The KBM note bears a penalty/late fee of $2,000 a day which comes to $730,000 a year or 1700% of the entire $43k note. Although penalties and late fees are not usually considered interest for the loan they also cannot be usurious. The New York Supreme Court decision on Funding Group Inc. v Water Chef Inc. is a good example. I'll copy an excerpt from that decision in the next post.


Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note.