Contract analysis

I. Purpose and Scope This memorandum summarizes the preliminary valuation findings received from Pinnacle West Appraisal Group LLC ("Pinnacle West"), our retained business valuation and intellectual property appraisal firm, as set forth in Pinnacle West's Preliminary Valuation Report dated February 20, 2023 (the "Preliminary Report"). The Preliminary Report was transmitted to this office on February 22, 2023, under c

II. Summary of Aggregate Probate Estate Valuation Pinnacle West's preliminary aggregate valuation of the probate estate assets subject to this engagement is $71,112,000. The table below sets forth the preliminary value attributed to each asset category: It should be noted that life insurance proceeds totaling $5,000,000 are non-probate assets payable directly to Ms. Fonseca as the named beneficiary under both policie

III. Lumiére Canyon Studios LLC — Business Valuation A. Entity Overview Lumiére Canyon Studios LLC ("Lumiére Canyon" or the "Company") is a California limited liability company formed on March 18, 2009, and registered with the California Secretary of State under Filing No. 200906410337. The Company was co-founded by Teodoro R. Fonseca and Marguerite D. Fonseca during their marriage, which commenced on June 14, 2008.

IV. Pacific Rim Narrative Partners LLC — Membership Interest Valuation A. Entity Overview Pacific Rim Narrative Partners LLC ("PRNP") is a California limited liability company formed in 2015 and registered with the California Secretary of State under Filing No. 201518720492. PRNP operates as a media investment fund that invests in film and television production, distribution, and intellectual property acquisition opp

V. Intellectual Property Portfolio — Net Present Value Appraisal A. Portfolio Composition The decedent's intellectual property portfolio comprises royalty streams and residual income from 14 feature films and 6 television series produced or co-produced by Lumiére Canyon Studios LLC and, in certain cases, by the decedent individually prior to or outside of Lumiére Canyon. The portfolio is diverse in terms of genre, pl

VI. Real Property Valuations A. Beverly Hills Residence — 1847 Coldwater Canyon Drive, Beverly Hills, CA 90210 Pinnacle West's preliminary fair market value of the Beverly Hills residence is $8,450,000 as of the September 3, 2022 valuation date. The appraisal was conducted using the comparable sales approach as the primary methodology, supplemented by the income approach (based on potential rental value) as a cross-c

VII. Financial Accounts and Personal Property A. Veltara Basin Bank, N.A. Accounts Information regarding the decedent's financial accounts at Veltara Basin Bank, N.A. was obtained from Franklin Ybarra, relationship manager, at the bank's offices located at 700 South Hope Street, Los Angeles, California 90017. Account information was provided pursuant to an account freeze and information request letter dated October 1

VIII. Comparison with Contestants' Valuation and Areas of Divergence A. Aggregate Discrepancy The aggregate valuation discrepancy between Pinnacle West and Hargrove & Linden is summarized as follows: The $2,362,000 difference represents approximately 3.3% of the total estate value as determined by Pinnacle West. While this gap is meaningful in absolute dollar terms, it is relatively modest in the context of a $71 mil

IX. Outstanding Items and Next Steps The following items require attention in order to advance the valuation process and prepare for the upcoming mediation and, if necessary, trial:

1. Final Valuation Report. Pinnacle West expects to deliver a final valuation report by approximately May 2023, pending receipt of additional financial records from PRNP (including the complete operating agreement and full distribution history) and updated production pipeline data from Lumiére Canyon Studios LLC. Dr. Fujimoto has indicated that the final report will refine the preliminary figures set forth herein, wi

2. PRNP Operating Agreement Review. The PRNP operating agreement is needed to assess transfer restrictions, tag-along and drag-along provisions, buy-sell provisions, and any other contractual limitations that may affect the marketability discount applied to the decedent's 35% membership interest. Victor Sandoval's response to the November 1, 2022 information request letter remains outstanding in part as of the date o

3. Estate Accountant Coordination. We should coordinate with Dennis Chua, CPA, at Ridgeway Accounting Partners LLP (515 South Flower Street, Suite 3600, Los Angeles, California 90071) to reconcile Pinnacle West's valuation findings with the estate inventory and financial statements currently under preparation. Mr. Chua's work on the estate's financial accounting should be consistent with and informed by the valuation

4. Hargrove & Linden Report. We should request, through Brennan, Ortega & Saldívar LLP (attention: Damian R. Ortega and Lydia Kwan), a copy of Hargrove & Linden's preliminary valuation report when it becomes available, to facilitate a direct comparison with Pinnacle West's findings. This request may be addressed through the mediation process or, if the current informal standstill terminates, through formal discovery.

5. Ashford Fiduciary Services Reporting. Gerald Whitmore at Ashford Fiduciary Services Inc. (600 Wilshire Boulevard, Suite 1450, Los Angeles, California 90017), the neutral estate administrator appointed by the court, should be provided a copy of the Pinnacle West Preliminary Report for estate administration purposes. Mr. Whitmore's role as neutral administrator requires that he be kept informed of material valuation

6. Mediation Preparation. The preliminary valuation findings summarized in this memorandum should be incorporated into the mediation brief being prepared for the April 12, 2023 mediation session before the Honorable Constance Adler (Ret.) at Westside Dispute Resolution Center. The mediation brief should present Pinnacle West's findings in a manner that is accessible to the mediator and persuasive to the contestants,

X. Conclusion Pinnacle West's preliminary findings support Ms. Fonseca's position that the total probate estate has a fair market value of approximately $71,112,000 as of the September 3, 2022 valuation date. This figure is based on a thorough analysis of each asset category using generally accepted valuation methodologies appropriate to the nature of the assets involved, including income and market approaches for th