Common use of Reduction of the Commitment Clause in Contracts

Reduction of the Commitment. 3.2.1 Subject to Clause 3.2.4 below, the amount of the Commitment shall, solely for the purpose of any future draw down and provided that no draw down has been made under this Subscription Agreement until that time, be irrevocably reduced as follows: (i) provided that the Issuer can demonstrate to the Facility Agent that the ratio of Total Net Rental Income to the aggregate of (a) Finance Costs, and (b) scheduled or actual repayments of principal on the Advances under Clause 6 (Repayment) of the Senior Credit Agreement, is not less than or equal to 1.2:1: (a) on the two consecutive Quarter Dates falling immediately before the proposed Commitment Reduction Date; (b) on the proposed Commitment Reduction Date; and (c) on each Quarter Date following the proposed Commitment Reduction Date up to and including the Senior Credit Final Repayment Date according to projections based on reasonable assumptions, the amount of the EUR Commitment shall be reduced by EUR 6,700,000; and (ii) provided that: (a) the Issuer can demonstrate to the Facility Agent that the ratio of Total Net Rental Income to the aggregate of (a) Finance Costs, and (b) scheduled or actual repayments of principal on the Advances under Clause 6 (Repayment) of the Senior Credit Agreement, is not less than or equal to 1.4:1: (I) on the two consecutive Quarter Dates falling immediately before the proposed Commitment Reduction Date; (II) on the proposed Commitment Reduction Date; and (III) on each Quarter Date following the proposed Commitment Reduction Date up to and including the Senior Credit Final Repayment Date according to projections based on reasonable assumptions; and (b) at least EUR 2,000,000 is standing to the credit of the Master Proceeds Account of the Issuer or First Shurgard and that such amount is available to be applied to meet the liabilities of the Subsidiaries of Shurgard Europe to the relevant Group Members in connection with the Joint Employer Agreements and the Split Payroll Agreements, the amount of the EUR Commitment shall be reduced by a further EUR 800,000 and the amount of the USD Commitment shall be reduced by USD 11,045,000. 3.2.2 For the avoidance of doubt, the Parties explicitly agree that once the conditions for reduction of the Commitment as set out in either Clause 3.2.1(i) or 3.2.1(ii) above are satisfied, the Commitment shall never again be increased up to the higher amount, even if the ratio of Total Net Rental Income to the aggregate of (a) Finance Costs, and (b) scheduled or actual repayments of principal on the Advances under Clause 6 (Repayment) of the Senior Credit Agreement subsequently declines. 3.2.3 Upon the occurrence of a reduction of the Commitment in accordance with Clause 3.2.1(i) or 3.2.1(ii), the Issuer shall be allowed to proportionally reduce any hedging arrangements as referred to in Clause 15.3(g)(ii) (Hedging) of the Senior Credit Agreement, in accordance with such Clause 15.3(g)(ii) (Hedging) of the Senior Credit Agreement. 3.2.4 The Commitment Reduction Date shall not occur until on or after the third Senior Credit Interest Payment Date after the date falling 42 months after the date of the Senior Credit Agreement.