Simplifying Legal Documents with AI and Standard Technical English

Original

Statistics

• Word Count: 880

• Sentence Count: 40

• Average Sentence Length: 22 words

• Flesch Reading Ease Score: 10-20: "very difficult to read" and best understood by university graduates.

Original Text

“Subordinated Indebtedness” means unsecured Funded Indebtedness of the Company which

A. On the date on which the status of such Funded Indebtedness is determined for any purpose hereof,

(1) has a final maturity not earlier than the maturity date of the last installment of principal then payable on the outstanding Notes,

(2) has a Weighted Average Life to Maturity at least as long as the remaining Weighted Average Life to Maturity of the Notes, and,

(3) is not subject to payment, redemption or other retirement by means of any installment, sinking fund, serial maturity or other required payments at a rate greater than the rate at which the unpaid principal amount of the outstanding Notes shall be payable in installments as herein and in the Notes provided; and

B. Is issued or assumed pursuant to, or evidenced by, an indenture or other instrument which contains provisions for the subordination of such Funded Indebtedness (to which appropriate reference shall be made in the instruments evidencing such Funded Indebtedness if not contained therein) to the Notes (and, at the option of the Company, if so provided, to other Indebtedness for Money Borrowed of the Company, either generally or as specifically designated) substantially as follows (without limitation as to further, not inconsistent, provisions, if so desired):

Subordination. Anything in this Subordinated Note to the contrary notwithstanding, the indebtedness evidenced by this Subordinated Note shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all indebtedness of the Company evidenced by its X% Senior Notes from time to time outstanding (whether outstanding at the date of this Subordinated Note or issued after the date of this Subordinated Note and as said X% Senior Notes may at any time and from time to time be modified or amended in any respect) and to (All such indebtedness to which this Subordinated Note is subordinate as aforesaid being sometimes hereinafter referred to as ‘Superior Indebtedness’):

(i) In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to the Company or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy, then the holders of Superior Indebtedness shall be entitled to receive payment in full of all principal, premium (if any) and interest on all Superior Indebtedness (including interest thereon accruing after the commencement of any such proceedings) before the holder of this Subordinated Note shall be entitled to receive any payment on account of principal, premium (if any) or interest on this Subordinated Note. Pursuant to the foregoing (but subject to the power of a court of competent jurisdiction to make other equitable provisions reflecting the rights conferred herein upon Superior Indebtedness and the holders thereof with respect to the subordinated indebtedness represented by this Subordinated Note and the holder hereof by a lawful plan of reorganization under applicable bankruptcy law) the holders of Superior Indebtedness (until payment in full of all principal, premium (if any) and interest on all Superior Indebtedness, including interest thereon accruing after the commencement of any such proceedings) shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in any such proceedings in respect of this Subordinated Note (including any such payment or distribution which may be payable or deliverable by virtue of the provisions of, or any security for, any securities which are subordinated and junior in right of payment to this Subordinated Note), except securities which are subordinated and junior (to at least the same extent as this Subordinated Note) in right of payment to the payment of all Superior Indebtedness then outstanding. The holder of this subordinated Note shall not exercise or attempt to exercise any right of setoff or counterclaim in respect of any obligations of the holder of this Subordinated Note to the Company against the obligations of the Company under this Subordinated Note if the effect thereof shall be to reduce the amount of any such payment or distribution to which the holders of Superior Indebtedness would be entitled in the absence of such setoff or counterclaim; and if and to the extent that, notwithstanding the foregoing, the holder of this Subordinated Note is required by any mandatory provision of law to exercise any such right of setoff or counterclaim, each reduction of the amount owing on account of the principal of or premium (if any) or interest on this Subordinated Note by reason of such setoff or counterclaim shall be deemed to be a payment by the Company in a like amount in respect of this Subordinated Note to which the second sentence of this paragraph (i) shall apply.

(ii) In the event that this Subordinated Note is declared due and payable before its expressed maturity because of the occurrence of an event of default hereunder (under circumstances when the provisions of the foregoing paragraph (i) or the following paragraph (iii) shall not be applicable), the holders of Superior Indebtedness then due, or becoming due by acceleration or otherwise prior to the expiration of a period of 75 days after the date on which the Company or a holder of this Subordinated Note gives to the holders of the Superior Indebtedness the written notice provided for below in this paragraph (ii), shall be entitled to receive payment in full of all principal, premium (if any) and interest on all such Superior Indebtedness before the holder of this Subordinated Note shall be entitled to receive any payment on account of the principal, premium (if any) or interest on this Subordinated Note other than any such principal, premium (if any) and interest due otherwise than by reason of such declaration. For the purpose of this paragraph (ii) the Company agrees, for the benefit of the holders of Superior Indebtedness as well as the holder of this Subordinated Note, that, if any such declaration remains unrescinded for 15 days, the Company will promptly give written notice thereof to all holders of Superior Indebtedness. If the company fails to give such notice, the holder of this Subordinated Note may do so on behalf of the Company. At any time within 75 days after the date on which such notice is given, any holder of outstanding Superior Indebtedness shall have the right to declare all Superior Indebtedness held by such holder to be due and payable, whereupon such Superior Indebtedness shall forthwith become immediately due and payable regardless of the expressed maturity date thereof. Nothing herein shall prevent the holder of this Subordinated Note from seeking any remedy allowed at law or in equity so long as any judgement or decree obtained thereby makes provision for enforcing this paragraph (ii).

(iii) In the event that any default shall occur and be continuing with respect to any Superior Indebtedness permitting the holders of such Superior Indebtedness to accelerate the maturity thereof, the holder of this Subordinated Note shall not be entitled to receive any payment on account of principal, premium (if any) or interest hereon (including any such payment which would cause a default) if either (a) judicial proceedings shall be pending in respect of such default, or (b) written notice of such default shall have been given to the Company by any holder of Superior Indebtedness and a period of 180 days in the case of a monetary default or 90 days in the case of any other default shall not have expired since the giving of such notice; provided, however, that this paragraph (iii) shall apply to only one such notice given in any 12 months’ period. The Company, forthwith upon receipt of any such notice, shall send a copy thereof to the holder of this Subordinated Note.

No present or future holder of Superior Indebtedness shall be prejudiced in such holder’s right to enforce subordination of this Subordinated Note by any act or failure to act on the part of the Company. The provisions of this Section are solely for the purpose of defining the relative rights of the holders of Superior Indebtedness on the one hand, and the holder of this Subordinated Note on the other hand, and nothing herein shall impair, as between the Company and the holder of this Subordinated Note, the obligation of the Company, which is unconditional and absolute, to pay to the holder hereof the principal and interest hereon in accordance with the terms hereof, nor shall anything herein prevent the holder of this Subordinated Note from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder, subject to the rights, if any, under this Section of holders of Superior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the holder of this Subordinated Note and all amounts which are deemed to be payments in respect of this Subordinated Note by reason of setoff or counterclaim in respect of any obligations of the holder of this Subordinated Note to the Company against the obligations of the Company under this Subordinated Note.

Simplified

Statistics

• Word Count: 710.

• Sentence Count: 60

• Average Sentence Length: 12 words

• Flesch Reading Ease Score: 50-60: "fairly difficult to read" and potentially understood by high school students or those with some technical background.

Original Text

"Junior Debt" means the Company's unsecured debt.

A. When we check the status of this debt:

(1) Its final due date is not before the last principal payment due on the existing Notes.

(2) Its average time to due date is not less than the remaining average time to due date of the Notes.

(3) Its required payments (installments, sinking fund, serial maturity, or other payments) are not faster than the payment rate of the existing Notes.

B. It is issued or assumed by an agreement that subordinates this debt to the Notes. This agreement must state this subordination. It can also subordinate this debt to other Company debt (general or specific). The subordination must follow these rules (but can have other, consistent rules):

Subordination. This junior debt is subordinate to the Company’s X% senior debt. This applies to all X% senior debt (now or later issued, and any changes to that debt). This senior debt is called "Senior Debt."

(i) If the Company has insolvency, bankruptcy, receivership, liquidation, reorganization, or similar proceedings, or voluntary liquidation, dissolution, or winding up (whether or not insolvent or bankrupt), Senior Debt holders will receive full payment of principal, premium (if any), and interest (including interest after proceedings begin) before the Junior Debt holder receives any payment. This means Senior Debt holders will receive any payment or distribution (cash, property, or securities) from these proceedings until they are paid in full. This includes payments related to securities subordinate to this Junior Debt, except securities also subordinate to the Senior Debt. The Junior Debt holder cannot use setoff or counterclaim to reduce payments to Senior Debt holders. If the law requires the Junior Debt holder to use setoff or counterclaim, any reduction in principal, premium, or interest due to this will be considered a payment to which the previous rule about Senior Debt priority applies.

(ii) If this Junior Debt is declared due early because of a default (and rules (i) or (iii) do not apply), Senior Debt holders due to be paid within 75 days after the Company or a Junior Debt holder sends written notice to the Senior Debt holders, will receive full payment of principal, premium (if any), and interest before the Junior Debt holder receives any payment (except payments not due to the early declaration). If this declaration is not cancelled within 15 days, the Company will send written notice to all Senior Debt holders. If the Company does not send the notice, the Junior Debt holder can send it. Within 75 days of this notice, any Senior Debt holder can declare their debt due. This makes the Senior Debt immediately due. This does not stop the Junior Debt holder from using legal remedies if any judgment enforces this rule (ii).

(iii) If a default occurs on Senior Debt that lets Senior Debt holders accelerate its due date, the Junior Debt holder will not receive any payment (including payments that would cause a default) if either: (a) court proceedings are ongoing for this default, or (b) written notice of this default was sent to the Company by a Senior Debt holder, and 180 days (for a money default) or 90 days (for any other default) have not passed since the notice. This rule (iii) applies to only one notice in any 12-month period. When the Company receives such a notice, it will send a copy to the Junior Debt holder.

Current and future Senior Debt holders keep their right to enforce this subordination. The Company's actions do not change this right. This section only defines the rights of Senior Debt holders and the Junior Debt holder. This does not change the Company's duty to pay the Junior Debt holder principal and interest. This does not stop the Junior Debt holder from using legal remedies if the Company defaults. But, Senior Debt holders have the right to receive money, property, or securities due to the Junior Debt holder. This includes any amounts considered payments on this Junior Debt because of setoff or counterclaim.