Bridge Financing Term Sheet

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This Bridge Financing Term Sheet is for use by an individual or entity who agrees to finance a company in exchange for common stock.

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This Bridge Financing Term Sheet is a document between a company and an individual or entity (known as the "Noteholder" or “Investor”) who is agreeing in principal to provide interim financing to the company in exchange for a warrant to purchase the company's common stock. This document sets out the key terms of the proposed financing including the amount to be financed, financing due date and collateral that will secure any notes entered into under the agreement. It is non-binding but essential when entering into this type of transaction.

This Term Sheet also specifies that the notes will be automatically converted during a qualified financing to shares of the equity purchased in the financing.

This Bridge Financing Term Sheet contains the following:
  • Parties: Sets out the names of the company and the noteholders;
  • Intent: Intent of the document is to describe key terms of the proposed financing;
  • Amount/Security: Amount of financing and that it will be secured by convertible notes and warrants. Description of collateral of the notes and warrants is also included;
  • Interest Rate: Amount of interest due per annum;
  • Use of Proceeds: Sets out a description of use and how the company will be capitalized.

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This attorney-prepared packet contains:
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  2. Instructions and Checklist
  3. Bridge Financing Term Sheet
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Bridge Financing Term Sheet

 

 

This Term Sheet summarizes the principal terms of a proposed bridge financing, consisting of the sale and issuance of convertible notes and warrants by ___________________________ [name of corporation], a ______________ [state] corporation (the Company”), offered to ___________________________________ [noteholders] (Noteholders”). The intent of this document is to describe the key terms of the proposed financing.
 
Amount of Financing:
$ ______________[dollar amount of financing]
Securities:
Secured Convertible Notes (the Notes”) and Warrants (the Warrants”) to purchase Common Stock of the Company.
Due Date:
_____[number of years, e.g., 1] year from date of issue.
Security:
The Notes are secured by _________________________________________[description of collateral, e.g., all of the assets].
Interest Rate:
__________ [percentage rate of interest]% per annum payable upon the Due Date.
Conversion:
The Notes (principal and accrued interest) will be automatically converted upon the closing of a Qualified Financing (as defined below) into the same type of equity securities issued in the Qualified Financing (and on the same terms and conditions as given to the investors in such financing). The conversion price of the Notes shall be _____[percentage of price]% of the price per share paid by the investors participating in the Qualified Financing.
 
For purposes of this Term Sheet, a Qualified Financing” shall have the following characteristics: (i) an equity security financing by the Company; (ii) aggregate proceeds to the Company of not less than $ ___________ [dollar amount of minimum proceeds] (excluding conversion of the Notes), (iii) investments shall be made by accredited investors only and (iv) closing within ____[number of months, e.g., 12] months after the closing of this bridge financing.
Alternative Conversion Price (if no Qualified Financing within12 months after this bridge financing):
If a Qualified Financing does not occur within ___ [number of months, e.g. 12] months of this bridge financing, the Notes shall be convertible at the election of the Noteholders into the Companys Common Stock at a conversion price of $ ________ [dollar amount of price] per share. [Optional: This alternative conversion price is based on a pre-money valuation of $ _____ [dollar amount of valuation] and a post-money valuation of $ _____ [dollar amount of valuation]. Based on a _______[number of shares] share fully diluted capitalization, the Notes would be convertible at a conversion rate of $ _______ [dollar amount per share] per share into ____[number of shares] shares, or ___ [percentage of capitalization]% of the fully diluted capitalization of _______________________[name of company] Common Stock.]
 
Warrant Coverage:
Each Noteholder will receive a Warrant to purchase an amount in value of the Companys Common Stock equal to 10% of the principal and interest of the Note [Example: assuming the principal amount of the Notes is $1,000,000, the Warrant would be exercisable into $100,000 of Common Stock].
 
The number of shares subject to the Warrant is determined by dividing the Warrant coverage amount by the price of the equity securities sold in the Qualified Financing. [Thus, in the example, if the price of the Common Stock issued in the Qualified Financing were $1.00 per share, the number of shares subject to the Warrant would be 100,000 shares ($100,000 divided by $1.00)]. If the Qualified Financing does not occur within ___[number of months, e.g., 12] months of this bridge financing, the Warrant coverage amount would be divided by $1.00 per share.
 
The exercise price of the Warrant shall be ____ [percentage of price]% of the same price paid by the investors in the Qualified Financing, or if there is no Qualified Financing within ___[number of months, e.g., 12] months of this bridge financing, by $ ________ [dollar amount per share] per share.
 
The Warrants will expire ___[number of years, e.g., three] years from date of issue.
Use of Proceeds:
______________________[description of use]
Capitalization:
After completion of the bridge financing and assuming full conversion of the Convertible Notes into Common Stock and exercise of all Warrants, the Common Stock capitalization of the Company will be as follows:
 
Security
No. of Shares of Common Stock to be Issued and Outstanding
% of Total
Convertible Notes
________
________ %
Warrants
________
________ %
Previous Investors
________
________ %
Founders, Directors, Key Employees & Consultants
________
________ %
TOTALS
________
100%
 
 
 
 
 
 
 
 
 
Number of Pages7
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#43671
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Bridge Financing Term Sheet

 

 

This Term Sheet summarizes the principal terms of a proposed bridge financing, consisting of the sale and issuance of convertible notes and warrants by ___________________________ [name of corporation], a ______________ [state] corporation (the Company”), offered to ___________________________________ [noteholders] (Noteholders”). The intent of this document is to describe the key terms of the proposed financing.
 
Amount of Financing:
$ ______________[dollar amount of financing]
Securities:
Secured Convertible Notes (the Notes”) and Warrants (the Warrants”) to purchase Common Stock of the Company.
Due Date:
_____[number of years, e.g., 1] year from date of issue.
Security:
The Notes are secured by _________________________________________[description of collateral, e.g., all of the assets].
Interest Rate:
__________ [percentage rate of interest]% per annum payable upon the Due Date.
Conversion:
The Notes (principal and accrued interest) will be automatically converted upon the closing of a Qualified Financing (as defined below) into the same type of equity securities issued in the Qualified Financing (and on the same terms and conditions as given to the investors in such financing). The conversion price of the Notes shall be _____[percentage of price]% of the price per share paid by the investors participating in the Qualified Financing.
 
For purposes of this Term Sheet, a Qualified Financing” shall have the following characteristics: (i) an equity security financing by the Company; (ii) aggregate proceeds to the Company of not less than $ ___________ [dollar amount of minimum proceeds] (excluding conversion of the Notes), (iii) investments shall be made by accredited investors only and (iv) closing within ____[number of months, e.g., 12] months after the closing of this bridge financing.
Alternative Conversion Price (if no Qualified Financing within12 months after this bridge financing):
If a Qualified Financing does not occur within ___ [number of months, e.g. 12] months of this bridge financing, the Notes shall be convertible at the election of the Noteholders into the Companys Common Stock at a conversion price of $ ________ [dollar amount of price] per share. [Optional: This alternative conversion price is based on a pre-money valuation of $ _____ [dollar amount of valuation] and a post-money valuation of $ _____ [dollar amount of valuation]. Based on a _______[number of shares] share fully diluted capitalization, the Notes would be convertible at a conversion rate of $ _______ [dollar amount per share] per share into ____[number of shares] shares, or ___ [percentage of capitalization]% of the fully diluted capitalization of _______________________[name of company] Common Stock.]
 
Warrant Coverage:
Each Noteholder will receive a Warrant to purchase an amount in value of the Companys Common Stock equal to 10% of the principal and interest of the Note [Example: assuming the principal amount of the Notes is $1,000,000, the Warrant would be exercisable into $100,000 of Common Stock].
 
The number of shares subject to the Warrant is determined by dividing the Warrant coverage amount by the price of the equity securities sold in the Qualified Financing. [Thus, in the example, if the price of the Common Stock issued in the Qualified Financing were $1.00 per share, the number of shares subject to the Warrant would be 100,000 shares ($100,000 divided by $1.00)]. If the Qualified Financing does not occur within ___[number of months, e.g., 12] months of this bridge financing, the Warrant coverage amount would be divided by $1.00 per share.
 
The exercise price of the Warrant shall be ____ [percentage of price]% of the same price paid by the investors in the Qualified Financing, or if there is no Qualified Financing within ___[number of months, e.g., 12] months of this bridge financing, by $ ________ [dollar amount per share] per share.
 
The Warrants will expire ___[number of years, e.g., three] years from date of issue.
Use of Proceeds:
______________________[description of use]
Capitalization:
After completion of the bridge financing and assuming full conversion of the Convertible Notes into Common Stock and exercise of all Warrants, the Common Stock capitalization of the Company will be as follows:
 
Security
No. of Shares of Common Stock to be Issued and Outstanding
% of Total
Convertible Notes
________
________ %
Warrants
________
________ %
Previous Investors
________
________ %
Founders, Directors, Key Employees & Consultants
________
________ %
TOTALS
________
100%
 
 
 
 
 
 
 
 
 

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