<PAGE>
 
 
                          SCHEDULE 14A INFORMATION
 
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 by
                                          Rule 14a-6(e)(2))
 
[X] Definitive Proxy Statement
 
[_] 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:

        ________________________________________________________________________

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

        ________________________________________________________________________
 
    (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:

        ________________________________________________________________________

    (5) Total fee paid:

        ________________________________________________________________________
 
[_] 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:

        ________________________________________________________________________
 
    (2) Form, Schedule or Registration Statement No.:

        ________________________________________________________________________
 
    (3) Filing Party:

        ________________________________________________________________________
 
    (4) Date Filed:

        ________________________________________________________________________


<PAGE>
 
                             AVID TECHNOLOGY, INC.
                         METROPOLITAN TECHNOLOGY PARK
                                 ONE PARK WEST
                        TEWKSBURY, MASSACHUSETTS 01876
 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, JUNE 4, 1997
 
  The Annual Meeting of Stockholders of Avid Technology, Inc. (the "Company")
will be held on Wednesday, June 4, 1997 at The First National Bank of Boston,
100 Federal Street, Boston, Massachusetts at 10:00 a.m., local time, to
consider and act upon the following matters:
 
    1. To elect two Class I Directors to serve for the ensuing three years.
 
    2. To ratify and approve the adoption of the Company's 1997 Stock
  Incentive Plan.
 
    3. To ratify the selection of Coopers & Lybrand, L.L.P. as the Company's
  independent accountants for the current fiscal year.
 
    4. 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 14, 1997 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,
 
                                          Frederic G. Hammond
                                          Secretary
 
Tewksbury, Massachusetts
A
pril 23, 1997
 
  WHETHER OR NOT YOU EXPECT TO ATTEND THE 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.
 
                         METROPOLITAN TECHNOLOGY PARK
                                 ONE PARK WEST
                        TEWKSBURY, MASSACHUSETTS 01876
 
 PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 4,
                                     1997
 
  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 4, 1997 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.
 
  The Company's Annual Report to Stockholders for 1996 is being mailed to
stockholders concurrently with this Proxy Statement.
 
VOTING SECURITIES AND VOTES REQUIRED
 
  At the close of business on April 14, 1997, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there
were outstanding and entitled to vote an aggregate of 23,030,826 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 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 for the
approval of the other matters to be voted upon.
 
  Shares which 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, will not be counted as votes in favor of or against such
matter and will also not be counted as shares voting on such matter.

<PAGE>
 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth certain information as of April 14, 1997,
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 5% 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:
 

<TABLE>
<CAPTION>
 
                                                  NUMBER OF
                                                     SHARES    PERCENTAGE OF
                                                  BENEFICIALLY  COMMON STOCK
BENEFICIAL OWNER                                    OWNED(1)   OUTSTANDING(2)
- ----------------                                  ------------ --------------
<S>                                               <C>          <C>
Montgomery Asset Management, L.P. ...............  2,352,800       10.2%
 101 California Street
 San Francisco, CA 94111(3)
The Capital Group Companies, Inc. ...............  2,195,800        9.5%
 333 South Hope Street
 Los Angeles, CA 90071(4)
Intel Corporation................................  1,552,632        6.7%
 2200 Mission College Boulevard
 Santa Clara, CA 95052
B.A.T. Industries p.l.c. ........................  1,300,233        5.6%
 Windsor House
 50 Victoria Street
 London SW1H ONL England(5)
Mackenzie Financial Corporation..................  1,111,500        4.8%
 150 Bloor Street West, Suite M111
 Toronto, Ontario, Canada M5S 3B5(6)
Charles T. Brumback(7)...........................      8,500         *
William E. Foster(8).............................     37,500         *
Peter C. Gotcher(9)..............................    433,954        1.9%
Robert M. Halperin(10)...........................     79,498         *
William S. Kaiser(11)............................     50,535         *
Paul A. Maeder(12)...............................     56,771         *
William J. Miller(13)............................    102,500         *
William J. Warner(14)............................    250,000        1.1%
Curt A. Rawley(15)...............................    196,110         *
Rose G. O'Donnell(16)............................     18,251         *
C. Edward Hazen(17)..............................     75,547         *
David E. Olson(18)...............................     42,015         *
Eric C. Peters(19)...............................    175,713         *
Daniel A. Keshian(20)............................    132,787         *
Paul B. Madden(21)...............................     44,734         *
All directors and executive officers as a group
 (16 persons)(22)................................  1,394,522        5.9%
</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 to stock options held by the person or
     entity in question relates to stock options which are exercisable as of,
     or within 60 days after, April 14, 1997.
 
                                       2

<PAGE>
 
 (2) The number of shares deemed outstanding includes 23,030,826 shares
     outstanding as of April 14, 1997 plus any shares subject to options held
     by the person or entity in question that are exercisable as of, or within
     60 days after, April 14, 1997.
 (3) Beneficial ownership as reported on a Schedule 13G delivered to the
     Company in February 1997. Includes 2,000,000 shares held by Montgomery
     Growth Fund, a mutual fund managed by Montgomery Asset Management, L.P.
 (4) Beneficial ownership as reported on a Schedule 13G delivered to the
     Company in March 1997. Includes 1,975,000 shares, with respect to which
     Capital Research and Management Company ("CRM"), an operating subsidiary
     of The Capital Group Companies, Inc., reported having investment
     discretion. SMALLCAP World Fund, Inc. ("Smallcap"), which is advised by
     CRM, reported having sole voting and investment power with respect to
     1,325,000 of the shares reported as beneficially owned by CRM. The
     address of both CRM and Smallcap is 333 South Hope Street, Los Angeles,
     CA 90071.
 (5) Beneficial ownership as reported on a Schedule 13G delivered to the
     Company in February 1997. Farmers Group, Inc. ("Farmers"), an indirect
     wholly-owned subsidiary of B.A.T. Industries p.l.c., reported shared
     voting and investment power with respect to such shares through Farmers'
     subsidiaries, insurance exchanges for which Farmers acts as attorney-in-
     fact and benefit plans for employees of Farmers and its subsidiaries.
 (6) Beneficial ownership as reported on a Schedule 13G delivered to the
     Company in February 1997.
 (7) Mr. Brumback is a director of the Company. Includes 7,500 shares subject
     to stock options held by Mr. Brumback.
 (8) Mr. Foster is a director of the Company. Includes 37,500 shares subject
     to stock options held by Mr. Foster.
 (9) Mr. Gotcher is a director of the Company. Includes 33,750 shares subject
     to stock options held by Mr. Gotcher.
(10) Mr. Halperin is a director of the Company. Includes 41,998 shares owned
     by Mr. Halperin's adult children. Mr. Halperin has power of attorney to
     vote and/or dispose of such shares, but denies beneficial ownership
     thereof. Also includes 37,500 shares subject to stock options held by Mr.
     Halperin.
(11) Excludes 228,798 shares held by Greylock Capital Limited Partnership
     ("Greylock"), of which Mr. Kaiser, a director of the Company, is a
     general partner. Mr. Kaiser disclaims beneficial ownership of the shares
     held by Greylock, except as to his proportionate partnership interest
     therein. Includes 22,500 shares subject to stock options held by Mr.
     Kaiser.
(12) Mr. Maeder is a director of the Company. Includes 15,000 shares subject
     to stock options held by Mr. Maeder.
(13) Mr. Miller is Chief Executive Officer, President and Chairman of the
     Board of Directors of the Company. Includes 62,500 shares subject to
     stock options held by Mr. Miller.
(14) Mr. Warner is a director of the Company.
(15) Mr. Rawley served as a director of the Company until January 1997 and
     served as President and Chief Executive Officer of the Company until
     January 1996. Includes 164,374 shares subject to stock options held by
     Mr. Rawley. Also includes an aggregate of 10,230 shares owned by Mr.
     Rawley's minor children, as to which shares Mr. Rawley disclaims
     beneficial ownership.
(16) Ms. O'Donnell serves as Senior Vice President of Engineering of the
     Company. Includes 14,063 shares subject to stock options held by Ms.
     O'Donnell.
(17) Mr. Hazen serves as Senior Vice President of Business Development and
     Corporate Treasurer of the Company. Includes 48,047 shares subject to
     stock options held by Mr. Hazen. Also includes 2,500 shares held by Mr.
     Hazen's spouse.
(18) Mr. Olson serves as Senior Vice President of Worldwide Operations of the
     Company and Chief Operating Officer of Digidesign, a division of the
     Company. Includes 30,475 shares subject to stock options held by Mr.
     Olson.
(19) Mr. Peters serves as Senior Vice President and Chief Technology Officer
     of the Company. Includes 126,563 shares subject to stock options held by
     Mr. Peters.
(20) Mr. Keshian served as President of the Company until September 1996.
     Includes 94,349 shares subject to stock options held by Mr. Keshian.
(21) Mr. Madden served as Vice President of Engineering of the Company through
     November 1996. Consists of 44,734 shares subject to stock options held by
     Mr. Madden.
(22) Includes an aggregate of 464,761 shares subject to options held by
     directors and executive officers of the Company. Excludes shares
     beneficially owned by Messrs. Rawley, Keshian and Madden.
 
                                       3

<PAGE>
 
                             ELECTION OF DIRECTORS
 
  The Company has a classified Board of Directors consisting of three classes
(designated Class I Directors, Class II Directors and Class III Directors),
with members of each class holding office for staggered three-year terms. In
January 1997, Mr. Rawley, a Class I Director, resigned from the Board of
Directors of the Company. As a result of Mr. Rawley's resignation, Mr.
Halperin, previously a Class II Director, was reclassified as a Class I
Director.
 
  The persons named in the enclosed proxy will vote to elect Charles T.
Brumback and Robert M. Halperin as Class I Directors, unless authority to vote
for the election of any or all of the nominees is withheld by marking the
proxy to that effect. Each of the nominees has indicated his 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 are each director'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 of
the Company (including the two nominees for Class I Directors) serves as a
director and the year during which each such person first became a director of
the Company:
 
 NOMINEES
 
          CLASS I DIRECTORS (TERMS TO EXPIRE AT 2000 ANNUAL MEETING)
 
  Charles T. Brumback, 68, 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, 68, 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.
 
 CONTINUING MEMBERS OF THE BOARD OF DIRECTORS
 
           CLASS II DIRECTORS (TERMS EXPIRE AT 1998 ANNUAL MEETING)
 
  Peter C. Gotcher, 37, has served as a director since August 1995 and has
been a consultant to the Company since May 1996. 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.
 
  William J. Warner, 42, the founder of the Company, has served as a director
since the Company's inception in September 1987. 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.
 
           CLASS III DIRECTORS (TERMS EXPIRE AT 1999 ANNUAL MEETING)
 
  William E. Foster, 53, has served as a director since January 1993. Mr.
Foster has been Chairman of Stratus Computer, Inc. ("Stratus") since 1980 and
Chief Executive Officer of Stratus since July 1996. Mr. Foster was also the
Chief Executive Officer of Stratus from 1980 until January 1996. Mr. Foster
also serves on the Board of Directors of VideoServer, Inc.
 
                                       4

<PAGE>
 
  William S. Kaiser, 41, has served as a director since August 1988 and served
as Chairman of the Board from September 1991 until April 1996. Mr. Kaiser has
been a general partner of Greylock Capital Limited Partnership since 1987. Mr.
Kaiser has been associated with Greylock Management Corporation, a venture
capital firm, since May 1986. Mr. Kaiser also serves on the Board of Directors
of Spyglass, Inc., Open Market, Inc. and Raptor Systems, Inc.
 
  William J. Miller, 51, was appointed Chief Executive Officer and Chairman of
the Board of the Company in April 1996 and President in September 1996. From
March 1992 to September 1995, Mr. Miller served as Chief Executive Officer of
Quantum Corporation. 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 also serves on the Board of Directors of
Innovex, Inc.
 
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 contact between the Company's independent accountants and the
Board. The Audit Committee met five times during 1996. The current Audit
Committee members are Messrs. Brumback, Kaiser and Maeder.
 
  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 and reviews and recommends bonus and incentive plans and programs,
including stock option and other stock-based plans. The Compensation Committee
met on three occasions during 1996. The members of the Compensation Committee
in 1996 were Messrs. Halperin and Kaiser. Mr. Foster became a member of the
Compensation Committee in March 1997.
 
  The Compensation Committee has designated a standing Executive Option Grant
Sub-Committee (the "Sub-Committee") composed of members of the Compensation
Committee who are independent directors for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Sub-Committee is
authorized to grant options with respect to which the Company wishes to
preserve tax deductions available pursuant to Section 162(m) of the Code.
Current Members of the Sub-Committee are Messrs. Kaiser and Foster.
 
  In January 1997, the Company established a Nominating and Governance
Committee of the Board of Directors which provides recommendations to the
Board regarding nominees for director and reviews the corporate governance
structure of the Company. 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. Halperin and Brumback.
 
  The Board of Directors met ten times during 1996. Except as set forth below,
each director was present for at least 75% of the aggregate number of Board
meetings and meetings held by all committees on which he then served. Mr.
Foster was present for seven meetings of the Board of Directors during 1996.
 

DIRECTORS' COMPENSATION
 
  The members of the Board of Directors who are not employees of the Company
are each paid an annual retainer of $5,000. The Chairman of the Board, unless
he is an employee of the Company, is paid an annual retainer of $10,000. In
addition, each non-employee director is paid a fee of $1,000 for each meeting
attended.
 
                                       5

<PAGE>
 
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 Company's 1993 Director Stock Option Plan, as amended, directors
of the Company who are not officers or employees of the Company or of any
subsidiary of the Company receive a nonstatutory option to purchase 5,000
shares of Common Stock upon initial election to the Board of Directors. In
addition, each director receives a nonstatutory option to purchase 3,000
shares of Common Stock on the date of each annual meeting of the stockholders
of the Company, provided he has then served a minimum of six months on the
Board of Directors.
 
  In August 1996, Mr. Halperin received a nonstatutory stock option to
purchase 24,000 shares of Common Stock in connection with consulting services
provided by Mr. Halperin to the Company.
 
EXECUTIVE COMPENSATION
 
  SUMMARY COMPENSATION. The following table sets forth certain information
concerning the compensation for each of the last three fiscal years of (i) the
Company's Chief Executive Officer, (ii) the Company's four other most highly
compensated executive officers during the fiscal year ended December 31, 1996,
and (iii) three former executive officers of the Company who would have been
among the executive officers described in clauses (i) and (ii) above but for
the fact that they were not serving as executive officers on December 31, 1996
(collectively, the "Named Executive Officers").
 
                          SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                            LONG-TERM
                                                    ANNUAL COMPENSATION    COMPENSATION
                                                 ------------------------- ------------
                                                                            SECURITIES
                                                                            UNDERLYING
                                                                             OPTIONS        ALL OTHER
NAME AND PRINCIPAL POSITION                      YEAR SALARY ($) BONUS ($) (SHARES)(#)   COMPENSATION ($)
- ---------------------------                      ---- ---------- --------- ------------  ----------------
<S>                                              <C>  <C>        <C>       <C>           <C>
William J. Miller .............................. 1996  273,750      --       250,000            --
 Chairman of the Board, President
 and Chief Executive Officer(1)
Rose G. O'Donnell............................... 1996  175,000      --        45,000(2)         --
 Senior Vice President.......................... 1995  150,000      --        35,000            --
 of Engineering................................. 1994   22,602     20,000     35,000            --
C. Edward Hazen................................. 1996  170,000      --        22,500(2)         --
 Senior Vice President of Business.............. 1995  130,000      --        10,000            --
 Development and Corporate Treasurer............ 1994  125,000     30,000       --              --
David E. Olson.................................. 1996  158,666     81,314     35,000            --
 Senior Vice President of Worldwide Operations.. 1995  114,758    138,370       --              --
 and Chief Operating Officer, Digidesign........ 1994  103,000     37,029     23,700            --
Eric C. Peters.................................. 1996  155,000      --        15,000(2)         --
 Senior Vice President and Chief................ 1995  140,000      --         5,000            --
 Technology Officer............................. 1994  140,000     20,000       --              --
Curt A. Rawley.................................. 1996   58,750      --        35,000(2)      176,250(4)
 President and Chief Executive.................. 1995  235,000      --        35,000
 Officer(3)..................................... 1994  195,000    131,000       --
Paul B. Madden(5)............................... 1996  170,000      --        35,000(2)         --
 Vice President, Broadcast...................... 1995  160,000      --        30,000            --
 Engineering.................................... 1994  125,000     40,000       --              --
Daniel A. Keshian............................... 1996  168,750      --        80,000(2)       56,250(4)
 President(6)................................... 1995  160,000      --        10,000            --
                                                 1994  145,000     35,000       --              --
</TABLE>

- --------
 (1) Mr. Miller became Chief Executive Officer and Chairman of the Board of
     the Company in April 1996 and became President of the Company in
     September 1996.
 
                                       6

<PAGE>
 
 (2) Includes options granted in 1996 in substitution for the surrender of
     options granted in 1995. See "Option Grants in Last Fiscal Year" and
     "Ten-Year Option Repricings."
 (3) Mr. Rawley served as President and Chief Executive Officer of the Company
     until January 1996.
 (4) Consists of amounts paid pursuant to severance agreements with the
     Company.
 (5) Mr. Madden served as Vice President of Engineering of the Company through
     November 1996.
 (6) Mr. Keshian served as President of the Company until September 1996.
 
                       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,
1996.
 

<TABLE>
<CAPTION>
                                          INDIVIDUAL GRANTS
                         ----------------------------------------------------
                                                                              POTENTIAL REALIZABLE
                                                                                VALUE AT ASSUMED
                           NUMBER OF     PERCENT OF                           ANNUAL RATES OF STOCK
                          SECURITIES   TOTAL OPTIONS                            APPRECIATION FOR
                          UNDERLYING     GRANTED TO   EXERCISE OR                OPTION TERM(4)
                            OPTIONS     EMPLOYEES IN   BASE PRICE  EXPIRATION ----------------------
                         GRANTED(#)(1) FISCAL YEAR(2) ($/SHARE)(3)    DATE      5%($)      10%($)
                         ------------- -------------- ------------ ---------- ---------- -----------
<S>                      <C>           <C>            <C>          <C>        <C>        <C>
William J. Miller.......    250,000        11.00%        19.625     4/08/06    3,085,514  7,819,299
Rose G. O'Donnell.......     10,000         0.44         16.500     2/21/06      103,768    262,968
                             35,000(5)      1.54         16.500     2/21/06      363,187    920,386
C. Edward Hazen.........     12,500         0.54         16.500     2/21/06      129,710    328,709
                             10,000(5)      0.44         16.500     2/21/06      103,768    262,968
David E. Olson..........     15,000         0.66         16.500     2/21/06      155,641    394,451
                             20,000         0.88         21.375     4/15/06      268,852    681,325
Eric C. Peters..........     10,000         0.44         16.500     2/21/06      103,768    262,968
                              5,000(5)      0.22         16.500     2/21/06       51,884    131,484
Curt A. Rawley(6).......     35,000(5)      1.54         16.500     2/21/06      363,187    920,386
Paul B. Madden(7).......      5,000         0.22         16.500     2/21/06       51,884    131,484
                             30,000(5)      1.32         16.500     2/21/06      311,303    788,903
Daniel A. Keshian(8)....     70,000         3.08         16.500     2/21/06      726,373  1,840,773
                             10,000(5)      0.44         16.500     2/21/06      103,768    262,968
</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). The
    vesting of options held by certain Named Executive Officers may accelerate
    under certain circumstances. See "Employment and Other Agreements."
(2) Calculated based on grants of options to employees of the Company during
    1996 to purchase up to an aggregate of 2,273,398 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
    Securities and Exchange Commission and do not reflect the Company's
    estimate or projection of future stock price. Actual gains, if any, on
    stock option exercises will be dependent upon the future performance of
    the price of the Company's Common Stock.
(5) Option granted pursuant to the Option Repricing Program in exchange for an
    existing option covering the same number of shares. See "Ten-Year Option
    Repricings."
(6) Pursuant to a severance agreement with the Company, only 25% of this
    option will vest and become exercisable.
(7) As a result of Mr. Madden's resignation, only 25% of each of these options
    vested.
(8) Pursuant to a severance agreement with the Company, only 50% of each of
    these options will vest and become exercisable.
 
                                       7

<PAGE>
 
  In February 1996, employees of the Company, including the Named Executive
Officers, holding stock option grants with an exercise price of $28.48 per
share or higher were offered the opportunity to exchange such option grants,
each in whole and not in part, for new options ("Exchange Options"), each with
an exercise price equal to the last reported sale price of the Company's
Common Stock on February 21, 1996 and vesting over four years (25% on February
21, 1997 and the remainder in 12 equal quarterly installments).
 
   AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
 
  The following table sets forth information regarding options exercised
during the year ended December 31, 1996 by the Named Executive Officers.
 

<TABLE>
<CAPTION>
                                                        NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                             SHARES                    UNDERLYING UNEXERCISED             IN-THE-MONEY
                            ACQUIRED       VALUE     OPTIONS AT FISCAL YEAR-END    OPTIONS AT FISCAL YEAR-END
  NAME                   ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)(1)
  ----                   -------------- ----------- ---------------------------- -------------------------------
<S>                      <C>            <C>         <C>                          <C>
William J. Miller.......       --           --               --  /250,000                      (2)
Rose G. O'Donnell.......       --           --               --  / 45,000                      (2)
C. Edward Hazen.........       --           --             37,906/ 27,094                      (2)
David E. Olson..........       --           --             21,725/ 43,394                 46,028/  (2)
Eric C. Peters..........       --           --            129,638/ 26,562                440,608/26,363
Curt A. Rawley..........    110,426      1,742,267        162,256/ 55,859                271,530/19,772
Paul B. Madden..........       --           --             33,750/ 42,500                 46,973/  (2)
Daniel A. Keshian.......     14,062        217,961         66,458/ 89,453                 48,966/ 6,591
</TABLE>

- --------
(1) The per-share value of unexercised in-the-money options is calculated by
    subtracting the per-share option exercise price from the last per-share
    sale price of the Company's Common Stock on the Nasdaq National Market on
    December 31, 1996.
(2) Options were not in-the-money.
 
                                       8

<PAGE>
 
REPRICING OF OPTIONS
 
  The following table sets forth information concerning all repricings of
options since the Company became subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), held by any
person who served as an executive officer of the Company at any time during
1996. All such repricings were effected through the grant of replacement
options in exchange for existing options.
 
                          TEN-YEAR OPTION REPRICINGS
 

<TABLE>
<CAPTION>
                                     NUMBER OF      MARKET PRICE                         LENGTH OF ORIGINAL
                                    SECURITIES      OF STOCK AT  EXERCISE PRICE   NEW       OPTION TERM
                                    UNDERLYING        TIME OF      AT TIME OF   EXERCISE     AT DATE OF
         NAME            DATE   OPTIONS REPRICED(#) REPRICING($)  REPRICING($)  PRICE($)     REPRICING
         ----           ------- ------------------- ------------ -------------- -------- ------------------
<S>                     <C>     <C>                 <C>          <C>            <C>      <C>
Rose G. O'Donnell...... 2/21/96       35,000           16.50         29.75       16.50   8 years, 11 months
 Senior Vice President  1/25/95       35,000           29.75         41.25       29.75   9 years, 10 months
 of Engineering
C. Edward Hazen........ 2/21/96       10,000           16.50         29.75       16.50   8 years, 11 months
 Senior Vice President
  of
 Business Development
  and
 Corporate Treasurer
Eric C. Peters......... 2/21/96        5,000           16.50         29.75       16.50   8 years, 11 months
 Senior Vice President
  and
 Chief Technology Offi-
  cer
Judith M. Oppenheim.... 2/21/96       10,000           16.50         29.75       16.50   8 years, 11 months
 Senior Vice President
  of
 Human Resources and
 Corporate Services
Curt A. Rawley......... 2/21/96       35,000           16.50         29.75       16.50   8 years, 11 months
 President and Chief
 Executive Officer(1)
Paul B. Madden......... 2/21/96       30,000           16.50         29.75       16.50   8 years, 11 months
 Vice President, Broad-
  cast
 Engineering(2)
Daniel A. Keshian...... 2/21/96       10,000           16.50         29.75       16.50   8 years, 11 months
 President(3)
</TABLE>

- --------
(1) Mr. Rawley served as President and Chief Executive Officer of the Company
    until January 1996. Pursuant to a severance agreement with the Company,
    only 25% of this option will vest and become exercisable.
(2) Mr. Madden served as Vice President of Engineering of the Company through
    November 1996. As a result of Mr. Madden's resignation, only 25% of this
    option vested.
(3) Mr. Keshian served as President of the Company until September 1996.
    Pursuant to a severance agreement with the Company, only 50% of this
    option will vest and become exercisable.
 
REPORT OF COMPENSATION COMMITTEE ON REPRICING OF OPTIONS
 
  In February 1996, the Board of Directors approved the exchange (the
"Exchange") of outstanding options to purchase shares of the Company's Common
Stock having exercise prices equal to or greater than $28.48 per share (the
"Existing Options") for options exercisable at the fair market value of the
Common Stock on February 21, 1996 (the "Exchange Options"). Because of
declines in the market value of the Company's Common Stock, certain
outstanding options in February 1996 were exercisable at prices which
substantially exceeded the market value of the Common Stock. In view of such
declines in market value and in keeping with the Company's philosophy of
utilizing equity incentives to motivate and retain qualified employees, the
Board of Directors and the Compensation Committee determined that it was
important to regain the incentive intended to be provided by options to
purchase shares of the Company's Common Stock.
 
                                       9

<PAGE>
 
  The Exchange was effected on February 21, 1996 by cancelling any Existing
Options surrendered for cancellation by persons accepting the Exchange offer
and granting such persons new options exercisable at $16.50 per share, the
fair market value of the Common Stock at close of business on the date of the
Exchange. Each of the Exchange Options vested 25% on February 21, 1997 and
will vest thereafter in 12 equal quarterly installments. Other than with
respect to exercise price and vesting, the option agreements relating to the
Exchange Options are substantially the same as the option agreements for the
Existing Options that they replaced.
 
                                          COMPENSATION COMMITTEE
 
                                          William S. Kaiser
                                          Robert M. Halperin
 
EMPLOYMENT AND OTHER AGREEMENTS
 
  In April 1996, in connection with Mr. Miller's employment as the Company's
Chief Executive Officer and Chairman of the Board, the Company entered into an
employment agreement with Mr. Miller. Under this agreement, Mr. Miller's
initial annual base salary was set at $375,000. In addition, the Company
granted Mr. Miller options to purchase an aggregate of 250,000 shares of
Common Stock. The agreement provides Mr. Miller with severance benefits which
include the payment of up to 12 months of Mr. Miller's base salary, and the
acceleration by 12 months of the vesting of the options described above, if
the Company terminates his employment other than for cause. In addition,
during the period from the first to the second anniversary after a termination
which occurs prior to the second anniversary of Mr. Miller's employment with
the Company, the Company is required to pay Mr. Miller the amount, if any, by
which his monthly base salary at the time of termination exceeds his monthly
compensation from his new employer.
 
  In April 1996, in connection with his resignation, the Company entered into
an agreement with Mr. Rawley providing him with severance pay consisting of 24
months of his base salary and certain employee benefits. In addition to
receiving such severance pay, Mr. Rawley's options continued to vest through
March 1997 and will remain exercisable through June 1998.
 
  In August 1996, in connection with his resignation, the Company entered into
an agreement with Mr. Keshian providing him with severance pay consisting of
17 months of his base salary and certain employee benefits. In addition to
receiving such severance pay, Mr. Keshian's options shall continue to vest
through March 1998 and will remain exercisable through June 1998.
 
  In 1996 and 1997, the Company entered into, or offered to enter into,
agreements with the Named Executive Officers (other than Messrs. Miller,
Rawley, Madden and Keshian) providing 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. In addition, during
the period from the first to the second anniversary after a termination which
occurs prior to the second anniversary of such officer's commencement of
employment with the Company, the Company will pay such officer the amount by
which his or her monthly base salary at the time of termination exceeds the
monthly compensation from his or her new employer. Concurrently, the Company
also entered into an agreement with each such officer providing severance
benefits of two times such officer's employment compensation (grossed up to
cover any excise tax imposed by Section 4999 of the Code) upon any termination
of employment occurring within two years following a change in control of the
Company, as defined in the agreement (the "Change in Control Agreements"). The
Change in Control Agreements also provide that such officer's unvested options
will become immediately exercisable if such termination subsequent to a change
in control is (i) by the Company other than for cause or (ii) by the officer
for good reason, as defined in the agreement.
 
R
EPORT OF THE COMPENSATION COMMITTEE
 
  During 1996, the Compensation Committee of the Board of Directors (the
"Committee") was comprised of two non-employee directors. A third non-employee
director was appointed to the Committee in March 1997. The Committee is
responsible for establishing and administering the policies which govern both
annual compensation and equity ownership.
 
                                      10

<PAGE>
 
  This report is submitted by the Committee (as comprised in 1996) and
addresses the Company's policies for fiscal 1996 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 the Company's customers and
    achieve its strategic objectives.
 
  . To align management's interest with the success of the Company.
 
  . To align management's interests with stockholders by including long-term
    equity incentives.
 
  . To increase profitability of the Company and, accordingly, increase
    stockholder value.
 
  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
recommendations by the Company's Chief Executive Officer and Senior Vice
President of Human Resources. 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
employees of the Company.
 
  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 and success. 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.
 
  The Company's Executive and Senior Management Variable Compensation Program
is an incentive program for executive officers. The primary purpose of the
program is to provide annual cash incentives to executives to achieve the
Company's annual financial goals which are established at the beginning of
each fiscal year. Effective July 1, 1996, the Company revised the program to
provide that annual cash bonuses would be calculated based on Return on
Invested Capital ("ROIC"). To date, no bonuses have been paid based on ROIC.
Previously, bonuses were paid based on earnings per share ("EPS"). ROIC is
defined as after-tax profit as a percentage of total invested capital. For
incentive plan purposes, total invested capital is shareholders' equity less
cash reserves.
 
  This change in financial goals was initiated for two primary reasons. First,
it is the Committee's belief that ROIC is more strongly related to shareholder
value than is EPS and therefore that this change more closely aligns executive
annual incentives with shareholder interests. Second, ROIC focuses executive
attention on both the Company's profitability and the efficiency with which
its assets are deployed. As such, the Committee believes that ROIC is a very
useful measure for assessing the Company's operating performance.
 
  Long-term incentive compensation, in the form of stock options, helps to
align the interests of management and stockholders and enables executives to
develop a long-term stock ownership position in the Company. 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. 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 order to encourage key employees to continue in the
employ of the Company. Accordingly, stock options are intended to retain and
motivate executives to improve long-term stock market performance.
 
  The Company's employee stock purchase program, which is available to
virtually all employees, including executive officers, allows participants to
purchase shares at a discount of 15% from the fair market value at the
beginning or end of the applicable purchase period.
 
                                      11

<PAGE>
 
  As the Company's President and Chief Executive Officer during fiscal 1996,
Mr. Miller received salary compensation of $273,750 (consisting of a pro rata
portion of his annual base salary of $375,000 for service from April 1996
through December 1996). Mr. Miller's salary was based on an assessment of
comparative industry salaries using established executive compensation
surveys.
 
  Section 162(m) of the Code generally disallows tax deductions to publicly
traded corporations for compensation over $1,000,000 paid to the corporation's
Chief Executive Officer or any of its other four most highly compensated
executive officers. Qualifying performance-based compensation is not subject
to this disallowance if certain requirements are met. The Company seeks to
structure the compensation arrangements of its executive officers in a manner
that is intended to avoid disallowances under Section 162(m).
 
                                          COMPENSATION COMMITTEE
 
                                          William S. Kaiser
                                          Robert M. Halperin
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
  The members of the Compensation Committee in 1996 were Messrs. Kaiser and
Halperin, each of whom has received options to purchase stock. Mr. Foster
became a member of the Compensation Committee in March 1997. No executive
officer is a member of the Compensation Committee.
 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Based solely on its review of copies of reports filed by persons required to
file ownership reports under Section 16(a) of the Exchange Act ("'Reporting
Persons"), and written representations from certain Reporting Persons, the
Company believes that, except as follows, all filings required to be made by
Reporting Persons of the Company were timely made in accordance with the
requirements of the Exchange Act. In June 1996, each non-employee director of
the Company received an option to purchase 3,000 shares of Common Stock
pursuant to the Company's 1993 Director Stock Option Plan. Such options were
reported by Messrs. Foster and Kaiser on Form 5 under the Exchange Act in
April 1997. In August 1996, Mr. Halperin received an option to purchase 24,000
shares of Common Stock. This option was reported by Mr. Halperin on Form 5
under the Exchange Act in April 1997.
 
                                      12

<PAGE>
 
S
TOCK PERFORMANCE GRAPH
 
  The following graph compares the cumulative total stockholder return on the
Common Stock of the Company during the period from March 11, 1993 (the date on
which the Company's Common Stock became registered under Section 12 of the
Exchange Act) to December 31, 1996 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 March 11, 1993 in
the Company's Common Stock, the Nasdaq National Market Index and the Peer
Group Index and assumes dividends, if any, are reinvested.
 
                             [CHART APPEARS HERE]


<TABLE>
<CAPTION> 
                                  AVID         SIC       NASDAQ 
Measurement period             TECHNOLOGY      CODE      MARKET 
(Fiscal Year Covered)             INC.        INDEX      INDEX
- ---------------------           --------     --------    --------
<S>                             <C>          <C>         <C>
Measurement PT -
03/11/93                        $ 100.00     $ 100.00    $ 100.00

FYE 12/31/93                    $ 106.50     $ 148.30    $ 119.85 
FYE 12/30/94                    $ 160.65     $ 190.22    $ 125.84
FYE 12/31/95                    $  95.00     $ 192.17    $ 163.22
FYE 12/31/96                    $  51.88     $ 195.81    $ 202.83

</TABLE>
 

- --------
* Peer Group Index reflects the stock performance of the 85 publicly traded
  companies which comprise the SIC Code Index 3663 (Radio and Television
  Broadcasting and Communications Equipment).
 
                     APPROVAL OF 1997 STOCK INCENTIVE PLAN
 
  On February 26, 1997, the Board of Directors of the Company adopted, subject
to stockholder approval, the 1997 Stock Incentive Plan (the "1997 Plan"). Up
to 1,000,000 shares of Common Stock (subject to adjustment in the event of
stock splits and other similar events) may be issued pursuant to awards
granted under the 1997 Plan.
 
SUMMARY OF THE 1997 PLAN
 
  The following summary of the 1997 Plan is qualified in its entirety by
reference to the 1997 Plan, a copy of which is attached as Exhibit A to this
Proxy Statement.
 
 DESCRIPTION OF AWARDS
 
  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").
 
 
                                      13

<PAGE>
 
  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. Currently, under the
Code, incentive stock options 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. Restricted stock Awards 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. A maximum
of 500,000 shares (as adjusted upon the occurrence of certain events and net
of any shares subject to restricted stock Awards which are forfeited) may be
issued pursuant to restricted stock Awards.
 
  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.
 
  As of April 14, 1997, approximately 1,530 persons were eligible to receive
Awards under the 1997 Plan, including the Company's nine executive officers
and five 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 14, 1997, the last reported sale price of the Company Common Stock
on the Nasdaq National Market was $14.25.
 
 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. Subject to any applicable limitations contained in the 1997 Plan, the
Board of Directors or the Compensation Committee, the Executive Option Grant
Sub-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.
 
 
                                      14

<PAGE>
 
  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 replaced, 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 extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 1997 Plan, except that no Award
designated as subject to Section 162(m) of the Code by the Board of Directors
after the date of such amendment shall become exercisable, realizable or
vested (to the extent such amendment was required to grant such Award) unless
and until such amendment shall have been approved by the Company's
stockholders.
 
FEDERAL INCOME TAX CONSEQUENCES
 
  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 under the
1997 Plan.
 
 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 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 sale.
 
 NONSTATUTORY STOCK OPTIONS
 
  As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation
income in an amount equal to the
 
                                      15

<PAGE>
 
excess of the fair market value of the Common Stock acquired through the
exercise of the option ("NSO Stock") on the Exercise Date over the exercise
price.
 
  With respect to any NSO Stock, a participant will have a tax basis 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 excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will
be a long-term gain or loss if the participant has held the NSO Stock for more
than one year prior to the date of the sale.
 
 RESTRICTED STOCK AWARDS
 
  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 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, the participant
will recognize ordinary 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
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 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.
Among the relevant factors are 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 and the participant's
holding period and tax basis for the Award or underlying Common Stock.
 
 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 nor the sale of any Common Stock acquired under the 1997 Plan will have
any 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 1997 Plan, including
in connection with a restricted stock Award or as a result of the exercise of
a nonstatutory stock option or a Disqualifying Disposition. Any such deduction
will be subject to the limitations of Section 162(m) of the Code. The Company
will have a withholding obligation with respect to any ordinary compensation
income recognized by participants under the 1997 Plan who are employees or
otherwise subject to withholding in connection with a restricted stock Award
or the exercise of a nonstatutory stock option.
 
BOARD RECOMMENDATION
 
  The Board of Directors believes that the approval 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.
 
                                      16

<PAGE>
 
             RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
 
  The Board of Directors, at the recommendation of the Audit Committee, has
selected the firm of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as the
Company's independent accountants for the current fiscal year. Coopers &
Lybrand has served as the Company's independent accountants since 1992.
Although stockholder ratification of the Board of Directors' selection of
Coopers & Lybrand 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 Board of Directors
will reconsider its selection of Coopers & Lybrand.
 
  Representatives of Coopers & Lybrand 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 which 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 1998 ANNUAL MEETING OF STOCKHOLDERS
 
  Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Secretary of the Company at
its principal office in Tewksbury, Massachusetts not later than December 24,
1997 for inclusion in the proxy statement for that meeting.
 
                                          By Order of the Board of Directors,
 
                                          Frederic G. Hammond
                                          Secretary
 
April 23, 1997
 
  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.
 
                                      17

<PAGE>
 
                                                                      EXHIBIT A
                             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 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.
 
                                      A-1

<PAGE>
 
  (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)(1) also applies to any event, Section 8(e)(1) shall be
applicable to such event, and this Section 4(c) shall not be applicable.
 
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
 
                                      A-2

<PAGE>
 
  good faith ("Fair Market Value"), which Common Stock was owned by the
  Participant at least six months 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 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.
 
 
                                      A-3

<PAGE>
 
  (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 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.
 
  (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
 
                                      A-4

<PAGE>
 
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 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.
 
 
                                      A-5

<PAGE>
 
                                  DETACH HERE


                             AVID TECHNOLOGY, INC.
                        ANNUAL MEETING OF STOCKHOLDERS
                   This Proxy is Solicited on behalf of the 
                       Board of Directors of the Company


P      The undersigned, having received notice of the meeting and management's 
    proxy statement therefor, and revoking all prior proxies, hereby appoints 
R   Messrs. William J. Miller, William L. Flaherty and Frederic G. Hammond, and 
    each of them, with full power of substitution, as proxies to represent and  
O   vote all shares of stock which the undersigned would be entitled to vote, if
    personally present, at the Annual Meeting of Stockholders of Avid 
X   Technology, Inc. to be held at The First National Bank of Boston, 100 
    Federal Street, Boston, Massachusetts, on Wednesday, June 4, 1997 at
Y   10:00 a.m., and at any adjournment thereof, with respect to the following
    matters set forth on the reverse side.



                  CONTINUED AND TO BE SIGNED ON REVERSE SIDE

                               ----------------
                               SEE REVERSE SIDE
                               ----------------


<PAGE>
 

<TABLE> 
<CAPTION>


                                                            DETACH HERE
 
<S>                                                                <C>  
                                       
    Please mark
[X] votes as in
    this example

  1. To elect the two nominees listed below to serve as Class I       2. To ratify and approve the adoption    FOR  AGAINST  ABSTAIN
     Directors for a term of three years.                                of the Company's 1997 Stock           [_]    [_]      [_]
                                                                         Incentive Plan.
  Nominees: Mr. Charles T. Brumback and Mr. Robert M. Halperin

        [_] FOR           [_] WITHHELD                                3. To ratify the selection of Coopers &  [_]    [_]      [_]
            BOTH              FROM BOTH                                  Lybrand, L.L.P. as independent
            NOMINEES          NOMINEES                                   accountants of the Company.


  [_]______________________________________________                   4. In their discretion, the proxies are authorized to vote
     For each of the nominees except as noted above                      upon such other matters as may properly come before the
                                                                         meeting or any adjournment thereof.

                                                                          MARK HERE    [_]         MARK HERE    [_]
                                                                          FOR ADDRESS              IF YOU PLAN
                                                                          CHANGE AND               TO ATTEND    
                                                                          NOTE AT LEFT             THE MEETING
                                               
                                                                          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:__________

</TABLE>