LOAN NUMBER 2474-PRC LOAN AGREEMENT (Ordinary Operations) (Dryland Sustainable Agriculture Project) between PEOPLE’S REPUBLIC OF CHINA and ASIAN DEVELOPMENT BANK DATED 3 FEBRUARY 2009 LAL:PRC 38301 LOAN AGREEMENT (Ordinary Operations) LOAN AGREEMENT dated 3 February 2009 between PEOPLE’S REPUBLIC OF CHINA (hereinafter called the Borrower) and ASIAN DEVELOPMENT BANK (hereinafter called ADB). WHEREAS (A) the Borrower has applied to ADB for a loan for the purposes of the Project described in Schedule 1 to this Loan Agreement; (B) the Borrower has also applied for a grant from the Spanish Cooperation Fund for Technical Assistance in the amount equivalent to $350,000 to be administered by ADB; (C) the Project will be carried out by the Gansu Provincial Government (hereinafter called GPG), Henan Provincial Government (hereinafter called HPG) and Shandong Provincial Government (hereinafter called SPG), and for this purpose the Borrower will make available to GPG, HPG and SPG the proceeds of the Loan provided for herein upon terms and conditions acceptable to ADB; and (D) ADB has agreed to make a loan to the Borrower from ADB's ordinary capital resources upon the terms and conditions set forth herein and in the Project Agreement of even date herewith between ADB of one part and GPG, HPG and SPG of the other part; NOW THEREFORE the parties hereto agree as follows: ARTICLE I Loan Regulations; Definitions Section 1.01. All the provisions of the Ordinary Operations Loan Regulations Applicable to LIBOR-Based Loans Made from ADB's Ordinary Capital Resources, dated 1 July 2001, are hereby made applicable to this Loan Agreement with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said Ordinary Operations Loan Regulations as so modified being hereinafter called the Loan Regulations): (a) Section 3.03 is deleted and the following is substituted therefor: Commitment Charge; Credit. (aa) The Borrower shall pay a commitment charge on the unwithdrawn amount of 2 the Loan at the rate and on the terms specified in the Loan Agreement. (bb) ADB shall provide to the Borrower a credit at the rate specified in the Loan Agreement, which credit shall remain fixed for the term of the Loan. ADB shall apply the amount of the credit against the interest payable by the Borrower. (b) Section 3.06 is deleted and the following is substituted therefor: (aa) Following any announcement by ADB that the Fixed Spread applicable to new Loans shall be reduced, ADB shall provide a Rebate to any Borrower with an outstanding Loan on which a higher Fixed Spread is applicable. The amount of the Rebate shall be determined by multiplying (i) the difference between the Fixed Spread applicable to the outstanding Loan and the Fixed Spread that will be applied to new Loans (expressed as a percentage per annum), by (ii) the principal amount of the outstanding Loan on which the Borrower shall pay interest for all interest periods commencing on and after the effective date of the lower Fixed Spread that will be applied to new Loans. (bb) Following any announcement by ADB that its Funding Cost Margin calculations with respect to any Loan Currency (or Approved Currency) in any Semester resulted in ADB achieving savings, ADB shall provide a Rebate to the Borrower. The amount of the Rebate shall be determined by multiplying (i) the Funding Cost Margin (expressed as a percentage per annum) by (ii) the principal amount of the Loan on which the Borrower shall pay interest for the Interest Period commencing immediately after the Semester for which the Funding Cost Margin was calculated. ADB shall apply the amount of the Rebate against the interest payable by the Borrower for the Interest Period commencing immediately after the Semester for which the Funding Cost Margin was calculated. (c) Section 3.07 is deleted and the following is substituted therefor: (aa) Following any announcement by ADB that the Fixed Spread applicable to new Loans shall be increased, any Borrower with an outstanding Loan on which a lower Fixed Spread is applicable shall pay ADB a Surcharge. The amount of the Surcharge shall be determined by multiplying (i) the difference between the Fixed Spread that will be applied to new Loans and the Fixed Spread applicable to the outstanding Loan (expressed as a percentage per annum), by (ii) the principal amount of the outstanding Loan on which the Borrower shall pay interest for all interest periods commencing on and after 3 the effective date of the higher Fixed Spread that will be applied to new Loans. (bb) Following any announcement by ADB that its Funding Cost Margin calculations with respect to any Loan Currency (or Approved Currency) in any Semester resulted in ADB incurring additional costs, the Borrower shall pay ADB a Surcharge. The amount of the Surcharge shall be determined by multiplying (i) the Funding Cost Margin (expressed as a percentage per annum) by (ii) the principal amount of the Loan on which the Borrower shall pay interest for the Interest Period commencing immediately after the Semester for which the Funding Cost Margin was calculated. ADB shall add the amount of the Surcharge to the interest payable by the Borrower for the Interest Period commencing immediately after the Semester for which the Funding Cost Margin was calculated. Section 1.02. Wherever used in this Loan Agreement, unless the context otherwise requires, the several terms defined in the Loan Regulations have the respective meanings therein set forth, and the following additional terms have the following meanings: (a) "Consulting Guidelines" means ADB’s Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers dated February 2007, as amended from time to time; (b) “EIA” means any of the environmental impact assessments for the Project dated December 2007; (c) “Goods” means equipment and materials to be financed out of the proceeds of the Loan; including related services such as transportation, insurance, installation, commissioning, training, and initial maintenance, but excluding consulting services; (d) “GPG” means the Gansu Provincial Government or any successor thereto; (e) “HPG” means the Henan Provincial Government or any successor thereto; (f) “IEE” means initial environmental examination prepared for the Project; (g) “Implementing Agency” or “IA” means any of the governments of the following counties/cities/districts: (i) in Henan Province - Anyang County, Ruzhou City, Jiaozuo City, Dancheng County, Shanxian County, Changge City, Zhecheng County, Luoyang City, Luyi County, Linying County, Zhengzhou City, Xuchang County; 4 (ii) in Shandong Province - Zhucheng City, Boxing County, Gaomi City, Linshu County, Qingzhou City, Tancheng County, Wudi County, Yishui County; (iii) in Gansu Province - Gangu County, Qin’an County, Qinzhou District, Wushan County, Maiji District, Zhangjiachuan County, and Qingshui County; as more fully described in paragraph 3 of Schedule 5 to this Loan Agreement; (h) “MOA” means the Borrower’s Ministry of Agriculture or any successor thereto; (i) “Onlending Agreement(s)” means the onlending agreement(s) referred to in Section 3.01 (e) of this Loan Agreement; (j) “onlending loan(s)” means the loans made to Participating Enterprise(s) under the relevant Onlending Agreement(s); (k) “Participating Enterprises” means the following enterprises: (i) in Henan Province - Anyang Yuhe Agricultural Products Development Center; Dancheng Tianyu Economic & Trade Co., Ltd.; Fudamei Agricultural Production Co., Ltd. of Luoyang; Furen Medicine Group Co., Ltd.; Henan Mengxian Food Co., Ltd.; Henan Beixu Group Co., Ltd.; Henan Haofeng Machine Making Co., Ltd.; Henan Zhongpin Food Share Co., Ltd.; Jiaozuo City Yida Plant Oil Co., Ltd.; Sanmenxia Longfei Bio- engineering Co., Ltd.; Zhecheng Hongla Co. Ltd.; Zhengzhou Maozhuang Luyuan Industry Co., Ltd.; (ii) in Shandong Province - Zhucheng Zhongkang Vegetable Processing; Boxing Longsheng Vegetable Processing; Boxing Koufu Cotton Seed Oil Processing; Gaomi Mishui Grape Processing; Linshu Changlin Peanut Processing; Qingzhou Quancheng Fodder (Wheat and Maize) Processing; Tancheng Zhengde Starch Processing; Wudi Wandefu Date Processing; Yishui Yulong Peanut Processing; Yishui Zhenghang Wheat Processing; (iii) in Gansu Province - Gangu Sustainable Agriculture Partnership; Qin’an Sustainable Agriculture Partnership; Qinzhou Sustainable Agriculture Partnership; Wushan Sustainable Agriculture Partnership; Maiji Sustainable Agriculture Partnership; Zhangjiachuan Sustainable Agriculture Partnership; and Qingshui Sustainable Agriculture Partnership; (l) “PMO” means any of the project management offices referred to in paragraph 1 and 4 of Schedule 5 to this Loan Agreement; 5 (m) “Procurement Guidelines” means ADB’s Procurement Guidelines dated February 2007, as amended from time to time; (n) “Procurement Plan” means the procurement plan for the Project dated 21 October 2008 and agreed between the Borrower and ADB, as updated from time to time in accordance with Procurement Guidelines, Consulting Guidelines, and other arrangements agreed with ADB; (o) “Project area” means Gansu, Henan and Shandong Provinces where the Project will be implemented; (p) “Project Executing Agency” or “EA” for the purposes of, and within the meaning of, the Loan Regulations means any of MOA, GPG, HPG or SPG or any successor thereto acceptable to ADB, which is responsible for overall implementation of the Project; (q) “Project facilities” means the equipment provided