Subordinated Convertible Note (Genie AI)

A Subordinated Convertible Note (Genie AI) is a legal template designed to document a financing agreement between an investor and Genie AI, a technology company engaged in artificial intelligence (AI) development. This template outlines the terms and conditions under which the investor provides funds to Genie AI in exchange for a convertible note—a debt instrument that can later be converted into equity shares of the company.

This legal agreement typically starts by defining the key parties involved, their roles, and contact details. It then proceeds to establish the principal amount being invested, along with any interest accruing on the note. The template might include provisions related to the maturity date or repayment schedule for the note.

One important feature of this agreement is the subordination clause, which establishes that the investor's claim on Genie AI's assets and repayment ranking is secondary to the claims of other senior creditors. This means that in case of any liquidation or insolvency event, the subordinated convertible noteholder will receive payment only after all senior debt obligations have been satisfied.

Another crucial aspect covered in this template is the conversion clause. It outlines the terms under which the note can be converted into equity shares of Genie AI. The conversion may be triggered by specific events, such as a future funding round or an agreed-upon milestone. The template would typically specify the conversion price, the number of shares allotted, and any adjustments based on dilution or anti-dilution protections.

Additionally, the template might include representations and warranties made by both parties, outlining certain assurances regarding the validity of the investment and the company's operations. It may also contain provisions related to confidentiality, dispute resolution, and governing law.

Overall, this legal template for a Subordinated Convertible Note (Genie AI) establishes a framework for a financing arrangement that provides the investor with the option to convert their debt into equity in Genie AI in the future, subject to certain conditions and terms.