Case 18-10601-MFW Doc 775-1 Filed 05/07/18 Page 3 of 12

Privileged and Confidential

INCLUSION MEDIA, LLC

May 1, 2018

[BY EMAIL]

Cravath, Swaine & Moore LLP Richards, Layton & Finger, P.A.
Worldwide Plaza One Rodney Square
825 Eighth Avenue 920 North King Street
New York, New York 10019 Wilmington, Delaware 19801
Attn: Paul H. Zumbro, Attn: Mark D. Collins, collins@rlf.com
pzumbro@cravath.com, and Paul N. Heath, heath@rlf.com
George E. Zobitz, jzobitz@cravath.com
and Andrew Elken, aelken@cravath.com

Sidley Austin LLP Young Conaway Stargatt & Taylor, LLP

555 West Fifth Street Rodney Square
Los Angeles, California 90013 1000 North King Street
Attn: Jennifer C. Hagle, jhagle@sidley.com Wilmington, Delaware 19801
Attn: Robert S. Brady, rbrady@ycst.com
Sidley Austin LLP and Sean M. Beach, sbeach@ycst.com
1 S. Dearborn Street
Chicago, IL 60603
Attn: Annie Wallis, awallis@sidley.com

Pachulski Stang Ziehl & Jones LLP U.S. Trustee

10100 Santa Monica Boulevard, 13th Floor
Los Angeles, CA 90067
Attn: James I. Stang, Esq.,
jstang@pszjlaw.com
Pachulski Stang Ziehl & Jones LLP
919 N. Market Street, 17th Floor
Wilmington, DE 19801
Attn: Bradford J. Sandler, Esq.,
bsandler@pszjlaw.com
844 King Street, Suite 2207
Lockbox 35
Wilmington, Delaware 19801
Attn: Jane M. Leamy,
Jane.M.Leamy@usdoj.gov
and Hannah Mufson McCollum,
Hannah.McCollum@usdoj.gov

Re: In re The Weinstein Company Holdings LLC, et al.

Chapter 11 Case No. 18-10601 (MFW) (the “Chapter 11 Cases”)

Ladies and Gentlemen:

Reference hereby is made to that certain Order (I) (A) Approving Bidding Procedures for
Sale of Substantially All of the Debtors’ Assets, (B) Approving Stalking Horse Bid Protections,
(c) Scheduling Auction For, and Hearing to Approve, Sale of Substantially All of the Debtors’
Assets, (D) Approving Form and Manner of Notices of Sale, Auction and Sale Hearing, , (E)
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Approving Assumption and Assignment Procedures and (F) Granting Related Relief dated April
6, 2018 [Dkt. No. 190] and the Bidding Procedures attached thereto as Exhibit 1 (collectively,
the “Bid Procedures”) filed in the Chapter 11 Cases. All capitalized terms used herein and not
otherwise defined herein have the respective meanings assigned to such terms in the Bid
Procedures.

In accordance with the requirements of the Bid Procedures, the undersigned, Inclusion
Media, a special purpose acquisition vehicle newly formed for the purpose of acquiring, and
operating as a going concern, all the assets of The Weinstein Company by participating in the
Auction (the “Bidder”), hereby tenders its offer (the “Bid”) to purchase substantially all of the
Assets for a cash purchase price of $315 million, less any purchase price adjustment under
Section 2.9 of the Stalking Horse Agreement (other than the deduction for the Escrow Amount),1
which amount is equal to or greater than the Minimum Initial Overbid Amount (the “Purchase
Price”). Our price does not include funds for a break-up fee for the stalking horse, but does
assume a release of Lantern from liability associated with failing to close the pre-bankruptcy
acquisition.

ABOUT INCLUSION MEDIA

Inclusion Media is led by Howard Kagan. Mr. Kagan’s background is a unique

combination of investment banking and distressed investing experience, as well as producing.
His 25 years of experience on Wall Street includes investing in distressed debt, turnaround, and
restructuring opportunities. For the past ten years Mr. Kagan has been a full-time, Tony award-
winning, lead producer of several Broadway musicals and plays. His production and distribution
company produces content created by and/or about strong, independent women. Last year, his
musical won the Actors Equity Award for Diversity in casting. Two of his musicals were
directed by women, one of whom won her first Tony award and the other who was nominated in
her Broadway debut. In recent years Mr. Kagan has also begun developing film and TV
projects.

Mr. Kagan is leading a strong team of film and television executives to perform due
diligence and operate the assets of The Weinstein Company as a going concern.

INCLUSION MEDIA'S BUSINESS PLAN

Inclusion Media will become the most diverse and progressive film and TV studio in the
industry, while also maximizing its profitability for its investors. Inclusion Media, as the owner
and operator of the Assets will continue to be the only remaining independent film and TV
production company located in New York City, which will allow it to access the tax credits,
talent pool and other benefits offered by this location.

None of the employees involved in the sexual harassment scandal will continue with the
new company. The vast majority of the employees had no involvement in the Weinstein sexual
harassment scandal and their careers and their work on the company's film and TV projects will
continue; all of those employees will be offered positions by Inclusion Media.

1
The Purchase Price is based on the January 31, 2018 balance sheet, as instructed by the Debtors'
professionals.

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Inclusion Media, as the owner of the Assets, will produce content created by
professionals who represent the diversity of our community at every level of production. It is
anticipated that approximately half of the Inclusion Media’s senior level management positions
(CFO, General Counsel, Head of Sales, Head of TV, Film etc.), will be filled with experienced
women and minorities from the film and TV industry. Over the next three years, Inclusion
Media’s entire corporate staff will become just as diverse through growth and attrition. Inclusion
Media’s goal and corporate philosophy of diversity, a safe working environment, and gender and
race pay and job opportunity parity will be a key part of all new productions in all media. The
race and gender identity of the actors, directors, screenwriters, design and music teams, crew and
support staff will closely reflect the actual diversity of gender and race of the United States

Inclusion Media has a strategic partner that will augment the efforts of the existing
employees in distribution of new titles in the near term, and which will fund and implement the
press and marketing spend for these titles. In addition, Inclusion Media will co-produce slates of
new content with several independent producers with commercially attractive content in
preproduction that is designed for female and minority audiences. Inclusion Media will co-
produce these projects and release them in 2019. Content for female, minority and other diverse
audiences will be a significant part of Inclusion’s ongoing production slate.

Based on the current financial models developed by Inclusion Media, the cash flows from
the existing library and film titles will be sufficient to retire the acquisition debt, of
approximately $200 million, in about two years. Cash will be funded on the balance sheet at
closing for liquidity and to fund new productions. Over time, Inclusion Media will work toward
a public offering as one of the only publicly traded independent film and TV studios, or a private
sale. The current financial model anticipates returning the original investors’ equity capital
within three years.

We believe our Bid is the best bid. Other potential bidders have existing large staffs and
do not need to keep The Weinstein Company employees to continue as a going concern; have
rejected or walked away from commitments to support the victims of sexual harassment; have
their own history of problems with sexual harassment, including former and ongoing business
relationships with the Weinsteins or Mr. Glasser; or are themselves defendants in the victims’
class action lawsuit. Inclusion Media is completely free of these ongoing problems. By
proposing the settlement with the Victims (as defined below), Inclusion Media believes that the
Debtors and their estates will save millions of dollars in attorneys fees.

To thrive as a going concern, Inclusion Media must take extraordinary measures in this
Bid and through its business practices going forward. First, the Purchase Price includes specific
designated funds that must go directly to the victims of sexual harassment. Inclusion Media does
not want to bid if there will be any perception that it is buying the Debtors’ assets at a discount at
the expense of the victims of sexual harassment, which is the singular cause of these bankruptcy
proceedings. Second, Inclusion Media intends to implement a comprehensive set of human
resources policies designed to instill confidence in the employee and entertainment communities
that the problems plaguing the Debtors and their predecessors will not recur. Third, Inclusion
Media will pledge extensive cooperation with the victims in their pursuit of remedies against the
perpetrators, providing access to company records and employee witnesses wherever possible.
Fourth, Inclusion Media will implement a comprehensive professional development program to

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benefit the Victims and support their participation in the media industry, at Inclusion Media or
elsewhere.

Accordingly, we believe we can turn this very problematic situation into a profitable
business that also does the right thing for the victims, the employees and its investors while
creating an example of what can be accomplished by a management team committed to inclusion
and diversity.

PROPOSED ALLOCATION OF PURCHASE PRICE

Inclusion Media anticipates allocating its Bid as follows:

85% Existing film library.

10% Unreleased films/films in development.

5% TV business.

This allocation is subject to change based on the final contracts that are assumed and the
cure amounts associated with the Bid.

PROPOSED TREATMENT OF VICTIMS

1. Non-Employee Victims.

A portion of the Purchase Price, $25 million along with 4% of the equity of Inclusion
Media, will be deposited into a settlement fund (the “Fund”) for the benefit of non-employee
victims of sexual harassment for which the Debtors are liable (the "Class"). The Fund would be
operated as a “qualified settlement fund” within the meaning of Section 1.468B-1 of the
Treasury Regulations promulgated under Section 468B of the Internal Revenue Code and
consistent with Treas. Reg. Section 1.468B-1(c)(1). The Fund shall not be subject to the
jurisdiction of the Bankruptcy Court, but instead shall be subject to the jurisdiction of the judge
then presiding over the class action in the United States District Court for the Southern District
of New York (the "Geiss Court"). In exchange for the Fund, the Class must waive and release
Inclusion Media, provided, however, that such release shall not waive or settle any claims that
the Class may have against any third-parties, including, but not limited to, any claims that the
Class against former officer, directors, employees, agents, representatives and shareholders of
The Weinstein Company and the Debtors, provided, however, that claims against the Debtors
shall only survive to the extent of any insurance coverage. There must not be any opt-outs from
the Class.

Mechanisms to, among other things, (1) evaluate the merits of the claims of Class
members; (2) establish procedures either to adjudicate or consensually resolve the claims; (3)
assign dollar values to the claims; and (4) distribute the proceeds, including for the payment of
claims, class notice and administrative expenses, attorneys’ fees and costs, and service awards,
shall be subject to the approval of the Geiss Court and case management procedures established
by the Geiss Court. Any monies received by individual victims from the Fund would be without
prejudice to the pursuit of their claims against the balance of the defendants. The Debtors will

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not object to the manner or mechanisms for payments, even if partial and immediate to victims
or just some of them, or their counsel.

2. Employee Victims.

The Purchase Price includes a payment of cash equal to $5 million and 1% of the equity
in Inclusion Media to be distributed to holders of allowed claims relating to sexual harassment of
current and former employees of the Debtors and their predecessors (such persons, together with
the non-employee victims are referred to herein as the "Victims"). These victims will not be
required to release any third-party claims on the same terms and to the same extent as the Class.

3. Insurance.

Inclusion Media will be acquiring all insurance policies applicable to claims asserted by
Victims for the benefit of the claimants against the Fund. Inclusion Media will use commercially
reasonable efforts to ensure that bona fide Victims receive all or substantially all of the proceeds
of such policies in an equitable and expeditious manner.

4. Cooperation.

Inclusion Media will agree to cause those employees of The Weinstein Company with
knowledge of facts relevant to the Victims, who continue to work with Inclusion Media post-
bankruptcy, to cooperate with counsel to the Victims.

Cooperation shall include making such employees reasonably available to provide

information and to meet and consult with counsel to the Victims upon reasonable request and to
testify at deposition and/or trial. Inclusion Media will also preserve all documents and
electronically-stored information maintained by The Weinstein Company and provide counsel
access to relevant documents and electronically stored information upon reasonable notice.

4. Equitable Relief.

Inclusion Media will create “Inclusion Rising,” a film production company subsidiary or
division whose employee base would include a certain percentage of Victims with the goal of
reviving Victim’s rights to work in a non-sexualized, safe work environment. Inclusion Media
will create an advisory board, which would include Victims and employees to review, advise,
and comment on best practices. Inclusion Media will establish a hotline, available to both
employees of Inclusion Media as well as persons (actors or otherwise) working on a production
in which Inclusion Media is involved, to report harassment, abuse or discrimination. SAG-
AFTRA has released a code of Conduct which the Inclusion Media will adhere to in formulating
the manner of implementation of best practices and reporting tools. Inclusion Media will fund
counseling and career training services to victims in an amount and on terms to be determined
following further consultation with the victims. Inclusion Media will make employment offers
to employee victims if at all possible.

CONDITIONS TO BID

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As you know we have devoted significant resources and have been working feverishly to
complete our due diligence. Unfortunately we still have outstanding material due diligence
requests to remove any conditionality to our Bid; other significant due diligence requests were
satisfied only in the last couple of days. The late timing of the resolution of these requests has
delayed our obtaining firm commitments for the acquisition financing we are seeking.
Unfortunately, therefore we cannot provide a firm bid without completion of our due diligence.
Moreover, our due diligence has revealed substantial issues clouding the Debtors' title to some of
its most valuable assets and contracts which create the value of, among other things, the film and
TV library. Certain contracts have "key man" clauses that, if enforced, could require a buyer to
offer employment to Harvey or Bob Weinstein. Inclusion Media does not want to retain the
Weinsteins,

You have the right, and, indeed, the fiduciary duty, to maximize value from this bidding
process. And, indeed, you have reserved the right to change the procedures in accordance with
this duty. The Bid Procedures state that:

Subject to the express written consent of the Stalking Horse Bidder

(such consent not to be unreasonably withheld, conditioned or
delayed), or as otherwise required by order of the Bankruptcy
Court, but subject to the rights of the Stalking Horse Bidder under
the Stalking Horse Agreement, the Debtors reserve the right to
change the date and/or time of the Sale Hearing (or any other dates
related to the Sale) in order to achieve the maximum value for the
Assets."

All of the remaining work we need to do is to satisfy the one condition necessary to
finalize our Bid, which is to obtain final commitment letters for our financing.

Accordingly, we will provide a mark-up of the Stalking Horse Agreement that reflects the
following:

1. Satisfaction of all outstanding material due diligence requests by Inclusion Media

representatives, all of which are described in ongoing communications with the representatives
of the Debtors, including confirmatory due diligence that assumed contracts do not require
Inclusion Media to make future payments to, or for the benefit of, Harvey Weinstein, Bob
Weinstein, Miramax or the other defendants in the Victims litigation.

2. Assumption and assignment (or novation) of all executory contracts and

unexpired leases designated by Inclusion Media on or before the Auction, including, but not
limited to assignment and assignment (or novation) of all contracts which provide the basis for
the operating cash flows in the FTI model and the borrowing base for the Debtors’ secured debt.
We also will need contract counterparties, including Netflix, to waive "key man" conditions
purportedly requiring the continued employment or retention of Harvey Weinstein or Bob
Weinstein.

4. Assignments, where applicable, from third parties necessary to deliver title free
and clear to all assets Inclusion Media where such assets are held in joint ventures or special

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purpose vehicles. Based on communications with the Debtors’ advisors, we are told that this
condition should be easy to fulfill.

5. Cure payments shall be no more than $10 million for the contracts and leases to
be assumed.

Please contact our counsel, Kasowitz Benson Torres, LLP, Attn: Andrew K. Glenn
(aglenn@kasowitz.com, tel. no. (212) 506-1747), if you require any clarifications or additional
information in respect of the Bid.

Very truly yours,

INCLUSION MEDIA, LLC

By /s/ Howard Kagan__________

Howard Kagan
Managing Member
646-209-1313
PO Box 1355
NY, NY 10028