Exh. 4.4
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USN COMMUNICATIONS, INC.
9% CONVERTIBLE SUBORDINATED NOTES DUE 2004
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SUPPLEMENTAL INDENTURE NO. 1
Dated as of August 12, 1997
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XXXXXX TRUST AND SAVINGS BANK,
Trustee
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SUPPLEMENTAL INDENTURE NO. 1, dated as of August 12, 1997 (the
"Supplement"), to the Indenture, dated as of September 30, 1996 (the
"Indenture"), between USN COMMUNICATIONS, INC. (formerly, United USN, Inc.), a
Delaware corporation (the "Company"), having its principal office at 00 Xxxxx
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to such terms
in the Indenture.
RECITALS OF THE COMPANY
WHEREAS, the Company and the Trustee have entered into the Indenture
pursuant to which the Company has issued $36,000,000 aggregate principal amount
at Stated Maturity of its 9% Convertible Subordinated Notes due 2004 (the
"Convertible Notes");
WHEREAS, Section 9.02 of the Indenture provides that the Company and the
Trustee, with the consent of the Holder of each outstanding Convertible Note,
may enter into one or more indentures supplemental thereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or modifying in any manner the rights of the
Holders;
WHEREAS, all acts and things prescribed by the Indenture and by law
necessary to make this Supplement a valid instrument legally binding on the
Company and the Trustee, in accordance with its terms, have been duly done and
performed; and
WHEREAS, all conditions precedent to amend or supplement the Indenture have
been met, including, without limitation, receipt of the consents of each of the
Holders of the outstanding Convertible Notes.
NOW, THEREFORE, each party agrees, for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Notes, to the deletions,
amendments and modifications set forth below which will become operative
pursuant to the terms hereof.
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ARTICLE I
AMENDMENTS
Section 1.01 Deletions, Amendments and Modifications to Article I.
(a) The following terms are inserted in Section 1.1 of the
Indenture as new definitions.
""Consent Agreement" means the Consent Agreement, dated as of August
12, 1997, by and among the Company, Xxxxxxx Xxxxx Global Allocation Fund,
Inc. and Xxxxxxx Xxxxx Equity/Convertible Series (Global Allocation
Portfolio)."
""New Convertible Note Asset Sale Offer" means an "Asset Sale Offer"
as defined in and made pursuant to the provisions of the New Convertible
Note Indenture."
""New Convertible Note Indenture" means the Indenture, to be dated the
date of issuance of the New Convertible Notes, if issued, between the
Company and the New Convertible Note Trustee, as amended and supplemented
from time to time."
""New Convertible Note Trustee" means the trustee to be appointed, if
applicable, under the New Convertible Note Indenture and any successor
appointed in accordance with the terms thereof."
""New Convertible Notes" means a new issue of 9% convertible
subordinated notes in an amount yielding $10 million in proceeds to the
Company to be issued by the Company pursuant to the New Convertible Note
Indenture, if applicable, pursuant to the exercise by certain Persons of an
option to purchase such notes pursuant to the Consent Agreement."
""New Senior Note Asset Sale Offer" means an "Asset Sale Offer" as
defined in and made pursuant to the provisions of the New Senior Note
Indenture."
""New Senior Note Guarantees" means a guarantee of payment of the New
Senior Notes in the form of a supplemental indenture to the New
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Senior Note Indenture to be executed and delivered pursuant to the New
Senior Note Indenture."
""New Senior Note Indenture" means the indenture, dated the date
hereof, between the Company and the New Senior Note Trustee, as amended and
supplemented from time to time."
""New Senior Notes" means $152,800,000 aggregate principal amount at
stated maturity of senior notes to be issued pursuant to the New Senior
Note Indenture and up to $48,500,000 aggregate principal amount at stated
maturity of additional senior notes that may be issued pursuant to the New
Senior Note Indenture upon the exchange of Senior Notes, in whole but not
in part, by the holders thereof for New Senior Notes pursuant to the
Consent Agreement."
(b) The definition of "Additional Warrants" is hereby amended and
modified to read in its entirety as follows:
""Additional Warrants" means the Additional Warrants which may be
issued pursuant to Section 4.15 hereof and the Warrant Agreement if the
Company does not achieve consolidated total revenues (calculated in
accordance with GAAP) of at least $8,500,000 for the period from June 1,
1997 through June 30, 1997 and if, among other things, by August 31, 1997,
the Company has not either consummated a qualified Public Offering or been
sold pursuant to a Qualified Sale of the Company.
(c) The definition of "Asset Sale" is hereby amended and modified to
read in its entirety as follows:
""Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease or other disposition (including, without
limitation, dispositions pursuant to any consolidation or merger) by such
Person or any of its Restricted Subsidiaries to any Person other than to
such Person or a Restricted Subsidiary of such Person, in one transaction
or a series of related transactions (each hereinafter referred to as a
"Disposition"), of (a) Capital Stock of or other equity interests in any
Restricted Subsidiary (other than director's qualifying shares) except as
provided in clause (iv) of this definition, (b) all or substantially all of
the assets of any division or line of business of such Person or of any the
Restricted Subsidiaries or (c) Property or assets of
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such Person or any of its Restricted Subsidiaries, the Fair Market Value of
which exceeds $500,000, other than (i) a Disposition of Property in the
ordinary course of business and consistent with industry practice, (ii) a
Disposition of Eligible Cash Equivalents, (iii) a Disposition that
constitutes a Restricted Payment permitted under Section 4.13 of the Senior
Note Indenture and/or the New Senior Note Indenture, (iv) a Disposition of
no more than 10 percent of the Capital Stock of USN Solutions on a fully
diluted basis pursuant to the exercise of the USN Solutions Option, (v) a
Disposition by the Company in connection with a transaction permitted under
Article V hereof and (vi) contribution of assets to any Unrestricted
Subsidiary constituting an Investment otherwise permitted under the Senior
Note Indenture and the New Senior Note Indenture."
(d) The definition of "Pari Passu Indebtedness" is hereby amended and
modified to read in its entirety as follows:
""Pari Passu Indebtedness" means any Indebtedness (secured or
unsecured) of the Company or any Guarantor that ranks pari passu in right
of payment with the Senior Notes, the Senior Note Guarantees, the New
Senior Notes or the New Senior Note Guarantees, as applicable."
(e) The definition of "Senior Indebtedness" is hereby amended and
modified to read in its entirety as follows:
""Senior Indebtedness" means all obligations of the Company under the
Senior Notes, the Senior Note Indenture and the Senior Note Guarantees
contained in the Senior Note Indenture, if any, and the New Senior Notes,
the New Senior Note Indenture and the New Senior Note Guarantees contained
in the New Senior Note Indenture, if any."
(f) Section 1.03(g) is hereby amended and modified to read in its
entirety as follows:
"(g) when used with respect to the Senior Notes, the Convertible
Notes, the New Senior Notes or, if issued, the New Convertible Notes, the
term "principal amount" shall mean the principal amount thereof at the
Stated Maturity of such principal amount; and"
5
Section 1.02 Deletions, Amendments and Modifications to Article IV.
(a) Section 4.08(b)(ii) is hereby amended and modified to read
in its entirety as follows:
"(ii) apply an amount equal to such Net Cash Proceeds, or remaining
Net Cash Proceeds, (A) to the permanent reduction of Indebtedness of the
Company (other than Indebtedness to a Restricted Subsidiary of the Company)
that is pari passu in right of payment with the Senior Notes, the New
Senior Notes, the Convertible Notes and, if issued, the New Convertible
Notes; provided, however, that in connection with any such permanent
reduction of Indebtedness of the Company, the Company shall apply, pro
rata, a portion of such Net Cash Proceeds or remaining Net Cash Proceeds to
the permanent reduction of the aggregate amount of Senior Notes, New Senior
Notes, Convertible Notes and New Convertible Notes outstanding, or (B) to
the permanent reduction of Indebtedness of any Restricted Subsidiary of the
Company that is pari passu in right of payment with such Restricted
Subsidiary's Senior Note Guarantee, New Senior Note Guarantee, Convertible
Note Guarantee and New Convertible Note Guarantee, if applicable (other
than Indebtedness to the Company or another Restricted Subsidiary of the
Company)."
(b) Section 4.08(c) is hereby amended and modified to read in
its entirety as follows:
"(c) If at any time the aggregate amount of Excess Proceeds
calculated as of such date exceeds $5,000,000, the Company shall, within 30
days of the date on which such Excess Proceeds exceed $5,000,000, use such
Excess Proceeds to make an offer, as described in Section 4.08(d) hereof
(an "Asset Sale Offer"), to purchase on a pro rata basis from all Holders
of the Convertible Notes and the holders of New Convertible Notes, if
issued, Convertible Notes and New Convertible Notes in an aggregate
principal amount equal to the maximum principal amount that may be
purchased out of the then-existing Excess Proceeds, at a purchase price
(the "Asset Sale Purchase Price") in cash equal to 100 percent of the
Accreted Value of such Convertible Notes and New Convertible Notes on any
Asset Sale Payment Date occurring prior to September 30, 1999, plus accrued
and unpaid interest, if any, and Special Interest, if any, or any "Special
Interest" (as defined in the New Convertible Note Indenture), if any, as
applicable, to such Asset Sale
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Payment Date, or 100 percent of the principal amount at Stated Maturity of
such Convertible Notes and New Convertible Notes on any Asset Sale Payment
Date occurring on or after September 30, 1999, plus accrued and unpaid
interest, if any, and Special Interest or any "Special Interest" (as
defined in the New Convertible Note Indenture), if any, as applicable to
such Asset Sale Payment Date; provided that if any Senior Notes or New
Senior Notes are outstanding and the Senior Note Indenture or the New
Senior Note Indenture has not been satisfied or discharged, the Company
shall be required to apply the Excess Proceeds first to a Senior Note Asset
Sale Offer (as described in the Senior Note Indenture) and a New Senior
Note Asset Sale Offer (as described in the New Senior Note Indenture), on a
pro rata basis, and to the substantially concurrent repayment or redemption
of Pari Passu Indebtedness (if any) if required by the instruments relating
to such Pari Passu Indebtedness (which repayment or redemption, in the case
of a revolving credit arrangement or multiple advance arrangement, reduces
the commitment thereunder) in the manner permitted by the Senior Note
Indenture and the New Senior Note Indenture and to the extent that the
aggregate amount paid pursuant to the Senior Note Asset Sale Offer and the
New Senior Note Asset Sale Offer and, if applicable, the repayment of
Indebtedness as permitted by the Senior Note Indenture and the New Senior
Note Indenture is less than such Excess Proceeds, the Company shall then
make an Asset Sale Offer for such remaining portion of such Excess Proceeds
within 100 days of the date on which such Excess Proceeds exceeded
$5,000,000."
(c) The first paragraph of Section 4.08(d) and subsection (d)(i) are
hereby amended and modified to read in their entirety as follows:
"(d) Within 30 days (or 100 days if any Senior Notes or New Senior
Notes are outstanding and the Senior Note Indenture or the New Senior Note
Indenture has not been satisfied or discharged) of the date on which the
amount of Excess Proceeds exceeds $5,000,000 (but subject to the proviso of
clause (c) of this Section 4.08), the Company, or the Trustee at the
request and expense of the Company, shall send to each Holder by first
class mail, postage prepaid, a notice prepared by the Company stating:
(i) that an Asset Sale Offer is being made pursuant to this
Section 4.08, and that Convertible Notes that are properly tendered
will be accepted
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for payment, subject to proration in the event the amount of Excess
Proceeds is less than the aggregate Asset Sale Purchase Price of all
Convertible Notes and New Convertible Notes promptly tendered pursuant
to the Asset Sale Offer and the New Convertible Note Asset Sale Offer,
as applicable;
(d) Section 4.10(a) is hereby amended and modified to read in its
entirety as follows:
"(a) The Company may designate a Subsidiary (including a newly formed
or newly acquired Subsidiary) of the Company or any of its Restricted
Subsidiaries as an Unrestricted Subsidiary, provided that so long as the
Senior Notes or New Senior Notes remain outstanding and the Senior Note
Indenture or the New Senior Note Indenture has not been satisfied or
discharged, (i) immediately after giving effect to the transaction, the
Company could incur $1.00 of additional Indebtedness pursuant to Section
4.09(a) of the Senior Note Indenture and/or Section 4.09(a) of the New
Senior Note Indenture and (ii) such designation is at the time permitted
under Section 4.13(a) of the Senior Note Indenture and/or the New Senior
Note Indenture, as the case may be. Notwithstanding any provision of this
Section 4.10(a), all Subsidiaries of an Unrestricted Subsidiary will be
Unrestricted Subsidiaries."
(e) Section 4.12(c) is hereby amended and modified to read in
its entirety as follows:
"(c) The Company shall deliver written notice to the Trustee within 5
Business Days after becoming aware of (i) any Default or Event of Default,
(ii) any event of default under the Senior Note Indenture or the New Senior
Note Indenture or (iii) any event of default or any default under any other
mortgage, indenture or instrument referred to in Section 6.01(e) hereof,
describing such Default, Event of Default or other event of default or
default, its status and what action the Company is taking or proposes to
take with respect thereto."
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(f) Section 4.15 is hereby amended and modified to read in its
entirety as follows:
"SECTION 4.15 Additional Invested Equity. If the Company does not
achieve consolidated total revenues (calculated in accordance with GAAP) of
at least $8,500,000 for the period from June 1, 1997 through June 30, 1997
and if, by August 31, 1997, the Company has not either (i) consummated a
Qualified Public Offering or (ii) been sold pursuant to a Qualified Sale of
the Company, the Company shall by such date be required to either (A)
obtain $10,000,000 of Additional Invested Equity or (B) (i) grant to the
Holders of the Convertible Notes the right to purchase for $10,000,000
additional convertible securities of the Company convertible into 16 2/3
percent of the Common Stock on a fully diluted basis (as used herein, the
term "fully diluted" does not include any securities, including Common
Stock, issued in any transaction described in clauses (i) through (xi) of
Section 15(d)(ii) of the Warrant Agreement) after giving effect to the
issuance of such additional convertible securities and (ii) grant to the
holders of the Convertible Notes the right to purchase warrants (the
"Additional Warrants") exercisable for Common Stock representing up to 5%
of the Common Stock of the Company at a purchase price of $.01 per share
(subject to certain adjustments to be specified in the Additional Warrants,
if required) on a fully diluted basis (as used herein, the term "fully
diluted" does not include any securities, including Common Stock, issued in
any transaction described in clauses (i) through (xi) of Section 15(d)(ii)
of the Warrant Agreement) after giving effect to the issuance of such
Additional Warrants."
Section 1.03 Deletions, Amendments and Modifications to Article VI.
(a) Section 6.01(i) is hereby amended and modified to read in
its entirety as follows:
"(i) the occurrence and continuation of an "event of default"
under the Senior Note Indenture or the New Senior Note Indenture for a
period of 30 consecutive days, after written notice of the occurrence of
such "event of default" has been given to the Company by the Trustee or a
Holder or Holders of Convertible Notes, which notice states that such an
event constitutes a Default hereunder."
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(b) The second paragraph of Section 6.02 is hereby amended and
modified to read in its entirety as follows:
"In the event of a declaration of acceleration because an Event of
Default set forth in Section 6.01(e) hereof has occurred and is continuing,
such declaration of acceleration shall be automatically rescinded and
annulled if the event of default triggering such Event of Default pursuant
to Section 6.01(e) hereof shall be remedied, or cured or waived by the
holders of the relevant Indebtedness within 60 days after such event of
default; provided that no judgment or decree for the payment of the money
due on the Convertible Notes has been obtained by the Trustee as
hereinafter in this Article VI provided. In the event of a declaration of
acceleration because an Event of Default set forth in Section 6.01(i)
hereof has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled (A) if the Senior Notes
and/or the New Senior Notes, as applicable, have been repaid, (B) if the
event of default under the Senior Note Indenture and/or the New Senior Note
Indenture, as applicable, triggering such Event of Default pursuant to
Section 6.01(i) hereof shall be remedied or cured, or waived by the holders
of the Senior Notes and/or the New Senior Notes, as applicable, or (C) if
the Senior Notes and/or the New Senior Notes, as applicable, have been
accelerated, then the acceleration of the Senior Notes and/or the New
Senior Notes, as applicable, shall have been rescinded within 60 days of
the occurrence of such event of default under the Senior Note Indenture
and/or the New Senior Note Indenture, as applicable, and, in the case of
clauses (A), (B) or (C) above, the Senior Note Trustee and/or the New
Senior Note Trustee, as applicable, so certifies to the Trustee, provided
that any such event described in clause (A), (B) or (C) above must occur
prior to the commencement of an enforcement proceeding with respect to
this Indenture."
Section 1.04 Deletions, Amendments and Modifications to Article X.
The last sentence of Section 10.01(a) is hereby amended and modified to read in
its entirety as follows:
"This Convertible Note Guarantee is intended to be superior to or pari
passu in right of payment with all Indebtedness of the Guarantors, other
than the Senior Note Guarantees and the New Senior Note Guarantees, if any,
of such Guarantors, and each Guarantor's obligations are independent of any
obligation of the Company or any other Guarantor."
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Section 1.05 Deletions, Amendments and Modifications to Article XI.
The first paragraph of Section 11.09 is hereby amended and modified to read in
its entirety as follows:
"SECTION 11.09 No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or any
Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company or any Guarantor with the
terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with. No
provision of the subordination provisions contained in this Article may be
amended without the consent of the holders of Senior Indebtedness as
provided by the terms of such Senior Indebtedness."
Section 1.06 Deletions, Amendments and Modifications to Article XII.
(a) The second paragraph of Section 12.01 is hereby amended and
modified to read in its entirety as follows:
"The price at which the Common Stock of the Company shall be
delivered upon conversion (herein called the "Conversion Price") shall be
equal to $104.36 per share."
(b) The third sentence of the third paragraph of Section 12.01
is hereby amended and modified to read in its entirety as follows:
"In addition, if the Company does not achieve consolidated total
revenues (calculated in accordance with GAAP) of at least $8,500,000 for
the period from June 1, 1997 through June 30, 1997 and if, by August 31,
1997, the Company has not either (i) consummated a Qualified Public
Offering or (ii) been sold pursuant to a Qualified Sale of the Company, the
Company shall by such date be required to either (A) obtain $10,000,000 of
Additional Invested Equity or (B) (i) grant to the Holders of the
Convertible Notes the right to purchase for $10,000,000 additional
convertible securities of the Company convertible into 16 2/3 percent of
the Common Stock on a fully diluted basis (as used herein "fully diluted"
does not include
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any securities, including Common Stock, issued in any transaction described
in clauses (i) through (xi) of Section 15(d)(ii) of the Warrant Agreement)
after giving effect to the issuance of such additional convertible
securities, (ii) grant to the Holders of the Convertible Notes (the
Additional Warrants) on a fully diluted basis (as used herein, the term
"fully diluted" does not include any securities, including Common Stock,
issued in any transaction described in clauses (i) through (xi) of Section
15(d)(ii) of the Warrant Agreement) after giving effect to issuance of such
Additional Warrants, and (iii) adjust the Conversion Price for the
Convertible Notes by dividing the Conversion Price in effect immediately
prior to the issuance of such convertible securities and warrants by 1.15."
(c) Section 12.04(n) is hereby amended and modified to insert
the following after clause (vi) thereof:
"(vii) No adjustment need be made in respect of (1) the issuance of the
warrants to be issued by the Company in connection with the offering of the
New Senior Notes (the "New Warrants") or the exercise of such New Warrants;
(2) the issuance of warrants to be issued to Xxxxxxx Xxxxx Global
Allocation Fund, Inc. and Xxxxxxx Xxxxx Equity/Convertible Series (Global
Allocation Portfolio) pursuant to the Consent Agreement (the "Consent
Warrants") or the exercise of such Consent Warrants; (3) the issuance of
the New Convertible Notes or the conversion thereof; (4) the conversion of
shares of the Company's 9.0% Cumulative Convertible Pay-In-Kind Preferred
Stock, Series A; and (5) any adjustment of the warrant exercise price of
the New Warrants or the Consent Warrants in accordance with their
respective terms or any adjustment in the conversion price of the New
Convertible Notes in accordance with its terms."
ARTICLE IV
MISCELLANEOUS
Section 2.01 Effect of this Supplement. This Supplement is
supplemental to the Indenture and does and shall be deemed to form a part of,
and shall be construed in connection with and as part of, the Indenture for any
and all
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purposes. Except as specifically modified herein, the Indenture and the
Convertible Notes are in all respects ratified and confirmed and shall remain in
full force and effect in accordance with their terms.
Section 2.02 Trustee. Except as otherwise expressly provided herein,
no duties, responsibilities or liabilities are assumed, or shall be construed to
be assumed, by the Trustee by the reason of this Supplement. This Supplement is
executed and accepted by the Trustee subject to all the terms and conditions set
forth in the Indenture with the same force and effect as if those terms and
conditions were repeated at length herein and made applicable to the Trustee
with respect hereto. The Trustee assumes no responsibility for the recitals
contained herein, which shall be taken a statements of the Company, and makes no
representation as to the validity or sufficiency of this Supplement.
Section 2.03 GOVERNING LAW. THIS SUPPLEMENT AND THE CONVERTIBLE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, EXCEPT WITH REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
Section 2.04 Counterparts. This Supplement may be executed in any
number of counterparts and by the parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
Section 2.05 Severability. In case any provision in this Supplement,
the Indenture or in the Convertible Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 2.06 Titles and Headings. The titles and headings in this
Supplement are solely for convenience of reference and will not be given any
effect in the construction or interpretation of this Supplement.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
USN COMMUNICATIONS, INC.
By
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Name:
Title:
[Corporate Seal]
Attest
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XXXXXX TRUST AND SAVINGS BANK,
as Trustee
By
-------------------------------
Name:
Title:
[Corporate Seal]
Attest
--------------------
14
STATE OF ILLINOIS )
) SS.:
COUNTY OF XXXX )
On the _____ day of August, 1997, before me personally came
__________________, to me known, who being by me duly sworn, did depose and say
that he is ___________________ of USN Communications, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
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Notary Public
State of Illinois
My commission expires
[Seal]
STATE OF ILLINOIS )
) SS.:
COUNTY OF XXXX )
On the ___ day of August, 1997, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he is ___________________ of Xxxxxx Trust and Savings Bank, the Trustee
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
---------------------------------------
Notary Public
State of Illinois
My commission expires
[Seal]
