Document:

<PAGE>

                                  EXHIBIT 10.7

OCTOBER  19, 1999
$_______ (US)

                             MDU COMMUNICATIONS INC.

                 REPLACEMENT CONVERTIBLE PROMISSORY NOTE AND
                                 LOAN AGREEMENT

This note is in replacement of the convertible promissory notes dated _____,
1999 (for $______USD) and _______, 1999 (for $______USD) to __________, which
original promissory notes have been returned to the Company and cancelled.
For value received (the receipt and sufficiency of which is hereby
acknowledged above), MDU COMMUNICATIONS INC., a corporation with an office at
#108 - 11951 Hammersmith Way, Richmond, British Columbia, V&A 5H9, (the
"Company") hereby promises to and will pay to the order of _____________ (the
"Note Holder") on or before ____________ (the "Due Date") and thereafter on
demand the principal sum of Sixty Five Thousand U.S. Dollars ($____________
US)(the "Principal") and to pay interest on the Principal hereof at the rate
of _____% per annum calculated and compounded monthly (from the above two
inception dates) and until paid from the date that Principal is advanced
hereunder and payable thereafter upon the Principal becoming due.

All or any part of the Principal amount of this Note and any interest thereon
is convertible, at the option of the Note Holder, by written notice (duly
executed by the Note Holder) to the Company and MDU Communications
International Inc. (a Delaware corporation)(the "Issuer") at any time on or
before the close of business on the Due Date, or if the Company has delivered
to the Note Holder a Prepayment Notice (as herein defined), the second
business day immediately preceding the date of prepayment as specified in the
Prepayment Notice, into fully paid and non-assessable common shares (the
"Common Shares") in the capital of the Issuer at a conversion price $_____ US
(the "Conversion Price") per Common Share. As soon as practicable thereafter,
the Company and the Issuer shall deliver to the Note Holder a certificate or
certificates for such Common Shares.

If and whenever prior to the Due Date, the Issuer shall (i) subdivide the
outstanding Common Shares into a greater number of Common Shares, (ii)
consolidate the outstanding Common Shares into lesser number of Common
Shares, or (iii) issue Common Shares or securities convertible or
exchangeable for Common Shares, to the holders of all or substantially all of
the outstanding Common Shares by way of a stock dividend, the Conversion
Price shall, on the effective date of such subdivision or consolidation or
stock dividend, as the case

<PAGE>

may be, be adjusted to the amount which is in the same proportion to the
Conversion Price in effect immediately prior to such subdivision,
consolidation or stock dividend as the number of outstanding Common Shares
before giving effect to such subdivision, consolidation or stock dividend
bears to the number of outstanding Common Shares after giving effect to such
subdivision, consolidation or stock dividend. Such adjustments shall be made
successively whenever any event referred to herein shall occur.

Notwithstanding the foregoing, the Issuer shall not be required to issue
fractional Common Shares upon the conversion of this Note. If any fractional
interest in a Common Share would be delivered upon the conversion of this
Note, the Company and the Issuer shall, in lieu of delivering a certificate
for such fractional interest, satisfy such fractional interest by paying to
the Note Holder an amount equal to the same fraction of the Conversion Price.

The Company may prepay any part of this Note at any time and from time to
time without bonus or penalty provided however, that the Company shall
provide the Note Holder with 15 days written notice (the "Prepayment Notice")
of its intention to prepay this Note and the amount of the prepayment. If the
Prepayment Notice specifies a partial prepayment, the Note Holder may only
convert such amount as is being prepaid into Common Shares. All prepayments
shall include any interest that has been accrued but not paid.

The Company further agrees to pay costs and expenses reasonably incurred by
the Note Holder in preparing this Convertible Promissory Note and Loan
Agreement and any other documents in connection herewith and those incurred
by the Note Holder in enforcing payment of this Convertible Promissory Note
and Loan Agreement including all actual attorney's fees, disbursements, court
costs and costs of public officials.

This Convertible Promissory Note and Loan Agreement will be governed by and
construed in accordance with the laws of the Province of British Columbia and
the Company, the Issuer and the Note Holder hereby attorns and irrevocable
submits to the jurisdiction of the Courts of the Province of British Columbia
with respect to any disputes that may arise hereunder.

DATED at Richmond, British Columbia this _____ day of October, 1999.

MDU COMMUNICATIONS INC.                           MDU COMMUNICATIONS
                                                  INTERNATIONAL INC.

Per:_______________________                       Per:______________________
       Doug Irving                                         Doug Irving<PAGE>

                                  EXHIBIT 10.8

                                 MUTUAL RELEASE

This Mutual Release dated for reference January 5, 2000,

BETWEEN:

                     MDU COMMUNICATIONS INTERNATIONAL, INC.

                                     ("MDU")

AND:

                          CANACCORD CAPITAL CORPORATION

                                  ("Canaccord")

WHEREAS:

MDU and Canaccord entered into an Agency Agreement, dated for reference October
13, 1999 (the "Agreement");

         FOR AND IN CONSIDERATION of the payment by MDU to Canaccord of
$12,622.16 and 50,000 common shares in the capital of MDU, and the payment by
Canaccord to MDU of $1.00 an the mutual covenants and releases herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties, the parties agree with each other as
follows:

1.       The Agreement is hereby terminated, including without limitation
         Section IX thereof.

2.       MDU does hereby remise, release and forever discharge Canaccord, its
         past, present and future affiliates, predecessors, successors, assigns,
         principals, employees, agents, shareholders, officers and directors and
         the respective heirs, executors, administrators, successors and assigns
         of such principals, employees, agents, shareholders, officers and
         directors, of and from any and all past, present and future actions,
         manner of actions, causes of action, claims, suits, proceedings,
         obligations, liabilities, debts, dues, profits, expenses, contracts,
         covenants, demands and damages of any nature or kind whatsoever,
         whether actually pending or potential, at law or in equity, known as
         well as unknown, which MDU, its past, present and future servants,
         agents, principals, employees, officers, directors, shareholders,
         affiliates, heirs, executors, administrators, successors and assigns
         and the respective heirs, executors, administrators, successors and
         assigns of such

<PAGE>

         servants, agents, principals, employees, officers, directors,
         shareholders and affiliates had, now have, or hereafter can, shall
         or may have arising out of or by reason of any matter, cause or
         thing whatever occurring or existing up to and inclusive of the
         date of this Mutual Release (a "MDU Claim") and including in
         particular, but without limiting the generality of the foregoing,
         any matter, cause or thing arising out of or in relation to or in
         any way connected with the Agreement.

3.       Canaccord does hereby remise, release and forever discharge MDU, its
         past, present and future affiliates, predecessors, successors, assigns,
         principals, employees, agents, shareholders, officers and directors and
         the respective heirs, executors, administrators, successors and assigns
         of such principals, employees, agents, shareholders, officers and
         directors, of and from any and all past, present and future actions,
         manner of actions, causes of action, claims, suits, proceedings,
         obligations, liabilities, debts, dues, profits, expenses, contracts,
         covenants, demands and damages of any nature or kind whatsoever,
         whether actually pending or potential, at law or in equity, known as
         well as unknown, which any of Canaccord, its past, present and future
         servants, agents, principals, employees, officers, directors,
         shareholders, affiliates, heirs, executors, administrators, successors
         and assigns and the respective heirs, executors, administrators,
         successors and assigns the respective heirs, executors, administrators,
         successors and assigns of such servants, agents, principals, employees,
         officers, directors, shareholders and affiliates had, now have, or
         hereafter can, shall or may have arising out of or by reason of any
         matter, cause or thing whatsoever occurring or existing up to and
         inclusive of the date of this Mutual Release (a "Canaccord Claim") and
         including in particular, but without limiting the generality of the
         foregoing, any matter, cause or thing arising out of or in relation to
         or in any way connected with the Agreement.

4.       IT IS HEREBY UNDERSTOOD AND AGREED by the parties that nothing
         contained herein shall be deemed an admission of liability by any of
         the parties hereto with respect to any claim of any other party.

5.       IT IS HEREBY UNDERSTOOD AND AGREED that the parties providing Releases
         herein will not make, claim or take proceedings against any other
         person or corporation or other legal entity who might claim
         contribution or indemnity from any party hereto in connection with any
         of the matters referred to herein.

6.       Each party acknowledges that this Mutual Release has been executed
         voluntarily by such party after receiving independent legal advice. The
         parties further covenant and represent that the have not assigned their
         rights of action to anyone.

7.       The terms of this Mutual Release are contractual and not recitals. It
         is further understood and agreed that this Mutual Release, with the
         Settlement Agreement, contains the entire agreement among the
         undersigned parties in regard to the matters which are the subject
         matters of this Mutual Release. Further, this Mutual

                                       2
<PAGE>

         Releases shall be enforceable in all jurisdictions of the world and
         governed by the laws of the Province of British Columbia.

MDU COMMUNICATIONS INTERNATIONAL, INC.

Per

                     /s/ Bob Biagioni
         -------------------------------------------
         Authorized Signatory
         I have authority to bind the Company

CANACCORD CAPITAL CORPORATION

Per

                  /s/
         -------------------------------------------
         Authorized Signatory
         I have authority to bind the Company

                                       3
<PAGE>

                        [CANACCORD CAPITAL - LETTERHEAD]

October 13, 1999

MDU Communications International Inc.
108 - 11951 Hammersmith Way
Richmond, B.C.
V7A 5H9
Attention:        Sheldon Nelson
                  President & Director

Via Fax: (204) 783-9962

Dear Sirs:

         RE:      REORGANIZATION, OFFERING MEMORANDUM, PRIVATE PLACEMENT AND
                  SUBSEQUENT SPONSORSHIP AND INITIAL PUBLIC OFFERING ON THE
                  VANCOUVER STOCK EXCHANGE.

I.       PREAMBLE

This letter cancels all previous agreements, arrangements (particularly the
Engagement Letter of May 21, 1999) between Canaccord Capital Corporation (the
"Agent") and MDU Communications Inc. (the "Company") and herein delineates any
previous obligations of the Company to the Agent. It sets out a basic
reorganization plan (the "Reorganization", see Schedule "A") that will provide a
basis for the Agent and its investors to undertake. A Private Placement and a
subsequent Initial Public Offering ("IPO") on the Vancouver Stock Exchange
("VSE").

Canaccord as your Agent and Fiscal Advisor is desirous of establishing a long
term investment banking and advisory relationship with the Company which, on a
broad basis will require the following:

A.       REORGANIZATION ACTIVITIES: To fall in place prior to closing the
         Private Placement.

         1)        The Company must complete a creditor arrangement plan with
                   its key creditors, that is satisfactory to the Agent, which
                   provides for a deferment of payments spread over the year
                   2000. Letters or documentation confirming these deferments
                   are to be in place.

         2)        The Company must complete an Equipment Lease back and
                   future equipment lease arrangements with MerBanco Tiara
                   Capital ("MBT") and Star Choice Communications
                   ("Starchoice") that provides for:

                  (a)      an irrevocable lease back commitment from MBT (upon
                           their receipt of an advance of $150,000 from the
                           Company) to pay the Company $1,500,000 debt/lease
                           back financing by December 31, 1999, and

                  (b)      future funding (debt) of up to $40,000,000.

<PAGE>

         3)        The Company must complete a detailed revised cash flow that
                   reflects the Company's business and the above reorganization
                   activities.

B.       AGENT'S FINANCING ACTIVITIES: To be undertaken upon completion of A(1)
         and A(3) above and during A(2) above.

         1)        The Company will prepare an Offering Memorandum to allow the
                   Agent to finance a Private Placement of $1,000,000 or such
                   amounts as the parties agree. Documentation is to be
                   completed to market and close the issue prior to
                   December 10, 1999.

         2)        The Company will prepare a Prospectus to complete an IPO on
                   the Vancouver Stock Exchange for some $2.5 million. This is
                   anticipated to close in the first quarter of the year 2000.

         The outline expressed herein is subject to our further due diligence of
         your Company including but not limited to: (i) full evaluation of the
         details of the Company, Starchoice and MBT debt financing agreement;
         (ii) evaluation of the contract/alliance with Starchoice; and (iii)
         evaluation of one or two other strategic alliances that are in
         negotiation and/or to be completed this year.

II.      PRIVATE PLACEMENT - COMMON SHARES

The Company will completed an Offering Memorandum and the Agent will use its
best efforts to assist the Company and its principals in placing the following
issue:

         Issue:   Common Shares

         Issue Price:      To be established at time of issue in context of
                           market, plus one-half share purchase warrant.

         Amount of Issue:           C$1,000,000

         Selling Jurisdiction:      B.C. and Offshore.

         Selling Commission:        Eight Percent (8%)

Full details will be established in the Offering Memorandum and Agent Agreement.

III.     INITIAL PUBLIC OFFER - VANCOUVER STOCK EXCHANGE

The Agent will work with the Company to complete an Initial Public Offering on
the Vancouver Stock Exchange for $2.5 million or such amounts as its parties
agree. It is acknowledged that the Company is presently a publicly traded
company on the OTC Bulletin Board under the symbol MDTV and its listing in
Canada will require a full prospectus.

This issue is slated to complete, subject to the Company's performance and
success with its reorganization plan, in Q1, or early Q2 of 2000.

The terms of this issue will be negotiated at the time of the issue. There will
be further due diligence required prior to this offering.

                                       5
<PAGE>

IV.      CORPORATE FEES

The Agent, having worked with the Company since May 21, 1999 and having assisted
in developing an October 1999 reorganization plan and a financing plan will be
compensated by a Corporate Finance fee of 200,000 shares of the Company; 100,000
payable upon signing this letter and 100,000 upon completion of the Private
Placement.

A separate fee will be negotiated subsequent to this Private Placement as part
of the on going activities required for the pursuing twelve months including the
IPO.

V.       WORK FEE - FISCAL ADVISORY SERVICES

The Company must make arrangements to pay the balance of the previous work fees
(invoice dated October 6, 1999) and the remaining monthly work fees of $5,000
will continue, but may be accrued until the closing of the Private Placement.

VI.      EXPENSES

(a)      LEGAL DISBURSEMENTS

Upon signing this letter, the Company hereby agrees to deposit a $5,000 retainer
in trust with Canaccord. The said retainer will be applied towards the Agent's
legal fees and disbursements. Once the retainer is drawn down, the Agent shall,
from time to time, send an invoice to the Company representing any additional
fees and expenses of the Agent's legal counsel incurred in connection with the
matters outlined in this letter.

(b)      SPONSORSHIP AND ADMINISTRATIVE FEE

Subsequent to the Private Placement, the Agent herein agrees to act as the
Company's Sponsor (as part of the IPO and listing on the VSE) and to administer
the financing process. The Agent will charge a one time fee of a maximum of
$20,000 plus GST to cover these functions. The Sponsor will prepare an
application to and obtain pre-listing approval from the VSE's with regard to the
Company and its proposed developments. The Agent will liaise with the VSE's
Corporate Finance Department to obtain approval of the Company's application for
a change of business.

Such legal fees and expenses as incurred and set forth above shall be paid by
the Company regardless of whether the transactions contemplated herein are
completed or not.

All administrative fees and reasonable expenses shall be payable by the Company
upon completion of the Offering and, shall be payable by the Company whether ore
not the Offering is completed, terminated or withdrawn.

(c)      ASSESSMENT REPORT

If required, pursuant to the British Columbia Securities Commission's interim
Local Policy Statement 3-17, the Agent will retain an independent consultant to
undertake a review of the business and management of the Company. On completion
of the consultant's review, the consultant will provide the Agent with an
Assessment Report. The review and the Assessment Report will be undertaken and
provided in support of the Agent's due diligence responsibilities under the
Policy and the SECURITIES ACT (British Columbia) in connection with the
Company's anticipated financing. If required by the Vancouver Stock Exchange,
the Agent may require the Company to pay an estimated fee in the amount of
approximately $15,000 plus expenses, payable upon execution of a definitive
agreement to retain an independent consultant.

VII.     GENERAL UNDERTAKINGS

1.       The Company will work diligently with the Agent to develop a
         President's List for the Offering and will assist the Agent in placing
         a portion of the Private Placement and the IPO.

                                       6
<PAGE>

2.       If the Agent is the sole agent on the Offering and subsequent
         financings, the Company and the Agent will enter into written
         agreements prepared according to the Agent's standard form concerning
         the Offering and any subsequent financings.

3.       The Company will agree to establish:

         (a)      a public Relations Program

         (b)      a Promotional and Incentive Program, and

         (c)      a Market Maintenance Program

4.       The Company will provide the Agent on a timely basis with monthly
         unaudited financial statements following the execution of this letter
         agreement and continuing for a period of one year following the closing
         of the offering.

VIII.    SHARE STRUCTURE

The share structure of the company is presented in Schedule "A". The existing
position and pro forma positions are presented to reflect approximately the
number of shares outstanding after the Offerings. This model represents a
reasonable capitalization value and the type of share structure that, with
certain tolerances, would be readily financeable. The share structure may vary
depending upon forecasts, competitive factors, pricing, market factors and the
evaluation of the company.

IX.      RIGHT OF FIRST REFUSAL

The Agent shall have the right of first refusal, which will not be unreasonably
exercised, to participate in all future debt or equity financings of the
Company, whether public or private and whether or not an investment dealer is or
proposes to be involved, for a period of 12 months from the date of the IPO. If
the Agent is not willing to match the conditions of a financing available to the
Company, as provided by the "right of first refusal", the Company has the right
to terminate such rights. The Company has the right to arrange or bring other
Registrants as members of a syndicate to participate with the Agent on mutually
agreeable terms.

The Company may request that the Agent work with other Investment Dealers on
future financings.

X.      EXPIRATION OF THIS OFFER

The Agent hereby notifies the Company that this Agreement is only offered for a
limited time. The Agreement and all terms and conditions to herein will expired
by 4:00 p.m. on October 18, 1999 unless signed and returned to Canccord Capital
by mail or fax.

X.       OTHER

The Company covenants and agrees to indemnify the Agent as provided for in
Schedule B attached hereto.

This letter agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein.

If this letter accurately reflects your understanding of the terms of our
engagement and you agree to be legally bound thereby, please execute this letter
agreement (in counterparts, if necessary) where indicated below and return a
copy thereof (by facsimile and by courier) to Canaccord Capital Corporation
(Attention: David J. Horton).

                                       7
<PAGE>

Yours truly,

CANACCORD CAPITAL CORPORATION

/s/ David J. Horton

David J. Horton
Senior Vice President and Director

The foregoing accurately reflects the terms and the transaction which we hereby
agree to enter into and the undersigned agrees to be legally bound.

Acknowledge and agreed this 13th day of October, 1999.

MDU COMMUNICAITONS INTERNATIONAL INC.

Per:     /s/
     ---------------------------------------------
         Authorized Signatory

                                       8
<PAGE>

                                   SCHEDULE A
                          PRO FORMA SHARE STRUCTURE OF
                      MDU COMMUNICATIONS INTERNATIONAL INC.

<TABLE>
<CAPTION>

                                     NUMBER OF SHARES      $ RAISED
                                          (000)               (000)
                                          -----               -----

<S>                                  <C>                   <C>

Shares restricted l-44                   5,900
Float                                    3,991
Private Placement                        2,000              $1,000
Corp. Fees                                 200
I.P.O. (estimated)                       2,500               2,500
                                         -----               -----
TOTAL                                   14,591               3,500
                                        ======               =====

Estimated
Future warrants options, etc.            2,500              $3,000
                                         -----              ------

TOTAL FULLY DILUTED                     17,091              $6,500
                                        ======              ======

</TABLE>

                                       9
<PAGE>

                                  SCHEDULE "B"

MDU Communications International Inc. (the "Indemnitor") hereby agrees to
indemnify and hold Canaccord Capital Corporation and/or any of its subsidiary
companies and/or divisions (hereinafter referred to as the "Agent") and each and
every one of the directors, officers, employees and shareholders of the Agent
(hereinafter referred to as the "Personnel") harmless from and against any and
all expenses, losses, claims, actions, damages or liabilities, whether joint or
several (including the aggregate amount paid in reasonable settlement of any
actions, suits, proceedings or claims), and the reasonable fees and expenses of
its counsel that may be incurred in advising with respect to and/or defending
any claim that may be made against the Agent to which the Agent and/or its
Personnel may become subject or otherwise involved in any capacity under any
statute or common law or otherwise insofar as such expenses, losses, claims,
damages, liabilities or actions arise out of or are based, directly or
indirectly, upon the performance of professional services rendered to the
Indemnitor by the Agent and its Personnel hereunder or otherwise in connection
with the matters referred to in the attached letter agreement, provided,
however, that this indemnity shall not apply to the extent that a court of
competent jurisdiction in a final judgment that has become non-appealable shall
determine that:

i.       the Agent or its Personnel have been negligent or dishonest or have
committed any fraudulent act in the course of such performance; and

ii.      the expenses, losses, claims, damages or liabilities, as to which
indemnification is claimed, were directly caused by the negligence, dishonestly
or fraud referred to in (I).

If for any reason (other than the occurrence of any of the events itemized in
(i) and (ii) above, the foregoing indemnification is unavailable to the Agent or
insufficient to hold its harmless, then the Indemnitor shall contribute to the
amount paid or payable by the Agent as a result of such expense, loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Indemnitor on the one hand and the Agent on
the other but also the relative fault of the Indemnitor and the Agent, as well
as any relevant equitable considerations provided that the Indemnitor shall in
any event contribute to the amount paid or payable by the Agent as a result of
such expense, loss, claim, damage or liability any excess of such amount over
the amount of the fees received by the Agent hereunder.

The Indemnitor agrees that in case any legal proceeding shall be brought against
the Indemnitor and/or the Agent by any governmental commission or regulatory
authority or any stock exchange or other entity having regulatory authority,
either domestic or foreign, shall investigate the Indemnitor and/or the Agent
and Personnel of the Agent shall be required to testify in connection therewith
or shall be required to respond to procedures designed to discover information
regarding, in connection with, or by reason of the performance of professional
services rendered to the Indemnitor by the Agent, the Agent shall have the right
to employ its own counsel in connection therewith , and the reasonable fees and
expenses of such counsel as well as the reasonable costs and out-of-pocket
expenses incurred by the Agent and its Personnel in connection therewith shall
be paid by the Indemnitor as they occur.

Promptly after receipt of notice of the commencement of any legal proceeding
against the Agent or any of its Personnel or after receipt of notice of the
commencement of any investigation, which is based, directly or indirectly, upon
any matter in respect of which indemnification may be sought from the
Indemnitor, the Agent will notify the Indemnitor in writing of the commencement
thereof and, throughout the course thereof will provide copies of all relevant
documentation to the Indemnitor, will keep the Indemnitor advised of the
progress thereof and will discuss with the Indemnitor all significant actions
proposed.

The indemnity and contribution obligations of the Indemnitor shall be in
addition to any liability which the Indemnitor may otherwise have, shall extend
upon the same terms and conditions to the Personnel of the Agent and shall be
binding upon and enure to the benefit of any successors, assigns, heirs and
personal representatives of the Indemnitor, the Agent and any of the Personnel
of the Agent. The foregoing provisions shall survive the completion of
professional services rendered under the attached letter of agreement or any
termination of the authorization given by the attached letter of agreement.

                                       10
<PAGE>

         /s/                          for Canaccord Capital Corporation
--------------------------------

         /s/                          for MDU Communications International Inc.
--------------------------------

                                       11

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