without further instructions: (i) pay the amount of the Purchase
            Price to the Vendor on account of the Purchase Price including the
            delivery of the Note, and the Security; and (ii) pay to the
            Purchaser any interest earned upon the cash portion of the Escrow
            Funds prior to the Time of Closing.

      (d)   Upon receipt by the Escrow Agent, at any time following the Time of
            Closing of a certificate delivered by the Vendor and the Purchaser,
            substantially in the form of the certificate attached as Schedule
            "E" hereto, certifying that the conditions of closing set out in
            section 5 hereof have not been satisfied or waived, the Escrow Agent
            shall forthwith return the Escrow Funds, and any interest earned
            upon the cash portion thereof, to the Purchaser, without setoff or
            deduction.

      (e)   In the event that following the Time of Closing, the Escrow Agent
            has not received either of the certificates referred to in
            paragraphs 3.2(c) or 3.2(d) hereof, the Escrow Agent shall forthwith
            make an application to a Judge of the Ontario Superior Court of
            Justice, in Toronto, for an Interpleader Order, and shall name both
            the Vendor and the Purchaser as respondents to such application and
            serve them with notice of all steps and proceedings in connection
            therewith.

3.3 Taxes

      (a)   The Purchaser will be liable for and pay as required by law, in
            addition to the Purchase Price, all taxes, duties and fees
            whatsoever which are required to be paid by a purchaser in
            connection with the transaction contemplated herein, together with
            all duties, registration fees or other charges properly payable by
            the Purchaser upon or in connection with the conveyance or transfer
            of the Purchased Assets, including, without limitation, all taxes
            payable pursuant to the Excise Tax Act (Canada), An act respecting
            the Quebec sales tax and amending various fiscal legislation,
            Ontario retail sales tax and any other tax, duty, levy or fee
            payable in any other jurisdiction. Notwithstanding the foregoing,
            the Purchaser may provide the Vendor with suitable exemption
            certificates indicating the Purchaser's entitlement to an exemption
            or exemptions from any tax, which exemption certificates, if in form
            and substance acceptable to the Vendor, acting reasonably, will be
            accepted by the Vendor in lieu of the Purchaser's obligations
            insofar as such tax is concerned. The Purchaser will indemnify and
            hold the Vendor, and its employees, officers, directors and agents,
            harmless against liability, claim, expense, costs, penalty or loss
            suffered by the Vendor by virtue of the Purchaser's failure to pay
            any such taxes, duties and fees, whether arising from a reassessment
            or otherwise, or by virtue of the Vendor's acceptance of a
            certificate of


                                      -8-


            exemption; or by virtue of the making of the joint GST and QST
            elections referred to in paragraph (b) of this section and will
            provide the Vendor with evidence of all payments made hereunder.

      (b)   Notwithstanding the foregoing, the Vendor and Purchaser shall
            jointly make the elections provided for under subsection 167(1.1) of
            the Excise Tax Act (Canada) and under section 75 of the Act
            respecting Quebec sales tax so that no GST or QST will be payable in
            respect of the transactions contemplated herein. The Vendor and
            Purchaser shall jointly complete the election forms (form GST-44 and
            QST form VD-75) in respect of such elections and the Purchaser shall
            file such elections with its GST or QST return, as appropriate, for
            the first reporting period in which the GST and QST would, in the
            absence of such elections, become payable in connection with the
            transactions contemplated herein.

      (c)   The foregoing provisions of this section 3.3 shall apply mutatis
            mutandis to all other applicable federal, provincial and territorial
            taxation legislation, with the intent that the Vendor and the
            Purchaser shall cooperate fully so as to minimize the taxes
            applicable to or payable in connection with the acquisition by the
            Purchaser of the Purchased Assets.

3.4 Allocation of Purchase Price

            The Purchaser shall be entitled to allocate the Purchase Price among
the Purchased Assets as the Purchaser may determine.

3.5 Repurchase of Accounts Receivable

      (a)   The Purchaser covenants that following the Closing Date, it will use
            its commercially reasonable best efforts to collect the Accounts
            Receivable. In the event that 90 days following the Closing Date
            (the "Adjustment Date"), the Purchaser shall have collected less
            than $1,200,000 in respect of the Accounts Receivable pertaining to
            the period ending August 31, 1999 (the "Pre-September Accounts
            Receivable"), the Purchaser shall have the right, at the Purchaser's
            option, to require the Vendor to pay to the Purchaser the amount of
            the deficiency between $1,200,000 and the amount collected by the
            Purchaser, and upon payment thereof, the Purchaser shall transfer,
            sell and assign to the Vendor all of the Purchaser's right, title
            and interest in and to the uncollected Pre-September Accounts
            Receivable, together with, or if impractical, the rights of access
            to, all books, records and documents evidencing or relating to such
            Pre-September Accounts Receivable. Upon the completion of the said
            assignment, the Vendor shall be entitled to receive all amounts
            subsequently collected in respect of the Pre-September Accounts
            Receivable and the Purchaser shall hold any amounts received by it
            separate and apart from its other property and subject to a trust in
            favour of the Vendor. In the event that the amount collected by the
            Purchaser as of the Adjustment Date in respect of the Pre-September
            Accounts Receivable, exceeds $1,200,000, the Purchaser shall
            forthwith pay such excess amount to the


                                      -9-


            Vendor and shall hold such excess amount separate and apart from its
            other property and subject to a trust in favour of the Vendor.

      (b)   The Purchaser agrees to pay to the Vendor as soon as possible
            following the Closing Date and in any event by the Adjustment Date,
            (i) an amount equal to all expenses paid by GalaVu through its
            accounts with CIBC prior to the Closing Date and which relate to the
            operations of the Company from September 1, 1999 onwards, other than
            payments relating to employees and, other than pre-paid expenses
            recorded in the balance sheet of GalaVu as of August 31, 1999 and
            (ii) an amount equal to the payments, if any, made by GalaVu through
            its accounts with CIBC for film royalties payable for the months of
            July and August, 1999.

      (c)   Any payment required to be made by the Vendor to the Purchaser on
            the Adjustment Date in respect of uncollected Pre-September Accounts
            Receivable shall be made without set-off, discount, holdback or
            deduction except for payments, if any, required to be made by the
            Purchaser to the Vendor under paragraph 3.3, this paragraph 3.5 or
            in respect of paragraph 4.8 or the Occupancy and Indemnity
            Agreement. Similarly, payments required to be made by the Purchaser
            to the Vendor under paragraph 3.3, this paragraph 3.5 and under 4.8
            or the Occupancy and Indemnity Agreement shall be made without
            set-off, discount, holdback or deduction other than amounts payable
            by the Vendor to the Purchaser under this paragraph.

      (d)   Notwithstanding anything to the contrary or the acceptance of this
            Offer by the Receiver, the Bank shall be liable to the Purchaser in
            respect of the Vendor's obligations to the Purchaser contained in
            this paragraph 3.5.

3.6 Right to Audit

            The Vendor may, at its own expense, audit the books and records and
financial statements and accounts of the Purchaser in order to confirm the
amount collected by the Purchaser in respect of the Accounts Receivable.

4. Representations, Warranties and Covenants

4.1 Receiver's Representations and Warranties

            By acceptance of this Offer the Receiver represents and warrants to
the Purchaser and hereby acknowledges and confirms that the Purchaser is relying
on such representations and warranties in connection with the purchase by it of
the Purchased Assets that:

      (a)   the Receiver has been duly appointed as receiver or interim receiver
            of the property, assets and undertakings of GalaVu pursuant to s. 47
            of the B1A with the full right, power and authority to enter into
            this Agreement, perform its obligations hereunder and convey all the
            right, title and interest of the Receiver in and to the Purchased
            Assets;


                                      -10-


      (b)   the Receiver is not, and as at the Time of Closing, the Receiver
            will not be, a non-resident of Canada within the meaning of Section
            116 of the Income Tax Act (Canada);

      (c)   the Receiver has not done any act to encumber or dispose of the
            Purchased Assets; and

      (d)   GalaVu Entertainment Inc. is registered for purposes of Part IX of
            the Excise Tax Act (Canada) and Title I of the Act respecting the
            Quebec sales tax.

4.2 Survival of the Receiver's Representations, Warranties and Covenants

      (a)   The representations and warranties of the Vendor set forth in
            Section 4.1 will survive the completion of the sale and purchase of
            the Purchased Assets herein provided for and, notwithstanding such
            completion, will continue in full force and effect for the benefit
            of the Purchaser for a period of two years from the date of this
            Agreement;

      (b)   The covenants of the Vendor set forth in this Agreement will survive
            the completion of the sale and purchase of the Purchased Assets
            herein provided for and, notwithstanding such completion, will
            continue in full force and effect for the benefit of the Purchaser
            for a period of two years from the date of this Agreement; and

      (c)   The Purchaser acknowledges that, in entering into this Agreement,
            the Receiver is acting solely in its capacity as receiver of the
            property, assets and undertaking of GalaVu and any liability of the
            Receiver to the Purchaser is limited to the amount of the Purchase
            Price received by the Receiver.

4.3 Purchaser's Representations and Warranties

            The Purchaser represents and warrants to the Vendor and hereby
acknowledges and confirms that the Vendor is relying on such representations and
warranties in connection with the sale by it of the Purchased Assets that:

      (a)   the Purchaser is a corporation duly incorporated, organized and
            subsisting under the laws of the Province of Ontario;

      (b)   the Purchaser has good and sufficient power, authority and right to
            enter into and deliver this Agreement and to complete the
            transactions to be completed by the Purchaser contemplated hereunder
            and the Purchaser has taken all necessary corporate action to
            authorize the entering into and performance of this Agreement;

      (c)   this Agreement constitutes a valid and legally binding obligation of
            the Purchaser, enforceable against the Purchaser in accordance with
            its terms subject to applicable bankruptcy, insolvency,
            reorganization and other laws of general application limiting the
            enforcement of creditors' rights generally and to the fact


                                      -11-


            that specific performance is an equitable remedy available only in
            the discretion of the court;

      (d)   At the Time of Closing, the Shares:

            (i)   are validly issued pursuant to duly authorized resolutions of
                  the board of directors of Networks as fully paid and
                  non-assessable shares in the capital of Networks free of any
                  lien, charge, encumbrance, security interest or adverse claim;

            (ii)  are listed on the NASDAQ ("NASDAQ"); and

            (iii) are restricted securities within the meaning of Rule 144
                  promulgated under the Securities Act and may not be sold
                  pursuant to Rule 144 for at least 12 months and thereafter may
                  be sold only pursuant to Rule 144 or to a registration
                  statement filed under the Securities Act or other applicable
                  exemption under the Securities Act;

      (e)   Purchaser has previously delivered or caused to be delivered to
            Vendor, complete and correct copies of all reports, statements and
            registration statements (including annual reports on Form 10-K,
            quarterly reports on Form 10-Q, current reports on Form 8-K and
            proxy statements) filed by Networks with the SEC since August 31,
            1998 (the "Networks SEC Documents").

      (f)   Networks is not a reporting issuer for the purposes of Canadian
            provincial securities legislation;

      (g)   The Purchaser is registered for purposes of Part IX of the Excise
            Tax Act (Canada) and Title I of the Act respecting the Quebec sales
            tax.

      (h)   The Purchaser is acquiring hereunder all or substantially all of the
            property that can reasonably be regarded as being necessary for it
            to carry on the business of GalaVu as a business.

4.4 The Purchaser covenants that it will use reasonable efforts, for a period of
twelve months from the Closing Date, to cooperate with the Receiver, to provide
such access to books and records relating to the Purchased Business and to such
employees who may have become employees of the Purchaser but who may have
knowledge of such books and records relating to the Purchased Business as may be
reasonably required by the Receiver in order to fulfil its obligations as
Receiver, at no expense to the Vendor within the first 90 days following the
Date of Closing.

4.5 Survival of Purchaser's Representations, Warranties and Covenants

      (a)   The representations and warranties of the Purchaser set forth in
            Section 4.3 will survive the completion of the sale and purchase of
            the Purchased Assets herein provided for and, notwithstanding such
            completion, will continue in full force and


                                      -12-


            effect for the benefit of the Vendor for a period of two years from
            the date of this Agreement; and

      (b)   The covenants and indemnifications of the Purchaser set forth in
            this Agreement will survive the completion of the sale and purchase
            of the Purchased Assets herein provided for and, notwithstanding
            such completion, will continue in full force and effect for the
            benefit of the Vendor for a period of two years from the date of
            this Agreement.

4.6 "As Is, Where Is"

            The Purchaser acknowledges that the Vendor is selling and the
Purchaser is purchasing the Purchased Assets on an "as is, where is" and
"without recourse" basis as they shall exist on the date of this Agreement. The
Purchaser further acknowledges that it has entered into this Agreement on the
basis that neither GalaVu nor the Receiver has guaranteed or will guarantee
title to the Purchased Assets that the Purchaser has conducted such inspections
of the condition and title to the Purchased Assets as it deems appropriate and
has satisfied itself with regard to these matters. No representation, warranty
or condition is expressed or can be implied as to title, encumbrance,
description, fitness for purpose, environmental compliance, merchantability,
condition or quality, or in respect of any other matter or thing whatsoever
concerning the Purchased Assets, or the right of the Vendor to sell or assign
same save and except as expressly provided for in this Agreement. Without
limiting the generality of the foregoing, any and all conditions, warranties or
representations expressed or implied pursuant to the Sale of Goods Act (Ontario)
do not apply hereto and have been waived by the Purchaser. The description of
the Purchased Assets contained in this Agreement is for the purpose of
identification only and no representation, warranty or condition has or will be
given by the Vendor concerning the accuracy of such description.

4.7 Third Party Consents

            Until such consent is obtained nothing in this Agreement shall
constitute an assignment or attempted assignment of any rights of GalaVu which
are not assignable without the consent of another person if such written consent
has not been obtained. Upon receipt of such consent the applicable rights shall
be deemed to be assigned by this Agreement without any further formality. The
Vendor shall use its reasonable best efforts to assist the Purchaser in
obtaining the consent of any third party to any contract where such consent is
required, provided that the parties acknowledge that the Purchaser shall have
primary responsibility for obtaining such consent and shall diligently proceed
to do so.

            Unless and until any such consent is obtained and an assignment of
any such rights is effected, the Vendor shall hold such rights in trust for the
sole benefit of the Purchaser and, in this regard:

      (a)   the Vendor shall remit to the Purchaser all proceeds and receipts
            received by the Vendor in connection with such rights forthwith upon
            receipt thereof; and

      (b)   the Vendor will take such action as may be reasonably required to
            enable the Purchaser to administer such rights, including the
            ability to enforce such rights.


                                      -13-


            If, after two years from the Closing Date, the required consent
cannot be obtained in respect of any such rights, then such rights shall be
deemed to form part of the Excluded Assets.

4.8 Occupation

            In order to permit the orderly removal of the Purchased Assets by
the Purchaser and to assist the Purchaser in maintaining the continuity of the
Purchased Business, the Receiver shall permit the Purchaser to have access to
all of the premises leased or occupied by GalaVu for a period not to exceed 45
days from the closing date, on the terms and conditions set out in the Occupancy
and Indemnity Agreement, to be executed and delivered prior to the Time of
Closing.

4.9 Accepted Assets

            The Accepted Assets are all of the Purchased Assets other than the
Excluded Assets listed in Schedule "F" delivered by the Purchaser to the Vendor
prior to the Time of Closing.

5. Conditions

5.1 Conditions for the Benefit of the Purchaser (Time of Closing)

      (a)   The sale by the Vendor and the purchase by the Purchaser of the
            Purchased Assets are subject to the following conditions, which are
            for the exclusive benefit of the Purchaser and which are to be
            performed or complied with at or prior to the Time of Closing:

            (i)   the representations and warranties of the Vendor set forth in
                  Section.4.1 will be true and correct at the Time of Closing
                  with the same force and effect as if made at and as of such
                  time;

            (ii)  the Vendor will have performed or complied with all of the
                  terms, covenants and conditions of this Agreement to be
                  performed or complied with by it at or prior to the Time of
                  Closing;

            (iii) the Receiver shall have obtained an order of the Ontario
                  Superior Court of Justice in substantially the form set out in
                  Schedule "H" hereto, approving the transactions contemplated
                  herein, and vesting in the Purchaser the right, title and
                  interest of GalaVu and the Receiver, if any, in and to the
                  Purchased Assets, free and clear of the right, title and
                  interest of any other person other than Permitted Encumbrances
                  (the "Vesting Order");

            (iv)  no order shall have been made in favour of, and no action or
                  proceeding in Canada shall have been commenced by, any person,
                  firm, company, government, governmental agency, regulatory
                  body or agency to enjoin, restrict or prohibit the purchase
                  and sale of the Purchased Assets, in whole or in part,
                  contemplated hereby or to stay the Vesting Order; and


                                      -14-


            (v)   the Receiver and the Purchaser shall have entered into the
                  Occupancy and Indemnity Agreement.

      (b)   In case any term or covenant of the Vendor or condition to be
            performed or complied with for the benefit of the Purchaser at or
            prior to the Time of Closing has not been performed or complied with
            at or prior to the Time of Closing, the Purchaser, without limiting
            any other right that the Purchaser has, may at its sole option,
            either:

            (i)   rescind this Agreement by notice to the Vendor, and in such
                  event the Purchaser will be released from all obligations
                  hereunder and require that the Vendor immediately execute and
                  deliver to the Purchaser the certificate in the form attached
                  hereto as Schedule "E"; or

            (ii)  waive compliance with any such terms, covenant or condition in
                  whole or in part on such terms as may be agreed upon without
                  prejudice to any of its rights of rescission in the event of
                  non-performance of any other term, covenant or condition in
                  whole or in part; and, if the Purchaser rescinds this
                  Agreement pursuant to Section 5. 1 (b)(i), the Vendor will
                  also be released from all obligations hereunder.

5.2 Conditions for the Benefit of the Vendor (Time of Closing)

      (a)   The sale by the Vendor and the purchase by the Purchaser of the
            Purchased Assets are subject to the following conditions, which are
            the exclusive benefit of the Vendor and which are to be performed or
            complied with at or prior to the Time of Closing:

            (i)   the representations and warranties of the Purchaser set forth
                  in Section 4.3 will be true and correct at the Time of Closing
                  with the same force and effect as if made at any as of such
                  time;

            (ii)  the Purchaser will have performed or complied with all the
                  terms, covenants and conditions of this Agreement to be
                  performed or complied with by the Purchaser at or prior to the
                  Time of Closing;

            (iii) no order shall have been made in favour of, and no action or
                  proceeding in Canada shall have been commenced by any person,
                  firm, company, government, governmental agency, regulatory
                  body or agency to enjoin, restrict or prohibit the purchase
                  and sale of the Purchased Assets contemplated hereby or to
                  stay the Vesting Order;

            (iv)  the Purchaser shall deliver to the Vendor a certificate
                  executed by the Chief Executive Officer of Networks as to the
                  representations and warranties contained in Section 4.3(d),
                  (e) and (f) , and the covenant of Networks in the form
                  attached as Schedule "K" hereto;

            (v)   the Receiver shall have obtained the Vesting Order; and


                                      -15-


            (vi)  the Purchaser and the Receiver shall have entered into the
                  Occupancy and Indemnity Agreement.

      (b)   In the case any term or covenant of the Purchaser or condition to be
            performed or complied with for the benefit of the Vendor at or prior
            to the Time of Closing has not been performed or complied with at or
            prior to the Time of Closing, the Vendor, without limiting any other
            right that the Vendor has, may at its sole option, either:

            (i)   rescind this Agreement by notice to the Purchaser, and in such
                  event the Vendor will be released from all obligations
                  hereunder; or

            (ii)  waive compliance with any such term, covenant or condition in
                  whole or in part on such terms as may be agreed upon without
                  prejudice to any of their rights or rescission in the event of
                  non-performance of any other term, covenant or condition in
                  whole or in part.

6. Closing Arrangements

6.1 Closing

      (a)   The sale and purchase of the Purchased Assets will be completed at
            the Time of Closing at the offices of Blake, Cassels & Graydon, 23rd
            Floor, Commerce Court West, Toronto, Ontario or such other place as
            the Vendor and Purchaser may agree.

      (b)   At the Time of Closing, provided all of the conditions set out in
            Sections 5.1 and 5.2 have been satisfied or waived by the party so
            entitled at or prior to such Time of Closing:

            (i)   the Vendor will deliver to the Purchaser bill(s) of sale in
                  form and substance satisfactory to the Vendor and the
                  Purchaser acting reasonably in substantially the form attached
                  as Schedule "I" hereto transferring to the Purchaser the
                  right, title and interest of GalaVu and the Receiver, if any,
                  in and to the Accepted Assets, and a copy of the Vesting
                  Order;

            (ii)  the Purchaser will deliver to the Vendor the certificates
                  referred to in section 5.2(a)(v) hereof and attached hereto as
                  Schedule "J", a certified cheque or bank draft for provincial
                  retail sales tax (or suitable purchase exemption certificates
                  in respect thereof) and goods and services tax payable in
                  connection with the purchase of the Purchased Assets,; and

            (iii) the Escrow Agent shall deliver the Escrow Funds to the Vendor
                  upon receipt of the executed certificate in the form of
                  certificate attached as Schedule "D" hereto.

6.2 Delivery of Share Certificate


                                      -16-


      (a)   The Purchaser hereby agrees to deliver to the Receiver at the time
            of Closing or as soon as possible thereafter, and in any event no
            later than 7 days following the Closing Date, a share certificate in
            the name of the Receiver or as it may direct in writing representing
            the 100,000 Shares referred to in paragraph 3.2(iii).

7. Additional Post-Closing Obligations

7.1 On or before the 45th day following the Closing Date, except as otherwise
provided in the Occupancy and Indemnity Agreement the Purchaser shall deliver to
the Vendor, a schedule, in the form attached hereto as Schedule "F", identifying
those Excluded Assets, which the Purchaser does not agree to purchase from the
Vendor (the "Excluded Assets"). Upon delivery by the Purchaser to the Vendor of
the Schedule of Excluded Assets pursuant to section 7.1 hereof, the Purchaser
shall be deemed to have disclaimed, waived and abandoned all claims, rights,
title and interest in or to the Excluded Assets and the Receiver shall have no
further obligations to the Purchaser with respect thereto.

7.2 In the event that the Purchaser does not deliver to the Vendor a schedule of
Excluded Assets in the form attached hereto as Schedule "F" within 45 days
following the Closing Date, the Purchaser will be deemed to have agreed to
purchase all of the Purchased Assets.

8. Vesting Order

            If there should be any appeal or motion for leave to appeal to set
aside the Vesting Order or to vary or amend its terms:

      (a)   the Purchaser shall have the option, in its sole discretion, to
            require that the Vendor defend such appeal(s) at the Vendor's own
            expense; and

      (b)   the Vendor shall indemnify and save the Purchaser harmless from all
            reasonable legal expenses incurred by the Purchaser in responding to
            any such appeals, provided that the Vendor and Purchaser hereby
            agree that the Vendor shall have carriage of the response to any
            such appeals, the Purchaser shall provide to the Vendor copies of
            all accounts for legal expenses incurred by the Purchaser in
            response to such appeals and assign to the Vendor the Purchaser's
            right to have such accounts assessed.

            Notwithstanding anything to the contrary or the acceptance of this
Offer by the Receiver, the Bank shall be liable to the purchaser in respect of
the Vendor's obligations to the Purchaser under this paragraph 8.

8.2 General

8.3 Further Assurances

            Each of the Vendor and the Purchaser will from time to time execute
and deliver all such further documents, assignments and instruments and do all
acts and things as any other


                                      -17-


party may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full intent and meaning
of this Agreement.

8.4 Time of the Essence

            Time is of the essence of this Agreement.

8.5 Cost

            Each of the parties hereto will pay their respective legal and
accounting costs and expenses incurred in connection with the preparation,
execution and delivery of this Agreement and all documents and instruments
executed pursuant hereto and any other costs and expenses whatsoever and
howsoever incurred.

8.6 Public Announcements

            No press release, public announcement or other similar notice
concerning the sale and purchase of the Purchased Assets may be made prior to
the Time of Closing by either of the Vendor or the Purchaser without the prior
consent and approval of the Vendor and the Purchaser, (save as may be required
by Networks in accordance with its obligations to or under the Securities Act,
NASDAQ or the SEC), provided that the Vendor and the Bank shall have the right
to review and approve any such press release, announcement or other notice prior
to the Purchaser or Networks issuing the same to the public.

8.7 Notices

            Any demand, notice or other communication to be given in connection
with this Agreement will be given in writing and will be given by personal
delivery or by electronic means of communication addressed to the recipient as
follows:

            if to the Purchaser:

            1373224 Ontario Limited
            14 Meteor Drive
            Toronto, Ontario
            M9W 1A4

            Attention:    The President
            Facsimile:    (416) 675-8838

            With a copy to:

            Gowling, Strathy & Henderson
            Suite 4900
            Commerce Court West
            Toronto, Ontario
            M5L 1J3


                                      -18-


            Attention:    R. Douglas Kneebone and Richard Epstein
            Facsimile:    (416) 862-7661

            if to the Receiver:

            Arthur Andersen Inc.
            1900-79 Wellington Street
            P.O. Box 29, TD Centre
            Toronto, Ontario
            M5K 1B9

            Attention:  Brian Deazeley
            Facsimile:    (416) 947-7788

            if to the Escrow Agent

            Blake, Cassels & Graydon
            Box 25
            Commerce Court West
            Toronto, Ontario
            M5L 1A9

            Attention:  David J. Kee
            Facsimile:    (416) 863-2653

or to such other address, individual or electronic communication number as may
be designated by notice given by a party to the others. Any demand, notice or
other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
electronic communication, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the Business Day during which such
normal business hours next occur if not given during such hours on any day.

8.8 Capacity of Vendor

            The Purchaser acknowledges that any Receiver which executes this
Agreement does so solely in its capacity as Receiver, and not in its personal
capacity.


                                      -19-


8.9 Rights and Obligations of the Escrow Agent

            The only obligation of the Escrow Agent hereunder shall be to
disburse the Escrow Funds and interest thereon in the manner herein provided and
the Escrow Agent is expressly relieved of any obligation in respect of the
propriety of any claim made or the validity or genuineness of any document
submitted to it, provided the same shall in the Escrow Agent's reasonable
opinion be in the form provided for such documents in the schedules attached
hereto.

                                            Yours very truly,

                                            1373224 ONTARIO LIMITED


                                            By:_________________________________
                                            Name:
                                            Title:

Networks North Inc., for valuable consideration, hereby covenants to perform,
carry out and deliver all other acts, documents, and agreements to be delivered
or performed by Networks as set forth in the foregoing offer.

Dated this           day of September, 1999.

                                            NETWORKS NORTH INC.


                                            By:_________________________________
                                            Name:
                                            Title:

Blake, Cassels & Graydon confirms that it has received the Escrow Funds from the
Purchaser, and accepts the responsibilities of the Escrow Agent as set forth
above, and agrees to perform the same in accordance with their terms.

Dated this          day of September, 1999.

                                            BLAKE, CASSELS & GRAYDON


                                            By:_________________________________
                                            Name:
                                            Title:


                                      -20-


The undersigned accepts the Offer set forth herein this 10th day of September,
1999.

                                            CANADIAN IMPERIAL BANK OF
                                            COMMERCE


                                            By:_________________________________
                                            Name:  Gerry L. Soucie
                                            Title: General Manager

The undersigned as Receiver accepts the Offer set forth herein this day of
September, 1999.

                                            ____________________________________