Exhibit 10.3

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT (this “Guaranty”) is executed as of July 7, 2017, by
BSHH LLC, a Delaware limited liability company, having an address at c/o
Blackstone Real Estate Advisors, L.P., 345 Park Avenue, New York, New York 10154
(together with its successors and permitted assigns, “Guarantor”), in favor of
MORGAN STANLEY BANK, N.A., a national banking association, having an address at
1585 Broadway, New York, New York 10036, BANK OF AMERICA, N.A., a national
banking association, having an office at c/o Capital Markets Servicing Group,
900 West Trade Street, Suite 650, Mail Code: NC1-026-06-01, Charlotte, North
Carolina 28255, CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation,
having an address at 390 Greenwich Street, 7th Floor, New York, New York 10013,
and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking association chartered
under the laws of the United States of America, having an address at 383 Madison
Avenue, New York, New York 10179, collectively, as payee (together with their
respective successors and assigns, each, a “Co-Lender” and, collectively,
“Lender”).

W I T N E S  S E T H:

WHEREAS, pursuant to those certain promissory notes, each dated as of the date
hereof, executed by the entities set forth on Schedule 1 annexed hereto (each,
an “Individual Borrower” and collectively, “Borrower”) and made payable to the
order of each Co-Lender in the maximum original principal amount of EIGHT
HUNDRED MILLION AND 00/100 DOLLARS ($800,000,000), in the aggregate (together
with all renewals, modifications, substitutions, increases, amendments and
extensions thereof, collectively, the “Note”), Borrower has become indebted, and
may from time to time be further indebted, to Lender with respect to a loan
(“Loan”) which Loan is (i) secured by the liens and security interests of
certain mortgages, deed of trust and deeds to secure debt, each dated as of the
date hereof, made by the applicable Individual Borrower and BRE Select Hotels
Operating LLC, a Delaware limited liability company (“Operating Lessee”) for the
benefit of Lender (as the same may hereafter be amended, restated, renewed,
supplemented, replaced, extended or otherwise modified from time to time,
collectively, the “Mortgage”), (ii) further evidenced by that certain Loan
Agreement, dated as of the date hereof by and among Borrower, Operating Lessee
and Lender (as the same may hereafter be amended, modified, restated, renewed or
replaced, the “Loan Agreement”) and (iii) further evidenced, secured or governed
by the other instruments and documents executed in connection with the Loan
(together with the Note, the Loan Agreement and the Mortgage, are hereinafter
collectively referred to as the “Loan Documents”);

WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to
Borrower unless Guarantor unconditionally guarantees payment to Lender of the
Guaranteed Obligations (as herein defined); and

WHEREAS, Guarantor is an Affiliate of, or the owner of a direct or indirect
interest in Borrower, Operating Lessee and each other Loan Party and Guarantor
will directly benefit from Lender’s making of the Loan to Borrower.

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NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and for
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I

NATURE AND SCOPE OF GUARANTY

1.1 Guaranty of Obligation. Subject to the terms and conditions hereof,
Guarantor hereby irrevocably and unconditionally guarantees to Lender and its
successors and assigns the payment (either directly or through one or more of
its Affiliates or other Persons) of the Guaranteed Obligations as and when the
same shall be due and payable, whether by lapse of time, by acceleration of
maturity or otherwise. Guarantor hereby irrevocably and unconditionally
covenants and agrees that it is liable for the Guaranteed Obligations as a
primary obligor.

1.2 Definition of Guaranteed Obligations(a) .

(a) As used herein, the term “Guaranteed Obligations” means all obligations and
liabilities of Borrower, Operating Lessee and any other Loan Party for which
Borrower, Operating Lessee and any other Loan Party is personally liable
pursuant to Section 9.3(b) and Section 9.3(c)(ii)(A)-(D) of the Loan Agreement,
in each case, to the extent of the liability of Borrower, Operating Lessee and
any other Loan Party thereunder subject to the limitations in Section 1.2(b).

(b) Notwithstanding anything to the contrary in this Guaranty or any of the
other Loan Documents, the aggregate liability of Guarantor with respect to the
Guaranteed Obligations set forth in Section 9.3(c)(ii)(A)-(D) of the Loan
Agreement shall not exceed an amount equal to ten percent (10%) of the principal
balance of the Loan outstanding at the time of the occurrence of such event,
plus any and all reasonable third-party costs actually incurred by Lender
(including reasonable attorneys’ fees and costs reasonably incurred) in
connection with the collection of amounts due thereunder.

(c) In addition to the limitations set forth in Section 1.2(b) above, Guarantor
shall have no obligations under this Guaranty or otherwise with respect to the
Guaranteed Obligations arising out of acts or omissions occurring after the date
of (i) a Transfer resulting from the exercise of Lender’s rights under the Loan
Documents (but only as to the portion of the collateral subject to such
Transfer) or any Mezzanine Lender’s rights under any Mezzanine Loan Documents
(but only as to the portion of the collateral subject to such Transfer) or
(ii) the consummation of any remedial or enforcement action by (A) the Lender
under the Loan Documents or with respect to the collateral for the Loan (but
only as to the portion of the collateral subject to such enforcement or remedial
action), or (B) any holder of any Mezzanine Loan under the Mezzanine Loan
Documents or with respect to the collateral for such Mezzanine Loan (but only as
to the portion of the collateral subject to such enforcement or remedial
action), including, without limitation, any foreclosure, deed-in-lieu or
assignment in lieu of foreclosure or any other exercise by Lender or any
Mezzanine Lender of its rights under any Loan Document or Mezzanine Loan
Document, including, without limitation, any right to vote any pledged

 

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securities or any right to replace officers and directors of any Person, that in
each case, results in Borrower, Mezzanine Borrower or any Affiliated Manager, as
applicable, not being under the Control of Guarantor (collectively, a
“Foreclosure”). For the avoidance of doubt, in no event shall Guarantor be
released from any Guaranteed Obligations or any other liabilities under this
Guaranty in existence on or prior to such Foreclosure or caused by Guarantor or
any of its Affiliates, and such Guaranteed Obligations shall remain in full
force and effect.

1.3 Nature of Guaranty. This Guaranty is an irrevocable, absolute and continuing
guaranty of payment and not a guaranty of collection. This Guaranty may not be
revoked by Guarantor and shall continue to be effective with respect to any
Guaranteed Obligations arising or created after any attempted revocation by
Guarantor and after (if Guarantor is a natural person) Guarantor’s death (in
which event this Guaranty shall be binding upon Guarantor’s estate and
Guarantor’s legal representatives and heirs). The fact that at any time or from
time to time the Guaranteed Obligations may be increased or reduced shall not
release or discharge the obligation of Guarantor to Lender with respect to the
Guaranteed Obligations. This Guaranty may be enforced by Lender and any
subsequent holder of the Note or any part thereof and shall not be discharged by
the assignment or negotiation of all or part of the Note.

1.4 Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and
the liabilities and obligations of Guarantor to Lender hereunder, shall not be
reduced, discharged or released because or by reason of any existing or future
offset, claim or defense (other than that (x) the Guaranteed Obligations are not
due and owing or have been paid in full or (y) all sums payable under the Note
or any of the other Loan Documents have been paid in full) of Guarantor,
Borrower, Operating Lessee, any other Loan Party or any other party, against
Lender or against payment of the Guaranteed Obligations, whether such offset,
claim or defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise.

1.5 Payment By Guarantor. If all or any part of the Guaranteed Obligations shall
not be punctually paid or performed when due, whether at demand, maturity,
acceleration or otherwise, Guarantor shall, immediately upon demand by Lender,
and without presentment, protest, notice of protest, notice of non-payment,
notice of intention to accelerate the maturity, notice of acceleration of the
maturity, or any other notice whatsoever, perform and pay in lawful money of the
United States of America, the amount due on the Guaranteed Obligations to Lender
at Lender’s address as set forth herein. Such demand(s) may be made at any time
coincident with or after the time for payment of all or part of the Guaranteed
Obligations, and may be made from time to time with respect to the same or
different items of Guaranteed Obligations. Such demand shall be deemed made,
given and received in accordance with the notice provisions hereof.

1.6 No Duty To Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which Guarantor may have to require Lender),
in order to enforce the obligations of Guarantor hereunder, first to
(a) institute suit or exhaust its remedies against Borrower, Operating Lessee,
any other Loan Party or others liable on the Loan or the Guaranteed Obligations
or any other Person, (b) enforce Lender’s rights against any collateral which
shall ever have been given to secure the Loan, (c) enforce Lender’s rights
against any

 

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other guarantors of the Guaranteed Obligations, (d) join Borrower, Operating
Lessee, any other Loan Party or any others liable on the Guaranteed Obligations
in any action seeking to enforce this Guaranty, (e) exhaust any remedies
available to Lender against any collateral which shall ever have been given to
secure the Loan, or (f) resort to any other means of obtaining payment of the
Guaranteed Obligations. Lender shall not be required to mitigate damages or take
any other action to reduce, collect or enforce the Guaranteed Obligations.

1.7 Waivers. Guarantor agrees to the provisions of the Loan Documents, and
hereby waives notice of, and any rights of consent to, (a) any loans or advances
made by Lender to Borrower, (b) acceptance of this Guaranty, (c) any amendment
or extension of the Note, the Mortgage, the Loan Agreement or of any other Loan
Documents (other than this Guaranty), (d) the execution and delivery by Borrower
and Lender of any other loan or credit agreement or of Borrower’s execution and
delivery of any promissory notes or other documents arising under the Loan
Documents or in connection with the Properties and/or the collateral for the
Loan, (e) the occurrence of any breach by Borrower, Operating Lessee or any
other Loan Party or an Event of Default, (f) except as specifically provided in
the Loan Documents, Lender’s transfer or disposition of the Guaranteed
Obligations, or any part thereof, (g) except as specifically provided in the
Loan Documents, sale or foreclosure (or posting or advertising for sale or
foreclosure) of any collateral for the Guaranteed Obligations, (h) except as
specifically provided in the Loan Documents, protest, proof of non-payment or
default by Borrower, Operating Lessee or any other Loan Party, (i) except as
specifically provided herein or in the other Loan Documents, any other action at
any time taken or omitted by Lender, and, generally, all demands and notices of
every kind in connection with this Guaranty, the Loan Documents, any documents
or agreements evidencing, securing or relating to any of the Guaranteed
Obligations and the obligations hereby guaranteed, (j) any limitation of
liability or recourse in any other Loan Document or arising under any law;
(k) any claim or defense that this Guaranty was made without consideration or is
not supported by adequate consideration, (l) except as expressly provided in
Section 1.2 or in Section 5.4 hereof or as otherwise agreed to in writing by
Lender, whether express or by operation of law, any partial release of the
liability of Guarantor hereunder, or if one or more other guaranties are now or
hereafter obtained by Lender covering all or any part of the Guaranteed
Obligations, any complete or partial release of any one or more of such
guarantors under any such other guaranty, or any complete or partial release or
settlement of Borrower or any other party liable, directly or indirectly, for
the payment of any or all of the Guaranteed Obligations; (m) the making of
advances by Lender to protect its interest in the Properties, preserve the value
of the Properties or for the purpose of performing any term or covenant
contained in any of the Loan Documents; or (n) the existence of any claim,
counterclaim, set-off, recoupment, reduction or defense (other than that (x) the
Guaranteed Obligations are not due and owing or have been paid in full or
(y) all sums payable under the Note or any of the other Loan Documents have been
paid in full) based upon any claim or other right that Guarantor may at any time
have against Borrower, Lender, or any other Person, whether or not arising in
connection with this Guaranty, the Note, the Loan Agreement, or any other Loan
Document.

1.8 Payment of Expenses. In the event that Guarantor should breach or fail to
timely perform any provisions of this Guaranty, Guarantor shall, within ten
(10) Business Days after demand by Lender, pay Lender all reasonable
out-of-pocket costs and expenses (including court costs and reasonable
third-party attorneys’ fees) incurred by Lender in the enforcement hereof or the
preservation of Lender’s rights hereunder. The covenant contained in this
Section 1.8 shall survive the payment of the Guaranteed Obligations.

 

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1.9 Effect of Bankruptcy. In the event that, pursuant to any insolvency,
bankruptcy, reorganization, receivership or other debtor relief law, or any
judgment, order or decision thereunder, Lender must rescind or restore any
payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower, Operating Lessee, each other Loan Party and Guarantor that Guarantor’s
obligations hereunder shall not be discharged except as expressly provided for
herein or in the Loan Agreement or by Guarantor’s performance of such
obligations and then only to the extent of such performance.

1.10 Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding
anything to the contrary contained in this Guaranty, until the Debt is
indefeasibly paid in full, Guarantor hereby unconditionally and irrevocably
waives, releases and abrogates any and all rights it may now or hereafter have
under any agreement, at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender), to assert any claim against or
seek contribution, indemnification or any other form of reimbursement from
Borrower, Operating Lessee or any other Loan Party liable for payment of any or
all of the Guaranteed Obligations for any payment made by Guarantor under or in
connection with this Guaranty.

1.11 Borrower, Operating Lessee and Loan Party. The term “Borrower” as used
herein shall include any new or successor corporation, association, partnership
(general or limited), limited liability company, joint venture, trust or other
individual or organization formed as a result of any merger, reorganization,
sale, transfer, devise, gift or bequest of Borrower or all of the interest in
Borrower. The term “Operating Lessee” as used herein shall include any new or
successor corporation, association, partnership (general or limited), limited
liability company, joint venture, trust or other individual or organization
formed as a result of any merger, reorganization, sale, transfer, devise, gift
or bequest of any Operating Lessee or all of the interest in such Operating
Lessee. The term “Loan Party” as used herein shall include any new or successor
corporation, association, partnership (general or limited), limited liability
company, joint venture, trust or other individual or organization formed as a
result of any merger, reorganization, sale, transfer, devise, gift or bequest of
any Loan Party or all of the interest in such Loan Party.

ARTICLE II

EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING GUARANTOR’S OBLIGATIONS

Guarantor hereby consents and agrees to each of the following, and agrees that
Guarantor’s obligations under this Guaranty shall not be released, discharged,
diminished, impaired, reduced or adversely affected by any of the following, and
waives any common law, equitable, statutory or other rights (including without
limitation rights to notice) which Guarantor might otherwise have as a result of
or in connection with any of the following:

 

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2.1 Modifications. Any renewal, extension, increase, modification, alteration or
rearrangement of all or any part of the Guaranteed Obligations, the Note, the
Mortgage, the Loan Agreement, the other Loan Documents, or any other document,
instrument, contract or understanding between Borrower, Operating Lessee and
Lender, or any other parties, pertaining to the Guaranteed Obligations or any
failure of Lender to notify Guarantor of any such action.

2.2 Adjustment. Any adjustment, indulgence, forbearance or compromise that might
be granted or given by Lender to Borrower, Operating Lessee, any other Loan
Party or Guarantor.

2.3 Condition of Borrower or Guarantor. The insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability, dissolution or lack of power
of Borrower, Operating Lessee, any other Loan Party, Guarantor or any other
party at any time liable for the payment of all or part of the Guaranteed
Obligations; or any dissolution of Borrower, Operating Lessee, any other Loan
Party or Guarantor, or any sale, lease or transfer of any or all of the assets
of Borrower, Operating Lessee, any other Loan Party or Guarantor, or any changes
in the shareholders, partners or members of Borrower, Operating Lessee, any
other Loan Party or Guarantor; or any reorganization of Borrower, Operating
Lessee, any other Loan Party or Guarantor.

2.4 Invalidity of Guaranteed Obligations. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Obligations, or any
document or agreement executed in connection with the Guaranteed Obligations,
for any reason whatsoever, including without limitation the fact that (a) the
Guaranteed Obligations, or any part thereof, exceeds the amount permitted by
law, (b) the act of creating the Guaranteed Obligations or any part thereof is
ultra vires, (c) the officers or representatives executing the Note, the
Mortgage, the Loan Agreement or the other Loan Documents or otherwise creating
the Guaranteed Obligations acted in excess of their authority, (d) the
Guaranteed Obligations violate applicable usury laws, (e) Borrower has valid
defenses, claims or offsets (whether at law, in equity or by agreement) which
render the Guaranteed Obligations wholly or partially uncollectible from
Borrower other than the payments on the Loan made by Borrower, (f) the creation,
performance or repayment of the Guaranteed Obligations (or the execution,
delivery and performance of any document or instrument representing part of the
Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations) is
illegal, uncollectible or unenforceable, or (g) the Note, the Mortgage, the Loan
Agreement or any of the other Loan Documents have been forged or otherwise are
irregular or not genuine or authentic, it being agreed that Guarantor shall
remain liable hereon regardless of whether Borrower, Operating Lessee, any other
Loan Party or any other person be found not liable on the Guaranteed Obligations
or any part thereof for any reason.

2.5 Release. Any full or partial release of the liability of Borrower, Operating
Lessee or any other Loan Party on the Guaranteed Obligations, or any part
thereof, or of any co-guarantors, or any other Person now or hereafter liable,
whether directly or indirectly, jointly, severally, or jointly and severally, to
pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or
any part thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay or perform the Guaranteed Obligations in

 

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full without assistance or support of any other party, and Guarantor has not
been induced to enter into this Guaranty on the basis of a contemplation,
belief, understanding or agreement that other parties will be liable to pay or
perform the Guaranteed Obligations, or that Lender will look to other parties to
pay or perform the Guaranteed Obligations.

2.6 Other Collateral. The taking or accepting of any other security, collateral
or guaranty, or other assurance of payment, for all or any part of the
Guaranteed Obligations.

2.7 Release of Collateral. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including without limitation
negligent, willful, unreasonable or unjustifiable impairment) of any collateral,
property or security at any time existing in connection with, or assuring or
securing payment of, all or any part of the Guaranteed Obligations.

2.8 Care and Diligence. The failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale
or other handling or treatment of all or any part of any collateral, property or
security, including but not limited to any neglect, delay, omission, failure or
refusal of Lender (a) to take or prosecute any action for the collection of any
of the Guaranteed Obligations, or (b) to foreclose, or initiate any action to
foreclose, or, once commenced, prosecute to completion any action to foreclose
upon any security therefor, or (c) to take or prosecute any action in connection
with any instrument or agreement evidencing or securing all or any part of the
Guaranteed Obligations.

2.9 Unenforceability. The fact that any collateral, security, security interest
or lien contemplated or intended to be given, created or granted as security for
the repayment of the Guaranteed Obligations, or any part thereof, shall not be
properly perfected or created, or shall prove to be unenforceable or subordinate
to any other security interest or lien, it being recognized and agreed by
Guarantor that Guarantor is not entering into this Guaranty in reliance on, or
in contemplation of the benefits of, the validity, enforceability,
collectibility or value of any of the collateral for the Guaranteed Obligations.

2.10 Offset. Any existing or future right of offset, claim or defense of
Borrower, Operating Lessee, any other Loan Party or Guarantor against Lender, or
any other party, or against payment of the Guaranteed Obligations, whether such
right of offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or
otherwise, other than payment of the Guaranteed Obligations.

2.11 Merger. The reorganization, merger or consolidation of Borrower, Operating
Lessee or any other Loan Party into or with any other Person.

2.12 Preference. Any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else.

 

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2.13 Other Actions Taken or Omitted. Any other action taken or omitted to be
taken with respect to the Loan Documents, the Guaranteed Obligations, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay and perform the Guaranteed Obligations pursuant to the terms hereof. It
is the unambiguous and unequivocal intention of Guarantor that Guarantor shall
be obligated to pay and perform the Guaranteed Obligations when due,
notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, which obligation shall be deemed satisfied
only upon the full and final payment and satisfaction of the Guaranteed
Obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and extend credit to Borrower,
Guarantor represents and warrants as of the date hereof to Lender as follows:

3.1 Benefit. Guarantor is an Affiliate of Borrower, Operating Lessee and each
other Loan Party, or is the owner of a direct or indirect interest in one or
more Individual Borrowers comprising Borrower, Operating Lessee and each other
Loan Party, and has received, or will receive, direct or indirect benefit from
the making of this Guaranty with respect to the Guaranteed Obligations.

3.2 Familiarity and Reliance. Guarantor is familiar with, and has independently
reviewed books and records regarding, the financial condition of Borrower,
Operating Lessee and each other Loan Party and is familiar with the value of any
and all collateral intended to be created as security for the payment of the
Note or Guaranteed Obligations; however, Guarantor is not relying on such
financial condition or the collateral as an inducement to enter into this
Guaranty.

3.3 No Representation By Lender. Neither Lender nor any other party has made any
representation, warranty or statement to Guarantor in order to induce Guarantor
to execute this Guaranty.

3.4 Guarantor’s Financial Condition. As of the date hereof, and after giving
effect to this Guaranty and the contingent obligation evidenced hereby,
Guarantor is, and will be, solvent, and has and will have assets which, fairly
valued, exceed its obligations, liabilities (including contingent liabilities)
and debts, and has and will have property and assets sufficient to satisfy and
repay its obligations and liabilities.

3.5 Legality. The execution, delivery and performance by Guarantor of this
Guaranty and the consummation of the transactions contemplated hereunder do not,
and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Guarantor is subject or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, deed of trust, charge, lien,
or any contract, agreement or other instrument to which Guarantor is a party or
which may be applicable to Guarantor. This Guaranty is a legal and binding
obligation of Guarantor and is enforceable against Guarantor in accordance with
its terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, general equitable principles and a covenant of good faith and fair
dealing.

 

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3.6 Litigation. There are no actions, suits or proceedings at law or in equity
by or before any Governmental Authority now pending or, to the knowledge of
Guarantor, threatened against Guarantor, which actions, suits or proceedings, if
determined against Guarantor would be reasonably likely to materially adversely
affect the condition (financial or otherwise) or business of Guarantor.

3.7 No Plan Assets. As of the date of this Guaranty, Guarantor is not an
“employee benefit plan,” as defined in Section 3(3) of ERISA, whether or not
subject to Title I of ERISA, and none of the assets of Guarantor constitutes or
will constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101 as modified by Section 3(42) of ERISA. Except as could
not reasonably be expected, individually or in the aggregate, to have a
materially adverse effect on Guarantor, Guarantor is not obligated to contribute
to any employee benefit plan (as so defined) subject to Title IV of ERISA.
Assuming compliance by the Lender with paragraph (d) of Section 5.2.9 of the
Loan Agreement, transactions contemplated hereunder by or with Guarantor are not
subject to any state or other statute or regulation applicable to Guarantor with
respect to governmental plans within the meaning of Section 3(32) of ERISA which
are substantially similar to the prohibited transaction provisions of
Section 406 of ERISA or Section 4975 of the Code currently in effect and which
prohibit the transactions contemplated by this Agreement (“Applicable Similar
Law”), including, but not limited to the exercise by Lender of any of its rights
under the Loan Documents. Guarantor covenants and agrees that it will use
commercially reasonable efforts to provide notice to Lender in writing if, in
the reasonable judgment of Guarantor, which may be based on consultation with
Counsel, the assets of Guarantor constitute plan assets of any “benefit plan
investor” within the meaning of Section 3(42) of ERISA or any plan subject to
any Applicable Similar Law.

3.8 ERISA. Assuming compliance by Lender of the representation in
Section 5.2.9(d) of the Loan Agreement, Guarantor shall not knowingly engage in
any transaction, other than a transaction contemplated hereunder, which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, the Mortgage, the Loan Agreement
or the other Loan Documents) to be a non-exempt prohibited transaction under
Section 406(a) of ERISA or Section 4975(c)(1)(A) of the Code.

3.9 Survival. All representations and warranties made by Guarantor herein are
made as of the date hereof and shall survive the execution hereof.

ARTICLE IV

SUBORDINATION OF CERTAIN INDEBTEDNESS

4.1 Subordination of All Guarantor Claims. As used herein, the term “Guarantor
Claims” shall mean all debts and liabilities of Borrower, Operating Lessee and
each other Loan Party to Guarantor, whether such debts and liabilities now exist
or are hereafter incurred or arise, or whether the obligations of Borrower,
Operating Lessee or any other Loan Party thereon be direct, contingent, primary,
secondary, several, joint and several, or otherwise,

 

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and irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower, Operating Lessee or any
other Loan Party (arising as a result of subrogation or otherwise) as a result
of Guarantor’s payment of all or a portion of the Guaranteed Obligations. During
the continuance of an Event of Default, Guarantor shall not receive or collect,
directly or indirectly, from Borrower or any other Person any amount upon the
Guarantor Claims.

4.2 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such
dividends and payments to Lender. Should Lender receive, for application against
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit against the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims, provided, however, that Guarantor shall have
no such subrogation rights until repayment in full of the Debt.

4.3 Payments Held in Trust. In the event that, notwithstanding anything to the
contrary in this Guaranty, Guarantor should receive any funds, payment, claim or
distribution which is prohibited by this Guaranty, Guarantor agrees to hold in
trust for Lender an amount equal to the amount of all funds, payments, claims or
distributions so received, and agrees that it shall have absolutely no dominion
over the amount of such funds, payments, claims or distributions so received
except to pay them promptly to Lender, and Guarantor covenants promptly to pay
the same to Lender.

4.4 Liens Subordinate. Guarantor agrees that any liens, security interests,
judgment liens, charges or other encumbrances upon Borrower’s assets securing
payment of the Guarantor Claims shall be and remain inferior and subordinate to
any liens, security interests, judgment liens, charges or other encumbrances
upon Borrower’s assets securing payment of the Guaranteed Obligations,
regardless of whether such encumbrances in favor of Guarantor or Lender
presently exist or are hereafter created or attach. Without the prior written
consent of Lender, Guarantor shall not (i) exercise or enforce any creditor’s
right it may have against Borrower, Operating Lessee or any other Loan Party, or
(ii) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor’s relief or insolvency proceeding) to enforce any liens, mortgage, deeds
of trust, security interests, collateral rights, judgments or other encumbrances
on assets of Borrower, Operating Lessee or any other Loan Party held by
Guarantor.

 

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ARTICLE V

COVENANTS

Section 5.1 Definitions. As used in this Article V, the following terms shall
have the respective meanings set forth below:

(a) “GAAP” shall mean generally accepted accounting principles in the United
States of America, consistently applied.

(b) “Net Worth” shall mean, as of a given date, an entity’s total assets minus
its total liabilities (in each case exclusive of such entity’s interests in and
liabilities related to the Properties), in each case in accordance with GAAP.

Section 5.2 Covenants. Until all of the Debt and the Guaranteed Obligations have
been paid in full, Guarantor shall maintain a Net Worth of not less than
$200,000,000 (the “Net Worth Threshold”).

Section 5.3 Prohibited Transactions. Guarantor shall not, at any time while a
default in the payment of the Guaranteed Obligations has occurred and is
continuing, subject to Borrower’s right to replace the Guarantor pursuant to
Section 5.4, (i) enter into or effectuate any transaction with any Affiliate
that would reduce the Net Worth of Guarantor below the Net Worth Threshold
(including the payment of any dividend or distribution to a shareholder, or the
redemption, retirement, purchase or other acquisition for consideration of any
stock or other ownership interest in such Guarantor) or (ii) sell, pledge,
mortgage or otherwise transfer to any Person any of such Guarantor’s assets, or
any interest therein, except on commercially reasonable, market rate terms.

Section 5.4 Substitute Guarantor and Release of Guarantor.

(a) If at any time during the term of the Loan, (x) Guarantor shall not be in
compliance with the covenants set forth in this Article V of the Guaranty or
(y) Borrower otherwise elects in accordance with the provisions of the Loan
Agreement, then, in each case, Borrower shall have the right (1) in the case of
(x), to cause either (i) BREP or (ii) one or more entities that (A) are
Affiliates of Borrower and (B) are each a Replacement Guarantor or (2) in the
case of (y), to cause BREP, to execute and deliver a replacement guaranty
substantially in the form of this Guaranty or otherwise in form reasonably
acceptable to Lender (a “Substitute Guaranty”). If a Substitute Guaranty is
delivered in accordance with the terms hereunder, then the failure by Guarantor
to comply with the covenants set forth in this Article V shall not be a default
hereunder or under the Loan Documents or the Mezzanine Loan Documents and Lender
shall release Guarantor from its obligations hereunder (including, without
limitation, its obligation to comply with the covenants set forth in this
Article V) upon the execution and delivery by such Replacement Guarantor of a
Substitute Guaranty. In the event that (1) Borrower replaces Guarantor with a
Replacement Guarantor, following such replacement, Borrower shall deliver the
guarantor financial statements of the Substitute Guarantor as required pursuant
to Section 5.1.11 of the Loan Agreement with respect to such Replacement
Guarantor and (2) Borrower replaces Guarantor with BREP, then the covenants set
forth in Sections 5.2 and 5.3 hereof shall automatically terminate and shall
have no further force and effect.

 

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(b) In connection with the delivery of any Substitute Guaranty from any party
other than BREP, the applicable Replacement Guarantor shall deliver an Officer’s
Certificate (i) certifying that it has a Net Worth equal to or in excess of
$400,000,000, (ii) attaching Replacement Guarantor’s unaudited financial
statements demonstrating such Net Worth to Lender’s reasonable satisfaction, and
(iii) certifying that it is not subject to a Bankruptcy Action or a material
governmental or regulatory investigation which resulted in a final,
non-appealable conviction for criminal activity involving moral turpitude or a
civil proceeding in which such Person has been found liable in a final
non-appealable judgment to have attempted to hinder, delay or defraud creditors,
in each case for the past seven (7) years.

(c) Notwithstanding anything to the contrary contained herein, upon a
Replacement Guarantor executing and delivering a Substitute Guaranty in
accordance with, and permitted by, the terms of this Guaranty or the Loan
Agreement, Guarantor shall be released as Guarantor (or any then-Replacement
Guarantor shall be released as a Replacement Guarantor, if applicable) from its
obligations under this Guaranty for acts and omissions occurring from and after
such Replacement Guarantor’s execution and delivery of such Substitute Guaranty
without waiving any liability accruing prior to the date of such Replacement
Guarantor’s execution and delivery of such Substitute Guaranty. The foregoing
release shall be effective automatically upon the date of such Substitute
Guaranty, but Lender agrees to provide written evidence thereof if the same is
reasonably requested by Borrower.

ARTICLE VI

MISCELLANEOUS

6.1 Waiver. No failure to exercise, and no delay in exercising, on the part of
Lender, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided by law. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

6.2 Notices. Any notice, demand, statement, request or consent made hereunder
shall be in writing and shall be deemed to be received by the addressee on
(a) the third day following the day such notice is deposited with the United
States Postal Service first class certified mail, return receipt requested
(b) expedited, prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery and by telecopier (with answer
back acknowledged), addressed to the address, as set forth below, of the party
to whom such notice is to be given, or to such other address as either party
shall in like manner designate in writing. The addresses of the parties hereto
are as follows:

 

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Guarantor:

     

BSHH LLC

  

c/o Blackstone Real Estate Advisors L.P.

  

345 Park Avenue

  

New York, New York 10154

  

Attention: Robert Harper and Judy Turchin

  

Facsimile No: (212) 583-5202

with a copy to:

  

Simpson Thacher & Bartlett LLP

  

425 Lexington Avenue

  

New York, New York 10017

  

Attention: Krista Miniutti

  

Facsimile: (212) 455-2502

Lender:

     

Morgan Stanley Bank, N.A.

  

1585 Broadway

  

New York, NY 10036

  

Attention: George Kok

  

Facsimile No. 212.507.4859

and:

  

Bank of America, N.A.

  

c/o Capital Markets Servicing Group

  

900 West Trade Street, Suite 650

  

Mail Code: NC1-026-06-01

  

Charlotte, North Carolina 28255

  

Attention: Servicing Manager

  

Facsimile No.: (704) 317-4501

and:

     

Citigroup Global Markets Realty Corp.

  

390 Greenwich Street, 7th Floor

  

New York, New York 10013

  

Attention: Ana Rosu Marmann

  

Facsimile No.: (646) 328-2938

and:

  

JPMorgan Chase Bank, National Association

  

383 Madison Avenue

  

New York, New York 10179

  

Attention: Joseph E. Geoghan

  

Facsimile No.: (212) 834-6029

and:

  

JPMorgan Chase Bank, National Association

  

383 Madison Avenue

  

New York, New York 10179

  

Attention: Nancy Alto

  

Facsimile No.: (917) 546-2564

with a copy to:

  

Dechert LLP

  

Cira Centre

  

2929 Arch Street

  

Philadelphia, Pennsylvania 19104

  

Attention: David W. Forti, Esq.

  

Facsimile No.: (215) 655-2647

 

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6.3 Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER’S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND
GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
GUARANTOR AND HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
IN ANY SUIT, ACTION OR PROCEEDING. GUARANTOR DOES HEREBY DESIGNATE AND APPOINT:

                                         REPRESENTATIVE BORROWER

                                         C/O BLACKSTONE REAL ESTATE ADVISORS,
L.P.

                                         345 PARK AVENUE

                                         NEW YORK, NEW YORK 10154

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.

6.4 Invalid Provisions. If any provision of this Guaranty is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
of this Guaranty, such provision shall be fully severable and this Guaranty
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Guaranty, and the remaining
provisions of this Guaranty shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

6.5 Amendments. This Guaranty may be amended only by an instrument in writing
executed by the parties hereto.

 

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6.6 Parties Bound; Assignment; Joint and Several. This Guaranty shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors, assigns and legal representatives; provided, however, that
Guarantor may not, without the prior written consent of Lender, assign any of
its rights, powers, duties or obligations hereunder, except as contemplated by
the Loan Agreement and/or Section 6.15. If Guarantor consists of more than one
person or party, the obligations and liabilities of each such person or party
shall be joint and several.

6.7 Headings. Section headings are for convenience of reference only and shall
in no way affect the interpretation of this Guaranty.

6.8 Recitals. The recital and introductory paragraphs hereof are a part hereof,
form a basis for this Guaranty and shall be considered prima facie evidence of
the facts and documents referred to therein.

6.9 Counterparts. To facilitate execution, this Guaranty may be executed in as
many counterparts as may be convenient or required. It shall not be necessary
that the signature of, or on behalf of, each party, or that the signature of all
persons required to bind any party, appear on each counterpart. All counterparts
shall collectively constitute a single instrument. It shall not be necessary in
making proof of this Guaranty to produce or account for more than a single
counterpart containing the respective signatures of, or on behalf of, each of
the parties hereto. Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures thereon
and thereafter attached to another counterpart identical thereto except having
attached to it additional signature pages.

6.10 Rights and Remedies. If Guarantor becomes liable for any indebtedness owing
by Borrower to Lender, by endorsement or otherwise, other than under this
Guaranty, such liability shall not be in any manner impaired or affected hereby
and the rights of Lender hereunder shall be cumulative of any and all other
rights that Lender may ever have against Guarantor. The exercise by Lender of
any right or remedy hereunder or under any other instrument, or at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.

6.11 Other Defined Terms. Any capitalized term utilized herein shall have the
meaning as specified in the Loan Agreement, unless such term is otherwise
specifically defined herein.

6.12 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR
AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED OBLIGATIONS
AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE
EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN
GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO
EVIDENCE OF PRIOR,

 

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CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY
ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN
GUARANTOR AND LENDER.

6.13 Waiver of Right To Trial By Jury. EACH OF GUARANTOR AND LENDER (BY ITS
ACCEPTANCE HEREOF) HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
GUARANTY, THE NOTE, THE LOAN AGREEMENT, THE MORTGAGE, OR THE OTHER LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY GUARANTOR AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. EACH OF GUARANTOR AND LENDER IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OTHER PARTY.

6.14 Intentionally Omitted.

6.15 Reinstatement in Certain Circumstances. If at any time any payment of the
principal of or interest under the Note or any other amount payable by Borrower
under the Loan Documents is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of Borrower or otherwise,
then, upon the restoration or return of such payments, the Guarantor’s
obligations hereunder with respect to such payment shall be reinstated as though
such payment has been due but not made at such time.

6.16 Special State Provisions. In the event of any inconsistencies between the
other terms and conditions of this Agreement and this Section 6.16, the terms
and conditions of this Section 6.16 shall control and be binding:

(a) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of California:

(i) Modifications to Loan and Loan Documents. Guarantor agrees that Lender may
do any of the following without affecting the enforceability of this Guaranty or
the other Loan Documents: (A) take or release additional security for any
obligation in connection with the Loan Documents; (B) discharge or release (by
judicial or nonjudicial foreclosure, acceptance of a deed in lieu of foreclosure
or otherwise) any Person or Persons liable under the Loan Documents; (C) accept
or make compositions or other arrangements or file or refrain from filing a
claim in any bankruptcy proceeding of Borrower, Operating Lessee or any other
Loan Party, any guarantor of Borrower’s, Operating Lessee’s or other Loan
Party’s obligations under the Loan Documents or any pledgor of collateral for
any Person’s obligations to Lender; and (D) credit payments in such manner and
order of priority to principal, interest or other obligations as Lender may
determine in accordance with the terms of the Loan Documents.

 

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(ii) Waivers.

(A) Guarantor agrees that Lender’s right to enforce this Guaranty is absolute
and is not contingent upon the genuineness, validity or enforceability of any of
the Loan Documents. Guarantor waives all benefits and defenses it may have under
California Civil Code Section 2810 and agrees that Lender’s rights under this
Guaranty shall be enforceable even if Borrower, Operating Lessee or any other
Loan Party had no liability at the time of execution of the Loan Documents or
later ceases to be liable.

(B) Guarantor waives all benefits and defenses it may have under California
Civil Code Section 2809 and agrees that Lender’s rights under the Loan Documents
will remain enforceable even if the amount secured by the Loan Documents is
larger in amount and more burdensome than that for which Borrower, Operating
Lessee or any other Loan Party is responsible. The enforceability of the
Guaranty against Guarantor shall continue until all sums due under the Loan
Documents have been paid in full and shall not be limited or affected in any way
by any impairment or any diminution or loss of value of any security or
collateral for Borrower’s, Operating Lessee’s and each other Loan Party’s
obligations under the Loan Documents, from whatever cause, the failure of any
security interest in any such security or collateral or any disability or other
defense of Borrower, Operating Lessee or any other Loan Party, any guarantor of
Borrower’s, Operating Lessee’s or any other Loan Party’s obligations under the
Loan Documents, any other pledgor of collateral for any Person’s obligations to
Lender or any other Person in connection with the Loan.

(C) Guarantor waives all benefits and defenses it may have under California
Civil Code Sections 2845, 2849 and 2850 (subject to Section 1.10 of this
Guaranty), including, without limitation, the right to require Lender to
(i) proceed against Borrower, Operating Lessee or any other Loan Party, any
guarantor of Borrower’s, Operating Lessee’s or any other Loan Party’s
obligations under the Loan Documents, any other pledgor of collateral for any
Person’s obligations to Lender or any other Person in connection with the Loan,
(ii) proceed against or exhaust any other security or collateral Lender may
hold, or (iii) pursue any other right or remedy for Borrower’s, Operating
Lessee’s or any other Loan Party’s benefit, and agree that Lender may exercise
its rights under this Guaranty or may foreclose against any of the Individual
Properties without taking any action against Borrower, Operating Lessee, any
other Loan Party, any guarantor of Borrower’s, Operating Lessee’s obligations
under the Loan Documents, any pledgor of collateral for any Person’s obligations
to Lender or any other Person in connection with the Loan, and without
proceeding against or exhausting any security or collateral Lender holds.

 

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(D) Guarantor waives any rights or benefits it may have by reason of California
Code of Civil Procedure Section 580a, or other applicable law, which could limit
the amount which Lender could recover in a foreclosure of any of the Individual
Properties to the difference between the amount owing under the Loan Documents
and the fair value of any such Individual Property or interests sold at a
nonjudicial foreclosure sale or sales of any other real property held by Lender
as security for the obligations under the Loan Documents.

(E) Guarantor, as a guarantor or surety, waives diligence and all demands,
protests, presentments and notices of protest, dishonor, nonpayment and
acceptance of the Loan Documents.

(F) Guarantor waives all rights and defenses that are or may become available to
the guarantor or other surety by reason of California Civil Code Sections 2787
to 2855, inclusive, subject to Section 1.10 of this Guaranty.

(G) This Guaranty shall be effective as a waiver of, and Guarantor hereby
expressly waives:

(1) any and all rights to which Guarantor may otherwise have been entitled under
any suretyship laws in effect from time to time, including any right or
privilege, whether existing under statute, at law or in equity, to require
Lender to take prior recourse or proceedings against any collateral, security or
Person whatsoever;

(2) any rights of sovereign immunity and any other similar and/or related
rights; and

(3) any defenses (other than that (x) the Guaranteed Obligations are not due and
owing or have been paid in full or (y) all sums payable under the Note or any of
the other Loan Documents have been paid in full).

(H) Guarantor further waives: (a) any defense based upon any legal disability or
other defense of Borrower, any other guarantor or other person, or by reason of
the cessation or limitation of the liability of Borrower, Operating Lessee and
the other Loan Parties from any cause other than that (x) the Guaranteed
Obligations are not due and owing or have been paid in full or (y) all sums
payable under the Note or any of the other Loan Documents have been paid in
full; (b) any defense based upon any lack of authority of the officers,
directors, partners or agents acting or purporting to act on behalf of Borrower,
Operating Lessee and the other Loan Parties or any principal of Borrower,
Operating Lessee and the other Loan Parties or any defect in the formation of
Borrower, Operating Lessee and the other Loan Parties or any principal of
Borrower, Operating Lessee and the other Loan Parties; (c) any defense based
upon the application by Borrower, Operating Lessee and the other Loan Parties of
the proceeds of the Loan for purposes other than the purposes represented by
Borrower, Operating

 

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Lessee and the other Loan Parties to Lender or intended or understood by Lender
or Guarantor; (d) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
any other respects more burdensome than that of a principal; (c) any defense
based upon Lender’s election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code
or any successor statute; (f) any defense based upon any borrowing or any grant
of a security interest under Section 364 of the Bankruptcy Code; and (g) the
benefit of any statute of limitations affecting the liability of Guarantor
hereunder or the enforcement hereof. Guarantor agrees that the payment of all
sums payable under the Note or any of the other Loan Documents or any part
thereof or other act which tolls any statute of limitations applicable to the
Note or the other Loan Documents shall similarly operate to toll the statute of
limitations applicable to Guarantor’s liability hereunder. Without limiting the
generality of the foregoing or any other provision hereof, Guarantor expressly
waives for the benefit of Lender to the extent permitted by law any and all
rights and defenses which might otherwise be available to Guarantor under
California Civil Code Sections 2899 and 3433 or any similar law of California or
of any other state or of the United States.

(I) Guarantor hereby also waives and agrees not to assert or take advantage of
any defense of Guarantor based upon Lender’s election of any remedy against
Guarantor, Borrower, Operating Lessee and the other Loan Parties or any of them,
including, without limitation, the defense to enforcement of this Guaranty (the
“Gradsky” defense based upon Union Bank v. Gradsky, 265 Cal. App. 2d 40 (1968)
or subsequent cases) which, absent this waiver, Guarantor would have by virtue
of an election by Lender to conduct a non-judicial foreclosure sale of the
Properties, it being understood by Guarantor that any such non-judicial
foreclosure sale will destroy, by operation of California Code of Civil
Procedure Section 580d, all rights of any party to a deficiency judgment against
Borrower, and, as a consequence, will destroy all rights which Guarantor would
otherwise have (including, without limitation, the right of subrogation, the
right of reimbursement, and the right of contribution) to proceed against
Borrower and to recover any such amount, and that Lender could be otherwise
estopped from pursuing Guarantor for a deficiency judgment after a non-judicial
foreclosure sale on the theory that a guarantor should be exonerated if a lender
elects a remedy that eliminates the guarantor’s subrogation, reimbursement or
contribution rights.

(J) Guarantor hereby also waives (a) any defense based upon Lender’s failure to
disclose to Guarantor any information concerning Borrower’s financial condition
or any other circumstances bearing on Borrower’s ability to pay all sums payable
under the Note or any of the other Loan Documents; (b) any right of subrogation,
any right to enforce any remedy which Lender may have against Borrower and any
right to participate in, or benefit from, any security for the Note or the other
Loan Documents now or hereafter held by Lender; and (c) presentment, demand,
protest and notice of any kind. Guarantor agrees that the payment of all sums
payable under the Note or any of the other Loan Documents

 

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or any part thereof or other act which tolls any statute of limitations
applicable to the Note or the other Loan Documents shall similarly operate to
toll the statute of limitations applicable to Guarantor’s liability hereunder.
Without limiting the generality of the foregoing or any other provision hereof,
Guarantor expressly waives to the extent permitted by law any and all rights and
defenses which might otherwise be available to Guarantor under California Civil
Code Sections 2787 to 2855 inclusive (subject to Section 1.10 of this Guaranty)
and Chapter 2 of Title 14, 2899 and 3433 and under California Code of Civil
Procedure Sections 580a, 580b, 580d and 726, or any of such sections.

(K) Guarantor agrees that it is bound to the payment of all Guaranteed
Obligations, whether now existing or hereafter accruing as fully as if such
Guaranteed Obligations were directly owing to Lender by Guarantor. Guarantor
further waives any defense arising by reason of any disability or other defense
(other than that (x) the Guaranteed Obligations are not due and owing or have
been paid in full or (y) all sums payable under the Note or any of the other
Loan Documents have been paid in full) of Guarantor or by reason of the
cessation from any cause whatsoever of the liability of Guarantor in respect
thereof.

(L) Guarantor hereby also waives (i) any rights to assert against Lender any
defense (legal or equitable), set off, counterclaim, or claim which Guarantor
may now or at any time hereafter have against Guarantor or any other party
liable to Lender; (ii) any defense, set off, counterclaim, or claim, of any kind
or nature, arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Guaranteed
Obligations or any security therefor; and (iii) any defense Guarantor has to
performance hereunder, and any right Guarantor has to be exonerated, provided by
Sections 2819, 2822 or 2825 of the California Civil Code, or otherwise, arising
by reason of: any claim or defense based upon an election of remedies by Lender;
the impairment or suspension of Lender’s rights or remedies against Guarantor;
the alteration by Lender of the Guaranteed Obligations; any discharge of
Guarantor’s obligations to Lender by operation of law as a result of Lender’s
intervention or omission; or the acceptance by Lender of anything in partial
satisfaction of the Guaranteed Obligations. Guarantor acknowledges and agrees
that, as a result of the foregoing sentence, Guarantor is knowingly waiving in
advance a complete or partial defense to this Guaranty arising under California
Code of Civil Procedure Sections 580d or 580a and based upon Lender’s election
to conduct a private non-judicial foreclosure sale. Notwithstanding anything to
the contrary contained herein, Guarantor does not waive the defense that the
Guaranteed Obligation are not due or owing or the Guaranteed Obligations have
been fully and finally performed and indefeasibly paid.

(iii) Guarantor Informed of Borrower’s Condition. Guarantor acknowledges that it
has had an opportunity to review the Loan Documents, the value of the security
for each of the other entities comprising Borrower, Operating Lessee and each
other Loan Party under the Loan Documents and the financial condition of each of
the other entities comprising Borrower, Operating Lessee and each other Loan
Party and

 

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the ability of such entity to satisfy its obligations to Lender. Guarantor
agrees to keep itself fully informed of all aspects of the financial condition
of Borrower, Operating Lessee and each other Loan Party and of the performance
of Borrower, Operating Lessee and each other Loan Party to Lender and agrees
that Lender has no duty to disclose to Guarantor any information pertaining to
Borrower, Operating Lessee or any other Loan Party or any security for the
obligations of the other entities comprising Borrower under the Loan Documents.

(iv) Waiver of Estoppel Defense. Upon and during the continuance of an Event of
Default, Lender may elect to foreclose nonjudicially the Lien of any or all of
the Mortgages and, if such right has arisen, to also exercise its rights under
this Guaranty. Guarantor acknowledges that its right to seek reimbursement from
Borrower for any amounts paid by it to Lender under this Guaranty will be
eliminated if Lender elects to so foreclose the Lien of the Mortgages.
Nevertheless, Guarantor waives any such right to reimbursement and agrees that a
nonjudicial foreclosure by Lender of the Lien of the Mortgages will not affect
the enforceability of the Loan Documents on Guarantor’s interest in any of the
Individual Properties. In order to further effectuate such waiver, each
Guarantor hereby agrees that it waives all rights and defenses arising out of an
election of remedies by Lender, even though that election of remedies, such as a
nonjudicial foreclosure of the Lien of any or all of the Mortgages, has
destroyed its rights of subrogation and reimbursement against Borrower by the
operation of Section 580d of the Code of Civil Procedure or otherwise.

(v) Subrogation. Guarantor waives its rights under California Civil Code
Sections 2847, 2848 and 2849 to the extent not inconsistent with Section 1.10 of
this Guaranty.

(vi) Confirmation of Waivers. In accordance with California Civil Code
Section 2856(c), Guarantor, as guarantor, hereby makes the following waivers:

(A) Guarantor waives all rights and defenses that Guarantor may have because the
Loan is secured by real property. This means, among other things:

(1) Lender may collect from Guarantor without first foreclosing on any other
real or personal property collateral pledged by the Borrower, Operating Lessee
or any other Person (each an “Other Obligor” and collectively, the “Other
Obligors”).

(2) If Lender forecloses on any real property collateral pledged by any Other
Obligor:

a. The amount of the Loan may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price.

b. Lender may collect from Guarantor even if Lender, by foreclosing on the real
property collateral, has destroyed any right Guarantor may have to collect from
any Other Obligor.

 

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(B) This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have because the debtor’s debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedures.

(vii) Judicial Reference Agreement; Referee; Costs. In the event that any
action, proceeding and/or hearing on any matter whatsoever, including all issues
of fact or law arising out of, or in any way connected with, the Properties,
this Guaranty or any of the Loan Documents, or the enforcement of any remedy
under any law, statute, or regulation (hereinafter, a “Controversy”), is to be
tried in a court of Los Angeles County, California and the jury trial waiver
provisions set forth above are not permitted or otherwise applicable under
then-prevailing law, then Guarantor agrees to the following provisions:

(A) Controversies Subject to Judicial Reference; Conduct of Reference.

(1) Each Controversy shall be determined by a consensual general judicial
references (the “Reference”) pursuant to the provisions of California Code of
Civil Procedures §§ 638 et. seq., as such statutes may be amended or modified
from time to time.

(2) Upon a written request, or upon an appropriate motion by either Lender or
Guarantor, any pending action relating to any Controversy and every Controversy
shall be heard by a single Referee who shall then try all issues (including any
and all questions of law and questions of fact relating thereto), and issue
findings of fact and conclusions of law and report a statement of decision. The
Referee’s statement of decision will constitute the conclusive determination of
Controversy. Lender and Guarantor agree that the Referee shall have the power to
issue all legal and equitable relief appropriate under the circumstances before
him/her.

(3) Lender and Guarantor shall promptly and diligently cooperate with one
another and the Referee, and shall perform such acts as may be necessary to
obtain prompt and expeditious resolution of each Controversy in accordance with
the terms of this Section.

(4) Either Lender or Guarantor may file the Referee’s findings, conclusions and
statement with the clerk or judge of any appropriate court, file a motion to
confirm the Referee’s report and have judgment entered thereon. If the report is
deemed incomplete by such court, the Referee may be required to complete the
report and resubmit it.

 

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(5) Lender and Guarantor will each have such rights to assert such objections as
are set forth in California Code of Civil Procedure §§ 638 et seq.

(6) All proceedings shall be closed to the public and confidential, and all
records relating to the Reference shall be permanently sealed when the order
thereon becomes final.

(B) Selection of Referee; Powers.

(1) Lender and Guarantor shall select a single neutral referee (the “Referee”),
who shall be a retired judge or justice of the courts of the State of
California, or a federal court judge, in each case, with at least ten years of
judicial experience in civil matters. The Referee shall be appointed in
accordance with California Code of Civil Procedure §§ 638 (or pursuant to
comparable provisions of federal law if the dispute falls within the exclusive
jurisdiction of the federal courts).

(2) If within ten (10) days after the request or motion for the Reference,
Lender and Guarantor cannot agree upon a Referee, either Lender or Guarantor may
request or move that the Referee be appointed by the Presiding Judge of the Los
Angeles County Superior Court or of the U.S. District Court for the Central
District of California. The Referee shall determine all issues relating to the
applicability, interpretation, legality and enforceability of this Section.

(C) Provisional Remedies; Self-Help and Foreclosure.

(1) No provision of this Section shall limit the right of either Lender or
Guarantor, as the case may be, to (1) exercise such self-help remedies as might
otherwise be available under applicable law, (2) initiate judicial or
non-judicial foreclosure against any real or personal property collateral,
(3) exercise any judicial or power of sale rights, or (4) obtain or oppose
provisional or ancillary remedies, including without limitation, injunctive
relief, writs of possession, the appointment of a receiver, and/or additional or
supplementary remedies from a court of competent jurisdiction before, after or
during the pendency of the Reference.

(2) The exercise of, or opposition to, any such remedy does not waive the right
of Lender or Guarantor to the Reference pursuant to this Section.

(D) Costs and Fees.

(1) Promptly following the selection of the Referee, Lender and Guarantor shall
each advance equal portions of the estimated fees and costs of the Referee.

 

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(2) In the statement of decision issued by the Referee, the Referee shall award
costs, including reasonable attorneys’ fees, to the prevailing party, if any,
and may order the Referee’s fees to be paid or shared by Guarantor and/or Lender
in such manner as the Referee deems just.

(b) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Washington:

(i) NOTICE REGARDING ORAL COMMITMENTS: ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT, MODIFY LOAN TERMS, OR FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

(ii) Time is of the essence in this Guaranty.

(iii) Notwithstanding anything contained herein or in any other Loan Document to
the contrary, this Guaranty is not secured by any Mortgage encumbering property
in Washington State.

(c) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Oregon:

(i) STATE SPECIFIC PROVISIONS. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY
BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
AN AUTHORIZED REPRESENTATIVE OF LENDER TO BE ENFORCEABLE.

(d) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of North Carolina:

(i) Guarantor waives, to the fullest extent permitted by law, all rights granted
by N.C. Gen. Stat. §§ 26-7 through 26-9, inclusive, including, without
limitation, all rights to require Lender to proceed against or exhaust any
collateral held by Lender to secure the Loan.

(e) If and to the extent that the laws of the State of Colorado shall apply,
then Guarantor agrees to the following provisions of this Section:

(i) Guarantor waives any rights which might otherwise exist under C.R.S. §§
13-50-102 or 13-50-103 (or under any corresponding or similar statute, future
statute or rule of law) by reason of any release of fewer than all of the
guarantors if there are multiple guarantors.

 

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(f) If and to the extent that the laws of the State of Arizona shall apply, then
Guarantor agrees to the following provisions of this Section:

(i) To the extent permitted by applicable law and subject to Section 9.3 of the
Loan Agreement, Guarantor waives any rights or benefits it may have which could
limit the amount which Lender could recover in a foreclosure of any of the
Individual Properties to the difference between the amount owing under the Loan
Documents and the fair value of any such Individual Property or interests sold
at a nonjudicial foreclosure sale or sales of any other real property held by
Lender as security for the obligations under the Loan Documents.

(ii) To the extent permitted by applicable law, Guarantor, as guarantor, hereby
waives all rights and defenses that Guarantor may have because the Loan is
secured by real property. Subject to Section 9.3 of the Loan Agreement, this
means, among other things, that if Lender forecloses on any real property
collateral pledged by any Other Obligor:

(A) The amount of the Loan may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price.

(B) Lender may collect from Guarantor even if Lender, by foreclosing on the real
property collateral, has destroyed any right Guarantor may have to collect from
any Other Obligor.

(g) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Texas:

(i) Guarantor hereby expressly waives: (i) any right to revoke this Guaranty
with respect to the Guaranteed Obligations; (ii) any right to require Lender to
do any of the following before Guarantor is obligated to pay or perform the
Guaranteed Obligations or before Lender may proceed against Guarantor: (A) sue
or exhaust remedies against Borrower or any other Person liable for the
Guaranteed Obligations or any portion thereof; (B) sue on an accrued right of
action in respect of any of the Guaranteed Obligations or bring any other
action, exercise any other right, or exhaust any other remedy; or (C) enforce
rights against Borrower’s assets or the collateral pledged by Borrower to secure
the Guaranteed Obligations; (iii) any right relating to the timing, manner or
conduct of Lender’s enforcement of rights against Borrower’s assets or the
collateral pledged by Borrower to secure the Guaranteed Obligations; (iv) if
Guarantor and Borrower (or any other Person) have each pledged assets to secure
the Guaranteed Obligations, any right to require Lender to proceed first against
collateral pledged by Borrower (or any other Person) before proceeding against
the collateral pledged by Guarantor; (v) other than as provided for in this
Agreement or the Loan Documents, promptness, diligence, notice of any Event of
Default, notice of nonpayment or

 

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nonperformance, notice of acceleration or intent to accelerate, demand for
payment (although Lender may, but shall have no obligation to, make demand for
payment), acceptance or notice of acceptance of this Guaranty, presentment,
notice of protest, notice of dishonor, notice of the incurring by Borrower of
additional indebtedness, notice of any suit or other action by Lender against
Borrower or any other Person, any notice to any Person liable for the obligation
which is the subject of the suit or action, and all other notices and demands
with respect to the Guaranteed Obligations and this Guaranty; and (vi) each of
the foregoing rights or defenses, regardless of whether they arise under (A)
Rule 31 of the Texas Rules of Civil Procedure, (B) Section 17.001 of the Texas
Civil Practice and Remedies Code, (C) Chapter 34 of the Texas Business and
Commerce Code, or (D) any other statute or law, common law, in equity, under
contract or otherwise, or under any amendments, recodifications, supplements or
any successor statute or law of or to any such statute or law; and (vii) subject
to Section 9.3 of the Loan Agreement, any and all rights under Sections 51.003,
51.004 and 51.005 of the Texas Property Code, and under any amendments,
recodifications, supplements or any successor statute or law of or to any such
statute or law.

(h) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Georgia:

(i) Guarantor waives any rights which might otherwise exist under the provisions
of Section 10-7-24 of O.C.G.A. or 11-3-601 O.C.G.A.

(i) With respect to the foregoing provisions contained in this Guaranty, the
following shall apply with respect to the State of Connecticut:

(i) To induce Lender to enter into the commercial loan transaction evidenced by
the Loan Agreement and other Loan Documents, Guarantor agrees that this is a
“commercial transaction” as defined in Section 52-278(a) of the Connecticut
General Statutes, as amended, and Guarantor waives any rights to notice and a
hearing under Sections 52-278a to 52-278n of the Connecticut General Statutes,
as amended, and authorizes Lender’s attorney to issue a writ for a prejudgment
remedy, including, but not limited to, garnishment, attachment, foreign
attachment and replevin, without securing a court order.

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EXECUTED as of the day and year first above written.

 

GUARANTOR:

BSHH LLC, a Delaware limited liability company

By:

 

/s/ Brian Kim

 

Name: Brian Kim

 

Title: Managing Director & Vice President

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SCHEDULE 1

BORROWER

1. BRE Select Hotels AZ LLC

2. BRE Select Hotels Properties LLC

3. BRE Select Hotels Redmond LLC

4. BRE Select Hotels Tuscaloosa LLC

5. BRE Select Hotels NC L.P.

6. BRE Select Hotels TX L.P.

7. BRE Select Hotels Properties II LLC

8. BRE Select Hotels Properties II Sub LLC

 

SCH. 1-1