What does 'Maximum Rate' refer to in the Boulder Designs Promissory Note?

| principal balance outstanding from time to time hereon at a rate equal to 8.5% per annum | or the Maximum | Rate, whichever is less, under the terms and conditions of this promissory note and security agreement | | ("Note"). This Note is due and payable in 42 | monthly installments of principal and interest. The first of | | "Maximum Rate" means the maximum lawful rate of interest permitted by applicable usury laws | | now or hereafter enacted which interest rate shall change when and as said laws change, to the extent | | permitted by law, effective on the day such change in said laws becomes effective. | | | | excess of the Maximum Rate. Neither Debtor nor any co-makers, endorsers, sureties, guarantors or other parties now or hereafter becoming liable for payment of this Note shall ever be required to pay interest or finance charges at a rate in excess of the Maximum Rate, and the provisions of this paragraph shall control over all other provisions of this Note and any other Transaction Document which may be in apparent conflict herewith. PAYEE and any other holder of this Note expressly disavow any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of this Note is accelerated.

If demand is made or if the maturity of this Note shall be accelerated for any reason or if any of the principal of this Note is prepaid, and as a result thereof the interest or finance charge received for the actual period of existence of the loans evidenced by this Note exceeds the Maximum Rate, the holder of this Note shall, at its option, either refund to Debtor the amount of such excess or credit the amount of such excess against the principal balance of this Note then outstanding, and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest. If PAYEE or any other holder of this Note shall collect monies and/or any other thing of value which are deemed to constitute interest which would increase the effective interest rate on this Note to a rate in excess of the Maximum Rate, all such sums deemed to constitute interest in excess of the Maximum Rate shall, upon such determination, at the option of the holder of this Note, be either immediately returned to Debtor or credited against the principal balance of this Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable.

In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable law, PAYEE and Debtor shall to the greatest extent permitted by applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate and spread the total amount of interest throughout the entire contemplated term hereof in accordance with the amounts outstanding from time to time thereunder and the Maximum Rate from time to time in effect under applicable law in order to lawfully charge the maximum amount of interest permitted under applicable law. By execution of this Note, Debtor acknowledges that it believes the loans evidenced hereby to be non-usurious. The term "applicable law" as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

Source: Item 22 — CONTRACTS (FDD page 50)