Exhibit 99.2
CONFIDENTIAL MEMORANDUM
To: Employees of Insight
From: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Date: September 16, 2005
Re: Going Private Transaction
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As you are aware, on July 28, 2005, we entered into a merger agreement with
Insight Acquisition Corp., a corporation organized by affiliates of The Carlyle
Group for the sole purpose of effecting the merger and related transactions. The
transaction would have the effect of taking Insight private through the
acquisition of all of the outstanding publicly-held shares of Insight. The
proposed transaction is not expected to result in a change in the operational
aspects of our business. Following consummation of the proposed transaction, we
would continue to provide great customer service and state-of-the-art products
to our customers.
Consummation of the transaction is subject to stockholder approval (including
approval by a majority of the disinterested public stockholders) and the
satisfaction of a number of other legal requirements, including rules and
regulations issued by the Securities and Exchange Commission. If the proposed
transaction is consummated, the currently outstanding shares of Insight's common
stock, other than certain shares held by certain continuing investors, would
receive a cash payment equal to $11.75 per share, and Insight would be
recapitalized and new classes of stock would be issued to our new stockholders.
Insight's records indicate that you presently own the Insight equity set forth
on the attached Statement of Equity Holdings. This Statement does not reflect
any shares you may have acquired outside of Insight's plans (such as by direct
purchase through a broker). If you believe any of this information is incorrect
or incomplete, please contact Xxxxxx Xxxxxx, Human Resources Coordinator, as
soon as possible. Attached to the Statement of Equity Holdings are appendices
that describe the treatment of your equity holdings in the proposed transaction.
Certain of these documents also contain brief descriptions of certain federal
income tax consequences associated with the going-private proposal. Of course,
tax consequences may vary depending upon individual circumstances and these
materials are not intended to provide you with tax advice. Accordingly, we urge
you to consult with your personal tax adviser regarding your own federal income
tax consequences, as well as any state and local tax consequences.
To the extent that you currently own Insight stock options and remain employed
by Insight following the merger, you would be eligible to receive shares of
another new series of incentive-based stock of the private company in
consideration for future services to be provided by you to Insight.
If the transaction is not approved by the stockholders or does not otherwise
close, Insight would continue operating as a public company and your equity
holdings would be unaffected.
THIS MEMORANDUM IS NOT A SOLICITATION OF A PROXY OR A SUBSTITUTE FOR ANY PROXY
STATEMENT OR OTHER FILINGS THAT WILL BE MADE WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC"). YOU ARE URGED TO THOROUGHLY REVIEW AND CONSIDER INSIGHT'S
PRELIMINARY PROXY STATEMENT FILED WITH THE SEC AND ANY OTHER MATERIAL RELATED TO
THE TRANSACTION WHEN FILED WITH THE SEC BECAUSE THEY DO AND WILL CONTAIN
IMPORTANT INFORMATION. ANY SUCH DOCUMENTS, ONCE FILED, WILL BE AVAILABLE FREE OF
CHARGE AT THE SEC'S WEBSITE (XXX.XXX.XXX) AND FROM INSIGHT. YOU SHOULD NOT PUT
UNDUE RELIANCE ON THE PRELIMINARY PROXY STATEMENT, AS IT IS NOT COMPLETE AND
REMAINS SUBJECT TO REVIEW BY THE SEC AND INSIGHT AND CHANGES MAY BE SUBSTANTIAL.
September 16, 2005
INSIGHT COMMUNICATIONS COMPANY, INC.
STATEMENT OF EQUITY HOLDINGS
NAME:
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I. CURRENT OPTION HOLDINGS - SEE ATTACHED "STOCK OPTION APPENDIX" FOR
EXPLANATION
Cash At Closing
Current Options Exercise Price (before taxes)
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II. NEW PARTICIPATING COMMON STOCK to be granted (subject to specific terms and
conditions) after closing - SEE ATTACHED "STOCK OPTION APPENDIX" FOR
EXPLANATION
Shares of Series E
Non-Voting Common Participation Level
Stock Threshold
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III. 401(K) SHARES - SEE ATTACHED "401(K) APPENDIX" FOR EXPLANATION
Shares of Class A Cash to be
Common Stock Received in
Currently Held in 401(k) at Closing
401(k)
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IV. DEFERRED SHARES - SEE ATTACHED "DEFERRED SHARES APPENDIX" FOR EXPLANATION
Deferred Shares
Currently Held
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Note: Any shares held after the closing of the proposed merger will be subject
to terms, conditions and restrictions applicable to such shares and any equity
or equity based awards made by the Company after the closing will be subject to
certain additional terms, conditions and restrictions.
STOCK OPTION APPENDIX
A. VESTED AND UNVESTED "IN THE MONEY" STOCK OPTIONS (I.E., STOCK OPTIONS WITH
AN EXERCISE PRICE LOWER THAN THE $11.75 PRICE TO BE PAID FOR INSIGHT SHARES
IN THE MERGER)
CASH-OUT. Upon the consummation of the merger, these options (whether vested or
unvested) would be canceled in exchange for a cash payment per option share
equal to the difference between the exercise price and the $11.75 per share
merger price. This cash payment would be taxable to you as ordinary income.
NEW SERIES E SHARES. In addition, after the consummation of the merger, in
consideration for future services to be provided by you to Insight, Insight will
grant you one (1) share of a new series of Insight stock (Series E) for every
share subject to the canceled options. Your shares of Series E stock would be
entitled to participate in the per share appreciation of the value of Insight
over the $11.75 per share merger price. These shares would be subject to a five
(5) year vesting schedule, as well as certain other terms and conditions which
would be contained in a subscription agreement that you would be required to
sign as a condition to receiving these shares. In addition, you would be
required to enter into a Securityholders Agreement, which would contain, among
other provisions, restrictions on the sale or other transfer of Insight stock
and certain restrictions on voting rights, but would give shareholders rights to
sell their shares as part of certain sale transactions initiated by other
specified shareholders. The agreement also would require you to sell your shares
in connection with certain future sale transactions.
B. VESTED AND UNVESTED "OUT OF THE MONEY" OPTIONS (I.E., OPTIONS WITH AN
EXERCISE PRICE EQUAL TO OR HIGHER THAN THE $11.75 PRICE TO BE PAID FOR
INSIGHT SHARES IN THE MERGER).
Upon the consummation of the merger, you would receive no cash payments for
these options and they would be canceled.
NEW SERIES E STOCK. After the consummation of the merger, in consideration for
future services to be provided by you to Insight, Insight will grant you one (1)
share of a new series of Insight stock (Series E) for every share subject to the
canceled options. Your shares of Series E stock would be entitled to participate
in the per share appreciation of the value of Insight over the exercise price of
your canceled options. These shares would be subject to a vesting schedule that
mirrors the vesting schedule of the canceled options, so you will be immediately
vested in the same number of Series E shares as any option shares that already
are vested under the canceled options. The vesting terms, as well as certain
other terms and conditions, would be contained in a subscription agreement that
you would be required to sign as a condition to receiving these shares. In
addition, you would be required to enter into a Securityholders Agreement which
would contain, among other provisions, restrictions on the sale or other
transfer of Insight stock and certain restrictions on voting rights, but would
give shareholders rights to sell their shares as part of certain sale
transactions initiated by other specified shareholders. The agreement also would
require you to sell your shares in connection with certain future sale
transactions.
C. TAX CONSEQUENCES
Any cash payment you receive for "In The Money" stock options would be taxable
to you as ordinary income. Any new Series E shares you receive after the merger
that are vested as of the date they are awarded would be taxable as ordinary
income as of the date of the award. The amount you would be required to
recognize as ordinary income would be based on the fair market value of the
Series E shares at the time of the award. Series E shares you receive that are
not vested as of the date they are awarded would ordinarily be taxable at the
time they become vested unless you make a special election under Internal
Revenue Code Section 83(b), which would cause you to recognize ordinary income
equal to the fair market value of the Series E shares at the time of the award.
Any new Series E shares you receive after the merger are not currently expected
to have a significant value at the time of the grant. As a result, there may be
advantages to you in making an 83(b) election. The potential advantage to such
an election is that future appreciation in the value of the shares from the date
of the award (rather than the vesting dates) would be taxable as capital gains
on ultimate sale of the shares. In the event that an 83(b) election is made, any
depreciation in the value of the shares may be treated as a capital loss upon
disposition. However, any forfeiture of the shares may not be treated as a
capital loss. You will need to evaluate the potential costs and benefits to
making such an election taking your personal circumstances into consideration.
Additional information about the Section 83(b) election will be forthcoming. Of
course, tax consequences may vary depending on individual circumstances and
these materials are not intended to provide you with tax advice. Accordingly, we
urge you to consult with your own personal tax advisor regarding your own
federal income tax consequences, as well as any state and local tax
consequences.
401(K) APPENDIX
Upon consummation of the merger, you would continue to participate in the 401(k)
plan. Shares of Insight stock that you currently hold in your 401(k) account,
including any fractional shares, would be cashed out in the merger at the merger
price of $11.75 per share. That transaction would be tax deferred. You will also
receive information regarding the reinvestment of the cash proceeds received
into your account.
After the merger, Insight will continue to provide matching contributions in the
401(k) plan. The amount and form of the matching contribution would not be
determined until after the closing of the merger by the newly constituted Board
of Directors. We do expect, however, that Insight will continue to provide a
competitive and attractive matching contribution after closing.
