Kenneth R. Chiate, Pillsbury Madison & Sutro LLP 725 South Figueroa Street, Suite 1200 Los, Angeles, CA (213)

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1 BILLING BASED ON OUTPUT RATHER THAN INPUT (a/k/a Value Billing), and OTHER ALTERNATIVE FEE IDEAS I. Advantages of Value Billing _ Encourages early assessment (before huge fees incurred) _ Gives client jump start on positive control of case _ Attorney and client share risk/incentive _ Encourages efficient business management of law firm _ Provides predictable amounts for client to budget _ Improves relationship between attorney and client _ Increased satisfaction of both attorney and client II. Objectives of Client _ Reduce legal fees _ Increased predictability and control of cost _ Efficient service from lawyer, i.e., value _ Align attorney and client s interests III. Objectives of Attorney _ Increased profitability _ Increased predictability _ Permanency of relationship _ Improved relationship IV. Alternative Fee Ideas _ Blended rates _ Flat fees, e.g., per deal, case, task or phase _ Pure contingency, including reverse contingency _ Discounted rates plus incentive _ Push-pull _ Hard and soft budgets Kenneth R. Chiate, Pillsbury Madison & Sutro LLP 725 South Figueroa Street, Suite 1200 Los, Angeles, CA (213)

2 (213) March 3, 1998 Karen Randall, Esq. Senior Vice President, General Counsel Universal Studios, Inc. 100 Universal City Plaza Universal City, CA Re: Alternative Fee Arrangements Out-sourcing I.P. Work Dear Ms. Randall: I understand that you and Ken Chiate talked at lunch on February 11 about the possibility that Universal may out-source services currently performed by its legal department in prosecuting and docketing Universal s trademarks and copyrights. We respect your creative and open minded approach to exploring alternative fee arrangements for this work and hope to provide an attractive and acceptable proposal one week after you provide the information requested below. As Ken may have told you, we have more than 30 intellectual property attorneys in Southern California and have developed a very experienced, fully computer-compatible trademark/copyright department devoted to clearing, registering, tracking and maintaining trademarks and copyrights in the United States and throughout the world. Because trademarks can be very paper intensive, all work is done by extremely experienced, detail-oriented paralegals and clerks in order to keep costs down. Attorneys, of course, review all substantive work done by the paralegals. Attorneys also respond to legal issues raised by the U.S. Patent and Trademark Office or by various foreign Trademark Offices. Pillsbury maintains all of its files on a trademark software program called MDC, from which due dates, reports and similar information can be readily accessed. In most cases, clients prefer that trademark filings, payment of maintenance fees, clearance searches, vigilance searches, docketing, and many other similar tasks be done on a fixed fee basis. For larger trademark portfolios, a fixed monthly fee includes a monthly status report to the client. The fixed fee approach, which relies heavily on our efficient and close-knit attorneyparalegal team, has proved to be very cost competitive and allows clients to accurately project costs and fees for budgeting purposes and to virtually eliminate the likelihood of an unanticipated and extremely large legal bill. We find that clients with large portfolios are most enamored with the fixed fee approach. Simply put, our large volume of filings, our familiarity with what needs to be done in virtually every country in the world, the computerized tracking and docketing, and our experienced paralegals and attorneys lets Pillsbury offer substantial savings on large trademark (or copyright) portfolios even when compared to the costs of operating an in-house department. To prepare a fee proposal tailored to Universal s needs, we need the following information:

3 1. How large is Universal s portfolio of copyrights and trademarks? How is it presently maintained? What software, if any, is Universal using now? Is the portfolio likely to substantially increase or decrease in the next 12 to 24 months? 2. Approximately how many attorney and/or paralegal hours does your department presently devote to this effort? 3. What is the experience level of the attorneys or paralegals performing the work? What is Universal s total cost for these employees (salary, benefits etc.)? 4. Can you allocate the percentage of the total services performed by your legal department for each of the various areas of work you desire to be out-sourced (e.g., clearance, advices, prosecution, docketing etc)? 5. Is Universal currently using outside counsel to supplement its in-house services? Please approximate the amount of outside counsel fees for such services. 6. Do you expect that all of the work will be out-sourced or should we explore having the work jointly performed by your own personnel and outside counsel? We would also be interested in any particular philosophy or overall objectives you have with respect to the work, e.g., maximum efficiency at the risk of some occasional oversight with low exposure, maximum effort on all matters to avoid any potential exposure. We would also like to know the level of attention and expertise that would be required to provide the various services you expect. As soon as we receive the requested information, we will prepare a draft proposal for further discussion and input from you before preparing a final proposal. We intend to provide several alternatives, one proposal for a fixed fee for twelve months, and one for a three-year period, with built-in adjustments at the end of each year that could either increase or decrease the fee for subsequent years. cc: We look forward to exploring this exciting opportunity with you. Very truly yours, Richard H. Zaitlen Kenneth R. Chiate, Esq. Amy D. Hogue, Esq.

4 (213) March 3, 1998 Karen Randall, Esq. Senior Vice President, General Counsel Universal Studios, Inc. 100 Universal City Plaza Universal City, CA Re: Alternative Fee Arrangements Defense of Errors and Omissions Cases Dear Ms. Randall: My partner, Ken Chiate, told me about your recent luncheon discussion and Universal s desire to explore the prospect of using Pillsbury Madison & Sutro (Pillsbury) to defend errors and omissions litigation, including new copyright infringement, idea submission, right of publicity, defamation, privacy and trademark cases filed after June 1, As you know, we have defended hundreds of cases like these. We are excited about exploring alternative fee arrangements for defending this litigation for Universal, and intend to submit several alternative proposals for your consideration. In order to evaluate the magnitude of the work you anticipate referring to us, and for us to propose alternative fee arrangements most likely to be acceptable to you, we request the following information: 1. Would you consider a value billing proposal, i.e., where our fees would be based in large part on our performance and results, rather than how many hours are incurred? 2. Would you consider partnering the work on the cases, i.e., sharing work between your own legal department and our firm, or will all the professional work be performed by our firm? Please tell us the basic qualifications and experience of any staff available to partner with us in defending cases. 3. Do you have a preference for a blended rate (one hourly rate for all attorneys, whether associates or partners), or do you prefer a graduated hourly rate, discounted, if appropriate, to reflect the volume of services to be performed? 4. Would you like to be billed a flat rate? Would you prefer to have us work from a retainer such as one that adjusts quarterly based on the volume of work actually performed? 5. Do you wish to consider either a soft or hard budget on a per case basis, or for a certain period of time, such as quarterly? 6. To what extent will our work be reviewed, supervised, edited or modified by your legal department, or will we have full discretion with respect to the content of the pleadings (other than with respect to information supplied by Universal)? 7. If Universal is not self-insured, please identify its current errors and omissions insurer. How large is the retention? What is the extent of the coverage? Does the insurer have any rate caps or other requirements that will impact the fees charged or the services rendered?

5 8. Can we assume that payment will be made within ten days from receipt of billing if an advance retainer against future fees is not provided at the outset of the relationship? 9. For the last three calendar years, or for such time as you can easily retrieve the information, how many new cases have been filed against Universal that required a defense by outside counsel? 10. What is the approximate life of each case before it is concluded? 11. Of all the cases defended in the last three years: (a) What percentage were settled within the first six months of filing? (b) What percentage took at least one year to resolve? (c) What percentage were actually worked up for trial and settled within 90 days of trial? (d) What percentage were tried to a verdict? (e) What percentage were filed in federal court rather than state court? 12. Have you calculated an average fee per case that was charged by outside counsel? 13. For such defense work in the last three years, what is the average amount of fees paid to outside counsel annually for defense of all litigation you propose to send to us? 14. What percentage of the services can be performed by attorneys with less than three years experience, three to six years experience, and more than six years experience? 15. Are there any current philosophies or policy decisions that have been made that would impact the magnitude of work required, e.g., the desire to mediate or settle more cases quickly, even at a greater settlement cost, versus a desire to try to verdict more cases? 16. Are there any current trends or facts that would cause future work to be either substantially greater or less than it has been in the last three years? 17. What is your best estimate as to the total annual attorney hours that will be required to perform the work you are considering referring to us. If there is any other information that would help us prepare alternative fee proposals, please let us know. We are prepared to submit our proposals within one week of receipt of the information above, following which we would like to meet with you to discuss our alternative proposals in draft form before we finalize them. Thank you for giving us this exciting opportunity to work with you and your staff. Very truly yours, Amy D. Hogue cc: Kenneth R. Chiate, Esq.

6 (213) March 3, 1998 Mr. Tom Unterman Chief Financial Officer Times Mirror Times Mirror Square Los Angeles, California Re: Defense of Jumbo Case Fee Proposals Dear Tom: You recently requested that we participate in a beauty contest in connection with your selection of outside counsel to handle the anticipated Jumbo litigation, which you expect to be filed shortly. We welcome this opportunity to represent your company and would like to propose several alternative fee arrangements when we meet. Many of our clients have been very receptive to our value billing proposals, where we share the risk and reward with the client based on our performance. We enclose an outline that summarizes the advantages of this approach that you might find of interest. To assist us in preparing our fee proposals, we would appreciate knowing in advance some additional information. You can either call me, or if more convenient, respond in writing, whichever you prefer. 1. Are you inclined to retain counsel on the usual hourly rate basis, i.e., the traditional approach to fee for services? 2. Do you have a preference for hourly rates based on experience, or would you prefer a blended rate, i.e., one hourly rate for all attorneys? 3. Would you consider a task or phase based fee proposal, i.e., a fixed fee for various stages of the litigation? This could be proposed for the initial evaluation, responsive pleadings, discovery, mediation and trial preparation, or perhaps for a certain period of time, e.g., the first 90 days, the next 90 days etc., or on an annual basis? 4. Do you have any interest in an incentive component to the fee arrangement, e.g., in return for a discounted hourly rate, a premium over and above hourly rates if certain results are achieved, e.g., expedited disposition, settlement or ultimate result below some predetermined figure etc.? 5. Would you consider a reverse contingency fees, i.e., our firm would be entitled to a percentage of the amount agreed to be at risk if the result is substantially better than the exposure and expected result, and if not successful, there would be no or only a minimal fee? Once we have your response to these issues, we can prepare a specific fee proposal that is most likely to be consistent with your objectives. We are willing to accept various alternative

7 fee arrangements, or proceed on the traditional hourly rate approach, whichever meets your objectives. We are prepared to meet with you and provide alternative proposals as soon as we receive the above information. We look forward to hearing from you. Very truly yours, Kenneth R. Chiate