shl Doc 2381 Filed 08/07/17 Entered 08/07/17 15:56:13 Main Document Pg 1 of 13 : : : : : : :

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1 Pg 1 of 13 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re MSR HOTELS & RESORTS, INC., Debtor x In re MSR RESORT GOLF COURSE LLC, et al. Debtors x Chapter 11 Case No (SHL) Case No (SHL) Jointly Administered ORDER APPROVING SETTLEMENT AGREEMENT BETWEEN THE LIQUIDATOR AND THE ZURICH AMERICAN INSURANCE COMPANY AND AFFILIATES Upon the Notice of Presentment of the Liquidator for the Estate of the captioned Debtor, MSR Hotels & Resorts, Inc., and the Application in Support of an order (this Order ) 1 approving the Settlement Agreement regarding the Zurich; and Upon the entire record of this matter and all of the proceedings had before the Court; and the Court having found that it has jurisdiction over this matter, that this is a core proceeding, and that venue of this proceeding in this district is proper; and with due and sufficient notice of the Order and the opportunity to object and obtain a hearing on the Order having been provided; and the Court having found that the relief requested by the Order is in the best interests of the Estate 1 Capitalized terms not otherwise defined in this Order shall have the same meaning ascribed to them in the Application and Settlement Agreement.

2 Pg 2 of 13 and its creditors and other parties in interest; and after due deliberation and sufficient cause appearing to grant the relief requested; it is hereby ORDERED that 1. The Settlement Agreement attached to this Order is hereby approved and the terms thereof are hereby incorporated by reference into this Order. 2. The Liquidator and Zurich will perform all their respective obligations under the terms of the Settlement Agreement. 3. Within ten days (10) days after the last entered of the Approval Orders become final and non-appealable, Zurich shall return the LC undrawn to Bank of America and shall instruct Bank of America to cancel the LC. 4. The automatic stay is hereby lifted to the extent necessary to allow Zurich to apply the KSL Program Collateral and any Additional Collateral to any amounts due or which may become due to Zurich with respect to the KSL Insurance Agreements or the Insurance Agreements. 5. The releases contained in the Settlement Agreement are approved and granted as set forth in the Settlement Agreement. 6. Zurich shall continue to investigate, administer, and if required, pay any claims that are covered by the Insurance Agreements, but that Zurich shall have no further duties or obligations to MSR under the Insurance Agreements and nothing in this Order or the Settlement Agreement shall in any way impair Zurich rights under the Insurance Program. 7. The terms, conditions, and provisions of this Order shall be immediately effective and enforceable upon entry of the Order.

3 Pg 3 of The Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order. Dated New York, New York August 7, 2017 /s/ Sean H. Lane The Honorable Sean H. Lane United States Bankruptcy Judge

4 Pg 4 of 13 SETTLEMENT AGREEMENT ATTACHED TO APPROVAL ORDER

5 Pg 5 of 13 EXECUTION VERSION SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT (this "Agreement") is made and entered into as of the 8th day of May 2017 by and among Zurich American Insurance Company and its affiliates (collectively, "Zurich"); Eric G. Waxman III, the Liquidator for the Estate of MSR Hotels & Resorts, Inc. ( "REIT Liquidator"); MS Resorts Liquidating Trustee, LLC, as Liquidating Trustee of The MSR Liquidation Trust ( "NON-REIT Trustee"); and GIC Real Estate, Inc., ABR Property LLC; TCR Property LLC; LQR Property LLC; LQR Golf LLC; LQR La Quinta INC., GWR Wailea Property LLC; and GWC Miami Property LLC (collectively, the "Purchaser"). Zurich, REIT Liquidator, Non-REIT Trustee, and Purchaser are sometimes referred to individually as a "Party" and collectively as the "Parties." KSL and Programs RECITALS WHEREAS, on or about December 29, 1993, KSL Recreation Corporation ("KSL") and Zurich entered into an insurance program which included insurance policies and one or more deductible and paid loss retrospective rating agreements or deductible agreements ( "KSL Non- Policy Agreements"); WHEREAS, Zurich issued workers' compensation, commercial general liability, and commercial automobile and other policies ( "KSL Policies" and with the KSL Non-Policy Agreements, ("KSL Insurance Agreements") to KSL and certain entities affiliated with KSL, between December 29, 1993 and January 31, 2006, which policies covered the operations of certain hotels and resorts owned by KSL; WHEREAS, effective January 31, 2006, Zurich issued policies ( "90210 Policies") to Management Company ( "90210") and entered into a separate non-policy agreement with (the "90210 Non -Policy Agreement," and with the Policies, the "90210 Insurance Agreements", and with the KSL Insurance Agreements, the "Insurance Agreements "); WHEREAS, was a management company engaged by certain Non-REIT Debtors (defined below) to manage certain hotels and resorts owned by the Non-REIT Debtors. The management agreements were assumed and assigned to Purchaser; WHEREAS, each entity insured under the KSL Insurance Agreements or the Insurance Agreements were jointly and severally liable for all amount owed to Zurich under the applicable agreement; WHEREAS, KSL, which changed its name in 2004 to CNL Resort Recreation LP and in 2008 changed its name to MSR Resort Recreation LP; WHEREAS, on or about April 12, 2008, MSR Hotels & Resorts, Inc. ( "MSR REIT") became the parent of KSL, then known as MSR Resort Recreation LP;

6 Pg 6 of 13 WHEREAS, on June 10, 2008, MSR REIT entered into a Ratification and Adoption Agreement with Zurich ("Ratification Agreement "), under which MSR REIT assumed the obligations owed to Zurich under the KSL Insurance Agreements; WHEREAS, for the avoidance of doubt, all references to the KSL Insurance Agreements will mean only those agreements and policies which were the subject of the Ratification Agreement; WHEREAS, Zurich held a letter of credit in the amount of $850,000 ( "KSL LC") as security for all obligations owed to Zurich with respect to the KSL Insurance Agreements; WHEREAS, MSR REIT was the only account party for the KSL LC; WHEREAS, Zurich holds a letter of credit in the amount of $250,000 issued for Zurich's benefit by Bank of America ( "90210 LC"), which letter of credit secures all obligations owed to Zurich with respect to the Insurance Agreements; WHEREAS, the MSR REIT; CNL Biltmore Resort, LP; CNL Grand Wailea Resort, LP; CNL Desert Resort, LP; and CNL Resort Lodging Tenant Corp, (on behalf of 90210) are listed as the applicants for the LC and MSR REIT funds secure the reimbursement obligation under the LC; WHEREAS, Zurich has drawn the entire amount of the KSL LC but has not drawn on the LC; and WHEREAS, there are return premiums or dividends now owing or which may become due to any insureds with respect to the Insurance Agreements ( "Return Premium "), funds held in escrow supporting the obligations under Insurance Agreements ( "Escrow Funds"), and recoveries related to claims asserted under the KSL Policies and Policies ( "Subrogation Recoveries" and together with Return Premium and Escrow Funds, the "Additional Collateral"), all of which Zurich asserts may be applied to satisfy obligations under the Insurance Agreements. The Non-REIT Bankruptcy Cases WHEREAS, on February 1, 2011, MSR Resort Golf Course LLC and 29 of its affiliates (collectively, "Non-REIT Debtors") each filed chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York ( "Bankruptcy Court"), which cases were jointly administered under case no ( "Non-REIT Bankruptcy Case"); WHEREAS, Non-REIT Debtors were direct or indirect subsidiaries of MSR REIT; WHEREAS, Non-REIT Debtors had interests in five resorts -- Grand Wailea in Maui, Hawaii, Desert Resort in LaQuinta, California, Biltmore Resort in Phoenix Arizona, Claremont Resort in Berkeley, California, and Doral Golf in Miami, Florida ( "Debtor Resorts "); WHEREAS, in 2010, Zurich asserts that MSR REIT had stopped paying Zurich the amounts owed with respect to certain resorts, and had instructed Zurich to draw on the KSL LC 2

7 Pg 7 of 13 and use the letter of credit proceeds (the "KSL Letter of Credit Proceeds ") to pay any amounts owed relating to those resorts; WHEREAS, Zurich asserts that it applied the KSL Letter of Credit Proceeds to the amounts owed to it relating to the Debtor Resorts and to amounts owed relating to the La Costa Resort, which was not part of the bankruptcy case; WHEREAS, as of January 11, 2013, Zurich asserts that it had applied $687, of the KSL Letter of Credit Proceeds to the unpaid amounts owed to Zurich by KSL and the unapplied balance of the KSL Letter of Credit Proceeds was $162,988.29; WHEREAS, on February 22, 2013, the Bankruptcy Court confirmed the Second Amended Joint Plan of Reorganization of MSR Resort Golf Course LLC, et al., Pursuant to Chapter 11 of the Bankruptcy Code (as amended from time to time, the "Non-REIT Debtors' Plan"); WHEREAS, under the Non-REIT Debtors' Plan, the Non-REIT Debtors assumed both the KSL Insurance Agreements and the Insurance Agreements and assigned them to Purchaser; WHEREAS, the MSR Liquidation Trust established under the Non-REIT Debtors' Plan made a cure payment to Zurich in the amount of $678,334,71 (the "Cure Payment"), which replenished the security held by Zurich; WHEREAS Zurich now holds cash proceeds in the amount of $841,323, as security for the amounts owed to Zurich under the KSL Insurance Agreements (the "KSL Program Collateral"). (Due to errors in Zurich's cure objection, the cure payment did not bring the balance up to the required collateral amount of $850,000); WHEREAS, Purchaser purchased the Grand Wailea Resort, the Desert Resort, Biltmore Resort and Claremont Resorts under the Non-REIT Debtors' Plan; WHEREAS, Purchaser has made certain payments to Zurich with respect to the KSL Insurance Agreements and the Insurance Agreements, but has ceased making payments to Zurich; and WHEREAS, Zurich asserts that obligations under the KSL Insurance Agreements exceed the amount of the KSL Program Collateral and Additional Collateral. REIT Bankruptcy Case WHEREAS, on May 8, 2013, MSR REIT filed a chapter 11 petition in the Bankruptcy Court, case no (the "REIT Bankruptcy Case"); WHEREAS, on February 10, 2014, the Bankruptcy Court confirmed the Plan of MSR Hotels & Resorts, Inc., Pursuant to Chapter 11 of the Bankruptcy Code, (the "REIT Plan "), under which the REIT Liquidator was appointed as the Liquidator for the Estate of MSR Hotels & Resorts, Inc.; 3

8 Pg 8 of 13 WHEREAS, under the REIT Plan, the REIT Liquidator has full authority to administer, settle, or compromise the Wind Down Causes of Action, including Insurance Causes of Action arising from or related to Insurance Policies (as those terms are defined in the REIT Plan), which includes the Zurich Insurance Agreements; WHEREAS, in March 2014, Zurich filed a liquidated proof of claim in the REIT Bankruptcy Case in the total amount of $1,594,601 and identified as Claim No. 2 on the Claims Register ( "Zurich Claim"), reflecting its then estimates that $1,459,512 was owed under the KSL Insurance Agreements and $135,089 was owed under the Insurance Agreements, prior to any reduction for the KSL Program Collateral or the LC, or any credits due under the KSL Insurance Agreements; claim; WHEREAS, the REIT Liquidator disputes Zurich's calculation of the amount of its WHEREAS, the Purchaser filed certain proofs of claim for, among other things, contingent claims and claims related to the Insurance Agreements and identified as Claims Nos. 4, 5, 6, 7, 12, 13,14, 15, 16, 17, and 18 on the Claims Register ( "Purchaser's Claims"); and WHEREAS, the Parties wish to settle certain claims, counter-claims, or causes of action the Parties may have against one another under this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and promises in this Agreement, the sufficiency of which is acknowledged, the Parties agree 1. The foregoing recitals are incorporated herein as if fully set forth in the text of this Agreement. 2. This Agreement shall be subject to approval of the Bankruptcy Court. Promptly after the execution of this Agreement by each of the Parties, counsel for the REIT Liquidator shall file an appropriate pleading with the Bankruptcy Court in each of the MSR REIT and MSR Non-REIT Bankruptcy Cases seeking order(s) approving this Agreement ( "Approval Orders"). 3. Within ten business days after the last entered of the Approval Orders becomes final and non-appealable, Zurich shall return the LC undrawn to Bank of America and shall instruct Bank of America to cancel the LC. The automatic stay will be lifted, to the extent necessary, to allow Zurich to apply the KSL Program Collateral, any Additional Collateral to any amounts due or which may become due to Zurich with respect to the KSL Insurance Agreements or the Insurance Agreements. 4. The REIT Liquidator on behalf of MSR REIT; Non-REIT Trustee, on behalf of the MSR Liquidation Trust and all of Non-REIT Debtors; and Purchaser, and all of their affiliates, subsidiaries, successors and assigns, release and forever discharge Zurich and each other and all of their affiliates, subsidiaries, officers, directors, partners, employees, agents, attorneys, shareholders, successors, assigns, and other representatives from liability for any and all claims, controversies, actions, causes of action, demands, debts, damages, costs, attorneys' fees, monies due on account, obligations, judgments and liabilities of any nature whatsoever at law or in equity, past or present, in contract, in tort or otherwise, whether or not now or 4

9 Pg 9 of 13 heretofore known, suspected, or claimed against them, including, but not limited to any claims with respect to KSL Program Collateral, the Cure Payment, and Additional Collateral, arising from or related to the Insurance Agreements, including those arising from or related to the administration of, and the reserving, pricing, billing or calculation and collection of premiums and other charges under the Insurance Agreements; provided, however, Zurich will continue to defend and pay all claims insured under the KSL Policies and Policies under the terms of the policies and applicable law and to otherwise honor its obligations under the KSL Policies and the Policies; and provided further, this section will not release Zurich from any obligations or liabilities created by this Agreement. 5. Zurich, on behalf of itself and its affiliates, successors, and assigns, releases and forever discharges the REIT Liquidator, MSR REIT, Non-REIT Trustee, MSR Liquidation Trust, Non-REIT Debtors, Purchaser (including its management companies), Waldorf-Astoria Management LLC, KSL Permanent Management, LLC, KSL II Management Operations, LLC and each of their respective affiliates, subsidiaries, officers, directors, managers, members, partners, employees, agents, attorneys, shareholders, successors, assigns, and other representatives from liability for any and all claims, controversies, actions, causes of action, demands, debts, damages, costs, attorneys' fees, monies due on account, obligations, judgments and liabilities of any nature whatsoever at law or in equity, past or present, in contract, in tort or otherwise, whether or not now or heretofore known, suspected, or claimed against them arising from or related to the Insurance Agreements; provided however, this section will release none of them from any obligations or liabilities created by this Agreement. 6. After the last entered of the Approval Orders becomes final and non-appealable, the Zurich Claim and Purchaser's Claims are deemed withdrawn with prejudice. 7. To the extent required under the Insurance Agreements, and to the extent reasonably practicable, the REIT Liquidator and Purchaser (including its management companies) will continue to cooperate with Zurich and provide Zurich with the information required from KSL under the Insurance Agreements, including, but not limited to, providing claims information and documentation. 8. This Agreement will be interpreted and governed by the laws of the State of New York without regard to principles of conflicts of law. If this paragraph is deemed unenforceable in any judicial, arbitration or governmental proceeding, the remaining provisions of this Agreement will remain in full force and effect. 9. Each Party may enforce this Agreement in strict accordance with the terms, notwithstanding any conduct or custom by such party in refraining from so doing at any time or times. The failure of any Party at any time or times to enforce its rights under such provisions will not be construed as having created a custom or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. 10. Any notices or consents required or permitted by this Agreement will be in writing and will be deemed delivered if delivered in person, or if sent by overnight delivery, fax or by certified mail, postage prepaid, return receipt requested, as follows, unless such address is changed by written notice hereunder 5

10 Pg 10 of 13 If to Zurich With a copy to If to REIT Liquidator With a copy to If to Non-REIT Trustee With a copy to Annette Peat Zurich American Insurance Company 1299 Zurich Way Schaumburg, IL T F Margaret M. Anderson Fox Swibel Levin and Carroll LLP 200 W. Madison Street Chicago, IL T F anderson foxswibel.com Eric G. Waxman III Cadwalader, Wickersham & Taft 200 Liberty Street New York, NY T F Eric.waxmancwt.com Richard F. Harrison, Esq. Westerman Ball Ederer Miller Zucker & Sharfstein, LLP 1201 RXR Plaza Uniondale, NY T F rharrison@westermanllp.com MS Resorts Liquidating Trustee, LLC clo Christopher Devine Pyramid Hotel Group One Post Office Square, Suite 1950 Boston, MA T CDevine kpyramidhotelgrouta com Goulston & Storrs, P.C. Attention Peter D. Bilowz, Esq. 400 Atlantic Avenue Boston, MA T pbilowz(goulstonstorrs.com 0

11 Pg 11 of 13 If to Purchaser With a copy to Ryan Seidman GIC Real Estate 280 Park Avenue, 9th Floor New York, New York T r anseidman ic.com.s Brian E. Greer, Esq. Dechert LLP 1095 Avenue of the Americas New York, NY T F brian.greerndechert.com 11. Each of the persons or entities executing this Agreement on behalf of a Party represents and warrants that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement; (b) it is duly authorized to enter, execute, deliver and perform this Agreement on behalf of said Party, and, if applicable, subject to the entry of the Approval Orders; (c) it has voluntarily, with full knowledge and without fraud, coercion, duress or undue influence of any kind, entered this Agreement; and (d) it has not sold, assigned or transferred or purported to sell, assign or transfer, in whole or in part, any of the claims or obligations being compromised, released or discharged under this Agreement. 12. This Agreement contains the entire Agreement between the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings, written and oral, between the Parties with respect to the subject matter hereof. All discussions, negotiations, promises, inducements, statements of intention, or other such agreements previously entertained between the Parties concerning the subject matter of hereof are merged into this Agreement. This Agreement may not be modified, amended, or supplemented nor any of its provisions waived, except by an instrument in writing, signed by all Parties. 13. This Agreement and any amendment hereto may be executed in several counterparts and by each Party on separate counterpart, each of which, when so executed and delivered will be an original, but all of which together will constitute but one and the same instrument. In proving this Agreement, it will not be necessary to produce or account for more than one such counterpart signed by the Party against whom enforcement is sought. A facsimile signature or Adobe.pdf will be treated as an original signature. 7

12 Pg 12 of This Agreement was negotiated and drafted with full participation of the Parties and their respective counsel. If it is determined that any ambiguity exists in this Agreement, any such ambiguity will not be resolved or otherwise construed against any particular Party, but rather will be resolved by a fair reading of the intent of the Parties as established herein. 15. This Agreement and the obligations and duties hereunder shall be binding upon the Parties and all successors and assigns of each of the Parties to the Agreement. Nothing in this Agreement is intended or will be construed to confer upon, or give to, any person other than the Parties' and their respective successors and assigns, any right, remedy or claim under or by reason of this Agreement. 16. If this Agreement is not approved by the Bankruptcy Court, the Parties agree that upon such occurrence, they will each revert to the status quo et ante with respect to all of their legal rights as though this Agreement had never been executed. 17. The Bankruptcy Court will retain jurisdiction over the Parties to hear and determine any matter arising from or related to the making, interpretation, and enforcement of this Agreement. Any action, suit or proceeding between the Parties with respect to the terms and conditions of this Agreement or the enforcement thereof will be brought before the Bankruptcy Court, and each Party irrevocably consents to such jurisdiction with respect to any such action, suit or proceeding. SIGNATURE PAGE FOLLOWS

13 Pg 13 of 13 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and date first written above. ZURICH AMERICAN INSURANCE COMPANY and its affiliates By Is/H. Scharnowski Name Title Head of Finance Operations N.A. ESTATE OF MSR HOTELS & RESORTS, INC. C /s/eric G. Waxman III Eric G. Waxman III, Liquidator MS RESORTS LIQUIDATING TRUSTEE, LLC, as Liquidating Trustee of The MSR Liquidation Trust By /s/christopher Devine, Liquidating Trustee GIC REAL ESTATE, INC., ASR PROPERTY LLC, TCR PROPERTY LLC, LQR PROPERTY LLC, LQR GOLF LLC, LQR LA QUINTA INC., GWR WAILEA PROPERTY LLC and GWC MIAMI PROPERTY LLC By Name Title Is/Jesse Hom; /s/michael Jordan 9