Ecvc Draft Bridge Loan Agreement

Skill: Draft Convertible Note Purchase Agreement for Bridge Financing

1. Subject-matter triage (only if applicable)

• This is a transaction-drafting task, so the primary work is to produce an execution-ready purchase agreement with exhibits, not a commentary on the deal.
• Identify every source document that bears on economics, conversion mechanics, closing conditions, schedules, and exhibit terms before drafting final language.
• If the bridge package includes multiple notes, purchasers, closings, or related instruments, enumerate each separately and draft consistently across them.

2. Failure modes the skill is correcting

• The conversion denominator is left undefined or internally inconsistent, which makes the conversion price and resulting equity allocation unstable.
• The agreement does not say whether the capitalization denominator is measured on a pre-money or post-money basis, creating avoidable dispute risk at conversion.
• Accrued interest is not addressed with precision, leaving uncertainty whether it converts with principal or is paid separately.
• Co-existing SAFEs or prior notes are not sequenced or aggregated clearly, creating circularity or double-counting in the conversion mechanics.
• Qualified financing mechanics are drafted without checking whether the threshold is realistic for the company’s stage and the contemplated raise size.
• An MFN concept is drafted so broadly that it can be used to assemble a hybrid instrument from multiple prior notes.
• Secured-note language is included without the matching security agreement and perfection steps, or unsecured paper includes stray lien concepts.
• Events of default are drafted with subjective or vague triggers instead of objective, cureable defaults.
• The cover memo omits cross-document ambiguities and leaves open items buried in the agreement instead of surfacing them for client decision.

3. Legal frameworks / domain conventions that apply

• Define the conversion denominator precisely and specify whether it is pre-money or post-money; tie the definition to the exact capitalization base used for conversion under the note.
• State whether converting instruments are included or excluded from the denominator, and keep the defined term consistent across discount, cap, and qualified financing mechanics.
• Address accrued interest expressly: either include it in the conversion amount at the same price as principal or require cash payment at conversion.
• If multiple bridge instruments may convert in the same round, state whether conversion is simultaneous or sequenced, and if simultaneous, define the aggregate denominator and allocation method.
• If the note includes an MFN feature, define “more favorable terms” narrowly and allow election from a single prior instrument rather than a stitched combination of terms.
• If the note is secured, align the purchase agreement, note, security agreement, and filing obligations; if unsecured, remove security concepts that imply a lien.
• Include objective events of default and cure periods; avoid open-ended MAC-style language or subjective deterioration tests.
• Surface tax-attribute considerations where a new equity issuance could matter, and flag the need for a tax analysis if the round may be large relative to company value.
• Use governing-law, notice, amendment, waiver, transfer, and counterpart conventions consistent with standard venture debt / convertible note drafting practice.
• Cite controlling legal authority where the draft depends on a legal proposition, using the governing statute, rule, or recognized authority as appropriate.

4. Analytical scaffolds

• Start from the transaction economics, then map them into defined terms, closing conditions, note terms, and conversion provisions.
• For each conversion concept, test: what is the numerator, what is the denominator, when is it measured, and what instruments are included.
• Draft the purchase agreement and note together so that purchase mechanics, funding mechanics, and conversion mechanics do not conflict.
• If the source materials suggest more than one purchaser, note, tranche, closing date, or instrument class, draft each as a separate item and keep the schedule matching the body.
• Resolve internal ambiguities in the draft itself; if a point cannot be resolved from the source set, preserve it as an open item in the cover memo rather than guessing.
• Make exhibits operative: the note exhibit should contain the actual conversion and default mechanics, and the purchaser schedule should identify each investor and funding amount.
• Treat the cover memo as secondary to the agreement: the agreement must be complete and execution-ready before the memo is drafted.
• Before finalizing, check that the purchase agreement file exists and is non-empty, then confirm the memo file exists and is non-empty, with the agreement taking priority.

5. Vertical / structural / temporal relationships (only if applicable)

• Map the temporal sequence clearly: signing, funding, accrual start, closing, qualification of a future financing, and conversion or repayment.
• If there are multiple closings or delayed fundings, state which obligations arise at each closing and which survive until the final closing.
• If other convertible securities are outstanding, place their conversion rules in the same temporal sequence so the agreement answers what happens first and what happens simultaneously.
• If a secured structure is contemplated, sequence the security agreement and perfection filings with the loan closing and make deliverables internally consistent.

6. Output structure conventions

• Produce an execution-ready convertible note purchase agreement as the primary deliverable, with exhibits attached and fully operative.
• Include the note form as an exhibit, plus any purchaser schedule or closing schedule needed to make the package signable.
• Keep the agreement language transactional and complete; do not replace drafting with a summary of what the agreement should say.
• Prepare a separate drafting cover memo that flags resolved ambiguities, remaining open items, and any assumptions that were necessary.
• In the cover memo, organize issues by topic and state the recommended resolution or decision needed from the client.
• Ensure the memo does not displace the agreement: it should explain choices, not substitute for contract text.