Temporary Disruption of the Benchmark Clause Samples
The Temporary Disruption of the Benchmark clause defines how parties should proceed if the financial benchmark referenced in an agreement becomes temporarily unavailable or disrupted. Typically, this clause outlines the procedures for identifying a suitable alternative benchmark or suspending certain obligations until the original benchmark is restored. For example, if a loan agreement references LIBOR and LIBOR is temporarily inaccessible, the clause may specify using the most recent available rate or a fallback rate for the interim period. This clause ensures continuity and predictability in contractual obligations, minimizing uncertainty and disputes during short-term disruptions of key financial indices.
Temporary Disruption of the Benchmark. Subject to Section 17.2(b), if:
(a) the Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the then-current Benchmark and such inability to ascertain is not expected to be permanent; or
(b) the Agent has been advised by the Required Lenders that the then-current Benchmark will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan); then the Agent shall give notice thereof to the Borrower and the Lenders as promptly as practicable thereafter and, until the Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any outstanding Loan that bears interest at a rate based on the then-current Benchmark shall on and from such day be converted by the Agent to, and shall constitute, a Loan that bears interest at a rate based on (1) Daily Simple SOFR, (2) the Agreed-Upon Replacement or (3) the Alternate Base Rate (in order of the foregoing priority pursuant to clauses (1) through (3) as to the first of which (x) clauses (a) and (b) above are not applicable and (y) Section 17.2(b) is not applicable); provided that, in the case of clause (1) and (2) above, the Agent will notify the Lenders of the replacement rate on the date of determination thereof and, until the Lenders object to such replacement rate (which right of objection shall expire at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after such written notice thereof is provided to the Lenders), the replacement rate shall be effective. For avoidance of doubt, until such time as the replacement rate is effective, the Loans will continue to bear interest based on the then-current Benchmark as of the last date of determination.
Temporary Disruption of the Benchmark. Subject to Section 17.2(b), if:
(a) the Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the then-current Benchmark and such inability to ascertain is not expected to be permanent; or
(b) the Agent has been advised by the Required Lenders that the then-current Benchmark will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan); then the Agent shall give notice thereof to the Borrower and the Lenders as promptly as practicable thereafter and, until the Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any outstanding Loan that bears interest at a rate based on the then-current Benchmark shall on and from such day be converted by the Agent to, and shall constitute, a Loan that bears interest at a rate based on (1) Daily Simple SOFR, (2) the Agreed-Upon Replacement or (3) the Alternate Base Rate (in order of the foregoing priority pursuant to clauses (1) through (3) as to the first of which (x) clauses (a) and (b) above are not applicable and
Temporary Disruption of the Benchmark. Subject to Section 11.6, if, on or prior to the first day of any Interest Period for any SOFR Loan:
(a) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that “Term SOFR” cannot be determined pursuant to the definition thereof, or
(b) the Majority Lenders determine that for any reason in connection with any request for a SOFR Loan or a conversion thereto or a continuation thereof that Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan does not adequately and fairly reflect the cost to such Lenders of making and maintaining such SOFR Loan, and the Majority Lenders have provided notice of such determination to the Administrative Agent, then, in each case, the Administrative Agent will promptly so notify the Borrower, each Lender and S&P. Upon notice thereof by the Administrative Agent to the Borrower, any obligation of the Lenders to make SOFR Loans, and any right of the Borrower to continue SOFR Loans, shall be suspended (to the extent of the affected SOFR Loans or affected Interest Periods) until the Administrative Agent (with respect to clause (b), at the instruction of the Majority Lenders) revokes such notice. Upon receipt of such notice, (i) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or affected Interest Periods) or, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to Loans that bear interest at a rate based on (1) the Benchmark Replacement or (2) the Alternate Base Rate (in order of the foregoing priority pursuant to clauses (1) through (2)) and (ii) any outstanding affected SOFR Loans will be deemed to have been converted into Loans that bear interest at a rate based on (1) the Benchmark Replacement or (2) the Alternate Base Rate (in order of the foregoing priority pursuant to clauses (1) through (2)) at the end of the applicable Interest Period. Upon any such conversion, the Borrower shall also pay accrued interest on the amount so converted, together with any additional amounts required pursuant to Section 2.9.