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Exhibit (4)(c)
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of May 17, 1999 (this "Agreement"), among
Safety-Kleen Corp. (formerly known as Xxxxxxx Environmental Services, Inc.), a
Delaware corporation (the "Company"), the Bank of Nova Scotia Trust Company of
New York, a trust company organized under the laws of New York, as trustee under
the Indenture referred to below (the "Trustee"), and The Bank of Nova Scotia
Trust Company of New York, a trust company organized under the laws of New York,
as escrow agent (the "Escrow Agent").
WHEREAS, this Agreement is being entered into in connection with the
Purchase Agreement (the "Purchase Agreement"), dated as of May 10, 1999, among
the Company and TD Securities (USA) Inc., NationsBanc Xxxxxxxxxx Securities LLC
and Xxxxxxx Xxxxx & Associates, Inc. (collectively, the "Initial Purchasers"),
and the Indenture (the "Indenture"), dated of even date herewith between the
Company and the Trustee;
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
issue and sell to the Initial Purchasers, for resale by the Initial Purchasers
under Rule 144A and Regulation S under the Securities Act of 1933, as amended
(the "Securities Act") (the "Offering"), $225 million aggregate principal amount
of its 9 1/4% Senior Notes due 2009 (the "Notes").
WHEREAS, concurrently with and as a condition to the closing of the
Offering, the Company will deposit, or cause to be deposited, the Initial
Deposit (as hereinafter defined) with the Escrow Agent;
WHEREAS, in the event that the Funding Conditions (as hereinafter
defined) are not satisfied on or prior to the close of business on September 30,
1999, subject to the terms and conditions set forth herein, the Escrow Agent
shall transfer on October 15, 1999 the Escrowed Funds to pay all (or such
portion as is equal to the full amount of the Escrowed Funds) of the Mandatory
Redemption Price for the Special Mandatory Redemption (as defined in the
Indenture);
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Definitions.
"Cash Equivalents" means (a) any evidence of indebtedness with a
maturity of one year or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (b) certificates of deposit or acceptances or
Eurodollar time deposits with a maturity of one year or less of, and overnight
bank deposits with, any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $500 million; (c) commercial paper with a maturity
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of one year or less issued by a person rated at least A-1 by Standard & Poor's
Rating Services, a division of the McGraw Hill Company, or at least P-1 by
Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a term of no
more than 30 days for underlying securities of the types described in clause (a)
entered into with a bank meeting the qualifications described in clause (b)
above; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least
"A" by Standard & Poor's Rating Services, a division of the McGraw Hill
Companies, or "A" by Xxxxx'x Investors Service, Inc.; (f) securities with
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any financial institution satisfying the
requirements of clause (b) of this definition; (g) bond and note obligations
issued or unconditionally guaranteed by corporations or limited liability
companies organized under the laws of the United States with maturities of one
year or less from the date of acquisition which are rated at least "A" by
Standard & Poor's Rating Services, a division of the McGraw Hill Companies, or
"A" by Xxxxx'x Investors Services, Inc.; and (h) funds which invest in any of
the foregoing.
"Escrowed Funds" shall have the meaning set forth in Section 2(e).
"Funding Conditions" means the occurrence of the following events:
(i) the stockholders of the Company shall have approved the
issuance of shares of the Company's common stock in connection with the
Company's repurchase of the PIK Debenture in accordance with the rules
of The New York Stock Exchange; and
(ii) the conditions set forth in Article IV of the securities
purchase agreement dated as of April 19, 1999 among the Company,
Xxxxxxx Inc. and Xxxxxxx International Finance Corporation have been
satisfied or waived.
"Initial Deposit" means cash in an amount equal to the net proceeds of
the Offering.
"Mandatory Redemption Price" means, as of any date, an amount in cash
equal to 101% of the aggregate principal amount of the Notes.
"Permitted Investments" means (i) Cash Equivalents or (ii) money market
funds at least 95% of the assets of which are invested in investments described
in subparagraph (a) of the definition of Cash Equivalents or repurchase
agreements the payment of which are secured by investments described in such
subparagraph (a).
"PIK Debenture" means the 5% Subordinated Convertible Pay-In-Kind
Debenture due 2009 dated May 15, 1997 issued by the Company to Xxxxxxx
Transportation, Inc.
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Other capitalized terms used but not defined herein have the meanings
given to such terms in the Indenture.
SECTION 2. Delivery, Acceptance and Investment of Escrowed Funds. (a)
Concurrently with the execution and delivery hereof, the Company shall deposit
the Initial Deposit with the Escrow Agent. Upon receipt of the Initial Deposit,
the Escrow Agent shall, upon the written request of the Company from time to
time invest all or a portion of the Initial Deposit and the proceeds therefrom
in Permitted Investments.
(b) If the Notes become subject to Special Mandatory Redemption
pursuant to the terms of the Notes and Article XI of the Indenture, the Company
shall provide written notice thereof (a "Redemption Notice") to the Escrow Agent
and the Trustee in accordance with Section 1103 of the Indenture together with a
certificate of a nationally recognized firm of independent accountants setting
forth a calculation of the amount of cash that will be available to the Escrow
Agent, based on the Escrowed Funds then held with the Escrow Agent, without any
reinvestment thereof or sale prior to maturity, on the third Business Day prior
to the date fixed for such Special Mandatory Redemption; provided, however, that
no such certificate shall be required if the Escrowed Funds consist exclusively
of cash. In connection with any Redemption Notice received from the Company
relating to a date fixed for Special Mandatory Redemption, the Escrow Agent is
hereby authorized and directed to promptly liquidate any Permitted Investments
that will not mature on or prior to the third Business Day prior to the date
fixed for Special Mandatory Redemption to the extent necessary to fund the
Mandatory Redemption Price; provided that the Escrow Agent shall reinvest any
portion of the proceeds so realized by the Escrow Agent in Permitted Investments
as directed by the Company that shall mature on or prior to the date fixed for
Special Mandatory Redemption. In no event shall the Escrow Agent have any
liability for any shortfall in funds available to pay the aggregate Mandatory
Redemption Price.
(c) If at any time the aggregate amount of cash and Permitted
Investments held by the Escrow Agent hereunder, without the reinvestment thereof
or sale prior to maturity, exceeds the Mandatory Redemption Price, the Company
shall be entitled to request in writing the prompt release of, and the Escrow
Agent shall, subject to Section 2(d), promptly release to the Company all such
amounts in excess of the Mandatory Redemption Price.
(d) As a condition to any release requested by the Company under
Section 2(c), the Escrow Agent shall have received a written statement,
certified as to its mathematical accuracy by a nationally recognized firm of
independent accountants selected by the Company, setting forth a calculation
showing that the amount of cash that would be available to the Escrow Agent
based on the Escrowed Funds that would be held by the Escrow Agent (after giving
effect to any such release) without any reinvestment thereof or sale prior to
maturity together with any other funds or Permitted Investments held by the
Escrow Agent hereunder, taking into account scheduled maturities of and
scheduled payments of interest on the Permitted Investments included in the
Escrowed Funds, would be at least equal to the Mandatory Redemption Price. The
Escrow Agent shall be under no obligation to and shall not independently confirm
the calculations contained in,
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or the conclusions reached by, such statement. In addition, the Company shall
deliver in writing to the Escrow Agent, in conjunction with and as a condition
to any release requested by the Company hereunder, wire instructions for the
delivery of any funds subject to such release.
(e) The Escrow Agent shall accept the Initial Deposit and shall hold
such funds and the proceeds thereof in one or more separate identifiable
accounts for disbursement in accordance with the provisions hereof. The Trustee
shall be granted a first priority security interest in all such accounts and the
Company, and the Company shall execute all financing statements and take all
other steps necessary or as may be reasonably requested by the Trustee or
Initial Purchasers in connection with the perfection of such first priority
security interest. The Initial Deposit and the proceeds therefrom, including
without limitation, the proceeds of any Permitted Investments, less any amounts
released pursuant to the terms of this Agreement, shall constitute the "Escrowed
Funds." The Escrow Agent further agrees to invest any portion of the Escrowed
Funds that is comprised of cash in Permitted Investments as may be directed by
the Company in writing from time to time. Except as otherwise agreed to by the
Company and the Escrow Agent, temporarily uninvested funds shall not earn or
accrue interest.
(f) The obligation and liability of the Escrow Agent to make the
payments and transfers required by this Escrow Agreement shall be limited to the
Escrowed Funds. The Escrow Agent shall not be liable for any loss resulting from
any investment made pursuant to this Agreement in compliance with the provisions
hereof.
SECTION 3. Disbursement of Escrowed Funds. (a) If the Escrow Agent
receives written notice from the Company that the Funding Conditions have been
satisfied together with an officer's certificate, substantially in the form of
Exhibit A hereto, signed by any of the Chief Executive Officer, President, Chief
Financial Officer or Vice President of the Company, certifying to the Escrow
Agent as to the matters specified in Exhibit A hereto, then the Escrow Agent
will promptly (i) release all Escrowed Funds then held by it to the Company or
(ii) at the request of the Company, liquidate all or a portion of the Permitted
Investments and, upon such liquidation, promptly release all Escrowed Funds then
held by it to the Company.
(b) If the Escrow Agent receives a written notice from the Company that
a Special Mandatory Redemption pursuant to the terms of the Notes and Article XI
of the Indenture will occur, then the Escrow Agent will liquidate all Permitted
Investments in accordance with Section 2(b) and will, on the Business Day fixed
for such Special Mandatory Redemption, release to the Paying Agent an amount of
Escrowed Funds in cash equal to the Mandatory Redemption Price or, if the total
amount of the Escrowed Funds is less than the Mandatory Redemption Price, all of
the Escrowed Funds. Concurrently with such release to the Paying Agent, the
Escrow Agent shall release any excess of Escrowed Funds over the Mandatory
Redemption Price to the Company.
(c) Notwithstanding paragraphs 3(a) and (b) above, if the Escrow Agent
receives a written notice from the Trustee or otherwise has actual knowledge
that a Default or Event of
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Default under the Indenture has occurred and is continuing, the Escrow Agent
will not release any Escrowed Funds to the Company unless and until the Escrow
Agent receives a written notice from the Trustee that such Default or Event of
Default is not continuing. Subject to Section 3(d) below, if the Escrow Agent
receives a written notice from the Trustee that (i) the principal amount of, and
accrued and unpaid interest on the Notes has become immediately due and payable
pursuant to Section 5.02 of the Indenture (an "Acceleration Event"), and (ii)
either (A) a court of competent jurisdiction by final and nonappealable judgment
has determined that the acceleration of the Notes was appropriate as a result of
a bona fide Event of Default under the Indenture or (B) such acceleration has
not been rescinded prior to September 30, 1999 (either such event, a "Remedies
Trigger Event"), the Escrow Agent will liquidate all Escrowed Funds then held by
it, in the case of clause (A) above, within one Business Day after the Escrow
Agent receives such written notice of such court determination or, in the case
of clause (B) above, on October 15, 1999, and, in each case, will release to the
Paying Agent for payment to the holders of the Notes in accordance with the
Indenture the amount of Escrowed Funds sufficient to pay such accelerated
principal and accrued and unpaid interest, if any, on the Notes (or if the total
amount of Escrowed Funds is less than such accelerated principal plus any
accrued and unpaid interest, all of the Escrowed Funds). The Escrow Agent will
release, subject to Section 2(d), all remaining Escrowed Funds to the Company.
The Trustee will provide written notice to the Escrow Agent upon
obtaining knowledge of the occurrence of a Default, Event of Default or a
Remedies Trigger Event. The Trustee shall be deemed to have knowledge of any
Default or Event of Default upon the earlier of (i) an officer in the corporate
trust department of the Trustee having actual knowledge thereof or (ii) the
Trustee receiving written or oral notice thereof in accordance with the
provisions of the Indenture, and the Trustee shall have no obligation to give
notice to the Escrow Agent of a Default or Event of Default in the absence of
such knowledge.
Notwithstanding the provisions of this Section 3(c), upon receipt of a
Redemption Notice by the Escrow Agent pursuant to Section 2(b), this Section
3(c) shall be of no further effect and all amounts then held by the Escrow Agent
shall be released in accordance with Section 3(b).
(d) In the event of (i) an Acceleration Event or (ii) a Change of
Control under the Indenture, in either case occurring prior to a Remedies
Trigger Event, (x) the Company may, at its sole option, direct the Escrow Agent
in writing to liquidate the Permitted Investments and release to the Paying
Agent Escrowed Funds in an amount sufficient for the payment of the purchase
price or accelerated principal, as applicable, and interest, as the case may be,
and (y) if the Paying Agent pays all amounts due in respect of the Notes
pursuant to such Acceleration Event or Change of Control, the Company may (A) in
the case of an Acceleration Event, request in writing the Escrow Agent to
release to the Company and the Escrow Agent shall promptly release to the
Company all remaining Escrowed Funds or (B) in the case of a Change of Control,
request the Escrow Agent to release to the Company and the Escrow Agent shall
promptly release to the Company the excess of the remaining Escrowed Funds over
the amount necessary to pay the remaining principal of, accrued and unpaid
interest on and premium, if any, with respect to
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any Notes (assuming such Notes mature on the Special Redemption Date) that
remain outstanding following the consummation of the repurchase of Notes in
accordance with Section 1012 of the Indenture in respect of such Change of
Control.
SECTION 4. Termination. Upon the release of any Escrowed Funds to the
Company pursuant to Section 2 or Section 3 hereof, such Escrowed Funds shall be
delivered to the Company, free and clear of any and all interests of the Escrow
Agent, the Trustee and the holders of the Notes. Upon the release of all
Escrowed Funds in accordance with Sections 2 and 3 hereof, this Agreement shall
terminate. In connection with such release, the Escrow Agent agrees to cooperate
with the Company to release any liens hereunder (including, without limitation,
delivering executed releases and financing termination statements) and will take
all action reasonably requested by the Company in connection therewith.
SECTION 5. Indemnity. The Company agrees to indemnify the Trustee and
the Escrow Agent, and any predecessor escrow agent or trustee, and their
respective officers, directors, employees and agents, for and to hold it and
each of them harmless against any loss, liability or reasonable expense arising
out of or in connection with this Agreement and carrying out their respective
duties hereunder, including the reasonable costs and expenses of defending
itself against any claim of liability; provided, however, that the Company will
not be liable for indemnification or otherwise for any loss, liability or
expense to the extent arising out of the gross negligence, willful misconduct or
bad faith of the Escrow Agent or the Trustee. Notwithstanding any other
provision in this Agreement, neither the Escrow Agent nor the Trustee shall be
liable for incidental or consequential damages. The provisions of this Section
shall survive termination of this Agreement.
SECTION 6. Modifications, Waivers and Amendments. No party shall be
bound by any modification, amendment, termination (except as provided in Section
4 hereof), cancellation or rescission or supersession of this Agreement unless
the same shall be in writing and signed by such party, and, if the Escrow
Agent's rights, duties, immunities or indemnities as Escrow Agent are affected
thereby, unless it shall have given its prior written consent thereto. This
Agreement may not be modified, amended, terminated (except as provided in
Section 4 hereof), canceled, rescinded or superseded without the written consent
of the Initial Purchasers.
SECTION 7. Concerning the Escrow Agent. (a) The Escrow Agent shall
receive a fee for acting hereunder as agreed to by the Escrow Agent and the
Company. The Company also agrees to pay on demand the reasonable out-of pocket
costs and expenses of the Escrow Agent, including the reasonable fees and
expenses of counsel selected by the Escrow Agent, incurred in connection with
its duties hereunder.
(b) The Escrow Agent shall exercise the same degree of care toward the
Escrowed Funds as it exercises toward its own similar property and shall not be
held to any higher standard of care under this Agreement, nor be deemed to owe
any fiduciary duty to the Company.
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(c) The Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to have been signed or presented
by the proper person, and subject to the foregoing, shall have no obligation to
determine the authenticity thereof or the correctness of any fact stated therein
or the propriety or validity of service thereof, and shall not be liable to any
party hereto in connection with the performance of its duties hereunder, except
for its own gross negligence, willful misconduct or bad faith. The duties of the
Escrow Agent shall be determined only with reference to this Escrow Agreement
and applicable laws and the Escrow Agent is not charged with any knowledge of or
any duties or responsibilities in connection with any other document or
agreement. If in doubt as to its duties and responsibilities hereunder, the
Escrow Agent may consult with counsel of its choice and shall be protected in
any action taken or omitted in good faith in reliance on the written advice or
opinion of such counsel.
(d) The Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder either directly or by or through its
agents or attorneys, and the Escrow Agent shall not be responsible for the
misconduct or negligence of such agents or attorneys appointed with due care.
(e) Nothing in this Escrow Agreement shall be deemed to impose upon the
Escrow Agent any duty to qualify to do business or to act as agent or otherwise
in any jurisdiction other than the State of New York.
(f) The Escrow Agent shall not be responsible for and shall not be
under a duty to examine or pass upon the validity, binding effect, execution or
sufficiency of this Agreement, any agreement amendatory or supplemental hereto
or of any certificates delivered to it hereunder.
(g) The Escrow Agent makes no representation as to the validity, value,
genuineness or collectability of any security or other document or instrument
held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
(i) The Escrow Agent shall have the right at any time to resign
hereunder by giving written notice of its resignation to the Company and the
Trustee at their respective addresses set forth herein or at such other address
as the Company or the Trustee shall provide, at least 30 days prior to the date
specified for such resignation to take effect. Upon the effective date of such
resignation, all cash and other payments and all other property then held by the
Escrow Agent hereunder shall be delivered by it to a successor escrow agent, as
chosen by the Company after consultation with the Initial Purchasers. If no
successor escrow agent is appointed within 30 days of the Escrow Agent giving
written notice of its resignation to the Company and the Trustee, the Escrow
Agent may apply to a court of competent jurisdiction for such appointment and
the Escrow Agent's sole responsibility thereafter shall be to safekeep the
Escrowed Funds until receipt of written notice of the designation of a successor
escrow agent.
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(j) In the event that Escrow Agent should at any time be confronted
with inconsistent claims or demands to the Escrowed Funds, the Escrow Agent
shall have the right, but not the duty, (i) to interplead the parties in any
court of competent jurisdiction and request that such court determine the
respective rights of the parties with respect to the Escrowed Funds and (ii) to
retain in its possession without liability to anyone all the Escrowed Funds
until such dispute shall have been settled either by the mutual agreement of the
parties hereto or by a final, non-appealable order, decree or judgment of such
court. Any court order, decree or judgment shall be accompanied by a legal
opinion of counsel reasonably satisfactory to the Escrow Agent that such order,
decree or judgment is final and non-appealable. In the event the Escrow Agent no
longer holds any Escrowed Funds, it shall be released from any obligation or
liability as a consequence of any such claims or demands.
SECTION 8. Notices. All notices required to be given hereunder shall be
in writing and shall be deemed given when received at the following addresses
until such time as the parties hereto designate a different or additional
address or addresses:
To the Company:
Safety-Kleen Corp.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Trustee:
The Bank of Nova Scotia
Trust Company of New York
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Escrow Agent:
The Bank of Nova Scotia
Trust Company of New York
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
SECTION 9. Tax Reporting Matters. All interest earned on Escrowed Funds
shall constitute the currently reportable income of the Company for federal
income tax purposes. The Company agrees to provide the Escrow Agent a certified
tax identification number for it by furnishing appropriate forms W-9 (or Forms
W-8, in the case of non-U.S. persons) and other forms and documents that the
Escrow Agent may reasonably request (collectively, "Tax Reporting
Documentation") to the Escrow Agent within 30 days after the date hereof. The
parties hereto understand that, if such Tax Reporting Documentation is not so
certified to the Escrow Agent, the Escrow Agent may be required by the Internal
Revenue Code, as it may be amended from time to time, to withhold a portion of
any interest or other income earned on the investment of monies or other
property held by the Escrow Agent pursuant to this Agreement. The Escrow Agent
need not make any distribution of all or any portion of the Escrowed Funds to
any person (other than to the Paying Agent for the purposes of the Special
Mandatory Redemption) until such person has furnished to the Escrow Agent such
Tax Reporting Documentation as the Escrow Agent may reasonably require.
SECTION 10. Miscellaneous. (a) This Agreement sets forth exclusively
the duties of the Escrow Agent with respect to any and all matters pertinent
hereto and no implied duties or obligations shall be read into this Agreement
against the Escrow Agent.
(b) This Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which when taken together shall
constitute one agreement.
(c) This Agreement shall be governed by the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day first written above.
THE BANK OF NOVA SCOTIA
TRUST COMPANY OF NEW YORK,
as Escrow Agent
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
TRUST COMPANY OF NEW YORK,
as Trustee
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
SAFETY-KLEEN CORP.
By /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President of Finance
and Chief Financial Officer
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EXHIBIT A
FORM OF OFFICER'S CERTIFICATE
OF
SAFETY-KLEEN CORP.
This certificate is being delivered pursuant to Section 3(a) of the
Escrow Agreement dated as of May 17, 1999 (the "Escrow Agreement"), among
Safety-Kleen Corp. (the "Company"), The Bank of Nova Scotia Trust Company of New
York, a bank and trust company organized under the laws of New York, as Trustee
and The Bank of Nova Scotia Trust Company of New York, a bank and trust company
organized under the laws of New York, as Escrow Agent. Capitalized terms used
but not defined herein have the respective meanings specified in the Escrow
Agreement. The Company hereby certifies through the undersigned officer that:
1. As of the date hereof, the Funding Conditions have been
satisfied.
2. The Escrowed Funds (as defined in the Escrow Agreement),
upon release to the Company in accordance with the Escrow Agreement,
will be used as set forth under "Use of Proceeds" in the Offering
Memorandum dated May 10, 1999 relating to the Notes.
IN WITNESS WHEREOF, the undersigned has signed this Certificate this
___ day of __________, 1999,
SAFETY-KLEEN CORP.
By ___________________________________
Name:
Title:
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