Conformed Copy - L4001 - Animal Feed Project - Amendment 1

Page 1 May 16, 2000 Mr. Shang Fulin, President Agricultural Bank of China 25 Fuxing Road Beijing People's Republic of China Dear Mr. Shang: RE: Animal Feed Project (Ln. 4001-CHA) Amendment to Project Agreement 1. I refer to the Agreement Amending Loan Agreement between the People's Republic of China (the Borrower) and the International Bank for Reconstruction and Development (the Bank); dated March 4, 1998 (the Loan Agreement) amending the Loan Agreement between the Borrower and the Bank dated June 7, 1996 and to the Project Agreement of even date with the Loan Agreement between the Bank and the Agricultural Bank of China (ABC) (the Project Agreement). I also refer to the letter dated February 22, 2000 from Mr. Wu Gang, Deputy Director General, International Department, Ministry of Finance, on behalf of the Borrower, requesting an amendment to the Loan Agreement and the Project Agreement in order to establish a revolving working capital fund out of the proceeds of the loan provided for under the Loan Agreement (the Loan). 2. I am pleased to inform you that the Bank hereby concurs with the Borrower's proposal to establish a revolving working capital fund and hereby agrees to amend the Project Agreement as hereinafter provided. 3. Schedule 1 to the Project Agreement is amended by the addition of the following new Part E at the end thereof "E. Working Capital Sub-loans. 1. Each Working Capital Sub-loan shall be made to an Investment Enterprise eligible to receive a Sub-loan under Part A of the Project in accordance with Part A of this Schedule and for which an application has been approved by the Bank pursuant to Paragraph 5 of Part D of this Schedule. 2. Each Working Capital Sub-loan: (a) shall be made for a period not exceeding six months; (b) shall be charged interest: (i) on the principal amount thereof denominated in dollars and withdrawn and outstanding from time to time at an annual rate not less than the sum of (A) the rate of interest payable by ABC pursuant to Section 3.01(c)(iii) of the Loan Agreement plus (B) 2.0%;.and (ii) on the principal amount thereof denominated in Renminbi and withdrawn and outstanding from time to time at a rate equal to the rate charged by ABC for loans of similar maturity at the time the Working Capital Sub-loan is approved by ABC; and (c) shall be charged a penalty for overdue payments at a rate of 1 % per month of the amount overdue until such amount is paid in full. 3. ABC shall establish and operate a revolving fund, in accordance with procedures acceptable to the Bank, out of the repayments by Investment Enterprises of the proceeds of Working Capital Sub-loans, for the purpose of providing additional Working Capital Sub-loans from said funds, in accordance with the terms and conditions set forth or referred to in this Schedule. 4. No Working Capital Sub\1eloan shall be made to an Investment Enterprise unless: (a) the Investment Enterprise has received a Sub-loan made under Part A of the Project and in accordance with the provisions of this Schedule; (b) the proceeds of the Working Capital Sub-loan will be utilized for the Page 2 same purpose for which the Sub\1eloan to said Investment Enterprise was approved; and (c) if the amount of the Working Capital Sub-loan is equal to or greater than 20% of the amount of the Sub-loan to such Investment Enterprise, said Working Capital Sub-loan shall have been approved by the Bank. 5. When presenting a Working Capital Sub-loan to the Bank for approval in accordance with paragraph 4(c) of this Schedule, ABC shall furnish to the Bank an application, in form satisfactory to the Bank, together with (i) a summary description of the Investment Enterprise, including a description of the expenditures proposed to be financed out of the proceeds of the Working Capital Sub-loan; (ii) the proposed terms and conditions of the Working Capital Sub-loan; and (iii) such other information as the Bank shall reasonably request." 4. Please confirm the agreement of ABC to the amendment set forth in paragraph 3 above by countersigning and dating the corresponding form of confirmation set forth below, and returning one fully signed original of this amendment letter to us. One fully signed original should be retained by ABC. 5. Except as specifically amended hereby, all other provisions of the Project Agreement remain in full force and effect. Upon receipt by the Bank of the copy of this letter of amendment duly countersigned by the authorized representative of ABC and of the letter of amendment of even date herewith from the Bank to the Borrower concerning amendments to the Loan Agreement (the Loan Agreement amendment), duly countersigned by the Borrower, the above amendment shall become effective as of the date of countersignature of this letter of amendment or the date of countersignature of the Loan Agreement amendment, whichever is later. Sincerely, By /s/ Yukon Huang Country Director, China East Asia and Pacific Region CONFIRMED AGRICULTURAL BANK OF CHINA By /s/ Authorized Representative Date: July 13, 2000