Penalty Interest and Compound Interest. 1. If Party B fails to repay the loan on schedule as agreed herein, Party A will calculate the interest on the portion that is past due at the Overdue Penalty Interest Rate starting on the day following the due date of that portion, until both the principal and interest of the loan is paid off. The Penalty Interest Rate for the delayed portion shall be the original interest rate as stipulated in Article 1 herein plus an additional 50% thereof. 2. If Party B fails to use the loan in accordance with the provisions herein, the interest on the diverted portion of the loan shall be calculated at the Diversion Penalty Interest Rate starting on the day of appropriating the portion of the loan, until both the principal and interest of the loan is paid off. The Diversion Penalty Interest Rate for the diverted portion shall be the original interest rate as stipulated in Article 1 herein plus an additional 100% thereof. 3. For the portion that is both past due and used for diverted purpose(s), the interest on this portion of the loan shall be calculated at the Diversion Penalty Interest Rate as stipulated above. 4. If Party B fails to pay any interest on schedule, the interest shall be calculated using the settlement method as stipulated in Provision 3 of in this Article. The interest will be compounded at the loan rate as stipulated in Provision 1 of this article within the term of the loan. After the maturity of the loan, the interest will be compounded at the Penalty Interest Rate stipulated herein. 5. The calculation of penalty interest and compounded interest shall be adjusted in accordance with the loan interest rates as stipulated in this contract; such penalty and compounded interests shall be calculated in segments on the adjustment dates.
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Sources: Domestic L/C Trade Finance Credit Facility Contract (Cogo Group, Inc.), Domestic L/C Trade Finance Credit Facility Contract (Cogo Group, Inc.)