Document background
The Promissory Note Conversion Agreement is commonly used when companies, particularly startups, want to convert outstanding debt into equity. This typically occurs during financing rounds, restructuring, or when originally planned in convertible note financing. The agreement is essential in the United States where securities laws strictly regulate such conversions. It details the conversion terms, representations and warranties, and compliance with applicable securities regulations. The document should be carefully structured to ensure compliance with both federal securities laws and state-specific requirements, particularly regarding registration exemptions and disclosure obligations.
