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77060900v2 <br /> <br /> <br /> 42 <br /> <br />Section 9.7 Contingency Reserve. The amount allocated to “contingency” in the Development <br />Budget is not intended to be disbursed without, and will only be disbursed upon, the prior approval of the <br />Controlling Person. The disbursement of a portion of the contingency reserve shall in no way prejudice the <br />Controlling Person or the Funding Lender from withholding disbursement of any further portion of the <br />contingency reserve. <br />Section 9.8 Stored Materials; Removal of Materials. <br />(a) The Controlling Person shall approve Requisitions for funds for materials, <br />furnishings, fixtures, machinery or equipment not yet incorporated into the Improvements, <br />provided that any such disbursement shall be subject to and shall be contingent upon the Controlling <br />Person’s receiving satisfactory evidence that: <br />(1) such materials are components in a form ready for incorporation <br />into the Improvements and shall be so incorporated within a period of thirty (30) <br />days; and <br />(2) such materials are stored at the Project Facilities, or at such other <br />site as the Controlling Person shall approve, and are insured and protected against <br />theft and damage. <br />(b) Within five (5) days after receiving notice from the Controlling Person (or the <br />Engineering Consultant), the Borrower will commence or cause to be commenced the removal of <br />all materials, whether worked or unworked, and all portions of the construction which the <br />Controlling Person (or the Engineering Consultant) may condemn as failing in a substantial way to <br />conform with the Plans and Specifications, and will prosecute diligently or cause to be prosecuted <br />diligently such removal. The Borrower further agrees to make good all portions of the construction <br />and other materials damaged by such removal. <br />Section 9.9 Cost Overruns and Savings. <br />(a) If the Borrower becomes aware of any change in the costs of the Work which will <br />increase or decrease the projection of the costs reflected on the Development Budget by $50,000 <br />or more, the Borrower shall immediately notify the Controlling Person in writing and promptly <br />submit to the Controlling Person for its approval a revised Development Budget. If the Controlling <br />Person otherwise becomes aware of any such change in costs of the Work, the Controlling Person <br />shall have the right to prepare and to authorize disbursements on the basis of a revised Development <br />Budget. <br />(b) If the revised Development Budget indicates an increase in costs of the Work for <br />the Project Facilities (in excess of the aggregate contingency amount and savings), no further <br />Requisitions for the Work at the Project Facilities need be approved by the Controlling Person <br />unless and until the Borrower has deposited with the Funding Lender (or the Fiscal Agent at the <br />direction of the Funding Lender) any required funds necessary to cause the amount remaining on <br />deposit with the Funding Lender or the Fiscal Agent (or available for draw under the Funding Loan) <br />and any Required Equity Funds yet to be deposited with the Funding Lender to be sufficient to <br />complete fully the construction of the Improvements in accordance with the Plans and <br />Specifications to the extent applicable, and to pay all other Projected costs in connection with the <br />Work.