(a) On the LIBOR replacement date, the recommended benchmark replacement, by operation of law, is the benchmark replacement for a contract, security, or instrument that uses LIBOR as a benchmark and:
Terms Used In Tennessee Code 47-33-103
Benchmark: means an index of interest rates or dividend rates that is used, in whole or in part, as the basis of, or as a reference for, calculating or determining a valuation, payment, or other measurement under or in respect of a contract, security, or instrument. See Tennessee Code 47-33-102
Benchmark replacement: means a benchmark, or an interest rate or dividend rate, that may be based in whole or in part on a prior setting of LIBOR, to replace LIBOR or an interest rate or dividend rate based on LIBOR, whether on a temporary, permanent, or indefinite basis, under or in respect of a contract, security, or instrument. See Tennessee Code 47-33-102
Contract: A legal written agreement that becomes binding when signed.
Determining person: means , with respect to a contract, security, or instrument, in the following order of priority:(A) A person so specified. See Tennessee Code 47-33-102
Fallback provisions: means terms in a contract, security, or instrument that set forth a methodology or procedure for determining a benchmark replacement, including terms relating to the date on which the benchmark replacement becomes effective, without regard to whether a benchmark replacement can be determined in accordance with the methodology or procedure. See Tennessee Code 47-33-102
Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
LIBOR: means , for purposes of the application of this chapter to a particular contract, security, or instrument, United States dollar LIBOR, formerly known as the London Interbank Offered Rate, as administered by ICE Benchmark Administration Limited, or a predecessor or successor thereof, and a tenor thereof, as applicable, that is used in making a calculation or determination thereunder. See Tennessee Code 47-33-102
Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
Recommended benchmark replacement: means a benchmark replacement based on SOFR, including a recommended spread adjustment and benchmark replacement conforming changes, that has been selected or recommended by a relevant recommending body with respect to the type of contract, security, or instrument. See Tennessee Code 47-33-102
State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(1) Contains no fallback provisions; or(2) Contains fallback provisions that result in a benchmark replacement, other than a recommended benchmark replacement, that is based in any way on a LIBOR value.(b) Following the effective date of this act, fallback provisions in a contract, security, or instrument that provide for a benchmark replacement based on or otherwise involving a poll, survey, or inquiries for quotes or information concerning interbank lending rates or an interest rate or dividend rate based on LIBOR must be disregarded as if not included in the contract, security, or instrument and are void.(c)(1) This subsection (c) applies to a contract, security, or instrument that uses LIBOR as a benchmark and contains fallback provisions that permit or require the selection of a benchmark replacement that:
(A) Is based in any way on a LIBOR value; or(B) Is the substantive equivalent of § 47-33-104(a)(1), (a)(2), or (a)(3).(2) A determining person has the authority under this chapter, but is not required, to select the recommended benchmark replacement as the benchmark replacement. The selection of the recommended benchmark replacement:
(A) Is irrevocable;(B) Must be made by the earlier of either the LIBOR replacement date, or the latest date for selecting a benchmark replacement according to the contract, security, or instrument; and(C) Must be used in determinations of the benchmark under or with respect to the contract, security, or instrument occurring on and after the LIBOR replacement date.(d) If a recommended benchmark replacement becomes the benchmark replacement for a contract, security, or instrument pursuant to this section, then all benchmark replacement conforming changes that are applicable to the recommended benchmark replacement become an integral part of the contract, security, or instrument by operation of law.(e) This chapter does not alter or impair the following:
(1) A written agreement by all requisite parties that, retrospectively or prospectively, provides, without necessarily referring specifically to this chapter, that a contract, security, or instrument is not subject to this chapter. For purposes of this subdivision (e)(1), “requisite parties” means all parties required to amend the terms and provisions of a contract, security, or instrument that otherwise would be altered or affected by this chapter;(2) A contract, security, or instrument that contains fallback provisions that would result in a benchmark replacement that is not based on LIBOR, including, but not limited to, the prime rate or the federal funds rate, except that the contract, security, or instrument is subject to subsection (b);(3) A contract, security, or instrument subject to subsection (c) as to which a determining person does not elect to use a recommended benchmark replacement or as to which a determining person elects to use a recommended benchmark replacement prior to the effective date of this act, except that the contract, security, or instrument is subject to subsection (b); and(4) The application to a recommended benchmark replacement of a cap, floor, modifier, or spread adjustment to which LIBOR had been subject pursuant to the terms of a contract, security, or instrument.(f) Notwithstanding the uniform commercial code or another law of this state, this chapter applies to all contracts, securities, and instruments, including contracts with respect to commercial transactions and is not displaced by another law of this state.
