Conformed Copy - L4045 - Chongqing Industrial Pollution Control and Reform Project - Project Agreement 1

Page 1 CONFORMED COPY LOAN NUMBER 4045 CHA Steel Companies Project Agreement (Chongqing Industrial Pollution Control and Reform Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and CHONGQING SPECIAL STEEL COMPANY (GROUP) LIMITED and CHONGQING IRON AND STEEL COMPANY (GROUP) LIMITED Dated December 4, 1996 LOAN NUMBER 4045 CHA STEEL COMPANIES PROJECT AGREEMENT AGREEMENT, dated December 4, 1996, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank) and CHONGQING SPECIAL STEEL COMPANY (GROUP) LIMITED (CSSC) AND CHONGQING IRON AND STEEL COMPANY (GROUP) LIMITED (CISGC) (CSSC and CISGC hereinafter referred to collectively as the Steel Companies). WHEREAS by the Loan Agreement of even date herewith between People's Republic of China (the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount equal to one hundred seventy million dollars ($170,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Steel Companies agree to undertake such obligations toward the Bank as are set forth in this Agreement; (B) by subsidiary loan agreements to be entered into between Chongqing and the Steel Companies (the Steel Company Subsidiary Loan Agreements), part of the proceeds of the loan provided for under the Loan Agreement will be made available to the Steel Companies on the terms and conditions set forth in the Steel Company Subsidiary Loan Agreements; and WHEREAS the Steel Companies, in consideration of the Bank's entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations set forth Page 2 in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Loan Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. (a) The Steel Companies declare their commitment to the objectives of the Project as set forth in Schedule 2 to the Loan Agreement, and, to this end, CSSC shall carry out Part B (1) of the Project and CISGC shall carry out Part B (2) of the Project, each with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and industrial practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for Part B of the Project. (b) CSSC shall establish to the Bank