THIRD AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT
*In re Estate of Teodoro R. Fonseca, Deceased*
Los Angeles County Superior Court, Probate Division Case No. 22STPB09714
Dated: October 25, 2024
This THIRD AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT (this "Third Amendment") is entered into as of October 25, 2024, by and among the following parties:
MARGUERITE D. FONSECA ("Petitioner"), an individual residing at 1847 Coldwater Canyon Drive, Beverly Hills, California 90210, represented by Calderwood & Harkness LLP, 350 South Grand Avenue, Suite 4800, Los Angeles, California 90071;
and
RAFAEL T. FONSECA, an individual residing at 502 Olive Avenue, Unit 3, Burbank, California 91502;
ISABELA C. FONSECA-GREER, an individual residing at 78 Eucalyptus Lane, Santa Monica, California 90402;
NICOLÁS R. FONSECA, an individual residing at 1190 Elm Street, Apt. 4B, Palo Alto, California 94301;
(Rafael T. Fonseca, Isabela C. Fonseca-Greer, and Nicolás R. Fonseca are collectively referred to herein as "Contestants"), represented by Brennan, Ortega & Saldívar LLP, 1900 Avenue of the Stars, Suite 2100, Los Angeles, California 90067.
Petitioner and Contestants are collectively referred to herein as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, the Parties entered into a Settlement Standstill Agreement dated April 28, 2023 (the "Original Agreement") in connection with the contested probate proceeding captioned In re Estate of Teodoro R. Fonseca, Case No. 22STPB09714, pending in the Los Angeles County Superior Court, Probate Division, which proceeding involves competing claims concerning the administration and distribution of the estate of the late Teodoro R. Fonseca;
WHEREAS, the Original Agreement provided, among other things, for: (a) the tolling of all litigation deadlines in Case No. 22STPB09714 during the term of the Agreement; (b) a prohibition on the filing of new motions, pleadings, or discovery requests by any Party during the standstill period; (c) the continued neutral administration of the estate by Ashford Fiduciary Services Inc., a California corporation (Gerald Whitmore, principal officer, 600 Wilshire Boulevard, Suite 1450, Los Angeles, California 90017) (the "Neutral Administrator"); (d) the equal sharing of monthly administration costs of Eight Thousand Five Hundred Dollars ($8,500.00) per month, allocated as Four Thousand Two Hundred Fifty Dollars ($4,250.00) payable by Petitioner and Four Thousand Two Hundred Fifty Dollars ($4,250.00) payable by Contestants collectively, plus an annual fee of fifteen hundredths of one percent (0.15%) of assets under administration per annum; (e) the renewability of the standstill in six-month increments by mutual written consent of all Parties; (f) the right of either Party to terminate the Agreement upon thirty (30) days' written notice to the other Party and their respective counsel; and (g) confidentiality provisions governing all settlement discussions, negotiations, and related communications among the Parties;
WHEREAS, the Parties executed a First Amendment to Settlement Standstill Agreement on October 28, 2023 (the "First Amendment"), which extended the term of the Original Agreement from October 28, 2023, through and including April 28, 2024, representing the first six-month renewal period contemplated by the Original Agreement;
WHEREAS, the Parties executed a Second Amendment to Settlement Standstill Agreement on April 28, 2024 (the "Second Amendment"), which further extended the term of the Original Agreement, as amended by the First Amendment, from April 28, 2024, through and including October 28, 2024, representing the second six-month renewal period contemplated by the Original Agreement;
WHEREAS, the current term of the Original Agreement, as amended by the First Amendment and the Second Amendment, is set to expire on October 28, 2024, and absent further amendment or extension, all tolled litigation deadlines in Case No. 22STPB09714 would recommence and the standstill obligations would cease upon such expiration;
WHEREAS, the Parties have continued to engage in productive settlement discussions during the term of the Agreement, as amended, and believe that a further extension of the standstill period will facilitate the resolution of the contested probate proceeding without the need for protracted and costly litigation; and
WHEREAS, the Parties desire to further extend the term of the Original Agreement, as amended by the First Amendment and the Second Amendment, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1: DEFINED TERMS
All capitalized terms used but not otherwise defined in this Third Amendment shall have the meanings ascribed to them in the Original Agreement, as amended by the First Amendment and the Second Amendment. References to the "Agreement" shall mean and refer to the Original Agreement dated April 28, 2023, as amended by the First Amendment dated October 28, 2023, the Second Amendment dated April 28, 2024, and this Third Amendment dated October 25, 2024, collectively, unless the context clearly requires otherwise. In the event that a term is defined in both this Third Amendment and the Original Agreement (as previously amended), the definition set forth in this Third Amendment shall govern and control.
SECTION 2: AMENDMENT OF TERM; EXTENSION OF STANDSTILL PERIOD
2.1. Section 3.1 of the Original Agreement, as previously amended by Section 2 of the First Amendment and Section 2 of the Second Amendment, is hereby further amended to delete the expiration date of "October 28, 2024" and replace it with "February 28, 2025." Accordingly, the standstill period established under the Original Agreement, as amended, shall continue in full force and effect through and including February 28, 2025, unless earlier terminated in accordance with the termination provisions set forth in the Original Agreement (including, without limitation, the right of either Party to terminate upon thirty (30) days' written notice as provided in Section 7 of the Original Agreement).
2.2. The Parties acknowledge and agree that this Third Amendment provides for an extension period of approximately four (4) months (from October 28, 2024, through February 28, 2025), which is shorter than the six-month renewal increments contemplated in Section 3.2 of the Original Agreement. The Parties have mutually agreed to this truncated renewal period and confirm that the adoption of a shorter extension period under this Third Amendment shall not be construed as a waiver of the Parties' right to agree to six-month or other renewal periods in any future amendment, nor shall it establish a precedent or expectation regarding the duration of any subsequent renewal period. The decision to adopt a four-month extension reflects the Parties' mutual assessment of the current status of settlement discussions and their shared desire to reassess the standstill arrangement on an accelerated timeline.
SECTION 3: CONTINUED TOLLING OF LITIGATION DEADLINES
3.1. All litigation deadlines in the contested probate proceeding captioned In re Estate of Teodoro R. Fonseca, Case No. 22STPB09714, pending in the Los Angeles County Superior Court, Probate Division, shall continue to be tolled through the extended term ending February 28, 2025, in accordance with and subject to the same terms and conditions set forth in Section 4 of the Original Agreement. Such tolled deadlines include, without limitation, all deadlines for the filing of responsive pleadings, motions, petitions, objections, discovery requests, discovery responses, and any other filings or submissions required or permitted under applicable court rules, local rules, or prior court orders.
3.2. No Party shall file any new motions, pleadings, petitions, objections, discovery requests, subpoenas, or other process during the extended term, consistent with the standstill obligations set forth in Section 5 of the Original Agreement. This prohibition shall not apply to filings required by court order, filings necessary to preserve the jurisdiction of the Court, or filings made jointly by the Parties to inform the Court of the status of settlement discussions, provided that any such filings shall be made only upon mutual written agreement of the Parties and their respective counsel.
SECTION 4: CONTINUED NEUTRAL ADMINISTRATION OF THE ESTATE
4.1. Ashford Fiduciary Services Inc. (Gerald Whitmore, principal officer) shall continue to serve as the Neutral Administrator of the estate of Teodoro R. Fonseca during the extended term through February 28, 2025, in accordance with the terms and conditions of the Original Agreement and the engagement letter between Ashford Fiduciary Services Inc. and the Parties dated April 28, 2023. The Neutral Administrator shall continue to exercise its duties and responsibilities with respect to the preservation, management, and administration of estate assets in a prudent and commercially reasonable manner, consistent with applicable fiduciary standards and the directives set forth in the Original Agreement.
4.2. The monthly administration fee of Eight Thousand Five Hundred Dollars ($8,500.00), plus an annual fee of fifteen hundredths of one percent (0.15%) of assets under administration per annum, shall continue to be shared equally between the Parties as follows:
(a) Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month payable by Petitioner; and
(b) Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month payable by Contestants collectively.
The annual asset-based fee of 0.15% shall be calculated on the fair market value of estate assets under administration as of the last business day of each calendar quarter and shall be allocated equally between Petitioner and Contestants. All fees shall be payable within fifteen (15) days of invoice by the Neutral Administrator, as provided in the Original Agreement.
4.3. Ashford Fiduciary Services Inc. shall continue to provide quarterly reporting on estate assets, income, expenses, and disbursements to counsel for all Parties, with copies to be delivered to Calderwood & Harkness LLP (as counsel for Petitioner) and Brennan, Ortega & Saldívar LLP (as counsel for Contestants), in accordance with the reporting schedule and format established under the Original Agreement.
SECTION 5: CONFIDENTIALITY
The confidentiality provisions set forth in Section 9 of the Original Agreement shall continue to apply in full during the extended term through February 28, 2025, and shall govern all settlement discussions, proposals, counterproposals, communications, documents, and related materials exchanged among the Parties, their counsel, and their respective agents, advisors, and representatives in connection with the contested probate proceeding and the settlement negotiations contemplated by the Agreement. Nothing in this Third Amendment shall be construed to limit, modify, or waive any confidentiality obligation imposed by the Original Agreement, by applicable law, or by any protective order entered by the Court in Case No. 22STPB09714. All such settlement discussions and related communications shall remain privileged and inadmissible in any subsequent proceeding to the fullest extent permitted by California Evidence Code Sections 1119 through 1128 and any other applicable provisions of law.
SECTION 6: TERMINATION RIGHTS PRESERVED
6.1. The termination provisions set forth in Section 7 of the Original Agreement shall remain in full force and effect during the extended term. Accordingly, either Party may terminate the Agreement upon thirty (30) days' prior written notice delivered to the other Party and to the other Party's counsel of record. Written notice of termination shall be delivered in accordance with the notice provisions set forth in Section 11 of the Original Agreement.
6.2. Upon expiration of the extended term on February 28, 2025, or upon earlier termination of the Agreement in accordance with its terms, all tolled litigation deadlines in Case No. 22STPB09714 shall recommence in accordance with the terms of the Original Agreement and applicable rules of the Los Angeles County Superior Court, Probate Division, including any applicable local rules and standing orders. The Parties shall cooperate in good faith to file a joint status report or stipulation with the Court advising of the expiration or termination of the standstill and the recommencement of litigation deadlines, and shall request that the Court set an appropriate schedule for the resumption of proceedings.
SECTION 7: NO OTHER MODIFICATIONS; RATIFICATION
7.1. Except as expressly modified by this Third Amendment, all terms and conditions of the Original Agreement, as amended by the First Amendment and the Second Amendment, shall remain in full force and effect and are hereby ratified and confirmed in their entirety. Each Party hereby reaffirms its obligations under the Agreement and acknowledges that the Agreement, as further amended by this Third Amendment, constitutes a valid and binding obligation of such Party, enforceable in accordance with its terms.
7.2. In the event of any conflict or inconsistency between the terms of this Third Amendment and the terms of the Original Agreement, the First Amendment, or the Second Amendment, the terms of this Third Amendment shall govern and control to the extent of such conflict or inconsistency. In all other respects, the Original Agreement, as amended by the First Amendment and the Second Amendment, shall continue in full force and effect.
SECTION 8: FURTHER RENEWALS
The Parties acknowledge and agree that the Agreement may be further extended beyond February 28, 2025, only by mutual written consent executed by all Parties, consistent with the renewal provisions set forth in Section 3.2 of the Original Agreement. No Party shall have any obligation to agree to any further extension, and the failure or refusal of any Party to consent to an additional renewal period shall not constitute a breach of the Agreement or give rise to any claim or liability. Any future extension shall be documented in a written amendment signed by all Parties and their respective counsel.
SECTION 9: COUNTERPARTS; ELECTRONIC SIGNATURES
9.1. This Third Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Third Amendment by facsimile or by electronic transmission in portable document format (PDF) shall be effective as delivery of a manually executed original counterpart thereof.
9.2. The Parties agree that signatures transmitted by electronic means, including but not limited to scanned signatures transmitted by email in PDF format and signatures executed through electronic signature platforms, shall be deemed original signatures for all purposes and shall have the same legal force and effect as original ink signatures. Each Party intends to be bound by its respective electronic signature on this Third Amendment to the same extent as if such Party had delivered an original signed counterpart.
SECTION 10: GOVERNING LAW
This Third Amendment shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction. Any dispute arising out of or relating to this Third Amendment shall be subject to the exclusive jurisdiction of the Los Angeles County Superior Court, Probate Division, in connection with Case No. 22STPB09714.
[Remainder of page intentionally left blank. Signature pages follow.]
SIGNATURE PAGE TO THIRD AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT
*In re Estate of Teodoro R. Fonseca, Deceased* Case No. 22STPB09714
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment to Settlement Standstill Agreement as of the date first written above.
PETITIONER.
________________________________________
Marguerite D. Fonseca
Date: October 25, 2024
CONTESTANTS.
________________________________________
Rafael T. Fonseca
Date: October 25, 2024
________________________________________
Isabela C. Fonseca-Greer
Date: October 25, 2024
________________________________________
Nicolás R. Fonseca
Date: October 25, 2024
APPROVAL OF COUNSEL
SIGNATURE PAGE TO THIRD AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT
*In re Estate of Teodoro R. Fonseca, Deceased* Case No. 22STPB09714
APPROVED AS TO FORM — PETITIONER'S COUNSEL
CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, Suite 4800 Los Angeles, California 90071
By: ________
Name: Howard Quinn
Title: Partner
Date: October 25, 2024
APPROVED AS TO FORM — CONTESTANTS' COUNSEL
BRENNAN, ORTEGA & SALDÍVAR LLP 1900 Avenue of the Stars, Suite 2100 Los Angeles, California 90067
By: ________
Name: Damian R. Ortega
Title: Partner
Date: October 25, 2024