Love this part!!! subject Note (Exhibit “C”)
Post# of 15187
subject Note (Exhibit “C”) made by and between Plaintiff KBM as lender, and
Defendant Hangover as Borrower, is dated January 2, 2015, and has a maturity date of October
6, 2015. At first glance, the Note is an attractive proposition, especially for one who is in dire
need of cash as it sets forth an interest rate of only 8% with a default interest rate of 22%, and
which purports to be due on October 6, 2015. (See the first paragraph of the Note).
However, although it states that the Note is not due until October 6, 2015, the next
section entitled “Article 1- CONVERSION RIGHTS” contains language in paragraphs
Article1:1 - 1:8 which, in summary, provides that the lender has the right from 180 days after
January 2, 2015, which is July 1, 2015, until the maturity date, which is October 6, 2015, to
convert any or all of the debt into stock at a 45% discounted rate. Effectively, the lender could,
after 180 days, cause repayment of the note before it even becomes due by converting stock in
satisfaction of all or part of the note.
The 45% discount of the market value of the stock to satisfy either part or all of
the money owed amounts to a usurious rate of interest. The lender is effectively getting
$78,182.00 worth of stock for repayment of the $43,000.00 note. This is interest of
$35,182.00 on a $43,000.00 note. This subjects the borrower to an interest rate on this debt
conversion of 81%. It does not even take into account the windfall of profit that the lender
receives when it then sells the stock at the market value and the damage to the Defendants in
having to sell their stock at a 45% discount and having to suffer the consequences of the market
being flooded with more stock causing the stock price to plummet after Plaintiff has made its
enormous profits. The Note, on its face, is criminally usurious as the conversion rate subjects the
borrower to said 81% interest rate
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