UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): November 15, 2006

 

AVID TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

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):

 

 

 

 

 

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Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.

 

2005 Stock Incentive Plan – Form Agreements

On November 15, 2006, the Compensation Committee of the Board of Directors of Avid Technology, Inc. (the “Company”) adopted the following form agreements for equity awards under the Company’s 2005 Stock Incentive Plan:

 

 

Item 9.01. Financial Statements and Exhibits.

 

 

2

 

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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.

 

 

 

3

 

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EXHIBIT INDEX

 

 

 

 

_________________________________________

* Documents filed herewith

# Management contract or compensatory plan

 

4

 

 

EXHIBIT 10.1

 

Avid Technology, Inc.

Notice of Grant of Restricted Stock Units Under 2005 Stock Incentive Plan

[NAME]

Employee ID: _____

 

Dear ___________,

 

This notice evidences the grant by Avid Technology, Inc. (the “Company”) on _________________, 200_ (the “Grant Date”) to you of ________ restricted stock units of the Company (individually, a “RSU” and collectively, the “RSUs”). Each RSU represents the right to receive one share of common stock, $0.01 par value per share of the Company (“Common Stock”). The shares of Common Stock that are issuable upon vesting of the RSUs are referred to in this Notice and the attached Terms and Conditions of the Restricted Stock Units as “Shares.” The RSUs and the Shares are subject to the terms and conditions of the Company’s 2005 Stock Incentive Plan and the Terms and Conditions of the Restricted Stock Units, each of which is attached hereto, and which, together with this Notice forms the complete agreement between you and the Company relative to the RSUs and the Shares.

 

This award of RSUs will vest as set forth in the following schedule, and will become fully vested on the last date shown.

 

 

 

 

By your signature and the Company’s signature below, you and the Company agree that the RSUs are granted under and governed by the terms and conditions of the Company’s 2005 Stock Incentive Plan and the Terms and Conditions of the Restricted Stock Units.

 

AVID TECHNOLOGY, INC.

 

Name:

Title:

Address: One Park West

Tewksbury, MA 01876

 

Employee

Address:

 

 

Notice of Grant of Restricted Stock Units under 2005 Stock Incentive Plan (Revised Nov 2006)

 

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Avid Technology, Inc.

Terms and Conditions of Restricted Stock Units

Granted Under 2005 Stock Incentive Plan

 

 

Avid Technology, Inc., a Delaware corporation (the “Company”), shall grant to you (the “Participant”), subject to the terms and conditions set forth herein and in the Company’s 2005 Stock Incentive Plan (the “Plan”), the number of restricted stock units of the Company (individually, a “RSU” and collectively, the “RSUs”) identified in the attached Notice. Each RSU represents the right to receive one share of common stock, $.01 par value, of the Company (“Common Stock”). The Company shall record on its books the grant to the Participant of that number of RSUs granted to the Participant. The shares of Common Stock issuable upon vesting of the RSUs are referred to in these Terms and Conditions as “Shares”. The Participant agrees that the RSUs are subject to the restrictions on transfer set forth in Section 4 herein.

 

(a)          The RSUs shall vest on the dates set forth in the attached Notice (each of such vesting dates being referred to as a “Vesting Date”). Except as provided in subsections 2(b) and 2(c) below, in the event that the Participant ceases to be employed by the Company (as an employee or officer of, or an advisor or consultant to, the Company) for any reason or no reason, with or without cause, prior to the final Vesting Date following the date hereof, vesting shall cease and the Participant will have no rights with respect to any RSUs that have not then vested.

(b)          In the event that the Participant’s employment with the Company is terminated by reason of death or disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)), the Participant’s RSUs shall vest with respect to an additional number of RSUs that would have vested during the one-year period following the termination of the Participant’s employment with the Company.

(c)          If the Participant retires prior to the final Vesting Date, then the RSUs shall continue to vest through the final Vesting Date notwithstanding that the Participant ceases to be employed by the Company; provided, however, if the Participant, prior to the final Vesting Date, violates (as determined by the Company in its sole discretion) the non-competition, non-solicitation or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other similar agreement between the Participant and the Company, vesting shall immediately cease and the Participant will have no rights with respect to any RSUs that have not vested as of the date of the violation.

For purposes of this Section 2(c), “retirement” shall mean the cessation of employment with the Company for any reason other than “cause” by a Participant who is at least 60 years of age and who has worked continuously for the Company for the seven years immediately preceding the date of cessation of employment. “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other

 

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Terms and Conditions of Restricted Stock Units under 2005 Stock Incentive Plan (Revised Nov 2006)

 

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similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive.

(d)          For purposes of these Terms and Conditions of the Restricted Stock Units, employment with the Company shall include employment with any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) and 424(f) of the Code.

 

(a)          The Company will distribute to the Participant (or to the Participant’s estate in the event that his or her death occurs after a Vesting Date but before distribution of the corresponding Shares), as soon as administratively practicable after each vesting date (each such date of distribution is hereinafter referred to as a “Settlement Date”), the Shares of Common Stock represented by RSUs that vested on such vesting date.

(b)          The Company shall not be obligated to issue to the Participant the Shares upon the vesting of any RSU (or otherwise) unless the issuance and delivery of such Shares shall comply with all relevant provisions of law and other legal requirements including, without limitation, any applicable federal or state securities laws and the requirements of any stock exchange upon which shares of Common Stock may then be listed.

 

The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively, “transfer”) any RSUs, or any interest therein, except by will or the laws of descent and distribution.

 

The Company shall not be required (a) to transfer on its books any of the RSUs which shall have been sold or transferred in violation of any of the provisions set forth herein, or (b) to treat as owner of such RSUs any transferee to whom any such RSUs shall have been so sold or transferred.

 

Except as set forth in the 2005 Stock Incentive Plan, neither the Participant nor any person claiming under or through the Participant shall be, or have any rights or privileges of, a stockholder of the Company in respect of the Shares issuable pursuant to the RSUs granted hereunder until the Shares have been delivered to the Participant.

 

These Terms and Conditions of Restricted Stock Units are subject to the provisions of the 2005 Stock Incentive Plan, a copy of which is furnished herewith to the Participant.

 

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Terms and Conditions of Restricted Stock Units under 2005 Stock Incentive Plan (Revised Nov 2006)

 

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(a)          No Shares will be delivered pursuant to the vesting of an RSU unless and until the Participant satisfies any federal, state or local withholding tax obligation required by law to be withheld in respect of this award. The Participant acknowledges and agrees that to satisfy any such tax obligation, the Company shall deduct and retain from the Shares to be distributed upon the Settlement Date such number of Shares as is equal in value to the Company’s minimum statutory withholding obligations with respect to the income recognized by the Participant upon the lapse of the forfeiture provisions (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such income), based on the closing price of the Company’s common stock on the Settlement Date. The Participant represents to the Company that, as of the date hereof, he or she is not aware of any material nonpublic information about the Company or the Common Stock. The Participant and the Company have structured these terms and conditions to constitute a “binding contract” relating to the sale of Common Stock pursuant to this Section 8, consistent with the affirmative defense to liability under Section 10(b) of the Securities Exchange Act of 1934 under Rule 10b5-1(c) promulgated under such Act.

(b)          The Participant acknowledges that no election under Section 83(b) of the Internal Revenue Code of 1986 may be filed with respect to this award.

 

(a)          No Rights to Employment. The Participant acknowledges and agrees that, except as otherwise provided in Section 2(c), the vesting of the RSUs pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

(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 Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Section 4 herein.

(d)          Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

(e)          Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United

 

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Terms and Conditions of Restricted Stock Units under 2005 Stock Incentive Plan (Revised Nov 2006)

 

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States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or its respective signature to the attached Notice, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9(e).

(f)           Entire Agreement. These terms and conditions, the attached Notice and the Plan constitute the entire agreement between the parties, and supersede all prior agreements and understandings, relating to the subject matter herein.

(g)          Amendment. These terms and conditions may be amended or modified in accordance with Section 11(f) of the Plan.

(h)          Governing Law. These terms and conditions shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws.

(i)           Unfunded Rights. The right of the Participant to receive Common Stock pursuant to this award is an unfunded and unsecured obligation of the Company. The Participant shall have no rights under these terms and conditions other than those of an unsecured general creditor of the Company.

 

 

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Terms and Conditions of Restricted Stock Units under 2005 Stock Incentive Plan (Revised Nov 2006)

 

 

EXHIBIT 10.2

 

Avid Technology, Inc.

Notice of Grant of Restricted Stock Under 2005 Stock Incentive Plan

[NAME]

Employee ID: _____

 

Dear ___________,

 

Effective ______________ (the “Effective Date”), you have been granted the right to buy ____ shares of Avid Technology, Inc. (the “Company”) common stock, $0.01 par value per share (the “Shares”), at $__ per share. The total price of the Shares is $_______. The Shares are subject to the terms and conditions of the Company’s 2005 Stock Incentive Plan, as amended and the Terms and Conditions of the Restricted Stock Award, each of which is attached hereto, and which, together with this Notice of Grant of Restricted Stock, forms the complete agreement between you and the Company relative to the Shares.

 

The Shares will vest as set forth in the following schedule, and will become fully vested on the last date shown.

 

 

 

Except as otherwise provided in Section 2(c) of the Terms and Conditions of the Restricted Stock Award, upon termination of your employment, the Company has an option to repurchase the Shares that are not then vested at a price of $___ per Share, pursuant to the Terms and Conditions of the Restricted Stock Award.

 

By your signature and the Company’s signature below, you and the Company agree that the Shares are granted under and governed by the terms and conditions of the Company’s 2005 Stock Incentive Plan and the Terms and Conditions of the Restricted Stock Award.

 

AVID TECHNOLOGY, INC.

 

Name:

Title:

Address: One Park West

Tewksbury, MA 01876

 

Employee

Address:

 

 

Notice of Grant of Restricted Stock under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

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Avid Technology, Inc.

Terms and Conditions of Restricted Stock Award

Granted Under 2005 Stock Incentive Plan

 

 

Avid Technology, Inc., a Delaware corporation (the “Company”) shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth herein and in the Company’s 2005 Stock Incentive Plan (the “Plan”), the number of shares identified in the attached Notice (the “Shares”) of common stock, $.01 par value, of the Company (“Common Stock”), at a purchase price per share identified in the attached Notice. The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company. The Company shall record on its books the issuance to the Participant of that number of Shares purchased by the Participant. The Participant agrees that the Shares shall be subject to the Purchase Option set forth in Section 2 herein and the restrictions on transfer set forth in Section 4 herein.

 

(a)        The Shares shall vest and become “Vested Shares” on the dates set forth in the attached Notice (each of such vesting dates being referred to as a “Vesting Date”). Except as provided in subsections 2(b) and 2(c) below, in the event that the Participant ceases to be employed by the Company (as an employee or officer of, or an advisor or consultant to, the Company) for any reason or no reason, with or without cause, prior to the final Vesting Date following the date hereof, vesting shall cease and the Company shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum specified in the attached Notice (the “Option Price”), some or all of the Shares that are not then Vested Shares.

(b)        In the event that the Participant’s employment with the Company is terminated by reason of death or disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)), the Participant’s Shares shall vest with respect to an additional number of Shares that would have vested during the one-year period following the termination of the Participant’s employment with the Company.

(c)         If the Participant retires prior to the final Vesting Date, then the Shares shall continue to vest through the final Vesting Date notwithstanding that the Participant ceases to be employed by the Company; provided, however, if the Participant, prior to the final Vesting Date, violates (as determined by the Company in its sole discretion) the non-competition, non-solicitation or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other similar agreement between the Participant and the Company, vesting shall immediately cease and the Company shall have the right to exercise the Purchase Option with respect to all of the Shares that are not Vested Shares on the date of the violation.

For purposes of this Section 2(c), “retirement” shall mean the cessation of employment with the Company for any reason other than “cause” by a Participant who is at least 60 years of age and who has worked continuously for the Company for the seven years

 

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Terms and Conditions of Restricted Stock - Award under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

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immediately preceding the date of cessation of employment. “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive.

(d)        For purposes of these Terms and Conditions of the Restricted Stock Award, employment with the Company shall include employment with any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) and 424(f) of the Code.

 

(a)        The Company may exercise the Purchase Option by delivering or mailing to the Participant (or his estate), within 90 days after the termination of the employment of the Participant with the Company, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

(b)        Within 10 days after delivery to the Participant of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Company shall cause to be transferred to the Company on its books that number of Shares which the Company has elected to purchase in accordance with the terms herein. In the event a certificate or certificates representing the Shares have been issued to the Participant, the Participant (or his estate) shall tender to the Company at its principal offices the certificate or certificates representing the Shares which the Company has elected to purchase in accordance with the terms herein, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the transfer of such Shares to the Company. Upon such transfer, the Company shall deliver or mail to the Participant a check in the amount of the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

(c)        After the time at which any Shares are transferred to the Company pursuant to subsection 3(b) above, the Company shall not pay any dividend to the Participant on account of such Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Shares.

(d)        The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or both.

(e)        The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to

 

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Terms and Conditions of Restricted Stock - Award under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

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Section 2 herein shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

(f)         The Company may assign its Purchase Option to one or more persons or entities.

 

The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise any unvested Shares, or any interest therein, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, provided that such Shares shall remain subject to these Terms and Conditions of Restricted Stock Award (including without limitation the restrictions on transfer set forth in this Section 4, and the Purchase Option) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions herein.

 

The Company shall not be required (a) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth herein, or (b) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.

 

All certificates representing Shares shall have affixed thereto a legend in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

“The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in certain Terms and Conditions of Restricted Stock Award, and a copy of such Terms and Conditions of Restricted Stock Award is available for inspection without charge at the office of the Secretary of the corporation.”

 

These Terms and Conditions of Restricted Stock Award are subject to the provisions of the Plan, a copy of which is furnished herewith to the Participant.

 

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Terms and Conditions of Restricted Stock - Award under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

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(a)         No Shares will become Vested Shares unless and until the Participant satisfies any federal, state or local withholding tax obligation required by law to be withheld in respect of this award. The Participant acknowledges and agrees that to satisfy any such tax obligation, the Company shall deduct and retain from the Shares no longer subject to forfeiture under Section 2 such number of Shares as is equal in value to the Company’s minimum statutory withholding obligations with respect to the income recognized by the Participant upon the lapse of the forfeiture provisions (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such income), based on the closing price of the Company’s common stock on the Vesting Date. The Participant represents to the Company that, as of the date hereof, he or she is not aware of any material nonpublic information about the Company or the Common Stock. The Participant and the Company have structured these terms and conditions to constitute a “binding contract” relating to the sale of Common Stock pursuant to this Section 8, consistent with the affirmative defense to liability under Section 10(b) of the Securities Exchange Act of 1934 under Rule 10b5-1(c) promulgated under such Act.

(b)        The Participant acknowledges that no election under Section 83(b) of the Internal Revenue Code of 1986 may be filed with respect to this award.

 

(a)         No Rights to Employment. The Participant acknowledges and agrees that, except as otherwise provided in Section 2(c), the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

(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 Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Section 4 herein.

(d)        Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or its respective signature to the attached Notice, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9(c).

 

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Terms and Conditions of Restricted Stock - Award under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

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(e)         Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

(f)         Entire Agreement. These terms and conditions, the attached Notice and the Plan constitute the entire agreement between the parties, and supersede all prior agreements and understandings, relating to the subject matter herein.

(g)        Amendment. These terms and conditions may be amended or modified in accordance with Section 11(f) of the Plan.

(h)        Governing Law. These terms and conditions shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws.

 

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Terms and Conditions of Restricted Stock - Award under 2005 Stock Incentive Plan (Revised Nov. 2006)

 

 

EXHIBIT 10.3

 

Avid Technology, Inc.

Nonstatutory Stock Option Grant

Terms and Conditions

 

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.

(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, an employee, officer or director of, or consultant or advisor to, the Company (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 paragraphs (d), (e) and (f) below, the right to exercise this option shall terminate three months after such cessation (but in no event

 

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(Revised November 2006)

 

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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.

(d)          Exercise Period Upon Death or Disability. If the Optionee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Optionee and the Company has not terminated such relationship for “cause” as specified in paragraph (f) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Optionee, by the Optionee (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Optionee on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.

(e)          Exercise Period Upon Retirement. If the Optionee retires prior to the Final Exercise Date while he or she is an Eligible Optionee, then:

(i) if this option is not fully vested on the Optionee’s date of retirement, the option shall continue to vest and be exercisable through the date which is 90 days after the final vesting date set forth in the Notice (but in no event after the Final Exercise Date); and

(ii) if this option is fully vested on the Optionee’s date of retirement, the option shall be exercisable by the Optionee for a period of one year following the date of retirement (but in no event after the Final Exercise Date).

For purposes of this Section 3, “retirement” shall mean the cessation of employment with the Company for any reason other than “cause” as specified in paragraph (f) below, by an Optionee who is at least 60 years of age and who has worked continuously for the Company for the seven years immediately preceding the date of cessation of employment.

(f)           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 employment, consulting, advisory, 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.

(g)          Effect of Breach of Covenants. Notwithstanding anything to the contrary in paragraphs (c), (d) and (e) above, if the Optionee, prior to the Final Exercise Date, violates (as determined by the Company in its sole discretion) the non-competition, non-solicitation or confidentiality provisions of any employment contract, 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.

 

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(Revised November 2006)

 

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4.          Payment of Purchase Price. Common Stock purchased upon the exercise of this option shall be paid for as follows:

(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 of Directors of the Company (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 Optionnee for six months or such other minimum period of time, if any, as may be established by the Board in its discretion and (iii) 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

5.          Tax Matters. No Shares will be issued pursuant to the exercise of this option unless and until the Optionee pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option. In the Board’s discretion, and subject to such conditions as the Board may establish, such tax obligations may be paid in whole or in part in shares of Common Stock, including Shares retained from the option 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 the Optionee.

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.

 

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(Revised November 2006)

 

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(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 be amended or modified in accordance with Section 11(f) of the Plan.

 

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(Revised November 2006)

 

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Avid Technology, Inc.

Notice of Grant of Stock Option

 

[NAME]

 

Employee ID: _____

 

 

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.

 

 

 

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 and the attached Terms and Conditions.

 

AVID TECHNOLOGY, INC.

 

 

 

Employee

 

 

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(Revised November 2006)