Covertable Note Agreement
AI Agent Design and Deployment Services
DATE:
PARTIES:
Service Provider: CarefulAI Ltd
Client:
1. SERVICES
1.1 Principal Amount: The client acknowledges a debt of £5,000 representing the discounted market value of AI agent design and deployment services provided by the CarefulAI Ltd which is £315,00.
1.2 Services Delivered: CarefulAI Ltd to be provided for the debt are:
- AI agent system design and architecture
- Design and deployment of AI agent solutions
- Documentation and training materials
- A route to market strategy for an AI Agent
1.3 Intellectual Property: All intellectual property in the AI agents remains owned by CarefulAI Ltd until full conversion or repayment occurs.
2. INTEREST AND MATURITY
2.1 Interest Rate: The Principal shall accrue interest at 12% per annum, compounded monthly.
2.2 Maturity Date: 18 months from the date of this Agreement. If not converted by this date, the full amount plus accrued interest becomes immediately due and payable.
3. CONVERSION TERMS
3.1 Conversion Rights: CarefulAI Ltd may elect to convert all or part of the outstanding debt (including accrued interest) into:
- Equity: 10% equity stake in Clients business, or
- Revenue Share: 15% of gross revenues from AI agent operations for 5 years
3.2 Conversion Triggers: CarefulAI Ltd may exercise conversion rights upon:
- Borrower raising £25,000+ in funding
- Borrower achieving £5,000+ monthly recurring revenue
- Borrower entering discussions for business sale
- Any time after 6 months from this Agreement
- Borrower default on any terms
3.3 Valuation Protection: If conversion to equity, valuation shall not exceed 4x the clients annual revenue or £315,000, whichever is higher.
4. CLIENT OBLIGATIONS
4.1 Information Rights: the Client must provide monthly financial statements, customer metrics, and business updates.
4.2 Use Restrictions: the Client may only use AI agents for the agreed business purposes and cannot license, sell, or transfer them without CarefulAI Ltd's written consent.
4.3 Business Operations: the client must:
- Maintain business registration and good standing
- Not take on debt exceeding £10,000 without CarefulAI's written consent
- Maintain appropriate insurance coverage to protect against damages associated with the AI Agents use.
5. SECURITY AND GUARANTEES
5.1 Security Interest: CarefulAI Ltd holds a first-priority security interest in:
- All AI agent systems and related IP
- Business equipment and assets
- Customer contracts and receivables
- Bank accounts and cash flows
5.2 Personal Guarantee: the Client shareholders personally guarantees all obligations under this Agreement.
5.3 Cross-Default: Default under any other borrowing arrangements constitutes default under this Agreement.
6. DEFAULT AND REMEDIES
6.1 Events of Default:
- Failure to pay when due
- Breach of any covenant or obligation
- Insolvency or bankruptcy proceedings
- Cessation of business operations
- Material adverse change in business condition
6.2 Remedies: Upon default, CarefulAI Ltd may:
- Declare entire amount immediately due
- Exercise any conversion rights
- Take possession of secured assets
- Pursue all legal remedies
- Charge default interest at 18% per annum
7. ADDITIONAL PROTECTIONS
7.1 Anti-Dilution: Any future equity issuances must offer CarefulAI Ltd pro-rata participation rights.
7.2 Right of First Refusal: CarefulAI Ltd has first right to purchase any equity being sold by existing owners.
7.3 Tag-Along Rights: If the Client sells the business, CarefulAI Ltd require its equity stake be purchased on same terms.
7.4 Board Representation: Upon conversion to equity, CarefulAI Ltd receives board seat or observer rights.
8. GENERAL PROVISIONS
8.1 Governing Law: This Agreement is governed by the laws of England and Wales.
8.2 Jurisdiction: UK courts have exclusive jurisdiction over disputes.
8.3 Enforceability: If any provision is unenforceable, the remainder remains in full force.
8.4 Amendment: Changes require written agreement signed by all parties.
8.5 Amendment: CarefulAI Ltd may assign this Agreement; Borrower may not without CarefulAI Ltd's consent.
SIGNATURES
SERVICE PROVIDER:
Organisation: CarefulAI Ltd
Address: Springboard Centre, Cwmbran, Wales, NP20 5DN
Signature:
NAME IN CAPITALS:
Date:
CLIENT:
Organisation:
Address:
Signature:
NAME IN CAPITALS:
Date:
PERSONAL GUARANTOR
Signature:
NAME IN CAPITALS:
Address:
Date:
DATE:
PARTIES:
Service Provider: CarefulAI Ltd
Client:
1. SERVICES
1.1 Principal Amount: The client acknowledges a debt of £5,000 representing the discounted market value of AI agent design and deployment services provided by the CarefulAI Ltd which is £315,00.
1.2 Services Delivered: CarefulAI Ltd to be provided for the debt are:
- AI agent system design and architecture
- Design and deployment of AI agent solutions
- Documentation and training materials
- A route to market strategy for an AI Agent
1.3 Intellectual Property: All intellectual property in the AI agents remains owned by CarefulAI Ltd until full conversion or repayment occurs.
2. INTEREST AND MATURITY
2.1 Interest Rate: The Principal shall accrue interest at 12% per annum, compounded monthly.
2.2 Maturity Date: 18 months from the date of this Agreement. If not converted by this date, the full amount plus accrued interest becomes immediately due and payable.
3. CONVERSION TERMS
3.1 Conversion Rights: CarefulAI Ltd may elect to convert all or part of the outstanding debt (including accrued interest) into:
- Equity: 10% equity stake in Clients business, or
- Revenue Share: 15% of gross revenues from AI agent operations for 5 years
3.2 Conversion Triggers: CarefulAI Ltd may exercise conversion rights upon:
- Borrower raising £25,000+ in funding
- Borrower achieving £5,000+ monthly recurring revenue
- Borrower entering discussions for business sale
- Any time after 6 months from this Agreement
- Borrower default on any terms
3.3 Valuation Protection: If conversion to equity, valuation shall not exceed 4x the clients annual revenue or £315,000, whichever is higher.
4. CLIENT OBLIGATIONS
4.1 Information Rights: the Client must provide monthly financial statements, customer metrics, and business updates.
4.2 Use Restrictions: the Client may only use AI agents for the agreed business purposes and cannot license, sell, or transfer them without CarefulAI Ltd's written consent.
4.3 Business Operations: the client must:
- Maintain business registration and good standing
- Not take on debt exceeding £10,000 without CarefulAI's written consent
- Maintain appropriate insurance coverage to protect against damages associated with the AI Agents use.
5. SECURITY AND GUARANTEES
5.1 Security Interest: CarefulAI Ltd holds a first-priority security interest in:
- All AI agent systems and related IP
- Business equipment and assets
- Customer contracts and receivables
- Bank accounts and cash flows
5.2 Personal Guarantee: the Client shareholders personally guarantees all obligations under this Agreement.
5.3 Cross-Default: Default under any other borrowing arrangements constitutes default under this Agreement.
6. DEFAULT AND REMEDIES
6.1 Events of Default:
- Failure to pay when due
- Breach of any covenant or obligation
- Insolvency or bankruptcy proceedings
- Cessation of business operations
- Material adverse change in business condition
6.2 Remedies: Upon default, CarefulAI Ltd may:
- Declare entire amount immediately due
- Exercise any conversion rights
- Take possession of secured assets
- Pursue all legal remedies
- Charge default interest at 18% per annum
7. ADDITIONAL PROTECTIONS
7.1 Anti-Dilution: Any future equity issuances must offer CarefulAI Ltd pro-rata participation rights.
7.2 Right of First Refusal: CarefulAI Ltd has first right to purchase any equity being sold by existing owners.
7.3 Tag-Along Rights: If the Client sells the business, CarefulAI Ltd require its equity stake be purchased on same terms.
7.4 Board Representation: Upon conversion to equity, CarefulAI Ltd receives board seat or observer rights.
8. GENERAL PROVISIONS
8.1 Governing Law: This Agreement is governed by the laws of England and Wales.
8.2 Jurisdiction: UK courts have exclusive jurisdiction over disputes.
8.3 Enforceability: If any provision is unenforceable, the remainder remains in full force.
8.4 Amendment: Changes require written agreement signed by all parties.
8.5 Amendment: CarefulAI Ltd may assign this Agreement; Borrower may not without CarefulAI Ltd's consent.
SIGNATURES
SERVICE PROVIDER:
Organisation: CarefulAI Ltd
Address: Springboard Centre, Cwmbran, Wales, NP20 5DN
Signature:
NAME IN CAPITALS:
Date:
CLIENT:
Organisation:
Address:
Signature:
NAME IN CAPITALS:
Date:
PERSONAL GUARANTOR
Signature:
NAME IN CAPITALS:
Address:
Date: