<PAGE>
 
=============================================================================== 

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 SCHEDULE 14A 

          Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No.  )
        
Filed by the Registrant [X]

Filed by a Party other than the Registrant [_] 

Check the appropriate box:

[_]  Preliminary Proxy Statement           [_]  Confidential, for Use of the
                                                Commission Only (as permitted
[X]  Definitive Proxy Statement                 by Rule 14a-6(e)(2))
 
[_]  Definitive Additional Materials 

[_]  Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

                             Avid Technology, Inc.
- --------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)


- --------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

   
Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
   
     (1) Title of each class of securities to which transaction applies:

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     (2) Aggregate number of securities to which transaction applies:

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     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which
         the filing fee is calculated and state how it was determined):

     -------------------------------------------------------------------------

     (4) Proposed maximum aggregate value of transaction:

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     (5) Total fee paid:

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[_]  Fee paid previously with preliminary materials.
     
[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.
     
     (1) Amount Previously Paid:
 
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     (2) Form, Schedule or Registration Statement No.:

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     (3) Filing Party:
      
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     (4) Date Filed:

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Notes:

<PAGE>
 
                             Avid Technology, Inc.
 
                             Avid Technology Park
                                 One Park West
                        Tewksbury, Massachusetts 01876
 

Notice of Annual Meeting of Stockholders to be Held On Wednesday, June 2, 1999
 
  The Annual Meeting of Stockholders of Avid Technology, Inc. (the "Company")
will be held on Wednesday, June 2, 1999, at BankBoston, 100 Federal Street,
Boston, Massachusetts at 10:00 a.m., local time, to consider and act upon the
following matters:
 
    1. To elect three Class III Directors to serve for the ensuing three
  years.
 
    2. To approve an amendment of the Company's 1997 Stock Incentive Plan.
 
    3. To approve an amendment of the Company's 1993 Director Stock Option
  Plan.
 
    4. To ratify the selection of PricewaterhouseCoopers LLP as the Company's
        independent accountants for the current fiscal year.
 
    5. To transact such other business as may properly come before the
        meeting or any adjournment thereof.
 
  Stockholders of record at the close of business on April 12, 1999 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
The stock transfer books of the Company will remain open.
 
  All stockholders are cordially invited to attend the meeting.
 
                                            By Order of the Board of
                                            Directors,
 
                                            Ethan E. Jacks
                                            Secretary
 
Tewksbury, Massachusetts
A
pril 23, 1999
 
  WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED
IF THE PROXY IS MAILED IN THE UNITED STATES.

<PAGE>
 
                             Avid Technology, Inc.
 
                             Avid Technology Park
                                 One Park West
                        Tewksbury, Massachusetts 01876
 
 Proxy Statement for the Annual Meeting of Stockholders to be Held on June 2,
                                     1999
 
  This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Avid Technology, Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held on June 2, 1999 and at
any adjournments of that meeting (the "Annual Meeting"). All proxies will be
voted in accordance with the stockholders' instructions, and if no choice is
specified, the proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting. Any proxy may be revoked by a stockholder at
any time before its exercise by delivery of written revocation or a
subsequently dated proxy to the Secretary of the Company or by voting in
person at the Annual Meeting.
 
  This Proxy Statement, together with the Company's Annual Report to
Stockholders for 1998, is being mailed to stockholders on or about April 23,
1999.
 
Voting Securities and Votes Required
 
  At the close of business on April 12, 1999, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of
26,883,910 shares of common stock, $.01 par value per share, of the Company
(the "Common Stock"). Stockholders are entitled to one vote per share.
 
  Shares of Common Stock represented in person or by proxy (including shares
which abstain or do not vote for any reason with respect to one or more of the
matters presented for stockholder approval) will be counted for purposes of
determining whether a quorum is present at the Annual Meeting. The affirmative
vote of the holders of a plurality of the shares of Common Stock present or
represented and voting at the Annual Meeting is required for election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented and voting at the Annual Meeting is
required to approve the proposed amendments of the Company's 1997 Stock
Incentive Plan and the Company's 1993 Director Stock Option Plan and to ratify
the selection of PricewaterhouseCoopers LLP as the Company's independent
accountants for the current fiscal year.
 
  Shares that abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a
particular matter ("broker non-votes"), will not be counted as votes in favor
of such matter, and will also not be counted as votes cast or shares voting on
such matter. Accordingly, abstentions and broker non-votes will not affect the
voting on items submitted to the stockholders for approval at the Annual
Meeting.

<PAGE>
 

Security Ownership of Certain Beneficial Owners and Management
 
  The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by (i) each person known by
the Company to own beneficially more than five percent of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company named in the Summary Compensation Table set
forth under the caption "Executive Compensation" below and (iv) all directors
and executive officers of the Company as a group. This information is as of
January 31, 1999, except information with respect to stockholders reporting
their ownership in filings under Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which is as of March 31, 1999.
 

<TABLE>
<CAPTION>
 
                                               Number of
                                                  Shares      Percentage of
                                               Beneficially   Common Stock
Beneficial Owner                                 Owned(1)   Outstanding(1)(2)
- ----------------                               ------------ -----------------
<S>                                            <C>          <C>
Bluewater Investment Management, Inc.(3)......  3,003,700         11.3%
 150 King Street, West
 Toronto, Ontario, Canada M5H 1J9
 
Microsoft Corporation.........................  2,394,813          8.8%
 One Microsoft Way
 Redmond, WA 98052
Charles T. Brumback(4)........................     16,750           *
William E. Foster(5)(6).......................     40,500           *
Peter C. Gotcher(7)...........................    360,229          1.4%
Robert M. Halperin(5).........................     55,500           *
Nancy Hawthorne(5)............................      1,563           *
Roger J. Heinen, Jr.(5).......................      1,250           *
Daniel Langlois...............................          0          --
William J. Miller(8)..........................    305,148          1.1%
Lucille S. Salhany(5).........................      1,250           *
William J. Warner.............................    190,000           *
Clifford A. Jenks(9)..........................     55,518           *
William L. Flaherty(10).......................     92,478           *
David R. Froker(11)...........................     34,053           *
David E. Olson(12)............................     33,948           *
Jean A. Proulx(13)............................     33,936           *
All directors and executive officers as a
 group (18 persons)(14).......................  1,422,999          5.3%
</TABLE>

- --------
*  Less than 1%
 (1) The inclusion herein of any shares of Common Stock deemed beneficially
     owned does not constitute an admission of beneficial ownership of such
     shares. Unless otherwise indicated, each person listed above has sole
     voting and/or investment power with respect to the shares listed. Any
     reference in the footnotes below
 
                                       2

<PAGE>
 
     to shares subject to stock options held by the person or entity in question
     relates only to stock options which were exercisable on, or within 60 days
     after, January 31, 1999.
 (2) In calculating the percent of the Company's Common Stock beneficially
     owned by each person or entity listed, the number of shares deemed
     outstanding consists of the 26,639,421 shares actually outstanding as of
     January 31, 1999, plus, for that person or entity only, any shares
     subject to options that were exercisable on, or within 60 days after,
     January 31, 1999.
 (3) Beneficial ownership as reported in an amendment to a Schedule 13G filed
     with the Securities and Exchange Commission (the "Commission") in
     November 1998.
 (4) Includes 15,750 shares subject to stock options.
 (5) Consists of shares subject to stock options.
 (6) Mr. Foster, currently a director, has informed the Board that he will not
     be standing for reelection to the Board when his current term expires at
     the annual meeting.
 (7) Includes 60,025 shares subject to stock options.
 (8) Includes 221,876 shares subject to stock options.
 (9) Includes 38,775 shares subject to stock options.
(10) Includes 51,250 shares subject to stock options and 3,000 shares held by
     Mr. Flaherty as custodian for his children.
(11) Includes 28,142 shares subject to stock options.
(12) Includes 900 shares held by a trust and 24,168 shares subject to stock
     options.
(13) Includes 25,000 shares subject to stock options.
(14) Includes an aggregate of 670,676 shares subject to options held by
     directors and executive officers of the Company.
 
                                       3

<PAGE>
 
                             ELECTION OF DIRECTORS
 
  The Company's Board of Directors consists of three classes (designated Class
I, Class II and Class III Directors), with members of each class holding
office for overlapping three-year terms. In October 1998, the Board of
Directors elected Daniel Langlois as a Class III Director.
 
  The persons named in the enclosed proxy will vote to elect Daniel Langlois,
William J. Miller and Lucy S. Salhany as Class III Directors, unless authority
to vote for the election of any or all of the nominees is withheld by marking
the proxy to that effect. All of the nominees have indicated their willingness
to serve if elected, but if any or all of the nominees should be unable or
unwilling to serve, proxies may be voted for substitute nominee(s) designated
by the Board of Directors.
 
Directors
 
  Set forth below regarding each continuing director and each of the nominees
is each such person's name, age, positions with the Company, principal
occupation, business experience during at least the past five years and the
names of other publicly held corporations of which such director (including
the three nominees for Class III Directors) serves as a director and the year
during which each such person first became a director of the Company.
 
Nominees
 
         Class III Directors (Terms to expire at 2002 Annual Meeting)
 
  Daniel Langlois, 42, became a director of the Company in October 1998. Mr.
Langlois is President of Terra Incognita Inc., a real estate firm. Mr.
Langlois was the founder and President of Softimage Inc., a developer of high-
end visual content software, from 1986 to 1997. Softimage Inc. became a
wholly-owned subsidiary of the Company in August, 1998.
 
  William J. Miller, 53, was appointed Chief Executive Officer and Chairman of
the Board of the Company in April 1996 and served as President of the Company
from September 1996 to February 1999. From March 1992 to September 1995, Mr.
Miller served as Chief Executive Officer of Quantum Corporation ("Quantum").
He was a member of the Board of Directors, and Chairman thereof, from,
respectively, May 1992 and September 1993 to August 1995. From 1981 to March
1992, he served in various positions at Control Data Corporation, most
recently as Executive Vice President and President, Information Services. Mr.
Miller is a director of NVidia Corporation and Waters Corporation.
 
  Lucille S. Salhany, 52, has served as a director since January 1998. Ms.
Salhany has been President and Chief Executive Officer of JH Media, Ltd., a
communications consulting firm, since September 1997. She has also been a
private consultant for BHC Communications, Inc., a 50% partner in UPN Network,
since May 1997. Ms. Salhany was President and Chief Executive Officer of UPN
Network from September 1994 to September 1997. From September 1991 to
September 1994, Ms. Salhany was Chairman of the FOX Broadcasting Company.
 
                                       4

<PAGE>
 
Continuing Members of the Board of Directors
 
          Class I Directors (Terms to expire at 2000 Annual Meeting)
 
  Charles T. Brumback, 70, became a director of the Company in April 1996. Mr.
Brumback was Chairman of Tribune Company ("Tribune") from January 1993 to
December 1995 and Chief Executive Officer from August 1990 to May 1995.
Previously, he served as President and Chief Operating Officer of Tribune and
President and Chief Executive Officer of Chicago Tribune Company. He served as
a Tribune board member from 1981 through May 1996.
 
  Robert M. Halperin, 70, has served as a director since May 1991. Mr.
Halperin was Vice Chairman of the Board of Raychem Corporation from April 1990
to November 1994. Prior to April 1990, Mr. Halperin was President of Raychem
Corporation.
 
  Nancy Hawthorne, 48, became a director of the Company in October 1997. Since
October 1997, Ms. Hawthorne has been Chief Executive Officer and Managing
Partner of Hawthorne, Krauss & Associates, LLC, a provider of consulting
services to corporate management. Previously, Ms. Hawthorne served as
Executive Vice President--Enterprise Transformation at MediaOne, a
telecommunications firm. She also served as Senior Vice President and Chief
Financial Officer of MediaOne from 1992 to 1996. Ms. Hawthorne is also a
director of Perini Corporation.
 
           Class II Directors (Terms expire at 2001 Annual Meeting)
 
  Peter C. Gotcher, 39, has served as a director since August 1995 and is a
part-time employee of the Company. From January 1995 to April 1996, Mr.
Gotcher was Executive Vice President and General Manager of Digidesign, the
Company's Audio Division. From October 1983 to January 1995, Mr. Gotcher was
President and Chief Executive Officer of Digidesign, Inc.
 
  Roger J. Heinen, Jr., 48, has served as a director since January 1998. Since
March 1996, Mr. Heinen has been a private consultant to several software and
technology companies. From January 1993 to March 1996, he was Senior Vice
President, Developer Division with Microsoft Corporation. Previously, Mr.
Heinen held various management positions in software development, including
Senior Vice President and General Manager, Software Division with Apple
Computer, Inc. and Corporate Consulting Engineer with Digital Equipment
Corporation. Mr. Heinen is also a director of ANSYS, Inc. and MAPICS, Inc.
 
  William J. Warner, 44, the founder of the Company, has served as a director
since the Company's inception in September 1987 and is a part-time employee of
the Company. Mr. Warner was President and Chief Executive Officer of the
Company from its inception through, respectively, May and September 1991.
Since January 1992, Mr. Warner has been Chairman of Wildfire Communications,
Inc., a developer of personal communications products.
 
Board and Committee Meetings
 
  The Company has a standing Audit Committee of the Board of Directors, which
reviews the Company's financial reporting and internal controls and policies,
recommends the selection of the Company's independent auditors, reviews the
overall plan and scope of the independent audit and provides the opportunity
for direct
 
                                       5

<PAGE>
 
contact between the Company's independent accountants and the Board. The Audit
Committee met five times during 1998. The current Audit Committee members are
Mr. Brumback and Ms. Hawthorne.
 
  The Company has a standing Compensation Committee of the Board of Directors
which reviews, and recommends to the Board for approval, the compensation
programs for the Chief Executive Officer, other executive officers and key
employees. The Compensation Committee also administers the Company's bonus and
incentive plans and programs, including stock option and stock purchase plans.
The Compensation Committee met once during 1998. The current members of the
Compensation Committee are Mr. Halperin and Ms. Salhany.
 
  The Company has a standing Nominating and Governance Committee of the Board
of Directors which recommends nominees for director and reviews the corporate
governance structure of the Company. The Nominating and Governance Committee
met once during 1998. The Nominating and Governance Committee will consider
nominees recommended by stockholders. Stockholders who wish to recommend
nominees for director should submit such recommendations to the Secretary of
the Company, at the principal offices of the Company, who will forward such
recommendations to the Nominating and Governance Committee for consideration.
The current members of the Nominating and Governance Committee are Messrs.
Brumback and Halperin.
 
  During 1998, the Board of Directors met eleven times. With the exception of
Mr. Langlois, each director was present for at least 75% of the aggregate
number of Board meetings and meetings held by all committees on which that
director then served. Mr. Langlois was present at 67% of such meetings.
 

Directors' Compensation
 
  The members of the Board of Directors who are not employees of the Company
are each paid an annual retainer of $15,000 and a fee of $1,500 for each
meeting attended. Under the Company's 1993 Director Stock Option Plan, as
proposed to be amended (the "1993 Plan"), non-employee directors may elect to
receive such amounts as options in lieu of cash. The options are fully
exercisable upon grant, have an exercise price equal to half of the fair
market value of the Company's Common Stock on the date of grant, and cover a
number of shares equal to the cash that would otherwise be payable divided by
the exercise price. See "Amendment of 1993 Director Stock Option Plan."
 
  The Company does not pay directors who are also employees in connection with
their service on the Board of Directors. The Company reimburses all of its
directors for their out-of-pocket expenses in connection with performing their
duties as directors of the Company.
 
  Under the 1993 Plan, as proposed to be amended, directors of the Company who
are not officers or employees of the Company or any subsidiary of the Company
receive an option to purchase 10,000 shares of Common Stock upon their initial
election to the Board of Directors. In addition, each director receives an
option to purchase 10,000 shares of Common Stock on the date of each annual
meeting of stockholders, provided the director has then served a minimum of
six months on the Board of Directors. Under the 1993 Plan, as amended, each
option will become exercisable in accordance with the vesting schedule
determined for such option by the Board at the time of grant. See "Amendment
of 1993 Director Stock Option Plan."
 
                                       6

<PAGE>
 
Executive Compensation
 
  The following table sets forth certain information for each of the last
three fiscal years regarding the compensation of the Company's Chief Executive
Officer and five other executive officers as required under the rules of the
Commission (the "Named Executive Officers").
 
                          Summary Compensation Table
 

<TABLE>
<CAPTION>
                                                     Long-term Compensation
                                                    -------------------------
                                                                  Securities
                             Annual Compensation     Restricted   Underlying
Name and                     --------------------       Stock       Options      All Other
Principal Position      Year Salary ($) Bonus ($)   Awards ($)(1) (Shares)(#) Compensation ($)
- ------------------      ---- ---------- ---------   ------------- ----------- ----------------
<S>                     <C>  <C>        <C>         <C>           <C>         <C>
William J. Miller(2)... 1998  475,008    730,325            --      160,000        3,168(3)
 Chief Executive        1997  425,000    595,000      1,324,500      60,000        3,135(3) 
  Officer,              1996  273,750        --             --      250,000          --      
 Chairman of the Board 
 
Clifford A. Jenks(4)... 1998  350,000    466,375            --      120,000        2,434(3)
 President, Chief       1997  275,000    330,000        529,800      20,000        1,362(3)  
  Operating             1996   64,696     64,375(5)         --       75,000          --      
 Officer               
 
William L. Flaher-
 ty(6)................. 1998  285,000    350,550            --       80,000        3,168(3)
 Senior Vice President  1997  260,000    312,000        397,350      20,000        3,135(3) 
  of                    1996   72,917     80,000(5)         --       50,000          -- 
 Finance, Chief
  Financial Officer    
 and Treasurer
 
David R. Froker........ 1998  240,000    246,000            --       60,000        3,168(3)
 Senior Vice President, 1997  215,000    209,625        264,900      20,000        2,426(3)
 General Manager of     1996  154,333        --             --       25,000          --  
  Digidesign           
 
David E. Olson......... 1998  240,000    246,000            --       60,000        2,874(3)
 Senior Vice President  1997  215,000    209,625        264,900      20,000        2,688(3)
                        1996  158,666     81,314            --       35,000          --
 
Jean A. Proulx(7)...... 1998  240,000    246,000            --       50,000        2,706(3)
 Senior Vice President  1997  144,087    144,087        264,900      40,000          371(3)
</TABLE>

- --------
(1) For each of the Named Executive Officers, represents the fair market value
    of shares of restricted stock on June 26, 1997, the date of grant. Such
    shares vest in five equal annual installments and may not be transferred
    until vested. Vesting of some shares may accelerate by twelve months if
    the price of the Company's Common Stock exceeds $35.00 for 20 consecutive
    trading days and by an additional year if the price of the Company's
    Common Stock exceeds $60.00 for 20 consecutive trading days, in each case
    subject to certain additional limitations.
 
                                       7

<PAGE>
 
  The following numbers of shares of restricted stock received in fiscal 1997
by each of the Named Executive Officers constitute all shares of restricted
stock held by each at the end of fiscal 1998. The value of the shares of
restricted stock is based on the last sale price of the Company's Common Stock
as reported on the Nasdaq National Market on December 31, 1998, $23.375.
 

<TABLE>
<CAPTION>
                                                                    Value as of
                                                                    December 31,
                                                         Shares (#)   1998($)
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Mr. Miller...........................................   50,000    1,168,750
   Mr. Jenks............................................   20,000      467,500
   Mr. Flaherty.........................................   15,000      350,675
   Mr. Froker...........................................   10,000      233,750
   Mr. Olson............................................   10,000      233,750
   Ms. Proulx...........................................   10,000      233,750
</TABLE>

- --------
(2) Mr. Miller became Chief Executive Officer and Chairman of the Board of the
    Company in April 1996 and served as President of the Company from
    September 1996 to February 1999.
(3) Constitutes a matching contribution under the Company's 401(k) Plan.
(4) Mr. Jenks joined the Company in October 1996, became Senior Vice President
    of Worldwide Sales and Marketing in January 1997, became Executive Vice
    President, General Manager of Editing and Effects Products in January 1998
    and became President and Chief Operating Officer in February 1999.
(5) Includes a bonus of $30,000 paid upon commencement of employment.
(6) Mr. Flaherty joined the Company in September 1996, became Senior Vice
    President of Finance and Chief Financial Officer of the Company in January
    1997 and became Treasurer of the Company in December 1997.
(7) Ms. Proulx joined the Company in May 1997 and became Senior Vice President
    in January 1999.
 
                                       8

<PAGE>
 
                       Option Grants in Last Fiscal Year
 
  The following table sets forth certain information regarding options granted
to the Named Executive Officers during the fiscal year ended December 31,
1998.
 

<TABLE>
<CAPTION>
                                                                              Potential
                                                                             Realizable
                                                                          Value at Assumed
                                                                           Annual Rates of
                                                                                Stock
                                                                          Appreciation for
                                        Individual Grants                  Option Term(4)
                         ----------------------------------------------- -------------------
                         Number of
                         Securities   Percent of
                         Underlying      Total      Exercise
                          Options   Options Granted   Price
                          Granted   to Employees in ($/share) Expiration
          Name             (#)(1)   Fiscal Year(2)     (3)       Date      5%($)    10%($)
          ----           ---------- --------------- --------- ---------- --------- ---------
<S>                      <C>        <C>             <C>       <C>        <C>       <C>
William J. Miller.......   80,000        1.58%       29.7500   01/29/08  1,496,769 3,793,107
                           80,000        1.58%       21.4375   12/29/08  1,078,554 2,733,268
 
Clifford A. Jenks.......   60,000        1.18%       29.7500   01/29/08  1,122,577 2,844,830
                           60,000        1.18%       21.4375   12/29/08    808,916 2,049,951
 
William L. Flaherty.....   40,000        0.79%       29.7500   01/29/08    748,385 1,896,554
                           40,000        0.79%       21.4375   12/29/08    539,277 1,366,634
 
David R. Froker.........   30,000        0.59%       29.7500   01/29/08    374,192   948,277
                           30,000        0.59%       21.4375   12/29/08    269,639   683,317
 
David E. Olson..........   30,000        0.59%       29.7500   01/29/08    561,288 1,422,415
                           30,000        0.59%       21.4375   12/29/08    404,458 1,024,976
 
Jean A. Proulx..........   30,000        0.59%       29.7500   01/29/08    561,288 1,422,415
                           20,000        0.39%       21.4375   12/29/08    269,639   683,317
</TABLE>

- --------
(1) Options vest over a four-year period (25% on the first anniversary of the
    date of grant and thereafter in 12 equal quarterly installments).
(2) Calculated based on grants of options to employees of the Company during
    1998 to purchase up to an aggregate of 5,070,197 shares of Common Stock.
(3) The exercise price is equal to the fair market value of the Company's
    Common Stock on the date of grant.
(4) Potential realizable value is based on an assumption that the market price
    of the Company's Common Stock will appreciate at the stated rate,
    compounded annually, from the date of grant until the end of the ten-year
    term. These values are calculated based on rules promulgated by the
    Commission and do not reflect the Company's estimate or projection of
    future stock price. Actual gains, if any, on stock option exercises will
    depend upon the future performance of the Company's Common Stock.
 
                                       9

<PAGE>
 
  Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
                                    Values
 
  The following table sets forth information regarding options exercised
during the year ended December 31, 1998 by the Named Executive Officers.
 

<TABLE>
<CAPTION>
                                                                                  Value of
                                                                                 Unexercised
                                                      Number of Securities      In-the-Money
                                                     Underlying Unexercised      Options at
                             Shares                        Options at          Fiscal Year-End
                            Acquired       Value         Fiscal Year-End        Exercisable/
Name                     on Exercise(#) Realized($) Exercisable/Unexercisable Unexercisable($)*
- ----                     -------------- ----------- ------------------------- -----------------
<S>                      <C>            <C>         <C>                       <C>
William J. Miller.......        --            --         182,500/287,500      684,375/1,078,125
 
Clifford A. Jenks.......     28,438       562,979         17,812/168,750      187,026/1,771,875
 
William L. Flaherty.....        --            --          36,875/113,125      253,516/  777,734
 
David R. Froker.........      6,817       183,801         14,079/ 83,750      115,237/  685,494

David E. Olson..........     34,627       550,354         13,230/ 83,437      108,288/  682,932
 
Jean A. Proulx..........        --            --          15,000/ 75,000      103,125/  515,625
</TABLE>

- --------
*  The per-share value of unexercised in-the-money options is calculated by
   subtracting the option exercise price from $23.375 the last sale price of
   the Company's Common Stock as reported on the Nasdaq National Market on
   December 31, 1998.
 
Employment and Other Agreements
 
  The Company has employment agreements with certain of its executive
officers, including each of the Named Executive Officers, which provide
certain severance benefits, including the payment of up to 12 months of such
officer's base salary if the Company terminates such officer's employment
other than for cause or if the officer terminates employment under certain
limited circumstances. In addition, during the period from the first to the
second anniversary after such a termination, the Company will pay the amount
by which the officer's monthly base salary at the time of termination exceeds
the monthly compensation from any new employer. Upon such a termination, any
unvested stock options or restricted stock awards then held by the officer
that would have vested within 12 months after termination will become
immediately vested. The Company also has agreements with each such officer
providing that, upon any termination of employment without cause or for good
reason (as defined) within two years following a change in control, the
officer will receive severance benefits of up to such officer's base salary
plus two times such officer's annual bonus (grossed up to cover any excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code")) and any unvested options and restricted stock then held by such
officer will become immediately vested and exercisable in full.
 
R
eport of the Compensation Committee
 
  During 1998, the Compensation Committee of the Board of Directors (the
"Committee") was comprised of Mr. Halperin and Ms. Salhany. Both members of
the Committee are non-employee directors. The Committee establishes and
administers the policies that govern both annual compensation and equity
ownership. This report is submitted by the Committee (as comprised at the end
of 1998) and addresses the Company's policies for fiscal 1998 as they apply to
the Named Executive Officers.
 
  The Company uses its compensation program to achieve the following
objectives:
 
 .  To provide compensation that attracts, motivates and retains the best
   talent and highest caliber people to serve customers and achieve strategic
   objectives.
 
                                      10

<PAGE>
 
 .  To align management's interest with the success of the Company.
 
 .  To align management's interests with those of stockholders by including
   long-term equity incentives.
 
 .  To increase the profitability of the Company and, accordingly, increase
   stockholder value.
 
  Overview. The Committee believes that its executive compensation program
provides an overall level of compensation that is competitive in the computer-
based digital editing industry and among companies of comparable size and
complexity. At the beginning of each fiscal year, the Company establishes an
annual salary plan for the Company's senior executive officers based on its
review of salary data for executive officers at comparable companies. The
Company's executive compensation program consists of base salary, annual
incentive compensation, long-term equity incentives in the form of stock
options and certain benefits, such as life insurance benefits, the Company's
employee stock purchase program, medical and life insurance and 401(k) savings
plans, which are generally available to all U.S.-based employees of the
Company.
 
  Salary. Base salary compensation is generally set within the range of
salaries of executive officers with comparable qualifications, experience and
responsibilities at other companies in the same or similar business and of
comparable size. In addition to external market data, salary is determined by
the Company's financial performance and the individual's performance based on
predetermined non-financial objectives. Non-financial objectives include an
individual's contribution to the Company as a whole, including his or her
ability to motivate others, develop the skills necessary to grow as the
Company matures, recognize and pursue new business opportunities and initiate
programs to enhance the Company's growth and success.
 
  Incentive Compensation. The Executive and Senior Management Variable
Compensation Program was the Company's incentive program for executive
officers in 1998. The primary purpose of the program was to provide cash
incentives to executives to achieve the financial goals established by the
Company at the beginning of 1998. Cash bonuses were paid under the program
based on the Company's return on invested capital, which consists of operating
income as a percentage of total invested capital. For purposes of the program,
total invested capital consists of total non-cash assets minus interest
bearing debt. Cash bonuses for 1998 awarded to executive officers of the
Company, including those received by the Named Executive Officers as described
in the Summary Compensation Table under "Executive Compensation," were
determined objectively based on return on invested capital for fiscal 1998.
 
  Long-Term Incentive Compensation. Long-term incentive compensation, in the
form of stock options, grants of restricted stock and offerings under the
Company's stock purchase plan, helps to align the interests of management and
stockholders and enables executives to develop a long-term stock ownership
position in the Company.
 
  Stock Options. In addition to considering an executive's past performance,
the Company's desire to retain an individual is of paramount importance in the
determination of stock option grants. In order to encourage key employees to
continue in the employ of the Company and to motivate such employees to
improve long-term stock market performance, stock options are granted at an
option price equal to the fair market value of the Company's Common Stock on
the date of grant and generally vest over a four-year period. In 1998, the
Company granted options to purchase up to an aggregate of 630,000 shares of
Common Stock to nine executive officers of the Company, including the Named
Executive Officers.
 
  Employee Stock Purchase Plan. The Company's employee stock purchase program,
which is available to virtually all employees, including executive officers,
allows participants to purchase shares of the Company's Common Stock at a 15
percent discount from the fair market value of the Common Stock at the
beginning or end of the applicable purchase period.
 
                                      11

<PAGE>
 
  Compensation of Chief Executive Officer. As the Company's President and
Chief Executive Officer during fiscal 1998, William J. Miller received salary
compensation of $475,008. Mr. Miller's salary was based on an assessment of
comparative industry salaries using established executive compensation
surveys. Mr. Miller's cash bonus of $730,325 for 1998 was determined
objectively based on the Company's performance in 1998 in accordance with the
terms of the Company's Executive and Senior Management Variable Compensation
Program. See "Incentive Compensation."
 
  In January 1998, the Company granted Mr. Miller an option to purchase up to
80,000 shares of Common Stock at $29.75 per share. In December 1998, the
Company granted Mr. Miller an additional option to purchase up to 80,000
shares of Common Stock at $21.4375 per share. One-quarter of the shares
covered by these options will become exercisable on the first anniversary of
the dates of grant, and the remaining shares will become exercisable in twelve
equal quarterly installments thereafter. The Committee believes that these
options provide an appropriate long-term incentive for continued efforts on
behalf of the Company.
 
  Impact of Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Code generally disallows a tax deduction to public companies for compensation
over one million dollars paid to the corporation's chief executive officer or
any of its other four most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Committee reviews the potential effect of
Section 162(m) periodically and generally seeks to structure the stock options
granted to its executive officers in a manner that is intended to avoid
disallowances under Section 162(m). However, the Committee reserves the right
to use its judgment to authorize compensation payments which may be in excess
of the limit when the Committee believes such payment is appropriate, after
taking into consideration changing business conditions or the officer's
performance, and is in the best interests of the stockholders.
 
                                            Compensation Committee
 
                                            Robert M. Halperin
                                            Lucille S. Salhany
 
Compensation Committee Interlocks and Insider Participation
 
  The members of the Compensation Committee in 1998 were Mr. Halperin and Ms.
Salhany, neither of whom is an employee of the Company. No executive officer
of the Company is a member of the compensation committee of another
corporation or other entity (or other persons serving an equivalent function
for such entity) whose executive officers served on the Company's Board of
Directors.
 

Section 16(a) Beneficial Ownership Reporting Compliance
 
  Based solely on its review of copies of reports filed by persons required to
file such reports with respect to beneficial ownership of securities of the
Company ("Reporting Persons") pursuant to Section 16(a) of the Exchange Act,
and written representations from certain Reporting Persons, the Company
believes that all filings required to be made by Reporting Persons of the
Company were timely made in accordance with the requirements of the Exchange
Act.
 
                                      12

<PAGE>
 
S
tock Performance Graph
 
  The following graph compares the cumulative total stockholder return on the
Common Stock of the Company for the last five years with the cumulative total
return of (i) the Nasdaq National Market Index and (ii) a Peer Group Index*
over the same period. This comparison assumes the investment of $100 on
December 31, 1993 in the Company's Common Stock, the Nasdaq National Market
Index and the Peer Group Index and assumes dividends, if any, are reinvested.
 
                             [GRAPH APPEARS HERE]


<TABLE> 
<CAPTION> 
                         Dec. 31, 1993    Dec. 30, 1994    Dec. 29, 1995    Dec. 31, 1996    Dec. 31, 1997    Dec. 31, 1998 
                         -------------    -------------    -------------    -------------    -------------    -------------
<S>                     <C>              <C>              <C>              <C>              <C>              <C>      
AVID TECHNOLOGY, INC.        $100            $150.29          $ 88.89          $ 48.54          $125.15           $109.36
SIC CODE INDEX               $100            $128.26          $129.58          $132.03          $128.90           $139.38
NASDAQ MARKET INDEX          $100            $104.99          $136.18          $169.23          $207.00           $291.96        
</TABLE>
 
- --------
*  Peer Group Index reflects the stock performance of the 63 publicly traded
   companies which comprise the SIC Code Index 3663 (Radio and Television
   Broadcasting and Communications Equipment).
 
                                      13

<PAGE>
 
                    AMENDMENT OF 1997 STOCK INCENTIVE PLAN
 
  The Company's 1997 Stock Incentive Plan (the "1997 Plan") currently provides
for the issuance of up to 1,500,000 shares of Common Stock. The Board of
Directors voted to amend the 1997 Plan, subject to shareholder approval, to
increase the number of shares authorized for issuance thereunder by 500,000
shares to 2,000,000 shares of Common Stock. The Board of Directors' primary
reason for adopting the amendment to the 1997 Plan was to enhance the
Company's ability to attract, retain and motivate qualified employees. The
following summary of the 1997 Plan is qualified in all respects by reference
to the full text of the 1997 Plan, which is available upon request to the
Secretary of the Company.
 
Summary of the 1997 Plan
 
  The 1997 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code, nonstatutory stock options, restricted
stock awards and other stock-based awards, including the grant of shares based
upon certain conditions, the grant of securities convertible into Common Stock
and the grant of stock appreciation rights (collectively "Awards").
 
  Incentive Stock Options and Nonstatutory Stock Options. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. Options may be granted at an
exercise price which may be less than, equal to or greater than the fair
market value of the Common Stock on the date of grant. Incentive stock
options, however, and options intended to qualify as performance based
compensation under Section 162(m) of the Code, may not be granted at an
exercise price less than the fair market value of the Common Stock on the date
of grant (or less than 110% of the fair market value in the case of incentive
stock options granted to optionees holding more than 10% of the voting power
of the Company). The 1997 Plan permits the Board to determine the manner of
payment of the exercise price of options, including through payment by cash,
check or in connection with a "cashless exercise" through a broker, by
surrender to the Company of shares of Common Stock, by delivery to the Company
of a promissory note, or by any other lawful means.
 
  Restricted Stock Awards. Awards of restricted stock entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the
end of the applicable restriction period established for such Award. As of
April 12, 1999, 351,046 shares of restricted stock were outstanding. A maximum
of 398,954 additional shares may be issued as restricted stock under the 1997
Plan.
 
  Other Stock-Based Awards. Under the 1997 Plan, the Board has the right to
grant other Awards, including Awards of unrestricted Common Stock and Awards,
the value of which is based upon the value of Common Stock (such as securities
convertible into Common Stock and stock appreciation rights), having such
terms and conditions as the Board may determine.
 
  Eligibility to Receive Awards. Officers, employees, directors, consultants
and advisors of the Company and its subsidiaries are eligible to be granted
Awards under the 1997 Plan. Currently, however, the Code provides that
incentive stock options may be granted only to employees. The maximum number
of shares with respect to which an Award may be granted to any participant
under the 1997 Plan may not exceed 300,000 shares per calendar year.
 
                                      14

<PAGE>
 
  As of April 12, 1999, approximately 2,000 persons were eligible to receive
Awards under the 1997 Plan, including the Company's executive officers and
non-employee directors. The granting of Awards under the 1997 Plan is
discretionary and the Company cannot now determine the number or type of
Awards to be granted in the future to any particular person or group.
 
  On April 12, 1999, the last reported sale price of the Company Common Stock
on the Nasdaq National Market was $18.50 per share.
 
  Administration. The 1997 Plan is administered by the Board of Directors. The
Board has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 1997 Plan and to interpret the
provisions of the 1997 Plan. Pursuant to the terms of the 1997 Plan, the Board
of Directors may delegate authority under the 1997 Plan to one or more
committees of the Board, and subject to certain limitations, to one or more
executive officers of the Company. The Board has appointed the Compensation
Committee to administer certain aspects of the 1997 Plan. Subject to any
applicable limitations contained in the 1997 Plan, the Board of Directors, the
Compensation Committee, or any other committee or executive officer to whom
the Board delegates authority, selects the recipients of Awards and determines
(i) the number of shares of Common Stock covered by options and the dates upon
which such options become exercisable, (ii) the exercise price of options,
(iii) the duration of options, and (iv) the number of shares of Common Stock
subject to any restricted stock or other stock-based Awards and the terms and
conditions of such Awards, including conditions for repurchase, issue price
and repurchase price.
 
  The Board of Directors is required to make appropriate adjustments in
connection with the 1997 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 1997 Plan), the
Board of Directors is authorized to provide for outstanding options or other
stock-based Awards to be assumed or substituted for, to accelerate the Awards
to make them fully exercisable prior to consummation of the Acquisition Event
or, if cash is to be received by holders of Common Stock on consummation of
the Acquisition Event, to provide for a cash out of the value of any
outstanding options. If any Award expires or is terminated, surrendered,
canceled or forfeited, the unused shares of Common Stock covered by such Award
will again be available for grant under the 1997 Plan.
 
  Amendment or Termination. No Award may be made under the 1997 Plan after
February 26, 2007, but Awards previously granted may remain exercisable after
that date. The Board of Directors may at any time amend, suspend or terminate
the 1997 Plan, except that after the date of such amendment no Award that is
intended to comply with Section 162(m) of the Code shall become exercisable,
realizable or vested unless and until such amendment shall have been approved
by the Company's stockholders.
 
  The 1997 Plan is not qualified under Section 401(a) of the Code.
 
Federal Income Tax Consequences
 
  See Appendix A to this Proxy Statement for a discussion of the U.S. federal
income tax consequences of the 1997 Plan.
 
Board Recommendation
 
  The Board of Directors believes that the approval of the amendment of the
1997 Plan is in the best interests of the Company and its stockholders and
therefore recommends that the stockholders vote FOR this proposal.
 
                                      15

<PAGE>
 
                 AMENDMENT OF 1993 DIRECTOR STOCK OPTION PLAN
 
  The Board of Directors has adopted amendments to the Company's 1993 Director
Stock Option Plan (the "1993 Plan"), subject to stockholder approval, to
effect the following:
 
    1. The number of shares to be granted to a non-employee director upon his
  or her election to the Board was increased from 5,000 to 10,000.
 
    2. The annual grant of options to non-employee directors was increased
  from 3,000 shares to 10,000 shares.
 
    3. The term of options granted to non-employee directors was changed from
  ten years to six years.
 
    4. The 1993 Plan was amended to give the Board of Directors discretion to
  determine at the time of grant the vesting schedule of non-employee
  director options granted under 1 and 2 above.
 
    5. Non-employee directors are entitled to elect to receive, in lieu of
  annual retainers and/or meeting fees, an immediately exercisable
  nonstatutory option to purchase shares of Common Stock at half of the fair
  market value of the Company's Common Stock on the date of grant. The number
  of shares subject to such options equals the value of the cash amount that
  would otherwise have been received divided by the exercise price.
 
  The Board of Directors' primary reason for these amendments was to enhance
the Company's ability to attract, retain and motivate outside directors to
serve and remain as directors of the Company. In amending the vesting
provisions of the 1993 Plan, the Company considered expected changes in
accounting treatment for options granted to outside directors. Under the
expected changes, the vesting schedule of such options would affect the amount
of any expense attributable to the grant of such options. The discretion
granted to the Board by the amendment is intended to afford the Company
flexibility in responding to such expected accounting changes.
 
Summary of the 1993 Plan, as amended
 
  The 1993 Plan provides for the grant of non-statutory stock options (the
"Options") not entitled to special tax treatment under Section 422 of the
Code. As of April 12, 1999, an aggregate of 103,187 shares were available for
issuance under the 1993 Plan, options for an aggregate of 111,000 shares had
been granted to non-employee directors under the plan and options for 0, 0 and
5,000 shares had been granted, respectively, to Messrs. Langlois and Miller
and Ms. Salhany, the nominees for director at the annual meeting.
 
  Initial and Annual Stock Options. Upon the initial election of any non-
employee director as a director of the Company, the Company grants to such
director an Option to purchase 10,000 shares of Common Stock. On the date of
each annual meeting of stockholders of the Company, the Company grants to each
non-employee director who has served for at least six months an Option to
purchase an additional 10,000 shares of Common Stock. The exercise price is
equal to the last reported sales price per share of the Company's Common Stock
on the Nasdaq National Market on the date of the grant. The 1993 Plan permits
payment of the exercise price of Options through payment by cash, check or
through a broker by an irrevocable undertaking by the broker to deliver
promptly to the Company sufficient funds to pay the exercise price. The Board
of Directors determines the vesting schedule of such Options at the time of
grant.
 
  Elective Stock Options. In lieu of annual retainers and/or meeting fees,
non-employee directors of the Company may elect to receive an immediately
vested Option to purchase shares of the Company's Common Stock at half of the
closing price of the Company's Common Stock on the last trading day before the
date of grant. The date of grant of an option granted in lieu of an annual
retainer will be the tenth business day after the
 
                                      16

<PAGE>
 
date of the annual meeting of stockholders. The date of grant of an option
granted in lieu of a meeting fee will be the tenth business day after the date
of the Board or committee meeting. The number of shares subject to the Option
is equal to the cash amount that would otherwise have been received by the
director divided by the exercise price. For 1999, the election to receive the
annual retainer and/or meeting fees as an immediately vested Option in lieu of
cash must be made within 30 days after the date that amendments of the 1993
Plan are approved by stockholders. Such election will apply only to payments
made after the date of the election. For all subsequent years, the election
must be made before the beginning of the taxable year in which the
compensation is payable, except that in the first year in which a non-employee
director becomes eligible to participate in the 1993 Plan, the election to
receive the annual retainer and/or meeting fees as an Option in lieu of cash
must be made within 30 days after the date the non-employee director becomes
eligible. Such election will apply only to payments made after the date of the
election.
 
  Administration. The 1993 Plan is administered by the Board of Directors. The
Board has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 1993 Plan and to interpret the
provisions of the 1993 Plan. The Board of Directors is required to make
appropriate adjustments in connection with the 1993 Plan and any outstanding
Options to reflect stock dividends, stock splits and certain other events. In
the event of a Change in Control (as defined in the 1993 Plan), all Options
outstanding as of the date of such Change in Control become exercisable in
full. If any Option expires or is terminated, surrendered, canceled or
forfeited, the unused shares of Common Stock covered by such Option will again
be available for grant under the 1993 Plan.
 
  Amendment. The Board of Directors may at any time amend, suspend or
terminate the 1993 Plan; provided, however, that without approval of the
stockholders, the Company may not change the number of shares subject to the
1993 Plan (except in the case of a change in the Common Stock of the Company),
change the designation of the class of directors eligible to receive Options,
or materially increase the benefits accruing to participants under the 1993
Plan.
 
  The 1993 Plan is not qualified under Section 401(a) of the Code.
 
Federal Income Tax Consequences
 
  See Appendix B to this Proxy Statement for a discussion of the U.S. federal
income tax consequences of the 1993 Plan.
 
Board Recommendation
 
  The Board of Directors believes that the approval of the amendment of the
1993 Plan is in the best interests of the Company and its stockholders and
therefore recommends that the stockholders vote FOR this proposal.
 
                                      17

<PAGE>
 
             RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
 
  The Audit Committee has selected the firm of PricewaterhouseCoopers LLP
("PwC") as the Company's independent accountants for the current fiscal year.
PwC has served as the Company's independent accountants since 1992. Although
stockholder ratification of the selection of PwC is not required by law, the
Board of Directors believes that it is advisable to give stockholders the
opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Company will reconsider the selection of PwC.
 
  Representatives of PwC are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement if they desire to do so and
will also be available to respond to appropriate questions from stockholders.
 
                                 OTHER MATTERS
 
  Management does not know of any other matters that may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
 
  All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of shares held in their names and the Company will reimburse them for
out-of-pocket expenses incurred on behalf of the Company.
 
Stockholder Proposals for the 2000 Annual Meeting of Stockholders
 
  Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Secretary of the Company at
its principal office in Tewksbury, Massachusetts not later than December 25,
1999 in order to be included in the Company's proxy statement for that
meeting.
 
  In addition, the Company's by-laws require all stockholder proposals to be
timely submitted in advance to the Company at the above address (other than
proposals submitted for inclusion in the Company's proxy statement and form of
proxy card, which are described above). To be timely, the notice must be
received by the Company no later than March 24, 2000 or 60 days before the
date of the 2000 annual meeting, whichever is later. The Company has not yet
set a date for the 2000 Meeting. However, if the 2000 annual meeting is held
on June 2, 2000 (the anniversary of the 1999 Annual Meeting), the deadline for
delivery of the notice is expected to be April 3, 2000.
 
                                                 By Order of the Board of
                                                        Directors,
 
                                                 Ethan E. Jacks
                                                 Secretary
 
April 23, 1999
 
  THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT STOCKHOLDERS PLAN TO ATTEND, STOCKHOLDERS ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR SHARES PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
 
                                      18

<PAGE>
 
                                     PROXY

                             AVID TECHNOLOGY, INC.

                        ANNUAL MEETING OF STOCKHOLDERS

  This Proxy is Solicited on behalf of the Board of Directors of the Company

  The undersigned, having received notice of the meeting and the accompanying
proxy statement, and revoking all prior proxies, hereby appoints Messrs. William
J. Miller and William L. Flaherty, and each of them, with full power of
substitution, as proxies to represent and vote all shares of stock which the
undersigned would be entitled to vote, if personally present, at the Annual
Meeting of Stockholders of Avid Technology, Inc. to be held at BankBoston, 100
Federal Street, Boston, Massachusetts, on Wednesday, June 2, 1999, at 10:00
a.m., and at any adjournment thereof, with respect to the following matters set
forth on the reverse side.

 
- ---------------                                                ---------------
  SEE REVERSE    CONTINUED AND TO BE SIGNED ON REVERSE SIDE      SEE REVERSE
      SIDE                                                           SIDE   
- ---------------                                                --------------- 



<PAGE>
 
[X]  Please mark
     votes as in
     this example.

     1. To elect the three nominees listed below to serve as 
        Class III Directors for a term of three years.
        Nominees:  Mr. Daniel Langlois, Mr. William J. Miller
                   and Ms. Lucille S. Salhany

           FOR   [_]    [_] WITHHELD           MARK HERE    [_]    
           ALL              FROM ALL         IF YOU PLAN TO        
         NOMINEES           NOMINEES           ATTEND THE          
                                                 MEETING           
                                                                   
                                               MARK HERE    [_]    
                                              FOR ADDRESS          
                                               CHANGE AND          
                                               NOTE BELOW           
[_]______________________________________
   For all nominees except as noted above 

                                            
                                              FOR       AGAINST       ABSTAIN 
     2. To approve an amendment to the        [_]         [_]           [_]   
        Company's 1997 Stock Incentive Plan.                                   
   
     3. To approve an amendment to the        [_]         [_]           [_]
        Company's 1993 Director Stock            
        Option Plan.                                                           

     4. To ratify the selection of            [_]         [_]           [_]
        PricewaterhouseCoopers LLP as            
        independent accountants of the                                         
        Company.


     In their discretion, the proxies are authorized to vote upon
     such other matters as may properly come before the meeting
     or any adjournment thereof. This proxy, when properly executed,
     will be voted in the manner directed herein by the undersigned. If
     no direction is given, this proxy will be voted FOR Proposals 
     1 through 4.

     Please sign and return immediately.
  
     When signing as attorney, executor, administrator, trustee or 
     guardian, please give full title. If more than one trustee, all should
     sign. All joint owners must sign.



Signature:_____________________________ Date:____________      


Signature:_____________________________ Date:____________      


<PAGE>
 
                                  APPENDIX A
 
                        FEDERAL INCOME TAX CONSEQUENCES
                       OF THE 1997 STOCK INCENTIVE PLAN
 
  The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under
the 1997 Plan, and with respect to the sale of Common Stock acquired
thereunder.
 
  Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option.
Instead, a participant will recognize taxable income with respect to an
incentive stock option only upon the sale of Common Stock acquired through the
exercise of the option ("ISO Stock"). The exercise of an incentive stock
option, however, may subject the participant to the alternative minimum tax.
 
  Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least
two years from the date the option was granted (the "Grant Date") and one year
from the date the option was exercised (the "Exercise Date"), then the
participant will recognize long-term capital gain in an amount equal to the
excess of the sale price of the ISO Stock over the exercise price.
 
  If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of
the gain recognized by the participant will be ordinary compensation income
and the remaining gain, if any, will be a capital gain. This capital gain will
be a long-term capital gain if the participant has held the ISO Stock for more
than one year prior to the date of the sale.
 
  If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a long-
term capital loss if the participant has held the ISO Stock for more than one
year prior to the date of the sale.
 
  Non-Statutory Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a non-
statutory option. However, a participant generally will recognize ordinary
compensation income upon the exercise of a non-statutory option in an amount
equal to the excess of the fair market value of the Common Stock acquired
through the exercise of the option (the "NSO Stock") on the Exercise Date over
the exercise price.
 
  A participant will have a tax basis for any NSO Stock equal to the exercise
price plus any income recognized upon the exercise of the option. Upon selling
NSO Stock, a participant generally will recognize capital gain or loss in an
amount equal to the difference between the sale price of the NSO Stock and the
participant's tax basis in the NSO Stock. This capital gain or loss will be a
long-term capital gain or loss if the participant has held the NSO Stock for
more than one year prior to the date of the sale.
 
                                      A-1

<PAGE>
 
  Restricted Stock. A participant will not recognize taxable income upon the
grant of a restricted stock award unless the participant makes an election
under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize ordinary compensation income, for
the year in which the award is granted, in an amount equal to the difference
between the fair market value of the Common Stock at the time the award is
granted and the purchase price paid for the Common Stock. If a Section 83(b)
Election is not made, then the participant will recognize ordinary
compensation income at the time that the forfeiture provisions or restrictions
on transfer lapse in an amount equal to the difference between the fair market
value of the Common Stock at the time of such lapse and the original purchase
price paid for the Common Stock. The participant will have a tax basis in the
Common Stock acquired equal to the sum of the price paid and the amount of
ordinary compensation income recognized.
 
  Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss equal to
the difference between the sale price of the Common Stock and the
participant's tax basis in the Common Stock. The gain or loss will be a long-
term gain or loss if the shares are held for more than one year. For this
purpose, the holding period shall begin just after the date on which the
forfeiture provisions or restrictions lapse if a Section 83(b) Election is not
made, or just after the award is granted if a Section 83(b) Election is made.
 
  Other Stock-Based Awards. The tax consequences associated with any other
stock-based award granted under the 1997 Plan will vary depending on the
specific terms of such award, including, whether or not the award has a
readily ascertainable fair market value, whether or not the award is subject
to forfeiture provisions or restrictions on transfer, the nature of the
property to be received by the participant under the award, the applicable
holding period and the participant's tax basis.
 
  Tax Consequences to the Company. The grant of an Award under the 1997 Plan
will have no tax consequences to the Company. Moreover, in general, neither
the exercise of an incentive stock option acquired under the 1997 Plan nor the
sale of any Common Stock acquired under the 1997 Plan will have any tax
consequences to the Company. However, the Company generally will be entitled
to a business-expense deduction with respect to any ordinary compensation
income recognized by a participant under the 1997 Plan, including as a result
of the exercise of a non-statutory stock option, a Disqualifying Disposition
or a Section 83(b) Election. Any such deduction will be subject to the
limitations of Section 162(m) of the Code.
 
                                      A-2

<PAGE>
 
                                  APPENDIX B
 
                        FEDERAL INCOME TAX CONSEQUENCES
                    OF THE 1993 DIRECTOR STOCK OPTION PLAN
 
  The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under
the 1993 Plan, and with respect to the sale of Common Stock acquired
thereunder.
 
  Tax Consequences to Participants. A participant will not recognize taxable
income upon the grant of an option under the 1993 Plan. Nevertheless, a
participant generally will recognize ordinary compensation income upon the
exercise of the option in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option (the
"Option Stock") on the exercise date over the exercise price.
 
  A participant will have a tax basis for any Option Stock equal to the
exercise price plus any income recognized with respect to the option. Upon
selling Option Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the Option
Stock and the participant's tax basis in the Option Stock. This capital gain
or loss will be a long-term capital gain or loss if the participant has held
the Option Stock for more than one year prior to the date of the sale, and
will be a short-term capital gain or loss if the participant has held the
Option Stock for a shorter period.
 
  Tax Consequences to the Company. The grant of an option under the 1993 Plan
will have no tax consequences to the Company. The Company generally will be
entitled to a business-expense deduction, however, with respect to any
ordinary compensation income recognized by a participant under the 1993 Plan.
 
                                      B-1

<PAGE>
 
                                   Appendix C

                             Avid Technology, Inc.

                           1997 Stock Incentive Plan

1.   Purpose

     The purpose of this 1997 Stock Incentive Plan (the "Plan") of Avid
Technology, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any present or future subsidiary corporations of Avid Technology, Inc. as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code").

2.   Eligibility

     All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other stock-
based awards (each, an "Award") under the Plan.  Any person who has been granted
an Award under the Plan shall be deemed a "Participant".

3.   Administration, Delegation

     (a) Administration by Board of Directors.  The Plan will be administered by
the Board of Directors of the Company (the "Board").  The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency.  All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award.  No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.

     (b) Delegation to Executive Officers.  To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and

                                      C-1

<PAGE>
 
the maximum number of shares for any one Participant to be made by such
executive officers.

     (c) Appointment of Committees.  To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee").  All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.

4.   Stock Available for Awards

     (a) Number of Shares.  Subject to adjustment under Section 4(c), Awards may
be made under the Plan for up to 1,000,000 shares of Common Stock, $.01 par
value per share, of the Company (the "Common Stock").  If any Award expires or
is terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.

     (b) Per-Participant Limit  Subject to adjustment under Section 4(c), for
Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares with
respect to which an Award may be granted to any Participant under the Plan shall
be 300,000 per calendar year.  The Per-Participant limit described in this
Section 4(b) shall be construed and applied consistently with Section 162(m) of
the Code.

     (c) Adjustment to Common Stock.  In the event of any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award, and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate.  If this Section 4(c) applies and Section 8(e)(l)
also applies to any event, Section 8(e)(l) shall be applicable to such event,
and this Section 4(c) shall not be applicable.

                                      C-2

<PAGE>
 
5.   Stock Options

     (a) General.  The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

     (b) Incentive Stock Options.  An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code.  The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

     (c) Exercise Price.  The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.

     (d) Duration of Options.  Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

     (e) Exercise of Option.  Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

     (f) Payment Upon Exercise.  Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as the Board may otherwise provide in an Option, delivery
     of an irrevocable and unconditional undertaking by a credit worthy broker
     to deliver promptly to the Company sufficient funds to pay the exercise
     price, or delivery by the Participant to the Company of a copy of
     irrevocable and unconditional instructions to a credit worthy broker to
     deliver promptly to the Company cash or a check sufficient to pay the
     exercise price;

          (3) to the extent permitted by the Board and explicitly provided in
     the Option (i) by delivery of shares of Common Stock owned by the
     Participant valued at their fair market value as determined by the Board in
     good faith ("Fair Market Value"), which Common Stock was owned by the
     Participant at least six months

                                      C-3

<PAGE>
 
     prior to such delivery, (ii) by delivery of a promissory note of the
     Participant to the Company on terms determined by the Board, or (iii) by
     payment of such other lawful consideration as the Board may determine; or

          (4) any combination of the above permitted forms of payment.

6.   Restricted Stock

     (a) Grants.  The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").  The
Company may issue Restricted Stock Awards for up to a maximum of 500,000 shares
of Common Stock under this Plan (as adjusted pursuant to Section 4(c) and net of
any Restricted Stock Awards forfeited under this Plan).

     (b) Terms and Conditions.  The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any.  Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee).  At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary").  In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

7.   Other Stock-Based Awards

     The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.

8.   General Provisions Applicable to Awards

     (a) Transferability of Awards.   Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant.  References to a 

                                      C-4

<PAGE>
 
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

     (b) Documentation.   Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine.  Each Award may
contain terms and conditions in addition to those set forth in the Plan.

     (c) Board Discretion.   Except as otherwise provided by the Plan, each type
of Award may be made alone in addition or in relation to any other type of
Award.  The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.

     (d) Termination of Status.   The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

     (e)  Acquisition Events

          (1) Consequences of Acquisition Events.  Upon the occurrence of an
     Acquisition Event (as defined below), or the execution by the Company of
     any agreement with respect to an Acquisition Event, the Board shall take
     any one or more of the following actions with respect to then outstanding
     Awards: (i) provide that outstanding Options shall be assumed, or
     equivalent Options shall be substituted, by the acquiring or succeeding
     corporation (or an affiliate thereof), provided that any such Options
     substituted for Incentive Stock Options shall satisfy, in the determination
     of the Board, the requirements of Section 424(a) of the Code; (ii) upon
     written notice to the Participants, provide that all then unexercised
     Options will become exercisable in full as of a specified date (the
     "Acceleration Date") prior to the Acquisition Event and will terminate
     immediately prior to the consummation of such Acquisition Event, except to
     the extent exercised by the Participants between the Acceleration Date and
     the consummation of such Acquisition Event; (iii) in the event of an
     Acquisition Event under the terms of which holders of Common Stock will
     receive upon consummation thereof a cash payment for each share of Common
     Stock surrendered pursuant to such Acquisition Event (the "Acquisition
     Price"), provide that all outstanding Options shall terminate upon
     consummation of such Acquisition Event and each Participant shall receive,
     in exchange therefor, a cash payment equal to the amount (if any) by which
     (A) the Acquisition Price multiplied by the number of shares of Common
     Stock subject to such outstanding Options (whether or not then
     exercisable), exceeds (B) the aggregate exercise price of such Options;
     (iv) provide that all Restricted Stock Awards then outstanding shall become
     free of all restrictions prior 

                                      C-5

<PAGE>
 
     to the consummation of the Acquisition Event; and (v) provide that any
     other stock-based Awards outstanding (A) shall become exercisable,
     realizable or vested in full, or shall be free of all conditions or
     restrictions, as applicable to each such Award, prior to the consummation
     of the Acquisition Event, or (B), if applicable, shall be assumed, or
     equivalent Awards shall be substituted, by the acquiring or succeeding
     corporation (or an affiliate thereof).

          An "Acquisition Event" shall mean: (a) any merger or consolidation
     which results in the voting securities of the Company outstanding
     immediately prior thereto continuing to represent (either by remaining
     outstanding or by being converted into voting securities of the surviving
     or acquiring entity) less than 50% of the combined voting power of the
     voting securities of the Company or such surviving or acquiring entity
     outstanding immediately after such merger or consolidation; (b) any sale of
     all or substantially all of the assets of the Company; (c) the complete
     liquidation of the Company; or (d) the acquisition of "beneficial
     ownership" (as defined in Rule 13d-3 under the Exchange Act) of securities
     of the Company representing 50% or more of the combined voting power of the
     Company's then outstanding securities (other than through a merger or
     consolidation or an acquisition of securities directly from the Company) by
     any "person", as such term is used in Sections 13(d) and 14(d) of the
     Exchange Act other than the Company, any trustee or other fiduciary holding
     securities under an employee benefit plan of the Company or any corporation
     owned directly or indirectly by the stockholders of the Company in
     substantially the same proportion as their ownership of stock of the
     Company.

          (2) Assumption of Options Upon Certain Events.  The Board may grant
     Awards under the Plan in substitution for stock and stock-based awards held
     by employees of another corporation who become employees of the Company as
     a result of a merger or consolidation of the employing corporation with the
     Company or the acquisition by the Company of property or stock of the
     employing corporation.  The substitute Awards shall be granted on such
     terms and conditions as the Board considers appropriate in the
     circumstances.

     (f) Withholding.  Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability.  The Board may allow Participants to
satisfy such tax obligations in whole or in part in shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value.  The Company may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to a
Participant.

                                      C-6

<PAGE>
 
     (g) Amendment of Award.  The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

     (h) Conditions on Delivery of Stock.  The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

     (i) Acceleration.  The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of all restrictions or that any other stock-based Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

9.   Miscellaneous

     (a) No Right To Employment or Other Status.  No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company.  The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.

     (b) No Rights As Stockholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.

     (c) Effective Date and Term of Plan.  The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant designated as subject to Section 162(m) by the Board shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders.  No Awards shall be
granted under the Plan after the completion of ten years from the earlier of (i)
the date on which the Plan was adopted by the Board or (ii) the date 

                                      C-7

<PAGE>
 
the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.

     (d) Amendment of Plan.  The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.

     (e) Stockholder Approval.  For purposes of this Plan, stockholder approval
shall mean approval by a vote of the stockholders in accordance with the
requirements of Section 162(m) of the Code.

     (f) Governing Law.  The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

                                      C-8

<PAGE>
 
                             Avid Technology, Inc.

                           1997 Stock Incentive Plan

                                Amendment No. 1

     Pursuant to Section 9(d) of the 1997 Stock Incentive Plan (the "Plan") of
Avid Technology, Inc. (the "Company"), the Plan is hereby amended as set forth
below. Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Plan.

1.   Section 4(a) of the Plan is hereby deleted in its entirety and replaced
     with the following:

     "(a) Number of Shares.  Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 1,500,000 shares of Common Stock, $.01 par
value per share, of the Company (the "Common Stock").  If any Award expires or
is terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares."

2.   Section 6(a) of the Plan is hereby deleted in its entirety and replaced
     with the following:

     "(a) Grants.  The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, "Restricted Stock Award").  The
Company may issue Restricted Stock Awards for up to a maximum of 750,000 shares
of Common Stock under this Plan (as adjusted pursuant to Section 4(c) and net of
any Restricted Stock Awards forfeited under this Plan)."

     This amendment shall be effective as of the date of its approval by the
Board of Directors of the Company, subject to stockholder approval.

                         Adopted by the Board of Directors March 27, 1998

                         Approved by the stockholders May 19, 1998

                                      C-9

<PAGE>
 
                             Avid Technology, Inc.

                           1997 Stock Incentive Plan

                                Amendment No. 2

     Pursuant to Section 9(d) of the 1997 Stock Incentive Plan (the "Plan") of
Avid Technology, Inc. (the "Company"), the Plan is hereby amended as set forth
below. Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Plan.

Section 4(a) of the Plan is hereby deleted in its entirety and replaced with 
the following:

          "(a) Number of Shares.  Subject to adjustment under Section 4(c),
Awards may be made under the Plan for up to 2,000,000 shares of Common Stock,
$.01 par value per share, of the Company (the "Common Stock").  If any Award
expires or is terminated, surrendered or canceled without having been fully
exercised or is forfeited in whole or in part or results in any Common Stock not
being issued, the unused Common Stock covered by such Award shall again be
available for the grant of Awards under the Plan, subject, however, in the case
of Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code.  Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares."

     This amendment shall be effective as of the date of its approval by the
Board of Directors of the Company, subject to stockholder approval.

                         Adopted by the Board of Directors December 9, 1998

                         Approved by the stockholders June 2, 1999

                                      C-10

<PAGE>
 
                                   Appendix D

                             AVID TECHNOLOGY, INC.

                  1993 DIRECTOR STOCK OPTION PLAN, AS AMENDED

     1.   Purpose
          -------

     The purpose of this 1993 Director Stock Option Plan (the "Plan") of Avid
Technology, Inc. (the "Company") is to encourage ownership in the Company by
outside directors of the Company whose continued services are considered
essential to the Company's future progress and to provide them with a further
incentive to remain as directors of the Company.

     2.   Administration
          --------------

     The Board of Directors shall supervise and administer the Plan.  Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5.  However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.

     3.   Participation in the Plan
          -------------------------

     Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.

     4.   Stock Subject to the Plan
          -------------------------

          (a) The maximum number of shares which may be issued under the Plan
shall be 220,000 shares of the Company's Common Stock, par value $.0l per share
("Common Stock"), subject to adjustment as provided in Section 9 of the Plan.
All share amounts set forth in this Plan reflect the 2-for-3 stock split
approved by the Board of Directors on January 27, 1993.

          (b) If any outstanding option under the Plan for any reason expires or
is terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.

          (c) All options granted under the Plan shall be nonstatutory options
not entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended to date and as it may be amended from time to time (the
"Code").

                                      D-1

<PAGE>
 
     5.   Terms, Conditions and Form of Options
          -------------------------------------

     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:

          (a)  Option Grant Dates.
               ------------------ 

               (i) Upon the initial election of any eligible director as a
               director of the Company, the Company shall grant to such director
               an option to purchase 5,000 shares of Common Stock (the "Initial
               Option").

               (ii) On the date of each annual meeting of stockholders of the
               Company, the Company shall grant to each eligible director who
               has served on the Board of Directors for a minimum of six months
               an option to purchase 3,000 shares of Common Stock (the "Annual
               Option").

          (b) Option Exercise Price.  The option exercise price per share for
              ---------------------                                          
each option granted under the Plan shall equal (i) the last reported sales price
per share of the Company's Common Stock on the NASDAQ National Market System
(or, if the Company is traded on a nationally recognized securities exchange on
the date of grant, the reported closing sales price per share of the Company's
Common Stock by such exchange) on the date of grant (or if no such price is
reported on such date such price as reported on the nearest preceding day) or
(ii) if the Common Stock is not traded on NASDAQ or an exchange, the fair market
value per share on the date of grant as determined by-the Board of Directors.

          (c) Options Non-Transferable.  Each option granted under the Plan by
              ------------------------                                        
its terms shall not be transferable by the optionee otherwise than by will, or
by the laws of descent and distribution, and shall be exercised during the
lifetime of the optionee only by him.  No option or interest therein may be
transferred, assigned, pledged or hypothecated by the optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

          (d) Exercise Period.  Each Initial Option shall become exercisable
              ---------------                                               
over a four year period on a cumulative basis as to one-fourth of the shares
subject to the option on the first anniversary of the date of grant, with the
remainder becoming exercisable in twelve equal quarterly increments beginning
three months after the first anniversary of the date of grant of such option.
Each Annual Option shall become exercisable 12 months after the date of grant of
such option (or, if earlier, the day prior to the first Annual Meeting of
Stockholders of the Company following the date of grant).  In the event an
optionee ceases to serve as a director, each such option may be exercised by the
optionee (or, in the event of his death, by his administrator, executor or
heirs), at any time within 12 months after the optionee ceases to serve as a
director, to the extent such option was exercisable at the time of such
cessation of service. Notwithstanding the foregoing, no option shall be
exercisable after the expiration of ten years from the date of grant.

                                      D-2

<PAGE>
 
          (e) Exercise Procedure.  Options may be exercised only by written
              ------------------                                           
notice to the Company at its principal office accompanied by (i) payment in cash
of the full consideration for the shares as to which they are exercised or (ii)
an irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price or delivery of irrevocable
instructions to a broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.

     6.   Assignments
          -----------

     The rights and benefits of participants under the Plan may not be assigned,
whether voluntarily or by operation of law, except as provided in Section 5(d).

     7.   Effective Date
          --------------

     The Plan shall become effective immediately upon its adoption by the Board
of Directors, but all grants of options shall be conditional upon the approval
of the Plan by the stockholders of the Company within 12 months after adoption
of the Plan by the Board of Directors.

     8.   Limitation of Rights
          --------------------

          (a) No Right to Continue as a Director.  Neither the Plan, nor the
              ----------------------------------                            
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a director for any period of time.

          (b) No Stockholders' Rights for Options.  An optionee shall have no
              -----------------------------------                            
rights as a stockholder with respect to the shares covered by his options until
the date of the issuance to him of a stock certificate therefor, and no
adjustment will be made for dividends or other rights (except as provided in
Section 9) for which the record date is prior to the date such certificate is
issued.

     9.   Changes in Common Stock
          -----------------------

     If the outstanding shares of Common Stock are increased, decreased or
exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are distributed
with respect to such shares of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other distribution with respect to such shares of Common
Stock, or other securities, an appropriate and proportionate adjustment will be
made in (i) the maximum number and kind of shares reserved for issuance under
the Plan, (ii) the number and kind of shares or other securities subject to then
outstanding options under the Plan and (iii) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase 

                                      D-3

<PAGE>
 
price as to which such options remain exercisable. No fractional shares will be
issued under the Plan on account of any such adjustments.

     10.  Change in Control
          -----------------

     Notwithstanding any other provision to the contrary in this Plan, in the
event of a Change of Control (as defined below), all options outstanding as of
the date such Change in Control occurs shall become exercisable in full, whether
or not exercisable in accordance with their terms.  A "Change in Control" shall
occur or be deemed to have occurred only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; (ii) individuals who, as of the
date this Plan is adopted, constitute the Board of Directors of the Company (as
of the date thereof, the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a director
subsequent to the date thereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A under the Exchange Act) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as hereinabove defined) acquires
more than 30% of the combined voting power of the Company's then outstanding
securities; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.

                                      D-4

<PAGE>
 
     11.  Amendment of the Plan
          ---------------------

     The Board of Directors may suspend or discontinue the Plan or review of
amend it in any respect whatsoever; provided, however, that without approval of
the stockholders of the Company no revision or amendment shall change the number
of shares subject to the Plan (except as provided in Section 9), change the
designation of the class of directors eligible to receive options, or materially
increase the benefits accruing to participants under the Plan.  The Plan may not
be amended more than once in any six-month period.

     12.  Notice
          ------

     Any written notice to the Company required by any of the provisions of the
Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.

     13.  Governing Law
          -------------

     The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the Commonwealth of Massachusetts.

                    Adopted by the Board of Directors on January 27, 1993.

                    Approved by the stockholders on January 29, 1993.

                    Amended by the Board of Directors on February 16, 1995.

                    Amendment approved by stockholders on May 31, 1995.

                    Amended by the Board of Directors on April 12, 1996.

                                      D-5

<PAGE>
 
                             AVID TECHNOLOGY, INC.

                  AMENDMENT OF 1993 DIRECTOR STOCK OPTION PLAN

               Adopted by the Board of Directors, March 31, 1999
              Approved by the Company's stockholders, June 2, 1999

     Pursuant to Section 11 of the 1993 Director Stock Option Plan (the "Plan")
of Avid Technology, Inc. (the "Company"), the Plan is hereby amended to delete
Section 5 in its entirety and replace it with the following:

       5.   Terms, Conditions and Form of Options
            -------------------------------------

     Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:

          (a)  Initial and Annual Options
               --------------------------

               (i) Upon the initial election of any eligible director as a
          director of the Company, the Company shall grant to such director an
          option to purchase 10,000 shares of Common Stock (the "Initial
          Option").

               (ii) On the date of each annual meeting of stockholders of the
          Company, the Company shall grant to each eligible director who has
          served on the Board of Directors for a minimum of six months an option
          to purchase 10,000 shares of Common Stock (the "Annual Option").

          (b) Elective Options.  A director may elect to receive one or more
              ----------------                                              
options under the Plan (each, an "Elective Option") in lieu of receiving all or
part of the annual retainer fee and/or meeting fees otherwise payable to the
director for services to the Company. Elective Options shall be subject to the
following terms:

               (i) Subject to clause (ii) below, the election to receive an
          Elective Option in lieu of all or part of any annual retainer fee
          and/or meeting fee must be irrevocably made before the beginning of
          the taxable year in which such fee(s) would otherwise be payable, as
          evidenced by written notice to the Board at the time of the election
          (each, an "Election Notice"). The Election Notice must specify each of
          the fees, and if applicable, the portion of each, that is to be paid
          in the form of an Elective Option.

               (ii) Notwithstanding the foregoing, (a) an election to receive an
          Elective Option in lieu of any fees payable in 1999 may only be made
          with respect to fees payable after June 2, 1999 and must be made, and
          evidenced by an Election Notice delivered, by July 2, 1999 and (b) an
          election by a non-employee director, who first becomes eligible to
          participate in the Plan after June 2, 1999, to receive Elective
          Option(s) for any fee(s) otherwise payable in the remainder of the
          taxable year in which the director

                                      D-6

<PAGE>
 
first became eligible to participate in the Plan must be made, and evidenced by
an Election Notice delivered, within 30 days after the date such director first
became eligible.

               (iii) Each Elective Option in lieu of all or part of an annual
          retainer fee shall be granted on the tenth business day after the date
          of the annual meeting of stockholders. Each Elective Option in lieu of
          all or part of a meeting fee shall be granted on the tenth business
          day after the date of the meeting.

               (iv) The number of shares purchasable under each Elective Option
          shall equal the quotient of (a) the fee, or part thereof, in lieu of
          which the Elective Option is granted, divided by (b) the exercise
          price thereof as describe in (c) below.

          (c)  Option Exercise Prices
               ----------------------

               (i) The option exercise price per share for each Initial Option
          and each Annual Option granted under the Plan shall equal the Fair
          Value of the Common Stock. The "Fair Value" of the Common Stock means,
          as of the date of grant, (i) the last reported closing sale price of
          the Company's Common Stock on the Nasdaq National Market (or, if the
          Common Stock is traded on a nationally recognized securities exchange,
          the last reported closing sale price of the Common Stock on such
          exchange) or (ii) if the Common Stock is not traded on Nasdaq or an
          exchange, the fair market value per share as determined by the Board
          of Directors.

               (ii) The option exercise price per share for each Elective Option
          granted under the Plan shall equal one-half of the Fair Value.

          (d) Options Non-Transferable.  Each option granted under the Plan by
              ------------------------                                        
its terms shall not be transferable by the optionee otherwise than by will, or
by the laws of descent and distribution, and shall be exercised during the
lifetime of the optionee only by him.  No option or interest therein may be
transferred, assigned, pledged or hypothecated by the optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

          (e) Exercise Period.  Each Initial Option and each Annual Option shall
              ---------------                                                   
become exercisable in such amounts and at such times as designated by the Board
at the time of grant. Each Elective Option shall be exercisable in full on the
date of grant. All options granted under the Plan shall expire six years after
the date grant. If an optionee ceases to serve as a director, each option
granted under the Plan may be exercised by the optionee (or, in the event of his
death, by his administrator, executor or heirs), at any time within 12 months
after the optionee ceases to serve as a director, to the extent such option was
exercisable at the time of such cessation of service.

          (f) Exercise Procedure.  Options may be exercised only by written
              ------------------                                           
notice to the Company at its principal office accompanied by (i) payment in cash
of the full consideration for the shares as to which they are exercised or (ii)
an irrevocable undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price or delivery of irrevocable
instructions to a broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.

                                      D-7