UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 24, 2006
AVID TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21174 04-2977748
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
Avid Technology Park, One Park West, Tewksbury, MA 01876
(Address of Principal Executive Offices) (zip code)
Registrant's telephone number, including area code: (978) 640-6789
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
/ / Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
/ / Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
/ / Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
/ / Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
2005 Stock Incentive Plan - Form Agreement
On May 24, 2006, the Compensation Committee of the Board of Directors of
Avid Technology, Inc. (the "Company") adopted a form agreement, the Nonstatutory
Stock Option Grant Terms and Conditions, to be used for the grant of
nonstatutory stock options under the Company's 2005 Stock Incentive Plan (as
amended, the "2005 Plan") to non-employee members of Company's Board of
Directors (the "Board of Directors").
Board of Director Compensation
On May 24, 2006, the Board of Directors approved modifications to the
annual cash compensation paid to non-employee members of the Board of Directors.
Effective July 1, 2006, the annual cash compensation shall be as follows:
-------------------------------------------------------- ------------
Annual Retainer for Each Non-Employee Director $45,000
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Annual Retainer for the Chair of the Board of Directors $30,000
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Annual Retainer for the Chair of the Audit Committee $15,000
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Annual Retainer for the Chair of the Nominating and
Governance, Compensation, and Strategic Marketing and
Technology Committees $10,000
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Annual Retainer for Each Member of the Audit Committee
(including the Chair) $5,000
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Annual Retainer for Each Member of the Nominating and
Governance, Compensation, and Strategic Marketing and
Technology Committees (including the Chair) $3,000
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The equity compensation that each non-employee member of the Board of
Directors receives has not changed. On the date of the Company's annual meeting
of stockholders, each non-employee member of the Board of Directors receives a
nonstatutory stock option grant to purchase 10,000 shares of the Company's
Common Stock, provided such member of the Board of Directors has served a
minimum of six months on the Board of Directors. In addition, upon initial
election to the Board of Directors, non-employee members of the Board of
Directors receive a nonstatutory stock option grant to purchase 10,000 shares of
the Company's Common Stock. The stock options described above will be issued
pursuant to the 2005 Plan.
Shareholding Requirement Guidelines for Non-Employee Directors
On May 24, 2006, the Board of Directors approved new shareholding
requirement guidelines applicable to all non-employee members of the Board of
Directors whereby:
(1) within one year of the later of (a) May 24, 2006 and (b) the date
the director first receives an initial or annual stock option grant, each
non-employee member of the Board of Directors shall be required to own (as
defined below) at least 10,000 shares of the Company's Common Stock; and
(2) within three years of the later of (1) May 24, 2006 and (2) the date
the director first receives an annual grant of stock options, each non-employee
member of the Board of Directors shall be required to own (as defined below) at
least 20,000 shares of the Company's Common Stock.
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The following shares of the Company's Common Stock shall be considered
"owned" for purposes of satisfying the foregoing shareholding requirements:
o shares held directly;
o shares held in a brokerage account in the name of the director; and
o shares underlying fully-vested stock options.
A non-employee member of the Board of Directors who fails to comply with
these shareholding requirements will be required to retain all future awards of
equity compensation made by the Company until the foregoing thresholds are
achieved. Non-employee members of the Board of Directors shall be subject to
these guidelines for as long as they continue to serve on the Board of
Directors.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
See Exhibit Index attached hereto.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 31, 2006 AVID TECHNOLOGY, INC.
(Registrant)
By: /s/ Paige Parisi
----------------
Paige Parisi
Vice President and General Counsel
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EXHIBIT INDEX
Exhibit No. Description
- ------------ ------------------------------------------------------------------
*#10.1 Form of Nonstatutory Stock Option Grant Terms and Conditions
(Form for Non-Employee Directors)
- -----------------------------------------
* Documents filed herewith
# Management contract or compensatory plan
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Avid Technology, Inc.
---------------------
Nonstatutory Stock Option Grant
Terms and Conditions
--------------------
(Form for Non-Employee Directors)
---------------------------------
1. Grant of Option. Avid Technology, Inc., a Delaware corporation (the
"Company"), has granted to the Optionee identified in the attached Notice of
Stock Option Grant (the "Notice") an option pursuant to the Company's Stock
Plan identified in the Notice (the "Plan") to purchase a total number of shares
as identified in the Notice (the "Shares") of common stock, $0.01 par value per
share, of the Company ("Common Stock") at the price per share and subject to
the terms and conditions set forth herein and in the Notice and the Plan.
It is intended that the option evidenced hereby shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Optionee," as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms. Except where the context otherwise
requires, the term "Company" shall include any of the Company's present or
future parent or subsidiary corporations as defined in Sections 424(e) and
424(f) of the Code.
2. Vesting Schedule. Except as otherwise provided herein, this option may be
exercised in whole or in part prior to the tenth anniversary (the "Final
Exercise Date") of the date of grant as indicated in the Notice (the "Grant
Date"), subject to the vesting schedule provided in the Notice. The right of
exercise shall be cumulative so that to the extent the option is not exercised
in any period to the maximum extent permissible it shall continue to be
exercisable, in whole or in part, with respect to all Shares for which it is
vested until the earlier of the Final Exercise Date or the termination of this
option under Section 3 hereof or the Plan.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in a
manner as determined by the Company from time to time and shall be accompanied
by payment in full in accordance with Section 4 below. The Optionee may
purchase less than the number of shares covered hereby, provided that no
partial exercise of this option may be for any fractional share or for fewer
than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this option may not be exercised unless
the Optionee, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, a member of the Company's Board of Directors
(an "Eligible Optionee").
(c) Termination of Relationship with the Company. If the Optionee ceases
to be an Eligible Optionee for any reason, then, except as provided in
paragraph (e) below, the right to exercise this option shall terminate three
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months after such cessation (but in no event after the Final Exercise Date),
provided that this option shall be exercisable only to the extent that the
Optionee was entitled to exercise this option on the date of such cessation.
Notwithstanding the foregoing, if the Optionee, prior to the Final Exercise
Date, violates the non-competition or confidentiality provisions of any
confidentiality and nondisclosure agreement or other similar agreement between
the Optionee and the Company, the right to exercise this option shall terminate
immediately upon such violation.
(d) Acceleration. This option shall become exercisable in full if, while
the Optionee is an Eligible Optionee and the Company has not terminated such
relationship for "cause" as specified in paragraph (e) below, the Optionee
dies, becomes disabled (within the meaning of Section 22(e)(3) of the Code),
retires following at least 10 years of service as a member of the Company's
Board of Directors (the "Board") or reaches mandatory retirement age, provided
that this option shall not be exercisable after the Final Exercise Date. For
purposes of this Section 3(d), "mandatory retirement age" shall mean the age of
the Optionee at the time the Optionee is no longer eligible to stand for
re-election to the Board as set forth in the Company's Corporate Governance
Guidelines.
(e) Discharge for Cause. If the Optionee, prior to the Final Exercise
Date, is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of
such discharge. "Cause" shall mean willful misconduct by the Optionee or
willful failure by the Optionee to perform his or her responsibilities to the
Company (including, without limitation, breach by the Optionee of any provision
of any nondisclosure, non-competition or other similar agreement between the
Optionee and the Company), as determined by the Company, which determination
shall be conclusive. The Optionee shall be considered to have been discharged
for "Cause" if the Company determines, within 30 days after the Optionee's
resignation, that discharge for cause was warranted.
4. Payment of Purchase Price. Common Stock purchased upon the exercise of
this option shall be paid for as follows:
(a) in cash or by check, payable to the order of the Company;
(b) with the prior consent of the Company (which may be withheld in its
sole discretion), by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding or
(ii) delivery by the Optionee to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price and any required
tax withholding;
(c) if the Common Stock is registered under the Securities Exchange Act
of 1934, by delivery of shares of Common Stock owned by the Optionee valued at
their fair market value ("Fair Market Value") as determined by (or in a manner
approved by) the Board , provided (i) such method of payment is then permitted
under applicable law, (ii) such Common Stock, if acquired directly from the
Company, was owned by the Optionee for six months or such other minimum period
of time, if any, as may be established by the Board in its discretion and (iii)
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such Common Stock is not subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements;
(d) to the extent permitted by applicable law and by the Board, by
payment of such other lawful consideration as the Board may determine; or
(e) by any combination of the above permitted forms of payment.
5. Tax Matters. The Optionee shall be solely responsible for the payment of
any federal, state or local taxes required by law to be paid in connection with
this option.
6. Nontransferability of Option. This option may not be sold, assigned,
transferred, pledged or otherwise encumbered by the Optionee, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, and, during
the lifetime of the Optionee, this option shall be exercisable only by the
Optionee.
7. Provisions of the Plan. This option is subject to the provisions of the
Plan, a copy of which is furnished to the Optionee with this option.
8. Miscellaneous.
(a) Governing Law. This option shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to applicable
conflicts of laws.
(b) Severability. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other provision
hereof, and each such other provision shall be severable and enforceable to the
extent permitted by law.
(c) Binding Effect. These terms and conditions shall be binding upon and
inure to the benefit of the Company and the Optionee and their respective
heirs, executors, administrators, legal representatives, successors and
assigns.
(d) Entire Agreement. These terms and conditions, the attached Notice and
the Plan constitute the entire agreement between the parties, and supersedes
all prior agreements and understandings, relating to the subject matter hereof.
(e) Amendment. These terms and conditions may only be amended or modified
in accordance with the Plan.
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Avid Technology, Inc.
Notice of Grant of Stock Option
to Non-Employee Directors
[NAME]
Dear ___________,
Effective_____________ (the "Grant Date"), you have been granted a stock option
to buy ______ shares of common stock of Avid Technology, Inc. (the "Company") at
an exercise price of $____ per share.
Shares in each period will become fully vested on the date shown.
- ------------------- ------------------- ------------------- --------------------
Number of Shares Vest Type Full Vest Expiration
- ------------------- ------------------- ------------------- --------------------
- ------------------- ------------------- ------------------- --------------------
By your signature and the Company's signature below, you and the Company agree
that this option is granted under and governed by the terms and conditions of
the 2005 Stock Incentive Plan (as amended from time to time) and the attached
Terms and Conditions.
AVID TECHNOLOGY, INC.
By _______________________________ Date _______________________
__________________________________ Date _______________________
Member of the Board of Directors
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