New Properties. In the event either Borrower desires to acquire any real property upon which a Borrower intends to renovate existing improvements or construct new improvements, such Borrower shall notify Mezzanine Lender in writing at least five (5) Business Days in advance of such acquisition and shall establish a new wholly owned subsidiary of such Borrower to acquire such real property and to incur debt in connection with such acquisition and construction activities on terms acceptable to Mezzanine Lender; provided, however, that in no event shall such debt exceed at any time seventy-five percent (75%) of the cost of the land which has actually been acquired and the portion of the improvements that have actually been completed, as Mezzanine Lender shall determine in its sole discretion. All debt incurred by such wholly owned subsidiary of the relevant Borrower shall be the exclusive obligation of such subsidiary and no Borrower shall have any obligations or liabilities with respect to such debt (or any part of it) under any circumstances. Simultaneous with the creation of any such wholly owned subsidiary, each Borrower shall take all steps as shall be necessary in Mezzanine Lender's sole discretion to ensure that Mezzanine Lender obtains a first perfected security interest in the equity in such wholly owned subsidiary of the relevant Borrower. In addition, simultaneous with the creation of any such wholly owned subsidiary, the relevant Borrower shall cause such subsidiary to grant to Mezzanine Lender an enforceable irrevocable right of first refusal to provide any financing to such subsidiary. Borrowers and Mezzanine Lender agree that on or about November 27, 1996 Borrowers established a wholly-owned subsidiary known as HH Properties - VB, Inc. which shall be permitted to incur the indebtedness described in and under the conditions set forth in this Section.
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New Properties. In the event either Borrower desires to acquire any real property upon which a Borrower intends to renovate existing improvements or construct new improvements, such Borrower shall notify Mezzanine Lender in writing at least five (5) Business Days in advance of such acquisition and shall establish a new wholly owned subsidiary of such Borrower to acquire such real property and to incur debt in connection with such acquisition and construction activities on terms acceptable to Mezzanine Lender; provided, however, that in no event shall such debt exceed at any time seventy-five percent (75%) of the cost of the land which has actually been acquired and the portion of the improvements that have actually been completed, as Mezzanine Lender shall determine in its sole discretion. All debt incurred by such wholly owned subsidiary of the relevant Borrower shall be the exclusive obligation of such subsidiary and no Borrower shall have any obligations or liabilities with respect to such debt (or any part of it) under any circumstances. Simultaneous with the creation of any such wholly owned subsidiary, each Borrower shall take all steps as shall be necessary in Mezzanine Lender's sole discretion to ensure that Mezzanine Lender obtains a first perfected security interest in the equity in such wholly owned subsidiary of the relevant Borrower. In addition, simultaneous with the creation of any such wholly owned subsidiary, the relevant Borrower shall cause such subsidiary to grant to Mezzanine Lender an enforceable irrevocable right of first refusal to provide any financing to such subsidiary. Borrowers and Mezzanine Lender agree that on or about November 27, 1996 Borrowers established a wholly-owned subsidiary known as HH Properties - VB, Inc. which shall be permitted to incur the indebtedness described in and under the conditions set forth in this Section.
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