Document:

<PAGE>

                                                                    EXHIBIT 10.4

                     THIS LOAN AGREEMENT made as of this   day of        , 1999.

                                                                        BETWEEN:

                                    NEWBRIDGE NETWORKS CORPORATION, a body
                                    corporate, duly incorporated under and by
                                    virtue of the laws of Canada (hereinafter
                                    called "Newbridge")

                                                               OF THE FIRST PART

                                     - and -

                                    IMAGICTV INC., a corporation incorporated
                                    under the laws of Canada (hereinafter called
                                    the "Corporation")

                                                              OF THE SECOND PART

     WHEREAS under the authority of Order-in-Council 98-332 made pursuant to the
Economic Development Act, Acts of New Brunswick, 1975, Chapter E-1.11, the
Minister of Economic Development, Tourism & Culture for the Province of New
Brunswick (the "Minister") has granted or has agreed to grant financial
assistance to Newbridge by way of a repayable loan and a forgivable loan for the
purpose of assisting Newbridge and its Affiliates to create research and
development jobs in the Province of New Brunswick, including without limitation,
such jobs in relation to the ImagicTV Project (as hereinafter defined)
undertaken or to be undertaken by the Corporation.

     AND WHEREAS Newbridge and the Minister have entered into a loan agreement
dated February 10, 1999 (the "Provincial Loan Agreement");

     AND WHEREAS subject to the terms and conditions of the Provincial Loan
Agreement Newbridge has agreed to grant financial assistance to the Corporation
by way of a Repayable Loan in an amount not exceeding $2,560,000 and a
Forgivable Loan in an amount not to exceed $640,000 to assist in the ImagicTV
Project;

     NOW THEREFORE THIS AGREEMENT WITNESSETH that, in consideration of Newbridge
making the aforesaid loans to the Corporation and in consideration of the sum of
Ten Dollars ($10.00) paid by each of the parties hereto to the other of them,
the receipt whereof by each of them is hereby acknowledged and in consideration
of the mutual covenants and agreements herein contained, the parties agree as
follows:

DEFINITIONS
-----------

                                      -1-
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1.   For the purposes of this Agreement and the recitals hereto, unless there is
     something in the subject matter or the context necessarily inconsistent
     therewith:

     (a)  "Affiliate" means a body corporate, 20% or more of the voting shares
          of which are held by Newbridge;

     (b)  "Budget" means a budget in a form and content satisfactory to
          Newbridge and the Minister submitted by the Corporation to Newbridge
          on the ImagicTV Project, setting out details of proposed research and
          development and capital expenditures including expenditures related to
          the relocation of employees and operations to the Province, as well as
          proposed employment projections;

     (c)  "Employment Year" means a one (1) year period commencing on the 1st
          day of March of each year;

     (d)  "Event of Default" means any event referred to in Clause 11 of this
          Agreement;

     (e)  "Financial Statements" means a balance sheet, income statement,
          statement of retained earnings and statement of changes in financial
          position (including the notes and schedules thereto), all fairly
          reflecting the financial condition of the entity or entities to which
          the same relate and all prepared in accordance with generally accepted
          accounting principles and on a basis consistent with that used in the
          preparation thereof for the immediately preceding fiscal year or part
          thereof, as the case may be, or on such other basis as is acceptable
          to Newbridge and the Minister.

     (f)  "Forgivable Advances" means in relation to the ImagicTV Project, the
          amount equal to 20% of the amount of all financial assistance advanced
          from time to time by Newbridge to the Corporation under this
          Agreement.

     (g)  "Forgivable Loan" means the aggregate of all Forgivable Advances made
          or advanced from time to time by Newbridge to the Corporation under
          this Agreement;

     (h)  "Full Time Employee" means an employee of the Corporation who is
          ordinarily resident in the Province and whose terms of engagement
          require such employee to work a minimum of 37.5 hours per week and who
          has worked or is engaged to work for a minimum of one (1) year;

     (i)  "ImagicTV Project" means the project undertaken or to be undertaken by
          the Corporation, as submitted by the Corporation to Newbridge, and
          approved from time to time by Newbridge and the Minister;

                                      -2-
<PAGE>

     (j)  "Net Revenue" means the income from the sale of a product developed
          with a Forgivable Advance or a Repayable Advance after deduction of
          all taxes, duties, freight and insurance charges, refunds, discounts,
          allowances, credits, rebates and distributor commissions. Income shall
          not include amounts arising from or related to support, maintenance,
          training or other services for a developed product or other products;

     (k)  "Province" means the Province of New Brunswick;

     (l)  "Qualifying Expenditures" means one-half (1/2) of all amounts incurred
          or paid by the Corporation to parties with whom it deals at arm's
          length on or after March 1, 1998, which in the reasonable opinion of
          Newbridge and the Minister are in respect of research and development
          conducted or to be conducted in the Province for the ImagicTV Project,
          capital expenditures in respect of property necessary for such
          research and development and relocation expenditures necessary for the
          conduct of research and development in the Province, to the extent
          that the foregoing are set out in the Budget;

     (m)  "Repayable Advances" means, in relation to the ImagicTV Project, such
          of the amounts of financial assistance advanced pursuant to this
          Agreement by Newbridge if any that are not Forgivable Advances;

     (n)  "Repayable Loan" means the aggregate of all Repayable Advances made or
          advanced from time to time by Newbridge to the Corporation under this
          Agreement;

     (o)  "Sales Year" means the year that commences on the 1st day of March of
          one year and ends on the last day of February of the following year;

     (p)  "Supporting Documentation" means such evidence and documentation as
          Newbridge deems necessary in relation to the provisions of this
          Agreement.

DISBURSEMENT OF FINANCIAL ASSISTANCE
------------------------------------

2.   Financial assistance relating to the ImagicTV Project shall be advanced
     from time to time by Newbridge to the Corporation in an amount equal to the
     amount received by Newbridge from the Minister relating to the ImagicTV
     Project; PROVIDED ALWAYS that in relation to the ImagicTV Project;

     (a)  Newbridge has received and is satisfied with all relevant
          documentation;

     (b)  Newbridge has received and is satisfied with the Budget relating to
          the ImagicTV Project;

                                      -3-
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     (c)  Newbridge has received a written claim submitted, not more frequently
          than quarterly, by the Corporation setting out particulars of costs
          for the period of time budgeted that have been or are to be paid or
          incurred by the Corporation as Qualifying Expenditures;

     (d)  Newbridge has received and is satisfied with a statement setting out
          all Qualifying Expenditures that have been incurred or paid during the
          previous claim period; and

     (e)  Newbridge is satisfied the Corporation is observing and performing all
          of its obligations under this Agreement.

MAXIMUM AMOUNT OF FINANCIAL ASSISTANCE
--------------------------------------

3.   Notwithstanding anything contained herein to the contrary:

     (a)  the maximum amount of financial assistance advanced by Newbridge under
          this Agreement in relation to the ImagicTV Project shall not exceed
          $3,200,000 of which $640,000 shall constitute Forgivable Advances and
          $2,560,000 shall constitute Repayable Advances hereunder;

     (b)  the maximum amount of the Forgivable Loan advanced by Newbridge under
          this Agreement shall not exceed the lesser of $640,000 and the amount
          equal to 20% of the amount of all financial assistance advanced by
          Newbridge under this Agreement; and

     (c)  the maximum amount of the Repayable Loan advanced by Newbridge under
          this Agreement shall not exceed the lesser of $2,560,000 and the
          amount equal to 80% of all financial assistance advanced by Newbridge
          under this Agreement.

APPLICATION OF FINANCIAL ASSISTANCE
-----------------------------------

4.   All amounts advanced by Newbridge as financial assistance hereunder in
     respect of the ImagicTV Project shall be utilized by the Corporation to
     satisfy Qualifying Expenditures relating to the ImagicTV Project and for no
     other purpose.

INTEREST ON REPAYABLE LOAN
--------------------------

5.   The Repayable Loan shall bear no interest until the earlier of the date of
     an Event of Default or the 25th day of February 2006 and thereafter the
     Repayable Loan, or that portion thereof which is from time to time
     outstanding, shall bear interest payable on the 25th day of August and
     February in each year at the rate of six and three-tenths percent (6-3/10%)
     per annum, calculated half-yearly, not in advance, with interest payable on
     the

                                      -4-
<PAGE>

     aforesaid days at the aforesaid rate on amounts of interest which are past
     due, calculated half-yearly, not in advance, until paid.

REPAYMENT OF REPAYABLE LOAN
---------------------------

6.   The portion of the Repayable Loan that reflects Repayable Advances in
     relation to the ImagicTV Project shall become due and be paid by the
     Corporation to Newbridge by instalments payable on the 25th day of February
     of each and every year commencing on the 25th day of February in the year
     that next follows the year in which the first of such Repayable Advances
     was made, each such instalment shall be in an amount equal to 1.5% of the
     Net Revenue of the Corporation for the Sales Year ending on the last day of
     February immediately preceding the year in which the instalment is due and
     payable hereunder, and the balance of the Repayable loan, if any, shall be
     paid or repaid to Newbridge on the 25th day of February, 2006.

7.   In addition to the amounts payable from time to time under the provisions
     of Clause 6 hereof, a further payment or repayment on or in respect of the
     Repayable Loan shall become due and be paid by the Corporation to Newbridge
     on the last day of February, 2002 in the event that the number of Full Time
     Employees employed in the Province on the ImagicTV Project on the last day
     of February 2002 is less than 92. Such further payment or repayment shall
     equal the amount by which the aggregate of the Repayable Advances exceeds
     the amount obtained from Multiplying the number of Full Time Employees by
     the quotient which arises from dividing $2,560,000 by 92.

FORGIVENESS OF FORGIVABLE LOAN
------------------------------

8.   The Forgivable Loan shall be fully forgiven as it is advanced hereunder.

PRIOR CONDITIONS
----------------

9.   Notwithstanding anything else contained in this Agreement, the Corporation
     acknowledges that Newbridge shall not be called upon, nor shall Newbridge
     be required to make any advances under this Agreement;

     (a)  until this Agreement and each of the other documents and agreements
          required by Newbridge in connection with the said advances have been
          fully executed;

     (b)  if or while there exists an Event of Default;

     (c)  if the Corporation is not an Affiliate; or

     (d)  if Newbridge does not receive advances from the Minister pursuant to
          the Provincial Loan Agreement.

                                      -5-
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REPRESENTATIONS AND WARRANTIES
------------------------------

10.  The Corporation represents and warrants to Newbridge that:

     (a)  the Corporation is a business corporation duly incorporated and
          validly existing under the laws of Canada with its registered office
          located in Saint John, New Brunswick, and in good standing under the
          laws of the Province of New Brunswick;

     (b)  the Corporation has all necessary corporate power, authority and
          capacity to enter into this Agreement and to carry out its obligations
          under this Agreement. The execution and delivery of this Agreement and
          the consummation of the transactions contemplated under this Agreement
          have been duly authorized by all necessary corporate action of the
          Corporation;

     (c)  this Agreement constitutes a valid and binding obligation of the
          Corporation enforceable against it in accordance with the terms of
          this Agreement; and

     (d)  The Corporation is an Affiliate.

ACCELERATION OF REPAYMENT UPON DEFAULT
--------------------------------------

11.  The Repayable Loan shall, at the option of Newbridge or the Minister,
     become due and payable by the Corporation on the sixtieth (60th) day
     following receipt of notice from Newbridge that one or more of the
     following events have occurred that in the opinion of Newbridge or the
     Minister materially affects the viability of the ImagicTV Project and that
     has not before the aforementioned sixtieth (60th) day been cured by the
     Corporation to the satisfaction of Newbridge and the Minister, that it is
     to say if

     (a)  the Corporation has failed to make any of the payments in the amount
          or amounts and at the time or times specified in this Agreement;

     (b)  the Corporation has failed to perform or observe any covenants (other
          than a covenant to pay) contained in this Agreement or in any other
          agreement from time to time entered into between the parties hereto;

     (c)  in respect of any of the first four Employment Years commencing on the
          1st day of March, 1998, the number of Full Time Employees at any time
          during any such Employment Year is fewer than the numbers set out as
          follows:

          Employment Year 1                  18

          Employment Year 2                  30

          Employment Year 3                  60

                                      -6-
<PAGE>

          Employment Year 4                  92

     (d)  unless relied on by the Corporation as having been obtained from a
          third party which the Corporation reasonably believed to be true and
          correct, any information, representation, warranty, certificate,
          statement or report given or made by or on behalf of the Corporation
          to Newbridge or to any of its representatives in connection with this
          Agreement or in connection with the Forgivable Loan or the Repayable
          Loan or any advances in respect of the Forgivable Loan or the
          Repayable Loan is false, erroneous or misleading in any material
          respect;

     (e)  the Corporation becomes insolvent or bankrupt or subject to the
          provisions of the Winding-up Act or the Bankruptcy and Insolvency Act
          (Canada) or goes into liquidation, either voluntarily or under an
          order of a court of competent jurisdiction or makes a general
          assignment for the benefit of its creditors or otherwise acknowledges
          itself insolvent; and

     (f)  the Corporation abandons all or any substantial part of its
          undertaking and property and assets or threatens to commit any act of
          bankruptcy.

APPROPRIATION OF MONEY
----------------------

12.  Newbridge may from time to time appropriate any moneys received by
     Newbridge from the Corporation in or towards payment or repayment of the
     Repayable Loan and the interest thereon, if any, as Newbridge in its sole
     discretion may see fit, and the Corporation shall not have the right to
     require any other appropriation; PROVIDED that any such funds which have
     been received and have been designated by the Corporation as being a
     payment of principal or interest or both of the Repayable Loan may only be
     applied in accordance with such designation.

COVENANTS OF THE CORPORATION
----------------------------

13.  The Corporation does hereby covenant and agree to pay or repay the
     Repayable Loan, together with all interest thereon, if any, at the time or
     times and in the manner and amounts set forth in this Agreement.

14.  The Corporation shall maintain at locations within Canada proper and
     accurate books of account and records (including Supporting Documentation)
     concerning all costs incurred and all costs paid with respect to the
     Qualifying Expenditures made by the Corporation.

15.  (a)  Newbridge or the Minister shall be entitled, no more than once a year,
          to engage an independent firm of chartered accountants or other
          person(s) (the "Auditor") to

                                      -7-
<PAGE>

          inspect the books and records of the Corporation which is necessary to
          verify the amounts or that no amounts were payable by the Corporation
          pursuant to Clauses 5, 6 and 7 hereof. Neither Newbridge nor the
          Minister is entitled to engage an Auditor to verify amounts that were
          payable or not payable, as the case may be, for any period that
          preceded two years before the Auditor's engagement.

     (b)  The Auditor shall provide the Corporation with reasonable advance
          written notice of such inspection (but not less than two weeks), and
          the inspection shall be conducted expeditiously in a manner that is
          not unreasonably disruptive of the normal business of the Corporation.

     (c)  The Auditor shall execute a written agreement with the Corporation not
          to disclose any information learned in the audit to anyone, nor to use
          such information, except for providing Newbridge with a statement of
          the amounts due for the period(s) in question.

     (d)  The cost of the audit, including the fees and expenses of the Auditor,
          shall be borne by Newbridge unless the audit discloses an underpayment
          by the Corporation in the aggregate in excess of ten percent (10%) of
          the amount actually due for the period(s) being audited. The fees and
          expenses associated with such inspection shall not be calculated on a
          basis contingent on the results of the inspection.

     (e)  If the audit discloses an underpayment by the Corporation, the
          Corporation shall promptly make payment to Newbridge of such
          underpayment. If the audit discloses an overpayment by the
          Corporation, Newbridge shall at the Corporation's discretion, either
          credit the overpayment to the Corporation's account or promptly
          provide the Corporation with a refund of such overpayment.

16.  The Corporation shall deliver to Newbridge and the Minister within thirty
     (30) days of receipt of a request therefor the most recent annual Financial
     Statement of the Corporation, such Financial Statement to be accompanied by
     the report of the auditor or other professional person responsible for
     reviewing the Financial Statement if no auditor was engaged.

17.  The Corporation shall deliver to Newbridge and the Minister a written
     report as at the last day of February in each and every year while the
     Repayable Loan or any part thereof remains outstanding, which report shall
     be signed by an official representative of the Corporation and shall
     contain information concerning the amount of Net Revenue for the Sales Year
     immediately preceding and the number of Full Time Employees for the same
     period. The Corporation shall upon the reasonable request, deliver to
     Newbridge or the Minister such additional written reports and statements,
     in form and content satisfactory

                                      -8-
<PAGE>

     to Newbridge or the Minister as Newbridge or the Minister may from time to
     time request concerning any operation of the Corporation that relies upon a
     Qualifying Expenditure.

18.  The Corporation shall pay, before any of the following become overdue, all
     taxes, rates and other impositions (including local improvement rates)
     imposed by any government or authority in respect of and that would
     materially and adversely affect any property or asset owned by the
     Corporation in its New Brunswick operations. The non-payment of any such
     taxes, rates or other impositions during any period for which, in relation
     thereto, a bona fide objection or appeal is outstanding shall not be a
     contravention of this covenant.

NOTICES
-------

19.  Any notice, consent, waiver, certificate, statement or other document or
     moneys that Newbridge may be required or may desire to give, deliver or
     (with the exception of a facsimile transmission) pay to the Corporation or
     that the Corporation may be required or may desire to give, deliver or
     (with the exception of a facsimile transmission) pay to Newbridge shall be
     conclusively deemed validly given, delivered or (with the exception of
     facsimile transmissions) paid to and received by the addressee, if
     delivered personally, on the date of delivery, or if mailed, on the third
     business day after the mailing of the same in Canada by prepaid post
     addressed, or if sent by facsimile transmission, on the date of such
     transmission,

     (a)  if directed to the Corporation, to:

          ImagicTV Inc.
          P. O. Box 303
          One Brunswick Square
          Saint John, NB  E2L 3Y2
          Attention:  The President
          Fax Number:  (506) 631-3001

     (b)  if directed to Newbridge to:

          Newbridge Networks Corporation
          Corporate Headquarters
          600 March Road
          P. O. Box 13600
          Kanata, ON  K2K 2E6
          Attention:  Legal Department
          Fax Number:  (613) 599-3672

20.  Newbridge and the Corporation may at any time give written notice to the
     other of any change in the address set out in Clause 19 hereof and, after
     giving such notice, the

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     address specified therein shall, for the purposes of that Clause, be
     conclusively deemed to be the present address of the Corporation and
     Newbridge as the case may be.

OWNERSHIP OF DEVELOPMENT
------------------------

21.  Newbridge and the Corporation do hereby agree that the Corporation shall
     own all right, title and interest (including all intellectual property
     rights) in and to anything developed by the Corporation (as the case may
     be) from the ImagicTV Project.

ACCESS BY NEWBRIDGE OR MINISTER
-------------------------------

22.  The Corporation shall upon reasonable notice provide Newbridge or the
     Minister or both free and unrestricted access to any part of the operation
     of the Corporation in the Province as it relates to the ImagicTV Project,
     provided such access shall not materially interfere with the operation of
     the Corporation.

NO PARTNERSHIP
--------------

23.  The relationship between the Corporation and Newbridge under this Agreement
     is not and is not intended to be and shall not be deemed to be that of
     partner of, agent or representative of, or a joint venture with, the other.

INTERPRETATION
--------------

24.  It is agreed and understood that in the event of any discrepancy of
     conflict between the provisions of this Agreement and the provisions of any
     letter of other correspondence or agreement between or entered into between
     the parties hereto, the provisions of this Agreement and of any amendment
     made to this Agreement shall prevail.

25.  This Agreement shall be governed by and construed in accordance with the
     applicable laws of the Province of New Brunswick and of Canada.

26.  This Agreement shall be binding on and enure to the benefit of Newbridge
     and the Corporation, and their respective successors and assigns, except
     that the Corporation shall not, without the prior consent of Newbridge
     (which shall not unreasonably be withheld) and the Minister, assign any
     rights or obligations with respect to this Agreement.

27.  Any provision of this Agreement which is or becomes prohibited or
     enforceable in any jurisdiction shall not invalidate or impair the
     remaining provisions of this Agreement which shall be deemed severable from
     the prohibited of unenforceable provision and any prohibition or
     unenforceability in any jurisdiction shall not invalidate or render
     unenforceable that provision in any other jurisdiction.

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<PAGE>

28.  No term or condition of this Agreement and no breach by the Corporation or
     Newbridge of any such term or condition shall be deemed to have been waived
     unless such waiver is in writing signed by Newbridge, or the Corporation,
     as the case may be.

29.  The written waiver by Newbridge or the Corporation of any breach by the
     Corporation or Newbridge, as the case may be, of any term or condition of
     this Agreement shall not be deemed a waiver of such term or condition or of
     any subsequent breach by the Corporation or Newbridge, as the case may be,
     of the same or any other term of condition of this Agreement.

30.  No amendment of any provision of this Agreement or any other agreements
     provided for or contemplated hereby, nor any consent to any departure by
     the Corporation or Newbridge shall in any event be effective unless it
     shall be in writing and signed by Newbridge or the Corporation, as the case
     may be, and then the consent shall be effective only in the specific
     instance for the specific purpose for which it has been given.

31.  Time shall be of the essence of this Agreement.

32.  This Agreement constitutes the entire agreement between the parties with
     regard to matters dealt with herein and therein, and cancels and supersedes
     any prior agreements, undertakings, declarations or representations,
     written or verbal, in respect of such matters.

33.  The headings appearing in this Agreement have been inserted for reference
     and as a matter of convenience and in no way define, limit or enlarge the
     scope of any provision of this Agreement.

34.  Any reference to a statute in this Agreement, whether or not that statute
     has been defined, is a reference to a statute of the Province, unless
     otherwise stated, and includes all regulations at any time made under or
     pursuant to that statute and any amendment to that statute.

35.  In this Agreement wherever the singular or masculine is used it shall be
     construed as if the plural or feminine or neuter, as the case may be, had
     been used where the context so required.

FURTHER ACTS AND ASSURANCES
---------------------------

36.  Each of the parties shall, upon the reasonable request of the other, make,
     do, execute, or cause to be made, done or executed all further and other
     lawful acts, deeds, things, devices, documents, instruments and assurances
     whatever as may be reasonably necessary to effect the purpose of this
     Agreement and to carry out its provisions.

     IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their respective officers duly authorized in that behalf as of the day and year
first above written.

                                      -11-
<PAGE>

SIGNED, SEALED AND DELIVERED        )

NEWBRIDGE NETWORKS CORPORATION in the presence of:
                                                  ------------------------------

IMAGICTV INC.
-------------

                                      -12-<PAGE>

                                                                    EXHIBIT 10.5

                               TRANSFER AGREEMENT

THIS AGREEMENT made as of January 1, 1998.

BETWEEN: THE NEW BRUNSWICK TELEPHONE COMPANY, LIMITED, a business corporation,
         organized and existing under the laws of the Province of New Brunswick,

         (hereinafter called "NBTel")

                                                 OF THE ONE PART,

AND:     imagicTV Inc., a business corporation, organized and existing under the
         laws of Canada,

             (hereinafter called "imagic")

                                                 OF THE OTHER PART

WHEREAS NBTel is engaged in the telecommunications business and in conjunction
therewith has programs for the development of intellectual property ("IP")
including software, service designs and processes and, in particular, has
developed a software solution relating to IP multicasting and video over IP (the
"TV-IP Assets"); and

WHEREAS imagic has been created to acquire the TV-IP Assets, and, based on that
knowledge, to develop and subsequently market, license and maintain certain
software products and computer hardware and software architecture and interfaces
that will enable the delivery of broadcast television services to residential
subscribers over any high speed Internet-Protocol network infrastructure,
including Asymetrical Digital Subscriber Line access technology.

NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the mutual
covenants and agreements hereinafter contained and set forth, and all other
considerations hereafter mentioned, the parties respectively covenant and agree
with each other as follows:

1.       In this Agreement, the TV-IP Assets shall consist of NBTel's
         intellectual property relating to IP multicasting and video over IP.

2.       NBTel hereby transfers the TV-IP Assets to imagic;

3.       imagic shall pay to NBTel in consideration for the transfer of the
         TV-IP Assets the fair market value thereof, which shall be satisfied by
         the issue to NBTel of 2,000,000 Class A Shares in the capital of
         imagic.

                                  Page 1 of 5
<PAGE>

4.       (a)      NBTel and imagic agree to jointly file an election pursuant
                  to subsection 85(1) of the Income Tax Act (Canada) in
                  prescribed form and within the time referred to in subsection
                  85(6) of the said act with respect to the said TV-IP Assets
                  acquired by imagic with the agreed amount to be equivalent to
                  NBTel's adjusted cost base thereof for income tax purposes or
                  such other amount as NBTel directs.

         (b)      NBTel and imagic agree that any Harmonized Sales Tax ("HST")
                  payable shall be the responsibility of imagic. imagic shall
                  register for HST purposes and both parties shall file the HST
                  forms required to claim an exemption from HST for the
                  transfer.

         (c)      The Vendor and Purchaser agree that in accordance with the
                  provisions of subsection 26(3) of the Canada Business
                  Corporations Act, R.S.C. 1985, c. C-44, for the 2,000,000
                  Class A Shares of the Purchaser allotted and issued to the
                  Vendor pursuant to paragraph 3(c) hereof the aggregate sum of
                  $1.00 shall be added to the stated capital account maintained
                  for the Class A Shares of the Purchaser.

5.       NBTel undertakes with, represents and warrants to and in favour of
         imagic as follows that:

         (a)      it has full and absolute right, power and authority to sell,
                  transfer and deliver the TV-IP Assets in the manner
                  contemplated by this Agreement;

         (b)      there are no actions, suits or proceedings (whether or not
                  purportedly on behalf of NBTel) pending or to NBTel's
                  knowledge threatened against or affecting NBTel at law or in
                  equity or before any federal, provincial, municipal or
                  governmental department, commission, board, agency or
                  instrumentality, domestic or foreign, which might in any way
                  materially adversely affect the TV-IP Assets;

         (c)      the consummation of the transactions provided in this
                  Agreement and in any other agreements, deeds and documents
                  mentioned or referred to in this Agreement do not and will not
                  conflict with and do not and will not result in any breach of
                  any of the terms, conditions or provisions of the constating
                  instruments of NBTel or any agreement or instrument to which
                  NBTel is a party or by which it is bound;

         (d)      it is a business corporation, duly incorporated, organized and
                  existing under the laws of the Province of New Brunswick, and
                  is in good standing with the Director, Corporate Affairs
                  Branch of the Department of Justice of New Brunswick, and all
                  documents required to be filed with such Director have in fact
                  been filed; and

         (e)      NBTel will observe and perform all of the covenants, terms,
                  conditions and agreements contained in this Agreement and on
                  its part to be observed and performed.
<PAGE>

6.   imagic undertakes with, represents and warrants to and in favour of NBTel
     as follows that:

     (a)    it is a business corporation, duly incorporated, organized and
            existing under the laws of Canada, and is in good standing with the
            Director under the Canada Business Corporations Act, and all
            documents required to be filed with such Director have in fact been
            filed; and

     (b)    it will observe and perform all of the covenants, terms, conditions
            and agreements contained in this Agreement and on its part to be
            observed and performed.

7.   NBTel shall indemnify and save harmless imagic and its successors and
     assigns from, against, for and in respect of any and all damages, losses,
     obligations, liabilities, claims, encumbrances, deficiencies, costs and
     expenses (including, without limitation, reasonable solicitors' fees and
     other costs and expenses incidental to any suit, action, investigation,
     claim or proceeding) suffered, sustained, incurred or required to be paid
     by imagic, its successors or assigns by reason of any breach or failure of,
     observation or performance of any of NBTel's undertakings, representations
     or warranties set forth in this Agreement. Notwithstanding any of the
     foregoing, NBTel's liability to imagic hereunder shall not exceed the total
     consideration paid to NBTel for the TV-IP Assets.

8.   imagic shall indemnify and save harmless NBTel and its successors and
     assigns from, against, for and in respect of any and all damages, losses,
     obligations, liabilities, claims, encumbrances, deficiencies, costs and
     expenses (including, without limitation, reasonable solicitors' fees and
     other costs and expenses incidental to any suit, action, investigation,
     claim or proceeding) suffered, sustained, incurred or required to be paid
     by NBTel, its successors or assigns by reason of any breach or failure of
     observation or performance of any of imagic's undertakings, representations
     or warranties set forth in this Agreement.

9.   NBTel and imagic shall at all times, do, execute, acknowledge and deliver
     or cause to be done, executed, acknowledged and delivered all such deeds,
     documents and things which in the opinion of any of the solicitors for
     NBTel or imagic are necessary for the purpose of accomplishing and
     effectuating the intentions of the parties as contemplated by this
     Agreement.

10.  No delay or omission of any of the parties to exercise any right or power
     accruing upon any default under this Agreement by the other party shall be
     a waiver of any such default or acquiescence therein and every power or
     remedy given to any of the parties by this Agreement or by law, equity or
     by statute may be exercised from time to time and as often as may be deemed
     expedient.

11.  Any notice required to be given under this Agreement shall be sufficiently
     served if delivered personally or sent by registered mail or facsimile to:

<PAGE>

         (a)      NBTel, if the notice is addressed to:

                  Attention: General Counsel

                  The New Brunswick Telephone Company, Ltd.
                  P.O. Box 1430
                  Saint John, N. B.
                  E2L 4K2
                  Facsimile No.: (506) 694-2722

         (b)      imagic, if the notice is addressed to:

                  Attention: General Manager

                  imagicTV Inc.
                  P. 0. Box 1430
                  Saint John, N. B.
                  E2L 4K2

                  Facsimile No.: (506) 694-2722

         (c)      Any such notice personally delivered shall be considered as
                  having been received on the day of delivery, any such notice
                  delivered by facsimile shall be considered as having been
                  received on the day following transmission, and any such
                  notice sent by registered mail shall be considered as having
                  been received on the fourth day following the day of mailing;
                  and

         (d)      Any party to this Agreement may at any time and from time to
                  time change its address for service set forth in this
                  Agreement by notice in writing given to the other party in the
                  manner prescribed.

12.      This Agreement shall be deemed to have been made and to have come into
         force on January 1, 1998.

13.      This Agreement shall be governed by and construed in accordance with
         the laws of the Province of New Brunswick.

14.      Neither party shall assign this Agreement, or any of its rights under
         the Agreement, without the prior written consent of the other, which
         consent shall not be unreasonably withheld.

15.      This Agreement and everything contained herein shall enure to the
         benefit of and be binding upon each of the parties and their successors
         and assigns as fully and as effectually as if the same had been
         mentioned herein.

                  IN WITNESS WHEREOF the parties hereto have executed these
presents in accordance with their rules and regulations in that behalf as of the
day and year first before written.
<PAGE>

                                        THE NEW BRUNSWICK TELEPHONE
                                        COMPANY, LIMITED

                                        -----------------------------
                                        Treasurer

                                        imagic TV INC.

                                        -----------------------------
                                        President

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