EXHIBIT F
PAYING AGENCY AGREEMENT
PAYING AGENCY AGREEMENT, dated as of February 23, 1999, made by
USN Communications, Inc., a Delaware corporation (the "Company"), each of
the Noteholders set forth on the signature pages hereof (together with
their permitted successors, transferees and assigns, the "Noteholders") and
PricewaterhouseCoopers LLP ("PWC"), as paying agent (together with its
permitted successors in such capacity, the "Paying Agent").
RECITALS:
WHEREAS, the Company has entered into the Note Purchase Agreement,
dated as of February 23, 1999 (such Agreement, as amended, restated or
otherwise modified from time to time, is referred to herein as the "Note
Purchase Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined), with the Noteholders,
pursuant to which the Company is issuing senior secured notes due June 30,
1999 (as amended, restated or otherwise modified from time to time, the
"Notes").
WHEREAS, in order to ensure that the cash proceeds of the Notes
are utilized strictly in accordance with the terms of Section 5.14 of the
Note Purchase Agreement, the Company and the Noteholders have requested
that the Paying Agent act as paying agent with respect to the disbursement
of such proceeds; and
WHEREAS, PWC is willing to act as the paying agent hereunder upon
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. The Company and the Noteholders hereby appoint PWC as the
Paying Agent in connection with the disbursement of the cash proceeds of
the Notes to the Company, upon the terms and subject to the conditions set
forth herein.
2. Prior to the First Closing, the Company shall designate at
Xxxxxx Trust and Savings Bank, Account No. 000-000-0, as its disbursement
account (the "Disbursement Account"). At the First Closing, the Second
Closing and each Delayed Closing, the Noteholders will transfer proceeds of
the Notes (except for the Class B Note, which shall be funded by converting
the principal, interest and fees outstanding on the First Closing Date
under the Existing Note Purchase Agreement into the principal amount of the
Class B Note) to the Disbursement Account (except for those Proceeds that
are applied to pay the fees and expenses of XxXxxxxxx, Will & Xxxxx and
PWC, which shall be paid directly to such Persons from the Proceeds) in
accordance with the terms and conditions of the Note Purchase Agreement.
The Noteholders shall be solely responsible for ensuring, and the Paying
Agent shall have no responsibility to verify, that all such amounts
transferred into the Disbursement Account are transferred in accordance
with the terms and conditions of the Note Purchase Agreement. In addition,
on each Business Day, amounts that are owing from the account debtors for
the Company and its Subsidiaries and that are on deposit in each blocked
account of the Company shall be transferred into the Disbursement Account
(all such amounts deposited into the Disbursement Account from time to time
being the "Proceeds"). All transfers out of the Disbursement Account shall
(a) require the approval and written authorization of both the Paying Agent
and the Company and (b) be made only to one of the following accounts of
the Company: (i) Xxxxxx Trust and Savings Bank Payroll Account (430-899-5);
(ii) Xxxxxx Trust and Savings Bank Disbursement Zero Balance Account
(430-898-7); (iii) The Chase Manhattan Bank Asset Management Account
(3121-003121); (iv) Xxxxxx Trust and Savings Bank Investment Management
Account (54345-71); or (v) Gabelli Fixed Income Account (72342-71).
3. The Company will, from time to time from and including the
First Closing Date to and including the Business Day immediately preceding
the Maturity Date (the "Disbursement Period"), submit to the Paying Agent
(with copies to each Noteholder) written disbursement requests (each a
"Disbursement Request") in the form of a "pre-check" register with respect
to the disbursement of the Proceeds, together with proposed wire transfer
instructions for transfers from the Disbursement Account. Each such
Disbursement Request shall specify in reasonable detail the amount, date
and payee of the requested disbursements, and those items referenced in
Section 5.6 of the Note Purchase Agreement and, more specifically, Exhibit
G thereto under which each requested disbursement is proposed to be made.
The Company shall provide in writing such further details with respect to
each Disbursement Request as the Paying Agent may reasonably request.
4. During the Disbursement Period, the Paying Agent is hereby
authorized and directed within two Business Days of receipt of a
Disbursement Request, in form and substance, in good faith determination by
the Paying Agent, consistent with the requirements of Section 5.6 of the
Note Purchase Agreement and, more specifically, Exhibit G thereto, to
approve and authorize for release the transfers proposed to be made by the
Company from the Disbursement Account; provided, however, that in no event
shall the Paying Agent approve and authorize for release pursuant to
Disbursement Requests (a) an aggregate amount in excess of the Proceeds,
(b) if any such release would result in the expenses of the Company and its
Subsidiaries increasing cumulatively by more 5% since the date of the First
Closing or 10% during any calendar week, in each case as measured against
the cash flow presentations delivered pursuant to Section 5.6 of the Note
Purchase Agreement or (c) subject to the three business day notice period
required by paragraph 15 of the Interim DIP Order, if any Default or Event
of Default under the Note Purchase Agreement has occurred and is
continuing. Promptly after making any payment, whether by check or by wire
transfer, in accordance with an approved Disbursement Request with funds
released from the Disbursement Account, the Company shall provide to the
Paying Agent a check register identifying each such payment.
5. The Paying Agent shall monitor the expenses and cash flow of
the Company and its Subsidiaries on terms requested by the Required
Holders, including, without limitation, with respect to compliance by the
Company of those matters which could constitute an Event of Default under
Section 11.1(n) of the Note Purchase Agreement.
6. The Paying Agent may resign at any time by giving 10 Business
Days' written notice thereof to each of the other parties hereto. Upon any
such resignation, the Noteholders and the Company shall appoint a
replacement paying agent. In the event the Noteholders and the Company have
not agreed to a replacement agent prior to the effectiveness of the Paying
Agent's resignation, the Noteholders shall name a replacement paying agent.
7. The Noteholders shall indemnify the Paying Agent and hold it
harmless from and against any loss, liability, costs, claims, damage,
expense, action or demand which the Paying Agent may incur or which may be
made against it as a result of or in connection with its appointment or the
exercise of its powers or the administration of its duties as the Paying
Agent, as well as the reasonable costs and expenses (including attorneys'
fees) which it may incur defending against any claim or liability except
such as may result from its own gross negligence or willful misconduct;
provided that the Paying Agent shall promptly notify the Noteholders in
writing of any such less, liability, cost, claim, damage, expense, action
or demand, in respect of which indemnity may be sought against the
Noteholders; provided further that prior to settling any such loss,
liability, cost, claim, damage expense, action or demand, in respect of
which indemnity may be sought against the Noteholders, the Paying Agent
shall promptly notify the Noteholders in writing of the terms and
conditions of any proposed settlement, and the Noteholders may at their
option assume the defense thereof, including the employment of counsel and
the payment of all expenses in connection therewith, and the Noteholders
shall thereafter have the right to negotiate and consent to the settlement
thereof. The Paying Agent shall have the right to employ separate counsel
and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Paying Agent unless the
employment such counsel has been specifically authorized by the
Noteholders. The Noteholders shall not be liable for any settlement
effected without their consent, but if settled with the consent of the
Noteholders or if there be a final judgment for the plaintiff in any action
with or without consent, the Noteholders agree to indemnify and hold
harmless the Paying Agent from and against any loss or liability by reason
of such settlement or judgment. The Paying Agent and its officers,
employees and agents shall incur no liability and shall be indemnified and
held harmless by the Company for any action, taken, omitted or suffered to
be taken in good faith, without gross negligence or willful misconduct, in
reliance upon (a) any written opinion of counsel, (b) any written or cabled
or telexed instruction from the Company or the Noteholders, or (c) any
written direction, consent, certificate, officers' certificate, affidavit,
statement, notice, request, order or approval, or other document conforming
to the requirements of the Note Purchase Agreement or this Agreement and
reasonably believed by the Paying Agent receiving the same to be genuine
and to be delivered, sent or signed by the proper party or parties. The
Paying Agent shall have no responsibility for any act, or omission to act,
of either the Company or any Noteholder.
8. Any notice, demand, request, consent, approval, declaration or
other communication to be given hereunder shall be in writing and either
shall be delivered in person with receipt acknowledged or by registered or
certified mail, return receipt requested, postage prepaid, or telecopied
and confirmed by telecopy answerback to the respective parties at their
addresses set forth on the signature pages to this Agreement or at such
other address as may be substituted by notice given as herein provided.
9. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State, without regard to the
principles thereof regarding conflict of laws, and any applicable laws of
the United States of America.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer(s) on
the date first set forth above.
COMPANY: USN COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
______________________________
Name: Xxxxxx X. Xxxxxxxx
Title:
USN Communications, Inc.
00 Xxxxx Xxxxxxxxx Xxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Phone: 312/000-0000
Fax: 312/000-0000
NOTEHOLDER: XXXXXXX XXXXX GLOBAL
ALLOCATION FUND, INC.
By: /s/ Xxxx Xxx X'Xxxxxxx
_______________________________
Name: Xxxx Xxx X'Xxxxxxx
Title: V.P. MLAM, Authorized
Signatory
Xxxxxxx Xxxxx Global Allocation Fund,
Inc.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Phone: 609/000-0000
Fax: 609/000-0000
NOTEHOLDER: CORECOMM LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
CoreComm Limited
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: 212/000-0000
Fax: 212/000-0000
PAYING AGENT: PRICEWATERHOUSECOOPERS LLP
By: /s/ Xxxxxx E.M. Kopucz
_______________________________
Name: Xxxxxx E.M. Kopucz
Title: Principal
PricewaterhouseCoopers LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X.X. Xxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
