Document:

Exhibit 10.2

    GUARANTY
      OF CORPORATION

     

     

    THIS
      GUARANTY OF CORPORATION,
      dated
      as of September 11, 2006 (this “Guaranty”),
      is
      made by MDU COMMUNICATIONS INTERNATIONAL, INC. a Delaware corporation
      (“Guarantor”),
      in
      favor of FCC,
      LLC d/b/a/
      First
      Capital (“Lender”).

     

    RECITALS

    

    A.    Guarantor
      is the sole
      shareholder
      of MDU
      COMMUNICATIONS (USA) INC., a Washington corporation (“Borrower”).
      Borrower and Lender are parties to that certain Loan and Security Agreement
      of
      even date herewith (as amended, restated or otherwise modified from time to
      time, the “Loan
      Agreement”;
      capitalized terms used herein without definition shall have the meanings
      ascribed to such terms in the Loan Agreement).

    

    B.    The
      receipt of this Guaranty from Guarantor is a condition precedent to Lender’s
      obligation to make loans to Borrower under the Loan Agreement.

    

    C.    Guarantor
      will receive substantial direct and indirect benefits from Lender’s agreement to
      make loans to Borrower under the Loan Agreement.

    

    STATEMENT
      OF AGREEMENT

    

    NOW,
      THEREFORE,
      in
      consideration of the foregoing and other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, to induce Lender
      to
      make loans to Borrower under the Loan Agreement, Guarantor and Lender agree
      as
      follows:

     

    1.    CHARACTER
      OF OBLIGATION.

    

    Guarantor
      hereby unconditionally guarantees the full payment and performance by Borrower
      of all principal, interest and other Obligations (as such term is defined in
      the
      Loan Agreement) owing by Borrower to Lender, whether or not evidenced by
      promissory notes, any obligations for letters of credit or agreements with
      respect thereto, any drafts or any obligations for acceptances or agreements
      with respect thereto, including all interest and other charges stated therein,
      any other loans, promissory notes, advances or overadvances, including all
      interest and other charges stated therein, all obligations of Borrower under
      any
      security agreement, instrument of lien, security deed or other security device
      in favor of Lender, and all other obligations of Borrower to Lender however
      and
      whenever incurred or evidenced, whether direct or indirect, absolute or
      contingent, or due or to become due (collectively, the “Guaranteed
      Obligations”). 
      The obligation of Guarantor hereunder is primary and unconditional and shall
      be
      enforceable before, concurrently or after any claim or demand is made or suit
      is
      filed against Borrower or any other guarantor or surety, and before,
      concurrently or after any proceeding by Lender against any security, and shall
      be effective regardless of the solvency or insolvency of Borrower at any time,
      the extension or modification of the Guaranteed Obligations by operation of
      law,
      or the subsequent reorganization, merger or consolidation of Borrower, or any
      other change in its composition, nature, personnel or location.  The
      obligation hereunder may be considered by Lender either as a guaranty or
      agreement of surety.  Payment of any sum or sums due to Lender hereunder
      will be made by Guarantor immediately upon demand by Lender.  If claim is
      ever made upon Lender for repayment or recovery of any amount or amounts
      received by Lender in payment of any of the Guaranteed Obligations and Lender
      repays all or part of said amount by reason of (a) any judgment, decree or
      order of any court or administrative body having jurisdiction over Lender or
      any
      of its property, or (b) any settlement or compromise of any such claim
      effected by Lender with any such claimant (including Borrower), then in such
      event Guarantor agrees that any such judgment, decree, order, settlement or
      compromise shall be binding upon Guarantor, notwithstanding any revocation
      hereof or the cancellation of any note or other instrument evidencing any of
      the
      Guaranteed Obligations, and Guarantor shall be and remain obligated to Lender
      hereunder for the amount so repaid or recovered to the same extent as if such
      amount had never originally been received by Lender.  Guarantor agrees that
      the books and records of Lender showing the account between Lender and Borrower
      shall be admissible in evidence in any action or proceeding, shall be binding
      upon Guarantor for the purpose of establishing the items therein set forth,
      and
      shall constitute prima facie proof thereof, except that the monthly statements
      rendered to Borrower by Lender shall, to the extent to which no objection is
      made within thirty (30) days after date thereof, constitute an account stated
      between Lender and Borrower binding upon Guarantor.  Guarantor agrees to
      pay all costs of Lender of collection of any sum or sums due hereunder, and,
      if
      collected by or through an attorney, reasonable attorneys’ fees, together with
      all other legal and court expenses.  Lender is hereby given a security
      interest upon and in all of its balances, credits, deposits, accounts, items
      and
      monies and other property of Guarantor of every kind and description now or
      hereafter in the possession or control of Lender or any affiliate of Lender
      for
      any reason, including all dividends and distributions or other rights in
      connection therewith.  Guarantor agrees that its obligation hereunder shall
      not be discharged or impaired in any respect by reason of any failure by Lender
      to perfect, or continue perfection of, any lien or security interest in any
      security or any delay by Lender in perfecting any such lien or security
      interest. Guarantor acknowledges and agrees that Guarantor will receive a
      substantial direct and indirect benefit from Lender’s loans to Borrower, which
      loans are conditioned upon Guarantor’s execution and delivery of this Guaranty
      in favor of Lender.

    

    
      
         

      

      
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    2.    CONSENT
      AND WAIVER.

    

    Guarantor
      waives notice of acceptance hereof, creation of any of the Guaranteed
      Obligations, or nonpayment or default by Borrower under any of the Guaranteed
      Obligations or any agreement now or hereafter existing between Borrower and
      Lender, presentment, demand, notice of dishonor, protest and any other notices
      whatever. Guarantor waives any right to direct apportionment of payments and
      agrees that Lender may apply any payments received from Guarantor, Borrower
      or
      any other person or entity to the Guaranteed Obligations in such order as Lender
      may elect in its discretion. Guarantor, without affecting its liability
      hereunder, consents to and waives notice of all changes of terms of the
      Guaranteed Obligations, the withdrawal or extension of credit or time to pay,
      the release of the whole or any part of the Guaranteed Obligations, renewal,
      indulgence, settlement, compromise or failure to exercise due diligence in
      collection, the acceptance or release of security, extension of the time to
      pay
      for any period or periods whether or not longer than the original period, or
      any
      surrender, substitution or release of any other person directly or indirectly
      liable for any of the Guaranteed Obligations or any collateral security given
      by
      Borrower.  Guarantor agrees to subordinate and postpone any right of
      subrogation, reimbursement or indemnity whatsoever and any “claim” against
      Borrower in any proceeding under Title 11 of the United States Code, as amended
      (the “Bankruptcy
      Code”)
      and
      any right of recourse to or with respect to any assets or property of Borrower
      or to any collateral for the Guaranteed Obligations, until payment in full
      of
      the Guaranteed Obligations.  Guarantor also consents to and waives notice
      of any arrangements or settlements made in or out of court in the event of
      receivership, liquidation, readjustment, any proceeding under the Bankruptcy
      Code, or assignment for the benefit of creditors of Borrower, and anything
      whatever whether or not herein specified which may be done or waived by or
      between Lender and Borrower, or Borrower and any other person whose claim
      against Borrower has been or shall be assigned or transferred to Lender.
      Guarantor agrees that if any notification of intended disposition of collateral
      or of any other act by Lender is required by law and a specific time period
      is
      not stated therein, such notification, if mailed by first class mail at least
      ten (10) days before such disposition or act, postage prepaid, addressed to
      Guarantor at the address set forth on the signature page hereto or at any other
      address of Guarantor appearing on the records of Lender, shall be deemed
      reasonably and properly given.  Lender may, without notice of any kind,
      sell, assign or transfer any or all of the Guaranteed Obligations and in such
      event each and every immediate and successive assignee, transferee or holder
      of
      any of the Guaranteed Obligations shall have the right to enforce this Guaranty,
      by suit or otherwise for the benefit of such assignee, transferee or holder,
      as
      fully as if such assignee, transferee or holder were herein by name specifically
      given such rights, powers and benefits; Lender shall have an unimpaired right
      prior and superior to that of any such assignee, transferee or holder to enforce
      this Guaranty for the benefit of Lender as to such of the Guaranteed Obligations
      as is not sold, assigned or transferred.  LENDER AND GUARANTOR EACH HEREBY
      WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
      HEREON. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
      RELATED DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
      YORK
      LOCATED
      IN NEW YORK COUNTY OR OF THE UNITED STATES OF AMERICA LOCATED IN THE SOUTHERN
      DISTRICT OF NEW
      YORK,
      AND
      EACH OF GUARANTOR AND LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
      PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF GUARANTOR
      AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
      LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
      NON CONVENIENS,
      WHICH
      IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
      SUCH
      JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED
      HERETO.

    

    
      
         

      

      
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    3.    REPRESENTATIONS
      AND WARRANTIES.

    

    Guarantor
      hereby represents and warrants to Lender as follows:

    

    (a)    Guarantor
      (i) is a duly organized and validly existing corporation in good standing under
      the laws of the State of Delaware, (ii) is duly licensed or qualified to do
      business and in good standing in each jurisdiction where the failure to be
      so
      licensed or qualified would impair its ability to perform its obligations
      hereunder, and (iii) has all requisite corporate power and authority to own
      its
      properties and conduct its business as presently conducted and to execute and
      deliver, and to perform its obligations hereunder.

    

    (b)    There
      is
      no action, suit, proceeding or investigation at law or in equity by or before
      any court, governmental body or other agency now pending or, to the knowledge
      of
      Guarantor, threatened against or affecting Guarantor or its property or rights
      in which there is a reasonable possibility of an adverse determination and
      which, if adversely determined, could have a material adverse effect on
      Guarantor, its property or its business or prospects.

    

    (c)    The
      execution, delivery and performance of this Guaranty will not (i) conflict
      with
      or result in a breach of any terms or provisions of, or constitute a default
      under, any indenture, mortgage or other agreement or instrument to which
      Guarantor is a party or by which it or any of its property is bound, or any
      existing applicable law, rule, regulation, license, judgment, order or decree
      of
      any government, governmental body or court having jurisdiction over Guarantor
      or
      any of its activities or properties, or the articles of incorporation or by-laws
      of Guarantor, or (ii) result in, or require the creation or imposition of,
      any
      lien or security interest upon or with respect to any properties now or
      hereafter owned by Guarantor.

    

    (d)    The
      execution, delivery and performance of this Guaranty has been duly authorized
      by
      all necessary action of Guarantor, including, if necessary, approval by the
      board of directors and/or shareholders of Guarantor. This Guaranty has been
      duly
      executed and delivered by Guarantor and constitutes a legal, valid and binding
      obligation of Guarantor, enforceable according to its terms, subject to
      applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
      generally.

    

    4.    CONSTRUCTION.

    

    This
      Guaranty shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York.  Wherever possible, each provision of this
      Guaranty shall be interpreted in such manner as to be effective and valid under
      applicable law, but if any provision of this Guaranty shall be prohibited by
      or
      invalid under applicable law, said provision shall be ineffective only to the
      extent of such prohibition or invalidity, without invalidating the remainder
      of
      such provision or the remaining provisions of this Guaranty.  This Guaranty
      does not supersede any other guaranty or other agreement executed by Guarantor,
      or any other guaranty in favor of Lender.

     

    
      
         

      

      
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    5.    BENEFIT.

    

    This
      Guaranty shall bind Guarantor, and its successors and assigns, and the rights
      and privileges of Lender hereunder shall inure to the benefit of its successors
      and assigns, and this Guaranty shall be effective with respect to loans or
      advances made by Lender’s successors and assigns to Borrower. 

    

    6.    DURATION.

    

    This
      Guaranty shall continue in full force and effect until terminated by the actual
      receipt by Lender by registered or certified mail of written notice of
      termination from Guarantor.  Such termination shall be applicable only to
      transactions having their inception thereafter, and rights and obligations
      arising out of transactions having their inception prior to such termination
      shall not be affected.

    

    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      Guarantor has caused this Guaranty to be executed by its duly authorized officer
      as of the date first above written.

     

    
      	 	GUARANTOR: 
	 	 
	 	MDU COMMUNICATIONS INTERNATIONAL,
              INC. 
	 	 
	 	
              By:
                ______________________________
Name:
                ____________________________
Title:
                _____________________________ 

            

    

     

     

    ACCEPTANCE

     

    The
      foregoing Guaranty is accepted in __________________, ________________ this
      _____ day of September, 2006. 

     

    
      
        	 	FCC, LLC, d/b/a FIRST CAPITAL
	 	 
	 	
                By:
                  _________________________________
Name:
                  _______________________________
Title:
                  ________________________________ 

              

      

       

      
        
          	 	
                  FULL
                    CIRCLE FUNDING, LP
  
                    By its General Partner
     
                    FULL CIRCLE FUNDING, LLC
        
                    By its Managing Members

                
	 	 
	 	
                  By:
                    ______________________________
Robert
                    A. Blum
Managing Member 

                

        

        
           

          
            
              	 	 
	 	
                      By:
                        ______________________________
John
                        E. Stuart
Managing
                        MemberExhibit
      10.3

     

    STOCK
      PLEDGE AGREEMENT

    

    THIS
      STOCK PLEDGE AGREEMENT, dated as of September 11, 2006, is executed and
      delivered by MDU Communications International, Inc. (“Pledgor”), in favor of
      FCC, LLC d/b/a First Capital and Full
      Circle Funding, L.P. (collectively
      the “Secured Party”).

    

    W
      I T
      N E S S E T H
      :

    

    WHEREAS,
      Pledgor is the record and beneficial owner of the shares of capital stock
      described in Exhibit
      A
      hereto
      (the “Pledged Securities”) issued by each corporation named therein
      (individually and collectively referred to as the “Issuer”);
      and

    

    WHEREAS,
      MDU Communications (USA) Inc. (“Borrower”) and the Secured Party have entered
      into a Loan and Security Agreement dated as of September 11, 2006 (as amended,
      modified, supplemented and restated from time to time, the “Loan Agreement”),
      pursuant to which the Secured Party has agreed to make certain loans and other
      financial accommodations to the Borrower; and

    

    WHEREAS,
      Pledgor has guaranteed the Obligations of Borrower to Secured Party in
      accordance with the terms of the Loan Documents and as a condition precedent
      to
      the Secured Party’s obligation to make loans under the Loan Agreement, and as
      security for all of the Obligations, the Secured Party is requiring that Pledgor
      execute and deliver this Stock Pledge Agreement and grant the security interest
      contemplated hereby.

    

    NOW,
      THEREFORE, in consideration of the premises and the covenants hereinafter
      contained, and to induce the Secured Party to enter into the Loan Agreement
      and
      make the loans under the Loan Agreement, it is agreed as follows:

    

    1.    Definitions.
      Unless
      otherwise defined herein, terms defined in the Loan Agreement are used herein
      as
      there-in defined, and the following shall have (unless other-wise provided
      elsewhere in this Stock Pledge Agreement) the following respective meanings
      (such meanings being equally applicable to both the singular and plural form
      of
      the terms defined):

    

    “Agreement”
      shall mean this Stock Pledge Agreement, including all amendments, modifications
      and supplements and any exhibits or schedules to any of the foregoing, and
      shall
      refer to the Agreement as the same may be in effect at the time such reference
      becomes operative.

    

    “Bankruptcy
      Code” shall mean Title 11, United States Code, as amended from time to time, and
      any successor statute thereto.

    

    “Event
      of
      Default” shall mean any of the following events:

    

    (a)    there
      shall occur any “Default” under the Loan Agreement, as such term is defined
      therein;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)    any
      of
      the Pledged Collateral shall be attached or levied upon or seized in any legal
      proceedings, or held by virtue of any Lien or distress, which attachment or
      process shall continue undischarged or unstayed for thirty (30)
      days;

    

    (c)    Pledgor
      shall default in the observance or performance of any covenant or agreement
      set
      forth in this Agreement, and such default shall continue for ten (10) days
      after
      written notice thereof is given to Pledgor by the Secured Party (provided such
      cure period shall not apply to defaults under Sections 6.1, 6.2, 6.4, 6.5 or
      6.7); or

    

    (d)    Pledgor
      or any affiliate of Pledgor makes any representations or warranties in this
      Agreement or in any certificate or statement furnished at any time hereunder
      or
      thereunder or in connection herewith or therewith which proves to have been
      untrue or misleading in any material respect when made or furnished and which
      continues to be untrue or misleading in any material respect.

    

    “Lien”
means
      any
      mortgage, deed to secure debt, deed of trust, lien, pledge, charge, capital
      lease, conditional sale or other title retention agreement, or other security
      interest, security title or encumbrance of any kind in respect of any
      property.

    

    “Person” means
      an
      individual, corporation, partnership, limited liability company, association,
      trust, unincorporated organization, government or any agency or political
      subdivision thereof, or any other entity.

    

    “Pledged
      Collateral”
shall
      have the meaning assigned to such term in Section 2 hereof.

    

    2.    Pledge.
      Pledgor
      hereby pledges and grants to the Secured Party a security interest in all of
      the
      following (collectively, the “Pledged Collateral”):

    

    2.1    One
      hundred percent (100%) of the issued and outstanding capital stock of the Issuer
      as represented by the Pledged Securities and the certificates representing
      the
      Pledged Securities, and all dividends, distributions, cash, instruments and
      other property or proceeds from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of the Pledged
      Securities; and

    

    2.2    all
      proceeds of any of the foregoing.

    

    3.    Security
      for Obligations.
      This
      Agreement secures, and the Pledged Collateral is security for, the payment
      and
      performance of all of the Obligations.

    

    4.    Delivery
      of Pledged Collateral.
      All
      certi-ficates representing or evidencing the Pledged Securities shall be
      delivered to and held by or on behalf of the Secured Party pursuant hereto
      and
      shall be accompanied by duly executed instruments of transfer or assignment
      in
      blank, all in form and substance satisfactory to the Secured Party. The Secured
      Party shall have the right, in its discretion and without notice to Pledgor
      at
      any time after the occurrence and during the continuance of an Event of Default,
      to transfer to or to register in the name of the Secured Party, or any of its
      nominees, subject to the terms of this Agreement, any or all of the Pledged
      Securities. In addition, the Secured Party shall have the right at any time
      following the occurrence and during the continuance of an Event of Default
      to
      exchange certificates or instruments representing or evidencing Pledged
      Securities for certificates or instruments of smaller or larger
      denominations.

     

    
      
        
        

      

      
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    5.    Representations
      and Warranties.
      Pledgor
      represents and warrants to the Secured Party that:

    

    5.1    Pledgor
      is, and at the time of delivery of the Pledged Securities to the Secured Party
      pursuant to Section 4 hereof will be, the sole holder of record and the sole
      beneficial owner of the Pledged Collateral free and clear of any Lien thereon
      or
      affecting the title thereto except for the Lien created by this Agreement and
      the Lien created in favor of the Secured Party under the Loan
      Agreement.

    

    5.2    The
      Pledged Securities included in the Pledged Collateral constitute the percentage
      of the issued and outstanding shares of capital stock of the Issuer as is set
      forth on Exhibit A
      attached
      hereto. All of the Pledged Securities have been duly authorized, validly issued
      and are fully paid and non-assessable; and there are no existing options,
      warrants or commitments of any kind or nature or any outstanding securities
      or
      other instruments convertible into shares of any class of capital stock of
      the
      Issuer, and no capital stock of the Issuer is held in the treasury of the
      Issuer.

    

    5.3    Pledgor
      has the right and requisite authority to pledge, assign, transfer, deliver,
      deposit and set over the Pledged Collateral to the Secured Party as provided
      herein.

    

    5.4    None
      of
      the Pledged Securities has been issued or transferred in violation of the
      securities registration, securities disclosure or similar laws of any
      jurisdiction to which such issuance or transfer may be subject. Pledgor’s
      execution and delivery of this Agreement and the pledge of the Pledged
      Collateral hereunder do not, directly or indirectly, violate or result in a
      violation of any such laws.

    

    5.5    None
      of
      the Pledged Securities included in the Pledged Collateral is, as of the date
      of
      this Agreement, Margin Stock (as such term is defined in 12 C.F.R. Section
      207),
      and Pledgor shall, promptly after learning thereof, notify the Secured Party
      of
      any Pledged Collateral which is or becomes Margin Stock and execute and deliver
      in favor of the Secured Party any and all instruments, documents and agreements
      (including, but not limited to Form U-1) necessary to cause the pledge of such
      Margin Stock to comply with all applicable laws, rules and
      regulations.

    

    5.6    No
      consent, approval, authorization or other order of any Person and no consent,
      authorization, approval, or other action by, and no notice to or filing with,
      any governmental departments, commissions, boards, bureaus, agencies or other
      instrumentalities, domestic or foreign, is required to be made or obtained
      by
      Pledgor either (a) for the pledge of the Pledged Collateral pursuant to this
      Agreement or for the execution, delivery or performance of this Agreement by
      Pledgor or (b) for the exercise by the Secured Party of the voting or other
      rights provided for in this Agreement or the remedies in respect of the Pledged
      Collateral pursuant to this Agreement, except as may be required in connection
      with such disposition by laws affecting the offering and sale of securities
      generally.

     

    
      
        
        

      

      
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    5.7    The
      pledge, assignment and delivery of the Pledged Collateral pursuant to this
      Agreement will create a valid Lien on and a perfected security interest in
      the
      Pledged Collateral pledged by Pledgor, and the proceeds thereof, securing the
      payment of the Obligations.

    

    5.8    This
      Agreement has been duly authorized, executed and delivered by Pledgor and
      constitutes a legal, valid and binding obligation of Pledgor enforceable in
      accordance with its terms, except as enforceability may be limited by
      bankruptcy, insolvency, or other similar laws affecting the rights of creditors
      generally or by the application of general equity principles.

    

    The
      representations and warranties set forth in this Section 5 shall survive the
      execution and delivery of this Agreement.

    

    6.    Covenants.
      Pledgor
      covenants and agrees that until the later to occur of (a) the end of the Term,
      or (b) the payment in full of the Obligations and the termination of the Secured
      Party’s commitment to advance funds under the Loan Agreement:

    

    6.1    Except
      as
      provided herein and as permitted under the Loan Agreement, without the prior
      written consent of the Secured Party, Pledgor will not sell, assign, transfer,
      pledge, or otherwise encumber any of its rights in or to the Pledged Collateral
      or any unpaid dividends or other unpaid distributions or payments with respect
      thereto or grant a Lien therein.

    

    6.2    Pledgor
      will not, subsequent to the date of this Agreement, other than as permitted
      in
      the Loan Agreement, cause or permit the Issuer to issue any shares of capital
      stock or securities convertible into shares of capital stock, unless and except
      upon first having obtained the prior written consent of the Secured Party
      thereto.

    

    6.3    Pledgor
      will, at its expense, promptly execute, acknowledge and deliver all such
      instruments and take all such action as the Secured Party from time to time
      may
      reasonably request in order to ensure to the Secured Party the benefits of
      the
      Liens in and to the Pledged Collateral intended to be created by this Agreement,
      including the filing of any necessary or desirable Uniform Commercial Code
      financing statements, which may be filed by the Secured Party with or without
      the signature of Pledgor, and will cooperate with the Secured Party, at
      Pledgor’s expense, in obtaining all necessary approvals and making all necessary
      filings under federal or state law in connection with such Liens or any sale
      or
      transfer of the Pledged Collateral.

    

    6.4    Pledgor
      has and will defend the title to the Pledged Collateral and the Liens of the
      Secured Party thereon against the claim of any Person and will maintain and
      preserve such Liens.

    

    6.5    Pledgor
      will, upon obtaining any additional shares of capital stock of the Issuer which
      are not already Pledged Collateral, promptly (and in any event within three
      (3)
      Business Days) deliver to the Secured Party a Pledge Amendment, duly executed
      by
      Pledgor, in substantially the form of Exhibit
      B
      hereto
      (a “Pledge Amendment”), to confirm the pledge of such additional Pledged
      Securities pursuant to this Agreement; provided,
      however,
      that
      the failure of Pledgor to execute and deliver any such Pledge Amendment shall
      not prevent such additional Pledged Securities from being subject to the Lien
      created by this Agreement. Pledgor hereby authorizes the Secured Party to attach
      each Pledge Amendment to this Agreement and agrees that all shares of stock
      listed on any Pledge Amendment delivered to the Secured Party shall for all
      purposes hereunder be considered Pledged Securities hereunder and shall be
      included in the Pledged Collateral.

     

    
      
        
        

      

      
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    6.6    Pledgor
      will pay all taxes, assessments and charges levied, assessed or imposed upon
      the
      Pledged Collateral owned by it before the same become delinquent or become
      Liens
      upon any of the Pledged Collateral except where such taxes, assessments and
      charges may be contested in good faith by appropriate proceedings and
      appropriate reserves have been established on Pledgor’s books in accordance with
      GAAP.

    

    6.7    Pledgor
      will not create, grant or suffer to exist any Lien on any of the Pledged
      Collateral except those in favor of the Secured Party.

    

    7.    Distributions;
      Etc.

    

    7.1    Right
      of Pledgor to Receive Distributions.
      For so
      long as no Event of Default exists, Pledgor shall have the right to receive
      cash
      distributions declared and paid with respect to the Pledged Collateral, to
      the
      extent such distributions are permitted by the Loan Agreement. Any and all
      stock
      or liquidating distributions, other distributions in property, return of capital
      or other distributions made on or in respect of Pledged Collateral, whether
      resulting from a subdivision, combination or reclassification of the outstanding
      capital stock of the Issuer or received in exchange for Pledged Collateral
      or
      any part thereof or as a result of any merger, consolidation, acquisition or
      other exchange of assets to which the Issuer may be a party or otherwise, shall
      be and become part of the Pledged Collateral pledged hereunder and, if received
      by Pledgor, shall be received in trust for benefit of the Secured Party, be
      segregated from the other property and funds of Pledgor, and shall forthwith
      be
      delivered to the Secured Party to be held subject to the terms of this
      Agreement.

    

    7.2    Holding
      Pledged Collateral; Exchanges.
      The
      Secured Party may hold any of the Pledged Collateral, endorsed or assigned
      in
      blank, and following the occurrence and during the continuance of an Event
      of
      Default, may deliver any of the Pledged Collateral to the issuer thereof for
      the
      purpose of making denominational exchanges or registrations or transfers or
      for
      such other reasonable purpose in furtherance of this Agreement as the Secured
      Party may deem desirable. In addition, the Secured Party shall have the right
      at
      any time following the occurrence and during the continuance of an Event of
      Default to exchange certificates or instruments representing or evidencing
      Pledged Collateral for certificates or instruments of smaller or larger
      denominations.

    

    7.3    Termination
      of Pledgor’s Right to Receive Distributions.
      During
      the existence of any Event of Default, all rights of Pledgor to receive any
      cash
      distributions pursuant to Section 7.1 hereof shall cease, and all such rights
      shall thereupon become vested in the Secured Party, and the Secured Party shall
      have the sole and exclusive right to receive and retain the distributions which
      Pledgor would otherwise be authorized to receive and retain pursuant to Section
      7.1 hereof. In such event, Pledgor shall pay over to the Secured Party any
      distributions received by it with respect to the Pledged Collateral and any
      and
      all money and other property paid over to or received by the Secured Party
      pursuant to the provisions of this Section 7.3 shall be retained by the Secured
      Party as Pledged Collateral hereunder and/or shall be applied to the repayment
      of the Obligations in accordance with the provisions hereof.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    8.    Remedies.
      When an
      Event of Default has occurred and is continuing, the Secured Party shall have
      the following rights and remedies:

    

    8.1    Secured
      Creditor.
      All of
      the rights and remedies of a secured party under the Uniform Commercial Code
      of
      the State where such rights and remedies are asserted, or under other applicable
      law, all of which rights and remedies shall be cumulative, and none of which
      shall be exclusive, to the extent permitted by law, in addition to any other
      rights and remedies contained in this Agreement.

    

    8.2    Right
      of Sale.
      The
      Secured Party may, without demand and without advertisement, notice or legal
      process of any kind (except as may be required by law), all of which Pledgor
      waives, at any time or times (a) apply any cash distributions received by
      the Secured Party pursuant to Section 7.3 hereof to the Obligations and (b)
      if
      following such application there remains outstanding any Obligations, sell
      the
      remaining Pledged Collateral, or any part thereof at public or private sale
      or
      at any broker’s board or on any securities exchange, for cash, upon credit or
      for future delivery as the Secured Party shall deem appropriate. The Secured
      Party shall be authorized at any such sale (if, on the advice of counsel, it
      deems it advisable to do so) to restrict the prospective bidders or purchasers
      to Persons who will represent and agree that they are purchasing the Pledged
      Collateral for their own account for investment and not with a view to the
      distribution or resale thereof, and upon consummation of any such sale the
      Secured Party shall have the right to assign, transfer and deliver to the
      purchaser or purchasers thereof the Pledged Collateral so sold. Each such
      purchaser at any such sale shall hold the property sold absolutely free from
      any
      claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent
      permitted by law) all rights of redemption, stay and/or appraisal which Pledgor
      now has or may have at any time in the future under any rule of law or statute
      now existing or hereafter enacted. The proceeds realized from the sale of any
      Pledged Collateral shall be applied as set forth in the Loan
      Agreement.

    

    8.3    Notice.
      In
      addition thereto, Pledgor further agrees that in the event that notice is
      necessary under applicable law, written notice mailed to Pledgor in the manner
      specified in Section 16 hereof ten (10) days prior to the date of the
      disposition of the Pledged Collateral subject to the security interest created
      herein at any such public sale or sale at any broker’s board or on any such
      securities exchange, or prior to the date after which private sale or any other
      disposition of said Pledged Collateral will be made, shall constitute
      commercially reasonable and fair notice.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    8.4    Securities
      Act, etc.
      If, at
      any time when the Secured Party shall determine to exercise its right to sell
      the whole or any part of the Pledged Collateral hereunder, such Pledged
      Collateral or the part thereof to be sold shall not, for any reason whatsoever,
      be effectively registered under the Securities Act of 1933, as now or hereafter
      in effect, or any similar statute now or hereafter in effect in any jurisdiction
      (collectively, the “Securities Laws”), the Secured Party may, in its discretion
      (subject only to applicable requirements of law), sell such Pledged Collateral
      or part thereof by private sale in such manner and under such circumstances
      as
      the Secured Party may deem necessary or advisable, but subject to the other
      requirements of this Section 8, and shall not be required to effect such
      registration or to cause the same to be effected. Without limiting the
      generality of the forego-ing, in any such event, the Secured Party in its
      discretion (a) may, in accordance with applicable securities laws, proceed
      to make such private sale notwithstanding that a registration statement for
      the
      purpose of registering such Pledged Collateral or part thereof could be or
      shall
      have been filed under any applicable Securities Law, (b) may approach and
      negotiate with a single possible purchaser to effect such sale, and (c) may
      restrict such sale to a purchaser who will represent and agree that such
      purchaser is purchasing for its own account, for investment and not with a
      view
      to the distribution or sale of such Pledged Collateral or part thereof. In
      addition to a private sale as provided above in this Section 8, if any of
      the Pledged Collateral shall not be freely distributable to the public without
      registration under applicable Securities Laws at the time of any proposed sale
      pursuant to this Section 8, then the Secured Party shall not be required to
      effect such registration or cause the same to be effected but, in its discretion
      (subject only to applicable requirements of law), may require that any sale
      hereunder (including a sale at auction) be conducted subject to restrictions
      (i) as to the financial sophistication and ability of any Person permitted
      to bid or purchase at any such sale, (ii) as to the content of legends to
      be placed upon any certificates representing the Pledged Collateral sold in
      such
      sale, including restrictions on future transfer thereof, (iii) as to the
      representations required to be made by each Person bidding or purchasing at
      such
      sale relating to that Person’s access to financial information about Pledgor and
      such Person’s intentions as to the holding of the Pledged Collateral so sold for
      investment, for its own account, and not with a view to the distribution
      thereof, and (iv) as to such other matters as the Secured Party may, in its
      discretion, deem necessary or appropriate in order that such sale
      (notwithstanding any failure so to register) may be effected in compliance
      with
      the Bankruptcy Code and other laws affecting the enforcement of creditors’
rights and all applicable Securities Laws.

     

    8.5    Registration.
      Pledgor
      acknowledges that notwithstanding the legal availability of a private sale
      or a
      sale subject to the restrictions described above in paragraph 8.4, the Secured
      Party may, in its discretion and at its sole expense, elect to register any
      or
      all of the Pledged Collateral under applicable Securities Laws. Pledgor,
      however, recognizes that the Secured Party may be unable to effect a public
      sale
      of any or all the Pledged Collateral and may be compelled to resort to one
      or
      more private sales thereof. Pledgor also acknowledges that any such private
      sale
      may result in prices and other terms less favorable to the seller than if such
      sale were a public sale and, notwithstanding such circumstances, agrees that
      any
      such private sale shall be deemed to have been made in a commercially reasonable
      manner. The Secured Party shall be under no obligation to delay a sale of any
      of
      the Pledged Collateral for the period of time necessary to permit the registrant
      to register such securities for public sale under applicable Securities Laws,
      even if Pledgor would agree to do so.

    

    8.6    Waiver
      of Certain Rights.
      Pledgor
      agrees that following the occurrence and during the continuance of an Event
      of
      Default it will not at any time plead, claim or take the benefit of any
      appraisal, valuation, stay, extension, moratorium or redemption law now or
      hereafter in force in order to prevent or delay the enforcement of this
      Agreement, or the absolute sale of the whole or any part of the Pledged
      Collateral or the possession thereof by any purchaser at any sale hereunder,
      and
      Pledgor waives the benefit of all such laws to the extent it lawfully may do
      so.
      Pledgor agrees that it will not interfere with any right, power or remedy of
      the
      Secured Party provided for in this Agreement or now or hereafter existing at
      law
      or in equity or by statute or otherwise, or the exercise or beginning of the
      exercise by the Secured Party of any one or more of such rights, powers or
      remedies. No failure or delay on the part of the Secured party to exercise
      any
      such right, power or remedy and no notice or demand which may be given to or
      made upon Pledgor by the Secured Party with respect to any such remedies shall
      operate as a waiver thereof, or limit or impair the Secured Party’s right to
      take any action or to exercise any power or remedy hereunder, without notice
      or
      demand, or prejudice its rights as against Pledgor in any respect.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    8.7    Specific
      Performance.
      Pledgor
      further agrees that a breach of any of the covenants contained in this Section
      8
      will cause irreparable injury to the Secured Party, that the Secured Party
      has
      no adequate remedy at law in respect of such breach and, as a consequence,
      agrees that each and every covenant contained in this Section 8 shall be
      specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
      not to assert any defenses against an action for specific performance of such
      covenants except for a defense that the Obligations are not then due and payable
      in accordance with the agreements and instruments governing and evidencing
      such
      obligations.

    

    9.    Power
      of Attorney; Proxy.
      

    

    9.1    During
      the existence of an Event of Default, Pledgor irrevocably designates, makes,
      constitutes and appoints the Secured Party (and all Persons designated by the
      Secured Party) as its true and lawful attorney (and agent-in-fact) and the
      Secured Party, or the Secured Party’s agent, may, without notice to Pledgor, and
      at such time or times thereafter as the Secured Party or said agent, in its
      discretion, may determine, in the name of Pledgor or the Secured Party: (a)
      transfer the Pledged Collateral on the books of the issuer thereof, with full
      power of substitution in the premises; (b) endorse the name of Pledgor upon
      any
      checks, notes, acceptance, money orders, certificates, drafts or other forms
      of
      payment of security that come into the Secured Party’s possession to the extent
      they constitute Pledged Collateral; and (c) do all acts and things necessary,
      in
      the Secured Party’s discretion, to fulfill the obligations of Pledgor under this
      Agreement.

    

    9.2    During
      the existence of an Event of Default, the Secured Party, or its nominee, without
      notice or demand of any kind to Pledgor, shall have the sole and exclusive
      right
      to exercise all voting powers pertaining to any and all of the Pledged
      Collateral (and to give written consents in lieu of voting thereon) and may
      exercise such power in such manner as the Secured Party, in its sole discretion,
      shall determine. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE.
      The
      exercise by the Secured Party of any of its rights and remedies under this
      Section shall not be deemed a disposition of Pledged Collateral under
      Article 9 of the Uniform Commercial Code nor an acceptance by the Secured
      Party of any of the Pledged Collateral in satisfaction of any of the
      Obligations.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    10.    Waiver.
      No
      delay on the Secured Party’s part in exercising any power of sale, Lien, option
      or other right hereunder, and no notice or demand which may be given to or
      made
      upon Pledgor by the Secured Party with respect to any power of sale, Lien,
      option or other right hereunder, shall constitute a waiver thereof, or limit
      or
      impair the Secured Party’s right to take any action or to exercise any power of
      sale, Lien, option, or any other right hereunder, without notice or demand,
      or
      prejudice the Secured Party’s rights as against Pledgor in any
      respect.

    

    11.    Assignment.
      The
      Secured Party may assign, endorse or transfer any instrument evidencing all
      or
      any part of the Obligations as provided in, and in accordance with, the Loan
      Agreement, and the holder of such instrument shall be entitled to the benefits
      of this Agreement.

    

    12.    Termination.
      This
      Agreement shall terminate and be of no further force or effect at such time
      as
      the Obligations shall be paid and performed in full and the Secured Party’s
      commitment to lend under the Loan Agreement shall have been terminated. Upon
      such termination of this Agreement, the Secured Party shall deliver to Pledgor
      the Pledged Collateral at the time subject to this Agreement and then in the
      Secured Party’s possession or control and all instruments of assignment executed
      in connection therewith, free and clear of the Liens hereof and, except as
      otherwise provided herein, all of Pledgor’s obligations hereunder shall at such
      time terminate.

    

    13.    Reinstatement.
      This
      Agreement shall remain in full force and effect and continue to be effective
      should any petition be filed by or against Borrower for liquidation or
      reorganization, should Borrower become insolvent or make an assignment for
      the
      benefit of creditors or should a receiver or trustee be appointed for all or
      any
      significant part of Borrower’s assets, and shall continue to be effective or be
      reinstated, as the case may be, if at any time payment and performance of the
      Obligations, or any part thereof, is, pursuant to applicable law, rescinded
      or
      reduced in amount, or must otherwise be restored or returned by any obligee
      of
      the Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or
      otherwise, all as though such payment or performance had not been made. In
      the
      event that any payment, or any part thereof, is rescinded, reduced, restored
      or
      returned, the Obligations shall be reinstated and deemed reduced only by such
      amount paid and not so rescinded, reduced, restored or returned.

    

    14.    Miscellaneous.
      This
      Agreement shall be binding upon Pledgor and its successors and assigns, and
      shall inure to the benefit of, and be enforceable by, the Secured Party and
      its
      successors and assigns, and shall be governed by, and construed and enforced
      in
      accordance with, the internal laws in effect in the State of New York, and
      none
      of the terms or provisions of this Agreement may be waived, altered, modified
      or
      amended except in writing duly signed for and on behalf of the Secured Party
      and
      Pledgor.

    

    15.    Severability.
      If for
      any reason any provision or provisions hereof are determined to be invalid
      and
      contrary to any existing or future law, such invalidity shall not impair the
      operation of or effect those portions of this Agreement which are
      valid.

    

    16.    Notices.
      Except
      as otherwise provided herein, whenever it is provided herein that any notice,
      demand, request, consent, approval, declaration or other communication shall
      or
      may be given to or served upon any of the parties by any other party, or
      whenever any of the parties desires to give or serve upon any other a
      communication with respect to this Agreement, each such notice, demand, request,
      consent, approval, declaration or other communication shall be in writing and
      shall be delivered in accordance with the terms of Section 13 of the Loan
      Agreement.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    17.    Section
      Titles.
      The
      Section titles contained in this Agreement are and shall be without substantive
      meaning or content of any kind whatsoever and are not a part of the agreement
      between the parties hereto.

    

    18.    Counterparts.
      This
      Agreement may be executed in any number of counterparts, which shall,
      collectively and separately, constitute one agreement.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed as of the date first
      written above.

     

    
      
        	 	PLEDGOR:
	 	 
	 	MDU COMMUNICATIONS INTERNATIONAL,
                INC. 
	 	 
	 	
                By:
                  ______________________________
Sheldon
                  Nelson,
President
                  and Chief Executive
                  Officer 

              

      

       

       

      
        
          	 	SECURED PARTY: 
	 	 
	 	FCC, LLC, d/b/a FIRST CAPITAL
	 	 
	 	
                  By:
                    _________________________________
Name:
                    _______________________________
Title:
                    ________________________________ 

                

        

         

        
          
            	 	SECURED PARTY: 
	 	 
	 	
                    FULL
                      CIRCLE FUNDING, LP

  
                      By its General Partner

     
                      FULL CIRCLE FUNDING, LLC

        
                      By its Managing Members

                  
	 	 
	 	
                    By:
                      ______________________________
Name:
                      Robert A. Blum
Title: Managing
                      Member 

                  

          

          
             

            
              
                	 	 
	 	
                        By:
                          ______________________________
Name:
                          John E. Stuart
Title: Managing
                          Member 

                      

              

               

              
                
                   

                

                
                   

                  
                    

                  

                

                
                   

                

              

            

          

        

      

    

    EXHIBIT
      A

    to
      the
      Stock Pledge Agreement

    
 

    Attached
      to and forming a part of that certain Stock Pledge Agreement dated as of
      September __, 2006 executed and delivered by Pledgor to Secured
      Party.

     

    
      	
              Issuer

            	
              Class
                of
Stock

            	
              Certificate
Number(s)

            	
              Number
                of
Shares

            	
              Number
                of Shares
Issued
                & Outstanding

            
	 	 	 	 	 
	MDU
              Communications (USA)
              Inc.	
              Common

            	
              1

            	
              10,000

            	
              10,000

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

       

    EXHIBIT
      B

    to
      the
      Stock Pledge Agreement

    

    PLEDGE
      AMENDMENT

    
 

    This
      Pledge Amendment, dated September __, 2006 is delivered pursuant to
      Section 6.5 of the Stock Pledge Agreement referred to below. The
      undersigned hereby (a) pledges,
      conveys, hypothecates, mortgages, assigns, sets over, delivers and grants to
      the
      Secured Party a security interest in the shares of capital stock set forth
      below
      (the “Additional Securities”) and all dividends, distributions, cash,
      instruments and other property or proceeds from time to time received,
      receivable or otherwise distributed in respect of or in exchange for any or
      all
      of the Additional Securities, all on the terms and conditions set forth in
      that
      certain Stock Pledge Agreement, dated as of _____________________ (the “Stock
      Pledge Agreement”), executed and delivered by the undersigned, as Pledgor, to
      __________________, a division of ________________, which terms and conditions
      are hereby incorporated herein by reference; (b)
      agrees
      that this Pledge Amendment may be attached to the Pledge Agreement; and
      (c)
      agrees
      that the Additional Securities listed on this Pledge Amendment shall be deemed
      to be a part of the Pledged Securities under the Stock Pledge Agreement, shall
      become a part of the Pledged Collateral referred to in the Stock Pledge
      Agreement and shall secure all Obligations referred to in the Stock Pledge
      Agreement. Capitalized terms used herein but not defined shall have the meanings
      ascribed to such terms in the Stock Pledge Agreement.

    

    

    
      	 	__________________________________ 
	 	 
	 	
              By:
                _______________________________
Name:
                _____________________________
Title:
                ______________________________

            

    

     

    
       

      
        	
                Issuer

              	
                Class
                  of
Stock

              	
                Certificate
Number(s)

              	
                Number
                  of
Shares

              	
                Number
                  of Shares
Issued
                  & Outstanding

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