Secured Convertible
Promissory Note
The binding legal instrument governing each investor's Series A Note. Review the complete document and understand its key terms before signing.
What Is a Secured Convertible
Promissory Note?
A Secured Convertible Promissory Note is a formal debt instrument — a legally binding promise by Solomon's Palace & Chateaus, Inc. to repay your principal investment plus accrued interest, either at maturity or upon a qualifying equity event.
The word secured means your Note is backed by all tangible and intangible assets of the Company, giving you a first-position creditor claim ahead of unsecured obligations.
The word convertible means the Note carries an option — at specified trigger events — to convert the outstanding principal and accrued interest into Common Stock of the Company at a predetermined discount, rather than receiving cash repayment.
Each investor receives their own individually executed Note, governed by the Note Purchase Agreement and the terms set forth in the Private Placement Memorandum.
Every Material Term of Your Note
The face value of your Note — the amount you invest. Phase 1 accepts investments from $50,000 to $5,000,000 per investor. The principal is the basis on which all interest is calculated.
Simple interest accrues on your outstanding principal on a 365-day basis from the date of your Note Purchase Agreement. Interest is not compounded — it accrues linearly and is paid at maturity or upon conversion.
Your Note matures 48 months from the date of your Note Purchase Agreement. At maturity, you elect either full repayment of principal plus all accrued interest, or conversion to Common Stock at the announced price.
Your Note is secured by all tangible and intangible assets of Solomon's Palace & Chateaus, Inc. This security interest gives Note holders a senior creditor position over unsecured obligations of the Company.
Upon a qualified equity financing, your Note principal and accrued interest automatically convert to Common Stock at a 30% discount (Phase 1) or 20% discount (Phase 2) off the per-share price paid by new investors in that round.
Phase 1 Founding Investors may elect — at their sole discretion — to convert their Note to Common Stock at the 18-month mark. The Company notifies investors at least 60 days prior. No obligation to exercise. No penalty for staying.
The Company may not prepay your Note — returning principal and interest early — without your prior written approval. This protects your right to earn the full interest over the intended term.
The Note is governed by and construed under the laws of the State of Nevada, consistent with the Company's state of incorporation as a Nevada corporation.
All investors must be verified accredited investors as defined under SEC Rule 501(a) prior to execution of the Note. The Company reserves the right to reject any subscription at its sole discretion.
How Your Note Works
From Execution to Maturity
You execute the Note Purchase Agreement, submit verified accredited investor documentation, and fund your investment. Your Note is issued. Simple interest begins accruing at 10% per annum (Phase 1) from this date. Phase 1 Founding Investors are added to the Founding Investor Register.
At least 60 days before the 18-month anniversary, the Company notifies all Phase 1 Founding Investors of the Early Exit Window — including the Board-approved conversion price per share, the number of shares you would receive at the 30% discount, and the election deadline.
You may elect to convert your outstanding principal and all accrued interest into Common Stock at the 30% discounted price. This is entirely voluntary — investors who do not elect simply continue under the original Note terms through month 48 with no penalty or change.
If the Company proceeds with a registered equity offering under the Securities Act of 1933, all outstanding Notes automatically convert into equity at the applicable discount. Phase 1 investors convert at 70% of the per-share price (30% discount). Phase 2 investors convert at 80% (20% discount). Phase 1 investors receive first priority participation rights in this round.
If no qualified equity financing has occurred, at maturity you choose: (1) full repayment of all outstanding principal plus all accrued interest in cash, or (2) conversion into Common Stock at the price announced by the Company no less than 30 days prior to the maturity date.
How Your Note Converts to Equity
When the Company proceeds to a registered equity offering or at maturity, the conversion price is determined by your phase. The discount is calculated off the per-share price paid by purchasers in the equity offering.
30% Conversion Discount
70¢ per $1 You pay 70% of what new investors pay per shareIf new investors pay $10.00 per share in the equity offering, your conversion price is $7.00 per share. Your principal and all accrued interest convert at this discounted price, maximizing the number of shares you receive. Phase 1 investors also receive first priority to participate in the equity round before it opens to outside investors.
20% Conversion Discount
80¢ per $1 You pay 80% of what new investors pay per shareIf new investors pay $10.00 per share in the equity offering, your conversion price is $8.00 per share. Your principal and all accrued interest convert at this discounted price. Phase 2 investors receive a standard pro-rata allocation in the equity offering with no priority advantage over new investors.
Converted shares are restricted securities under applicable federal securities laws and may not be freely transferred without registration or a valid exemption. Conversion does not guarantee liquidity.
Secured Convertible Promissory Note
Solomon's Palace & Chateaus, Inc. · Series A · Confidential · Accredited Investors Only
PDF preview is not available on mobile browsers.
Use the buttons below to open or download the Promissory Note.
This document is intended solely for accredited investors as defined under SEC Regulation D Rule 506(c). Please review the complete PPM and consult your legal and financial advisors before signing.
What the Note Protects
No Prepayment Without Consent
The Company cannot return your principal and interest early without your written approval. You cannot be forced out of your investment before you are ready.
365-Day Interest Accrual
Interest accrues daily on the full outstanding principal balance using a 365-day year basis. No tricks, no unusual conventions — straightforward simple interest from day one.
Security Interest in All Assets
Your Note is backed by a security interest in all tangible and intangible assets of the Company. In the event of default, Note holders have a senior claim against Company assets.
Accrued Interest Converts Too
Upon conversion — whether at the Early Exit Window, upon equity financing, or at maturity — both your principal AND all accrued but unpaid interest convert to equity. You do not forfeit earned interest upon conversion.
Investor Election at Maturity
At the 48-month maturity date, the choice is yours: take full cash repayment, or convert to equity. The Company must announce the conversion price no less than 30 days before maturity.
Transfer Restrictions
These Notes are restricted securities and may not be transferred without registration or a valid exemption under federal and state securities laws. There is no secondary market for these instruments.
Review the Complete Investment Package
Ready to Review and Sign?
Contact our investment team to receive your personalized Note Purchase Agreement and begin the subscription process.
This page is for informational purposes only and does not constitute an offer to sell or a solicitation to buy securities. This offering is made exclusively to verified accredited investors under Regulation D, Rule 506(c) of the Securities Act of 1933. These securities have not been registered under the Securities Act of 1933 or any state securities laws. The Notes described herein are restricted securities — there is no public or secondary market for these instruments. Investors should assume they may be required to hold their investment for the full 48-month term or longer. All investors should carefully review the complete Private Placement Memorandum, including all Risk Factors, and consult their own legal, financial, and tax advisors before investing or signing any document. As disclosed in the PPM, on May 6, 1998, Barry Michaels, Founder and CEO, pleaded guilty to one count of securities fraud and one count of subscribing to a false tax return. Full details are set forth in the PPM and incorporated herein by reference. Copyright © 2026 Solomon's Palace and Chateaus, Inc. All Rights Reserved. · CONFIDENTIAL — For Accredited Investors Only