Paying Agency Agreement

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 Harris Trust and Savings Bank, Account No. 432-329-1, 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 McDermott, Will & Emery 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) Harris Trust and Savings Bank Payroll Account (430-899-5); (ii) Harris Trust and Savings Bank Disbursement Zero Balance Account (430-898-7); (iii) The Chase Manhattan Bank Asset Management Account (3121-003121); (iv) Harris 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 ...