LOAN NUMBER 189 IT Loan Agreement (Southern Italy Development Projects-1958) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CASSA PER OPERE STRAORDINARIE DI PUBBLICO INTERESSE NELL'ITALIA MERIDIONALE (CASSA PER IL MEZZOGIORNO) DATED FEBRUARY 28, 1958 * .OAN NUMBER 189 IT Loan Agreement (Southern Italy Development Projects-1958) BETWEEN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND CASSA PER OPERE STRAORDINARIE DI PUBBLICO INTERESSE NELL'ITALIA MERIDIONALE (CASSA PER IL MEZZOGIORNO) DATED FEBRUARY 28, 1958 AGREEMENT, dated February 28, 1958, between INTER- NATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank), and CASSA PER OPERE STRAORDINARIE DI PUBBLICO INTERESSE NELL'ITALIA MERIDIG- NALE (CASSA PER IL MEZZOGIORNO) (hereinafter called the Borrower). ARTICLE I Loan Regulations; Special Defnitions SECTION 1.01. The parties to this Agreement accept all the provisions of Loan Regulations No. 4 of the Bank dated June 15, 1956, subject, however, to the modifications thereof set forth in Schedule 3 to this Agreement (said Loan Regu- lations No. 4 as so modified being hereinafter called the Loan Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Except where the context otherwise re- quires, the following terms have the following meanings wherever used in this Agreement or any Schedule thereto: (1) The term "Cassa" means Cassa per opere straordi- narie di pubblico interesse nell'Italia meridionale (Cassa per il Mezzogiorno) established by Law No. 646 of the Republic of Italy, dated the 10th of Au- gust 1950, as amended and supplemented. (2) The term "Borrower" means the Cassa and also includes any department or agency of the Guarantor which may be charged by the Guarantor, upon disso- lution of the Cassa or otherwise, with the carrying out of the obligations of the Borrower hereunder. (3) The term "Agency" means any political subdivision of the Guarantor or any instrumentality of the Guar- antor or of a political subdivision of the Guarantor and shall include any institution or organization a 4 majority interest in which at the time referred to is owned directly or indirectly by the Guarantor or a political subdivision of the Guarantor, or all or substantially all of whose obligations are guaran- teed by the Guarantor or a political subdivision of the Guarantor, or the operations of which are con- ducted primarily in the interest of or for account of the Guarantor or a political subdivision of the Guar- antor, as the case may be. (4) The term "beneficiary enterprise" means any com- pany, societa per azioni, ente, consortium, individual or group of individuals, or other entity or associa- tion, other than the Borrower, to which any part of the Loan shall be made available for the construction or operation of a Project or which shall be charged with or be responsible for or undertake the operation of an Irrigation Project or any part thereof. It shall also include Societh Finanziaria Elettrica Nazionale per Azioni (hereinafter called Finelettrica) and Societh Italiana per le Strade Ferrate Meridionali (hereinafter called Bastogi). (5) The term "SME Project Agreement" means the agreement of even date herewith between the Bank of the one part and Societh Meridionale di Elettricita, Finelettrica and Bastogi of the other part. (6) The term "SGES Project Agreement" means the agreement of even date herewith between the Bank of the one part and Societa Generale Elettrica della Sicilia, Finelettrica and Bastogi of the other part. ARTIOLI II The Loan SECTION 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in this Agreement set forth or referred to, an amount in various currencies equivalent to seventy-five million dollars ($75,000,000). 5 SECTION 2.02. The Bank shall open a Loan Account on its books in the name of the Borrower and, as this Agree- ment becomes effective in respect of any Project, shall credit to such Account the amount of the Loan set forth opposite such Project in Schedule 4 to this Agreement. The amount of the Loan may be withdrawn from the Loan Account as provided in, and subject to the rights of cancel- lation and suspension set forth in, the Loan Regulations. SECTION 2.03. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not so withdrawn from time to time. Such commit- ment charge shall accrue from a date 60 days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Loan Account as provided in Article IV of the Loan Regulations or shall be cancelled pursuant to Article V of the Loan Regulations. SECTION 2.04. The Borrower shall pay interest at the rate of five and one-half percent (51/2%) per annum on the principal amount of the Loan so withdrawn and outstanding from time to time. SECTION 2.05. Interest and commitment charge shall be payable semi-a.nually on February 15 and August 15 in each year. SECTION 2.06. The Borrower shall repay the principal of the Loan in accordance with the amortization schedule set forth in Schedule 1 to this Agreement. ARTICLE III Use of Proceeds of Loan SECTION 3.01. (a) The Borrower shall cause the pro- ceeds of the Loan to be applied in accordance with the pro- visions of this Agreement to expenditures on the Projects 6 described in Schedule 2 to this Agreement in the amounts specified in Schedule 4 to this Agreement. (b) The Bank and the Borrower may from time to time . agree to changes in Schedule 2 and Schedule 4 to this Agreement. ARTICLE IV Special Provisions Relating to Projects SECTION 4.01. The Borrower shall make arrangements, and enter into loan agreements, adequate to protect the interests of the Borrower and the Bank and satisfactory to the Bank, with the respective beneficiary enterprises con- cerning the financing, construction and operation of the Power Projects and the Industrial Projects and the rights of the Borrower and the Bank with respect thereto. Such agreements shall not be amended without the consent of the Bank. SECTION 4.02. The Borrower shall cause each of the beneficiary enterprises concerned punctually to perform all the covenants and agreements on its part to be performed as set forth in the SME Project Agreement and the SGES Project Agreement, respectively. SECTION 4.03. All arrangements and agreements entered into pursuant to Section 4.01 shall include provisions which will enable the Borrower and the Guarantor to carry out their respective obligations under this Agreement and the Guarantee Agreement and shall include, without limitation: (i) the right to require that the proceeds of the Loan shall be used exclusively as provided in this Agreement in the carrying out of the Projects; (ii) the right to require that the Projects be constructed and operated with due diligence and efficiency and in accordance with sound engineering, financial and business standards, including the maintenance of adequate records; (iii) the right to inspect the sites, works and construction included in the Projects and the 7 operation thereof; (iv) the right to obtain all such informa- tion as the Bank or the Borrower shall reasonably request relating to any of the foregoing and to the operation and financial condition of the Projects and of the beneficiary enterprises. Such arrangements and agreements shall also include appropriate provisions whereby further access by a beneficiary enterprise to the proceeds of the Loan may be suspended or cancelled by the Borrower, upon failure by such enterprise to carry out the terms of arrangements or agreements entered into pursuant to this Article IV. SECTION 4.04. The Borrower shall exercise its rights in relation to each Project in such manner as to protect the interests of the Borrower and the Bank. SECTION 4.05. The Borrower shall, immediately upon the preparation thereof, cause the plans, specifications, con- struction schedules and cost estimates for each Project to be furnished to the Bank in such form and detail as the Bank shall reasonably request and shall promptly cause any material modifications therein to be furnished to the Bank. ARTICLE V Bonds SECTION 5.01. The Borrower shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations. SECTION 5.02. The President, any Vice President or the Director General of the Borrower, and such person or per- sons as any of them shall appoint in writing to act in his stead, are designated as authorized representatives of the Borrower for the purposes of Section 6.12 (a) of the Loan Regulations. 8 ARTICLE VI Particular Covenants SECTION 6.01. (a) The Borrower shall cause the Irriga- tion Projects to be constructed with due diligence and effi- ciency and in accordance with sound engineering, financial and business standards and practices, and shall exercise every right and recourse available to it to cause the Power Projects and Industrial Projects to be so constructed and so operated. (b) The Borrower shall, within the limits of its compe- tence, cause the Irrigation Projects to be operated and maintained with due diligence and efficiency and in accord- ance with sound engineering, agricultural, financial and business standards and practices and shall exercise every right and recourse available to it to cause to be taken all such action as shall be required to assure that no use, other than for potable purposes, will reduce the amounts of water available for irrigation purposes on the Irrigation Projects below the amounts needed therefor. (c) The Borrower shall maintain, or cause to be main- tained, books, accounts and records adequate to show the expenditure of the proceeds of the Loan; the current total expenditures on each Project; the progress of each Project; the operation and financial condition of each Project; and, in respect of the Industrial Projects, the operations and financial condition of each beneficiary enterprise. The Bor- rower shall at the request of the Bank enable, or take such steps as shall be necessary to enable, the Bank's accredited representatives to examine the sites, works and construction included in each Project, the operation thereof, and any relevant records and documents; and shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, each Project and the operation thereof, and the opera- tions and financial condition of each beneficiary enterprise. 9 (d) The operations and transactions of the Borrower in connection with the Projects shall be accounted for by the Borrower separately from its other activities. SECTTON 6.02. (a) The Bank and the Borrower shall cooperate fully to assure that the purposes of the Loan will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Loan. On the part of the Borrower such information shall include information with respect to its operations and financial condition. (b) The Bank and the Borrower shall from time to time exchange views through their representatives with regard to matters relating to the purposes of the Loan and the maintenance of the service thereof. The Borrower shall promptly inform the Bank of any condition which inter- fores with, or threatens to interfere with, the accomplish- ment of the purposes of the Loan or the maintenance of the service thereof. SECTION 6.03. It is the mutual intention of the Borrower and the Bank that no other debt shall enjoy any priority over the Loan by way of a lien on assets of the Borrower. To that end, the Borrower specifically undertakes that, except as the Bank shall otherwise agree, if any lien shall be created on any assets of the Borrower as security for any debt, such lien shall ipso facto equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan and the Bonds, and that in the creation of any such lien express provision shall be made to that effect, provided, however, that the foregoing provisions of this Section shall not apply to any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property. SECTION 6.04. The Borrower shall pay or cause to be paid anv and all taxes, duties, charges or fees that ,hall be imposed on or in connection with the execution, issue, deliv- 10 ery or registration of this Agreement, the Bonds, the Proj- ect Agreements or the Guarantee Agreement, or that shall )e imposed by the Guarantor or by any Agency or by any tax..ig authority thereof or therein upon this Agreement, the Bonds, the Project Agreements or the Guarantee Agree- ment, or the registration thereof with any Agency or official, or the payment of principal, interest or other charges there- under. Such principal, interest and other charges shall be paid without deduction for and free of any and all such taxes, duties, charges and fees. This Section shall not apply to taxation of any Bond, or payments made under the pro- visions of any Bond, when the beneficial holder thereof, other than the Bank, shall be an individual or corporate resident of the Guarantor. ARTICLE VII Remedies of the Bank SECTION 7.01. (i) If any event specified in paragraphs (a) or (b) of Section 5.02 of the Loan Regulations shall occur and shall have continued for a period of thirty days, or (ii) if any event specified in paragraph (c) of Section 5.02 of the Loan Regulations shall occur and shall have continued for a period of sixty days after notice thereof shall have been given by the Bank to the Borrower, then at any subse- quent time during the continuance thereof, the Bank, at its option, may declare the principal of the Loan and of all the Bonds then outstanding to be due and payable immediately, and upon any such declaration such principal shall become due and payable immediately, anything in this Agreement or in the Bonds to the contrary notwithstanding. ARTICLE VIII Effective Dates SECTION 8.01. This Agreement and the Guarantee Agree- ment shall not in any event become effective in respect of any Project or any part of the Loan until the Bank shall 11 have notified the Borrower and the Guarantor of its accept- ance of the evidence provided for in Sections 9.01 and 9.02 of the Loan Regulations. SECTION 8.02. This Agreement and the Guarantee Agree- ment shall become effective in respect of the Irrigation Projects and the amounts of the Loan set forth opposite such Projects in Schedule 4 to this Agreement when the Bank notifies the Borrower and the Guarantor of its accept- ance of the evidence provided for in Sections 9.01 and 9.02 of the Loan Regulations. SEOTION 8.03. This Agreement and the Guarantee Agree- ment shall become effective in respect of each Power Project and each Industrial Project and in respect of the amount of the Loan set forth opposite such Project in Schedule 4 to this Agreement when: (a) the Bank shall have received evidence (including the opinion provided for in Section 8.04 hereof) satisfactory to it that the requirements set forth in Sections 4.01 and 4.03 of this Agreement have been satisfied in respect thereof (and, in the case of a Power Project, that the Project Agree- ment relating thereto has been duly authorized or ratified by all necessary corporate and governmental action and is valid and binding on the beneficiary enterprises which are parties thereto), and (b) the Bank notifies the Borrower and the Guarantor of its acceptance of such evidence. SECTION 8.04. As part of the evidence to be furnished pursuant to Section 8.03 hereof, there shall be furnished to the Bank an opinion or opinions satisfactory to the Bank of counsel acceptable to the Bank showing that the arrange- ments and agreements to which such evidence relates are valid, binding and enforceable in accordance with their terms and (in the case of agreements and arrangements 12 made pursuant to Section 4.01 of this Agreement) contain valid provisions satisfying the requirements of Section 4.03 of this Agreement. ARTIOLE IX Miscellaneous SECTION 9.01. The date specified for the purposes of Section 9.04 of the Loan Regulations is 90 days after the date of this Agreement. SECTION 9.02. The Closing Date for each Project shall be February 15, 1961. SECTION 9.03. The following addresses are specified for the purposes of Section 8.01 of the Loan Regulations: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington 25, D. C. United States of America Alternative address for cablegrams and radiograms: INTBAFRAD, Washington, D. C. For the Borrower: Cassa per il Mezzogiorno Piazza dei Congressi N.20 (EUR) Rome, Italy Alternative address for cablegrams and radiograms: CASMEZ, Rome 13 ARTICLE X Provisions as to Maturities SECTION 10.01. For the purposes of this Article the term prior Loan Agreements" means the Loan Agreements be- tween the Bank and the Borrower dated October 10, 1951, October 6, 1953, June 1, 1955, and October 11, 1956, respec- tively, and , J term "amortization schedule" means the amortiza,ca schedule set forth in Schedule 1 of the Loan Agreement or Agreements referred to. SECTION 10.02. For the purpose of facilitating the sale of portions of the Loan, of Bonds, of portions of the loans provided for in the prior Loan Agreements or any of them or of bonds issuable pursuant to the terms thereof, the Bank and the Borrower may, notwithstanding anything contained herein or in the prior Loan Agreements, from time to time by agreement between them vary the amounts of instalments of principal set forth in the amortization schedule to the Loan Agreement and of instalments of principal set forth in the amortization schedules to the prior Loan Agreements or any of them, provided that no such variation shall change (a) the aggregate amount of instalments of principal which, but for such variation, would have been due in any half of any calendar year under this Agreement and the prior Loan Agreements; or (b) the total principal amount payable in respect of the Loan or the total principal amount payable in respect of the loan provided for in any of the prior Loan Agreements. 14 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ W. A. B. ILtFF Vice President CASSA PER OPERE STRAORDINARIE DI PUB- BLICO INTERESSE NELL'ITALIA MERIDIO- NALE (CASSA PER IL MEZZOGIORNO) By /s/ GABRIELE PESCATORz President 15 SCHEDULE 1 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) February 15, 1961 $1,302,000 August 15, 1961 1,338,000 February 15, 1962 1,374,000 August 15, 1962 1,412,000 February 15, 1963 1,451,000 August 15, 1963 1,491,000 February 15, 1964 1,532,000 August 15, 1964 1,574,000 February 15, 1965 1,617,000 August 15, 1965 1,662,000 February 15, 1966 1,707,000 August 15, 1966 1,754,000 February 15, 1967 1,803,000 August 15, 1967 1,852,000 February 15, 1968 1,903,000 August 15, 1968 1,956,000 February 15, 1969 2,009,000 August 15, 1969 2,065,000 February 15, 1970 2,121,000 August 15, 1970 2,180,000 February 15, 1971 2,240,000 August 15, 1971 2,301,000 February 15, 1972 2,364,000 August 15, 1972 2,429,000 February 15, 1973 2,496,000 August 15, 1973 2,565,000 February 15, 1974 2,635,000 August 15, 1974 2,708,000 February 15, 1975 2,782,000 August 15, 1975 2,859,000 February 15, 1976 2,938,000 August 15, 1976 3,018,000 February 15, 1977 3,101,000 August 15, 1977 3,187,000 February 15, 1978 3,274,000 * To the extent that any part of the Loan is repayable in a currency other than dollars (see Loan Regulations, Section 3.02), the figures in this column represent dollar equivalents determined as for purposes of withdrawal. S 16 Premiums on Prepayment and Redemption The following percentages are specified as the premiums payable on repayment in advance of maturity of any part of the principal amount of the Loan pursuant to Section 2.05 (b) of the Loan Regulations or on the redemption of any Bond prior to its maturity pursuant to Section 6.16 of the Loan Regulations: Time of Prepayment or Redemption Premium Not more than 3 years before maturity.... 1/2% More than 3 years but not more than 6 years before maturity .................... 11/2% More than 6 years but not more than 11 years before maturity............... 21/2% More than 11 years but not more than 16 years before maturity ............... 31/2% More than 16 years but not more than 18 years before maturity............... 4Y2% More than 18 years before maturity ...... 5Y2% 17 SCHEDDUL 2 Description of Projects A. POWER PROJECTS I. 8K Power Project This Project, to be constructed by Societi Meridio- nale di Elettricith (SME), and scheduled to be com- pleted by June 30, 1961, includes a thermal electric plant and auxiliary works to be constructed on the east side of the existing Vigliena Thermal Electric Plant, in the harbor of Naples. It will be owned by SME and operated as part of its system. The plant will be equipped with two turbo-generating units, with a maximum continuous output capacity of 150,000 kw each and operating at a temperature of 1,000 degrees Fahrenheit and at a pressure of 2,400 lbs. per square inch. Two boilers will produce 1.06 million lbs. of steam per hour each, and will be fired by fuel oil or pulverized coal. The condensers will be cooled by sea water. There will be a bank of single phase transformers, with a total capacity of about 430,000 kva, and 220 kv and 60 kv cables connecting the plant with the SME grid. The plant will be equipped with all necessary auxiliaries including a feed water treatment plant, fuel handling and storage facilities, switchgear and control-equipment. II. SES Power Project This Project, to be contructed by Societa Generale Elettrica della Sicilia (SGES), and scheduled to be completed by December 31, 1960, includes a hydro- electric plant to be located at Guadalami, south of Palermo, Sicily. It will be owned and operated by SGES as part of its system. The main works will consist of the following: an intake structure, taking water from the existing Piani dei Greci reservoir; a 1,113 meter long intake pressure tunnel; a surgetank; 18 two steel penstocks, each about 230 meters long; a powerhouse; and an earth dam-25 meters high and 450 meters long-across the upper Belice river, creat- ing a lower reservoir with a useful capacity of 750,000 cubic meters. The water of the Guadalami stream will be diverted into the lower reservoir by means of a small barrage and a 755 meters long canal. The pow- erhouse will be located on the right bank of the upper Belice river and will be equipped with two horizontal units, each consisting of a turbine, a generator/motor and a pump. The turbines will be of the Francis type and will operate under a head of 170 meters. Each generator will have a capacity of 30,000 kw. The plant will be equipped with all necessary auxiliary equip- ment. Two 43,000 kva transformers will be installed in an outdoor substation. One 18 km 150 kv transmission line and three 70 kv transmission lines with a total length of 30 km will be constructed to connect the plant with the SGES grid. During the day the plant will supply energy to the SGES system at times of peak load and during the night it will pump water from the lower reservoir to the Piani dei Greci reser- voir using energy from the SGES grid. B. IRRIGATION PROJECTS I. Fortore Irrigation Project This Project is designed to provide irrigation to about 66,000 hectares along the lower reaches of the Fortore river and in the plain around the city of Foggia. It includes the following works: a) Dam and Reservoir An earth dam will be constructed across the Fortore river at the Occhito gap. The dam will be 60 meters high and will have a length of 432 meters along the crest. It will create a reservoir with a useful capacity of 250 million cubic meters. 0 19 b) Diversion Barrage and Canal A concrete diversion barrage 1.5 meters high and 190 meters long will be constructed at S. Maria about 10 kilometers downstream from Occhito on the Fortore river. An intake structure on the right side of the barrage will feed a diversion canal with a capacity of 21 cubic meters per second, to be constructed along the right bank of the river. The canal will have a length of 13 kilometers, of which 5 kilometers will be in tunnel. c) Main Canals (i) A canal, fed directly from the end of the diver- sion canal, will run south-eastwards. It will have a total length of 58.5 kilometers, of which 3.5 kilometers will be in tunnel. The initial capacity will be 19 cubic meters per second. At kilometer 8 a canal about 15 kilometers long with an initial capacity of 1 cubic meter per second will branch off and run northwards on the right side of the Fortore. At kilometer 13.5 a second canal about 34 kilometers long with an initial capacity of 5 cubic meters per second will branch off and run northwards. (ii) A canal, also fed directly from the end of the diversion canal, will run northwards on the left side of the Fortore. A siphon will be con- structed across the river. The canal will be about 25 kilometers long and will have an initial capacity of 2 cubic meters per second. d) Distribution Networks A network consisting of about 3,400 kilometers of secondary and small canals will be constructed to distribute the water to each farm to be irrigated. 20 e) Other Works The Project also includes flood and erosion con- trol works, roads and other works necessary for the proper utilization of the irrigation water and the land in the area to be irrigated. II. 'Volturno Irrigation Project This Project is designed to provide irrigation to, and enable the effective utilization of, about 40,000 hectares in the lower Volturno Plain. It includes the following works: a) Diversion Works (i) Barrage near Ponte Annibale A concrete barrage, being constructed near Ponte Annibale on the Volturno river, will divert a total of 23 cubic meters per second of water into two diversion canals, one on the right and one on the left bank of the river. A power plant, not part of the Project, and to be located at the left end of the barrage, will be constructed by Ente Autonomo Volturno. (ii) Right Bank Diversion Canal The diversion canal on the right bank will be 7.2 kilometers long and will have an initial capacity of 12.6 cubic meters per second. This canal will feed the area north of the Volturno river. (iii) Left Bank Diversion Canal The diversion canal on the left bank will be 7.2 kilometers long and will have an initial capacity of 10.4 cubic meters per second. This canal will feed the area south of the Volturro river. S 21 b) Main Canals (i) Canals North of the Volturno (a) At kilometer 2.1 a canal will branch off the right bank diversion canal; it will be 6.25 kilometers long and will have an ini- tial capacity of 1 cubic meter per second. (b) At kilometer 7.2 the right bank diversion canal will feed two main canals; one will run southwards and will be 5.5 kilometers long and have an initial capacity of 0.85 cubic meters per second; the other will run westwards and will be 5.95 kilometers long and have an initial capacity of 10.7 cubic meters per second. (c) This last canal will feed, on the one side, a single canal which will follow the Volturno rather closely, and on the other side a system of canals, which will serve the most northern parts of the Project area. The canal along the Volturno will be 16.5 kilometers long and will have an initial capacity of 3.3 cubic meters per second. The system of canals for the northern part of the plain will have a total length of 51.5 kilometers and an initial capacity of 7.0 cubic meters per second. (ii) Canals South of the Volturno (a) A first canal, starting at the end of the left bank diversion canal, will follow the Vol- turno rather closely; it will be 22.4 kilo- meters long and have an initial capacity of 5.7 cubic meters per second. (b) A second canal, also starting at the end of the left bank diversion canal, will run south-westwards; it will be 41 kilometers long and have an initial capacity of 4.7 cubic meters per second. 22 c) Irrigation Network A network of distributory canals will be con- structed to distribute the water from the main canals to each farm to be irrigated. The network to the north of the Volturno will have a total length of 726 kilometers; the network to the south of the Volturno will have a total length of 800 kilometers. d) Other Works The Project also includes the construction and improvement of river control and drainage works, roads, electric lines, windbreaks and other struc- tures necessary for the proper utilization of the irrigation water and the land in the area to be irrigated. 0. INDUSTRIAL PROJECTS I. TRINACRIA Potash Fertilizer Project This Project consists of a mine to be opened and worked, and a plant to be constructed and operated, at Calascibetta by Sali Potassici Trinacria S.p.A. to mine and process annually about 560,000 tons of potash ore for the production of about 140,000 tons of kalimagnesia with a K20 content of 26o and 26,000 tons of potassium sulphate with a K20 con.- tent of 48 to 50%. II. MONTECATINI Potash Fertilizer Project This Project consists of a mino at Serradifalco to be opened and worked, a processing plant at Campofranco to be constructed and operated, and a ropeway between these two points to be installed and operated, by Montecatini, Societh Generale per l'Industria Mineraria e ChimicvL S.p.A. to mine, transport and process annually about 840,000 tons of potash ore for the production of about 133,000 tons of potassium sulphate with a K20 content of 48 to 507. 0 23 III. SINCAT Fertilizer and Chlorine-Caustic Project This Project consists of the expansion of a ferti- lizer plant near Augusta, owned and operated by SINCAT (Societa' Industriale Catanese S.p.A.) to increase capacity from 100,000 tons to about 300,000 tons per year of double and triple compound ferti- lizers. The major items to be provided under this Project include: (1) the construction and operation at Augusta (Priolo) of (a) facilities for the production of 200,000 tons per year of complex fertilizers, sulphuric acid facilities to expand production to 170,000 tons per year, nitric acid facilities to expand production to 70,000 tons per year, an anhydrous ammonia plant with an annual capacity of 36,000 tons and facilities for the production of ammonium sulphate, and (b) facilities for the annual production of 5,000 tons of caustic soda and 4,500 tons of chlo- rine and the manufacture of chlorine deriva- tives. (2) the opening and operation of a potash ore mine at S. Caterina, Sicily, and construction and operation of a plant at Augusta (Priolo) to mine and process annually about 130,000 tons of pot- ash ore for the production of about 8,000 tons potassium sulphate with a K20 content of 48 to 507 and about 50,000 tons of schoenite with a K20 content of 18 to 20o. iV. MARZOTTO Ready-made Clothing Project This Project consists of a plant at Salerno to be coiistructed, owned and operated by Marzotto Sud 0 24 8.p.A., to produce annually about 290,000 units of ready-to-wear clothing. V. C.M.I. Electrolytic Tin Plate Project This Project consists of the installation and opera- tion of an electrolytic tinplate line at an existing plant at Naples owned and operated by Cantieri Metallurgici Italiani to produce annually about 24,000 tons of electrolytic tinplate. VI. CONE Electric Household Appliances Project This Project consists of the modernization and expansion of a plant at Naples owned by Compagnia Napoletana Elettrici, to increase production to about 50,000 refrigerators and 30,000 water heaters per year. 0 25 SHEDULE 3 Modifications of the Loan Regulations For the purposes of this Agreement the provisions of Loan Regulations No. 4 of the Bank, dated June 15, 1956, shall be deemed to be modified as follows: (a) Section 2.02 is deleted. (b) The first two sentences of Section 3.01 are deleted. (c) The following sentence is added to Section 3.05: "If a withdrawal is applied for on account of expen- ditures in the currency of the Guarantor, the value of the currency of the Guarantor in terms of the cur- rency or currencies to be withdrawn shall be as rea- sonably determined by the Bank." (d) Section 4.01 is changed to read as follows: " Withdrawal from the Loan Account. The Borrower shall be entitled, subject to the provisions of these Regulations, to withdraw from the Loan Account, in dollars or such other currencies (other than the cur- rency of the Guarantor) as may be agreed upon be- tween the Bank and the Borrower, the equivalent of such amounts as shall be required by it to finance amounts expended on the Projects, provided that the Bank and the Borrower may make arrangements for advances on account of such withdrawals. Except as shall be otherwise agreed between the Bank and the Borrower, no withdrawals shall be made on account of: (i) expenditures made on the Projects before September 1, 1957; (ii) a Project in respect of which the Loan Agreement has not become effective; or (iii) expenditures in the territories of any country which is not a member of the Bank or for goods pro- duced in (including services supplied from) such territories.*" (e) Section 4.02 is deleted. (f) Section 4.03 is changed to read as follows: "Applications for Withdrawal. When the Borrower shall desire to withdraw any amount from the Loan Account, the Borrower shall deliver to the Bank a written application in such form, and containing such statements and agreements, as the Bank shall reasonably request. Since the rate at which Loan proceeds are withdrawn affects the cost to the Bank of holding funds at the Borrower's disposal, applica- tioiis for withdrawal, with the necessary documenta- tion as hereinafter in this Article provided, shall, except as the Bank and the Borrower shall otherwise agree, be made promptly in relation to expenditures on the Projects." (g) Section 5.01 is amended by inserting the words "in respect of any Project" after the word "cancel". (h) The first five lines of Section 5.02 are amended to read as follows: "Section 5.02. Suspension by the Bank. If any of the following events shall have happened and be continuing, the Bank may at any time or from time to time by notice to the Borrower suspend in whole or in part the right of the Borrower to make with- drawals from the Loan Account:" (i) The last paragraph of Section 5.02 is amended to read as follows: "The right of the Borrower to make withdrawals from the Loan Account shall continue to be suspended in whole or in part, as the case may be, until the event or events which gave rise to such suspension shall have ceased to exist or until the Bank shall have notified the Borrower that the right to make with- drawals has been restored, whichever is the earlier; provided, however, that in the case of any such notice of restoration, the right to make withdrawals shall be restored only to the extent and subject to the conditions specified in such notice, and no such 27 notice shall affect or impair any right, power or remedy of the Bank in respect of any other or subse- quent event described in this Section." (j) Section 5.03 is changed to read as follows: "Section 5.03. Cancellation by the Bank. (a) If any of the events described in Section 5.02 shall have happened and be continuing, the Bank may by notice to the Borrower terminate in whole or in part the right of the Borrower to make withdrawals from the Loan Account and, upon the giving of such notice, the unwithdrawn amount of the Loan with respect to which such notice of termination shall have been given shall be cancelled. (b) If at the Closing Date for any Project the Bor- rower shall not have withdrawn from the Loan Ac- count the full amount of the Loan set forth opposite such Project in Schedule 4 to the Loan Agreement, the Bank may by notice to the Borrower terminate the right of the Borrower to make withdrawals from the Loan Account on account of such Project. Upon the giving of such notice the unwithdrawn part of the amount of the Loan set forth opposite such Proj- ect in Schedule 4 to the Loan Agreement shall be cancelled." (k) Section 5.04 is deleted. (1) Section 5.06 is amended by inserting the words ", the Project Agreements" after the words "the Loan Agreements". (m) Section 6.17 is amended by inserting the words "or any Project Agreement" after the words "the Guar- antee Agreement". (n) Sections 7.01 and 7.02 are amended to read as fol- lows: "Section 7.01. Enforceability. The rights and obli- gations of the Bank, the Borrower and the Guarantor under the Loan Agreement, the Project Agreemeats, 28 the Guarantee Agreement and the Bonds shall be valid and enforceable in accordance with their terms notwithstanding the law of any state, or political subdivision thereof, to the contrary. Neither the Bank nor the Borrower nor the Guarantor shall be entitled in any proceeding under this Article to assert any claim that any provision of these Regulations or of the Loan Agreement, the Guarantee Agreement, the Project Agreements or the Bonds is invalid or unenforceable because of any provision of the Ar- ticles of Agreement of the Bank or for any other reason. "Section 7.02. Obligations of Guarantor. The obli- gations of the Guarantor under the Guarantee Agree- ment shall not be discharged except by performance and then only to the extent of such performance. Such obligations shall not be subject to any prior notice to, demand upon or action against the Bor- rower or any beneficiary enterprise or to any prior notice to or demand upon the Guarantor with regard to any default by the Borrower or any beneficiary enterprise, and shall not be impaired by any of the following: any extension of time, forbearance or concession given to the Borrower or any beneficiary enterprise; any assertion of, or failure to assert, or delay in asserting, any right, power or remedy against the Borrower or any beneficiary enterprise or in respect of any security for the Loan; any modi- fication or amplification of the provisions of the Loan Agreement or of any Project Agreement contein- plated by the terms thereof; any failure of the Bor- rower or any beneficiary enterprise to comply with any requirement of any law, regulation or order of the Guarantor or of any political subdivision or Agency of the Guarantor." (o) Section 7.03 is amended by inserting the words "or any Project Agreement" after the words "Guaran- tee Agreement". 29 (p) Section 9.03 is amended to read as follows: "Section 9.03. Effective Dates. Except as shall be otherwise agreed between the Bank and the Borrow- er, the Loan Agreement and Guarantee Agreement shall come into force and effect in respect of each Project and the amount of the Loan set forth oppo- site such Project in Schedule 4 to the Loan Agree- ment at the times and in the manner provided in Article VIII of the Loan Agreement." (q) Section 9.04 is amended to read as follows: "Section 9.04. Termination of Loan Agreement and Guarantee Agreement for Delay in Becoming Effec- tive. The Bank may at its option, at any time after the date specified in the Loan Agreement for the pur- poses of this Section, by notice to the Borrower and the Guarantor, terminate the Loan Agreement and the Guarantee Agreement in respect of any Project and the amount of the Loan set forth opposite such Project in Schedule 4 to the Loan Agreement, if the Loan Agreement and the Guarantee Agreement shall not have become effective in respect of such Project prior to such notice. Upon the giving of such notice the Loan Agreement and the Guarantee Agreement, and all obligations of the parties thereunder, in respect of such Project and such amount of the Loan shall forthwith terminate and such amount of the Loan shall be deemed to be cancelled pursuant to Article V of these Regulations." (r) Paragraph 6 of Section 10.01 is amended to read: "The term 'Guarantor' means the Republic of Italy." (s) Paragraph 12 of Section 10.01 is amended to read: "The terms 'Project' and 'Projects' mean the Proj- ects described in Schedule 2 of the Loan Agreement, or any of them, or such groupings of them, as the context may require." (t) Paragraph 13 of Section 10.01 is deleted. 30 (u) Paragraph 15 of Section 10.01 is amended to read as follows: "The term 'Closing Date' for any Project means the date specified in the Loan Agreement as the Closing Date for such Project, or such otlier date as shall be agreed upom by the Iank amd the Borrower as tile Closing Date for such Project." (v) Paragraph 16 of Section 10.01 is amended to read as fol IoNNv "rhl telrm 'l41ffective D t:et' nle li til Nte when the Loan Agreement shall first become effective in respect of any Project.'' (w) The following new paragraph 21 is added to Section 10.01: '21. The termin 'P"roject Agreoomit' anl 'Project. Agreemei ts' nwan such one or more of the aire ments referred to in Section 1.02 of the Loan Agree- iment as the context may rf,ir,e aid shall include any amendmenits to any of t1heni nmmlo by agreement betNweeni the Baik al the other parti( thereto." 31 SCHEDULE 4 Allocation of Loan The Projects to which the Loan shall be applied, and the amounts to be applied to each, are as follows: Amount in Project Dollar Equivalent A. POWER PROJECTS I. SME ..........................$22,000,000 II. SGES ........................... 7,200,000 B. IRRIGATION PROJECTS I. FORTORE ....................... 7,440,000 II. VOLTURNO ................... ..9,000,000 0. INDUSTRIAL PROJECTS I. TRINACRIA Potash Fertilizer Project 6,000,000 II. MONTECATINI Potash Fertilizer Project ........... 6,400,000 III. SINCAT Fertilizers and Chemicals Project . 12,800,000 IV. MARZOTTO Ready-made Clothing Project ... . 2,080,000 V. C.M.I. Electrolytic Tin Plate Project.. 960,000 VI. CONE Electric Household Appliances Project 1,120,000