PRIVILEGED AND CONFIDENTIAL

SIDLEY DRAFT 8/31/23

 

 

 

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

 

SCHEDULE 14A

 

(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

 

Filed by the Registrant

 

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))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under §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):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

 

PRELIMINARY PROXY STATEMENT, SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 2023

 

 

[       ], 2023

 

Dear Fellow Stockholder:

 

You are cordially invited to attend a special meeting of stockholders (as may be postponed or adjourned from time to time, the “special meeting”) of Avid Technology, Inc., a Delaware corporation (“Avid”), which will be held on [       ], 2023 at [       ] Eastern Time at [       ]. The purpose of the special meeting is to consider and vote on proposals relating to the proposed acquisition of Avid by Artisan Bidco, Inc., a Delaware corporation (“Parent”), for $27.05 per share of Avid common stock, par value $0.01 per share (“Avid common stock”) in cash, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement (as defined below). Parent is an affiliate of STG Partners, LLC, a private equity firm focused on fueling innovative software, data and analytics market leaders in the mid-market. Regardless of whether you plan to attend the meeting, we encourage you to vote your shares by mail, by telephone or through the Internet following the procedures outlined below.

 

On August 9, 2023, Avid entered into an Agreement and Plan of Merger (as may be amended from time to time, the “merger agreement”) with Parent and Artisan Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), providing that, on the terms and subject to the conditions of the merger agreement, Merger Sub will be merged with and into Avid (the “merger”), whereupon Avid will continue as the surviving corporation and a wholly-owned subsidiary of Parent. At the special meeting, Avid will ask you to adopt the merger agreement and approve other proposals related to the merger.

 

At the effective time of the merger (the “effective time”), each share of Avid common stock issued and outstanding immediately prior to the effective time (other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of the Delaware General Corporation Law concerning the right of stockholders to require appraisal of their shares of Avid common stock) will be cancelled and automatically converted into the right to receive $27.05 per share in cash, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement.

 

The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement. We encourage you to carefully read the accompanying proxy statement, including the annexes attached to it and the documents and information incorporated by reference in it. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement.

 

Avid’s board of directors (the “Board”) carefully reviewed and considered numerous factors, as more fully described in the proxy statement, including the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board (i) determined and declared that the merger agreement and the consummation by Avid of the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of Avid and its stockholders, (ii) approved and declared advisable the execution, delivery and performance of the merger agreement and, subject to the adoption of the merger agreement by Avid stockholders, the consummation by Avid of the transactions contemplated by the merger agreement, including the merger, (iii) directed that a proposal to adopt the merger agreement be submitted to a vote at a special meeting of Avid stockholders and (iv) upon the terms and subject to the conditions set forth in the merger agreement, resolved to recommend that Avid stockholders adopt the merger agreement and vote “FOR” the other proposals described in the accompanying proxy statement. Accordingly, the Board has unanimously recommended a vote “FOR” the proposal to adopt the merger agreement and the other proposals related to the merger described in the accompanying proxy statement.

 

 

 

 

Your vote is very important. Whether or not you plan to attend the special meeting and regardless of the number of shares you own, your careful consideration of, and vote on, the proposal to adopt the merger agreement and the other proposals related to the merger described in the accompanying proxy statement are important, regardless of the number of shares that you own, and we encourage you to vote promptly. The merger cannot be completed unless the merger agreement is adopted by stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting. The failure to vote will have the same effect as a vote AGAINSTthe proposal to adopt the merger agreement.

 

Even if you plan to attend the special meeting, after reading the accompanying proxy statement, please make sure to vote your shares promptly by completing, signing and dating the accompanying proxy card and returning it in the enclosed prepaid envelope or by voting by telephone or through the Internet by following the instructions on the accompanying proxy card. Instructions regarding all three methods of voting are provided on the proxy card. If you attend and vote at the special meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting, which will have the same effect as voting against the adoption of the merger agreement.

 

If you hold shares through an account with a bank, broker, trust or other nominee, please follow the instructions you receive from such bank, broker, trust or other nominee to vote your shares. Your bank, broker, trust or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or be voted at the special meeting, which will have the same effect as voting against the adoption of the merger agreement.

 

Thank you in advance for your continued support and your consideration of this matter.

 

  Sincerely,
   
  Jeff Rosica
Chief Executive Officer and President

 

Neither the United States Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

 

The accompanying proxy statement is dated [       ], 2023, and, together with the enclosed form of proxy card, is first being mailed to Avid stockholders on or about [       ], 2023.

 

 

 

 

PRELIMINARY PROXY STATEMENT, SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 2023

 

AVID TECHNOLOGY, INC.

 

75 Blue Sky Drive
Burlington, Massachusetts 01803

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

To Be Held on [       ], 2023

 

To the stockholders of Avid Technology, Inc.:

 

A special meeting (as may be postponed or adjourned from time to time, the “special meeting”) of stockholders of Avid Technology, Inc. (“Avid”) will be held on [       ], 2023 at [       ] Eastern Time at [       ], for the following purposes:

 

1.To consider and vote on a proposal (the “Merger Agreement Proposal”) to adopt the Agreement and Plan of Merger, dated as of August 9, 2023 (as may be amended from time to time, the “merger agreement”), by and among Avid, Artisan Bidco, Inc., a Delaware corporation (“Parent”), and Artisan Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”);

 

2.To consider and vote on a proposal (the “Non-Binding Compensation Advisory Proposal”) to approve, by a non-binding advisory vote, the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger of Merger Sub with and into Avid, as contemplated by the merger agreement (the “merger”); and

 

3.To consider and vote on a proposal (the “Adjournment Proposal”) to adjourn the special meeting from time to time to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

Stockholders of record at the close of business on [       ], 2023 are entitled to notice of, and to vote at, the special meeting.

 

For more information concerning the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement, please review the accompanying proxy statement and the copy of the merger agreement attached as Annex A to the proxy statement.

 

Avid’s board of directors (the “Board”) unanimously recommends that at the special meeting you vote “FOR” the Merger Agreement Proposal, “FOR” the Non-Binding Compensation Advisory Proposal and “FOR” the Adjournment Proposal.

 

To assure that your shares are represented at the special meeting, regardless of whether you plan to attend the special meeting in person, please fill in your vote and sign and mail the enclosed proxy card as soon as possible. We have enclosed a return envelope, which requires no postage if mailed in the United States. Alternatively, you may vote by telephone or through the Internet. Instructions regarding each of the methods of voting are provided on the enclosed proxy card. If you are a stockholder of record voting by telephone or through the Internet, then your voting instructions must be received by 11:59 p.m. Eastern Time on the day before the special meeting. If your shares are held in “street name” through a bank, broker, trust or other nominee, you should instruct your bank, broker, trust or other nominee on how to vote your shares in accordance with the voting instructions furnished by your bank, broker, trust or other nominee as soon as possible. Your bank, broker, trust or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or be voted at the special meeting, which will have the same effect as voting against the adoption of the merger agreement. Your proxy is being solicited by the Board.

 

 

 

 

If you have any questions about the merger or how to submit your proxy, or if you need additional copies of the accompanying proxy statement or the enclosed proxy card or voting instructions, please call Avid’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 825-8772.

 

If you fail to return your proxy, vote by telephone or through the Internet or attend the special meeting in person, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting, and it will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

 

  By Order of the Board
   
  Alessandra Melloni
Corporate Secretary

 

Burlington, Massachusetts
[       ], 2023

 

Please Vote—Your Vote is Very Important

 

 

 

 

TABLE OF CONTENTS

 

Page

 

SUMMARY TERM SHEET 1
Introduction 1
The Parties 1
The Merger 2
The Special Meeting 2
Stockholders Entitled to Vote; Vote Required to Adopt the Merger Agreement 3
How to Vote 3
The Board’s Reasons for Recommending the Adoption of the Merger Agreement 3
Opinion of Avid’s Financial Advisor 4
Market Price and Dividend Data 4
Voting Agreement 4
Consequences if the Merger is Not Completed 5
Treatment of Outstanding Equity Awards 5
Interests of Directors and Executive Officers in the Merger 6
Conditions to the Merger 6
Regulatory Approvals 7
Financing of the Merger 7
Limited Guarantee 7
Restrictions on Solicitation of Competing Proposals 8
Termination of the Merger Agreement 8
Termination Fees 10
Appraisal Rights 11
Material U.S. Federal Income Tax Consequences of the Merger 11
Where You Can Find More Information 11
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER 12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 20
PARTIES TO THE MERGER 21
Avid 21
Parent 21
Merger Sub 21
THE SPECIAL MEETING 22
Date, Time and Place of the Special Meeting 22

 

i

 

 

Purpose of the Special Meeting 22
Recommendation of the Board 22
Record Date and Quorum 22
Vote Required for Approval; Abstentions 23
Effect of Broker Non-Votes 23
How to Vote 24
Revocation of Proxies 24
Adjournments and Postponements 25
Solicitation of Proxies 25
Stockholder List 26
Questions and Additional Information 26
PROPOSAL 1: MERGER AGREEMENT PROPOSAL 27
PROPOSAL 2: NON-BINDING COMPENSATION ADVISORY PROPOSAL 28
PROPOSAL 3: ADJOURNMENT PROPOSAL 29
THE MERGER 30
Overview 30
Background of the Merger 30
Recommendation of the Board 49
Reasons for Recommending the Adoption of the Merger Agreement 49
Certain Avid Unaudited Prospective Financial Information 55
Opinion of Avid’s Financial Advisor 59
Interests of Directors and Executive Officers in the Merger 64
Certain Effects of the Merger 70
Consequences if the Merger is Not Completed 70
Financing of the Merger 71
Limited Guarantee 72
Material U.S. Federal Income Tax Consequences of the Merger 73
Regulatory Approvals Required for the Merger 76
THE AGREEMENT AND PLAN OF MERGER 77
Explanatory Note Regarding the Merger Agreement 77
Date of the Merger Agreement 77
The Merger 78
Closing; Effective Time of the Merger 78
Organizational Documents; Directors and Officers 78
Merger Consideration 79

 

ii

 

 

Exchange Procedures 79
Treatment of Outstanding Equity Awards and Equity Plans 81
Dissenting Shares 82
Representations and Warranties 83
Covenants Regarding Conduct of Business by Avid Prior to the Merger 87
Restriction on Solicitation of Competing Proposals 91
Obligations of the Board with Respect to Its Recommendation 93
Notice of Competing Proposals 94
Obligations with Respect to this Proxy Statement and the Special Meeting 95
Access to Information 95
Efforts to Complete the Merger 96
Financing 97
Directors & Officers Indemnification and Insurance Information 98
Employee Matters 99
Limited Guarantee 100
Other Covenants and Agreements 101
Conditions to the Merger 102
Termination of the Merger Agreement 104
Effect of Termination 105
Expenses; Termination Fees 106
Miscellaneous 108
APPRAISAL RIGHTS 109
MARKET PRICE AND DIVIDEND DATA 114
STOCK OWNERSHIP 115
THE VOTING AGREEMENT 117
OTHER MATTERS 118
FUTURE STOCKHOLDER PROPOSALS 119
HOUSEHOLDING OF PROXY MATERIAL 120
WHERE YOU CAN FIND MORE INFORMATION 121

 

Annex A – Agreement and Plan of Merger

Annex B – Opinion of Goldman Sachs & Co. LLC

Annex C – Voting Agreement

 

iii

 

 

SUMMARY TERM SHEET

 

This summary term sheet highlights certain information in this proxy statement, but may not contain all of the information that may be important to you. Accordingly, you are encouraged to read this proxy statement carefully and in its entirety, including the annexes attached to this proxy statement and the documents and information incorporated by reference in this proxy statement for a more complete understanding of the matters being considered at the special meeting. In addition, this proxy statement incorporates by reference important business and financial information about Avid Technology, Inc. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121. This proxy statement is dated [       ], 2023 and is first being mailed to Avid stockholders on or about [       ], 2023.

 

Introduction

 

On August 9, 2023, Avid Technology, Inc., a Delaware corporation (“Avid”) agreed to be acquired by an affiliate of STG Partners, LLC (“STG”). STG is a private equity firm focused on fueling innovative software, data and analytics market leaders in the mid-market. If the merger (as defined below) is completed, each outstanding share of Avid common stock will be converted into the right to receive an amount in cash equal to $27.05 per share (without interest and subject to any applicable withholding taxes).

 

The Parties

 

Avid develops, markets, sells and supports software and integrated solutions for video and audio content creation, management and distribution. Avid is a leading technology provider that powers the media and entertainment industry. Avid does this by providing an open and efficient platform for digital media, along with a comprehensive set of creative software tools and workflow solutions. Its solutions are used in production and post-production facilities; film studios; network, affiliate, independent and cable television stations; recording studios; live-sound performance venues; advertising agencies; government and educational institutions; corporate communications departments; and by independent video and audio creative professionals, as well as aspiring professionals. Projects produced using Avid’s tools, platform and ecosystem include feature films, television programming, live events, news broadcasts, sports productions, commercials, music, video and other digital media content. With over one million creative users and thousands of enterprise clients relying on its technology platforms and solutions around the world, Avid enables the industry to thrive in today’s connected media and entertainment world. Avid’s principal executive offices are located at 75 Blue Sky Drive, Burlington, Massachusetts 01803, and its telephone number is (978) 640-6789.

 

Artisan Bidco, Inc., a Delaware corporation (“Parent”), is an affiliate of STG and was formed on August 4, 2023, solely for the purpose of serving as the holding company for Avid upon completion of the merger (as defined below) and engaging in the transactions contemplated by the merger agreement (as defined below). Parent has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its formation, activities undertaken in connection with Parent’s proposed acquisition of Avid and other transactions contemplated by the merger agreement. Parent’s principal executive offices are located at c/o STG Partners, LLC, 1300 El Camino Real, Suite 300, Menlo Park, California 94025, and its telephone number is (650) 935-9500.

 

Artisan Merger Sub, Inc., a Delaware corporation (“Merger Sub”), is a wholly-owned subsidiary of Parent and was formed on August 4, 2023, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its formation and activities undertaken in connection with Parent’s acquisition of Avid. Upon completion of the merger, Merger Sub will merge with and into Avid, and Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at c/o STG Partners, LLC, 1300 El Camino Real, Suite 300, Menlo Park, California 94025, and its telephone number is (650) 935-9500.

 

See the section of this proxy statement entitled “Parties to the Merger” beginning on page 21 for more information.

 

1

 

 

The Merger

 

On August 9, 2023, Avid entered into an Agreement and Plan of Merger (as may be amended from time to time, the “merger agreement”) with Parent and Merger Sub, providing that, on the terms and subject to the conditions of the merger agreement, Merger Sub will be merged with and into Avid (the “merger”), whereupon Avid will continue as the surviving corporation and a wholly-owned subsidiary of Parent.

 

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), at the effective time of the merger (the “effective time”): (i) Merger Sub will merge with and into Avid; (ii) the separate corporate existence of Merger Sub will cease; and (iii) Avid will continue as the surviving corporation of the merger and as a wholly owned subsidiary of Parent. Throughout this proxy statement, the term “surviving corporation” is used to refer to Avid as the surviving corporation following the merger.

 

The effective time will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as Avid, Parent, and Merger Sub may agree and specify in the certificate of merger).

 

If the merger is completed, you will not own any shares of capital stock of the surviving corporation as a result of the merger. At the effective time, each share of Avid common stock issued and outstanding immediately prior to the effective time (other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of DGCL concerning the right of stockholders to require appraisal of their shares of Avid common stock) will be cancelled and will be automatically converted into the right to receive $27.05 in cash per share, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement.

 

As a result of the merger, Avid will cease to be a publicly-traded company, and shares of Avid common stock will no longer be listed or traded on Nasdaq or any other public market. In addition, the registration of shares of Avid common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be terminated.

 

See the section of this proxy statement entitled “The Merger” beginning on page 30 for more information.

 

The Special Meeting

 

The special meeting of Avid stockholders will be held on [       ], 2023 at [       ] Eastern Time at [       ], for the following purposes:

 

1.To consider and vote on a proposal (the “Merger Agreement Proposal”) to adopt the merger agreement;

 

2.To consider and vote on a proposal (the “Non-Binding Compensation Advisory Proposal”) to approve, by a non-binding advisory vote, the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger; and

 

3.To consider and vote on a proposal (the “Adjournment Proposal”) to adjourn the special meeting from time to time to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

See the section of this proxy statement entitled “The Special Meeting” beginning on page 22 for more information on the special meeting, including how to vote your shares of Avid common stock.

 

2

 

 

Stockholders Entitled to Vote; Vote Required to Adopt the Merger Agreement

 

Each holder of record of shares of Avid common stock as of the close of business on [       ], 2023, which is the record date for the special meeting, is entitled to receive notice of, and to vote at, the special meeting. You will be entitled to one vote for each share of Avid common stock that you owned on the record date for the special meeting. As of the record date for the special meeting, there were [       ] shares of Avid common stock issued and outstanding and entitled to vote at the special meeting. The adoption of the merger agreement requires the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting.

 

The presence at the special meeting, in person or by proxy, of the holders of [       ] shares of Avid common stock (a majority of the shares of Avid common stock issued and outstanding as of the record date for the special meeting) constitutes a quorum for the special meeting.

 

See the sections of this proxy statement entitled “The Special Meeting--Record Date and Quorum” and “The Special Meeting--Vote Required for Approval; Abstentions” beginning on page 22 and page 23, respectively, for more information.

 

How to Vote

 

Stockholders of record have a choice of voting by proxy by completing a proxy card and mailing it in the prepaid envelope provided, by calling a toll-free telephone number or through the Internet. Please refer to your proxy card or the information forwarded by your bank, broker, trust or other nominee to see which voting options are available to you. The telephone and Internet voting facilities for stockholders of record will close at 11:59 p.m. Eastern Time on [       ], 2023, the day before the special meeting.

 

If you wish to vote at the special meeting in person and your shares are held in the name of a bank, broker, trust or other nominee, you must obtain a legal proxy, executed in your favor, from the bank, broker, trust or other nominee authorizing you to vote at the special meeting. Under applicable stock exchange rules, banks, brokers, trusts or other nominees have the discretion to vote on routine matters, but not on non-routine matters. The proposals to be considered at the special meeting are all non-routine matters, and banks, brokers, trusts and other nominees cannot vote on these proposals without your instructions. Therefore, it is important that you cast your vote or instruct your bank, broker, trust or other nominee on how you wish to vote your shares.

 

YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATE(S) WITH YOUR PROXY CARD. A letter of transmittal with instructions for the surrender of certificates representing shares of Avid common stock will be mailed to those stockholders who hold certificated shares if the merger is completed.

 

If you have any questions about how to vote or direct a vote in respect of your shares of Avid common stock, you may contact Avid’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 825-8772.

 

See the section of this proxy statement entitled “The Special Meeting—How to Vote” beginning on page 24 for more information.

 

The Board’s Reasons for Recommending the Adoption of the Merger Agreement

 

Avid’s board of directors (the “Board”) carefully reviewed and considered numerous factors, including the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of Avid and its stockholders, and approved and declared advisable the execution, delivery and performance of the merger agreement and, subject to receiving Avid stockholder approval, the consummation by Avid of the transactions contemplated by the merger agreement, including the merger. Accordingly, the Board unanimously recommends a vote “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve, by a non-binding advisory vote, the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger and “FOR” the proposal to adjourn the special meeting from time to time to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

See the section of this proxy statement entitled “The Merger—Reasons for Recommending the Adoption of the Merger Agreement” beginning on page 49 for more information.

 

3

 

 

Opinion of Avid’s Financial Advisor

 

Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its oral opinion to the Board, subsequently confirmed in writing, that, as of August 9, 2023, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to Avid stockholders pursuant to the merger agreement was fair from a financial point of view to such Avid stockholders.

 

The full text of the written opinion of Goldman Sachs, dated August 9, 2023, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement. The summary of Goldman Sachs’ opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the transactions contemplated by the merger agreement. Goldman Sachs’ opinion is not a recommendation as to how any Avid stockholder should vote with respect to the Merger Agreement Proposal or any other matter. Pursuant to an engagement letter between Avid and Goldman Sachs, Avid has agreed to pay Goldman Sachs a transaction fee of approximately $20,000,000, payment of which is contingent upon consummation of the merger.

 

See the section of this proxy statement entitled “The Merger—Opinion of Avid’s Financial Advisor” beginning on page 59 for more information.

 

Market Price and Dividend Data

 

Shares of Avid common stock are listed on Nasdaq and trade under the symbol “AVID.” On May 23, 2023, the last trading day prior to the release of initial media reports that Avid may be exploring a sale, the closing price for Avid common stock was $20.47 per share. On August 2, 2023, the last trading day prior to the release of subsequent media reports that Avid may be exploring a sale, the closing price for Avid common stock was $23.08 per share. On [       ], 2023, the latest practicable trading day before the filing of this proxy statement, the closing price for Avid common stock was $[       ] per share.

 

See the section of this proxy statement entitled “Market Price and Dividend Data” beginning on page 114 for more information.

 

Voting Agreement

 

In connection with the execution of the merger agreement, Impactive Capital LLC, Impactive Capital GP LLC, Impactive Capital LP, Lauren Taylor Wolfe and Christian Asmar (collectively, the “Impactive Capital stockholders” and each an “Impactive Capital stockholder”) entered into a voting agreement with Avid and Parent. Subject to its terms, the voting agreement obligates the Impactive Capital stockholders to, among other things, vote shares subject to the voting agreement and owned by the Impactive Capital stockholders in favor of the adoption of the merger agreement and, subject to certain exceptions, not transfer any shares of Avid common stock prior to the termination of the voting agreement.

 

The voting agreement terminates and expires upon the earliest of: (i) the termination of the merger agreement; (ii) the effective time; (iii) any amendment, modification or supplement to the merger agreement that has, or could have, certain enumerated effects; (iv) a change of Avid recommendation (as defined in the section of this proxy statement entitled “Summary Term Sheet—Termination of the Merger Agreement—Parent Termination Rights”); and (v) with respect to any Impactive Capital stockholder, the termination of the voting agreement by written agreement of each of Parent, Avid and such Impactive Capital stockholder.

 

See the section of this proxy statement entitled “The Voting Agreement” beginning on page 117 for more information.

 

4

 

 

Consequences if the Merger is Not Completed

 

If the proposal to adopt the merger agreement does not receive the required approval from Avid stockholders or if the merger is not completed for any other reason holders of shares of Avid common stock will not receive any consideration from Parent or Merger Sub for their shares of Avid common stock. Instead, Avid will remain a publicly-traded company, and Avid common stock will continue to be listed and traded on Nasdaq. In addition, if the merger agreement is terminated under specified circumstances, Avid will be obligated to pay Parent a termination fee of $39,800,000 (the “Avid termination fee”). Upon termination of the merger agreement under certain other specified circumstances, Parent will be obligated to pay Avid a termination fee of $84,500,000 (the “Parent termination fee”).

 

See the section of this proxy statement entitled “The Merger—Consequences if the Merger is Not Completed” beginning on page 70 for more information.

 

Treatment of Outstanding Equity Awards

 

Pursuant to the terms of the merger agreement:

 

At the effective time, each outstanding restricted stock unit (“RSU”) award, including each award of performance-based RSUs, that is vested at the effective time (but not yet settled) or that vests as a result of the consummation of the transactions contemplated by the merger agreement (each, a “vested RSU award”) will be cancelled and, in exchange therefor, each holder of any such cancelled vested RSU award will be solely entitled to receive, in consideration of the cancellation of such vested RSU award and in settlement therefor, a payment in cash of an amount equal to the product of (i) the number of RSUs subject to such vested RSU award immediately prior to the effective time multiplied by (ii) the merger consideration (less any required tax withholdings in accordance with the terms of the merger agreement).

 

At the effective time, each outstanding RSU that is not a vested RSU award (each, an “unvested RSU award”) will automatically be cancelled and converted solely into the contingent right to receive from Parent or the surviving corporation a payment in cash (without interest) equal to the product of (i) the number of RSUs subject to such unvested RSU awards immediately prior to the effective time multiplied by (ii) the merger consideration (each, a “converted cash award”) (less any required tax withholdings in accordance with the terms of the merger agreement). Each such converted cash award assumed and converted pursuant to the terms of the merger agreement will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding RSU immediately prior to the effective time, with payment forfeited to the extent vesting is not satisfied. However, in the event that Parent or any of its affiliates (including the surviving corporation) terminates the employment or service of the holder of a converted cash award without “cause” (as defined in the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans”), the unvested portion of the holder’s converted cash award will become vested upon such termination and, with respect to unvested RSU awards with a performance-based vesting schedule, the vesting of such awards will be determined based on the current vesting schedules and performance conditions, except that the “ending Company stock price” (for purposes of determining Avid’s total shareholder return) will be equal to $27.05. Parent will pay any portion of a converted cash award that vests to the applicable holder as promptly as practicable following the date on which such portion vests, but in any event within two payroll periods following the date on which the converted cash award vested.

 

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The merger agreement provides that as of the effective time, the Avid Technology, Inc. 2014 Stock Incentive Plan, as amended (the “Avid stock plan”), will terminate, and no further rights with respect to shares of Avid common stock or any other awards will be granted thereunder. The merger agreement also provides that immediately prior to and effective as of the effective time, Avid will terminate the Avid Technology, Inc. Second Amended and Restated 1996 Employee Stock Purchase Plan, as amended (the “Avid stock purchase plan”).

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81 for more information.

 

Interests of Directors and Executive Officers in the Merger

 

In considering the recommendations of the Board with respect to the merger, Avid stockholders should be aware that the directors and executive officers of Avid have certain interests, including financial interests, in the merger that may be different from, or in addition to, the interests of Avid stockholders generally. The Board was aware of these interests and considered them, among other matters, in evaluating and negotiating the merger agreement, approving the merger agreement and the transactions contemplated thereby, and in making its recommendation that Avid stockholders vote “FOR” the Merger Agreement Proposal.

 

See the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64 for more information.

 

Conditions to the Merger

 

The respective obligations of each of Avid, Parent and Merger Sub to effect the merger are subject to the satisfaction (or to the extent permitted by law, mutual waiver by both Avid and Parent) at or prior to the effective time of each of the following conditions:

 

the Avid stockholder approval having been obtained;

 

the waiting period (and any extensions thereof) applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) having expired or been terminated and approval by the German Federal Cartel Office and any waivers, consents, agreements or approvals applicable under any investment screening law set forth in the Company disclosure letter (as defined below) having been obtained or the applicable waiting period having expired or been terminated; and

 

no governmental entity of competent jurisdiction having issued or entered any order, injunction or decree and no law (other than any antitrust law or investment screening law) having been enforced, enacted, entered or deemed applicable to the merger, in each case that is in effect and prohibits, enjoins or otherwise prevents the consummation of the merger.

 

The obligations of Parent and Merger Sub to effect the merger are also subject to the satisfaction or waiver by Parent at or prior to the effective time of each of the following additional conditions, any of which may be waived by Parent:

 

the accuracy of Avid’s representations and warranties contained in the merger agreement, subject to applicable materiality and other qualifiers, as of the closing date of the merger or the date in respect of which such representation or warranty was specifically made;

 

Avid having performed or complied in all material respects with all obligations and covenants required by the merger agreement to be performed or complied with by Avid on or before the closing date;

 

no Company material adverse effect (as defined below) having occurred after the date of the merger agreement that is continuing as of the closing date; and

 

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Parent having received a certificate signed on behalf of Avid by an executive officer of Avid as to the satisfaction of the conditions described above.

 

The obligations of Avid to effect the merger are also subject to the satisfaction or waiver by Avid at or prior to the effective time of each of the following additional conditions, any of which may be waived by Avid:

 

the accuracy of Parent’s and Merger Sub’s representations and warranties contained in the merger agreement, subject to applicable materiality and other qualifiers, as of the closing date of the merger or the date in respect of which such representation or warranty was specifically made;

 

each of Parent and Merger Sub having performed or complied in all material respects with all obligations and covenants required by the merger agreement to be performed or complied with by Parent and Merger Sub, respectively, on or before the closing date; and

 

Avid having received a certificate signed on behalf of Parent and Merger Sub by an executive officer of each of Parent and Merger Sub as to the satisfaction of the conditions described above.

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger—Conditions to the Merger” beginning on page 102 for more information.

 

Regulatory Approvals

 

Under the merger agreement, the respective obligations of Avid, Parent and Merger Sub to complete the merger are subject to, among other things, (i) the expiration or termination of any applicable waiting period (and any extension thereof) under the HSR Act and approval by the German Federal Cartel Office, (ii) the receipt of certain consents or approvals under applicable investment screening laws (or the expiration or termination of any applicable waiting period thereunder) and (iii) the absence of any order or law (other than any antitrust law or investment screening law) prohibiting, making illegal, voiding, enjoining or otherwise preventing the consummation of the merger.

 

See the section of this proxy statement entitled “The Merger—Regulatory Approvals Required for the Merger” beginning on page 76 for more information.

 

Financing of the Merger

 

Avid anticipates that the total funds needed to complete the merger, including the funds needed to pay Avid stockholders and holders of RSU awards the amounts due to them under the merger agreement, the funds needed to pay all transaction costs and expenses and the funds needed to repay or refinance indebtedness required in connection with the transactions contemplated by the merger agreement, will be approximately $[       ] billion based upon the number of shares of Avid common stock and RSU awards outstanding as of [       ], 2023, and will be funded through a combination of up to $660,000,000 of debt financing and up to $960,990,025.55 of equity financing. See the section of this proxy statement entitled “Financing of the Merger” beginning on page 71 for more information.

 

Limited Guarantee

 

To induce Avid to enter into the merger agreement, STG VII, L.P., STG VII-A, L.P., STG VII Executive Fund, L.P. and STG AV, L.P. (together, the “guarantors”) executed a limited guaranty, dated as of August 9, 2023, in favor of Avid (the “limited guarantee”). Under the limited guarantee, subject to the limitations described therein, each guarantor has guaranteed its respective portion of the following based on its pro rata percentage of the guaranteed obligations, as set forth in the limited guarantee: the due, punctual and full performance and discharge of payment to Avid of the Parent termination fee, if, as and when it becomes payable under the merger agreement, certain reimbursement and indemnification obligations specified in the merger agreement that may be owed by Parent pursuant to the merger agreement, damages for a willful breach by Parent or Merger Sub and all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) paid or incurred by Avid in enforcing its rights against the guarantors under the limited guarantee; provided, however, that the obligations of the guarantors are subject to an aggregate cap on all monetary damages to which Parent and its related parties are exposed (other than pursuant to the confidentiality agreement) equal to the Parent termination fee as described in the section of this proxy statement entitled “The Agreement and Plan of Merger – Expenses; Termination Fees” beginning on page 106.

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger—Limited Guarantee” beginning on page 100 for more information.

 

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Restrictions on Solicitation of Competing Proposals

 

Until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, Avid has agreed that it will not, and will cause its and the Avid subsidiaries’ directors, officers, legal and financial advisors not to, and will direct and use its reasonable best efforts to cause the other representatives of Avid not to:

 

initiate, solicit, knowingly encourage or knowingly facilitate the submission of any competing proposal;

 

furnish any non-public information regarding Avid or any of the Avid subsidiaries to any third person in connection with or in response to a competing proposal made, or reasonably expected to be made, by such third person;

 

participate in, engage in, or knowingly facilitate any discussions or negotiations with any third person with respect to any competing proposal made, or reasonably expected to be made, by such third person;

 

approve, endorse or recommend any proposal that constitutes, or is reasonably expected to lead to, a competing proposal; or

 

enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to a competing proposal, other than, in each case, an acceptable confidentiality agreement (as defined below).

 

Notwithstanding anything to the contrary, if, at any time after the date of the merger agreement and prior to the earlier of obtaining the Avid stockholder approval or the termination of the merger agreement in accordance with its terms, if Avid receives a written competing proposal that did not result from a material breach of the non-solicitation provisions described above and the Board determines in good faith that such proposal is or could reasonably be expected to lead to a superior proposal, then Avid can engage in discussions and negotiations with a person with respect to such competing proposal.

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger—Restrictions on Solicitation of Competing Proposals” beginning on page 91 for more information.

 

Termination of the Merger Agreement

 

Termination Rights Exercisable by Either Parent or Avid

 

The merger agreement may be terminated at any time prior to the effective time by ether Parent or Avid:

 

by mutual written consent of Parent and Avid;

 

if the Merger is not consummated on or before 11:59 p.m. (California time) on February 9, 2024 (the “outside date”) but, if all of the conditions to closing, other than the conditions as described in the second and third bullet points in the section of this proxy statement entitled “The Agreement and Plan of Merger — Conditions to the Merger — Conditions to Each Party’s Obligations” have been satisfied or are capable of being satisfied at such time, the outside date will automatically extend to 11:59 p.m. (California time) on May 9, 2024. Parent or Avid, as the case may be, is not be permitted to terminate the merger agreement under the circumstances described in this bullet point if the material breach by Parent or Merger Sub (in the case of termination by Parent) or Avid (in the case of termination by Avid) of any of its representations, warranties, covenants or obligations contained in the merger agreement materially contributed to the failure to consummate the merger by such date;

 

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if Avid did not obtain the Avid stockholder approval upon a vote taken at the stockholder meeting, including any adjournments or postponements thereof. However, the right to terminate the merger agreement pursuant to this bullet point will not be available to Avid if its action or failure to act (which action or failure to act constitutes a breach by Avid of the merger agreement) has been the primary cause of, or primarily resulted in, the failure to obtain the Avid stockholder approval; or

 

if any governmental entity of competent jurisdiction issues or enters any order, injunction or decree or any law (other than with respect to antitrust laws or investment screening laws) is enforced, enacted, entered or deemed applicable to the merger, in each case that is in effect and prohibits, enjoins or otherwise prevents the consummation of the merger, and such order or law becomes final and non-appealable. However, the right to terminate the merger agreement under the circumstances described in this bullet point will not be available to any party that has failed in any material respect to comply with its obligations to use reasonable best efforts to consummate the transactions contemplated by the merger agreement before asserting the right to terminate under the circumstances described in this bullet point.

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger—Termination Rights Exercisable by Avid and Parent” beginning on page 104 for more information.

 

Avid Termination Rights

 

Avid may terminate the merger agreement:

 

at any time prior to obtaining the Avid stockholder approval, if (i) the Board (or a committee thereof) has determined that Avid has received a superior proposal, (ii) the Board (or a committee thereof) has authorized Avid to enter immediately upon termination of the merger agreement into a definitive agreement to consummate the superior proposal, (iii) Avid has complied in all material respects with its applicable obligations in the merger agreement in respect of such superior proposal and (iv) Avid pays, or causes to be paid, the Avid termination fee;

 

at any time prior to the effective time, if: (i) Parent or Merger Sub breaches or fails to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, which breach or failure to perform would give rise to the failure of an applicable condition to the merger described above to be satisfied, (ii) Avid has delivered to Parent written notice of such breach or failure to perform and (iii) either such breach or failure to perform is not capable of cure or at least 30 days has elapsed since the date of delivery of such written notice to Parent and such breach or failure to perform has not been cured prior to the expiration of such 30 day period. However, Avid is not permitted to terminate the merger agreement under the circumstances described in this bullet point if Avid has breached or failed to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, such that an applicable condition to the merger described above would not be satisfied; or

 

at any time prior to the effective time, if (i) all of the applicable conditions to the merger described above (other than those conditions that by their nature are only capable of being satisfied on the closing date, each of which is capable of being satisfied if the closing were on the date of such termination, or that have failed to be satisfied as a result of Parent’s or Merger Sub’s material breach or failure to perform any of their respective representations, warranties, covenants or agreements contained in the merger agreement) have been satisfied or waived, (ii) Avid has notified Parent in writing at least three business days prior to such termination stating that Avid is ready, willing and able to consummate the closing and (iii) Parent and Merger Sub have failed to consummate the closing by the end of such three business day period.

 

See the section of this proxy statement entitled “The Agreement and Plan of MergerTermination Rights Exercisable by Avid” beginning on page 104 for more information.

 

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Parent Termination Rights

 

Parent may terminate the merger agreement:

 

at any time prior to obtaining the Avid stockholder approval, if (i) the Board or any committee thereof (a) adopts, authorizes, approves or recommends any competing proposal or (b) withholds, withdraws, qualifies, modifies or amends, or publicly proposes to withhold, withdraw, amend, qualify or modify, in a manner adverse to Parent, the Board’s recommendation that Avid stockholders adopt the merger agreement (the “Avid recommendation”) or fails to include the Avid recommendation in this proxy statement (and it will be considered a modification adverse to Parent if (1) any competing proposal structured as a tender or exchange offer is commenced and the Board fails to publicly recommend against acceptance of such tender or exchange offer by the stockholders of avid within ten business days of commencement thereof pursuant to Rule 14d-2 of the Exchange Act or (2) any competing proposal is publicly announced (other than by the commencement of a tender or exchange offer) and the Board fails to issue a public press release within ten business days following such public announcement providing that the Board reaffirms the Avid recommendation (provided that the Board will not be required to make any reaffirmation more than one time with respect to any competing proposal unless there has been a publicly disclosed change to the terms and conditions of such competing proposal in any material respect (it being understood that any change in the consideration thereof will be deemed such a modification in any material respect)) (any which action set forth in the foregoing clause (a) or (b), a “change of Avid recommendation”) or (ii) there has been a willful breach by Avid of the non-solicitation provisions under the merger agreement and such breach involved a director or named executive officer of Avid and had material consequences; or

 

at any time prior to the effective time, if: (i) Avid breaches or fails to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, which breach or failure to perform would give rise to the failure of an applicable condition to the merger described above to be satisfied, (ii) Parent has delivered to Avid written notice of such breach or failure to perform and (iii) either such breach or failure to perform is not capable of cure or at least 30 days has elapsed since the date of delivery of such written notice to Avid and such breach or failure to perform has not been cured prior to the expiration of such 30-day period. However, Parent is not permitted to terminate the merger agreement under the circumstances described in this bullet point if Parent or Merger Sub has breached or failed to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, such that an applicable condition to the merger described above would not be satisfied.

 

See the section of this proxy statement entitled “The Agreement and Plan of MergerTermination Rights Exercisable by Parent” beginning on page 105 for more information.

 

Termination Fees

 

Upon termination of the merger agreement under specified circumstances, Avid will be obligated to pay Parent the Avid termination fee of $39,800,000. Upon termination of the merger agreement under certain other specified circumstances, Parent will be obligated to pay Avid the Parent termination fee of $84,500,000. See the section of this proxy statement entitled “The Agreement and Plan of Merger—Expenses; Termination Fees” beginning on page 106 for more information.

 

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Appraisal Rights

 

Under Delaware law, holders of shares of Avid common stock are entitled to appraisal rights in connection with the merger, provided that such holders satisfy all of the conditions set forth in Section 262 of the DGCL. A holder of Avid common stock who properly seeks appraisal and complies with the applicable requirements under Delaware law, and does not thereafter lose his, her or its right to, or properly withdraw his, her or its demand for, appraisal rights will forego the merger consideration and instead receive a cash payment equal to the fair value of his, her or its shares of Avid common stock in connection with the merger. Fair value will be determined by the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) following an appraisal proceeding. Dissenting stockholders will not know the appraised fair value at the time such holders must elect whether to seek appraisal. The ultimate amount dissenting stockholders receive in an appraisal proceeding may be more or less than, or the same as, the amount such holders would have received under the merger agreement.

 

To seek appraisal, an Avid stockholder of record must deliver a written demand for appraisal to Avid before the vote on the merger agreement at the special meeting, not vote in favor of the proposal to adopt the merger agreement, continuously hold the shares of Avid common stock through the effective time, not withdraw their demand for appraisal or otherwise lose their rights to appraisal and otherwise comply with the procedures set forth in Section 262 of the DGCL. Failure to follow exactly the procedures specified under Delaware law may result in the loss of appraisal rights. Pursuant to Section 262 of the DGCL, assuming that immediately prior to the merger shares of Avid common stock continue to be listed on Nasdaq, the Delaware Court of Chancery will dismiss the appraisal proceedings as to all holders of shares who are otherwise entitled to appraisal rights unless (i) the total number of shares entitled to appraisal rights exceeds 1% of the outstanding shares of Avid common stock eligible for appraisal or (ii) the value of the merger consideration provided in the merger for such total number of shares exceeds $1,000,000.

 

See the section of this proxy statement entitled “Appraisal Rights” beginning on page 109 for more information.

 

Material U.S. Federal Income Tax Consequences of the Merger

 

The receipt of cash in exchange for shares of Avid common stock pursuant to the merger generally will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder (as defined below) who receives cash in exchange for shares of Avid common stock in the merger will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. holder’s adjusted tax basis in the shares converted into the right to receive cash in the merger. Gain or loss will be determined separately for each block of shares of Avid common stock (that is, shares acquired for the same cost in a single transaction). See the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 73 for more information, and you should consult your tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local and foreign taxes.

 

Where You Can Find More Information

 

You can find more information about Avid in the periodic reports and other information we file with the U.S. Securities and Exchange Commission (the “SEC”), including the documents incorporated by reference in this proxy statement, without charge through the SEC’s website at www.sec.gov.

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

 

The following questions and answers are intended to briefly address some commonly asked questions regarding the special meeting of Avid stockholders and the merger. These questions and answers do not address all questions that may be important to you as an Avid stockholder. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121.

 

Q:Why am I receiving this proxy statement?

 

A:On August 9, 2023, Avid entered into the merger agreement with Parent and Merger Sub. You are receiving this proxy statement in connection with the solicitation of proxies by the Board in favor of the proposal to adopt the merger agreement and the other proposals related to the merger described in this proxy statement.

 

Q:As a stockholder, what will I receive in the merger?

 

A:At the effective time, each share of Avid common stock issued and outstanding immediately prior to the effective time (other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of the DGCL concerning the right of stockholders to require appraisal of their shares of Avid common stock) will be cancelled and automatically converted into the right to receive $27.05 per share in cash, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement.

 

The receipt of cash in exchange for shares of Avid common stock pursuant to the merger generally will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder (as defined below) who receives cash in exchange for shares of Avid common stock in the merger will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. holder’s adjusted tax basis in the shares converted into the right to receive cash in the merger. Gain or loss will be determined separately for each block of shares of Avid common stock (that is, shares acquired for the same cost in a single transaction). See the section of this proxy statement entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 73 for more information, and you should consult your tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local and foreign taxes.

 

Q:What will happen to outstanding Avid equity compensation awards in the merger?

 

A:See the section of this proxy statement entitled “The Agreement and Plan of Merger — Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81 for information regarding the treatment of outstanding Avid equity awards.

 

Q:Where and when will the special meeting of stockholders be held?

 

A:The special meeting of Avid stockholders will be held on [       ], 2023 at [       ] Eastern Time at [       ].

 

Q:How do I attend the special meeting in person?

 

A:If you wish to attend the special meeting, you may be asked to present valid photo identification. If you hold your shares of Avid common stock in “street name,” you will need to present a copy of your voting instruction card or brokerage statement reflecting your stock ownership as of the record date for the special meeting and check in at the registration desk at the special meeting. Cameras, sound or video recording devices or any similar equipment, or the distribution of any printed materials, will not be permitted at the special meeting without the approval of Avid.

 

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Q:Who is entitled to vote at the special meeting?

 

A:Only holders of record of Avid common stock as of the close of business on [       ], 2023, the record date for the special meeting, are entitled to vote at the special meeting. You will be entitled to one vote on each of the proposals presented in this proxy statement for each share of Avid common stock that you held on the record date for the special meeting.

 

Q:What proposals will be considered at the special meeting?

 

At the special meeting, you will be asked to consider and vote on:

 

Merger Agreement Proposal—a proposal to adopt the merger agreement;

 

Non-Binding Compensation Advisory Proposal—a proposal to approve, by a non-binding advisory vote, the compensation that may be paid or become payable to Avid’s named executive officers that is based on or otherwise relates to the merger, as discussed in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger – Golden Parachute Compensation” beginning on page 68; and

 

Adjournment Proposal—a proposal to adjourn the special meeting from time to time to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

Q:What vote is required to approve each of the proposals?

 

A:The approval of the Merger Agreement Proposal requires the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting. Abstentions from voting and failures to vote will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

 

The approval of the Non-Binding Compensation Advisory Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. The vote is advisory only and, therefore, is not binding on Avid or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by Avid stockholders and the merger is completed, the compensation that is based on, or otherwise relates to, the merger will be payable to Avid’s named executive officers even if the Non-Binding Compensation Advisory Proposal is not approved. Abstentions from voting and failures to vote will have no effect on the Non-Binding Compensation Advisory Proposal.

 

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. Abstentions from voting and failures to vote will have no effect on the Adjournment Proposal. Additionally, if a quorum is not present at the special meeting, the special meeting may be adjourned to another place, date or time by the affirmative vote of the holders of a majority of the total number of votes cast by holders present in person or by proxy at the special meeting and entitled to vote at the special meeting. In this case, abstentions from voting and failures to vote will have no effect on the vote to adjourn the special meeting.

 

Q:How does the Board recommend that I vote on the proposals?

 

A:Upon careful consideration, including discussions with Avid’s management and Avid’s legal and financial advisors, the Board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of Avid and its stockholders, and has unanimously recommended that you vote “FOR” the Merger Agreement Proposal, “FOR” the Non-Binding Compensation Advisory Proposal and “FOR” the Adjournment Proposal.

 

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See the section of this proxy statement entitled “The Merger—Reasons for Recommending the Adoption of the Merger Agreement” beginning on page 49 for a discussion of the factors that the Board considered in determining to recommend the adoption of the merger agreement. In addition, in considering the recommendation of the Board with respect to the merger agreement, you should be aware that some of Avid’s directors and executive officers have interests that may be different from, or in addition to, the interests of Avid stockholders generally. See the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64 for more information.

 

Q:Do I need to attend the special meeting in person?

 

A:No. It is not necessary for you to attend the special meeting in person in order to vote your shares. You may vote by mail, by telephone or through the Internet, as described in more detail below.

 

Q:How many shares need to be represented at the special meeting to constitute a quorum?

 

A:The presence at the special meeting, in person or by proxy, of the holders of [       ] shares of Avid common stock (a majority of the shares of Avid common stock issued and outstanding as of the record date for the special meeting) constitutes a quorum for the special meeting. Each holder of record of shares of Avid common stock as of the close of business on [       ], 2023, which is the record date for the special meeting, is entitled to receive notice of, and to vote at, the special meeting. You will be entitled to one vote for each share of Avid common stock that you owned on the record date for the special meeting. If you sell or transfer your shares of Avid common stock after the record date for the special meeting but before the special meeting, you will transfer the right to receive merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares of Avid common stock, but you will retain your right to vote those shares at the special meeting. As of the record date for the special meeting, there were [       ] shares of Avid common stock issued and outstanding.

 

If you are an Avid stockholder of record and you vote by mail, by telephone or through the Internet or in person at the special meeting, then your shares of Avid common stock will be counted as part of the quorum. If you are a “street name” holder of shares of Avid common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

 

All shares of Avid common stock held by stockholders of record that are present in person or represented by proxy and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders abstain from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned to another place, date or time by the affirmative vote of the holders of a majority of the total number of votes cast by holders present in person or by proxy at the special meeting and entitled to vote at the special meeting.

 

Q:Why am I being asked to consider and cast a non-binding advisory vote to approve the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger?

 

A:The SEC has adopted rules that require companies to seek a non-binding advisory vote to approve certain compensation that may be paid or become payable to their named executive officers that is based on or otherwise relates to, certain corporate transactions, such as the merger. In accordance with the rules promulgated under Section 14A of the Exchange Act, Avid is providing its stockholders with the opportunity to cast a non-binding advisory vote on compensation that may be paid or become payable to Avid’s named executive officers in connection with the merger. See the section of this proxy statement entitled “Proposal 2: Non-Binding Compensation Advisory Proposal” beginning on page 28 for more information.

 

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Q:What will happen if Avid stockholders do not approve the Non-Binding Compensation Advisory Proposal?

 

A:The vote to approve the Non-Binding Compensation Advisory Proposal is a vote separate and apart from the vote to adopt the merger agreement. Approval of the Non-Binding Compensation Advisory Proposal is not a condition to completion of the merger, and it is advisory in nature only, meaning that it will not be binding on Avid or Parent or any of their respective subsidiaries. Accordingly, if the merger agreement is adopted by Avid stockholders and the merger is completed, the compensation that is based on, or otherwise relates to, the merger will be payable to Avid’s named executive officers even if this proposal is not approved.

 

Q:What do stockholders need to do now?

 

A:After carefully reading and considering the information contained in this proxy statement, including the annexes attached to this proxy statement and the documents and information incorporated by reference into this proxy statement, please vote your shares of Avid common stock in one of the ways described below as soon as possible. You will be entitled to one vote for each share of Avid common stock that you owned on the record date for the special meeting.

 

Q:How do I vote if I am a stockholder of record?

 

A:You may vote by:

 

submitting your proxy by completing, signing and dating each proxy card you receive and returning it by mail in the enclosed prepaid envelope;

 

submitting your proxy by using the telephone number printed on each proxy card you receive;

 

submitting your proxy through the Internet by following the voting instructions printed on each proxy card you receive; or

 

by attending the special meeting in person and voting (your attendance at the special meeting will not, by itself, constitute a vote or submission of your proxy).

 

If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received by 11:59 p.m. Eastern Time on the day before the special meeting.

 

Submitting your proxy by mail, by telephone or through the Internet will not prevent you from voting at the special meeting in person. You are encouraged to submit a proxy by mail, by telephone or through the Internet even if you plan to attend the special meeting in person to ensure that your shares of Avid common stock are represented at the special meeting.

 

If you return your signed and dated proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the Merger Agreement Proposal, “FOR” the Non-Binding Compensation Advisory Proposal and “FOR” the Adjournment Proposal.

 

If you wish to vote at the special meeting in person and your shares are held for you in “street name” by a bank, broker, trust or other nominee, you must obtain a legal proxy, executed in your favor, from the bank, broker, trust or other nominee authorizing you to vote at the special meeting.

 

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Q:If my shares are held for me in “street name” by a bank, broker, trust or other nominee, will my bank, broker, trust or other nominee vote those shares for me with respect to the proposals without my direction?

 

A:No. If your shares of Avid common stock are held in “street name,” you are not the “stockholder of record” of such shares. If this is the case, this proxy statement has been forwarded to you by your bank, broker, trust or other nominee. You, as the beneficial holder, generally have the right to direct your bank, broker, trust or other nominee as to how to vote your shares of Avid common stock. Your bank, broker, trust or other nominee will NOT have the power to vote your shares of Avid common stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote. If you are a “street name” holder of shares of Avid common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.

 

Q:What if I fail to instruct my bank, broker, trust or other nominee how to vote?

 

A:Your bank, broker, trust or other nominee will NOT be able to vote your shares of Avid common stock unless you have properly instructed your bank, broker, trust or other nominee on how to vote. Under applicable stock exchange rules, banks, brokers, trusts or other nominees have the discretion to vote your shares of Avid common stock on routine matters if you fail to instruct your bank, broker, trust or other nominee on how to vote your shares of Avid common stock with respect to such matters. The proposals in this proxy statement are non-routine matters, and banks, brokers, trusts and other nominees cannot vote on these proposals without your instructions. It is important that you instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the proposals, using the instructions provided by your bank, broker, trust or other nominee. Because the Merger Agreement Proposal requires the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting, the failure to provide your nominee with voting instructions will have the same effect as a vote “AGAINST” the Merger Agreement Proposal. Furthermore, if you fail to provide your nominee with any voting instructions, your shares will not be included in the calculation of the number of shares of Avid common stock present at the special meeting for purposes of determining whether a quorum is present. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options. You are invited to attend the special meeting even if you are not a stockholder of record. However, if you are not a stockholder of record, you may not vote your shares at the special meeting in person unless you obtain a legal proxy, executed in your favor, from such bank, broker, trust or other nominee authorizing you to vote at the special meeting.

 

Q:May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the Internet?

 

A:Yes. You may revoke your proxy or change your vote at any time before your shares are voted at the special meeting. If you are a stockholder of record, you may revoke your proxy by delivering a signed written notice of revocation stating that your proxy is revoked and bearing a date later than the date of your proxy to Avid’s Corporate Secretary at Avid Technology, Inc., 75 Blue Sky Drive, Burlington, Massachusetts 01803. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the Internet in accordance with the instructions on the enclosed proxy card. You may also submit a later-dated proxy card relating to the same shares of Avid common stock. If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the Internet. Alternatively, your proxy may be revoked or changed by attending the special meeting in person and voting. However, simply attending the special meeting without voting will not revoke or change your proxy; you must vote in person at the special meeting. “Street name” holders of shares of Avid common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies. If you have instructed a bank, broker, trust or other nominee to vote your shares, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.

 

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All properly submitted proxies received by us before the special meeting that are not revoked or changed prior to being voted at the special meeting will be voted at the special meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” each of the proposals.

 

Q:What does it mean if I receive more than one proxy card?

 

A:If you receive more than one proxy card, it means that you hold shares of Avid common stock that are registered in more than one account. For example, if you own your shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and you will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Therefore, to ensure that all of your shares of Avid common stock are voted, you will need to submit your proxies by properly completing and mailing each proxy card you receive or by telephone or through the Internet by using the different voter control number(s) on each proxy card.

 

Q:What happens if I sell or otherwise transfer my shares of Avid common stock after the record date for the special meeting but before the special meeting? What happens if I sell or otherwise transfer my shares of Avid common stock after the special meeting but before the effective time?

 

A:The record date for the special meeting is earlier than the date of the special meeting and earlier than the expected date of the merger. If you own shares of Avid common stock as of the close of business on the record date for the special meeting, but transfer your shares prior to the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or transfer your shares, you will retain your right to vote at the special meeting, but the right to receive the merger consideration will pass to the person who holds your shares as of immediately prior to the effective time of the merger. If you sell or transfer your shares of Avid common stock after the special meeting but before the effective time, the right to receive the merger consideration will pass to the person who holds your shares as of immediately prior to the effective time. In order to receive the merger consideration, you must hold your shares of Avid common stock through the completion of the merger.

 

Even if you sell or otherwise transfer your shares of Avid common stock after the record date for the special meeting, Avid encourages you to sign, date and return the enclosed proxy or submit your proxy to vote via the Internet or by telephone, or, if your shares are held in “street name” through a bank, broker, trust or other nominee, instruct your bank, broker, trust or other nominee on how to vote your shares using the instructions provided by your bank, broker, trust or other nominee.

 

Q:May I exercise dissenters’ rights or rights of appraisal in connection with the merger?

 

A:Yes. Under Delaware law, holders of shares of Avid common stock are entitled to appraisal rights in connection with the merger, provided that such holders meet all of the conditions set forth in Section 262 of the DGCL, which are summarized in this proxy statement. In order to exercise your appraisal rights under Section 262 of the DGCL, if the merger is effected, you must (i) properly submit a written demand to Avid prior to the stockholder vote on the adoption of the merger agreement, (ii) not vote in favor of the adoption of the merger agreement, (iii) continue to hold your shares of Avid common stock through the effective time and (iv) not thereafter withdraw your demand for appraisal of such shares or otherwise lose your appraisal rights, in each case, in accordance with the DGCL. The appraisal amount could be greater than, less than or the same as the merger consideration of $27.05 per share you would be entitled to receive under the terms of the merger agreement. If you wish to exercise your appraisal rights, you should carefully review the text of Section 262 of the DGCL, which is accessible at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. See the section of this proxy statement entitled “Appraisal Rights” beginning on page 109 for more information. Failure to timely and properly comply with the procedures specified in Section 262 of the DGCL may result in the loss of appraisal rights under the DGCL. A person who loses, his, her or its appraisal rights will still be entitled to receive the merger consideration of $27.05 per share.

 

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Q:If I hold my shares in certificated form, should I send in my stock certificates now?

 

A:No. Shortly after the merger is completed, stockholders holding certificated shares of Avid common stock will be sent a letter of transmittal that includes detailed written instructions on how to return such stock certificates. You must return your stock certificates in accordance with such instructions in order to receive the merger consideration. PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES NOW.

 

Q:What will happen to my Avid restricted stock unit awards?

 

A:At the effective time, your vested RSU awards will be automatically cancelled and, in exchange therefor, you will be entitled to receive a payment in cash of an amount equal to the product of (i) the number of RSUs subject to such vested RSU award immediately prior to the effective time multiplied by (ii) the merger consideration, which will be paid, less any required tax withholding, as promptly as practicable following the effective time of the merger. At the effective time, any unvested RSU awards will automatically be cancelled and converted solely into the contingent right to receive from Parent (or the surviving corporation) a payment in cash (without interest) equal to the product of (i) the number of RSUs subject to such unvested RSU awards immediately prior to the effective time multiplied by (ii) the merger consideration (less any required tax withholding), subject to satisfaction of the applicable vesting criteria. See the section of this proxy statement entitled “The Agreement and Plan of Merger — Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81 for more information.

 

Q:When is the merger expected to be completed?

 

A:Avid and Parent are working toward completing the merger as quickly as reasonably possible. Avid currently anticipates that the merger will be completed during the fourth quarter of 2023, subject to Avid stockholder approval, regulatory approvals and the satisfaction of other customary closing conditions, but Avid cannot be certain when or if the conditions to the merger will be satisfied (or, to the extent permitted, waived). The merger cannot be completed until the conditions to closing are satisfied (or, to the extent permitted, waived). See the section of this proxy statement entitled “The Agreement and Plan of Merger—Conditions to the Merger” beginning on page 102 for more information.

 

Q:What happens if the merger is not completed?

 

A:If the Merger Agreement Proposal is not approved by the stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting or if the merger is not completed for any other reason you will not receive any consideration from Parent or Merger Sub for your shares of Avid common stock. Instead, Avid will remain a publicly-traded company, and Avid common stock will continue to be registered under the Exchange Act and listed and traded on Nasdaq. Avid expects that its management will operate its business in a manner similar to that in which it is being operated today and that holders of shares of Avid common stock would continue to be subject to the same risks and opportunities to which they are currently subject with respect to their ownership of Avid common stock. Upon termination of the merger agreement under specified circumstances, Avid will be obligated to pay Parent the Avid termination fee of $39,800,000. Upon termination of the merger agreement under certain other specified circumstances, Parent will be obligated to pay Avid the Parent termination fee of $84,500,000. See the section of this proxy statement entitled “The Merger— Consequences if the Merger is Not Completed” beginning on page 70 for more information.

 

Q:Who will count the votes?

 

A:The votes will be counted by the inspector of elections appointed for the special meeting.

 

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Q:Where can I find the voting results of the special meeting?

 

A:Avid intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports that Avid files with the SEC are publicly available when filed. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121 for more information.

 

Q:Where can I find more information about Avid?

 

A:Avid files periodic reports, proxy statements and other information with the SEC. Avid’s SEC filings are available to the public at the SEC’s website at www.sec.gov. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121 for a more detailed description of the information available.

 

Q:Who can help answer my questions?

 

A:For additional questions about the merger or the special meeting, assistance in submitting proxies or voting shares of Avid common stock, or additional copies of the proxy statement or the enclosed proxy card(s), please contact Innisfree M&A Incorporated, Avid’s proxy solicitor:

 

 

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022

 

Stockholders may call toll free: (877) 825-8772
Banks and Brokers may call collect: (212) 750-5833

 

If your shares of Avid common stock are held for you by a bank, broker, trust or other nominee, you should also call your bank, broker, trust or other nominee for more information.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include statements regarding the transactions contemplated by the merger agreement, including the effect of the merger and the transactions, if consummated, and the sufficiency of the equity and debt financing commitments. These statements are based on Avid’s current expectations of future events and may include words such as “anticipate,” “believe,” “confidence,” “could,” “estimate,” “expect,” “feel,” “intend,” “may,” “plan,” “should,” “seek,” “will” and “would,” or other comparable terms, but the absence of these words does not mean a statement is not forward-looking. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from Avid’s expectations. Risks and uncertainties include, but are not limited to:

 

the risk that the transactions contemplated by the merger agreement may not be completed in a timely manner, or at all;

 

the failure to satisfy the conditions to the consummation of the transactions contemplated by the merger agreement, including the receipt of stockholder and regulatory approvals;

 

unanticipated difficulties or expenditures relating to the transactions contemplated by the merger agreement;

 

the effect of the announcement or pendency of the transactions contemplated by the merger agreement on Avid’s plans, business relationships, operating results and operations;

 

potential difficulties retaining employees as a result of the announcement and pendency of the transactions contemplated by the merger agreement;

 

the response of customers, channel partners and suppliers to the announcement of the transactions contemplated by the merger agreement;

 

risks related to diverting management’s attention from Avid’s ongoing business operations;

 

legal proceedings, including those that may be instituted against Avid, its board of directors, its executive officers or others following the announcement of the transactions contemplated by the merger agreement; and

 

risks regarding the failure to obtain the necessary financing to complete the transactions contemplated by the merger agreement.

 

The foregoing list is not exhaustive, and readers are advised to carefully consider the foregoing risk factors and the other risks and uncertainties that affect Avid’s businesses described in the “Risk Factors” sections of Avid’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, and Avid’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023, filed with the SEC on August 9, 2023, and other reports and documents filed by Avid from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Copies of these filings are available online at www.sec.gov and ir.avid.com. Forward-looking statements speak only as of the date of this proxy statement. Readers are cautioned not to put undue reliance on forward-looking statements, and Avid assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

 

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PARTIES TO THE MERGER

 

Avid

 

Avid, a Delaware corporation, develops, markets, sells and supports software and integrated solutions for video and audio content creation, management and distribution. Avid is a leading technology provider that powers the media and entertainment industry. Avid does this by providing an open and efficient platform for digital media, along with a comprehensive set of creative software tools and workflow solutions. Its solutions are used in production and post-production facilities; film studios; network, affiliate, independent and cable television stations; recording studios; live-sound performance venues; advertising agencies; government and educational institutions; corporate communications departments; and by independent video and audio creative professionals, as well as aspiring professionals. Projects produced using Avid’s tools, platform and ecosystem include feature films, television programming, live events, news broadcasts, sports productions, commercials, music, video and other digital media content. With over one million creative users and thousands of enterprise clients relying on its technology platforms and solutions around the world, Avid enables the industry to thrive in today’s connected media and entertainment world.

 

Avid became a publicly-traded company in 1993. Shares of Avid common stock are listed on Nasdaq and trade under the symbol “AVID.”

 

Avid’s principal executive offices are located at 75 Blue Sky Drive, Burlington, Massachusetts 01803, and its telephone number is (978) 640-6789. Avid’s website address is www.Avid.com. The information provided on Avid’s website is not part of this proxy statement and is not incorporated by reference in this proxy statement by this or any other reference to Avid’s website in this proxy statement.

 

Additional information about Avid is contained in Avid’s public filings, which are incorporated by reference in this proxy statement. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121 for more information.

 

Parent

 

Parent is an affiliate of STG, a private equity firm focused on fueling innovative software, data and analytics market leaders in the mid-market, and was formed on August 4, 2023, solely for the purpose of serving as the holding company for Avid upon completion of the merger and engaging in the transactions contemplated by the merger agreement. Parent has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its formation, activities undertaken in connection with Parent’s proposed acquisition of Avid and other transactions contemplated by the merger agreement. Parent’s principal executive offices are located at c/o STG Partners, LLC, 1300 El Camino Real, Suite 300, Menlo Park, California 94025, and its telephone number is (650) 935-9500.

 

Merger Sub

 

Merger Sub is a wholly-owned subsidiary of Parent and was formed on August 4, 2023, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not carried on any activities on or prior to the date of this proxy statement, except for activities incidental to its formation and activities undertaken in connection with Parent’s acquisition of Avid. Upon completion of the merger, Merger Sub will merge with and into Avid, and Merger Sub will cease to exist. Merger Sub’s principal executive offices are located at c/o STG Partners, LLC, 1300 El Camino Real, Suite 300, Menlo Park, California 94025, and its telephone number is (650) 935-9500.

 

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THE SPECIAL MEETING

 

Avid is furnishing this proxy statement as part of the solicitation of proxies by the Board for use at the special meeting and at any properly convened meeting following an adjournment or postponement of the special meeting.

 

Date, Time and Place of the Special Meeting

 

The special meeting is scheduled to be held on [       ], 2023 at [       ] Eastern Time at [       ].

 

Avid stockholders who wish to attend the special meeting may be asked to present valid photo identification. Please note that, if you hold your shares of Avid common stock in “street name,” you will need to present a copy of your voting instruction card or brokerage statement reflecting your stock ownership as of the record date for the special meeting and check in at the registration desk at the special meeting. Cameras, sound or video recording devices or any similar equipment, or the distribution of any printed materials, will not be permitted at the special meeting without the approval of Avid.

 

Purpose of the Special Meeting

 

At the special meeting, Avid stockholders of record as of the record date for the special meeting will be asked to consider and vote on the following three proposals:

 

Merger Agreement Proposal—a proposal to adopt the merger agreement;

 

Non-Binding Compensation Advisory Proposal—a proposal to approve, by a non-binding advisory vote, the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger; and

 

Adjournment Proposal—a proposal to adjourn the special meeting from time to time to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

Recommendation of the Board

 

The Board carefully reviewed and considered numerous factors, as more fully described in this proxy statement, including the terms and conditions of the merger agreement, the merger and the other transactions contemplated by the merger agreement. By a unanimous vote, the Board (i) determined and declared that the merger agreement and the consummation by Avid of the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of Avid and its stockholders, (ii) approved and declared advisable the execution, delivery and performance of the merger agreement and, subject to the adoption of the merger agreement by Avid stockholders, the consummation by Avid of the transactions contemplated by the merger agreement, including the merger, (iii) directed that a proposal to adopt the merger agreement be submitted to a vote at a special meeting of Avid stockholders and (iv) upon the terms and subject to the conditions set forth in the merger agreement, resolved to recommend that Avid stockholders adopt the merger agreement and vote “FOR” the other proposals described in this proxy statement. Accordingly, the Board has unanimously recommended a vote “FOR” the Merger Agreement Proposal.

 

The Board has unanimously recommended a vote “FOR” the Non-Binding Compensation Advisory Proposal and “FOR” the Adjournment Proposal.

 

Record Date and Quorum

 

Each holder of record of shares of Avid common stock as of the close of business on [       ], 2023, which is the record date for the special meeting, is entitled to receive notice of, and to vote at, the special meeting. You will be entitled to one vote for each share of Avid common stock that you owned on the record date for the special meeting. If you sell or transfer your shares of Avid common stock after the record date for the special meeting but before the special meeting, you will transfer the right to receive merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares of Avid common stock, but you will retain your right to vote those shares at the special meeting. As of the record date for the special meeting, there were [       ] shares of Avid common stock issued and outstanding and entitled to vote at the special meeting. The presence at the special meeting, in person or by proxy, of the holders of [       ] shares of Avid common stock (a majority of the shares of Avid common stock issued and outstanding and entitled to vote as of the record date for the special meeting) constitutes a quorum for the special meeting.

 

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If you are an Avid stockholder of record and you vote by mail, by telephone or through the Internet or in person at the special meeting, then your shares of Avid common stock will be counted as part of the quorum. If you are a “street name” holder of shares of Avid common stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.

 

All shares of Avid common stock held by stockholders of record that are present in person or represented by proxy and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders abstain from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned to another place, date or time by the affirmative vote of the holders of a majority of the total number of votes cast by holders present in person or by proxy at the special meeting and entitled to vote at the special meeting.

 

Vote Required for Approval; Abstentions

 

Merger Agreement Proposal. The approval of the Merger Agreement Proposal requires the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting. Abstentions from voting and failures to vote will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

 

Non-Binding Compensation Advisory Proposal. The approval of the Non-Binding Compensation Advisory Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. The vote is advisory only and, therefore, is not binding on Avid or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by Avid stockholders and the merger is completed, the compensation that is based on, or otherwise relates to, the merger will be payable to Avid’s named executive officers even if the Non-Binding Compensation Advisory Proposal is not approved. Abstentions from voting and failures to vote will have no effect on the Non-Binding Compensation Advisory Proposal.

 

Adjournment Proposal. The approval of the Adjournment Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. Abstentions from voting and failures to vote will have no effect on the Adjournment Proposal. Additionally, if a quorum is not present at the special meeting, the special meeting may be adjourned to another place, date or time by the affirmative vote of the holders of a majority of the total number of votes cast by holders present in person or by proxy at the special meeting and entitled to vote at the special meeting. In this case, abstentions from voting and failures to vote will have no effect on the vote to adjourn the special meeting.

 

Effect of Broker Non-Votes

 

A broker non-vote occurs when shares held by a bank, broker, trust or other nominee are represented at a meeting, but the bank, broker, trust or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals at such meeting. Under applicable stock exchange rules, all of the proposals in this proxy statement are non-routine matters, so there can be no broker non-votes at the special meeting. Accordingly, if your shares are held in “street name,” your bank, broker, trust or other nominee will NOT be able to vote your shares of Avid common stock on any of the proposals, and your shares will not be counted as present in determining the presence of a quorum, unless you have properly instructed your bank, broker, trust or other nominee on how to vote. Because the Merger Agreement Proposal requires the affirmative vote of Avid stockholders holding a majority of the outstanding shares entitled to vote thereon at the special meeting, the failure to provide your bank, broker, trust or other nominee with voting instructions will have the same effect as a vote “AGAINST” the Merger Agreement Proposal. Because the approval of each of the Non-Binding Compensation Advisory Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting, and because your bank, broker, trust or other nominee does not have discretionary authority to vote on either proposal, the failure to provide your bank, broker, trust or other nominee with voting instructions will have no effect on approval of either such proposal.

 

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How to Vote

 

Stockholders of record have a choice of voting by proxy by completing a proxy card and mailing it in the prepaid envelope provided, by calling a toll-free telephone number or through the Internet. Please refer to your proxy card or the information forwarded by your bank, broker, trust or other nominee to see which voting options are available to you. The telephone and Internet voting facilities for stockholders of record will close at 11:59 p.m. Eastern Time on [       ], 2023, the day before the special meeting.

 

If you submit your proxy by mail, by telephone or through the Internet voting procedures, but do not include “FOR,” “AGAINST” or “ABSTAIN” on a proposal to be voted, your shares of Avid common stock will be voted in favor of that proposal. If you indicate “ABSTAIN” on the Merger Agreement Proposal, it will have the same effect as a vote “AGAINST” that proposal. If you indicate “ABSTAIN” on the Non-Binding Compensatory Advisory Proposal or the Adjournment Proposal, it will have no effect on the proposal. If you wish to vote by proxy and your shares are held by a bank, broker, trust or other nominee, you must follow the voting instructions provided to you by your bank, broker, trust or other nominee. Unless you give your bank, broker, trust or other nominee instructions on how to vote your shares of Avid common stock, your bank, broker, trust or other nominee will NOT be able to vote your shares on any of the proposals.

 

If you wish to vote at the special meeting in person and your shares are held in the name of a bank, broker, trust or other nominee, you must obtain a legal proxy, executed in your favor, from the bank, broker, trust or other nominee authorizing you to vote at the special meeting.

 

If you do not submit a proxy or otherwise vote your shares of Avid common stock in any of the ways described above, it will have the same effect as a vote “AGAINST” the Merger Agreement Proposal, but will have no effect on approval of the Non-Binding Compensation Advisory Proposal or the Adjournment Proposal.

 

If you have any questions about how to vote or direct a vote in respect of your shares of Avid common stock, you may contact Avid’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 825-8772.

 

YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATE(S) WITH YOUR PROXY CARD. A letter of transmittal with instructions for the surrender of certificates representing shares of Avid common stock will be mailed to those stockholders who hold certificated shares if the merger is completed.

 

Revocation of Proxies

 

Any proxy given by an Avid stockholder of record may be revoked at any time before it is voted at the special meeting by doing any of the following:

 

by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy to Avid’s Corporate Secretary at Avid Technology, Inc., 75 Blue Sky Drive, Burlington, Massachusetts 01803;

 

by submitting another proxy by telephone or through the Internet, in accordance with the instructions on the enclosed proxy card;

 

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by submitting a later-dated proxy card relating to the same shares of Avid common stock; or

 

by attending the special meeting in person and voting (your attendance at the special meeting will not, by itself, revoke your proxy; you must vote in person at the special meeting).

 

“Street name” holders of shares of Avid common stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies. If you have instructed a bank, broker, trust or other nominee to vote your shares, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.

 

Adjournments and Postponements

 

Although it is not currently expected, the special meeting may be adjourned or postponed one or more times to a later day or time, if necessary or appropriate, including to solicit additional proxies in favor of the adoption of the merger agreement. Your shares will be voted on any adjournment proposal submitted to stockholders in accordance with the instructions indicated in your proxy or, if no instructions are provided, “FOR” the Adjournment Proposal.

 

If a quorum is present at the special meeting, the special meeting may be adjourned if the Adjournment Proposal receives the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. If a quorum is not present at the special meeting, the special meeting may be adjourned to another place, date or time by the affirmative vote of the holders of a majority of the total number of votes cast by holders present in person or by proxy at the special meeting and entitled to vote at the special meeting. In either case, the adjourned meeting may take place without further notice other than by an announcement made at the special meeting of the adjourned meeting’s time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, unless the adjournment is for more than 30 days or if, after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to notice of and to vote at the special meeting. If a quorum is not present at the special meeting, or if a quorum is present at the special meeting but there are insufficient votes at the time of the special meeting to adopt the merger agreement, then Avid may seek to adjourn the special meeting. Under the merger agreement, Avid may, in its reasonable discretion, adjourn, recess or postpone the special meeting and may change the record date thereof, (i) to the extent necessary, in the judgment of the Board, to ensure that any required supplement or amendment to this proxy statement is provided to Avid stockholders within a reasonable amount of time in advance of the special meeting, (ii) if as of the time for which the special meeting is originally scheduled (as set forth in this proxy statement) there are insufficient shares of Avid common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the special meeting or to the extent that at such time Avid has not received proxies sufficient to allow the Avid stockholder approval to be obtained at the special meeting or (iii) to the extent Avid determines in good faith that failure to do so would be inconsistent with Avid’s obligations under applicable law.

 

Solicitation of Proxies

 

Avid is soliciting proxies on behalf of the Board, and Avid will bear the expenses in connection with the solicitation of proxies. In addition to solicitation by mail, Avid and its directors, officers and employees may solicit proxies in person, by telephone or by electronic means. These persons will not be specifically compensated for doing this.

 

Avid has retained Innisfree M&A Incorporated to assist in the proxy solicitation process. Avid will pay Innisfree M&A Incorporated a fee of approximately $25,000 plus reimbursement of certain specified fees and expenses. Avid also has agreed to indemnify Innisfree M&A Incorporated against various liabilities and expenses arising out of or relating to the services it provides to Avid (subject to certain exceptions).

 

Avid will ask banks, brokers, trusts and other nominees to forward Avid’s proxy solicitation materials to the beneficial owners of shares of Avid common stock held of record by such banks, brokers, trusts or other nominees. Avid will reimburse these banks, brokers, trusts or other nominees for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.

 

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Stockholder List

 

A list of Avid stockholders entitled to vote at the special meeting will be available for examination by any Avid stockholder at the special meeting. At least ten days prior to the date of the special meeting, this stockholder list will be available for inspection by Avid stockholders, subject to compliance with applicable provisions of Delaware law, in accordance with Delaware law and Avid’s by-laws.

 

Questions and Additional Information

 

If you have questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call Avid’s proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 825-8772.

 

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PROPOSAL 1: MERGER AGREEMENT PROPOSAL

 

As discussed elsewhere in this proxy statement, at the special meeting, Avid stockholders will consider and vote on a proposal to adopt the merger agreement. You should carefully read this proxy statement in its entirety, including the annexes attached to this proxy statement and the documents and information incorporated by reference in this proxy statement, for more detailed information concerning the merger agreement and the merger. In particular, you should read in its entirety the merger agreement, which is attached as Annex A to this proxy statement. See the sections of this proxy statement entitled “The Merger” beginning on page 30 and “The Agreement and Plan of Merger” beginning on page 77 for more information.

 

The Board has unanimously recommended that Avid stockholders vote “FOR” the Merger Agreement Proposal.

 

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Avid common stock represented by such proxy card will be voted “FOR” the Merger Agreement Proposal.

 

The approval of the Merger Agreement Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting.

 

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PROPOSAL 2: NON-BINDING COMPENSATION ADVISORY PROPOSAL

 

Under Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Avid is required to provide stockholders the opportunity to vote to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Avid’s named executive officers that is based on, or otherwise relates to, the merger, as disclosed in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger—Golden Parachute Compensation” beginning on page 68, including the table entitled “Golden Parachute Compensation” and accompanying footnotes. Accordingly, Avid stockholders are being provided with the opportunity to cast a non-binding advisory vote on such payments.

 

As an advisory vote, this proposal is not binding upon Avid or Parent or any of their respective subsidiaries, and approval of this proposal is not a condition to completion of the merger. Because the executive compensation to be paid in connection with the merger is based on the terms of the merger agreement as well as the contractual arrangements with the named executive officers, such compensation will not be affected by the outcome of this non-binding advisory vote, if the merger agreement is adopted by Avid stockholders and the merger is completed (subject only to the contractual conditions applicable thereto). However, Avid seeks your support and believes that your support is appropriate because Avid has a comprehensive executive compensation program designed to link the compensation of Avid’s executives with Avid’s performance and the interests of its stockholders. Accordingly, Avid asks that you vote on the following resolution:

 

“RESOLVED, that the stockholders of Avid Technology, Inc. approve, by a non-binding, advisory vote, the compensation that may be paid or become payable to the named executive officers of Avid Technology, Inc. that is based on, or otherwise relates to, the merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading of Avid Technology, Inc.’s proxy statement entitled “The Merger —Interests of Directors and Executive Officers in the Merger—Golden Parachute Compensation” beginning on page 68 thereof (which disclosure includes the Golden Parachute Compensation Table required pursuant to Item 402(t) of Regulation S-K).”

 

The Board has unanimously recommended that Avid stockholders vote “FOR” the approval of the Non-Binding Compensation Advisory Proposal.

 

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Avid common stock represented by such proxy card will be voted “FOR” the approval of the Non-Binding Compensation Advisory Proposal.

 

The approval of the Non-Binding Compensation Advisory Proposal requires the affirmative vote of a majority of the total number of votes cast on such matter at the special meeting. The approval of the Non-Binding Compensation Advisory Proposal is a vote separate and apart from the vote to approve the Merger Agreement Proposal and does not affect whether the Merger Agreement Proposal is approved. The vote is advisory only and, therefore, is not binding on Avid or Parent or any of their respective subsidiaries, and, if the merger agreement is adopted by Avid stockholders and the merger is completed, the compensation that is based on, or otherwise relates to, the merger will be payable, upon the terms and subject to the conditions of the underlying contractual arrangements and plans, to Avid’s named executive officers even if the Non-Binding Compensation Advisory Proposal is not approved.

 

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PROPOSAL 3: ADJOURNMENT PROPOSAL

 

Avid may seek to adjourn the special meeting to a later date or time, if necessary or appropriate, including to solicit additional proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to adopt the merger agreement.

 

The Board has unanimously recommended that Avid stockholders vote “FOR” the approval of the Adjournment Proposal.

 

If you return a properly executed proxy card, but do not indicate instructions on your proxy card, your shares of Avid common stock represented by such proxy card will be voted “FOR” the approval of the Adjournment Proposal.

 

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast on such matter at the Avid special meeting. If a quorum is not present at the special meeting, the affirmative vote of the holders of a majority of the voting shares present in person or by proxy at the Avid special meeting may adjourn the meeting to another place, date or time.

 

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THE MERGER

 

Overview

 

Avid is seeking the adoption by Avid stockholders of the merger agreement. Under the terms of the merger agreement, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into Avid, whereupon the separate corporate existence of Merger Sub will cease, and Avid will continue as the surviving corporation and a wholly-owned subsidiary of Parent. The Board has unanimously approved the merger agreement and the transactions contemplated thereby, including the merger, and has unanimously recommended that Avid stockholders vote “FOR” the Merger Agreement Proposal.

 

At the effective time, each share of Avid common stock issued and outstanding immediately prior to the effective time (other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of the DGCL concerning the right of stockholders to require appraisal of their shares of Avid common stock) will be cancelled and will be automatically converted into the right to receive $27.05 in cash per share, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement.

 

Following the completion of the merger, shares of Avid common stock will no longer be listed or traded on Nasdaq or any other public market. In addition, the registration of shares of Avid common stock under the Exchange Act will be terminated.

 

Background of the Merger

 

As part of Avid’s strategic planning process, the Board regularly reviews, together with the senior management team, Avid’s near-term and long-term strategy, performance, positioning and operating prospects with a view toward enhancing stockholder value. In addition, the Board and senior management team actively monitor and assess industry trends, Avid’s near- and long-term performance, Avid’s share price performance and potential strategic initiatives. The Board and senior management team also periodically discuss actual and potential challenges that Avid faces in executing its near- and long-term strategy.

On August 4, 2022, the Board held a regularly scheduled in-person meeting in Burlington, Massachusetts, during which the Board discussed Avid’s strategic plan and strategic direction as well as the possibility of initiating a process to explore strategic alternatives and determined to further discuss Avid’s strategic plan and strategic direction and the possibility of initiating a strategic alternatives process at the next regularly scheduled Board meeting.

On November 15, 2022, the Board held a regularly scheduled in-person meeting in Burlington, Massachusetts, during which the Board reviewed and discussed Avid’s strategic plan and strategic direction. In connection with this discussion, the Board invited to the meeting representatives of Goldman Sachs, an investment banking firm that had historically worked with Avid and was familiar with Avid’s business, strategy and industry. At the meeting, such representatives discussed with the Board, based on public information, certain perspectives on various strategic and financial alternatives, and provided, based on public information, their perspectives on Avid, the strategic landscape and potential participants in a potential strategic alternatives process, including potential participants in a potential sale of Avid (a “Potential Transaction”). Following these discussions, the Board requested Goldman Sachs to continue exploring the strategic landscape, including surveying of potential counterparties who might be interested and capable of pursuing a Potential Transaction if the Board were ultimately to determine to commence a strategic alternatives process.

On December 4, 2022, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Avid’s outside legal counsel, Sidley Austin LLP (“Sidley Austin”), in attendance. During the meeting, a representative of Sidley Austin discussed with the Board, among other matters, its fiduciary duties in connection with a potential strategic alternatives process. In addition, the representatives of Goldman Sachs discussed with the Board a list of potential counterparties to a Potential Transaction that the Board could consider directing Goldman Sachs to contact at the appropriate time. After discussion, the Board determined that it was not the right time to initiate a strategic alternatives process. However, the Board requested that Goldman Sachs continue surveying potential counterparties who might be interested in and capable of pursuing a Potential Transaction if the Board were ultimately to determine to initiate a strategic alternatives process, as well as to continue exploring general market sentiment regarding Avid, such that the Board would have further information to assess whether or not to commence a strategic alternatives process at the appropriate time.

On December 16, 2022, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided updated perspectives regarding the strategic landscape and general market sentiment regarding Avid, and also provided a financing market update. During the meeting, the Board decided to defer any determination as to whether to proceed with a strategic alternatives process until, at the earliest, January 2023, following receipt of updated market perspectives from Goldman Sachs.

On January 18, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided updated perspectives regarding the strategic landscape and general market sentiment regarding Avid, and provided a general and financing market update. Following discussion with its advisors, the Board determined to defer any determination as to whether to proceed with a strategic alternatives process until, at the earliest, the Board’s next regularly scheduled meeting in March 2023, among other things, to assess the strategic landscape after other software companies and Avid released their fourth quarter and full-year earnings results for the 2022 fiscal year.

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On January 31, 2023, the Board held a videoconference meeting during which the Board, as part of its ordinary course activities, discussed Avid’s 2023 annual operating plan and five-year plan, including key underlying assumptions.

After market close on March 1, 2023, Avid released its fourth quarter and full-year results for the 2022 fiscal year. In connection with these results, Avid announced that it had recorded a one-time, non-cash adjustment to revenue related to a corrective change in methodology for calculating standalone selling price for subscription term-based licenses (the “Adjustment”).

On March 2, 2023, the closing price per share of Avid common stock was $28.79.

On March 10, 2023, the Board held a videoconference meeting with representatives from management and Sidley Austin in attendance. At the meeting, Jeff Rosica, Avid’s Chief Executive Officer and President, and Kenneth Gayron, Avid’s Chief Financial Officer and Executive Vice President, presented an updated 2023 annual operating plan (the “March AOP”) and an updated five-year plan (the “March Financial Projections”) and explained that the key differences implemented in such updates were to reflect actual results through February 2023 and changes as a result of the Adjustment. The Board accepted the March AOP and the March Financial Projections and directed management to provide the March Financial Projections to Goldman Sachs for purposes of preparing a preliminary financial analysis of Avid.

On March 15, 2023, the Board held a regularly scheduled in-person meeting in Los Angeles with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, a representative of Sidley Austin discussed the Board’s fiduciary duties in connection with a decision to explore a potential strategic transaction, including a Potential Transaction, and the Board’s fiduciary duties in connection with any potential change in control transaction, among other matters. Mr. Rosica then discussed with the Board certain challenges facing Avid over the next five years and the potential advantages to Avid of not remaining a publicly-traded company. The representatives of Goldman Sachs then discussed their preliminary financial analysis of Avid based on the March Financial Projections. The representatives of Goldman Sachs also discussed with the Board and management their views regarding potential counterparties in a Potential Transaction, including each such party’s potential interest in, and financial capacity to undertake, a Potential Transaction, and, following discussion, the Board and management, in consultation with Goldman Sachs, determined a preliminary list of potential counterparties for potential outreach by Goldman Sachs.

After discussion, the Board unanimously determined to initiate a strategic alternatives process with respect to a Potential Transaction. In connection therewith, the Board established a working group of the Board (the “Working Group”), chaired by Daniel B. Silvers and also comprised of Nancy Hawthorne, Christian A. Asmar, John P. Wallace and Peter M. Westley (though, as a matter of Avid policy, all members of the Board were generally invited to attend any meeting of the Working Group), to act as a resource for management with respect to the strategic alternatives process between meetings of the Board. The Working Group was not granted authority to approve or authorize any potential transaction, the entry into a definitive agreement with respect to any potential transaction or the engagement of any advisor in connection with any potential transaction.

On March 24, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided an update regarding market conditions and discussed with the Working Group commencing outreach to potential counterparties early in the week of March 27, 2023.

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On March 27, 2023, as authorized by the Board, Goldman Sachs began contacting potential counterparties in connection with a Potential Transaction. Between April 2, 2023 and April 11, 2023, 16 of the 31 potential counterparties contacted by Goldman Sachs entered into customary confidentiality agreements with Avid.

On April 3, 2023, the Working Group held a videoconference meeting with representatives from management and Sidley Austin in attendance. During the meeting, Mr. Rosica provided an update regarding the outreach to potential counterparties. The Working Group also discussed the terms of Goldman Sachs’ proposed engagement letter for a Potential Transaction.

On April 6, 2023, Avid made available to each of the 16 potential counterparties that had entered into a confidentiality agreement with Avid a management presentation that contained general background and confidential non-public business and financial information of Avid and the March Financial Projections (the “initial diligence materials”).

Between April 11 and April 13, 2023, management, along with representatives of Goldman Sachs, held in-person and videoconference meetings with eight of such 16 potential counterparties to discuss the initial diligence materials, Avid and its business and other matters related to a Potential Transaction.

On April 14, 2023, Goldman Sachs sent each of the 16 potential counterparties an initial phase process letter requesting the submission, by May 1, 2023, of written non-binding indications of interest with respect to a Potential Transaction (the “initial IOIs”). The process letter also contemplated that the strategic alternatives process would, in the Board’s discretion, entail one or more phases, including a subsequent phase in which potential counterparties would submit final definitive written proposals with respect to a Potential Transaction.

Between April 25 and April 28, 2023, management, along with representatives of Goldman Sachs, held additional in-person and videoconference meetings with five more of such 16 potential counterparties to discuss the initial diligence materials, Avid and its business and other matters related to a Potential Transaction.

On April 28, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance to discuss whether it would be beneficial to the strategic alternatives process to offer potential counterparties the opportunity to obtain from management direction with respect to Avid’s anticipated first quarter earnings results for the 2023 fiscal year in advance of the May 1, 2023 deadline for the initial IOIs. During the meeting, the Working Group determined that Goldman Sachs should offer calls with Mr. Rosica to all of the potential counterparties then engaged in the strategic alternatives process for this purpose prior to the May 1, 2023 deadline, and between April 28, 2023 and May 1, 2023, Mr. Rosica held videoconference meetings with five of such potential counterparties.

On May 1, 2023, Goldman Sachs received, on behalf of the Board, initial IOIs from two financial sponsors, including STG and another financial sponsor (which we refer to as “Bidder A”). Each of the initial IOIs received contemplated an acquisition of all of Avid’s outstanding fully-diluted shares of common stock. STG’s initial IOI indicated an offer price in the range of $40.00 to $45.00 per share, whereas Bidder A’s initial IOI indicated an offer price in the range of $36.00 to $39.00 per share.

On May 2, 2023, the WGA strike commenced.

On May 3, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. After reviewing the two initial IOIs that had been received, the Working Group determined to recommend to the Board that both STG and Bidder A be invited to the next phase of the strategic alternatives process.

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Later in the day on May 3, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided an overview of the initial IOIs submitted by both STG and Bidder A. The representatives of Goldman Sachs also stated that two other financial sponsors (one of which we refer to as “Bidder B”) had indicated to Goldman Sachs the potential to submit an initial IOI following Avid’s release of its financial results for the first quarter of the 2023 fiscal year on May 4, 2023. Following discussion with its advisors, the Board decided that the receipt of the initial IOIs from STG and Bidder A was sufficient to proceed with the strategic alternatives process and determined to permit STG and Bidder A to proceed to the next phase of the strategic alternatives process and to consider any initial IOI submitted by Bidder B or such other financial sponsor if and when received.

On May 3, 2023, the closing price per share of Avid common stock was $26.52.

On May 4, 2023, Goldman Sachs held separate videoconference meetings with each of STG and Bidder A to discuss their respective initial IOIs and process matters, during which Goldman Sachs informed each of STG and Bidder A that they were invited to proceed to the next phase of the strategic alternatives process.

After market close on May 4, 2023, Avid released its financial results for the first quarter of the 2023 fiscal year, which results were on the low end of Avid’s prior guidance.

On May 5, 2023, the closing price per share of Avid common stock was $22.11.

On May 8, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. Among other matters, the representatives of Goldman Sachs advised the Working Group that Goldman Sachs had been contacted by a strategic party (which we refer to as “Bidder C”) regarding its interest in a Potential Transaction. Following discussion with the representatives of Goldman Sachs regarding Bidder C’s estimated ability to fund an acquisition of Avid and catch up to STG and Bidder A in the strategic alternatives process, the Working Group instructed Goldman Sachs to provide a draft confidentiality agreement to Bidder C, which agreement was ultimately executed on May 12, 2023 (following which Bidder C was provided access to the initial diligence materials).

On May 9, 2023, Goldman Sachs received, on behalf of the Board, an initial IOI from Bidder B, which contemplated an acquisition of all of Avid’s outstanding fully-diluted shares of common stock at a price in the range of $29.00 to $32.00 per share.

On May 10, 2023, Goldman Sachs opened the virtual data room containing additional due diligence materials provided by Avid and provided access to STG and Bidder A.

On May 12, 2023, Goldman Sachs provided a customary relationship disclosure letter to Avid that disclosed certain relationships between Goldman Sachs and each of STG, Bidder A, Bidder B and Impactive Capital LP and its affiliates (including, if applicable, any portfolio companies of the foregoing but excluding Avid and Avid subsidiaries), which at such time, together with the other Impactive Capital stockholders, beneficially owned approximately 16.3% of the outstanding shares of Avid common stock.

Also on May 12, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided an overview of the IOI that Bidder B had submitted on May 9, 2023. After discussion with its advisors regarding Bidder B’s initial IOI and Bidder B’s level of engagement in the process and consideration of other factors, the Board directed Goldman Sachs to assess Bidder B’s level of interest in the process and inform Bidder B that its continued involvement in the strategic alternatives process would require an increase in offer price.

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The representatives of Sidley Austin then discussed the key terms of the proposed engagement letter with Goldman Sachs and a customary relationship disclosure letter made available by Goldman Sachs to the Board.

On May 15, 2023, Goldman Sachs held a call with representatives from Bidder B to assess Bidder B’s level of interest in the process and convey to Bidder B it would need to increase its offer price to remain in the strategic alternatives process, and in response, Bidder B indicated to Goldman Sachs that it was generally not interested in participating in a competitive sale process.

That week, management, along with representatives of Goldman Sachs, met, separately, with representatives of each of Bidder A (on May 16, 2023) and STG (on May 18, 2023) to discuss Avid and its business and other matters related to a Potential Transaction, including to respond to commercial due diligence questions from each such party.

On May 19, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Sidley Austin discussed with the Board a proposed form of auction draft merger agreement for a Potential Transaction, and the representatives of Sidley Austin and Goldman Sachs provided their respective recommendations with respect to deal protections and various other terms. Following discussion, the Board approved the form of auction draft merger agreement to be provided to potential counterparties at the appropriate time in the strategic alternatives process. During the meeting, the Board also approved the engagement of Goldman Sachs as Avid’s financial advisor in connection with a Potential Transaction on the terms discussed with the Board on May 12, 2023.

On May 23, 2023, the closing price per share of Avid common stock was $20.47.

During the trading day on May 24, 2023, there were media reports (the “May media reports”) stating that Avid was exploring a strategic alternatives process with Goldman Sachs as its financial advisor and that Avid had requested binding offers from interested parties.

The closing price per share of Avid common stock on May 24, 2023 was $25.16.

Between May 24, 2023 and June 2, 2023, following the May media reports, a total of 11 additional potential counterparties, consisting of both financial sponsors and strategic parties, contacted Goldman Sachs and/or Avid in connection with their interest in exploring a strategic transaction.

On May 25, 2023, the Board held a regularly scheduled in-person meeting in Burlington, Massachusetts, with representatives from management in attendance and representatives from Goldman Sachs and Sidley Austin in attendance by videoconference. During the meeting, the representatives of Goldman Sachs provided an update on the status of the strategic alternatives process, including STG’s, Bidder A’s and Bidder C’s ongoing due diligence review. In particular, the representatives of Goldman Sachs noted that STG had indicated that it would likely require at least three weeks to complete its due diligence review following access to certain additional customer data, which was expected to be provided within the next day, and that Bidder C was expecting to provide Goldman Sachs with a list of follow-up due diligence questions by the end of the week. The Board then discussed the potential deadline for submission of final definitive written proposals and the timing for making available the auction draft merger agreement. Following discussion, the Board determined to defer determination of any offer deadline until at least the week of May 28, 2023, at which point Goldman Sachs expected to have additional feedback from Bidder A with respect to its due diligence review that would help inform a deadline that would best foster competitive tension in the strategic alternatives process.

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During the meeting, Mr. Rosica also updated the Board that, following the May media reports, Avid had at such time been contacted by representatives of three new potential counterparties (out of the total of 11 potential counterparties that were to contact Goldman Sachs and/or Avid following the May media reports), including an additional financial sponsor (which we refer to as “Bidder D”) and an additional strategic party (which we refer to as “Bidder E”). The Board discussed these developments, and the directors and management confirmed they were not aware of any other potential counterparties that had at any time expressed any credible interest in acquiring Avid and had not been contacted or considered in connection with the strategic alternatives process. Following discussion, the Board authorized Avid to enter into customary confidentiality agreements with, and provide the initial diligence materials to, any additional potential counterparties whom management and Goldman Sachs believed were credible potential counterparties in terms of ability to finance a Potential Transaction and level of interest.

During the meeting, the Board also discussed with management the March Financial Projections and developments that had occurred since the March 15, 2023 Board meeting, and management confirmed that management remained confident with the assumptions underlying the March Financial Projections. Following the discussion, the Board concluded that no changes to the March Financial Projections were appropriate at the time.

Between May 25 and June 2, 2023, Goldman Sachs had various discussions with the potential counterparties that had contacted Avid or Goldman Sachs since the release of the May media reports, with respect to, among other matters, each such party’s interest in a Potential Transaction and ability to move expeditiously in the strategic alternatives process.

On May 30, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided an update regarding the due diligence investigations of each of STG, Bidder A and Bidder C (including that Bidder C had not provided a list of follow-up due diligence questions as previously indicated), as well as the outreach from three additional potential counterparties, including both financial sponsors and strategic parties, since the May 25, 2023 Board meeting (bringing the total number of new potential counterparties since the May media reports to six (out of the total of 11 potential counterparties that were to contact Goldman Sachs and/or Avid following the May media reports)). In light of the status of the due diligence investigations and the additional outreach, the Board determined to defer determination of any offer deadline at least until its next meeting.

Between May 31, 2023 and June 8, 2023, Avid entered into separate customary confidentiality agreements (on the dates indicated) with, and thereafter provided the initial diligence materials to, the following six (of the total of 11) potential counterparties that had contacted Avid or Goldman Sachs since the May media reports: Bidder D (May 31), Bidder F (June 1), Bidder G (June 7), Bidder H (June 7) and Bidder I (June 8).

On June 2, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided an update regarding STG’s and Bidder A’s respective due diligence investigations and engagement with nine potential counterparties (including two potential counterparties that Goldman Sachs had initially contacted in early April in connection with the strategic alternatives process) with which Goldman Sachs had engaged in preliminary discussions since the May media reports (out of the total of 11 potential counterparties that had contacted Goldman Sachs and/or Avid following the May media reports). In addition, the representatives of Goldman Sachs noted that Bidder B had not contacted Goldman Sachs since the May 15, 2023 call described above and the Board, after consultation with its advisors, determined that any further outreach by Avid to Bidder B at such time would likely not be beneficial to the strategic alternatives process, absent further developments. Among other matters relating to the strategic alternatives process, the Board discussed with representatives of Goldman Sachs and management the new potential counterparties and whether to deliver a formal process letter to such potential counterparties at such time, in light of their more recent engagement in the strategic alternatives process. Following discussion, the Board instructed management and Goldman Sachs not to deliver a formal process letter to the potential counterparties, other than STG and Bidder A, at such time.

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On June 2, 2023, Goldman Sachs sent each of STG and Bidder A a second phase process letter requesting submission of a final definitive written proposal with respect to a Potential Transaction by June 22, 2023 (the “June offer deadline”), as well as a markup of the auction draft merger agreement and related disclosure letter by June 15, 2023. Later in the day on June 2, 2023, Goldman Sachs provided each of STG and Bidder A with the auction draft merger agreement and related disclosure letter via the virtual data room.

On June 5, 2023, representatives of Goldman Sachs held various videoconference meetings with potential counterparties, including two potential counterparties that had engaged since the May media reports, discussing, among other matters relating to a Potential Transaction, the initial diligence materials, follow-up diligence questions and Avid and its business.

On June 5, 2023, representatives of Bidder C informed Goldman Sachs that Bidder C would not be continuing in the strategic alternatives process.

On June 14, 2023, representatives of Bidder A informed Goldman Sachs that Bidder A would not be continuing in the strategic alternatives process at such time, but that Bidder A remained interested in reengaging in the strategic alternatives process in the event that Avid did not receive a compelling offer by the June offer deadline.

Also on June 14, 2023, representatives of Bidder H informed Goldman Sachs that Bidder H would not be continuing in the strategic alternatives process.

On June 16, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. Among other matters, the representatives of Goldman Sachs provided a status update regarding the strategic alternatives process, including that no strategic parties remained in the strategic alternatives process.

On June 19, 2023, representatives of Bidder E informed Goldman Sachs that Bidder E would not be continuing in the strategic alternatives process.

On June 19, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided an update on the strategic alternatives process consistent with that provided at the June 16, 2023 meeting of the Working Group and the Board discussed with its advisors steps to maintain competitive tension in the strategic alternatives process.

On June 22, 2023, STG submitted a written offer (the “June STG proposal”) of $25.00 per fully-diluted share of Avid common stock, together with a markup of the auction draft merger agreement and related disclosure letter and three highly confident letters from reputable banks with respect to STG’s expected debt financing. The markup of the auction draft merger agreement contemplated, among other things, the execution and delivery “by certain stockholders” of voting agreements supporting the transaction. The June STG proposal included a request for a 30-day exclusivity period, a list of commercial and legal due diligence requests (some of which management did not expect were feasible for Avid to satisfy) and a list of issues purportedly uncovered in the course of STG’s due diligence review underlying the decrease in STG’s offer price from the range of $40.00 to $45.00 per share contained in STG’s initial IOI.

On June 23, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided an overview of the June STG proposal. Following discussion, the Working Group determined to instruct Goldman Sachs to contact STG to convey that it had to increase its offer price before exclusivity could be considered, and Bidder A to ascertain whether it remained interested in a Potential Transaction. The Working Group also determined to discuss potential outreach to Bidder B at the next Board meeting.

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Later in the day on June 23, 2023, Goldman Sachs contacted representatives of each of STG and Bidder A and conveyed the messages as instructed by the Working Group. In response, Bidder A indicated that it would consider the opportunity and revert to Goldman Sachs with a response.

On June 24, 2023, representatives of STG contacted Goldman Sachs to inform Goldman Sachs that, after further internal discussion, STG was not expecting to materially increase its $25.00 per share offer price, though a modest price increase remained a possibility.

On June 25, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs provided an update regarding the strategic alternatives process and the June STG proposal, consistent with that provided to the Working Group on June 23, 2023. The representatives of Goldman Sachs noted that, as instructed by the Working Group, Goldman Sachs had contacted the representatives of Bidder A to ascertain whether Bidder A remained interested in a Potential Transaction. Following discussion, the Board determined to direct Goldman Sachs to contact Bidder B and deliver a message similar to that delivered to Bidder A regarding its reengagement in the strategic alternatives process, as well as to continue to engage with Bidder A and the other potential counterparties that had expressed continued interest in a Potential Transaction and make clear that the opportunity and time remained to move forward in the strategic alternatives process. The Board also determined to direct management to provide the Board with a formal response to each item raised in the June STG proposal underlying the reduction in STG’s offer price, such that the Board could form a more complete view as to the legitimacy of the points raised and any impact on valuation, and the Board requested Goldman Sachs to prepare an updated preliminary financial analysis of Avid to reflect then-current market conditions.

On June 26, 2023, representatives of Bidder A confirmed to Goldman Sachs that Bidder A remained interested in a Potential Transaction and that they expected that Bidder A could provide a revised proposal with respect to a Potential Transaction in approximately two weeks, assuming full access to due diligence materials and management.

Also on June 26, 2023, Goldman Sachs discussed with representatives of Bidder B Bidder B’s interest in reengaging in the strategic alternatives process, and in response, they confirmed that Bidder B would consider the opportunity and revert to Goldman Sachs with a response.

On June 27, 2023, representatives of Bidder D informed Goldman Sachs that, based on the trading price of Avid common stock and Avid’s free cash flow, Bidder D did not expect to be able to submit a proposal that the Board would find compelling, and representatives of Bidder F similarly informed Goldman Sachs that Bidder F would not be continuing in the strategic alternatives process.

Also on June 27, 2023, representatives of Bidder I informed Goldman Sachs that Bidder I would require a few weeks to submit an indication of interest with respect to a Potential Transaction but that Bidder I remained interested in pursuing a Potential Transaction.

Also during the evening of June 27, 2023, Goldman Sachs contacted STG to reiterate that the offer price contained in the June STG proposal was not acceptable to the Board, the strategic alternatives process remained competitive and STG would need to reevaluate its offer price.

On June 28, 2023, management, along with representatives of Goldman Sachs, met in person with representatives of Bidder I to discuss Avid and its business and other matters related to a Potential Transaction, including certain of Bidder I’s commercial due diligence questions.

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On June 29, 2023, following further discussions between representatives of STG and Goldman Sachs between June 27 and 29, 2023, representatives of STG informed Goldman Sachs that STG desired to remain engaged in the strategic alternatives process and would work to increase its offer price. STG further requested calls with management to address its outstanding commercial due diligence questions and to better understand Avid’s outlook for the second half of the 2023 fiscal year.

Also on June 29, 2023, representatives of Bidder I contacted Mr. Rosica to confirm Bidder I’s strong interest in a Potential Transaction. The representatives of Bidder I also reiterated their expectation that Bidder I would need approximately two weeks to submit an indication of interest.

Also on June 29, 2023, representatives of Bidder B contacted Goldman Sachs to confirm that Bidder B was interested in pursuing a Potential Transaction and reengaging in the strategic alternatives process and that Bidder B would recommence its due diligence review. The representatives of Bidder B noted that they expected Bidder B would require at least two weeks to submit a revised indication of interest.

On July 1, 2023, management provided the Board with management’s response to each item raised in the June STG proposal underlying its reduction in offer price, and the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided an update regarding the strategic alternatives process, noting that each of STG, Bidder A, Bidder B and Bidder I remained engaged and that since the previous Board meeting on June 25, 2023, both Bidder D and Bidder F had determined not to continue in the strategic alternatives process. The representatives of Goldman Sachs also stated that, based on the limited engagement to date, Bidder G was not expected to continue in the strategic alternatives process.

The representatives of Goldman Sachs also discussed an updated preliminary financial analysis of Avid, reflecting then current market conditions and based on the March Financial Projections. Discussion of management’s responses to the items raised in the June STG proposal was deferred to provide the Board adequate time to review those responses. However, in executive session, the independent directors discussed various matters relating to the strategic alternatives process, including the challenges facing Avid’s business (including as a result of the WGA strike, the increasing risk of a SAG-AFTRA strike and the aftermath of such strikes), concerns with Avid’s business noted by the bidders (including as set forth in the June STG proposal) and the assumptions underlying the March Financial Projections. In the course of the discussion, the independent directors noted that certain financial information compiled by management in response to the commercial due diligence requests in the strategic alternatives process, including detailed customer data, was not previously available and warranted consideration. As a result, the independent directors determined to direct management to revisit the assumptions underlying the March Financial Projections and to prepare revised financial projections. Also, noting that any deadline for indications of interest would depend on management’s ability to provide potential counterparties with preliminary second quarter financial results in advance of such deadline and would need to follow the delivery of any revised financial projections, the independent directors directed management in consultation with Goldman Sachs to determine the appropriate deadline for the receipt of offers from the remaining potential counterparties.

On July 5, 2023, representatives of Bidder E contacted Goldman Sachs and requested to reengage in the strategic alternatives process. Based on discussions with representatives of Bidder E, who indicated their belief that Bidder E could access capital for an all-cash transaction, Goldman Sachs provided Bidder E with a draft confidentiality agreement (which was ultimately executed on July 7, 2023) and, following execution thereof, the initial diligence materials.

On July 6, 2023, STG’s outside counsel, Paul Hastings LLP (“Paul Hastings”), contacted Sidley Austin to inquire about the status of STG’s outstanding priority legal due diligence requests, which requests were included with the June STG proposal and further to STG’s commercial and legal due diligence review that had been ongoing since April 2023.

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On July 10, 2023, Goldman Sachs sent each of Bidder A, Bidder B, Bidder E and Bidder I a process letter (the “July process letter”) requesting the submission, by July 20, 2023 (the “July proposal deadline”), of a written non-binding indication of interest with respect to a Potential Transaction, including, at a minimum, a proposed per share offer price. The July process letter also stated that any additional information provided by a potential counterparty, including with respect to financing and the auction draft merger agreement, would further differentiate its proposal, and that Avid expected to move expeditiously in the process following the July proposal deadline. As STG had already submitted the June STG proposal, Goldman Sachs did not provide STG with the July process letter.

Between July 10 and July 19, 2023, Goldman Sachs and management held a series of telephonic and videoconference meetings with representatives of each of STG, Bidder A, Bidder B, Bidder E and Bidder I to discuss Avid, its business and other matters related to a Potential Transaction, including, in some cases, responses to commercial due diligence questions.

On July 14, 2023, the SAG-AFTRA strike commenced.

On July 18, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Goldman Sachs updated the Board that STG, Bidder A, Bidder B, Bidder E and Bidder I remained engaged in the strategic alternatives process and that, in coordination with management and the Working Group, Goldman Sachs had sent the July process letter to each of Bidder A, Bidder B, Bidder E and Bidder I.

During the meeting, management discussed its responses to the matters raised in the June STG proposal, noting that although management disagreed with many of the matters STG raised, some of the matters raised were valid and, as such, had been factored into the July Financial Projections (as defined below).

Also during the meeting, management provided an overview of Avid’s preliminary second quarter results (the “July Flash Numbers”). Messrs. Rosica and Gayron also presented an updated five-year plan (the “July Financial Projections”) and explained the key differences between the March Financial Projections and the July Financial Projections, including lower subscription growth assumptions for Avid’s Video & Media subscription business, more moderate views on the Integrated Solutions portfolio and revisions to working capital assumptions (in particular in 2026 and 2027) and management’s view regarding current and expected future market conditions, industry trends and preliminary financial results through June 2023. The Board approved the July Financial Projections, directed Goldman Sachs to use and rely upon the July Financial Projections for purposes of its financial analysis and opinion and authorized management and Goldman Sachs to provide the July Flash Numbers and the July Financial Projections to STG and each other actively engaged potential counterparty.

On July 19, 2023, representatives of Bidder E informed Goldman Sachs that Bidder E would not be continuing in the strategic alternatives process unless Avid were willing to engage in a transaction involving consideration not comprised entirely of cash, and representatives of Bidder I informed Goldman Sachs that Bidder I would not be continuing in the strategic alternatives process.

Also on July 19, 2023, Goldman Sachs provided each of STG, Bidder A and Bidder B with the July Flash Numbers and the July Financial Projections and held discussions with each such party with respect thereto.

On July 20, 2023, representatives of Sidley Austin had a call with Paul Hastings to provide feedback regarding the key issues raised by STG’s markup of the auction draft merger agreement.

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Also on July 20, 2023, Goldman Sachs received, on behalf of the Board, a non-binding indication of interest from Bidder B (the “Bidder B July IOI”), which contemplated an acquisition of all of Avid’s outstanding fully-diluted shares of common stock at an offer price in the range of $26.00 to $28.00 per share. The Bidder B July IOI stated that Bidder B would require approximately four weeks to complete its due diligence review and requested a period of exclusivity for Bidder B to do so. The Bidder B July IOI did not include a markup of the auction draft merger agreement or any other proposed transaction documents.

On July 21, 2023, Goldman Sachs had various discussions with representatives of Bidder A during which the representatives of Bidder A indicated that, if desired, Bidder A would continue to work towards a Possible Transaction, but that Bidder A did not intend to submit a non-binding indication of interest at that time.

On July 22, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs provided an update regarding the strategic alternatives process, including an overview of the Bidder B July IOI, and reported that STG had conditioned its continued engagement on obtaining responses to its outstanding commercial due diligence information requests and that the representatives of Goldman Sachs were uncertain if STG would be able to execute definitive transaction documents by Avid’s second quarter earnings announcement (which announcement was expected to be made on or prior to August 9, 2023) because of the significant work required to respond to those requests. The representatives of Goldman Sachs informed the Board that Bidder I had formally exited the strategic alternatives process and that Bidder E was not expected to further engage in the process, absent an indication from Avid that it would be willing to engage in a non-all-cash transaction (and, in response, the Board confirmed that at such time it was not interested in pursuing a non-all-cash transaction with Bidder E given the significantly smaller market capitalization of Bidder E relative to Avid and the risks and uncertainties involved in such a transaction). Also during the meeting, the representatives of Goldman Sachs discussed Goldman Sachs’ preliminary financial analysis based on the July Financial Projections. Following discussion, the Board directed Goldman Sachs to (i) inform STG that it would need to raise its offer price to ensure that Avid would not enter into exclusivity with any other party and (ii) request from Bidder B a detailed workplan to reach execution of definitive transaction documents and inform Bidder B that any exclusivity period with Bidder B would be conditioned on Avid’s receipt of an acceptable markup of the auction draft merger agreement.

On the evening of July 22, 2023, Goldman Sachs contacted representatives of Bidder B and delivered the messages as instructed by the Board at the July 22 Board meeting. Between July 23 and July 25, 2023, Goldman Sachs further engaged with representatives of Bidder B, and on July 25, 2023, Bidder B provided the requested diligence workplan, which contemplated a four-week period for the parties to reach execution of definitive transaction documents. Bidder B also informed Goldman Sachs that it did not plan to provide a markup of the auction draft merger agreement until it had conducted its legal due diligence review, which it expected to commence the following week.

On July 25, 2023, Goldman Sachs contacted representatives of STG to deliver the message as instructed by the Board at the July 22 Board meeting.

During the evening of July 25, 2023, STG sent a letter to the Board in care of Goldman Sachs (the “STG Letter”), expressing STG’s willingness to improve its offer price of $25.00 per share, if it were to receive responses to certain commercial diligence requests. In the STG Letter, STG indicated that it had otherwise completed its commercial due diligence investigation and was nearing completion of its confirmatory financial and legal due diligence workstreams.

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In the morning of July 26, 2023, the Working Group held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. Goldman Sachs discussed the STG Letter and provided an update regarding Goldman Sachs’ receipt of Bidder B’s due diligence workplan. The members of the Working Group provided their view that, based on the prior meeting of the Board, they did not expect that the Board would be amenable to entering into exclusivity with Bidder B prior to receiving a markup of the auction draft merger agreement. Following discussion, the Working Group directed Goldman Sachs to inform Bidder B that Avid would work towards execution of definitive transaction documents on Bidder B’s proposed timeline but that exclusivity would remain conditioned on Avid’s receipt of a constructive markup of the auction draft merger agreement. With respect to STG, the Working Group requested that Messrs. Rosica and Wallace work with management and Sidley Austin to finalize a formal response to the STG Letter.

In the afternoon of July 26, 2023, Mr. Wallace sent a letter to STG stating that the Board had been and remained actively engaged in all aspects of the strategic alternatives process (including understanding the nature and extent of STG’s outstanding commercial due diligence requests as well as the responses to those requests) and that the Board had instructed management to provide all reasonably available information and that he believed that management had done so. In addition, Mr. Wallace indicated that management was available to discuss STG’s remaining due diligence requests upon receipt of an improved indication of value.

During the evening of July 26, 2023, representatives of STG sent an email to Goldman Sachs, increasing STG’s offer price from $25.00 to $26.25 per share of Avid common stock.

In the morning of July 27, 2023, the Working Group, joined by all other members of the Board, held a videoconference meeting, with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs discussed the improved STG offer and indicated that STG had subsequently informed Goldman Sachs that it was committed to executing definitive transaction documents by Avid’s second quarter earnings announcement. Following discussion, the Working Group/Board directed Goldman Sachs to inform STG that the increase in its offer price was not sufficient but that Mr. Rosica would be available to speak with a representative of STG, and the Working Group/Board instructed Mr. Rosica to deliver the message in any such discussion that STG would need to increase its offer price. With respect to Bidder B, the Working Group/Board directed Goldman Sachs to continue to progress Bidder B’s due diligence review and encourage Bidder B to commit to providing a firm offer price and a markup of the auction draft merger agreement. The Working Group/Board instructed Mr. Rosica to deliver the message that, to obtain exclusivity, STG would need to increase its offer price to above $28.00 per share. The Working Group/Board also specifically instructed Mr. Rosica not to have any discussions with STG regarding any post-closing employment or compensation matters, and Mr. Rosica expressly confirmed his understanding of this instruction and that such matters would not be discussed with STG.

On July 27, 2023, following the meeting of the Working Group, Goldman Sachs contacted representatives of STG to convey that the increase in STG’s offer price to $26.25 per share was not sufficient but that Mr. Rosica would be available for a call with a representative of STG to further discuss the matter and STG’s key remaining due diligence requests.

Later in the day on July 27, 2023, Mr. Rosica, as instructed by the Working Group/Board, spoke with a representative of STG to discuss the path forward with respect to STG’s remaining due diligence requests and the terms of a Potential Transaction, with Mr. Rosica stating that, in his personal view, if STG could get “above $28.00 per share,” the parties could get a deal done, and that the Board expected that the terms of any transaction would need to be closer to Avid’s proposed terms in the auction draft merger agreement. In response, a representative of STG informed Mr. Rosica that STG could increase its offer price to $27.00 per share but could not offer more at that time. Mr. Rosica indicated that the offer price would need to be above $28.00 per share in order to obtain exclusivity, and a representative of STG confirmed that STG would be able to execute definitive transaction documents by Avid’s second quarter earnings announcement.

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In the afternoon of July 27, 2023, the Working Group, joined by three additional members of the Board (including Mr. Rosica), held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. Mr. Rosica provided an update regarding his discussion with a representative of STG. Following discussion, the Working Group and the other members of the Board in attendance instructed Goldman Sachs to inform STG that the due diligence information discussed between Mr. Rosica and a representative of STG would be provided later that day and that Avid would await STG’s revised offer. With respect to Bidder B, the Working Group and the other members of the Board in attendance instructed management and Goldman Sachs to continue to engage with Bidder B on Bidder B’s due diligence review and continue to push Bidder B for a firm commitment on offer price and a markup of the auction draft merger agreement.

In the evening of July 27, 2023, a representative of STG informed Mr. Rosica that STG expected to send a revised proposal to Avid by the next day.

On July 27 and 28, 2023, Goldman Sachs continued to engage with Bidder B, including on several commercial due diligence calls among Bidder B, Goldman Sachs and management, and representatives of Goldman Sachs and STG engaged in various discussions with respect to STG’s outstanding commercial due diligence requests.

On July 28, 2023, representatives of Bidder B informed Goldman Sachs that Bidder B was aware that Avid was in discussions with another party but that Bidder B remained committed to undertaking a transaction, would be sending a revised indication of interest, including a markup of the auction draft merger agreement, in the next 24-48 hours, and that such indication of interest would include a request for an exclusivity period.

Later in the day on July 28, 2023, STG delivered a revised offer letter to Goldman Sachs on behalf of Avid, which indicated STG’s best and final offer price of $27.05 per share and requested an exclusivity period through the later of (i) 5:30 pm Eastern time on August 9, 2023, and (ii) Avid’s second quarter earnings announcement, subject to extension.

In the morning of July 29, 2023, the Working Group, joined by three additional members of the Board (including Mr. Rosica), held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs updated the Working Group regarding the terms of the latest STG proposal and developments with respect to Bidder B. The representatives of Goldman Sachs also noted that Bidder B had stated that it did not expect to narrow the range or provide an offer price above the range of $26.00 to 28.00 per share previously indicated, and the representatives of Goldman Sachs further noted that Bidder B’s timing for a transaction remained unchanged and that Bidder B remained behind STG in terms of its due diligence review. The representatives of Sidley Austin also discussed the key issues with STG’s markup of the auction draft merger agreement and discussed potential responses thereto, including that the effects of the WGA and SAG-AFTRA strikes be excluded for purposes of determining whether there has been a “Company Material Adverse Effect.” Following discussion, the Working Group and the other members of the Board in attendance instructed (i) management to engage with STG to complete its remaining due diligence requests, (ii) Sidley Austin to send a revised draft of the merger agreement to STG’s counsel in line with the positions discussed during the meeting and (iii) Goldman Sachs to convey to STG that Avid would not enter into an exclusivity agreement before receiving STG’s response to Avid’s revised draft of the merger agreement and that any exclusivity period would terminate no later than August 6, 2023.

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Between July 29 and August 9, 2023, representatives of Goldman Sachs and STG engaged in various discussions with respect to the strategic alternatives process and STG’s outstanding commercial due diligence requests.

On July 29, 2023, Sidley Austin delivered a revised draft of the merger agreement to Paul Hastings.

In the early morning of July 31, 2023, Sidley Austin received from Bidder B’s outside counsel a preliminary markup of the auction draft merger agreement, much of which remained subject to further due diligence, and a proposed form of exclusivity agreement that contemplated a three-week exclusivity period.

In the afternoon of July 31, 2023, the Working Group, joined by all other members of the Board, held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs updated the Working Group/Board regarding the status of discussions with each of STG and Bidder B. The representatives of Goldman Sachs also noted that Bidder B had not provided a higher or firmer offer price despite having been presented with multiple opportunities to do so. The Working Group/Board instructed (i) Goldman Sachs and management to continue to engage with STG to complete its remaining due diligence, (ii) Goldman Sachs to obtain greater clarity with respect to the status of STG’s equity and debt financing and transaction timing and to convey to Bidder B that, at the Board meeting scheduled for the evening of August 1, the Board planned to make a determination with respect to Avid’s entry into an exclusivity agreement and that Bidder B would need to provide as firm and high of an offer price as possible to be best positioned with respect to that determination and (iii) Sidley Austin to assess STG’s revised draft merger agreement, once received, to determine whether any material issues would require resolution prior to entering into an exclusivity agreement with STG.

Later in the day on July 31, 2023, representatives of Bidder B indicated to Goldman Sachs that Bidder B was expecting to enter into exclusivity in the near term for it to continue to dedicate resources to evaluating a Potential Transaction. The representatives of Goldman Sachs then delivered the message as instructed by the Working Group/Board. In response, the representatives of Bidder B indicated that the Board should view Bidder B’s offer as a true range, not the lowest price in the range. The representatives of Bidder B also informed Goldman Sachs that Bidder B’s timing remained unchanged and its positions in its preliminary markup of the auction draft merger agreement, as well as its ultimate offer price, remained subject to further due diligence.

In the evening of July 31, 2023, Sidley Austin received from Paul Hastings a revised draft of the merger agreement, which included a request that Impactive Capital and each director and executive officer of Avid sign a voting agreement in support of the transaction, and a proposed form of exclusivity agreement.

In the morning of August 1, 2023, the Working Group, joined by two additional members of the Board (including Mr. Rosica), held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs updated the Working Group regarding the developments with respect to STG and Bidder B, including that representatives of STG had indicated that they would work toward executing definitive transaction documents by Avid’s second quarter earnings announcement if Avid were to enter into an exclusivity agreement with STG. Discussion followed, including with respect to the key issues in the draft merger agreements received from each of STG and Bidder B. The Working Group and the other members of the Board in attendance instructed Goldman Sachs to inform STG that if STG agreed to Avid’s position on certain key provisions in the draft merger agreement, STG would be best positioned when the Board considered later that day whether to grant exclusivity to any party.

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In the afternoon of August 1, 2023, Goldman Sachs contacted a representative of STG and conveyed the message as instructed by the Working Group. During the call, the representatives of Goldman Sachs provided feedback regarding various provisions of the draft merger agreement that pertained to deal certainty, and the representative of STG indicated that STG would not be able to respond to the points raised prior to the Board meeting that evening. However, the representative of STG stated that STG would work constructively in good faith to reach positions acceptable to both parties and reiterated that STG desired to execute definitive transaction documents within a week.

Also in the afternoon of August 1, 2023, Paul Hastings provided Sidley Austin with initial drafts of the equity commitment letter, the limited guarantee and the voting agreement.

Also in the afternoon of August 1, 2023, management held two videoconference meetings with representatives of Bidder B to discuss Bidder B’s commercial due diligence questions.

In the evening of August 1, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. The representatives of Goldman Sachs updated the Board that STG’s best and final offer remained at $27.05 per share, it continued to progress its due diligence review and appeared committed and able to execute definitive transaction documents by Avid’s second quarter earnings announcement and that though Bidder B continued to refer to its range of $26.00 to $28.00 per share, when pressed for greater specificity earlier that day, the representatives of Bidder B stated that, given the status of Bidder B’s due diligence, its indication remained a range, but that if a single value was required for comparison purposes, Bidder B’s offer could be viewed as the midpoint of that range (i.e., $27.00 per share). The Board then discussed with the representatives of Goldman Sachs whether Avid should pursue a transaction with STG, among other things, as STG’s offer price of $27.05 remained higher than the midpoint of Bidder B’s range, STG had substantially progressed the draft merger agreement, the other transaction documents and its due diligence review (whereas Bidder B had at least three weeks of remaining due diligence, Bidder B had not conducted any legal due diligence and there was no assurance that, after conducting its due diligence, Bidder B would submit an offer higher than $27.05 per share, or at all) and, as a result, STG’s proposal offered greater certainty of execution at a higher price. After the representatives of Sidley Austin provided an overview of the key open issues in STG’s July 31, 2023 draft of the merger agreement, the Board determined not to authorize Avid to enter into exclusivity with either STG or Bidder B at such time. The Board instructed Mr. Rosica to convey to STG that if STG were willing to address the Board’s key issues regarding deal certainty in the draft merger agreement, Avid would work toward executing definitive transaction documents with STG by Avid’s second quarter earnings announcement but that the Board had not authorized exclusive negotiations at this time. The Board also instructed the representatives of Goldman Sachs to relay the Board’s determination that Avid would not be entering into an exclusivity agreement with Bidder B at the time, but that Bidder B should remain in the strategic alternatives process and progress its due diligence review, in order to have an opportunity to execute a Potential Transaction.

Later in the evening of August 1, 2023, Goldman Sachs informed the representatives of Bidder B that Avid was not entering exclusivity with any potential counterparty and that Bidder B remained competitive in the strategic alternatives process. Bidder B then confirmed that it would continue to progress its due diligence review but that it remained unchanged with respect to offer price and timing.

In the morning of August 2, 2023, Mr. Rosica, as instructed by the Board, informed a representative of STG of the Board’s position, and Messrs. Rosica and a representative of STG also discussed having Sidley Austin and Paul Hastings narrow the remaining issues in the draft merger agreement.

Later in the day of August 2, 2023, Sidley Austin delivered to Paul Hastings revised drafts of the merger agreement, which included a request to specify which non-director individuals were expected to sign a voting agreement, equity commitment letter and limited guarantee.

Later in the day of August 2, 2023, representatives of Bidder B informed Goldman Sachs that Bidder B had determined to pause spending money on due diligence efforts for a week but that it would be ready to resume work expeditiously if Avid did not announce a transaction in connection with Avid’s second quarter earnings announcement.

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Prior to the open of trading on August 3, 2023, Avid issued a press release announcing that it would be releasing its second quarter earnings and holding a conference call to discuss such earnings after the close of trading on August 9, 2023.

On August 3, 2023, the Board held a regularly scheduled in-person meeting in Burlington, Massachusetts, which representatives of Goldman Sachs and Sidley Austin attended by videoconference, and during which the Board reviewed and discussed various matters, including the strategic alternatives process and the recent developments with respect thereto. During the meeting, the representatives of Goldman Sachs provided an update regarding the status of discussions with each of STG and Bidder B, including STG’s timeline for obtaining financing commitments by August 8, 2023. The members of the Board discussed the path forward in the strategic alternatives process and the ongoing preparation for all potential scenarios, including in the event that a transaction was not executed prior to Avid’s second quarter earnings announcement or at all.

During the trading day on August 3, 2023, there were media reports that Avid was in advanced discussions with respect to a potential sale process with STG and another potential counterparty (the “August media reports”).

On August 3, 2023, the closing price per share of Avid common stock was $27.32 per share.

In the afternoon of August 3, 2023, Sidley Austin and Paul Hastings, along with Alessandra Melloni, Avid’s Chief Legal Officer, discussed the draft merger agreement and the key remaining issues therein.

In the afternoon of August 3, 2023, the Impactive Capital stockholders’ outside counsel provided Sidley Austin with comments on the draft voting agreement, which Sidley Austin forwarded to Paul Hastings.

In the evening of August 3, 2023, Paul Hastings sent Sidley Austin revised drafts of the merger agreement, which specified which non-director individuals STG expected to sign a voting agreement, the equity commitment letter and the limited guarantee.

On August 3, 2023, representatives of Goldman Sachs and a representative of STG discussed the August media reports and other matters relating to the strategic alternatives process.

In the morning of August 4, 2023, the Working Group held two videoconference meetings, with representatives from management, Goldman Sachs and Sidley Austin in attendance. The members of the Working Group discussed Goldman Sachs’ recent discussions with STG following the August media reports, the impact of the August media reports on the strategic alternatives process and the recent call between Sidley Austin and Paul Hastings on the draft merger agreement, including that a number of open points remained in the draft merger agreement that impacted deal certainty. The members of the Working Group and the representatives of Sidley Austin also discussed the open issue as to which, if any, non-director individuals would be required to execute voting agreements. Following discussion, the Working Group determined that Mr. Rosica would convey to STG that Avid had a preference, but not a need, to execute definitive transaction documents by Avid’s second quarter earnings announcement and given STG’s offer price, Avid was not prepared to enter into a transaction on what Avid believed to be unfavorable deal terms relating to deal certainty and other matters.

On August 4, 2023, Mr. Rosica, as instructed by the Working Group, spoke with a representative of STG regarding the status of the transaction and negotiations, and Mr. Rosica delivered the messages as instructed by the Working Group.

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On August 4, 2023, representatives of Paul Hastings, Sidley Austin and the Impactive Capital stockholders’ outside counsel held a videoconference meeting to discuss the Impactive Capital stockholders’ comments on the draft voting agreement. Later that day, Paul Hastings confirmed that STG had agreed to the form of voting agreement as revised by the Impactive Capital stockholders.

On August 5, 2023, Sidley Austin sent Paul Hastings revised drafts of the merger agreement, which included a note indicating that only the directors of Avid and Impactive Capital would be signing voting agreements, equity commitment letter and limited guarantee.

On August 6, 2023, Paul Hastings sent Sidley Austin revised drafts of the equity commitment letter and limited guarantee, which Sidley Austin and Paul Hastings thereafter agreed as the substantially final forms of the equity commitment letter and the limited guarantee.

In the early morning of August 7, 2023, Paul Hastings sent Sidley Austin drafts of the debt commitment letter and fee letter.

In the morning of August 7, 2023, representatives of Avid, STG, Sidley Austin and Paul Hastings held a videoconference meeting to discuss the key remaining issues in the draft merger agreement (principally related to deal certainty) and the parties’ respective positions thereon.

In the afternoon of August 7, 2023, Paul Hastings sent Sidley Austin a revised draft of the merger agreement, and Sidley Austin sent Paul Hastings comments on the debt commitment letter and fee letter.

On August 7, 2023, prior to the Board meeting, Avid and Goldman Sachs executed the Goldman Sachs engagement letter, which reflected the terms that the Board had approved on May 19, 2023.

In the evening of August 7, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, the representatives of Sidley Austin discussed with the Board the Board’s fiduciary duties in connection with a potential change in control and related matters. The representatives of Sidley Austin also discussed the terms of the draft merger agreement and other transaction documents, noting differences from the auction draft and open issues, several of which pertained to deal certainty. The representatives of Sidley Austin also noted that, based on earlier discussions with Paul Hastings, STG was willing to accept as part of a compromise on the key remaining issues that for purposes of determining whether there has been a “Company Material Adverse Effect” the effects of the WGA and SAG-AFTRA strikes would be excluded (and without regard to any disproportionate impact on Avid as compared to other companies in Avid’s industry). The Board provided guidance with respect to the open issues, emphasizing that the Board was not willing to authorize Avid to enter into a transaction without sufficient deal certainty. The Board also expressed an expectation that STG would indemnify any of Avid’s directors or officers who executed voting agreements for any liability resulting from such agreements.

During the meeting, management confirmed that there had been no changes to Avid’s projections since the July Financial Projections had been accepted by the Board, and Mr. Rosica confirmed that no discussions had taken place regarding post-closing roles or compensation of management. After a discussion of the updated relationship disclosure letter that had been delivered by Goldman Sachs to the Board (which was substantially similar to the relationship disclosure letter provided in May 2023), the representatives of Goldman Sachs then reviewed Goldman Sachs’ updated preliminary financial analysis, which was based on the July Financial Projections.

Following the Board meeting, the representatives of Sidley Austin delivered to Paul Hastings a list of remaining issues in the draft merger agreement and Avid’s position thereon, as discussed at the August 7 Board meeting. In the evening of August 7, representatives of Sidley Austin and Paul Hastings discussed, among other matters, the Board’s request that STG indemnify any of Avid’s directors or officers who executed voting agreements for any liability resulting from such agreements, with the representatives of Paul Hastings conveying STG’s position that STG would not be providing any such indemnity.

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In the morning of August 8, 2023, a representative of Paul Hastings informed Sidley Austin that STG did not expect to be in a position to execute definitive transaction documents until after the close of trading on August 9. During the course of the day on August 8, discussions ensued among members of the Working Group, management and the representatives of Sidley Austin and Goldman Sachs regarding next steps in the strategic alternatives process and the change in STG’s timing. Following discussion, the Working Group directed Mr. Rosica to speak with STG to gather further information with respect to STG’s ability to execute definitive transaction documents prior to Avid’s second quarter earnings announcement, as well as to speak with the representatives of Bidder B to ascertain Bidder B’s willingness to reengage in the strategic alternatives process if Avid did not announce on August 9 that it had entered into a Potential Transaction.

Also that morning, each of Avid, STG and Goldman Sachs were contacted by a reporter about a potential story regarding the potential sale of Avid to STG for more than $27.00 per share.

Later that day, Mr. Rosica, as instructed by the Working Group, spoke with representatives of STG. The parties discussed the leak of information and the status of STG’s financing. After Mr. Rosica told the representatives of STG that if Avid did not announce a transaction with STG prior to Avid’s second quarter earnings announcement, “all bets were off,” and the representatives of STG indicated that they believed STG could finalize its financing by 4:00 p.m. EDT the next day.

During the afternoon of August 8, 2023, Mr. Rosica, as instructed by the Working Group, spoke with a representative of Bidder B to determine whether Bidder B would be interested in reengaging in the strategic alternatives process if Avid did not announce the next day that it had entered into definitive agreements with respect to a Potential Transaction, and the representative of Bidder B indicated that, although it would take a few days for Bidder B’s advisors to reengage, Bidder B would be willing to reengage in the strategic alternatives process.

In the evening of August 8, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, Mr. Rosica provided an update regarding developments with STG and Bidder B. Following discussion, including with respect to a detailed timeline for August 9, the Board determined to give STG until 2:00 p.m. EDT to resolve all remaining issues in the draft merger agreement and deliver STG’s signature pages to all transaction documents to be held in escrow pending Board approval of the transaction and the release of Avid’s signature pages. The Board also provided guidance regarding the remaining open terms of the draft merger agreement and determined that, given that STG was not prepared to indemnify any of Avid’s directors or officers in connection therewith, none of Avid’s directors (other than Mr. Asmar in his capacity as an Impactive Capital representative and stockholder) or officers would enter into a voting agreement with STG. The Board also determined that if STG did not deliver its signature pages by the deadline, Avid would (i) announce in connection with its second quarter earnings that the Board was actively pursuing strategic alternatives and (ii) engage with Bidder B, potentially on an exclusive basis. Further, the Board directed that each of Mr. Wallace, on behalf of the Board, and Goldman Sachs and Sidley Austin contact the representatives of STG and Paul Hastings, respectively, to relay the Board’s position regarding timing and consequences of failing to meet the 2:00 p.m. EDT deadline, which each did shortly following the conclusion of the meeting.

In response to the outreach following the Board meeting, representatives of STG confirmed that STG was committed to working toward execution of definitive transaction documents shortly following the close of trading on August 9 and that STG would work with Avid to resolve all remaining issues in the draft merger agreement expeditiously.

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Later in the evening of August 8, 2023, representatives of Avid, STG, Sidley Austin and Paul Hastings held a videoconference meeting to discuss the key remaining issues in the draft merger agreement and the parties’ respective positions with respect thereto, during which STG agreed that none of Avid’s directors (other than Mr. Asmar in his capacity as an Impactive Capital representative and stockholder) or officers would enter into a voting agreement with STG.

In the early morning of August 9, 2023, Paul Hastings sent Sidley Austin a revised draft of the merger agreement reflecting the discussions among the parties during the evening of August 8, including that for purposes of determining whether there has been a “Company Material Adverse Effect” the effects of the WGA and SAG-AFTRA strikes would be excluded.

Later in the morning of August 9, 2023, Sidley Austin confirmed with Paul Hastings that no material issues remained in the draft merger agreement and it was in substantially final form. In addition, Paul Hastings sent Sidley Austin an executed debt commitment letter and fee letter from Sixth Street and Silver Point and confirmed to Sidley Austin that its equity financing was also secured.

In the afternoon of August 9, 2023, Paul Hastings and Sidley Austin confirmed that all transaction documents were in final form and Paul Hastings provided Sidley Austin with STG’s signature pages in escrow prior to the 2:00 p.m. EDT deadline.

During the trading day on August 9, 2023, there were media reports that STG was nearing a deal to acquire Avid for “just over $27 per share in cash.” The closing price per share of Avid common stock on August 9, 2023 was $26.55.

In the afternoon of August 9, 2023, the Board held a videoconference meeting with representatives from management, Goldman Sachs and Sidley Austin in attendance. During the meeting, representatives of Goldman Sachs and Sidley Austin provided an update regarding negotiations with STG, and the representatives of Sidley Austin reviewed with the Board the key changes to the transaction documents since the August 7 Board meeting, noting that no open issues remained. The representatives of Goldman Sachs reviewed Goldman Sachs’ financial analysis of the $27.05 in cash per share of Avid common stock to be paid to the holders of Avid common stock pursuant to the merger agreement. The representatives of Goldman Sachs delivered to the Board Goldman Sachs’ oral opinion, subsequently confirmed in writing, that, as of August 9, 2023 and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to Avid stockholders pursuant to the merger agreement was fair from a financial point of view to such Avid stockholders. See the section of this proxy statement entitled “—Opinion of Avid’s Financial Advisor” beginning on page 59 for a detailed discussion of Goldman Sachs’ opinion.

Following discussion, the Board unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement shortly following the close of trading.

Following the conclusion of the Board meeting, concurrently with the delivery of the voting agreement executed by the Impactive Capital stockholders and the equity commitment letter, the parties executed the merger agreement, the limited guarantee and the voting agreement.

Shortly thereafter, Avid issued a press release announcing the execution of the merger agreement.

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Recommendation of the Board

 

At the special meeting of the Board held on August 9, 2023, after careful consideration, including discussions with Avid’s management and Avid’s legal and financial advisors, the Board unanimously:

 

determined and declared that the merger agreement and the consummation by Avid of the transactions contemplated by the merger agreement, including the merger, are advisable and in the best interests of Avid and its stockholders;

approved and declared advisable the execution, delivery and performance of the merger agreement and, subject to the adoption of the merger agreement by Avid stockholders, the consummation by Avid of the transactions contemplated by the merger agreement, including the merger;

directed that a proposal to adopt the merger agreement be submitted to a vote at a special meeting of Avid stockholders; and

upon the terms and subject to the conditions set forth in the merger agreement, resolved to recommend that Avid stockholders vote “FOR” the adoption of the merger agreement.

 

Reasons for Recommending the Adoption of the Merger Agreement

 

In the course of evaluating the merger agreement and the transactions contemplated by the merger agreement, including the merger, and in determining to recommend that Avid stockholders adopt the merger agreement, the Board consulted with Avid’s senior management team, Avid’s outside legal counsel, Sidley Austin, and Avid’s independent financial advisor, Goldman Sachs, and considered and evaluated a variety of factors over the course of 21 meetings of the Board and an additional 13 meetings of the Transaction Working Group since the Board began preliminary discussions regarding the possibility of exploring strategic alternatives on November 15, 2022, including the following factors, each of which the Board believes supports its unanimous determination:

 

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Merger Consideration. The Board evaluated the attractiveness of the merger consideration and the financial terms of the merger agreement. In particular, the Board considered the following:

The per share merger consideration represented:

A 32.1% premium over the closing price per share of Avid common stock on May 23, 2023 (the last trading day prior to the release of initial media reports that Avid may be exploring a sale);

A premium of 12.8% to the 30-day volume-weighted average closing price per share of Avid common stock reported prior to May 23, 2023 (the last trading day prior to the release of initial media reports that Avid may be exploring a sale);

A premium of 7.3% to the 30-day volume-weighted average closing price per share of Avid common stock reported prior to August 2, 2023 (the last trading day prior to the release of subsequent media reports that Avid may be exploring a sale);

A discount of 19.0% to the highest closing price per share of Avid common stock, and a premium of 36.7% to the lowest closing price per share of Avid common stock, over the 52-week period ended August 9, 2023; and

An implied total enterprise value of $1.404 billion, which represents a multiple of 13.9x EV / ‘23E Adj. EBITDA.

The $27.05 per share merger consideration is a fixed cash amount, providing Avid’s stockholders with certainty of value and liquidity immediately upon the closing of the merger, eliminating the risks and uncertainties for Avid’s stockholders of long-term business and execution risk, as well as risks related to the financial markets generally (including the potential recessionary pressures in the U.S. and in Europe, the Middle East and Africa (EMEA), the increased volatility resulting from escalating political and global trade tensions and industry conditions, and the current and potential impact of such factors in both the near term and long term on the industries in which Avid operates), in comparison to the risks and uncertainties that would be inherent in remaining a stand-alone public company or in engaging in a transaction in which all or a portion of the consideration is payable in stock or in which Avid sold one or more of its product lines.

The Board’s belief that the $27.05 per share merger consideration represented the best and highest risk-adjusted return reasonably available to Avid’s stockholders, taking into account the indications of interest received by Avid in the strategic alternatives process and Avid’s financial plan, prospects and market position and overall industry conditions, including that the compression of valuation multiples for the industry could be prolonged.

The $27.05 per share merger consideration was the result of negotiations and two price increases by Parent from its June 22, 2023 offer of $25.00 per share of Avid common stock and the Board’s belief that the $27.05 per share merger consideration represented the best and highest consideration that Parent was willing to pay and there was substantial risk of losing STG’s final offer of $27.05 per share if Avid continued to pursue a higher price.

The $27.05 per share merger consideration was in excess of the midpoint of the range of potential prices per share submitted by Bidder B in its non-binding indication of interest and without the related risks and uncertainties.

 

Sales Process; Potential Counterparties. The Board considered the competitive exploratory process engaged in by Avid, in which representatives of Goldman Sachs, at the direction of Avid, contacted 30 parties that the Board determined, after consultation with Goldman Sachs, as the most likely to have the interest and financial resources to undertake and complete a strategic transaction with Avid, Avid entered into confidentiality agreements with 22 potential counterparties, including both financial and strategic potential acquirers, and Avid received written initial indications of interest from three potential counterparties (inclusive of STG). The Board also considered that, although 11 additional potential counterparties contacted Avid or Goldman Sachs following the May 24, 2023 initial release of media reports regarding a possible sale of Avid and Avid entered into confidentiality agreements with six of such potential counterparties, none of such potential counterparties submitted a written indication of interest. The Board also considered the universe of potential purchasers in light of Avid’s size and unique line of business, as well as the ability of such potential purchasers to obtain committed acquisition financing in the current economic climate and interest rate environment. Given such process and the fact that any other potentially interested parties likely would have contacted Avid or Goldman Sachs after the May 24, 2023 and August 3, 2023 releases of media reports regarding a possible sale of Avid, the Board believed that it was unlikely that any other potential counterparty would be willing to acquire Avid at an all-cash price in excess of the $27.05 per share merger consideration. Further, the Board considered that it had received a non-binding indication of interest from Bidder B for a possible transaction at a range of $26.00 to $28.00 per share but that Bidder B’s due diligence was in its preliminary phases and required several more weeks to complete, the markup of the auction draft of the merger agreement received from Bidder B was largely incomplete and there was no assurance that Bidder B would ever acquire all of the outstanding fully-diluted shares of Avid common stock, including for more than $27.05 per share, or at all.

 

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Historical Performance, Stand-Alone Company Risks and Prospects and Strategic Alternatives.

The Board considered Avid’s current and historical financial condition, results of operations, assets and business, Avid’s financial plan and prospects if it were to remain an independent public company, the risks associated with achieving and executing upon Avid’s financial plan, Avid’s historical experience in achieving its projections and the other risks disclosed under the section entitled “Risk Factors” in Avid’s most recent annual report on Form 10-K.

The Board considered the possibility of continuing to operate Avid as an independent public company, including the related risks and uncertainties and the prospects for Avid going forward as an independent public company, including the following:

The risks and benefits of remaining independent and the uncertainties associated with pursuing Avid’s strategic business plan in the near and long term, including Avid’s ability to develop and market new products, expand its cloud offerings, transition to a recurring revenue-based model through a combination of subscription offerings, maintenance contracts and long-term agreements and generate revenues in line with market expectations and the Financial Projections;

Potential expansion opportunities, including into new business or product lines, through acquisitions or through internal research and development efforts, and the costs, benefits and risks that may be attendant thereto;

The potential constraints on Avid’s leverage as a publicly traded company and their impact on Avid’s ability to access capital markets and pursue organic and inorganic growth opportunities;

Avid’s market position and overall industry conditions, including Avid’s current and planned product offerings, the need to consistently offer innovative products and solutions in response to a dynamic, highly competitive and rapidly evolving market demand, customer pricing pressures, deceleration in Avid’s revenue the depth of resources of certain of Avid’s competitors and the ongoing WGA and SAG-AFTRA strikes;

General industry, economic and market risks and conditions, including challenging global macroeconomic conditions, that could reduce the market price of shares of Avid common stock, including whether the public markets will appropriately value Avid’s ongoing progress executing its business plan and whether the market price for Avid common stock would remain volatile; and

The Board’s belief that, following the May 24, 2023 and August 3, 2023 releases of media reports regarding a possible sale of Avid, entering into the merger agreement in the third quarter of 2023 would help to limit the negative effects of such media reports on Avid’s relationships with its employees, customers, suppliers and channel partners, among other parties, as well as other disruption to Avid’s business caused by such media reports, and thereby to increase the consideration reasonably available to Avid’s stockholders in a potential transaction.

The Board also considered the strategic review process conducted by the Board, which included in addition to a possible sale of Avid:

A review of other strategic alternatives, including the possibility of Avid continuing to operate as a public company under various alternative strategic plans;

 

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A review of the range of possible benefits to Avid’s stockholders of the various strategic alternatives and the timing and the costs, risks and likelihood of accomplishing the goals of any of these alternatives;

An assessment by the Board of the likelihood of the above-described strategic alternatives presenting superior opportunities for Avid, or being reasonably likely to create greater value for Avid’s stockholders, than the merger; and

The Board’s belief that none of the above-described strategic alternatives were more favorable to Avid’s stockholders than the merger.

 

Fairness Opinion from Goldman Sachs. The Board considered the financial analyses reviewed and discussed with the Board by representatives of Goldman Sachs on August 9, 2023 and the oral opinion of Goldman Sachs delivered to the Board, subsequently confirmed in writing, that, as of August 9, 2023 and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to Avid stockholders pursuant to the merger agreement was fair from a financial point of view to such Avid stockholders (as described in the section of this proxy statement entitled “—Opinion of Avid’s Financial Advisor” beginning on page 59).

 

Terms of the Merger Agreement. The Board considered the terms and conditions of the merger agreement and the course of extensive negotiations of the key provisions thereof with Parent, including Avid’s and Parent’s respective representations, warranties and covenants, the conditions to their respective obligations to consummate the merger and their ability to terminate the merger agreement (as described in the section of this proxy statement entitled “The Agreement and Plan of Merger” beginning on page 77). In particular, the Board considered the following:

Conditions to Closing the Merger; Likelihood of Closing. The Board considered that the merger was likely to be consummated, including that the merger agreement is subject to specific and limited closing conditions that are customary in nature, Parent’s obligations to use reasonable best efforts to cause the conditions to the merger to be satisfied as promptly as practicable (including, among other things, Parent’s obligation to take any and all actions necessary or advisable with respect to Parent and its subsidiaries (including Avid following the closing) to obtain all consents or approvals under certain competition or antitrust laws) and the expectation that Avid’s stockholders will adopt the merger agreement.

Specific Performance Right. The Board considered the fact that Avid is entitled, subject to certain conditions, to specifically enforce the merger agreement, in addition to any other remedies to which Avid may be entitled, and the Board considered the fact that Avid would have the right to specifically enforce, subject to certain conditions, Parent’s rights under the equity commitment letter.

Structure; Stockholder Approval. The Board considered that the structure of the transaction as a one-step statutory merger will result in detailed public disclosure and a substantial period of time prior to consummation of the merger during which an unsolicited superior proposal could be submitted to the Board. The Board also considered that completion of the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Avid common stock.

No Financing Condition. The Board considered the absence of a financing condition and the fact that Parent had represented that, assuming the financing is funded in accordance with the financing commitments, Parent will have sufficient available funds to fund all of the amounts required to be provided by Parent under the merger agreement for the consummation of the transactions contemplated by the merger agreement. As such, the Board considered the fact that, concurrently with the execution of the merger agreement, Parent delivered (i) an equity commitment letter that names Avid as a third-party beneficiary pursuant to which, immediately prior to the closing, the sponsors would provide Parent with an aggregate cash contribution of up to $960,990,025.55 as necessary for Parent to fund the transactions contemplated by the merger agreement and (ii) the limited guarantee in favor of Avid pursuant to which the guarantors guaranteed certain payment obligations of Parent under the merger agreement up to a cap of each guarantor’s pro rata percentage of the guaranteed obligations set forth in the limited guarantee.

 

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Committed Financing. The Board considered the fact that Parent has obtained committed debt and equity financing for the transaction, the limited number and nature of the conditions to the debt and equity financing and the reputation of the financing sources, the obligation of Parent to use its commercially reasonable efforts to consummate the financing and Avid’s ability to cause the equity financing sources to fund their contributions as contemplated by the merger agreement and the equity commitment letter, provided that the debt financing has been funded or will fund if the equity funds and all the conditions to closing are satisfied. The Board also considered the requirement that, if the debt financing is not obtained, Parent has an obligation to use commercially reasonable efforts to obtain alternative financing. The Board considered that the terms of the debt commitment letters made it reasonably likely the debt financing would be consummated. The Board also believed that the financing sources would be sufficient to fund the aggregate merger consideration, all fees and expenses payable by Parent, Merger Sub or Avid on the anticipated closing date and the repayment of indebtedness required to be repaid on the closing date.

Avid Termination Fee. The Board considered the fact that the Board believed that the Avid termination fee of $39,800,000 payable by Avid to Parent under the merger agreement in certain specified circumstances, or approximately 3.25% of the aggregate equity value of the transactions contemplated by the merger agreement, is reasonable and not preclusive of other offers.

Parent Termination Fee. The Board considered the fact that the merger agreement provides that, in the event of a failure of the closing of the merger under certain other specified circumstances, Parent will be obligated pay Avid the Parent termination fee of $84,500,000, or approximately 6.90% of the aggregate equity value of the transactions contemplated by the merger agreement, the payment of which, subject to the limitations described in the limited guarantee, each guarantor has guaranteed its respective portion of based on its pro rata percentage of the guaranteed obligations (as described in the section of this proxy statement entitled “The Agreement and Plan of Merger—Limited Guarantee” beginning on page 100).

Regulatory Undertaking. The Board considered that the merger is subject to a waiting period under the HSR Act and certain foreign antitrust and foreign direct investment approvals and clearances and that Parent is obligated to use its reasonable best efforts to consummate the transactions contemplated by the merger agreement, subject to certain limited exceptions.

Ability to Respond to Certain Unsolicited Acquisition Proposals. The Board considered Avid’s ability, under certain circumstances, to furnish information to and conduct negotiations with a third party if the Board (or any committee thereof) determines in good faith, after consultation with Avid’s outside financial advisors and outside legal counsel, that the third party has made a competing proposal that constitutes or could reasonably be expected to lead to a superior proposal.

Ability to Change Recommendation. The Board considered that the merger agreement provides that in certain circumstances, the Board is permitted to change its recommendation that Avid’s stockholders vote in favor of the adoption of the merger agreement and is permitted to terminate the merger agreement, including to enter into an agreement with respect to a superior proposal (as defined in the merger agreement and described in the section of this proxy statement entitled “The Agreement and Plan of Merger—Restrictions on Solicitation of Competing Proposals” beginning on page 91), subject to the payment to Parent of the Avid termination fee of $39,800,000 in connection with the termination of the merger agreement.

Voting Agreement. The Board considered the support for the merger of the Impactive Capital stockholders, which beneficially own approximately 16.3% of the outstanding shares of Avid common stock, as evidenced by the voting agreement. The Board considered that the voting agreement would terminate under certain circumstances, including upon a change of Avid recommendation, thereby permitting the Impactive Capital stockholders to support a superior proposal. The Board also considered that the voting agreement expressly does not preclude any stockholder from exercising its fiduciary duties as an Avid director.

Treatment of Employees. The Board considered that the merger agreement included customary provisions related to the treatment by Parent of Avid’s employees after consummation of the merger, which the Board concluded would be of assistance in retaining Avid’s employees prior to closing.

 

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Appraisal Rights. The Board considered that completion of the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Avid common stock and the availability of appraisal rights under Section 262 of the DGCL to Avid stockholders who do not vote in favor of the adoption of the merger agreement and comply with all of the required procedures under Delaware law, which provides those eligible Avid stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than or the same as the amount such stockholders would have received under the merger agreement.

 

No Management Agreements. The Board considered that, as of the execution of the merger agreement, no members of management (including any members of senior management) were party to any agreements with Parent regarding their post-closing employment with or equity participation in the surviving corporation or its affiliates.

 

In the course of its deliberations, the Board also considered certain risks and other potentially negative factors concerning the transactions contemplated by the merger agreement, including:

 

No Solicitation of Competing Proposals. The merger agreement prohibits the Board from soliciting or, subject to certain limited exceptions, considering unsolicited proposals, and Parent’s matching rights and Avid’s obligation to pay Parent the Avid termination fee of $39,800,000 if the merger agreement is terminated under certain circumstances could discourage other potential acquirers from making a competing proposal to acquire Avid.

Taxable Consideration. For United States federal income tax purposes, the $27.05 per share merger consideration will be taxable to Avid’s stockholders who are entitled to receive such consideration.

Financing Failure. The merger may not occur if the financing contemplated by the financing commitments is not obtained (as described in the section of this proxy statement entitled “The Merger—Financing of the Merger” beginning on page 71).

No Direct Ongoing Participation in the Surviving Corporation’s Potential Upside. Following the merger, Avid will no longer exist as an independent public company, and Avid’s existing stockholders will not have an opportunity to continue participating in the surviving corporation’s upside as a stand-alone company, including future earnings or growth of the surviving corporation, and will not benefit from any synergies resulting from the consummation of the transactions contemplated by the merger agreement.

Specific Performance; Cap on Damages. If the transactions contemplated by the merger agreement are not consummated, Avid’s sole monetary remedy in the event of a breach of the merger agreement by Parent or Merger Sub is generally limited to the receipt of the Parent termination fee of $84,500,000. It may be expensive and difficult to collect or enforce such Parent termination fee, and the success of any such action may be uncertain. Avid is limited to obtaining specific performance or damages in an amount up to the Parent termination fee in the event that Parent does not close when required, and Avid is not able to seek other monetary damages.

Interim Restrictions. The merger agreement generally requires Avid to use its reasonable best efforts to conduct its operations in the ordinary course of business and, to the extent consistent therewith, use its reasonable best efforts to preserve intact its material assets, properties, material contracts and business organizations, keep available the services of its current officers and key employees (subject to terminations for “cause”) and maintain existing relations with material customers, suppliers, channel partners, distributors, lessors, licensors, licensees, creditors, contractors and other key persons with whom Avid has significant relationships (subject to certain exceptions), and the merger agreement restricts Avid, without Parent’s consent (not to be unreasonably withheld, delayed or conditioned), from taking certain specified actions until the merger is completed, which restrictions may affect Avid’s ability to execute its business strategies, respond effectively to competitive pressures and industry developments, pursue alternative business opportunities, make appropriate changes to its business and attain its financial and other goals, all of which may adversely impact Avid’s financial condition and results of operations.

Potential Failure to Consummate the Merger. The merger might not be consummated in a timely manner or at all, due to a failure of certain closing conditions, many of which are not within Avid’s control, to be satisfied or (if permissible under applicable law) waived, including certain regulatory approvals, and if the merger is not consummated any resulting public announcement of termination of the merger agreement might have a negative effect on the trading price of shares of Avid common stock and Avid’s business operations.

 

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Transaction Expenses; Disruption to Operations. Avid has incurred and will incur substantial expenses in connection with entering into the merger agreement and completing the transactions contemplated by the merger agreement, and Avid’s management team and other employees will have expended extensive time and effort and will have experienced significant distractions from their work, potentially disrupting Avid’s business operations, during the pendency of the merger, in each case, regardless of whether the merger is consummated. Moreover, the announcement of the merger agreement and pendency of the merger, or the failure to consummate the merger, may harm Avid’s relationships with its employees and financial professionals (including making it more difficult to attract and retain such employees and financial professionals) and Avid’s relationships with existing and prospective customers, channel partners and suppliers and other third parties.

Interests of Directors and Officers. Avid’s directors and executive officers may receive certain benefits that are different from, and in addition to, those of Avid’s stockholders (such as change-in-control or termination payments) (as described in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64).

Fixed Merger Consideration. The transactions contemplated by the merger agreement have a potential outside date as late as six months from the date of the merger agreement (which may be extended in certain circumstances to nine months from the date of the merger agreement), and there is no interest payable on the merger consideration or adjustment for inflation or any other purchase price adjustment regardless of Avid’s performance during the pendency of the merger.

Risks of Challenge. Stockholders or others may object to and challenge the merger and take actions that may prevent or delay the closing, including, in the case of stockholders, voting against the adoption of the merger agreement.

 

The Board concluded that the potentially negative factors associated with the merger were outweighed by the potential benefits that it expected Avid’s stockholders would receive as a result of the merger, including the belief that the merger would maximize the value received by Avid’s stockholders and eliminate the risks and uncertainties affecting Avid’s future prospects as a stand-alone company.

 

The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive but includes the material factors considered by the Board. In view of the wide variety of factors considered in connection with the Board’s evaluation of the merger and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board did not undertake to make any specific determination as to whether, or to what extent, any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Board based its recommendation on the totality of the information presented, including the factors described above. The factors above are not necessarily presented in order of importance to the Board and its deliberations. The explanation of the reasons and reasoning set forth above contain forward-looking statements that should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 20.

 

Certain Avid Unaudited Prospective Financial Information

 

Although Avid has from time to time provided limited financial guidance to investors, Avid does not, as a matter of course, otherwise publicly disclose internal projections as to future performance, earnings or other results beyond the then-current annual period (other than key long-term model target ranges) due to, among other reasons, the inherent difficulty of accurately predicting financial performance for future periods and the uncertainty, unpredictability and subjectivity of underlying assumptions and estimates. However, in the ordinary course, management prepares a long-term strategic plan, which is periodically updated and reviewed with the Board and reflects Avid management’s financial and business outlook for Avid.

 

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In the ordinary course of business, in January 2023, management discussed with the Board management’s 2023 annual operating plan and five-year plan. In March 2023, management updated the 2023 annual operating plan and five-year plan to reflect more challenging global macroeconomic conditions and the impact of the Adjustment, resulting in a reduction in 2023 revenue largely related to subscription and overall storage revenue, additional cost savings measures, spend reduction programs and revised working capital and tax assumptions for 2023. This update resulted in the March Financial Projections that were accepted by the Board at the March 10, 2023 meeting of the Board, as discussed above in the section of this proxy statement entitled “The Merger – Background of the Merger” beginning on page 30.

 

At the March 10, 2023 meeting of the Board, the Board directed management to share the March Financial Projections with potential counterparties, including STG, in connection with their consideration and evaluation of a Potential Transaction.

 

In July 2023, at the request of the Board, management updated the March Financial Projections in light of recent developments with respect to Avid’s business as well as additional information and data gathered by management during the due diligence process with the potential counterparties. Management considered current and expected future market conditions, evolving industry trends and preliminary financial results through June 2023 and determined that it was appropriate to revise the March Financial Projections by, among other things, (1) reducing the forecasted growth rate of Video & Media subscription revenue in the short term to reflect the impact of anticipated industry headwinds, such as the WGA and the SAG-AFTRA strikes and over the longer term due to increasing pressure on media budgets, (2) reducing the projected growth rate of integrated solutions revenue and (3) making revisions to the working capital assumptions resulting in lower cash generated by operating activities. These updates resulted in the July Financial Projections that were accepted by the Board at the July 18, 2023 meeting of the Board, as discussed above in the section of this proxy statement entitled “The Merger – Background of the Merger” beginning on page 30. We refer to the March Financial Projections and the July Financial Projections together as the “Financial Projections.”

 

At the July 18, 2023 Board meeting, the Board directed management to share the July Financial Projections with the potential counterparties who remained engaged in the strategic alternatives process, including STG, in connection with their consideration and evaluation of a Potential Transaction. The Board further directed representatives of Goldman Sachs to use and rely on the July Financial Projections in connection with Goldman Sachs’s financial analysis and opinion, as described in the section entitled “The Merger – Opinion of Avid’s Financial Advisor” beginning on page 59.

 

None of the Financial Projections were intended for public disclosure. Nonetheless, a summary of the Financial Projections is included below to provide Avid stockholders with access to information that was made available to the Board, Goldman Sachs, STG and other potential counterparties. Additionally, while Avid management included “Unlevered Free Cash Flow” as a separate line item in the March Financial Projections or the July Financial Projections provided to potential counterparties, this line item was not explicitly included in the March Financial Projections and the July Financial Projections accepted by the Board, which instead included other enterprise cash flow metrics and, with respect to the March Financial Projections, detailed projected financial information with respect to Avid’s future cash flow, including the metrics from which “Unlevered Free Cash Flow” can be calculated.

 

The Financial Projections

 

The following is a summary of the March Financial Projections, with dollars in millions:

 

Summary of the March Financial Projections(1)

 

  2023F 2024F 2025F 2026F 2027F
Strategic Revenue $296.4 $363.7 $450.3 $512.9 $574.4
Total Revenue $461.0 $521.2 $590.1 $652.0 $717.4
Gross Profit $316.2 $360.7 $419.2 $469.5 $520.0
Adjusted EBITDA $102.1 $124.2 $160.4 $189.2 $221.4
Unlevered Free Cash  Flow $65.0 $84.7 $120.8 $160.9 $197.3
(1)See the footnotes to the Summary of the July Financial Projections table below for definitions of Strategic Revenue, Adjusted EBITDA and Unlevered Free Cash Flow.

 

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The following is a summary of the July Financial Projections, with dollars in millions:

 

Summary of the July Financial Projections

 

  2023F 2024F 2025F 2026F 2027F
Strategic Revenue(1) $292.4 $345.0 $414.0 $472.0 $528.6
Total Revenue $460.6 $506.6 $552.3 $593.7 $632.3
Gross Profit $305.4 $346.0 $384.4 $414.8 $443.6
Adjusted EBITDA(2) $101.3 $123.7 $146.8 $158.5 $171.2
Unlevered Free Cash  Flow(3) $59.0 $84.1 $109.0 $122.4 $132.9

 

(1)Strategic Revenue represents subscription revenue and maintenance revenue.

(2)Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, stock-based compensation, restructuring costs, early retirement program costs, acquisition, integration and other costs, efficiency program costs and digital transformation costs.

(3)Unlevered Free Cash Flow represents Adjusted EBITDA plus non-cash expenses less taxes, capital expenditures and change in working capital.

 

Important Information Regarding the Financial Projections

 

The inclusion of the Financial Projections in this proxy statement does not constitute an admission or representation by Avid, Goldman Sachs or any other person that the information is material. Moreover, the inclusion of the Financial Projections in this proxy statement should not be regarded as an indication that Avid or the Board, Goldman Sachs or any other recipient of this information, considered, or now considers, it to be an assurance of the achievement of future results or an accurate prediction of future results, and the Financial Projections should not be relied on as such.

 

The Financial Projections are unaudited and were not prepared with a view toward public disclosure or compliance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or United States generally accepted accounting principles (which we refer to as “GAAP”) or the published guidelines of the SEC regarding projections and the use of non-GAAP financial measures. Neither BDO USA, P.C., Avid’s independent registered public accounting firm (“BDO”), nor any other accounting firm, has compiled, examined or performed any procedures with respect to the Financial Projections, nor has BDO expressed any opinion or any other form of assurance with respect to the Financial Projections or their achievability. The report of BDO USA, LLP (n/k/a BDO USA, P.C.) incorporated by reference in this proxy statement relates to Avid’s historical financial information. It does not extend to any prospective financial information contained in this proxy statement, including the Financial Projections, and should not be read to do so.

 

Adjusted EBITDA, Non-GAAP Earnings Per Share and Unlevered Free Cash Flow are non-GAAP financial measures. Please see the tables above for a description of how Avid defines these non-GAAP financial measures for purposes of the Financial Projections. Non-GAAP financial measures, including Adjusted EBITDA, Non-GAAP Earnings Per Share and Unlevered Free Cash Flow, have limitations as analytical tools, and you should not consider any non-GAAP financial measure in isolation from or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Some of these limitations include the omission of certain material costs, such as depreciation, amortization and interest, necessary to operate Avid’s business. Other companies, including companies in Avid’s industry, may calculate similarly titled non-GAAP financial measures differently, which reduces their usefulness as a comparative measure. You should consider Avid’s non-GAAP financial measures alongside other financial performance measures, including various cash flow metrics, net income and Avid’s other GAAP results.

 

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SEC rules that may otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures provided to directors or a financial advisor (like the Financial Projections) in connection with a proposed transaction like the merger when the disclosure is included in a document like this proxy statement. In addition, reconciliations of non-GAAP financial measures to GAAP financial measures were not provided to or relied upon by Goldman Sachs for purposes of its financial analysis and opinion or by the Board in connection with its consideration and evaluation of the merger. Further, Avid did not provide STG or any other potential counterparty with a reconciliation of the non-GAAP financial measures included in the Financial Projections to the relevant GAAP financial measures. Accordingly, Avid has not provided in this proxy statement or otherwise a reconciliation of the non-GAAP financial measures included in the Financial Projections to the relevant GAAP financial measures.

 

The Financial Projections and the underlying assumptions upon which the Financial Projections were based are subjective in many respects and subject to multiple interpretations and frequent revisions attributable to the dynamics of Avid’s industry and based on actual experience and business developments. Although presented with numerical specificity, the Financial Projections are forward-looking statements and reflect various estimates and assumptions, all of which are difficult to predict, subject to significant risks and uncertainties and beyond Avid’s control, including, among others, those described in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements,” beginning on page 20, that could cause the Financial Projections or the underlying assumptions to be inaccurate and for actual results to differ materially from the Financial Projections. Accordingly, there can be no assurance that the projected results contemplated by the Financial Projections will be realized or that actual results will not differ materially from the results contemplated by the Financial Projections, and the Financial Projections cannot be considered a guarantee of future operating results and should not be relied upon as such. The Financial Projections also cover multiple fiscal years, and such information by its nature becomes less reliable with each successive year.

 

Some or all of the assumptions that have been made in connection with the preparation of the Financial Projections may have changed since the dates on which the Financial Projections were prepared. Neither Avid nor any of its affiliates nor any of their respective officers, directors, advisors or other representatives has made or makes any representation to any Avid stockholder or to Parent or Merger Sub in the merger agreement or otherwise regarding the Financial Projections or Avid’s ultimate performance compared to the information contained in the Financial Projections or that the Financial Projections will be achieved.

 

Some or all of the assumptions that have been made in connection with the preparation of the Financial Projections may have changed since the dates on which the Financial Projections were prepared. Economic and business environments can and do change quickly, which adds an additional significant level of uncertainty as to whether the results contemplated by the Financial Projections will be achieved. The Financial Projections have not been updated or revised to reflect information or results after the dates on which the Financial Projections were prepared or as of the date of this proxy statement, including the impact of negotiating or executing the merger agreement, the effect on Avid of any business or strategic decision or action that has been or will be taken as a result of the execution of the merger agreement or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the Financial Projections do not take into account the effect of any failure of the merger to be consummated and should not be viewed in any manner in that context.

 

Except as required by applicable law, neither Avid, Parent nor any of Avid’s or Parent’s respective affiliates or any other person intends to, and each of them disclaims any obligation to, update, revise or correct the Financial Projections to reflect circumstances existing or events occurring after the dates on which the Financial Projections were prepared or to reflect the existence of future circumstances or the occurrence of future events, even in the event that any or all of the assumptions underlying the Financial Projections are or become wrong or no longer appropriate. These considerations should be taken into account in reviewing the Financial Projections, which were prepared as of earlier dates.

 

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For the foregoing reasons, and considering that the Special Meeting will be held several months after the Financial Projections were prepared, as well as the uncertainties inherent in any forecasting information, readers of this proxy statement are cautioned not to place unwarranted reliance on the Financial Projections. The Financial Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Avid contained in Avid’s public filings with the SEC. Avid urges all of its stockholders to review its most recent SEC filings for a description of its reported financial results. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121.

 

Opinion of Avid’s Financial Advisor

 

Goldman Sachs delivered its oral opinion to the Board, subsequently confirmed in writing, that, as of August 9, 2023, and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to Avid stockholders pursuant to the merger agreement was fair from a financial point of view to such Avid stockholders.

 

The full text of the written opinion of Goldman Sachs, dated August 9, 2023, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement and is incorporated by reference in this proxy statement. The summary of Goldman Sachs’ opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the transactions contemplated by the merger agreement. Goldman Sachs’ opinion is not a recommendation as to how any Avid stockholder should vote with respect to the Merger Agreement Proposal or any other matter.

 

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

the merger agreement;

 

annual reports to stockholders and Annual Reports on Form 10-K of Avid for the five years ended December 31, 2022;

 

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Avid;

 

certain other communications from Avid to its stockholders;

 

certain publicly available research analyst reports for Avid; and

 

the July Financial Projections, which include certain internal financial analyses and forecasts for Avid prepared by Avid’s management, as approved for Goldman Sachs’ use by the Board. See the section of this proxy statement entitled “The Merger—Certain Avid Unaudited Prospective Financial Information” beginning on page 55 for more information regarding the July Financial Projections.

 

Goldman Sachs also held discussions with members of Avid’s senior management regarding their assessment of the past and current business operations, financial condition and future prospects of Avid; reviewed the reported price and trading activity for the shares of Avid common stock; compared certain financial and stock market information for Avid with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the technology, media and telecommunications industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

 

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For purposes of rendering its opinion, Goldman Sachs, with the consent of the Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed, with the consent of the Board, that the July Financial Projections were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of Avid. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Avid or any of its subsidiaries, and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transactions contemplated by the merger agreement will be obtained without any adverse effect on the expected benefits of such transactions in any way meaningful to its analysis. Goldman Sachs also assumed that the transactions contemplated by the merger agreement will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

 

Goldman Sachs’ opinion does not address the underlying business decision of Avid to engage in the transactions contemplated by the merger agreement, or the relative merits of such transactions as compared to any other strategic alternatives that may be available to Avid (including a non-binding indication of interest from a third party for a possible transaction at range of potential prices per share of Avid common stock that included in the upper portion of such range prices greater than the merger consideration, which non-binding indication of interest, the Board advised Goldman Sachs, it determined not to further pursue because of risks and uncertainties concerning such non-binding indication of interest, including that the midpoint of such range of potential prices per share of Avid common stock was lower than the merger consideration); nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to Avid stockholders, as of the date of the opinion, of the merger consideration to be paid to such Avid stockholders pursuant to the merger agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the transactions contemplated by the merger agreement or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with such transactions, including the fairness of such transactions to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of Avid; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Avid, or class of such persons, in connection with the transactions contemplated by the merger agreement, whether relative to the merger consideration to be paid to Avid stockholders pursuant to the merger agreement or otherwise. In addition, Goldman Sachs does not express any opinion as to the prices at which shares of Avid common stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on Avid, Parent or the transactions contemplated by the merger agreement or as to the impact of such transactions on the solvency or viability of Avid or Parent or the ability of Avid or Parent to pay their respective obligations when they come due. Goldman Sachs’ opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion, and Goldman Sachs assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

 

Summary of Material Financial Analysis

 

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 8, 2023, the last trading day before the execution of the merger agreement, and is not necessarily indicative of current market conditions.

 

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Illustrative Present Value of Future Share Price Analysis. Using the July Financial Projections, Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per share of Avid common stock. For this analysis, Goldman Sachs first calculated the implied enterprise value for Avid as of December 31 for each of calendar years 2023 through 2025, by applying a range of multiples of illustrative enterprise value (“EV”) to next twelve months’ (“NTM”) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) (which multiples are referred to as “EV/NTM EBITDA” for purposes of this section) of 9.0x to 13.0x to estimates of Avid’s NTM Adjusted EBITDA for each of calendar years 2023 through 2025. This illustrative range of EV/NTM EBITDA multiple estimates was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical EV/NTM EBITDA multiples for Avid and current and historical trading multiples for certain publicly traded companies, as described in the section of this proxy statement entitled “Opinion of Avid’s Financial AdvisorSelected Publicly Traded Companies Trading Multiples” beginning on page 62. Goldman Sachs then subtracted the amount of Avid’s total debt and added the amount of Avid’s cash and cash equivalents for each of calendar years 2023 through 2025, each as provided by and approved for Goldman Sachs’ use by the management of Avid, from the respective implied enterprise values in order to derive a range of implied equity values as of December 31 for Avid for each of calendar years 2023 through 2025. Goldman Sachs then divided these implied equity values by the projected year-end number of fully diluted outstanding shares of Avid common stock for each of calendar years 2023 through 2025, calculated using information provided by and approved for Goldman Sachs’ use by the management of Avid, to derive a range of implied future values per share of Avid. Goldman Sachs then discounted these implied future equity values per share of Avid to June 30, 2023, using an illustrative discount rate of 11.8%, reflecting an estimate of Avid’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model (“CAPM”), which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of implied present values of $21.59 to $36.02 per share of Avid common stock.

 

Illustrative Discounted Cash Flow Analysis. Using the July Financial Projections, Goldman Sachs performed an illustrative discounted cash flow analysis on Avid to derive a range of illustrative present values per share of Avid common stock. Using the mid-year convention for discounting cash flows and discount rates ranging from 11.0% to 12.0%, reflecting estimates of Avid’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2023 (i) estimates of unlevered free cash flow for Avid for calendar years 2023 through 2027 as reflected in the July Financial Projections and (ii) a range of illustrative terminal values for Avid, which were calculated by applying terminal year exit EBITDA multiples ranging from 9.0x to 13.0x, to a terminal year estimate of the Adjusted EBITDA to be generated by Avid, as reflected in the July Financial Projections (which analysis implied perpetuity growth rates ranging from 4.5% to 7.4%). The range of terminal year exit EBITDA multiples was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical trading multiples of Avid and of certain publicly traded companies, as described in the section of this proxy statement entitled “Opinion of Avid’s Financial AdvisorSelected Publicly Traded Companies Trading Multiples” beginning on page 62. Goldman Sachs derived such discount rates by application of the CAPM, which requires certain company-specific inputs, including Avid’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Avid, as well as certain financial metrics for the United States financial markets generally.

 

Goldman Sachs derived a range of illustrative enterprise values for Avid by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Avid the amount of Avid’s total debt and added the amount of Avid’s cash and cash equivalents, in each case, as of June 30, 2023, and provided by and approved for Goldman Sachs’ use by the management of Avid, to derive a range of illustrative equity values for Avid. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Avid, as provided by and approved for Goldman Sachs’ use by the management of Avid, to derive a range of illustrative present values per share ranging from $21.16 to $31.56.

 

Premia Paid Analysis. Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash acquisition transactions announced from January 1, 2016 through August 8, 2023 involving a public company in the technology industry globally as the target where the disclosed enterprise values for the transactions contemplated by the merger agreement were $500 million and above. For the entire period, using publicly available information, Goldman Sachs calculated the top third and bottom third premiums of the price paid in the 140 transactions relative to the target’s last undisturbed closing stock price prior to announcement of the applicable transaction. This analysis indicated a top third premium of 45% and a bottom third premium of 28% across the period. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 28% to 45% to the closing price per share of Avid common stock of $20.47 as of May 23, 2023 (the last trading day prior to the release of initial media reports that Avid may be exploring a sale) and calculated a range of implied equity values per share of Avid common stock of $26.12 to $29.68.

 

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Selected Publicly Traded Companies Trading Multiples. Using publicly available data, Goldman Sachs reviewed and compared certain financial information for Avid to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the technology, media and telecommunications industry (the “Selected Companies”):

 

Brightcove Inc.

Corsair Gaming, Inc.

Dolby Laboratories, Inc.

Evertz Technologies Limited

EVS Broadcast Equipment S.A.

Focusrite PLC

Haivision Systems Inc.

Harmonic Inc.

IMAX Corporation

Logitech International S.A.

Quantum Corporation

Seachange International, Inc.

Vantiva S.A.

Veritone, Inc.

Yamaha Corporation

 

Although such companies are not directly comparable to Avid, such companies were chosen because they are publicly traded companies in the technology, media and telecommunications industry with certain operations, financial characteristics or growth characteristics that, for purposes of analysis, may be considered similar to certain operations, financial characteristics or growth characteristics of Avid.

 

For Avid and each of the Selected Companies, Goldman Sachs calculated and compared EV/Adjusted EBITDA multiples for calendar years 2023 and 2024, as well as historical EV/NTM EBITDA multiples as of January 1, 2022, March 15, 2023 (the date on which representatives of Goldman Sachs first discussed with the Board their preliminary financial analysis of Avid based on the March Financial Projections), May 1, 2023 (the date on which the initial IOIs were due), May 3, 2023 (the last trading day prior to the date on which Avid released its financial results for the first quarter of the 2023 fiscal year), May 5, 2023 (the trading day immediately following the date on which Avid released its financial results for the first quarter of the 2023 fiscal year) and May 23, 2023 (the last trading day prior to the release of initial media reports that Avid may be exploring a sale), the median of the EV/NTM EBITDA multiples (based on the daily closing prices for such Selected Company) since January 2022, the one-year median of the EV/NTM EBITDA multiples (based on the daily closing prices for such Selected Company) for the one-year period prior to August 8, 2023 and the median of the EV/NTM EBITDA multiples (based on the daily closing prices for such Selected Company) for the period between January 1, 2023 and August 8, 2023 (which are referred to in the table below as “EV/CY 2023 EBITDA,” “EV/CY 2024 EBITDA,” “1/1/2022 EV/NTM EBITDA,” “3/15/2023 EV/NTM EBITDA,” “5/1/2023 EV/NTM EBITDA,” “5/3/2023 EV/NTM EBITDA,” “5/5/2023 EV/NTM EBITDA,” “5/23/2023 EV/NTM EBITDA,” “Median EV/NTM EBITDA Since January 2022,” “1-Year Median EV/NTM EBITDA” and “YTD Median EV/NTM EBITDA,” respectively).

 

The results of these calculations are summarized as follows:

 

  EV/CY 2023 EBITDA EV/CY 2024 EBITDA 1/1/2022 EV/NTM EBITDA 3/15/2023
EV/NTM
EBITDA
5/1/2023 EV/NTM EBITDA 5/3/2023 EV/NTM EBITDA 5/5/2023 EV/NTM EBITDA 5/23/2023 EV/NTM EBITDA Median EV/NTM EBITDA Since January 2022 1-Year Median EV/NTM EBITDA YTD Median
EV/NTM EBITDA
Avid 13.5x 11.0x 18.4x 14.3x 13.9x 13.0x 11.3x 10.5x 14.6x 14.3x 14.1x
Median of Selected Companies 10.6 8.9x 12.9x 9.8x 10.7x 9.8x 9.6x 10.1x 10.6x 10.5x 10.0x

 

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General

 

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Avid or Parent or the transactions contemplated by the merger agreement.

 

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Board as to the fairness from a financial point of view of the merger consideration to be paid to Avid stockholders. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Avid, Parent, Goldman Sachs or any other person assumes responsibility if actual future results are materially different from forecasted future results.

 

The merger consideration was determined through arm’s-length negotiations between Avid and STG Partners, LLC, an affiliate of Parent (“STG”), and was approved by the Board. Goldman Sachs provided advice to Avid during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to Avid or the Board or that any specific amount of consideration constituted the only appropriate merger consideration.

 

As described above, Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with its opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B to this proxy statement.

 

Goldman Sachs and its affiliates are engaged in advisory, underwriting, lending and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Avid, Parent, any of their respective affiliates and third parties, including Impactive Capital LP, a significant stockholder of Avid (“Impactive”), and STG and any of their respective affiliates and, as applicable, portfolio companies, or any currency or commodity that may be involved in the transactions contemplated by the merger agreement. Goldman Sachs acted as financial advisor to Avid in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. During the two-year period ended on the date of its opinion, Goldman Sachs’ investment banking business unit (“Goldman Sachs Investment Banking”) has not been engaged by Avid or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. During the two-year period ended on the date of its opinion, Goldman Sachs Investment Banking has not been engaged by Parent or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to STG and/or its affiliates and portfolio companies from time to time for which Goldman Sachs Investment Banking has received, and may receive, compensation, including having acted as financial advisor to RSA Security LLC, a portfolio company of STG, in connection with its sale of a minority stake in August 2021 and as financial advisor to Archer Integrated Risk Management, Inc., a portfolio company of STG, in connection with its sale in April 2023. During the two-year period ended on the date of its opinion, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by Goldman Sachs Investment Banking to STG and/or its affiliates and portfolio companies of approximately $10 million. During the two-year period ended on the date of its opinion, Goldman Sachs Investment Banking has not been engaged by Impactive and/or its affiliates and portfolio companies to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Avid, Parent, STG, Impactive and their respective affiliates and, as applicable, portfolio companies, for which Goldman Sachs Investment Banking may receive compensation. Affiliates of Goldman Sachs also may have co-invested with STG and Impactive and their respective affiliates from time to time and may have invested in limited partnership units of affiliates of STG or Impactive from time to time and may do so in the future.

 

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The Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transactions contemplated by the merger agreement. Pursuant to a letter agreement, dated August 7, 2023, Avid engaged Goldman Sachs to act as its financial advisor in connection with the transactions contemplated by the merger agreement. The engagement letter between Avid and Goldman Sachs provides for a transaction fee of approximately $20,000,000, payment of which is contingent upon consummation of the merger. In addition, Avid has agreed to reimburse Goldman Sachs for certain of its reasonable and documented out-of-pocket expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

 

Interests of Directors and Executive Officers in the Merger

 

In considering the recommendations of the Board with respect to the merger, Avid stockholders should be aware that the directors and executive officers of Avid have certain interests, including financial interests, in the merger that may be different from, or in addition to, the interests of Avid stockholders generally. The Board was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby, and in resolving to recommend that Avid stockholders vote “FOR” the adoption of the merger agreement, upon the terms and subject to the conditions set forth therein. For the purposes of the plans and agreements described below, to the extent applicable, the completion of the merger will constitute a change of control, change in control or any term of similar meaning.

 

Certain Assumptions

 

Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions were used:

 

the assumed effective time is [       ], 2023, which is the assumed date of the closing of the merger solely for purposes of this merger-related compensation disclosure (the “assumed effective time”);

 

the relevant price per Avid share is $27.05, the Avid cash consideration pursuant to the merger agreement;

 

each executive officer is terminated by Parent without “cause” or resigned for “good reason” (as applicable, and as such terms are defined in the relevant plans and agreements), in each case immediately following the assumed effective time;

 

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quantification of outstanding RSUs is calculated based on the outstanding RSUs expected to be held by each executive officer as of the assumed effective time;

 

all unvested RSU awards that are expected to be held by each executive officer as of [           ], 2023 remain unvested as of the assumed effective time;

 

the amounts set forth in the tables below regarding executive officer compensation are based on expected compensation levels as of [            ], 2023; and

 

the board of directors and management team of Parent following the consummation of the merger will consist of the individuals set forth in the section of this proxy statement entitled “The Agreement and Plan of Merger — Organizational Documents; Directors and Officers” beginning on page 78.

 

Treatment of Outstanding RSU Awards

 

The merger agreement provides for the following treatment of outstanding RSU awards, including those held by Avid’s directors and executive officers as of the effective time:

 

each vested RSU award will be cancelled and, in exchange therefor, each holder of any such cancelled vested RSU award will be solely entitled to receive, in consideration of the cancellation of such vested RSU award and in settlement therefor, a payment in cash of an amount equal to the product of (i) the number of RSUs subject to such vested RSU award immediately prior to the effective time multiplied by (ii) the merger consideration (less any required tax withholdings in accordance with the terms of the merger agreement).

 

each unvested RSU award will automatically be cancelled and converted solely into a converted cash award (less any required tax withholdings in accordance with the terms of the merger agreement). Each such converted cash award assumed and converted pursuant to the terms of the merger agreement will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding RSU immediately prior to the effective time, with payment forfeited to the extent vesting is not satisfied. However, in the event that Parent or any of its affiliates (including the surviving corporation) terminates the employment or service of the holder of a converted cash award without “cause” (as defined in the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans”), the unvested portion of the holder’s converted cash award will become vested upon such termination and, with respect to unvested RSU awards with a performance-based vesting schedule, the vesting of such awards will be determined based on the current vesting schedules and performance conditions, except that the “ending Company stock price” (for purposes of determining Avid’s total shareholder return) will be equal to $27.05. Parent will pay any portion of a converted cash award that vests to the applicable holder as promptly as practicable following the date on which such portion vests, but in any event within two payroll periods following the date on which the converted cash award vested.

 

In addition to their outstanding equity awards, which are described in more detail below, Avid’s directors and executive officers may beneficially own shares of Avid common stock. Details regarding the beneficial ownership of Avid’s directors’ and executive officers’ Avid common stock are set out in the section of this proxy statement entitled “Stock Ownership” beginning on page 115.

 

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Summary Tables

 

Non-Employee Directors

 

The following table sets forth the outstanding RSUs held by each of Avid’s non-employee directors as of the assumed effective time and the estimated value of such RSUs, based on the merger consideration. Depending on when the effective time occurs, certain of these RSUs may vest or be cancelled, in each case, prior to the effective time in accordance with their terms and independent of the occurrence of the merger. All RSU numbers have been rounded to the nearest whole number.

 

Non-Employee Director Unvested RSU Awards Summary Table

 

Non-Employee Director 

Number of Unvested Restricted Stock Units (#) 

Value of Unvested Restricted Stock Units ($)1 

Christian A. Asmar 6,203 $167,791
Robert M. Bakish 6,203 $167,791
Paula E. Boggs 6,203 $167,791
Elizabeth M. Daley 6,203 $167,791
Nancy Hawthorne 6,203 $167,791
Daniel B. Silvers 6,203 $167,791
John P. Wallace 6,203 $167,791
Peter M. Westley 6,203 $167,791

 

Executive Officers

 

The following table sets forth the unvested RSU awards held by each of Avid’s executive officers as of the assumed effective time (assuming no additional grants are made prior to the effective time) and the estimated value of such unvested RSU awards based on the merger consideration. Depending on when the effective time occurs, certain of these RSUs may vest or be cancelled, in each case, prior to the actual effective time in accordance with their terms and independent of the occurrence of the merger. All RSU numbers and values have been rounded to the nearest whole number.

 

Executive Officer Unvested RSU Awards Summary Table

 

Executive Officer 

Number of Unvested Restricted Stock Units (#) 

Value of Unvested Restricted Stock Units ($)1 

Jeff Rosica 197,324 $5,337,614
Kenneth L. Gayron 77,228 $2,089,017
Tom Cordiner 56,602 $1,531,084
Kevin W. Riley 58,705 $1,587,970
Timothy Claman 43,067 $1,164,962
David Toomey 35,694 $965,522
Mariesa Victoria 11,316 $306,097

 

 
(1)Under the merger agreement, each unvested RSU award held by a non-employee director will be automatically cancelled and will become a converted cash award, which is a contingent right to receive from Parent or the surviving corporation a cash payment equal to the product of (i) the number of RSUs subject to such unvested RSU award immediately prior to the effective time multiplied by (ii) $27.05. Such converted cash award shall generally be subject to the same vesting terms that apply to the RSU award prior to the effective time, but with certain accelerated vesting if the holder’s service is terminated by Parent or the surviving corporation without “cause” (as defined in the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans”) prior to the time when such converted cash award is scheduled to vest. It is assumed for purposes hereof that the services of the non-employee directors will be terminated without “cause” immediately at the effective time and the non-employee directors will, therefore, become fully vested in their converted cash awards as of the effective time.

 

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Change in Control Severance Benefits in Executive Officer Employment Arrangements

 

Employment Agreements and Amended and Restated Offer Letters. Prior to the date of the merger agreement, Avid entered into employment agreements with each of Jeff Rosica and Kenneth Gayron, and amended and restated offer letters with each of Tom Cordiner, Kevin Riley, Timothy Claman, David Toomey and Mariesa Victoria, which provide for certain payments and benefits if such executive officers are terminated by Avid (or a successor) without “cause” or they resign for “good reason” (in each case as defined in the applicable employment agreement or amended and restated offer letter) (each, a “qualifying termination”) within 12 months following a “change in control” of Avid (as defined in the applicable employment agreement or amended and restated offer letter). Specifically, the executive officers are eligible to receive the following benefits upon such qualifying termination, provided that they sign a severance and release agreement provided by Avid within 45 days after their qualifying termination and do not revoke such agreement within that time.

 

Severance Payment. Within 60 days following the executive officer’s termination of employment, the executive officer will receive a lump sum payment equal to (i) 1.5 times the executive officer’s base salary in effect as of the termination date (2.0 times for Mr. Rosica and 1.0 times for Ms. Victoria), (ii) 1.5 times the executive officer’s target annual bonus in effect as of the termination date (2.0 times for Mr. Rosica and 1.0 times for Ms. Victoria) and (iii) an amount equal to the executive officer’s target annual bonus in effect as of the termination date, pro-rated for the number of months during which the executive officer was employed during the year.

 

Health Benefits. If an executive officers elect to continue group health coverage under Avid’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the executive officer will receive a lump sum payment equal to the excess of the total monthly premiums for the coverage elected by the executive officer, over the monthly amount that Avid requires similarly situated employees to pay for the same type of coverage, plus any administrative fees, for a period of 18 months (24 months for Mr. Rosica and 12 months for Ms. Victoria). Such lump sum is payable within 60 days after the executive officer’s termination date (74 days for Mr. Rosica).

 

Outplacement Assistance. The executive officers will receive outplacement assistance with a total value not to exceed $5,000 ($30,000 for Mr. Rosica), with such outplacement assistance services to be provided by the end of the year following the year in which the termination date occurs.

 

Equity Vesting Acceleration. As described above, in connection with the executive officer’s termination of employment, the executive officer will receive full accelerated vesting of his or her unvested RSU awards as of the executive officer’s last day of employment, with any vesting requirements conditioned upon the achievement of performance goals to be deemed satisfied at the greater of (i) the target level or (ii) the level of performance actually achieved as of the executive officer’s last day of employment; provided that Ms. Victoria’s performance-based RSUs will vest at the target level in all circumstances.

 

Value of Payments Under Employment Agreements and Amended and Restated Offer Letters

 

For an estimate of the value of the payments and benefits described above that would become payable to named executive officers under their employment agreements and amended and restated offer letters, see the section of this proxy statement entitled “— Golden Parachute Compensation” below.

 

Retention RSU Award

 

In connection with the merger, Avid entered into a retention RSU award (the “retention award”) with Ms. Victoria, under which Avid granted her RSUs with respect to 4,892 shares of Avid common stock subject to the terms and conditions of the retention award. Under the terms of the retention award, 50% of the RSUs will vest as of the effective time, and the remaining 50% will vest on the earliest of (i) the date that is 45 days after the effective time, (ii) the first anniversary of the grant date of the retention award or (iii) a termination of Ms. Victoria’s employment by Avid or one of its subsidiaries without “cause” (as defined in the retention award), provided that she remains employed with Avid or its subsidiaries as of such dates. Based on the assumptions referenced above, it is expected that the retention award will have a value equal to $132,328.60.

 

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Golden Parachute Compensation

 

The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about certain compensation for each of Avid’s named executive officers that is based on, or otherwise relates to, the merger. See the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64 for additional details regarding the terms of the payments described below.

 

As discussed above, all of the named executive officers are eligible for certain severance payments and benefits if they are terminated by Avid without “cause” or resign for “good reason” within 12 months following a “change in control” of Avid under the terms of their employment agreements or amended and restated offer letters. The merger will constitute a change in control under the employment agreements and the amended and restated offer letters referenced above.

 

The following table sets forth the amount of payments and benefits that may be paid or become payable to each of the named executive officers in connection with the merger pursuant to all applicable compensation plans or agreements, assuming:

 

the effective time is [           ], 2023 (the assumed effective time);

 

each named executive officer incurs a qualifying termination immediately after the effective time;

 

all unvested RSU awards expected to be held by each named executive officer as of the effective time (and the converted cash awards relating thereto) have not already vested as of such date; and

 

expected compensation levels as of the assumed effective time.

 

Golden Parachute Compensation

 

Name 

Cash ($)1 

Equity ($)2 

Pension/ NQDC ($) 

Perquisites/ Benefits ($)3 

Tax Reimbursement ($) 

Other ($) 

Total ($) 

Jeff Rosica $2,915,000 $5,337,614   $76,668     $8,329,282
               
Kenneth L. Gayron $1,185,000 $2,089,017   $40,001     $3,314,018
               
Tom Cordiner $1,228,904 $1,531,084   $16,700     $2,776,688
               
Kevin W. Riley $1,114,350 $1,587,970   $32,608     $2,734,928
               
Timothy Claman $945,000 $1,164,962   $38,783     $2,148,745

 

 

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(1)Cash. The amounts reported in the “Cash” column are attributable to the double-trigger severance arrangements (i.e., the amounts are triggered by the change in control that will occur upon completion of the merger and payment is conditioned upon the named executive officer’s qualifying termination of employment within 12 months following the change in control) under the employment agreements or amended and restated offer letters that Avid entered into with the named executive officers. As discussed in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64, such amounts are comprised of a lump sum payment equal to: (i) 1.5 times the named executive officer’s base salary in effect as of the termination date (2.0 times for Mr. Rosica) (base salaries for the named executive officers as of the effective time are: $550,000 for Mr. Rosica, $400,000 for Mr. Gayron, $367,668 for Mr. Cordiner, $234,600 for Mr. Riley and $360,000 for Mr. Claman), (ii) 1.5 times the named executive officer’s target annual bonus in effect as of the termination date (2.0 times for Mr. Rosica) (target bonuses for the named executive officers as of the effective time are: $660,000 for Mr. Rosica, $260,000 for Mr. Gayron, $220,600 for Mr. Cordiner, $234,600 for Mr. Riley and $180,000 for Mr. Claman) and (iii) an amount equal to the named executive officer’s target annual bonus in effect as of the termination date, pro-rated for the number of months during which the named executive officers were employed during the year (with the assumption that such pro-ration will be based on nine months of the current year). Mr. Cordiner is a resident of the United Kingdom and his compensation is paid in British Pounds. The calculations of Mr. Cordiner’s cash payments are based on his salary of £289,051 and his target bonus equal to 60% thereof, which were converted from British Pounds into United States Dollars as of August 30, 2023. It is also assumed that Mr. Cordiner’s cash payments will include his sales commission payments, prorated for nine months of the year, which is equal to $181,052.

 

(2)Equity. The amounts reported in the “Equity” column are attributable to converted cash awards payable to the named executive officers with respect to their unvested RSU awards. As discussed in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64, named executive officers’ employment agreements or amended and restated offer letters provide for accelerated vesting of unvested RSU awards (including converted cash awards received in the merger with respect to unvested RSU awards) if they experience a qualifying termination within 12 months after a change of control of Avid. The merger will constitute a change in control of Avid under the terms of the employment agreements and amended and restated offer letters, and it is assumed that each of the named executive officers will experience a qualifying termination immediately after the effective time. Therefore, it is assumed that each of the named executive officers will become fully vested in his converted cash awards as of the effective time, and it is further assumed that any converted cash award relating to RSUs that contain performance-based vesting conditions will vest at the greater of (i) the target level or (ii) the level of actual performance as of the effective time.

 

(3)Perquisites/Benefits. The amounts reported in the “Perquisites/Benefits” column are attributable to payments for COBRA benefits that the named executive officers are eligible to receive under the terms of their employment agreements or offer letters following their qualifying termination within 12 months after a change in control of Avid. As discussed in the section of this proxy statement entitled “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 64, such amounts are comprised of a payment equal to the excess of the total monthly premiums for the coverage elected by the named executive officer, over the monthly amount that Avid requires similarly situated employees to pay for the same type of coverage, plus any administrative fees, for a period of 18 months (24 months for Mr. Rosica). It is assumed for purposes of the calculation of such amounts that the monthly premium amount plus administrative fees for the coverage elected by the named executive officers (including medical, dental, and vision insurance, as applicable) is $2,703 for Messrs. Rosica and Gayron, $3,166 for Mr. Cordiner, $1,928 for Mr. Riley, and $2,782 for Mr. Claman, and the amount of the monthly premiums that Avid generally requires similarly situated employees to pay for the same type of coverage is $758 for the coverage elected by Messrs. Rosica and Gayron, $2,516 for the coverage elected by Mr. Cordiner, $394 for the coverage elected by Mr. Riley, and $905 for the coverage elected by Mr. Claman. This amount also includes outplacement assistance benefits equal to $5,000 per named executive officer ($30,000 for Mr. Rosica) pursuant to the terms of their employment agreements or offer letters.

 

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Certain Effects of the Merger

 

If the Merger Agreement Proposal is approved by the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting, and the other conditions to the closing are either are satisfied (or, to the extent permitted, waived), Merger Sub will be merged with and into Avid, whereupon the separate corporate existence of Merger Sub will cease, and Avid will continue as the surviving corporation and a wholly-owned subsidiary of Parent.

 

Following the completion of the merger, all of Avid’s equity interests will be beneficially owned by Parent, and, by virtue of the merger, none of Avid’s current stockholders will have any ownership interest in, or be a stockholder of, Avid, the surviving corporation or Parent. As a result, Avid’s current stockholders will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Avid common stock. Following the merger, Parent will benefit from any increase in Avid’s value and also will bear the risk of any decrease in Avid’s value.

 

At the effective time, each share of Avid common stock issued and outstanding immediately prior to the effective time (other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of the DGCL concerning the right of stockholders to require appraisal of their shares of Avid common stock) will be cancelled and will be automatically converted into the right to receive $27.05 in cash per share, without interest thereon, subject to any required tax withholding in accordance with the terms of the merger agreement.

 

See the sections of this proxy statement entitled “The Merger — Interests of Directors and Executive Officers in the Merger” beginning on page 64 and “The Agreement and Plan of Merger — Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81 for information regarding the effects of the merger on Avid’s outstanding equity awards and Avid’s equity plans.

 

Avid common stock is currently registered under the Exchange Act and trades on Nasdaq under the symbol “AVID.” Following the completion of the merger, shares of Avid common stock will no longer be listed or traded on Nasdaq or any other public market. In addition, the registration of shares of Avid common stock under the Exchange Act will be terminated, and Avid will no longer be required to file periodic and other reports with the SEC with respect to Avid common stock. Termination of registration of Avid common stock under the Exchange Act will reduce the information required to be furnished by Avid to Avid stockholders and the SEC, and will make certain provisions of the Exchange Act, such as the requirement to file annual and quarterly reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement to furnish a proxy statement in connection with stockholders’ meetings pursuant to Section 14(a) of the Exchange Act, no longer applicable to Avid, to the extent that such provisions apply solely as a result of the registration of Avid common stock under the Exchange Act.

 

Consequences if the Merger is Not Completed

 

If the Merger Agreement Proposal is not approved by the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting or if the merger is not completed for any other reason, then holders of shares of Avid common stock will not receive any consideration from Parent or Merger Sub for their shares of Avid common stock. Instead, Avid will remain a publicly-traded company, and Avid common stock will continue to be listed and traded on Nasdaq. Avid expects that its management will operate its business in a manner similar to that in which it is being operated today and that the holders of shares of Avid common stock would continue to be subject to the same risks and opportunities to which they are currently subject with respect to their ownership of Avid common stock. If the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of Avid common stock, including the risk that the market price of Avid common stock may decline to the extent that the current market price of Avid common stock reflects a market assumption that the merger will be completed. If the Merger Agreement Proposal is not approved by the affirmative vote of stockholders holding a majority of the outstanding shares of Avid common stock entitled to vote thereon at the special meeting or if the merger is not completed for any other reason there can be no assurance that any other transaction acceptable to us will be offered or that Avid’s business, prospects or results of operations will not be adversely impacted.

 

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In addition, if the merger agreement is terminated under specified circumstances, Avid will be obligated to pay Parent the Avid termination fee of $39,800,000. Upon termination of the merger agreement under certain other specified circumstances, Parent will be obligated to pay Avid the Parent termination fee of $84,500,000. See the section of this proxy statement entitled “The Agreement and Plan of Merger — Expenses; Termination Fees” beginning on page 106 for more information.

 

Financing of the Merger

 

Avid anticipates that the total funds needed to complete the merger, including the funds needed to pay Avid stockholders and holders of RSU awards the amounts due to them under the merger agreement, the funds needed to pay all transaction costs and expenses and the funds needed to repay or refinance indebtedness required in connection with the transactions contemplated by the merger agreement, will be approximately $[       ] billion based upon the number of shares of Avid common stock and RSU awards outstanding as of [       ], 2023, and will be funded through a combination of up to $660,000,000 of debt financing and up to $960,990,025.55 of equity financing.

 

Equity Financing

 

In connection with the equity financing and as contemplated by the merger agreement, Parent has entered into an equity financing commitment letter, dated as of August 9, 2023 (the “equity financing commitment letter”), by and among STG VII, L.P., STG VII-A, L.P., STG VII Executive Fund, L.P. and STG AV, L.P. (together, the “sponsors”) and Parent.

 

The equity financing commitment letter obligates the sponsors to provide financing to Parent by purchasing, or causing the purchase of, certain equity securities of Parent with an aggregate purchase price up to $960,990,025.55, solely for the purpose of enabling Parent to fund a portion of the financing required to be paid by Parent or Merger Sub under the merger agreement at the closing, including the fees and expenses related to the transactions contemplated by the merger agreement.

 

Avid is an express third-party beneficiary of the equity financing commitment letter and for the purpose of causing Parent to enforce the obligations of the sponsors, and, upon the terms and subject to the conditions of the equity financing commitment letter and the merger agreement, has the ability to obtain a decree or order for injunctive relief or specific performance of Parent’s obligations to enforce the equity financing commitment letter if (i) all of the conditions to Parent’s obligations to consummate the merger (other than those conditions that by their terms are only capable of being satisfied on the date of the closing) have been satisfied (or waived) at the time when the closing would have been required to occur pursuant to the terms of the merger agreement, (ii) the debt financing has been funded or would be funded at or prior to the closing if the equity financing is funded at or prior to the closing, (iii) Avid has confirmed in writing that, if specific performance is granted and if the equity financing and debt financing are funded, then it would take all actions required to be taken by Avid to consummate the closing in accordance with the terms hereof and (iv) Parent has failed to consummate the closing within three business days following the later of (A) the date on which the notice described in clause (iii) of this sentence is delivered by Avid and (B) the time when the closing should have occurred pursuant to the terms of the merger agreement.

 

Debt Financing

 

Parent has entered into a debt commitment letter, dated as of August 9, 2023 (as may be amended from time to time, the “debt commitment letter”), with Sixth Street Partners, LLC and Silver Point Capital L.P. (each acting for and on behalf of its affiliated funds, related funds and investment vehicles, and together with any additional arrangers appointed pursuant to the terms thereof, collectively the “debt commitment parties”). Pursuant to and subject to the terms and conditions of the debt commitment letter, the debt commitment parties committed to provide a $660,000,000 senior secured credit facility consisting of a $600,000,000 term loan facility (the “Term Facility”) and a $60,000,000 revolving credit facility (the “Revolving Facility”, and together with the Term Facility, collectively the “debt financing”).

 

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The proceeds of the Term Facility will be used (i) to finance all or a portion of the transactions contemplated by the merger agreement (including the payment of fees, premiums, expenses and other transaction costs incurred in connection with the transactions contemplated by the merger agreement and debt financing and the refinancing of certain existing indebtedness of Avid) and (ii) to the extent any such proceeds remain after being applied in accordance with the foregoing clause (i), for working capital purposes.

 

The proceeds of the Revolving Facility will be used (a) on the closing date (i) to replace, backstop or cash collateralize existing or issue new letters of credit, guarantees or performance or similar bonds, (ii) to provide for ordinary course working capital needs, (iii) to fund the merger and pay transaction costs and expenses and (iv) to fund currency conversion and foreign exchange costs in connection with any borrowing in currency other than U.S. dollars, in an aggregate amount for purposes of clauses (a)(ii) through (iv) not to exceed $15,000,000 and (b) after the closing date for working capital, capital expenditures and other general corporate purposes (including permitted acquisitions and the payment of permitted dividends).

 

The debt commitment letter terminates automatically on the earliest to occur of (i) the closing date of the merger, (ii) the termination by Parent of the merger agreement prior to the closing of the merger, (iii) five days after the outside date (as defined in the merger agreement as in effect on the date of the commitment letter, including giving effect to extensions contemplated by such definition as in effect on the date of the commitment letter) and (iv) the consummation of the merger without the use of any of the debt financing. To the knowledge of Avid, as of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made as a result of the debt financing described in this proxy statement not being available.

 

The completion of the merger is not conditioned upon Parent’s or Merger Sub’s receipt of financing.

 

Limited Guarantee

 

To induce Avid to enter into the merger agreement, the guarantors executed the limited guarantee. Under the limited guarantee, subject to the limitations described therein, each guarantor has guaranteed its respective portion of the following based on its pro rata percentage of the guaranteed obligations, as set forth in the limited guarantee: the due, punctual and full performance and discharge of payment to Avid of the Parent termination fee, if, as and when it becomes payable under the merger agreement, certain reimbursement and indemnification obligations specified in the merger agreement that may be owed by Parent pursuant to the merger agreement, damages for a willful breach by Parent or Merger Sub and all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) paid or incurred by Avid in enforcing its rights against the guarantors under the limited guarantee provided, however, that the obligations of the guarantors are subject to an aggregate cap on all monetary damages to which Parent and its related parties are exposed (other than pursuant to the confidentiality agreement) equal to the Parent termination fee.

 

See the section of this proxy statement entitled “The Agreement and Plan of Merger — Limited Guarantee” beginning on page 100 for additional detail regarding the limited guarantee.

 

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Material U.S. Federal Income Tax Consequences of the Merger

 

The following is a summary of the U.S. federal income tax consequences of the merger to beneficial owners of Avid common stock who receive cash for their shares of Avid common stock in the merger. This summary is general in nature and does not discuss all aspects of U.S. federal income taxation that might be relevant to a beneficial owner of shares in light of such beneficial owner’s particular circumstances. In addition, this summary does not describe any tax consequences arising under the laws of any state, local or foreign jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation (e.g., estate or gift taxation). This summary only addresses shares of Avid common stock held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder (the “Code”) (generally, property held for investment). This summary does not address the U.S. federal income tax consequences to Avid stockholders who demand appraisal rights under Section 262 of the DGCL. This summary does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income. This summary also does not address tax considerations applicable to any stockholder that may be subject to special treatment under the U.S. federal income tax laws, including:

 

a bank, insurance company or other financial institution;

 

a tax-exempt organization or governmental organization;

 

a retirement plan or other tax-deferred account;

 

a partnership, an S corporation or other entity treated as a pass-through entity for U.S. federal income tax purposes (or an investor in such an entity);

 

a mutual fund;

 

a real estate investment trust or regulated investment company;

 

a personal holding company;

 

a dealer or broker in stocks and securities or currencies;

 

a trader in securities that elects mark-to-market treatment;

 

a holder of shares of Avid common stock subject to the alternative minimum tax provisions of the Code;

 

a holder of shares of Avid common stock that received the shares through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

a U.S. holder (as described below) that has a functional currency other than the U.S. dollar;

 

a “controlled foreign corporation,” “passive foreign investment company” or corporation that accumulates earnings to avoid U.S. federal income tax;

 

a holder of Avid common stock that holds shares as part of a hedge, straddle, constructive sale, conversion or other risk reduction strategy or integrated transaction; or

 

a U.S. expatriate or a former citizen or long-time resident of the United States.

 

This summary is based on the Code, the Treasury regulations promulgated under the Code and rulings and judicial decisions, all as in effect as of the date of this proxy statement, and all of which are subject to change or differing interpretations at any time, with possible retroactive effect. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect an Avid stockholder. We have not sought, and do not intend to seek, any ruling from the U.S. Internal Revenue Service (the “IRS”) with respect to the statements made and the conclusions reached in the following summary. No assurance can be given that the IRS will agree with the views expressed in this summary or that a court will not sustain any challenge by the IRS in the event of litigation.

 

THIS DISCUSSION IS INTENDED ONLY AS A GENERAL SUMMARY OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO AN AVID STOCKHOLDER. WE URGE BENEFICIAL OWNERS OF SHARES OF AVID COMMON STOCK TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING FEDERAL ESTATE, GIFT AND OTHER NON-INCOME TAX CONSEQUENCES, AND TAX CONSEQUENCES UNDER STATE, LOCAL OR FOREIGN TAX LAWS, OR UNDER ANY APPLICABLE INCOME TAX TREATY, INCLUDING POSSIBLE CHANGES IN SUCH LAWS OR TREATIES.

 

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The term “U.S. holder” means a beneficial owner of shares of Avid common stock that is, for U.S. federal income tax purposes:

 

an individual citizen or resident of the United States;

 

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

 

a trust that (A) is subject to the supervision of a court within the United States and the control of one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) or (B) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

 

an estate that is subject to U.S. federal income tax on its income regardless of its source.

 

The term “non-U.S. holder” means a beneficial owner of Avid common stock (other than a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. holder.

 

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) beneficially owns shares of Avid common stock and receives cash for its shares of Avid common stock in the merger, the tax treatment of the partnership and its partners generally will depend on the status of the partners and the activities of the partnership. The terms “U.S. holder” and “non-U.S. holder” as defined above do not include entities treated as partnerships for U.S. federal income tax purposes. A partner in a partnership holding shares of Avid common stock should consult such partner’s tax advisor regarding the tax consequences to it of receiving cash for its shares of Avid common stock in the merger.

 

U.S. Holders

 

General. A U.S. holder’s receipt of cash in exchange for shares of Avid common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, and a U.S. holder who receives cash in exchange for shares of Avid common stock in the merger will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. holder’s adjusted tax basis in the shares exchanged. If a U.S. holder acquired a share by purchase, the U.S. holder’s adjusted tax basis in the share generally will be equal to the amount the U.S. holder paid for the share, less any returns of capital that the U.S. holder might have received with regard to the share. Gain or loss will be determined separately for each block of shares of Avid common stock (that is, shares acquired at the same cost in a single transaction). Such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. holder’s holding period for the shares is more than one year at the effective time. Long-term capital gain recognized by individuals and other non-corporate persons that are U.S. holders generally is subject to tax at a reduced rate of U.S. federal income tax. There are limitations on the deductibility of capital losses.

 

Information Reporting and Backup Withholding. A U.S. holder may be subject to information reporting with respect to the U.S. holder’s receipt of cash in exchange for shares of Avid common stock pursuant to the merger. In addition, all payments to which a U.S. holder would be entitled pursuant to the merger will be subject to backup withholding at the statutory rate unless such holder (i) is a corporation or other exempt recipient (and, when required, properly demonstrates this fact) or (ii) provides a taxpayer identification number (“TIN”) and certifies, under penalty of perjury, that the U.S. holder is not subject to backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. A U.S. holder that does not otherwise establish exemption should complete and sign the IRS Form W-9 in order to provide the information and certification necessary to avoid backup withholding and possible penalties. If a U.S. holder does not provide a correct TIN, such U.S. holder may be subject to backup withholding and penalties imposed by the IRS.

 

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Any amount paid as backup withholding does not constitute an additional tax and will be creditable against a U.S. holder’s U.S. federal income tax liability, provided the required information is given to the IRS in a timely and appropriate manner. If backup withholding results in an overpayment of tax, a U.S. holder may obtain a refund by filing a U.S. federal income tax return in a timely manner. U.S. holders are urged to consult their tax advisors as to qualifications for exemption from backup withholding and the procedure for obtaining the exemption.

 

Non-U.S. Holders

 

General. A non-U.S. holder’s receipt of cash for shares of Avid common stock pursuant to the merger generally will not be subject to U.S. federal income tax unless:

 

the non-U.S. holder is an individual who was present in the United States for 183 days or more during the taxable year of the merger and certain other conditions are met;

 

the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States and, if required by an applicable tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the United States; or

 

Avid is or has been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the merger or the period that the non-U.S. holder held shares of Avid common stock, and, in the case where shares of Avid common stock are regularly traded on an established securities market, the non-U.S. holder has owned, directly or constructively, more than 5% of the total shares of Avid common stock at any time within the shorter of the five-year period preceding the merger or such non-U.S. holder’s holding period for the shares of Avid common stock.

 

Gain described in the first bullet point above generally will be subject to tax at a flat rate of 30% (or such lower rate as may be specified under an applicable income tax treaty), net of applicable U.S.-source losses from sales or exchanges of other capital assets recognized by such non-U.S. holder during the taxable year even though the individual is not considered a resident of the United States, provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. Unless a tax treaty provides otherwise, gain described in the second bullet point above will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. holder. A non-U.S. holder that is a foreign corporation also may be subject to a 30% branch profits tax (or applicable lower treaty rate). Non-U.S. holders are urged to consult their tax advisors as to any applicable tax treaties that might provide for different rules.

 

Information Reporting and Backup Withholding. Information reporting and backup withholding will generally apply to payments made pursuant to the merger to a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise properly establishes an exemption. Information reporting and backup withholding generally will not apply to any payment of cash to a non-U.S. holder pursuant to the merger that is effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the non-U.S. holder is not a U.S. person and certain other conditions are met, or the non-U.S. holder otherwise establishes an exemption, information reporting will apply to a payment effected outside the United States by such a broker if it has certain relationships within the United States. A non-U.S. holder must generally submit an IRS Form W-8BEN or W-8BEN-E (or other applicable IRS Form W-8) attesting to its exempt foreign status in order to qualify as an exempt recipient. Any amount paid as backup withholding does not constitute an additional tax and will be creditable against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is given to the IRS in a timely and appropriate manner. If backup withholding results in an overpayment of tax, a non-U.S. holder may obtain a refund by filing a U.S. federal income tax return in a timely manner. Non-U.S. holders are urged to consult their tax advisors as to qualifications for exemption from backup withholding and the procedure for obtaining the exemption. Copies of information returns that are filed with the IRS may also be made available under an applicable tax treaty or information exchange agreement to the tax authorities of the country in which the non-U.S. holder resides or is established.

 

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THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR AVID STOCKHOLDERS. AVID STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT OF CASH FOR THEIR SHARES OF AVID COMMON STOCK PURSUANT TO THE MERGER UNDER ANY U.S. FEDERAL, STATE, FOREIGN, LOCAL OR OTHER TAX LAWS, OR UNDER ANY APPLICABLE INCOME TAX TREATY.

 

Regulatory Approvals Required for the Merger

 

At any time before or after the effective time, the U.S. Department of Justice (the “DOJ”), the U.S. Federal Trade Commission (the “FTC”), antitrust or investment screening authorities outside of the United States or U.S. state attorneys general could take action under applicable antitrust laws or investment screening laws, including seeking to enjoin the completion of the merger, conditionally approving the merger upon the divestiture of Avid’s or Parent’s (or its affiliates’) assets or the termination of existing relationships and contractual rights, subjecting the completion of the merger to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws or investment screening laws under certain circumstances. There can be no assurance that a challenge to the merger on antitrust or investment screening grounds will not be made or, if such a challenge is made, that it would not be successful.

 

Completion of the merger is conditioned on the expiration or termination of any applicable waiting period (and any extension thereof) under the HSR Act and approval by the German Federal Cartel Office, the receipt of certain consents or approvals under applicable investment screening laws (or the expiration or termination of any applicable waiting period thereunder) and the absence of any order or law (other than any antitrust law or investment screening law) prohibiting, making illegal, voiding, enjoining or otherwise preventing the consummation of the merger.

 

Avid currently expects to obtain during the third and fourth calendar quarter of 2023 all regulatory approvals that are required for the completion of the merger. However, Avid cannot guarantee when any such approvals will be obtained or that they will be obtained at all.

 

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THE AGREEMENT AND PLAN OF MERGER

 

Explanatory Note Regarding the Merger Agreement

 

The material provisions of the merger agreement summarized below and elsewhere in this proxy statement are qualified in their entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A, and which is incorporated by reference in this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement, which is the legal document that governs the merger, carefully in its entirety, as well as this proxy statement in its entirety, including the annexes attached to this proxy statement and the documents and information incorporated by reference in this proxy statement, before making any decisions regarding the merger.

 

The rights and obligations of the parties to the merger agreement and governed by the express terms of the merger agreement, and not by this summary or any other information contained in this proxy statement.

 

The merger agreement is described in this proxy statement and included as Annex A only to provide you with information regarding its terms and conditions and not to provide any other factual information regarding Avid, Parent or Merger Sub or their respective businesses. Such information can be found elsewhere in this proxy statement or, in the case of Avid, in the public filings that Avid makes with the SEC, which are available without charge through the SEC’s website at www.sec.gov. See the section of this proxy statement entitled “Where You Can Find More Information” beginning on page 121.

 

The representations, warranties, covenants and agreements made in the merger agreement by Avid, Parent and Merger Sub are qualified and subject to important limitations agreed to by Avid, Parent and Merger Sub in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the primary purposes of (i) establishing the circumstances in which a party to the merger agreement may have the right not to close the merger if the representations and warranties of the other party prove to be untrue to a specified degree, due to a change in circumstance or otherwise, and (ii) allocating risk between the parties to the merger agreement. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the SEC, and in some cases are qualified by the disclosure letter delivered by Avid in connection with the merger agreement (the “Company disclosure letter”), which such disclosures are not reflected in the text of the merger agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the merger agreement, and subsequent developments or new information qualifying a representation or warranty may or may not have been included in this proxy statement. Avid stockholders are not generally third-party beneficiaries under the merger agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of Avid, Parent or Merger Sub or any of their respective affiliates or businesses. None of the representations and warranties will survive the effective time, and, therefore, they will have no legal effect under the merger agreement after the effective time. In addition, you should not rely on the covenants in the merger agreement as actual limitations on the respective businesses of Avid, Parent and Merger Sub because the parties to the merger agreement may take certain actions that are either expressly permitted in the Avid disclosure letter or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public.

 

Date of the Merger Agreement

 

The merger agreement was executed by Avid, Parent and Merger Sub on August 9, 2023 (the “date of the merger agreement”).

 

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The Merger

 

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the DGCL, at the effective time, Merger Sub will be merged with and into Avid, whereupon the separate corporate existence of Merger Sub will cease, and Avid will continue as the surviving corporation (the “surviving corporation”), and all the property, rights, immunities, powers and franchises of Merger Sub and Avid will vest in the surviving corporation, and all of the debts, liabilities, duties and obligations of Avid and Merger Sub will become the debts, liabilities, duties and obligations of the surviving corporation, in each case, in accordance with Section 259 of the DGCL.

 

Closing; Effective Time of the Merger

 

The closing of the merger will take place on the third business day after the date on which each of the conditions set forth in the merger agreement are satisfied, or to the extent permitted by law, waived by the party entitled to waive such condition (other than those conditions that by their terms are only capable of being satisfied on the closing date, but subject to the satisfaction or, if permissible, waiver of such conditions by the party entitled to waive such conditions), by the exchange of electronic signatures and documents, at the officers of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois 60603 (or remotely via the electronic exchange of documents), or at such other date, place or time agreed to in writing by the parties to the merger agreement.

 

Concurrently with the closing, Avid will file a certificate of merger with respect to the merger with the Secretary of State of the State of Delaware in such form as required by, and executed in accordance with, the DGCL. The merger will become effective on the date and time at which the certificate of merger has been duly filed with the Secretary of State of the State of Delaware or at such other date and time as is agreed between the parties to the merger agreement and specified in the certificate of merger.

 

Organizational Documents; Directors and Officers

 

The merger agreement provides that, at the effective time, (i) subject to the terms of the merger agreement with respect to directors and officers indemnification and insurance, Avid’s certificate of incorporation, as in effect immediately prior to the effective time, shall, by virtue of the merger, be amended and restated so as to read in its entirety in the form attached to the merger agreement, and as so amended and restated, will be the certificate of incorporation of the surviving corporation until thereafter amended in accordance with applicable law and the applicable provisions of the certificate of incorporation of the surviving corporation, and (ii) the amended and restated by-laws of Avid will be amended and restated in their entirety to read as the by-laws of Merger Sub, as in effect immediately prior to the effective time, and as so amended and restated, will thereafter be the by-laws of surviving corporation (except that references to the name of Merger Sub will be replaced by references to the name of the surviving corporation) until thereafter amended in accordance with applicable law and the applicable provisions of the certificate of incorporation and the by-laws of the surviving corporation.

 

Additionally, the merger agreement provides that the board of directors of the surviving corporation effective as of, and immediately following, the effective time will consist of the members of the board of directors of Merger Sub as of immediately prior to the effective time, each to hold office in accordance with the applicable provisions of the certificate of incorporation and the by-laws of the surviving corporation until their respective successors are duly appointed, or until their earlier death, resignation or removal. Furthermore, from and after the effective time, the officers of Avid as of immediately prior to the effective time will be the officers of the surviving corporation, each to hold office in accordance with the applicable provisions of the certificate of incorporation and the by-laws of the surviving corporation until their respective successors are duly appointed, or until their earlier death, resignation or removal.

 

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Merger Consideration

 

Outstanding Avid Common Stock

 

At the effective time, by virtue of the merger and without any action on the part of Parent, Merger Sub, Avid, the holders of any capital stock of Avid or Merger Sub or any other person, except as described below, each share of Avid common stock issued and outstanding immediately prior to the effective time, other than shares of Avid common stock that are (i) held in treasury by Avid, (ii) owned of record by Avid or any Avid subsidiary, (iii) owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case of clauses (i)-(iii), shares held on behalf of a third party) and (iv) held by stockholders who are entitled to appraisal rights under Section 262 of the DGCL concerning the right of stockholders to require appraisal of their shares of Avid common stock, will be automatically cancelled and converted into the right to receive $27.05 in cash, without any interest thereon and less any required tax withholdings in accordance with the terms of the merger agreement.

 

Avid-Owned and Parent-Owned Avid Common Stock

 

At the effective time, by virtue of the merger and without any action on the part of Parent, Merger Sub, Avid, the holders of any capital stock of Avid or Merger Sub or any other person, all shares of Avid common stock that are held in the treasury of Avid or owned of record by Avid or any subsidiary of Avid and all shares of Avid common stock owned of record by Parent, Merger Sub or any of their respective subsidiaries (other than, in each case, such shares held on behalf of a third party) will be cancelled and will cease to exist, with no payment being made with respect thereto.

 

Merger Sub Capital Stock

 

At the effective time, by virtue of the merger and without any action on the part of Parent, Merger Sub, Avid, the holders of any capital stock of Avid or Merger Sub or any other person, each issued and outstanding share of capital stock of Merger Sub will be automatically converted into and become one validly issued, fully paid and nonassessable share of common stock of the surviving corporation.

 

Merger Consideration Adjustment

 

Notwithstanding anything in the merger agreement to the contrary, if, prior to the effective time, the number of outstanding shares of Avid common stock has been changed into a different number of shares or a different class by reason of any reclassification, stock split (including a reverse stock split), recapitalization, split-up, combination, exchange of shares, readjustment or other similar transaction, or a stock dividend or stock distribution thereon has been declared with a record date and payment date within said period, the merger consideration will be appropriately adjusted to provide the holders of shares of Avid common stock the same economic effect as contemplated by the merger agreement prior to such event.

 

Exchange Procedures

 

The merger agreement provides that prior to the effective time, Parent will deposit with Computershare Trust Company N.A. or another nationally recognized financial institution reasonably acceptable to Avid to act as agent (the “paying agent”), by wire transfer of immediately available funds, an amount in cash equal to the aggregate merger consideration to which Avid stockholders will become entitled in connection with the merger (the “exchange fund”). The exchange fund will be for the benefit of the holders of shares of Avid common stock that are entitled to receive the merger consideration. For purposes of determining the aggregate amount to be so deposited, Parent will assume that no stockholder of Avid will perfect any right to appraisal of such stockholder’s shares of Avid common stock. In the event the exchange fund is insufficient to make the payments contemplated by the merger agreement, Parent will promptly deposit, or cause to be deposited, with the paying agent, by wire transfer of immediately available funds, an amount in cash such that the exchange fund becomes sufficient to make such payments. Funds made available to the paying agent shall be invested by the paying agent, as directed by Parent, in short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the United States of America with maturities of no more than 30 days, pending payment thereof by the paying agent to the holders of shares of Avid common stock pursuant to the merger agreement; provided that no investment of such deposited funds will relieve Parent, the surviving corporation or the paying agent from promptly making the payments required by the merger agreement, and following any losses from any such investment, Parent shall promptly deposit with the paying agent by wire transfer of immediately available funds, for the benefit of the holders of shares of Avid common stock, an amount in cash equal to the amount of such losses, which additional funds will be held and disbursed in the same manner as funds initially deposited with the paying agent to make the payments contemplated by the merger agreement. Any interest or income produced by such investments will be payable to Merger Sub or Parent, as Parent directs. Parent shall direct the paying agent to hold the exchange fund for the benefit of the persons entitled to the merger consideration and to make payments from the exchange fund in accordance with the merger agreement. The exchange fund shall not be used for any purpose other than to fund payments pursuant to the merger agreement.

 

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As promptly as practicable after the effective time (but in no event later than the second business day following the effective time), Parent will cause the paying agent to mail to each holder of record of a stock certificate whose shares of Avid common stock were converted into the right to receive the merger consideration pursuant to the merger agreement: (i) a letter of transmittal in customary form (agreed to by Parent and Avid prior to the effective time), which will specify that delivery will be effected, and risk of loss and title to the stock certificates will pass, only upon delivery of the stock certificates (or affidavits of loss in lieu thereof) to the paying agent and (ii) instructions for effecting the surrender of the stock certificates in exchange for the merger consideration. Upon surrender of any stock certificates (or affidavits of loss in lieu thereof) for cancellation to the paying agent, if applicable, and upon delivery of a letter of transmittal, duly executed and in proper form, with respect to such stock certificates, the holder of such stock certificates will be entitled to receive in exchange therefor the merger consideration into which the shares of Avid common stock formerly represented by such stock certificates were converted pursuant to the merger agreement, and the stock certificates so surrendered will forthwith be canceled. In the event of a transfer of ownership of shares of Avid common stock that is not registered in the transfer records of Avid, payment may be made and merger consideration may be issued to a person other than the person in whose name the stock certificates so surrendered is registered, if such stock certificate is properly endorsed or is otherwise in proper form for transfer and the person requesting such payment either pays to the paying agent any transfer and other similar taxes required by reason of the payment of the merger consideration or any other merger consideration to a person other than the registered holder of the stock certificate so surrendered or establishes to the reasonable satisfaction of the paying agent that such taxes either have been paid or are not required to be paid.

 

Any holder of non-certificated shares of Avid common stock represented by book-entry whose shares were converted into the right to receive the merger consideration at the effective time pursuant to the merger agreement will not be required to deliver a stock certificate or an executed letter of transmittal to the paying agent to receive the merger consideration that such holder is entitled to receive pursuant to the merger agreement. In lieu thereof, each such registered holder of non-certificated shares of Avid common stock represented by book-entry will automatically upon the effective time be entitled to receive the merger consideration, and the surviving corporation will cause the paying agent to pay and deliver as promptly as reasonably practicable after the effective time (but in no event more than two business days thereafter), the merger consideration for each non-certificated shares of Avid common stock represented by book-entry. Payment of the merger consideration with respect to non-certificated shares of Avid common stock represented by book-entry will only be made to the person in whose name such shares are registered.

 

No interest will be paid or accrue on any portion of the merger consideration payable upon surrender of any stock certificate (or affidavit of loss in lieu thereof) or in respect of any non-certificated shares of Avid common stock represented by book-entry.

 

You should not send in your stock certificate(s) with your proxy card. A letter of transmittal with instructions for the surrender of stock certificates will be mailed to stockholders holding certificated shares of Avid common stock if the merger is completed.

 

Transfer Books; No Further Ownership Rights in Shares.

 

As of the effective time, the stock transfer books of Avid will be closed, and thereafter there will be no further registration of transfers of shares of Avid common stock on the records of Avid. The merger consideration received will be deemed to have been received in full satisfaction of all rights pertaining to such shares of Avid common stock. After the effective time, the holders of shares of Avid common stock outstanding immediately prior to the effective time will cease to have any rights with respect to such shares of Avid common stock except as otherwise provided for in the merger agreement or by applicable law. If, after the effective time, any stock certificates formerly representing shares of Avid common stock or any shares of Avid common stock represented by book-entry are presented to the surviving corporation or the paying agent for any reason, they shall be cancelled and exchanged as provided in the merger agreement.

 

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Termination of Exchange Fund; Abandoned Property; No Liability.

 

At any time following the first anniversary of the effective time, the surviving corporation shall be entitled to require the paying agent to deliver to it any portion of the exchange fund (including any interest received with respect thereto) not disbursed to or claimed by holders of shares of Avid common stock, and thereafter such holders shall be entitled to look only to the surviving corporation (subject to abandoned property, escheat or other similar laws) as general creditors thereof with respect to the merger consideration payable in respect of their shares of Avid common stock in accordance with the procedures set forth in the merger agreement, without interest. None of Parent, the surviving corporation or the paying agent will be liable to any holder of a share of Avid common stock for merger consideration properly delivered to a public official in accordance with any applicable abandoned property, escheat or similar law.

 

Lost, Stolen or Destroyed Certificates.

 

If any stock certificate has been lost, stolen or destroyed, upon the making of an affidavit (in form and substance reasonably acceptable to the paying agent) of that fact by the person claiming such stock certificate to be lost, stolen or destroyed, the paying agent or the surviving corporation, as applicable, will issue in exchange for such lost, stolen or destroyed stock certificate the merger consideration into which the shares of Avid common stock formerly represented by such certificate were converted pursuant to the terms of the merger agreement. However, the paying agent may, in its reasonable discretion and as a condition precedent to the payment of any merger consideration, require the owner of such lost, stolen or destroyed certificate to provide a bond in a customary amount.

 

Treatment of Outstanding Equity Awards and Equity Plans

 

Vested RSU Awards

 

The merger agreement provides that at the effective time, and without any action on the part of Parent, Merger Sub, Avid, the holders of any capital stock of Avid or Merger Sub or any other person, each vested RSU award will be cancelled and, in exchange therefor, each holder of any such cancelled vested RSU award will be solely entitled to receive, in consideration of the cancellation of such vested RSU award and in settlement therefor, a payment in cash of an amount equal to the product of (i) the number of RSUs subject to such vested RSU award immediately prior to the effective time multiplied by (ii) the merger consideration (less any required tax withholdings in accordance with the terms of the merger agreement).

 

Unvested RSU Awards

 

The merger agreement provides that at the effective time, and without any action on the part of Parent, Merger Sub, Avid, the holders of any capital stock of Avid or Merger Sub or any other person, each unvested RSU award will automatically be cancelled and converted solely into the contingent right to receive from Parent or the surviving corporation a converted cash award (less any required tax withholdings in accordance with the terms of the merger agreement). Each such converted cash award assumed and converted pursuant to the terms of the merger agreement will continue to have, and will be subject to, the same vesting terms and conditions (including acceleration provisions upon a qualifying termination of employment (if any)) as applied to the corresponding RSU immediately prior to the effective time, with payment forfeited to the extent vesting is not satisfied. However, (x) in the event that Parent or any of its affiliates (including the surviving corporation) terminates the employment or service of the holder of the converted cash award without “cause”, the unvested portion of the holder’s converted cash award will become vested upon such termination; and (y) with respect to unvested RSU awards with a performance-based vesting schedule, the vesting of such awards will be determined based on the current vesting schedules and performance conditions, except that the “ending Company stock price” (for purposes of determined Avid’s total shareholder return) will be equal to the value of the merger consideration.

 

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For purposes of the merger agreement, “cause” has the same meaning as set forth in any unexpired employment, service or offer letter agreement between Parent or one of its affiliates (including the surviving corporation) and the holder of a converted cash award for purposes of providing severance upon a termination without “cause” or, if no such definition for “cause” exists, misconduct including, but not limited to: (a) indictment for, conviction of, or entry of a plea of guilty or nolo contendere to, any felony or any crime involving moral turpitude or dishonesty; (b) participation in a fraud, embezzlement or act of dishonesty to the detriment of Parent or one of its affiliates (including the surviving corporation); (c) material breach of any policy of Parent or one of its affiliates (including the surviving corporation); (d) gross negligence or willful misconduct; (e) material breach of any agreement between the holder and Parent or one of its affiliates (including the surviving corporation), including the holder’s non-disclosure and invention assignment agreement and the surviving corporation’s code of business conduct and ethics; (f) failure by the holder to substantially perform the holder’s duties with Parent or one of its affiliates (including the surviving corporation) (other than any such failure resulting from the holder’s incapacity due to physical or mental illness); or (g) failing or refusing to cooperate, as reasonably requested in writing by Parent or one of its affiliates (including the surviving corporation), in any internal or external investigation of any matter in which Parent or one of its affiliates (including the surviving corporation) has a material interest (financial or otherwise) in the outcome of the investigation.

 

Stock Plan and Employee Stock Purchase Plan

 

The merger agreement provides that as of the effective time, the Avid stock plan will terminate, and no further rights with respect to shares of Avid common stock or any other awards will be granted thereunder.

 

With respect to the Avid stock purchase plan, as promptly as reasonably practicable after the date of the merger agreement and prior to the effective time, the Board (or the compensation committee of the Board) will adopt resolutions or take other actions as may be required to provide that (i) “offerings” (as defined in the Avid stock purchase plan) will be suspended as of the first “offering commencement date” (as defined in the Avid stock purchase plan scheduled to occur after the date of the merger agreement, (ii) no new participants will be permitted to participate in the Avid stock purchase plan from and after the date of the merger agreement and (iii) participants will not be permitted to increase their rate or amount of payroll deductions under the Avid stock purchase plan. Further, prior to the effective time, Avid will take all actions to the extent reasonably necessary to, effective as of the effective time: (x) cause the “exercise date” (as defined in the Avid stock purchase plan) with respect to any “plan period” (as defined in the Avid stock purchase plan) that would otherwise occur on or after the effective time, if any, to occur no later than the earlier of (A) five business days prior to the date on which the effective time occurs or (B) the date on which such plan period otherwise would end (such earlier date, the “final exercise date”), (y) make any pro rata adjustments to the extent reasonably necessary to reflect the shortened plan period, but otherwise treat such shortened plan period as a fully effective and completed plan period for all purposes pursuant to the Avid stock purchase plan and (z) cause the exercise, as of the final exercise date, of each outstanding purchase right pursuant to the Avid stock purchase plan. On the final exercise date, Avid will apply the funds credited as of such date pursuant to the Avid stock purchase plan within each participant’s payroll withholding account to the purchase of whole shares of Avid common stock in accordance with the terms of the Avid stock purchase plan and will cause the remaining accumulated but unused payroll deductions to be distributed to the relevant participants, without interest, as promptly as reasonably practicable following the final exercise date. Immediately prior to and effective as of the effective time, Avid will terminate the Avid stock purchase plan.

 

Dissenting Shares

 

Any issued and outstanding shares of Avid common stock held by a person who is entitled to appraisal rights under Section 262 of the DGCL and has complied with all the provisions of the DGCL concerning the right of holders of shares of Avid common stock to require appraisal of such shares (the “dissenting shares”) will not be converted into the right to receive the merger consideration, but will instead become the right to receive such consideration as may be determined to be due to such dissenting stockholder pursuant to the procedures set forth in Section 262 of the DGCL. If such dissenting stockholder withdraws such dissenting stockholder’s demand for appraisal or fails to perfect or otherwise loses its right of appraisal with respect to such shares of Avid common stock, in any case pursuant to the DGCL, such shares of Avid common stock will be deemed not to be dissenting shares and will be deemed to be converted as of the effective time into the right to receive the merger consideration for each such share of Avid common stock, without interest and less any required tax withholdings in accordance with the terms of the merger agreement, and the surviving corporation will remain liable for delivery of the merger consideration for such shares of Avid common stock.

 

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The merger agreement provides that Avid will give Parent (i) prompt notice of any written demands for appraisal of shares of Avid common stock received by Avid, withdrawals of such demands and any other instruments served on Avid pursuant to Section 262 of the DGCL and (ii) the opportunity to participate, at Parent’s sole cost and expense, in all negotiations and proceedings with respect to demands for appraisal pursuant to the DGCL. Avid will not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. “Participate” means that Parent will be kept apprised of the proposed strategy and other significant decisions with respect to demands for appraisal pursuant to the DGCL in respect of any dissenting shares (to the extent that the attorney-client privilege between Avid and its counsel is not undermined or otherwise affected) and may offer comments or suggestions with respect to such demands, but Parent will not be afforded any decision-making power or other authority over such demands except for the payment, settlement or compromise consent set forth above.

 

Representations and Warranties

 

Avid, on the one hand, and Parent and Merger Sub, on the other hand, have each made representations and warranties to each other in the merger agreement. The representations and warranties referenced below and included in the merger agreement were made only for purposes of the merger agreement and as of specific dates, were solely for the benefit of the parties to the merger agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to Avid stockholders and may be subject to limitations agreed upon by the parties to the merger agreement, including being qualified by Avid’s disclosures filed with or furnished to the SEC and confidential disclosures made by Avid to Parent and Merger Sub in the Company disclosure letter. The representations and warranties contained in the merger agreement should not be relied upon as characterizations of the actual state of facts or conditions of Avid, Parent, Merger Sub or any of their respective subsidiaries, affiliates or businesses. The representations and warranties of each of the parties to the merger agreement will expire at the effective time.

 

Representations and Warranties of Avid

 

Avid has made customary representations and warranties to Parent and Merger Sub in the merger agreement regarding aspects of Avid’s business and operations and various other matters pertinent to the merger. The topics covered by Avid’s representations and warranties include, among others, the following:

 

the organization, qualification to do business and good standing of Avid;

 

the Avid subsidiaries, including, among other things, the organization, qualification to do business, good standing, capital structure and absence of restrictions with respect to the capital stock of such subsidiaries;

 

the capital structure, and the absence of restrictions or obligations with respect to the capital stock and other securities, of Avid;

 

Avid’s authority to enter into, and, subject to receipt of the Avid stockholder approval, consummate the transactions contemplated by the merger agreement, including the merger;

 

the absence of conflicts with, or violations of, or consents required under, organizational documents, laws or material contracts, in each case as a result of Avid’s execution or delivery of the merger agreement or the performance by Avid of its covenants and obligations under, or the consummation by Avid of the transactions contemplated by, the merger agreement;

 

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the governmental and regulatory approvals required to complete the merger;

 

Avid’s and the Avid subsidiaries’ governmental permits and compliance with law;

 

Avid’s SEC filings since January 1, 2021 and Avid’s financial statements contained in such filings;

 

The information contained in this proxy statement;

 

Avid’s and the Avid subsidiaries’ systems of internal control over financial reporting and disclosure controls and procedures;

 

the absence of any Company material adverse effect (as defined below) since December 31, 2022 and the absence of certain other changes or events since December 31, 2022;

 

the absence of liabilities not disclosed in Avid’s financial statements or otherwise disclosed in the Company disclosure letter;

 

the absence of pending or threatened suits, claims, actions, proceedings or arbitrations or governmental orders;

 

employee benefits matters related to Avid and the Avid subsidiaries;

 

employee and labor matters related to Avid and the Avid subsidiaries;

 

tax matters related to Avid and the Avid subsidiaries;

 

Avid’s and the Avid subsidiaries’ owned and leased real property;

 

matters related to Avid’s and the Avid subsidiaries’ tangible assets;

 

environmental matters related to Avid and the Avid subsidiaries;

 

Avid’s and the Avid subsidiaries’ intellectual property;

 

contracts that would be required to be filed by Avid pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act of 1933, as amended, and other contracts related to Avid and the Avid subsidiaries that are described in the material contracts representations and warranties in the merger agreement (the “material contracts”);

 

matters related to Avid’s and the Avid subsidiaries’ material contracts with material customers, material channel partners and material suppliers;

 

matters related to Avid’s and the Avid subsidiaries’ products;

 

privacy and data security matters related to Avid and the Avid subsidiaries;

 

anti-bribery, anti-corruption and export compliance matters related to Avid and the Avid subsidiaries;

 

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insurance coverage related to Avid and the Avid subsidiaries;

 

the opinion of Avid’s financial advisor;

 

the inapplicability of takeover statutes to the merger;

 

the vote of holders of Avid common stock required to approve the merger;

 

the absence of fees or commissions related to brokers, finders or investment bankers, other than those payable to Avid’s financial advisors in connection with the transactions contemplated by the merger agreement;

 

the absence of transactions between Avid or any of the Avid subsidiaries and any affiliate of Avid (but not include any subsidiary of Avid) that would be required to be reported by Avid pursuant to Item 404 of Regulation S-K promulgated under the Securities Act; and

 

matters related to Avid’s and the Avid subsidiaries’ contracts with governmental entities.

 

Some of Avid’s representations and warranties are qualified by the concept of a “Company material adverse effect.” Under the terms of the merger agreement, a Company material adverse effect means any change, circumstance, event or effect (each, an “effect”) that has had, or would reasonably be expected to have, individually or in the aggregate together with all other effects, a material adverse effect on the business, financial condition or results of operations of Avid and the Avid subsidiaries, taken as a whole. However, none of the following, and no effect arising out of or resulting from the following will constitute or be taken into account in determining whether there has been, a “Company material adverse effect”

 

the entry into or the announcement or pendency of the merger agreement or the transactions contemplated by the merger agreement, the performance by Avid or any of its subsidiaries of the merger agreement or the consummation of the transactions contemplated by the merger agreement, in each case, including (i) by reason of the identity of, or any facts or circumstances relating to, Parent, Merger Sub, the guarantors, the sponsors or any of their respective affiliates or any source of debt or equity financing, (ii) by reason of any communication by Parent or any of its affiliates regarding the plans or intentions of Parent with respect to the conduct of the business of Avid or any of the Avid subsidiaries following the effective time and (iii) the impact of any of the foregoing on any of Avid’s or any of the Avid subsidiaries relationships (contractual or otherwise) with its respective customers, suppliers, vendors, partners (including channel partners), employees or regulators

 

any change in or effect affecting the economy or the financial, credit or securities markets in the United States or elsewhere in the world (including interest rates and exchange rates or any changes therein), or any change in or effect generally affecting any business or industries in which Avid or any of the Avid subsidiaries operates;

 

the suspension of trading in securities generally on the Nasdaq;

 

any development or change in applicable law or GAAP or the interpretation of any of the foregoing;

 

any action taken by Avid or any of the Avid subsidiaries that is expressly contemplated or required by the merger agreement or with Parent’s written consent or at Parent’s request or the failure of Avid or any of the Avid subsidiaries to take any action resulting from Parent’s failure to grant any approval or consent requested by Avid take any action restricted or prohibited by the merger agreement, in and of itself;

 

the commencement, occurrence, continuation or escalation of any armed hostilities or acts of war (whether or not declared) or terrorism, or any escalation or worsening of acts of terrorism, armed hostilities or war;

 

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any proceeding or actions or claims made or brought by any of the current or former Avid stockholders (or on their behalf or on behalf of Avid, but in any event only in their capacities as current or former stockholders) arising out of the merger agreement or any of the transactions contemplated by the merger agreement;

 

the existence, occurrence, continuation or escalation of any acts of God, force majeure events, any earthquakes, floods, hurricanes, tropical storms, fires or other natural disasters or weather-related events or any national, international or regional calamity or any civil unrest or any disease outbreak, pandemic (including any effect with respect to COVID-19 or any effects with respect to measures in response to COVID-19) or epidemic;

 

the 2023 Writers Guild of America strike or the 2023 Screen Actors Guild – American Federation of Television and Radio Artists strike; and

 

any changes in the market price or trading volume of the shares of Avid common stock, any changes in the ratings or the ratings outlook for Avid or any of its subsidiaries by any applicable rating agency, any changes in any analyst’s recommendations or ratings with respect to Avid or any of the Avid subsidiaries or any failure of Avid or any of the Avid subsidiaries to meet any internal or external projections, budgets, guidance, forecasts or estimates of revenues, earnings or other financial results or metrics for any period ending on or after the date of the merger agreement. The exceptions in this bullet point will not prevent or otherwise affect the underlying cause of any such change or failure referred to therein (to the extent not otherwise falling within any of the exceptions provided by the proceeding bullet points) from being taken into account in determining whether a Company material adverse effect has occurred and this bullet point will not be construed as implying that Avid is making any representation or warranty with respect to any internal or external projections, budgets, guidance, forecasts or estimates of revenues, earnings or other financial results or metrics for any period.

 

However, with respect to the exceptions described in the second, third, fourth, sixth and eighth bullet points above, such effects may be taken into account to the extent they disproportionately adversely affect Avid and the Avid subsidiaries, taken as a whole, compared to other similarly situated companies operating primarily in the same industries in which Avid and the Avid subsidiaries operate, in which case the incremental adverse impact may be taken into account in determining whether a Company material adverse effect has occurred or would be expected to occur.

 

Representations and Warranties of Parent and Merger Sub

 

Parent and Merger Sub made customary representations and warranties to Avid in the merger agreement, in each case, subject to customary qualifications and limitations, including representations and warranties relating to the following:

 

the organization and good standing of Parent and Merger Sub;

 

each of Parent’s and Merger Sub’s authority to enter into and consummate the transactions contemplated by the merger agreement;

 

the absence of conflicts with, or violations of, or consents required under, laws, organizational documents or contracts and permits to which Parent or Merger Sub is a party, in each case as a result of Parent’s and Merger Sub’s execution or delivery of the merger agreement or the performance by Parent and Merger Sub of their respective covenants and obligations under, or the consummation by Parent and Merger Sub of the transactions contemplated by, the merger agreement;

 

the governmental and regulatory approvals required to complete the merger;

 

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the information contained in this proxy statement;

 

the absence of pending or threatened litigation and outstanding orders which would reasonably be expected to prevent or materially delay the merger;

 

the ownership of Merger Sub by Parent;

 

Merger Sub’s lack of operating activities;

 

the equity financing commitment letter and the equity financing;

 

the debt commitment letter and the debt financing;

 

the limited guarantee;

 

the solvency of Parent, certain affiliates of Parent, the surviving corporation and each subsidiary of the surviving corporation at and immediately following the effective time;

 

the absence of fees or commissions related to brokers, finders or investment bankers in connection with the transactions contemplated by the merger agreement;

 

other than the debt commitment letter, the equity financing commitment letters and the voting agreement, the absence of certain contracts or commitments to enter into a contract between Parent, Merger Sub or any of their respective affiliates, on the one hand, and any director, officer, employee, the specified stockholders or any other Avid stockholder, on the other hand;

 

the absence of ownership of shares of Avid common stock by Parent, Merger Sub or any of their respective affiliates or associates; and

 

the absence of certain foreign ownership and control, including with respect to the governance and operations of Parent.

 

Covenants Regarding Conduct of Business by Avid Prior to the Merger

 

Under the merger agreement, Avid agreed that, until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, except (i) as set forth in the Company disclosure letter, (ii) as expressly contemplated or required by any other provision of the merger agreement, (iii) as required by applicable law, any governmental entity of competent jurisdiction or the rules or regulations of the Nasdaq or (iv) with the prior written consent of Parent (which consent will not be unreasonably withheld, delayed or conditioned), Avid will, and will cause each of the Avid subsidiaries to, use its reasonable best efforts to conduct its operations in the ordinary course of business and, to the extent consistent therewith, Avid will, and will cause each of its subsidiaries to, use its reasonable best efforts to (x) preserve intact its material assets, properties, material contracts and business organizations, (y) keep available the services of its current officers and key employees, subject to terminations for “cause” and (z) maintain existing relations with material customers, suppliers, channel partners, distributors, lessors, licensors, licensees, creditors, contractors and other key persons with whom Avid and the Avid subsidiaries have significant relationships to the extent that Avid or one of the Avid subsidiaries has not, as of the date of the merger agreement, already notified any such person of its intent to modify or terminate such relations. However, no action with respect to the matters addressed by any of the following bullet points will constitute a breach of the foregoing obligations unless such action would constitute a breach of the following bullet points.

 

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Further, Avid agreed that, until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, except as set forth in the Company disclosure letter, as expressly contemplated or required by any other provision of the merger agreement, as required by applicable law, any governmental entity of competent jurisdiction or the rules or regulations of the Nasdaq, Avid will not, and will not permit any of the Avid subsidiaries to, do any of the following without the prior written consent of Parent (which consent will not be unreasonably withheld, delayed or conditioned):

 

amend Avid’s certificate of incorporation or by-laws;

 

except as required by any contract or pursuant to the terms of the Avid stock purchase plan, issue or authorize the issuance of any equity securities in Avid or any Avid subsidiary, or securities convertible into, or exchangeable or exercisable for, any such equity securities, or any rights of any kind to acquire any such equity securities or such convertible or exchangeable securities, other than (A) grants of RSU awards in connection with contracts in effect on the date of the merger agreement, including annual grants, new hire grants, promotion grants and retention grants (with all such contracts being set forth in the Company disclosure letter), (B) the issuance of shares of Avid common stock upon the vesting of RSU awards outstanding as of the date of the merger agreement or otherwise permitted to be granted under the merger agreement and (C) the issuance of securities by a subsidiary of Avid to Avid or another Avid subsidiary;

 

adjust, split, combine, recapitalize or reclassify any capital stock or other equity interest of Avid;

 

other than in the ordinary course of business, sell, pledge, dispose of, transfer, lease, license or encumber any property or assets of Avid or any of its subsidiaries that are material to Avid and the Avid subsidiaries, taken as a whole, except (A) sales or dispositions made in connection with any transaction between or among Avid and any of the Avid subsidiaries or between or among the subsidiaries of Avid, (B) for properties or assets not currently used in Avid’s business or (C) in the case of liens, as required in connection with any indebtedness (as defined in the merger agreement) permitted to be incurred pursuant to the ninth bullet point below or that constitutes a permitted lien (as defined in the merger agreement);

 

(A) declare, set aside, make or pay any dividend or other distribution with respect to the capital stock of Avid, whether payable in cash, stock, property or a combination thereof, other than as between Avid and any of the Avid subsidiaries or between the Avid subsidiaries, (B) pledge or encumber any of its capital stock or other equity or voting interests (other than permitted liens) or (C) modify the terms of any of its capital stock or other equity or voting interests;

 

other than (A) in respect of the Avid subsidiaries or (B) in connection with the payment of related withholding taxes, by net exercise or by tendering of shares (or tax withholdings on the vesting or payment of RSU awards), reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of Avid’s equity securities or any options, warrants, securities or other rights exercisable for or convertible into any such equity securities;

 

merge or consolidate Avid or any of its subsidiaries with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Avid, other than (A) the merger of one or more Avid subsidiaries with or into one or more other Avid subsidiaries or Avid or (B) in connection with any disposition permitted by the fourth bullet point above;

 

make or offer to make any acquisition of a material business (including by merger, consolidation or acquisition of stock or assets) or enter into any joint venture, partnership or similar arrangement with any third person;

 

incur any indebtedness for borrowed money or issue any debt securities, or assume or guarantee the obligations of any person (other than a wholly-owned Avid subsidiary) for borrowed money, except (A) in connection with restatements, replacements or refinancings of existing indebtedness, (B) for borrowings (including letters of credit (and related guarantees) and surety and performance bonds) in the ordinary course of business, (C) indebtedness between or among Avid and the Avid subsidiaries or between or among the Avid subsidiaries or any credit facility of Avid hereafter created, whether term or revolving indebtedness, on terms substantially the same as those governing Avid’s existing credit facility as it may have been amended, restated, amended and restated, replaced, refinanced, modified or supplemented consistent with this bullet point, (D) indebtedness under any credit facility of Avid in existence as of the date of the merger agreement, (E) for any guarantee by Avid of indebtedness of the Avid subsidiaries or any guarantee by such subsidiaries of indebtedness of Avid or any of the Avid subsidiaries or (F) with respect to any indebtedness not in accordance with the foregoing clauses (A) through (E), for any indebtedness incurred after the date of the merger agreement to fund operations of the business in the ordinary course of business or as expressly contemplated, permitted or required by any provision of the merger agreement, not to exceed $1,000,000 in the aggregate outstanding at any one time;

 

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make any loans, advances or capital contributions to, or investments in, any other person (other than any subsidiary of Avid) other than (A) loans made in the ordinary course of business consistent with past practice, (B) loans solely between Avid or any of the Avid subsidiaries or between the Avid subsidiaries, (C) as required pursuant to the terms of any existing contract in effect as of the date of the merger agreement, (D) extended payment terms granted to customers or clients in the ordinary course of business or (E) advances for travel and other out-of-pocket expenses to officers, directors or employees of Avid or any of the Avid subsidiaries in the ordinary course of business;

 

except to the extent required by or to comply with law or the terms of any Avid benefit plan, or as specifically contemplated by the terms of the merger agreement: (A) other than increases in salary and annual bonuses in the ordinary course of business consistent with past practice and changes to broad-based Avid benefit plans in the ordinary course of business consistent with past practice, materially increase the compensation or benefits payable or to become payable to Avid’s directors, officers or employees with an annual base salary less than or equal to $300,000 (or the local currency equivalent thereof), (B) other than in the ordinary course of business in connection with open enrollment periods with respect to any Avid benefit plan or actions otherwise permitted by this bullet point, establish, adopt, enter into, terminate or amend, any material Avid benefit plan (or any plan, policy, contract or arrangement that would be a material Avid benefit plan if in effect on the date of the merger agreement) or take any action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Avid benefit plan (or any plan, policy, agreement, contract or arrangement that would be an Avid benefit plan if in effect on the date of the merger agreement), (C) grant to any of its current or former employees or service providers any change in control, retention, transaction, stay bonus, tax gross-up, special remuneration, equity or equity-based award, bonus, severance or termination pay, (D) enter into, terminate, amend or modify any employment, consulting, change in control, retention, severance or termination agreement with any of its employees or individual service providers with annual base compensation in excess of $200,000 (or the local currency equivalent thereof) or (E) terminate, engage or hire any employee or individual service provider with an annual base compensation in excess of $200,000 (or the local currency equivalent thereof), other than terminations for cause or terminations of employment in the ordinary course of business of employees or hiring employees to fill positions that are open as of the date of the merger agreement;

 

other than as required by applicable law, enter into, terminate or, other than in the ordinary course of business outside the United States, amend, in any material respect, any collective bargaining, union or works council agreement or other contract with any employee representative body;

 

except to the extent necessary to preserve enforceability of a contract or as otherwise required by applicable law, intentionally waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference or nondisparagement obligation of any employee or individual service provider of Avid or any of the Avid subsidiaries;

 

effectuate a “plant closing” or “mass layoff” (each as defined in the Worker Adjustment and Retraining Notification Act of 1988 and all similar applicable laws);

 

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(A) make any material change in accounting policies or procedures or (B) other than in the ordinary course of business, revalue in any material respect any of its properties or assets, including writing-off notes or accounts receivable, in each case other than as required by GAAP, applicable law or any governmental entity with competent jurisdiction;

 

make any capital expenditures that in the aggregate exceed $10,000,000, other than capital expenditures contemplated by Avid’s annual budget or forecast;

 

except for non-exclusive licenses granted in the ordinary course of business, sell, license, sublicense, covenant not to assert, assign, transfer, abandon, allow to lapse, exclusively license, otherwise dispose of or grant any rights in any intellectual property material to the business of Avid and the Avid subsidiaries as currently conducted;

 

disclose or abandon any trade secret or confidential information that is intellectual property owned by Avid and material to the business of Avid and the Avid subsidiaries as currently conducted or disclose, make available or deliver any source code for any software of Avid to any person except to a third-party service provider or other agent obligated in writing to (A) maintain the confidentiality of, and not disclose, such source code and (B) use such source code only in the provision of services to Avid and the Avid subsidiaries;

 

engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of Avid or other person covered by Item 404 of Regulation S-K promulgated under the Exchange Act that would reasonably be expected to have a Company material adverse effect;

 

(A) make or change any tax election or change any method of tax accounting, (B) settle or compromise any tax liability or claim relating to a material amount of taxes, (C) enter into any closing agreement relating to any tax, (D) other than as a result of extending the due date to file a tax return, agree to an extension of a statute of limitations with respect to any tax, (E) surrender any right to claim a material tax refund, (F) prepare any tax return in a manner inconsistent with the past practices of Avid or the Avid subsidiaries with respect to the treatment of items on prior tax returns or (G) file any tax return in a jurisdiction where Avid or any of its subsidiaries did not file a tax return of the same type in the immediately preceding tax period (unless necessitated by new operations in such jurisdiction), in each case described in clauses (A) through (G), that would, individually or in the aggregate, reasonably be expected to be material to Avid and the Avid subsidiaries, taken as a whole;

 

commence any proceeding that is reasonably likely to be material to Avid and the Avid subsidiaries, taken as a whole, other than a proceeding as a result of a proceeding commenced against Avid or any of the Avid subsidiaries, or compromise, settle or agree to settle any proceeding other than (A) compromises, settlements or agreements in the ordinary course of business consistent with past practice that involve only the payment of money damages not in excess of the amount set forth in the Company disclosure letter, other than any settlement or conciliation that is covered by insurance or indemnification (which Avid is reasonably expected to receive) above such amount set forth in the Company disclosure letter, in any case, without the imposition of any equitable relief on, or the admission of wrongdoing by, Avid or (B) compromises, settlements or agreements of litigation brought by Avid stockholders and any other third-party litigation against Avid or its directors, officers or other representatives arising out of or relating to the merger in compliance with the terms of the merger agreement;

 

except in the ordinary course of business or in connection with any transaction to the extent specifically permitted by any other ‎bullet point, (A) enter into any contract which if entered into prior to the date of the merger agreement would be a material contract of a type specified in the merger agreement or (B) modify or amend any material rights under any material contract or terminate any material contract (other than any material contract that has expired in accordance with its terms or terminations in connection with the enforcement of rights as a result of breach of such material contract by the counterparty), in each case in a manner that is adverse in any material respect to Avid or any of the Avid subsidiaries, as applicable;

 

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maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice, in each case, in any material respect;

 

other than in the ordinary course of business, grant any refunds, credits, rebates or other allowances to any end user, customer, reseller or distributor that exceed $100,000 individually;

 

other than in the ordinary course of business, make any material change to Avid’s or any of the Avid subsidiaries’ written policies or procedures with respect to their processing of personal information, except (A) to remediate any privacy or security issue that Avid or any of the Avid subsidiaries reasonably believes is material, (B) to comply with applicable privacy laws (but with respect to privacy laws that consist of contractual obligations, solely those that are in effect until the earlier of the effective time and the termination of the merger agreement in accordance with its terms (however, any such contractual obligations entered into after the date of the merger agreement must be entered into in accordance with the terms of the merger agreement)) or (C) as otherwise directed or required by a governmental entity;

 

acquire, or agree to acquire, fee ownership (or its jurisdictional equivalent) of any real property; or

 

enter into any contract to do any of the foregoing.

 

Nothing contained in the merger agreement will give Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of Avid prior to the effective time. Prior to the effective time, Avid shall exercise, consistent with the terms and conditions of the merger agreement, complete unilateral control and supervision over its business operations.

 

Restriction on Solicitation of Competing Proposals

 

Except as set forth below, until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, (i) Avid will, and will cause its and the Avid subsidiaries’ directors, officers, legal and financial advisors to, and will direct and use its reasonable best efforts to cause the other representatives of Avid to, cease and cause to be terminated any solicitations, discussions or negotiations with, and terminate any data room access (or other access to diligence) of, any persons that may be ongoing as of the execution of the merger agreement with respect to any competing proposal made by such person or any of its representatives, or that would reasonably be expected to lead to a competing proposal by such person or its representatives, and (ii) Avid will not, and will cause its and the Avid subsidiaries’ directors, officers, legal and financial advisors not to, and will direct and use its reasonable best efforts to cause the other representatives of Avid not to, (A) initiate, solicit, knowingly encourage or knowingly facilitate the submission of any competing proposal, (B) furnish any non-public information regarding Avid or any of the Avid subsidiaries to any third person in connection with or in response to a competing proposal made, or reasonably expected to be made, by such third person, (C) participate in any discussions or negotiations with any third person with respect to any competing proposal made, or reasonably expected to be made, by such third person, (D) approve, endorse or recommend any proposal that constitutes, or is reasonably expected to lead to, a competing proposal or (E) enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to a competing proposal, other than, in each case, an acceptable confidentiality agreement.

 

Notwithstanding anything to the contrary, if, at any time after the date of the merger agreement and prior to the earlier of obtaining the Avid stockholder approval or the termination of the merger agreement in accordance with its terms, (i) Avid has received a written competing proposal from a third person after date of the merger agreement that did not result from a material breach of the non-solicitation provisions described above and (ii) the Board (or any committee thereof) determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that such competing proposal constitutes or could reasonably be expected to lead to a superior proposal, then Avid, the Avid subsidiaries and its representatives may (A) furnish information (including any non-public information), including with respect to Avid and the Avid subsidiaries, to, (B) afford access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Avid and the Avid subsidiaries to, (C) participate or engage in discussions or negotiations with or (D) otherwise facilitate the making of a superior proposal by, in each case, the person making such competing proposal and its representatives in connection with such person’s competing proposal. However, Avid will not, will cause its and the Avid subsidiaries’ directors, officers, legal and financial advisors not to, and will not direct, authorize or knowingly permit other representatives of Avid to, take any of the actions set forth in clauses (A) to (D) above (other than the negotiation of an acceptable confidentiality agreement) until there is an acceptable confidentiality agreement in place. Avid will reasonably promptly (and, in any event, within one business day) provide Parent a non-redacted copy of each acceptable confidentiality agreement that Avid has executed and any non-public information provided to any such person and which was not previously provided to Parent. Avid will not provide (and will not permit any representatives of Avid to provide) any non-public information that Avid’s outside counsel reasonably determines to be competitively sensitive in connection with the actions permitted by the foregoing, except in accordance with “clean room” or other similar procedures designed to limit any adverse effect of the sharing of such information on Avid.

 

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Except as set forth below, until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, neither the Board nor any committee thereof will (i) effect a change of Avid recommendation or (ii) allow Avid or any of the Avid subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement to effect any competing proposal (other than an acceptable confidentiality agreement) or requiring Avid to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement.

 

A “competing proposal” is defined in the merger agreement to mean, other than the transactions contemplated by the merger agreement, any indication of interest, proposal or offer from any person, persons or group (other than Parent, Merger Sub or any of their respective affiliates) relating to:

 

any direct or indirect acquisition or purchase from Avid or the Avid subsidiaries, in a single transaction or a series of transactions (whether or not concurrently and whether or not in connection with a single or multiple definitive agreements with such person or persons with respect to such transaction or series of transactions), of (A) 15% or more (based on the fair market value thereof, as determined by the Board (or any committee thereof) in good faith) of assets (including capital stock of the Avid subsidiaries, and by means of any merger, consolidation, business combination, recapitalization, liquidation, dissolution, binding share exchange or similar transaction to which Avid or any of the Avid subsidiaries is a party) of Avid and the Avid subsidiaries, taken as a whole, (B) 15% or more of the outstanding shares of Avid common stock, or (C) 15% or more (as determined by the Board (or any committee thereof) in good faith) of the consolidated business, revenues or net income of Avid and the Avid subsidiaries, taken as a whole;

 

any tender offer or exchange offer that, if consummated, would result in any person, persons or group owning, directly or indirectly, 15% or more of the outstanding shares of Avid common stock; or

 

any merger, consolidation, business combination, recapitalization, liquidation, dissolution, binding share exchange or similar transaction to which Avid or any of the Avid subsidiaries is a party pursuant to which (A) any person, persons or group (or the shareholders of any such person(s)) would own, directly or indirectly, 15% or more of the voting securities of Avid or of the surviving entity in a merger involving Avid or the resulting direct or indirect parent of Avid or such surviving entity, other than, in each case, the transactions contemplated by the merger agreement or (B) the owners of outstanding Shares immediately prior to such transaction would own less than 85% of the voting securities of Avid or of the surviving entity in a merger involving Avid or the resulting direct or indirect parent of Avid or such surviving entity, other than, in each case, the transactions contemplated by the merger agreement.

 

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A “superior proposal” is defined in the merger agreement to mean a written competing proposal (with all percentages in the definition of competing proposal changed to 50%) made by any person or persons or group on terms that the Board (or any committee thereof) determines in good faith, after consultation with its outside financial advisors and outside legal counsel, and considering such factors as the Board (or any committee thereof) considers to be appropriate (including the conditionality and the timing and likelihood of consummation of such proposal), would result in a transaction or series of related transactions that is or are more favorable from a financial point of view to the stockholders of Avid than the transactions contemplated by the merger agreement (including after taking into account: (i) any applicable Avid termination fee and (ii) any revisions to the merger agreement made or proposed in a binding irrevocable written offer to Avid by Parent prior to the time of such determination).

 

An “acceptable confidentiality agreement” is defined in the merger agreement to mean a confidentiality agreement that contains confidentiality terms no less favorable to Avid than those contained in the letter agreement regarding confidentiality between Avid and STG, dated April 2, 2023 (the “confidentiality agreement”). However, an acceptable confidentiality agreement need not contain a standstill or restriction on exclusive arrangement with financing sources and will not prohibit compliance by Avid with the merger agreement.

 

Obligations of the Board with Respect to Its Recommendation

 

Notwithstanding anything to the contrary, at any time prior to obtaining the Avid stockholder approval, the Board (or any committee thereof) may make a change of Avid recommendation (and, if so desired by the Board (or any committee thereof), terminate the merger agreement, in accordance with its terms, in order to cause Avid to enter into a definitive agreement with respect to a superior proposal) if:

 

a competing proposal (that did not result from a material breach of the non-solicitation provisions described above) is made to Avid by a third person and the Board (or any committee thereof) determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that such competing proposal constitutes a superior proposal (it being agreed that such determination in itself by the Board (or a committee thereof) will not constitute a change of Avid recommendation);

 

Avid provides Parent prior written notice at least five business days in advance (the “notice period”) of the intention of the Board (or any committee thereof) to make a change of Avid recommendation (a “notice of change of Avid recommendation”) in response to such superior proposal, which notice will include the material terms and conditions of, and the identity of the person making, such superior proposal, and contemporaneously furnishes copies of the substantially final proposed definitive documents setting forth such superior proposal and any other relevant transaction documents (subject to customary redactions to debt financing commitments) (it being agreed that neither the delivery of the notice of change of Avid recommendation by Avid nor any public announcement that the Board (or any committee thereof) is considering making a change of Avid recommendation will constitute a change of Avid recommendation);

 

if requested by Parent, Avid has negotiated, and directed any applicable representatives of Avid to negotiate, in good faith, with Parent and its representatives during the notice period to make such adjustments to the terms and conditions of the merger agreement and the other transaction documents so that such superior proposal would cease to constitute a superior proposal; and

 

at the end of the notice period, after taking into account any changes to the terms and conditions of the merger agreement and the debt and equity financing commitments proposed by Parent in a binding irrevocable written offer to Avid pursuant to the third bullet point above, the Board (or any committee thereof) has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that (A) such superior proposal continues to constitute a superior proposal and (B) the failure to make a change of Avid recommendation in response to such superior proposal would reasonably be expected to be inconsistent with the fiduciary duties of the Board under applicable law, even if such changes irrevocably offered in writing by Parent were to be given effect. However, any material amendment, revision, update or supplement to the terms of such superior proposal (whether or not in response to any changes irrevocably offered in writing by Parent pursuant to the third bullet point above) will require a new notice of change of Avid recommendation and an additional three business day “notice period” from the date of such notice during which the terms of the third bullet point above and this bullet point will apply mutatis mutandis (other than the number of days).

 

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Other than in connection with a competing proposal, prior to obtaining the Avid stockholder approval, nothing in the merger agreement will prohibit or restrict the Board (or any committee thereof) from effecting a change of Avid recommendation in response to the occurrence of an intervening event if the Board (or any committee thereof) determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that the failure to effect a change of Avid recommendation in response to such intervening event would reasonably be expected to be inconsistent with its fiduciary duties under applicable law(it being agreed that such a determination in itself by the Board (or a committee thereof) will not constitute a change of Avid recommendation); provided, that:

 

Avid provides Parent with a notice of change of Avid recommendation in response to the occurrence of such intervening event, which notice will describe in reasonable detail the basis for such change of Avid recommendation and the intervening event (it being agreed that neither the delivery of the notice of change of Avid recommendation by Avid nor any public announcement that the Board (or any committee thereof) is considering making a change of Avid recommendation will constitute a change of Avid recommendation);

 

if requested by Parent, Avid has negotiated, and directed any applicable representatives of Avid to negotiate, in good faith, with Parent and its representatives during the five business days after the date of such notice of change of Avid recommendation (the “event notice period”) with respect to any changes to the terms and conditions of the merger agreement and the debt and equity financing commitments proposed by Parent in a binding irrevocable written offer to Avid; and

 

following such event notice period, after taking into account any changes to the terms and conditions of the merger agreement and the debt and equity financing commitments proposed by Parent in a binding irrevocable written offer to Avid pursuant to the second bullet point above, the Board (or any committee thereof) has determined in good faith, after consultation with its outside financial advisors and outside legal counsel, that the failure to make a change of Avid recommendation in response to the occurrence of such intervening event would reasonably be expected to be inconsistent with the fiduciary duties of the Board under applicable law, even if such changes proposed by Parent were to be given effect. However, each time that material modifications or developments with respect to the intervening event occur (as reasonably determined by the Board in good faith), Avid will notify Parent of such modification and the time period set forth in the preceding second bullet point will recommence and last for three business days from the latter of (A) the delivery of such written notice to Parent or (B) the end of the original event notice period.

 

Notice of Competing Proposals

 

Until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, Avid has further agreed to promptly (and, in any event, within 24 hours after the receipt thereof) notify Parent in writing if a competing proposal is, to the knowledge of Avid, received by Avid or any of its representatives or, to the knowledge of Avid, any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, Avid or any of its representatives, which requests, discussions or negotiations would reasonably be expected to lead to a competing proposal. Such notice will include (i) the identity of the person or group making such proposal or request; (ii) a copy of such proposal or request, if in writing, or a summary of the material terms and conditions of such proposal or request, if not in writing, and (iii) copies of any material agreements, documents or other written materials submitted in connection therewith. Thereafter, until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, Avid will keep Parent reasonably informed, on a reasonably prompt basis (and in any event within 48 hours of any material development with respect to or material amendment of such proposal or request), of the status and terms of any such proposal (including any amendments thereto) and the status of any such discussions or negotiations, including providing copies of any new or amended material agreements, documents or other written materials submitted in writing in connection therewith. Until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, Avid will reasonably promptly (and in any event within 48 hours) make available to Parent or its representatives any non-public information concerning Avid and the Avid subsidiaries that is provided to any such person or group or its representatives that was not previously made available to Parent or its representatives.

 

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Obligations with Respect to this Proxy Statement and the Special Meeting

 

Under the merger agreement, Avid agreed to, as promptly as reasonably practicable after the date of the merger agreement, prepare and file a preliminary proxy statement in connection with the Avid stockholder meeting with the SEC (and to cause such filing to be made within 20 business days after the date of the merger agreement, to the extent reasonably practicable). Subject to the exceptions set forth in the merger agreement, the proxy statement will include the Avid recommendation. Parent is required to cooperate with Avid in the preparation of the proxy statement, and to furnish all information concerning Parent, Merger Sub, the guarantors, any of their affiliates and any transaction any of them have or are contemplating entering into in connection with the merger agreement that is necessary or appropriate in connection with the preparation of the proxy statement, and provide such other assistance, as may be reasonably requested in connection with the preparation, filing and distribution of the proxy statement. The parties to the merger agreement are required to use their respective reasonable best efforts to have the proxy statement cleared by the SEC as promptly as reasonably practicable after filing with the SEC.

 

As promptly as reasonably practicable, following the (i) confirmation by the SEC that it has no further comments or (ii) expiration of the ten-day waiting period contemplated by Rule 14a-6(a) promulgated under the Exchange Act, Avid has agreed to cause the proxy statement in definitive form to be mailed to the stockholders of Avid. Subject to the exceptions set forth in the merger agreement, Avid will, as promptly as reasonably practicable after the proxy statement is cleared by the SEC for mailing to the Avid stockholders, duly call, give notice of, convene and hold the special meeting for the purpose of seeking the Avid stockholder approval. Subject to the exceptions set forth in the merger agreement, the Board will recommend that Avid stockholders adopt the merger agreement, and Avid will, unless there has been a change of Avid recommendation or the merger agreement has been terminated in accordance with its terms, use its reasonable best efforts to solicit from its stockholders proxies in favor of the adoption of the merger agreement.

 

Access to Information

 

Until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, Avid, and will cause each of the Avid subsidiaries to: (i) provide to Parent and Merger Sub and their respective representatives reasonable access (at Parent’s sole cost and expense), upon reasonable notice, during normal business hours and in such a manner as not to unreasonably interfere with the operation of any business conducted by Avid or any of the Avid subsidiaries, to the books, records, officers, employees, properties, offices and other facilities of Avid; and (ii) furnish promptly such information concerning the business, properties, contracts, assets and liabilities of Avid and the Avid subsidiaries as Parent or its representatives may reasonably request to the extent related to any reasonable business purpose related to the consummation of the transactions contemplated by the merger agreement or post-closing integration matters. However, Avid is not required to (or to cause any of the Avid subsidiaries to) afford such access or furnish such information to the extent that Avid believes reasonably and in good faith that doing so would: (A) result in the loss of attorney-client privilege (but Avid has agreed to use its reasonable best efforts to allow for such access or disclosure in a manner that does not result in a loss of attorney-client privilege), (B) violate any confidentiality obligations of Avid or any of the Avid subsidiaries to any third person or otherwise breach, contravene or violate any then effective contract to which Avid or any of the Avid subsidiaries is party, (C) breach, contravene or violate any applicable law (including the HSR Act or any other antitrust law or any investment screening law) or any measures in response to COVID-19 or (D) jeopardize the health and safety of any employee of Avid or the Avid subsidiaries, in light of COVID-19 or any measures in response to COVID-19. However, in the case of (A) through (D) above, Avid is required to give notice to Parent of the fact that it is withholding such information or documents, and use reasonable best efforts to make appropriate substitute disclosure arrangements to permit the disclosure of such information without implicating the foregoing restrictions. Notwithstanding anything in the merger agreement to the contrary, Parent and Merger Sub will not, and will cause their respective representatives acting on their behalf not to, contact any customer, partner, vendor, supplier or employee of Avid or any Avid subsidiary in connection with the transactions contemplated by the merger agreement without Avid’s prior written consent.

 

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Efforts to Complete the Merger

 

The merger agreement provides that Parent will (and will cause Merger Sub, each guarantor and each of its and their applicable affiliates to) and, subject to the ability of Board to change its recommendation, Avid will, use its respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable law to consummate the transactions contemplated by the merger agreement and to cause the conditions to the consummation of the merger to be satisfied as promptly as practicable after the date of the merger agreement. More specifically, Parent will (and will cause Merger Sub, each sponsor, each guarantor and each of its and their applicable affiliates, representatives, officers, directors and direct and indirect owners to) and, subject to the ability of Board to change its recommendation, Avid will (and will cause each of its subsidiaries to) use its reasonable best efforts to (i) as promptly as practicable obtain all actions or nonactions, consents, permits, waivers, approvals, authorizations and orders from governmental entities or other persons necessary or advisable in connection with the consummation of the transactions contemplated by the merger agreement, (ii) as promptly as practicable (and in any event within ten business days after the date of the merger agreement with respect to the HSR Act filings described in (A) below and within 20 business days after the date of the merger agreement with respect to the filings described in (B) below), make and not withdraw (without Avid’s prior written consent) all registrations and filings (including, where appropriate and advisable, filings in draft form) with any governmental entity or other persons necessary or advisable or as required by applicable law in connection with the consummation of the transactions contemplated by the merger agreement, including (A) the filings required of the parties to the merger agreement or their “ultimate parent entities” or “ultimate controlling persons” under the HSR Act or any other antitrust law or any investment screening law listed in the Company disclosure letter and (B) promptly make any further filings or submissions pursuant thereto that may be necessary or advisable, (iii) contest and defend all lawsuits or other legal, regulatory, administrative or other proceedings to which it or any of its affiliates is a party challenging or affecting the merger agreement or the consummation of the transactions contemplated by the merger agreement, in each case until the issuance of a final, non-appealable order with respect to each such proceeding, (iv) seek to have lifted or rescinded any injunction or restraining order that may adversely affect the ability of the parties to the merger agreement to consummate the transactions contemplated by the merger agreement, in each case until the issuance of a final, non-appealable order with respect thereto, (v) seek to resolve any objection or assertion by any governmental entity challenging the merger agreement or the transactions contemplated by the merger agreement and (vi) execute and deliver any additional instruments necessary or advisable to consummate the transactions contemplated by the merger agreement. However, Avid and the Avid subsidiaries will not be required to make any concessions in connection with the foregoing obligations that are not conditioned upon the closing.

 

The merger agreement also provides that (i) Parent will promptly take (and will cause its subsidiaries to take) any and all actions necessary or advisable in order to avoid or eliminate each and every impediment to the consummation of the transactions contemplated by the merger agreement and obtain all approvals and consents, including approvals and consents under any antitrust laws or investment screening laws required or advisable by any foreign or U.S. federal, state or local governmental entity, in each case with competent jurisdiction, so as to enable the parties to the merger agreement to consummate the transactions contemplated by the merger agreement as promptly as practicable, including operational restrictions or limitations on, and committing to or effecting, by consent decree, hold separate orders, trust or otherwise, the sale, license, disposition or holding separate of, assets or businesses of Parent, Merger Sub, Avid, the surviving corporation or their respective subsidiaries (and the entry into agreements with, and submission to decrees, judgments, injunctions or orders of the relevant governmental entity) as may be required or advisable to obtain such approvals or consents of such governmental entities or to avoid the entry of, or to effect the dissolution of or vacate or lift, any orders that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by the merger agreement and (ii) upon agreement of the parties to the merger agreement, Avid will make, subject to the condition that the closing actually occurs, any undertakings (including undertakings to accept operational restrictions or limitations or to make sales or other dispositions that are conditioned upon the consummation of the transactions contemplated by the merger agreement) as are required to obtain such approvals or consents of such governmental entities or to avoid the entry of, or to effect the dissolution of or vacate or lift, any decrees, judgments, injunctions or orders that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by the merger agreement. However, the foregoing will not require Parent, Merger Sub, or their respective affiliates to commit to or effect any action with respect to the capital stock or other equity or voting interest, assets (whether tangible or intangible), rights, properties, products or businesses of affiliates of Parent or Merger Sub (other than Parent, Merger Sub, and, following consummation of the transactions contemplated by the merger agreement, Avid and the Avid subsidiaries).

 

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In addition, Parent has also agreed that neither Parent nor Merger Sub, directly or indirectly, through one or more of their respective affiliates or otherwise, will take any action, including acquiring or making any investment in any person or any division or assets thereof, that would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by the merger agreement, including under any antitrust laws or investment screening laws.

 

Without limiting the generality of the obligations described above, each party to the merger agreement will:

 

give the other parties to the merger agreement prompt notice of the making or commencement of any request, inquiry, investigation or proceeding by or before any governmental Entity with respect to the transactions contemplated by the merger agreement;

 

keep the other parties to the merger agreement informed as to the status of any such request, inquiry, investigation or proceeding; and

 

promptly inform the other parties to the merger agreement of any material communication to or from the FTC, the DOJ or any other governmental entity regarding the transactions contemplated by the merger agreement.

 

Each party to the merger agreement agreed that it will consult and cooperate with the other parties and will consider in good faith the views of the other parties in connection with any filing, submission, analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal to be made or to be submitted to any governmental entity in connection with the transactions contemplated by the merger agreement. In addition, except as may be prohibited by any governmental entity or by any applicable law, in connection with any such request, inquiry, investigation, action or proceeding, each party to the merger agreement will permit authorized representatives of the other parties to be present at each meeting or conference relating to such request, inquiry, investigation, action or proceeding and to have access to and be consulted in connection with and provided a reasonable opportunity to review in advance, any document, opinion or proposal made or submitted to any governmental entity in connection with such request, inquiry, investigation or proceeding, including any filings or submissions referred to above. No party to the merger agreement will be in violation of the merger agreement by virtue of providing information that is competitively sensitive to one another on an “outside counsel only” or other basis designed to ensure compliance with applicable law (including the HSR Act or any other antitrust law or any investment screening law listed in the Company disclosure letter).

 

Financing

 

The consummation of the merger is not conditioned upon Parent’s or Merger Sub’s receipt of financing. However, under the merger agreement, each of Parent and Merger Sub are obligated to use its commercially reasonable efforts to obtain the financing on a timely basis on the terms and subject to the conditions described in the described in the debt commitment letter and equity financing commitment letter, including using its commercially reasonable efforts to (i) comply with its obligations under the applicable debt commitment letter and equity financing commitment letter, (ii) maintain in effect the applicable debt commitment letter and equity financing commitment letter, (iii) negotiate and enter into definitive agreements with respect to the debt commitment letter and equity financing commitment letter on a timely basis on terms and conditions (including the “market flex” provisions, if applicable) contained therein or otherwise not materially less favorable to Parent in the aggregate than those contained in the debt commitment letter and equity financing commitment letter, (iv) satisfy on a timely basis (or obtain a waiver of) (and cause their affiliates to satisfy or obtain such waiver) all conditions applicable to Parent and its affiliates contained in the applicable debt commitment letter and equity financing commitment letter within its control, including the payment of any commitment, engagement or placement fees required as a condition to the financing, and (v) if all conditions to financing are satisfied (or would be satisfied if the financing were funded), cause the other parties to the merger agreement to each of the debt commitment letter and equity financing commitment letter to comply with their obligations thereunder and to fund, at or prior to the closing, the financing required to satisfy the uses for the financing set forth in the merger agreement.

 

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Parent will not, without the prior written consent of Avid, amend, modify, supplement or waive any of the conditions or contingencies to funding contained in the debt commitment letter and equity financing commitment letter or any other provision of, or remedies under, the debt commitment letter and equity financing commitment letter, in each case to the extent such amendment, modification, supplement or waiver would reasonably be expected to have the effect of (i) adversely affecting in any respect the ability of Parent to timely consummate the transactions contemplated by the merger agreement, (ii) amending, modifying, supplementing or waiving the existing conditions or contingencies to the financing in a manner adverse to Avid or imposing new or additional conditions precedent to the financing or (iii) delaying the closing (provided that Parent may amend any debt commitment letter related to the debt financing to add lenders, investors, lead arrangers, bookrunners, syndication agents or other similar entities who had not executed such debt commitment letter as of the date of the merger agreement accordance with the terms thereof).

 

If all or any portion of the debt financing becomes unavailable, Parent has agreed to use its commercially reasonable efforts to (i) arrange to promptly obtain the debt financing or such portion of the debt financing from alternative sources, in an amount sufficient, when added to any portion of the financing that is available, to pay in cash all of the uses for the financing set forth in the merger agreement and (ii) obtain a new financing commitment letter and a new definitive agreement with respect thereto that provides for financing (A) on terms not materially less favorable (including with respect to conditionality to the availability and funding of any debt financing commitment), in the aggregate, to Parent, (B) containing conditions to draw and other terms that would reasonably be expected to adversely affect the availability thereof that (1) are not more onerous, taken as a whole, than those conditions and terms contained in the debt financing commitments as of the date of the merger agreement and (2) would not reasonably be expected to delay, impede or prevent the consummation of the transactions contemplated by the merger agreement and (C) in an amount that is sufficient, when added to any portion of the financing that is available, to pay the uses for the financing set forth in the merger agreement.

 

Subject to certain exceptions, prior to the closing, Avid is obligated to, and must cause each of the Avid subsidiaries to, use its commercially reasonable efforts to provide such customary cooperation with the arrangement of the financing as may be reasonably requested by Parent (provided that such requested cooperation does not unreasonably interfere with the ongoing operations of Avid and its subsidiaries). Subject to limited exceptions, Parent has agreed to reimburse Avid for all reasonable and documented out-of-pocket costs and expenses incurred by Avid or any of its subsidiaries in connection with such cooperation, and to indemnify Avid, the Avid subsidiaries and the representatives of Avid against losses incurred in connection with the financing and any information used in connection therewith.

 

Directors & Officers Indemnification and Insurance Information

 

Pursuant to the merger agreement, from and after the effective time, the surviving corporation will, and Parent will cause the surviving corporation and its subsidiaries to, to the fullest extent permitted by applicable law, indemnify, defend and hold harmless each current or former director, officer or employee of Avid or any of the Avid subsidiaries, each fiduciary under benefit plans of Avid or any of the Avid subsidiaries and each such person who performed services at the request of Avid or any of the Avid subsidiaries against (i) all losses, expenses (including reasonable attorneys’ fees and expenses), judgments, fines, claims, damages or liabilities or, subject to the proviso of the next succeeding sentence, amounts paid in settlement, arising out of actions or omissions occurring at or prior to the effective time (and whether asserted or claimed prior to, at or after the effective time) to the extent such indemnification obligations are provided pursuant to any existing organizational documents of Avid or any of the Avid subsidiaries or indemnification agreements of Avid or any of the Avid subsidiaries set forth in the Company disclosure letter, filed by Avid with the SEC or that use the same form, in all material respects, as the form of indemnification agreement filed by Avid with the SEC, and (ii) all such indemnified liabilities to the extent they are based on or arise out of or pertain to the transactions contemplated by the merger agreement, whether asserted or claimed prior to, at or after the effective time, and including any expenses incurred in enforcing the foregoing rights. In the event of any such indemnified liability (whether or not asserted before the effective time), the surviving corporation shall, to the extent required by the any existing organizational documents of Avid or any of the Avid subsidiaries or the aforementioned indemnification agreements, pay the reasonable fees and expenses of counsel selected by the indemnified parties promptly after statements therefor are received and otherwise advance to such indemnified party upon request, reimbursement of documented expenses reasonably incurred (provided that the person to whom expenses are advanced provides an undertaking to repay such advance if it is determined by a final and non-appealable judgment of a court of competent jurisdiction that such person is not legally entitled to indemnification under applicable law).

 

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Also, Avid has agreed to, prior to the effective time, obtain and fully pay the premium for an irrevocable “tail” insurance and indemnification policy that provides coverage for a period of six years from and after the effective time for events occurring at or prior to the effective time that is substantially equivalent to and in any event not less favorable in the aggregate to the intended beneficiaries thereof than Avid’s existing directors’ and officers’ liability insurance. The surviving corporation will not, and Parent will cause the surviving corporation not to, cancel or change such insurance in any respect for a period of at least six years from and after the effective time (and for so long thereafter as any claims brought before the end of such six-year period thereunder are being adjudicated). In satisfying the foregoing obligations, the surviving corporation will not be obligated to pay annual premiums in excess of 275% of the amount paid by Avid for coverage for its last full fiscal year and if the annual premiums of such insurance coverage exceed such amount, then the surviving corporation will be obligated to obtain a policy with the greatest coverage available for a cost not exceeding such amount from an insurance carrier with the same or better credit rating as Avid’s current directors’ and officers’ liability insurance carrier.

 

In addition, for not less than six years from and after the effective time, Parent will, and will cause the surviving corporation to, ensure that the certificate of incorporation and the by-laws (or other similar documents) of the surviving corporation and the certificate of incorporation and by-laws (or other similar documents) of each Avid subsidiary will contain provisions no less favorable with respect to exculpation, indemnification and advancement of expenses for periods at or prior to the effective time than are currently set forth in the organizational documents of Avid and the Avid subsidiaries. The contractual indemnification rights, if any, in existence on the date of the merger agreement with any of the directors, officers or employees of Avid or any Avid subsidiary will be assumed by the surviving corporation, without any further action, and will continue in full force and effect in accordance with their terms following the effective time.

 

Employee Matters

 

Under the merger agreement, for a period of at least 12 months following the closing date, Parent will, or will cause its subsidiaries (including the surviving corporation) to, provide each individual who is an employee of Avid or an Avid subsidiary immediately prior to the effective time (each, an “Avid employee”) with (i) a base salary or base hourly wage rate, as applicable, that is no less than the base salary or base hourly wage rate as in effect immediately prior to the closing, (ii) target cash incentive compensation opportunities, other than cash sales commission or incentive plans, that taken as a whole are no less favorable than the target cash incentive compensation opportunities as in effect immediately prior to the closing, (iii) severance payments and benefits that are no less than the severance payments and benefits set forth in the Company disclosure letter and (iv) employee benefits (other than severance, equity-based benefits, defined benefits pursuant to qualified and nonqualified retirement plans, retiree medical benefits and other retiree health and welfare arrangements) that, in the aggregate, are no less than the greater of (A) the employee benefits (other than severance and incentive compensation opportunities) provided immediately prior to the closing and (B) the employee benefits (other than severance and incentive compensation opportunities, equity-based benefits, defined benefits pursuant to qualified and nonqualified retirement plans, retiree medical benefits and other retiree health and welfare arrangements) provided by Parent and its subsidiaries to similarly situated employees under the Parent plans (as defined below). Notwithstanding the foregoing or anything in the merger agreement to the contrary, neither Parent nor any of its subsidiaries (including the surviving corporation) will be obligated to continue to employ any Avid employee for any specific period of time following the closing date, subject to applicable law.

 

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In addition, from and after the effective time, Parent will, or will cause its subsidiaries, including the surviving corporation, to, assume, honor and continue all of Avid’s and the Avid subsidiaries’ employment, severance, retention and termination plans, policies, programs, agreements and arrangements (including any such arrangements set out in employment agreements or offer letters but excluding any plans, policies, programs, agreements or arrangements relating to any equity-based benefits, defined benefits pursuant to qualified and nonqualified retirement plans, retiree medical benefits and other retiree health and welfare arrangements), in each case, in accordance with their terms as in effect immediately prior to the effective time, including with respect to any payments, benefits or rights arising as a result of the transactions contemplated by the merger agreement and, for a period of at least 12 months following the closing date, will do so without any amendment or modification, other than any amendment or modification required to comply with applicable law or as consented to by the parties thereto.

 

To the extent that service is relevant for any purpose including eligibility, benefit accrual and vesting (including, in order to calculate the amount of any paid time off and leave balance (including vacation and sick days)), gratuities, severance and similar benefits (except, unless required by applicable law, not for purposes of defined benefit pension benefit accruals) under any employee benefit plan, program or arrangement established or maintained by Parent or any of its subsidiaries (including the surviving corporation) for the benefit of the Avid employees (the “Parent plans”) following the closing date, Parent will, or will cause its subsidiaries (including the surviving corporation) to credit such Avid employees for service earned on and prior to the closing date with Avid and the Avid subsidiaries and any of their predecessors in addition to service earned with Parent or any of Parent’s affiliates (including the surviving corporation) after the closing date under any relevant plan, program or arrangement. However, any such service need not be recognized to the extent that such recognition would result in any duplication of benefits.

 

Limited Guarantee

 

To induce Avid to enter into the merger agreement, the guarantors executed a limited guaranty, dated as of August 9, 2023, in favor of Avid (the “limited guarantee”). Under the limited guarantee, subject to the limitations described therein, each guarantor has guaranteed its respective portion of the following based on its pro rata percentage of the guaranteed obligations, as set forth in the limited guarantee: the due, punctual and full performance and discharge of payment to Avid of the Parent termination fee, if, as and when it becomes payable under the merger agreement, certain reimbursement and indemnification obligations specified in the merger agreement that may be owed by Parent pursuant to the merger agreement, damages for a willful breach by Parent or Merger Sub and all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) paid or incurred by Avid in enforcing its rights against the guarantors under the limited guarantee; provided, however, that the obligations of the guarantors are subject to an aggregate cap on all monetary damages to which Parent and its related parties are exposed (other than pursuant to the confidentiality agreement) equal to the Parent termination fee as described in the section of this proxy statement entitled “The Agreement and Plan of Merger — Expenses; Termination Fee” below. The limited guarantee is binding on each of the guarantors and their respective successors and assigns until Parent’s guaranteed obligations under the merger agreement have been indefeasibly paid in full. The limited guarantee terminates at the earliest of:

 

the closing;

 

the payment in full and in immediately available funds to Avid of Parent’s guaranteed obligations; and

 

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90 days following the valid termination of the merger agreement, unless Avid brings a claim against the guarantors pursuant to the limited guarantee prior to the expiration of the 90-day period, in which case the limited guarantee will remain in full force and effect, and will be enforceable by Avid and will only terminate upon the final, non-appealable adjudication, dismissal, settlement or other resolution of such claim and the full satisfaction by the guarantors of any obligations finally determined by a court of competent jurisdiction or otherwise agreed by the guarantors and Avid in writing to be owed by the guarantors.

 

In the event that Avid or any of its controlled affiliates or any of its or their directors or officers (solely in their respective capacity as such) directly or indirectly asserts in writing (A) that the provisions of the limited guarantee, including relating to any guarantor’s maximum liability, are illegal, invalid or unenforceable, (B) that any guarantor is liable in excess of such guarantor’s maximum liability pursuant to the terms of the limited guarantee, (C) that the provisions of the equity commitment letter are illegal, invalid or unenforceable or that any sponsor is liable in excess of such sponsor’s maximum commitment pursuant to the terms of the equity commitment letter or (D) certain claims against a non-recourse party, then: (i) the obligations of the guarantors under or in connection with the limited guarantee shall terminate ab initio and be null and void; (ii) if any guarantor has previously made any payments under or in connection with the limited guarantee, such guarantor will be entitled to recover and retain such payments; and (iii) neither the guarantors nor any other non-recourse parties will have any liability to Avid or any other person in any way under or in connection with the limited guarantee, the equity commitment letter, the merger agreement, any other agreement or instrument delivered in connection with the limited guarantee, the equity commitment letter, the merger agreement or the transactions contemplated thereby (other than Parent and Merger Sub under the merger agreement).

 

Other Covenants and Agreements

 

Under the merger agreement, Avid and Parent have made certain other covenants to, and agreements with, each other regarding various other matters, including:

 

operating activities of Merger Sub during the period from the date of the merger agreement to the earlier of the effective time or the date (if any) on which the merger agreement is terminated pursuant to its terms;

 

public statements and disclosure concerning the merger agreement and the transactions contemplated by the merger agreement;

 

state anti-takeover or other similar laws;

 

the costs and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement;

 

Avid’s taking actions as may be reasonably necessary or advisable to ensure that the dispositions of equity securities of Avid (including derivative securities) by any officer or director of Avid who is subject to Section 16 of the Exchange Act pursuant to the merger are exempt under Rule 16b-3 under the Exchange Act;

 

control of the defense of litigation brought by Avid stockholders and any other third-party litigation against Avid or its directors, officers or other representatives arising out of or relating to the merger;

 

stock exchange de-listing and de-registration matters; and

 

Avid using commercially reasonable efforts to obtain and deliver to Parent at or prior to the closing a customary payoff letter in connection with the repayment of indebtedness under Avid’s existing credit agreement.

 

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Conditions to the Merger

 

Conditions to Each Party’s Obligations

 

The respective obligations of each of Avid, Parent and Merger Sub to effect the merger are subject to the satisfaction (or to the extent permitted by law, mutual waiver by both Avid and Parent) at or prior to the effective time of each of the following conditions:

 

The Avid stockholder approval having been obtained;

 

the waiting period (and any extensions thereof) applicable to the merger under the HSR Act having expired or been terminated and approval by the German Federal Cartel Office and any waivers, consents, agreements or approvals applicable under any investment screening law set forth in the Company disclosure letter having been obtained or the applicable waiting period having expired or been terminated; and

 

no governmental entity of competent jurisdiction having issued or entered any order, injunction or decree and no law (other than any antitrust law or investment screening law, which will be governed by the second bullet point above) having been enforced, enacted, entered or deemed applicable to the merger, in each case that is in effect and prohibits, enjoins or otherwise prevents the consummation of the merger.

 

Conditions to Parent’s and Merger Sub’s Obligations

 

The obligations of Parent and Merger Sub to effect the merger are also subject to the satisfaction or waiver by Parent at or prior to the effective time of each of the following additional conditions:

 

each of Avid’s representations and warranties contained in the merger agreement (other than the representations and warranties related to (A) the organization, qualification to do business and good standing of Avid and the Avid subsidiaries; (B) the capital structure of Avid and Avid subsidiaries that are “significant subsidiaries” (as defined in the merger agreement); (C) Avid’s authority to enter into, and, subject to the Avid stockholder approval, consummate the transactions contemplated by the merger agreement; (D) the absence of a Company material adverse effect; (E) the opinion of Avid’s financial advisor; (F) takeover statutes applicable to the merger and the transactions contemplated by the merger agreement; (G) the vote of holders of Avid common stock required to approve the merger; and (H) the absence of broker’s, finder’s or investment banker’s fees, other than those payable to Avid’s financial advisor in connection with the transactions contemplated by the merger agreement) without regard to materiality or Company material adverse effect qualifiers contained within such representations and warranties, being true and correct as of the date of the merger agreement and as of the closing date as though made on and as of the closing date (except to the extent such representations and warranties expressly relate to another date (in which case such representations and warranties will be true and correct on and as of such other date)), other than failures to be true and correct that have not had, individually or in the aggregate, a Company material adverse effect that is continuing as of the closing date;

 

each of Avid’s representations and warranties contained in the merger agreement related to (A) the organization, qualification to do business and good standing of Avid and the Avid subsidiaries; (B) Avid’s authority to enter into, and, subject to the Avid stockholder approval, consummate the transactions contemplated by the merger agreement; (C) the opinion of Avid’s financial advisor; (D) takeover statutes applicable to the merger and the transactions contemplated by the merger agreement; (E) the vote of holders of Avid common stock required to approve the merger; and (F) the absence of broker’s, finder’s or investment banker’s fees, other than those payable to Avid’s financial advisor in connection with the transactions contemplated by the merger agreement that (x) are not qualified by materiality or Company material adverse effect being true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of the closing date (except to the extent such representations and warranties expressly relate to another date in which case such representations and warranties will be true and correct in all material respects on and as of such other date) and (y) are qualified by materiality or Company material adverse effect being true and correct in all respects as of the date of the merger agreement and as of the closing date as though made on and as of the closing date (except to the extent such representations and warranties expressly relate to another date in which case such representations and warranties will be true and correct in all material respects on and as of such other date);

 

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certain of Avid’s representations and warranties contained in the merger agreement related to the capitalization of Avid being true and correct in all respects as of the closing as though made as of the closing date (except to the extent such representations and warranties expressly relate to another date (in which case such representations and warranties will be true and correct on and as of such other date)), except where the failure to be so true and correct in all respects would not in the aggregate reasonably be expected to result in the requirement of Parent to pay additional aggregate merger consideration in excess of $5,000,000 relative to the aggregate merger consideration that would have been payable had such representations and warranties been true and correct in all respects;

 

certain other of Avid’s representations and warranties contained in the merger agreement related to the capitalization of Avid being true and correct in all respects as of the closing date as though made as of the closing date (except to the extent such representations and warranties expressly relate to another date (in which case such representations and warranties will be true and correct on and as of such other date)), except for de minimis inaccuracies;

 

Avid’s representation and warranty contained in the merger agreement related to the absence of a Company material adverse effect since December 31, 2022 being true and correct in all respects as of the date of the merger agreement and as of the closing date as though made on and as of the closing date;

 

Avid having performed or complied with all obligations and covenants in all material respects required by the merger agreement to be performed or complied with by Avid on or before the closing date;

 

No Company material adverse effect having occurred after the date of the merger agreement that is continuing as of the closing date; and

 

Parent having received a certificate signed on behalf of Avid by an executive officer of Avid as to the satisfaction of the conditions described above.

 

Conditions to Avid’s Obligations

 

The obligations of Avid to effect the merger are also subject to the satisfaction or waiver by Avid at or prior to the effective time of each of the following additional conditions:

 

each of Parent’s and Merger Sub’s representations and warranties contained in the merger agreement being true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of the closing (except to the extent such representations and warranties expressly relate to another date in which case such representations and warranties will be true and correct in all material respects on and as of such other date);

 

each of Parent and Merger Sub having performed or complied with all obligations and covenants in all material respects required by the merger agreement to be performed or complied with by Parent and Merger Sub, respectively, on or before the closing date; and

 

Avid having received a certificate signed on behalf of Parent and Merger Sub by an executive officer of each of Parent and Merger Sub as to the satisfaction of the conditions described above.

 

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The merger agreement further provides that neither Avid nor Parent or Merger Sub may rely, either as a basis for not consummating the merger or the other transactions contemplated by the merger agreement or terminating the merger agreement and abandoning the merger, on the failure of any condition described above, as the case may be, to be satisfied if such failure was caused by such party’s material breach of any provision of the merger agreement or if such party’s failure to comply with its obligations hereunder was the primary cause of the failure of such condition to be satisfied.

 

Termination of the Merger Agreement

 

Termination Rights Exercisable by Avid and Parent

 

The merger agreement may be terminated at any time prior to the effective time by ether Parent or Avid:

 

by mutual written consent of Parent and Avid;

 

if the Merger is not consummated on or before 11:59 p.m. (California time) on the outside date but, if all of the conditions to closing, other than the conditions as described in the second and third bullet points in the section of this proxy statement entitled “The Agreement and Plan of Merger — Conditions to the Merger — Conditions to Each Party’s Obligations,” having been satisfied or being be capable of being satisfied at such time, the outside date will automatically extend to 11:59 p.m. (California time) on May 9, 2024. Parent or Avid, as the case may be, is not be permitted to terminate the merger agreement pursuant to this bullet point if the material breach by Parent or Merger Sub (in the case of termination by Parent) or Avid (in the case of termination by Avid) of any of its representations, warranties, covenants or obligations contained in the merger agreement materially contributed to the failure to consummate the merger by such date;

 

if, upon a vote taken at any duly held special meeting (or any adjournment or postponement thereof) held to obtain the Avid stockholder approval, the Avid stockholder approval is not obtained. However, the right to terminate the merger agreement pursuant to this bullet point will not be available to Avid if its action or failure to act (which action or failure to act constitutes a breach by Avid of the merger agreement) has been the primary cause of, or primarily resulted in, the failure to obtain the Avid stockholder approval; and

 

if any governmental entity of competent jurisdiction issues or enters any order, injunction or decree or any law (other than with respect to antitrust laws or investment screening laws) is enforced, enacted, entered or deemed applicable to the merger, in each case that is in effect and prohibits, enjoins or otherwise prevents the consummation of the merger, and such order or law becomes final and non-appealable. However, the right to terminate the merger agreement under this bullet point will not be available to any party that has failed in any material respect to comply with its efforts obligations under the merger agreement before asserting the right to terminate under this bullet point.

 

Termination Rights Exercisable by Avid

 

In addition to the termination rights set forth above, Avid may also terminate the merger agreement:

 

at any time prior to obtaining the Avid stockholder approval, if (A) the Board (or a committee thereof) has determined that Avid has received a superior proposal, (B) the Board (or a committee thereof) has authorized Avid to enter immediately upon termination of the merger agreement into a definitive agreement to consummate the superior proposal, (C) Avid has complied in all material respects with its applicable obligations in the merger agreement in respect of such superior proposal and (D) Avid pays, or causes to be paid, the Avid termination fee;

 

at any time prior to the effective time, if: (A) Parent or Merger Sub breaches or fails to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, which breach or failure to perform would give rise to the failure of an applicable condition to the merger described above to be satisfied, (B) Avid has delivered to Parent written notice of such breach or failure to perform and (C) either such breach or failure to perform is not capable of cure or at least 30 days has elapsed since the date of delivery of such written notice to Parent and such breach or failure to perform has not been cured prior to the expiration of such 30 day period. However, Avid is not permitted to terminate the merger agreement pursuant to this bullet point if Avid has breached or failed to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, such that an applicable condition to the merger described above would not be satisfied; or

 

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at any time prior to the effective time, if (A) all of the applicable conditions to the merger described above (other than those conditions that by their nature are only capable of being satisfied on the closing date, each of which is capable of being satisfied if the closing were on the date of such termination, or that have failed to be satisfied as a result of Parent’s or Merger Sub’s material breach or failure to perform any of their respective representations, warranties, covenants or agreements contained in the merger agreement) have been satisfied or waived, (B) Avid has notified Parent in writing at least three business day prior to such termination stating that Avid is ready, willing and able to consummate the closing and (C) Parent and Merger Sub have failed to consummate the closing by the end of such three business day period.

 

Termination Rights Exercisable by Parent

 

In addition to the termination rights set forth above, Parent may also terminate the merger agreement:

 

at any time prior to obtaining the Avid stockholder approval, if (A) the Board effects a change of Avid recommendation or (B) there has been a willful breach by Avid of the non-solicitation provisions under the merger agreement and such breach involved a director and/or named executive officer of Avid and had material consequences; or

 

at any time prior to the effective time, if: (A) Avid breaches or fails to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, which breach or failure to perform would give rise to the failure of an applicable condition to the merger described above to be satisfied, (B) Parent has delivered to Avid written notice of such breach or failure to perform and (C) either such breach or failure to perform is not capable of cure or at least 30 days has elapsed since the date of delivery of such written notice to Avid and such breach or failure to perform has not been cured prior to the expiration of such 30-day period. However, Parent is not permitted to terminate the merger agreement pursuant to this bullet point if Parent or Merger Sub has breached or failed to perform any of its representations, warranties, covenants or agreements contained in the merger agreement, in any case, such that an applicable condition to the merger described above would not be satisfied.

 

Effect of Termination

 

If the merger agreement is terminated by Avid or Parent, the merger agreement will become void and there will be no liability or obligations on the part of Parent, Merger Sub or Avid or their respective subsidiaries, officers or directors, except that the following obligations would survive such termination:

 

All information provided in connection with Parent and Merger Sub’s right in the merger agreement to access information and facilities of Avid and the Avid subsidiaries remaining subject to the terms of the confidentiality agreement;

 

Parent’s agreement to indemnify and hold harmless Avid, the Avid subsidiaries and the representatives of Avid from and against damages and expenses suffered or incurred by them in connection with the financing;

 

the parties’ agreement regarding costs and expenses incurred in connection with the merger agreement and the merger;

 

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the respective obligations of Avid and Parent to pay a termination fee (as applicable);

 

the obligations under the limited guarantee, the equity commitment letter and the confidentiality agreement in accordance with their respective terms;

 

the terms of certain miscellaneous provisions; and

 

if such termination resulted, directly or indirectly, from a willful breach, then the breaching party will be fully liable for any and all damages, costs, expenses, liabilities of any kind, in each case, suffered by the party as a result of or in connection with such breach, subject to an aggregate cap on all monetary damages to which Avid or Parent (and their respective related parties) are exposed (other than pursuant to the confidentiality agreement) equal to the Avid termination fee or the Parent termination fee, as applicable, as described in the section of this proxy statement entitled “The Agreement and Plan of Merger — Expenses; Termination Fees” below.

 

Expenses; Termination Fees

 

Except as otherwise provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement and the merger will be paid by the party incurring such expense.

 

Avid has agreed to pay Parent the Avid termination fee:

 

if (A) the merger agreement is validly terminated (x) by either Parent or Avid as described in the third bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid and Parent,” above, (y) by either Parent or Avid as described in the second bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid and Parent,” above and the special meeting has not been held as a result of a breach by Avid or (z) by Parent as described in the second bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Parent,” above, (B) following the execution and delivery of the merger agreement, a competing proposal was publicly disclosed or made known to Avid, and not withdrawn or abandoned, prior to such termination and (C) concurrently with or within 12 months after the date of any such termination, (x) Avid or any of the Avid subsidiaries enters into a definitive agreement to effect any competing proposal or (y) any competing proposal is consummated, then Avid will pay to Parent or its designee the Avid termination fee concurrently with the consummation of such competing proposal. For purposes of this bullet point, all references to “15%” and “85%” in the definition of “competing proposal” will be deemed to be references to “50%”;

 

if the merger agreement is validly terminated by Parent as described in the first bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Parent,” then Avid will pay to Parent or its designee the Avid termination fee within two business days after the date of such termination;

 

if the merger agreement is validly terminated by Avid as described in the first bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid,” then Avid will pay to Parent or its designee the Avid termination fee prior to or concurrently with, and as a condition to, such termination; or

 

if the merger agreement is validly terminated by either Parent or Avid as described in the third bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid and Parent,” and at the time of such termination, Parent had the right to terminate the merger agreement as described in the first clause of the first bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Parent,” then Avid will pay to Parent or its designee the Avid termination fee within two business days after the date of such termination.

 

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Parent has agreed to pay Avid the Parent termination fee:

 

if the merger agreement is validly terminated by Avid or Parent as described in the second bullet point in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid and Parent,” after such time as Avid has complied with the respective requirements of, and thus had the right to terminate at such time pursuant to, the termination rights as described in the second or third bullet points in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid,” then Parent will pay to Avid or its designee the Parent termination fee within two business days after the date of such termination; or

 

if the merger agreement is validly terminated by Avid as described in the second or third bullet points in the section of this proxy statement entitled “The Agreement and Plan of Merger — Termination of the Merger Agreement — Termination Rights Exercisable by Avid,” then Parent will pay to Avid or its designee the Parent termination fee within two business days after the date of such termination.

 

Other than pursuant to the confidentiality agreement, in no event will Parent or any of its related parties be entitled to seek or obtain, nor will they permit any of their representatives or any other person acting on their behalf to seek or obtain, any monetary recovery or award in excess of the Avid termination fee against Avid or any of its related parties or any monetary damages of any kind, including consequential, special, indirect or punitive damages, in excess of the Avid termination fee against Avid or any of its related parties, in each case, for, or with respect to, the merger agreement, the merger, the other transactions contemplated by the merger agreement, the termination of the merger agreement, the failure to consummate the merger or any claims or actions under applicable law arising out of any such breach, termination or failure. In the event that Parent receives full payment of the Avid termination fee pursuant to the terms of merger agreement under circumstances where an Avid termination fee was payable, the receipt of the Avid termination fee will be the sole and exclusive monetary remedy against Avid and any of its related parties for any and all losses or damages suffered or incurred by Parent, Merger Sub, any of their respective affiliates or any other person in connection with the merger agreement (and the termination of the merger agreement), the merger and the other transactions contemplated by the merger agreement (and the abandonment thereof) or any matter forming the basis for such termination.

 

Other than pursuant to the confidentiality agreement, in no event will Avid or any of its related parties be entitled to seek or obtain, nor will they permit any of their representatives or any other person acting on their behalf to seek or obtain, any monetary recovery or award in excess of the Parent termination fee against Parent or any of its related parties or any monetary damages of any kind, including consequential, special, indirect or punitive damages, in excess of the Parent termination fee against Parent or any of its related parties, in each case, for, or with respect to, the merger agreement, the merger, the debt and equity commitment letters, the limited guarantee, the other transactions contemplated by the merger agreement, the termination of the merger agreement, the failure to consummate the merger or any claims or actions under applicable law arising out of any such breach, termination or failure. In the event that Avid receives full payment of the Parent termination fee pursuant to the terms of the merger agreement under circumstances where a Parent termination fee was payable, the receipt of the Parent termination fee (including, without duplication, Avid’s right to enforce the limited guarantee with respect thereto and receive the Parent termination fee from the guarantors) will be the sole and exclusive monetary remedy against Parent and any of its related parties for any and all losses or damages suffered or incurred by Avid or any of its affiliates or any other person in connection with the merger agreement (and the termination of the merger agreement), the merger and the other transactions contemplated by the merger agreement (and the abandonment thereof) or any matter forming the basis for such termination.

 

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Miscellaneous

 

Specific Performance

 

The parties to the merger agreement are entitled to an injunction, specific performance or other equitable relief to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement, in addition to any other remedy to which they are entitled under law or equity, except that Avid may only cause Parent and Merger Sub to consummate the merger, and cause the equity financing under the equity commitment letter (of which Avid is an express third-party beneficiary) to be funded, if the following conditions are satisfied:

 

all of the conditions to Parent’s obligations to consummate the merger (other than those conditions that by their terms are only capable of being satisfied on the date of the closing) have been satisfied (or waived) at the time when the closing would have been required to occur pursuant to the terms of the merger agreement,

 

the debt financing has been funded or would be funded at or prior to the closing if the equity financing is funded at or prior to the closing,

 

Avid has confirmed in writing that, if specific performance is granted and if the equity financing and debt financing are funded, then it would take all actions required to be taken by Avid to consummate the closing in accordance with the terms hereof, and

 

Parent has failed to consummate the closing within three business days following the later of (i) the date on which the notice described in the third bullet point above is delivered by Avid and (ii) the time when the closing should have occurred pursuant to the terms of the merger agreement.

 

Amendment of the Merger Agreement

 

The merger agreement may be amended by the parties to the merger agreement at any time before or after obtaining the Avid stockholder approval. However, after obtaining the Avid stockholder approval, there will be made no amendment that by law requires further approval by the stockholders of Avid without the further approval of such stockholders and no amendment will be made to the merger agreement after the effective time. Except as required by applicable law, no amendment of the merger agreement by Avid will require the approval of the Avid stockholders.

 

Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury

 

The merger agreement and all legal actions and proceedings arising out of or relating to the merger agreement are governed by Delaware law. However, any legal action or proceeding against the debt commitment parties in any way relating to the merger agreement or the transactions contemplated by the merger agreement is governed by New York law. Each of the parties to the merger agreement has irrevocably agreed that any legal action or proceeding arising out of or relating to the merger agreement brought by any other party or its successors or assigns will be brought and determined in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (unless such court will decline to accept jurisdiction over a particular matter, in which case, in any Delaware state or federal court within the State of Delaware). Notwithstanding the foregoing, actions against the debt commitment parties must generally be brought exclusively in any federal or state court in the Borough of Manhattan, New York, New York. In addition, each of the parties to the merger agreement has irrevocably and unconditionally waived any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to the merger agreement or the merger.

 

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APPRAISAL RIGHTS

 

Under Delaware law, holders of shares of Avid common stock are entitled to appraisal rights in connection with the merger, provided that such holders meet all of the conditions set forth in Section 262 of the DGCL. If the merger is completed, stockholders and beneficial owners who hold shares of Avid common stock, who continuously hold shares through the effective time, who did not vote in favor of the merger and who otherwise complied with the applicable statutory procedures under Section 262 of the DGCL will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL.

 

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL, which is which is accessible at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. All references in Section 262 of the DGCL and in this summary to a (i) “stockholder” are to the record holder of shares of Avid common stock, (ii) “beneficial owner” are to a person who is the beneficial owner of shares of the Avid common stock held either in a voting trust or by a nominee on behalf of such person and (iii) “person” are to an individual, corporation, partnership, unincorporated association or other entity. Holders of Avid common stock should carefully review the full text of Section 262 of the DGCL as well as the information discussed below. Holders should assume that Avid will take no action to perfect any appraisal rights of any stockholder or beneficial owner.

 

Under Section 262 of the DGCL, if the merger is effected, holders of shares of Avid common stock that desire to exercise their right to appraisal must (i) properly submit a written demand to Avid prior to the stockholder vote on the adoption of the merger agreement, (ii) not vote in favor of the adoption of the merger agreement, (iii) continue to hold their shares of Avid common stock through the effective time and (iv) not thereafter withdraw their demand for appraisal of such shares or otherwise lose their appraisal rights, in each case, in accordance with the DGCL. A beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with the procedures of Section 262, provided that the demand made by such beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by Avid under Section 262 and to be set forth on the verified list (defined below).

 

Any stockholders and beneficial owners that meet the requirements under DGCL 262 may have their shares of Avid common stock appraised by the Delaware Court of Chancery and receive payment of the “fair value” of such shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by such court, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of the shares of Avid common stock as determined by the Delaware Court of Chancery could be based upon considerations other than, or in addition to, the merger consideration of $27.05 per share. Stockholders and beneficial owners should recognize that the “fair value” could be greater than, less than or the same as the merger consideration of $27.05 per share and that an investment banking opinion as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the merger, is not an opinion as to, and does not otherwise address, fair value under the DGCL.

 

Under Section 262 of the DGCL, Avid is required, not less than 20 days before the special meeting to vote on the adoption of the merger agreement, to notify each of the holders of Avid common stock who are entitled to appraisal rights that appraisal rights are available for any or all of such shares, and to include in such notice either a copy of Section 262 of the DGCL or information directing the stockholders and beneficial owners to a publicly available electronic resource at which Section 262 may be accessed without a subscription or cost. This proxy statement constitutes a formal notice of appraisal rights under Section 262 of the DGCL. If you wish to exercise your appraisal rights, you should carefully review the text of Section 262 of the DGCL, which is accessible at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. Any holder of shares of Avid common stock who wishes to exercise such appraisal rights, or who wishes to preserve such holder’s right to do so, should review the following discussion carefully because failure to timely and properly comply with the procedures specified may result in the loss of appraisal rights under the DGCL. A person who loses, his, her or its appraisal rights will still be entitled to receive the merger consideration of $27.05 per share.

 

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Any person wishing to exercise appraisal rights should consider consulting legal counsel before attempting to exercise such rights.

 

To exercise appraisal rights with respect to your shares of Avid common stock, you must:

 

NOT vote your shares of Avid common stock in favor of the Merger Agreement Proposal;

 

deliver to Avid a written demand for appraisal of your shares before the taking of the vote on the Merger Agreement Proposal at the special meeting, as described further below under the subsection entitled “—Written Demand by the Record Holder or Beneficial Owner”;

 

continuously hold your shares of Avid common stock through the effective time; and

 

otherwise comply with the procedures set forth in Section 262 of the DGCL.

 

Written Demand by the Record Holder or Beneficial Owner

 

Any stockholder or beneficial owner who elects to exercise appraisal rights of his, her or its Avid common stock must deliver to Avid, before the taking of the vote on the Merger Agreement Proposal at the special meeting, a written demand for the appraisal of such person’s shares. All written demands for appraisal should be addressed to Avid Technology, Inc., 75 Blue Sky Drive, Burlington, Massachusetts 01803, Attention: Corporate Secretary. Such demand will be sufficient if it reasonably informs Avid of the identity of the stockholder and that the stockholder intends thereby to demand appraisal of such stockholder’s shares.

 

Under Section 262 of the DGCL, a proxy or vote against the merger does not constitute such a demand. If the shares are owned of record in a fiduciary or a representative capacity, such as by a trustee, guardian or custodian, execution of the demand must be made on behalf of the record holder in that capacity, and if the shares are owned of record by more than one person, such as in a joint tenancy or a tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including one of two or more joint owners, may execute the demand for appraisal for a stockholder. However, the agent must identify the record owner(s) and expressly disclose the fact that, in executing the demand, the agent is acting as agent for the record owner(s).

 

A holder of record, such as a brokerage firm, bank, trust or other nominee who in turn holds Avid common stock as nominee or intermediary for one or more beneficial owners may exercise appraisal rights with respect to shares of Avid common stock held for one or more beneficial owners while not exercising appraisal rights for other beneficial owners. In that case, the written demand should state the number of shares of Avid common stock as to which appraisal is sought. Where no number of shares of Avid common stock is expressly mentioned, the demand will be presumed to cover all shares of Avid common stock held in the name of the holder of record.

 

Beneficial Owners

 

A beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with the procedures of Section 262, provided that the demand made by such beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by the surviving corporation (which, in this case, will be Avid), under Section 262 and to be set forth on the verified list. Avid reserves the right to take the position that it may require the submission of all information required of a beneficial owner pursuant to Section 262 with respect to any person sharing beneficial ownership of the shares for which such demand is submitted.

 

Filing a Petition for Appraisal

 

Within 10 days after the effective date of the merger, the surviving corporation must notify each stockholder or beneficial owner who has complied with this subsection and has not voted in favor of the merger, of the effective date of the merger. Within 120 days after the effective time, but not thereafter, the surviving corporation, or person who has complied with Section 262 of the DGCL and is entitled to appraisal rights under Section 262, may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on Avid in the case of a petition filed by a stockholder or beneficial owner, demanding a determination of the fair value of the shares held by all holders who did not adopt the merger agreement and properly demanded appraisal of such shares. If no such petition is filed within that 120-day period, appraisal rights will be lost for all dissenting persons. Avid is under no obligation to, and has no present intention to, file a petition, and holders should not assume that Avid will file a petition or that it will initiate any negotiations with respect to the fair value of shares of Avid common stock. Accordingly, it is the obligation of the holders of shares of Avid common stock to initiate all necessary action to perfect their appraisal rights in respect of the shares within the period prescribed in Section 262 of the DGCL.

 

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At any time within 60 days after the effective date of the merger, any person entitled to appraisal rights who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such person’s demand for appraisal and to accept the terms offered upon the merger.

 

Within 120 days after the effective time, any person who has complied with the requirements for exercise of appraisal rights will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the merger and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares (provided that, where a beneficial owner makes a demand, the record holder of such shares shall not be considered a separate stockholder holding such shares for purposes of such aggregate number). Such statement must be given to the requesting stockholder or beneficial owner within ten days after a written request therefor has been received by the surviving corporation or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later.

 

Upon the filing of such petition by any such holder of shares, service of a copy thereof must be made upon the surviving corporation, which will then be obligated within 20 days after such service to file with the Delaware Register in Chancery of the Delaware Court of Chancery (the “Delaware Register in Chancery”) a duly verified list (a “verified list”) containing the names and addresses of all persons who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order the Delaware Register in Chancery to provide notice of the time and place fixed for the hearing on the petition by registered or certified mail to the surviving corporation and all of the persons shown on the verified list at the addresses stated therein. The forms of the notices by mail and by publication shall be approved by the Delaware Court of Chancery. The costs of these notices are borne by the surviving corporation.

 

After notice to the stockholders and beneficial owners as required by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those persons who have complied with Section 262 of the DGCL and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the persons who demanded appraisal of their shares of Avid common stock and who hold shares represented by certificates to submit their stock certificates to the Delaware Register in Chancery for notation thereon of the pendency of the appraisal proceeding, and, if any such person fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to that person. Pursuant to Section 262 of the DGCL, assuming that, immediately prior to the merger, shares of Avid common stock continue to be listed on the Nasdaq, the Delaware Court of Chancery will dismiss the appraisal proceedings as to all holders of shares who are otherwise entitled to appraisal rights unless (i) the total number of shares entitled to appraisal rights exceeds 1% of the outstanding shares of Avid common stock eligible for appraisal or (ii) the value of the consideration provided in the merger for such total number of shares exceeds $1,000,000.

 

Determination of Fair Value

 

After the Delaware Court of Chancery determines the persons who are entitled to appraisal, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through the appraisal proceeding, the Delaware Court of Chancery will determine the fair value of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value (subject, in the case of interest payments, to any voluntary cash payments made by the surviving corporation pursuant to subsection (h) of Section 262 of the DGCL that have the effect of limiting the sum on which interest accrues as described above). Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, and except as otherwise provided in Section 262 of the DGCL, interest from the effective time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided in Section 262 of the DGCL only upon the sum of (i) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (ii) interest theretofore accrued, unless paid at that time.

 

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In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the Delaware Court of Chancery must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger[.]” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

 

Stockholders and beneficial owners considering appraisal should be aware that the fair value of their shares of Avid common stock as so determined could be more than, the same as or less than the merger consideration of $27.05 per share and that an investment banking opinion as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the merger, is not an opinion as to, and does not otherwise address, “fair value” under Section 262 of the DGCL. Although Avid believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery. Neither Parent nor Avid anticipates offering more than the merger consideration to any stockholder exercising appraisal rights, and Parent and Avid reserve the right to assert, in any appraisal proceeding, that for purposes of Section 262 of the DGCL, the fair value of a share of Avid common stock is less than the merger consideration.

 

Upon application by the surviving corporation or by any person entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the verified list may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262. The Delaware Court of Chancery will direct the payment of the fair value of the shares of Avid common stock, together with interest, if any, by the surviving corporation to the persons entitled thereto. Payment will be so made to each such person upon such terms and conditions as the Delaware Court of Chancery may order. The Delaware Court of Chancery’s decree may be enforced as other decrees in such Court may be enforced.

 

The costs of the action (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable. Upon application of a person whose name appears on the verified list who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may order all or a portion of the expenses incurred by a stockholder in connection with an appraisal proceeding, including reasonable attorneys’ fees and the fees and expenses of experts utilized in the appraisal proceeding, to be charged pro rata against the value of all the shares of Avid common stock entitled to appraisal. In the absence of an order, each party bears its own expenses.

 

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Any person who has duly demanded appraisal rights for shares of Avid common stock in compliance with Section 262 of the DGCL will not, after the effective time, be entitled to vote such shares for any purpose or be entitled to the payment of dividends or other distributions thereon, except dividends or other distributions payable to holders of record of shares of Avid common stock as of a date or time prior to the effective time. At any time within 60 days after the effective time, any person who has not commenced an appraisal proceeding or joined that proceeding as a named party will have the right to withdraw such person’s demand for appraisal and to accept the terms offered in the merger; after this period, the person may withdraw such person’s demand for appraisal only with the written approval of Avid. If no petition for appraisal is filed with the Delaware Court of Chancery within 120 days after the effective time, the right to appraisal with respect to all shares shall cease, and persons will be entitled to receive the merger consideration. Inasmuch as Avid has no obligation to file such a petition and has no present intention to do so, any holder of shares of Avid common stock who desires such a petition to be filed is advised to file it on a timely basis. Notwithstanding the foregoing, an appraisal proceeding in the Delaware Court of Chancery shall not be dismissed as to any person without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just. Notwithstanding the foregoing, any holder who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such holder’s demand for appraisal and accept the terms offered upon the merger within 60 days after the effective time.

 

If you wish to exercise your appraisal rights, you must not vote your shares of Avid common stock in favor of the merger, and you must comply with the procedures set forth in Section 262 of the DGCL. If you fail to take any required step in connection with the exercise of appraisal rights, it will result in the termination or waiver of your appraisal rights.

 

The foregoing summary of the rights of Avid stockholders and beneficial owners to seek appraisal rights under Delaware law does not purport to be a complete statement of the procedures to be followed by Avid stockholders and beneficial owners desiring to exercise any appraisal rights available thereunder and is qualified in its entirety by reference to Section 262 of the DGCL. The proper exercise of appraisal rights requires adherence to the applicable provisions of the DGCL.

 

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MARKET PRICE AND DIVIDEND DATA

 

Shares of Avid common stock are listed on Nasdaq and trade under the symbol “AVID.” The following table presents the high and low closing sale prices of Avid common stock for the period indicated on Nasdaq. No dividends were declared on shares of Avid common stock during any period indicated below.

 

                     
        High     Low  
Fiscal 2020   Quarter ended March 31, 2020   $ 9.24     $ 5.47  
    Quarter ended June 30, 2020   $ 8.33     $ 4.92  
    Quarter ended September 30, 2020   $ 9.30     $ 6.89  
    Quarter ended December 31, 2020   $ 15.87     $ 8.36  
Fiscal 2021   Quarter ended March 31, 2021   $ 23.94     $ 14.58  
    Quarter ended June 30, 2021   $ 39.47     $ 19.52  
    Quarter ended September 30, 2021   $ 39.89     $ 24.77  
    Quarter ended December 31, 2021   $ 35.36     $ 27.25  
Fiscal 2022   Quarter ended March 31, 2022   $ 36.77     $ 27.78  
    Quarter ended June 30, 2022   $ 36.72     $ 21.45  
    Quarter ended September 30, 2022   $ 29.14     $ 21.28  
    Quarter ended December 31, 2022   $ 29.42     $ 23.57  
Fiscal 2023   Quarter ended March 31, 2023   $ 32.44     $ 26.24  
    Quarter ended June 30, 2023   $ 33.21     $ 20.06  
    Quarter ended September 30, 2023 (through [       ], 2023)   $ [       ]     $ [       ]  

 

The following table presents the closing per share sales price of Avid common stock, as reported on Nasdaq on May 23, 2023, the last trading day prior to the release of initial media reports that Avid may be exploring a sale; on August 2, 2023, the last trading day prior to the release of subsequent media reports that Avid may be exploring a sale; and on [       ], 2023, the latest practicable trading day before the filing of this proxy statement:

 

      
Date   Closing per Share Price 
May 23, 2023   $20.47 
August 2, 2023   $23.08 
[        ], 2023   $[       ] 

 

You are encouraged to obtain current market prices of Avid common stock in connection with voting your shares. Following the completion of the merger, shares of Avid common stock will no longer be listed or traded on Nasdaq or any other public market. In addition, the registration of shares of Avid common stock under the Exchange Act will be terminated.

 

Historically, Avid has neither declared nor paid any dividend on Avid common stock. The merger agreement prohibits Avid from declaring, setting aside, making or paying any dividend or other distribution with respect to Avid common stock, other than as between Avid and any Avid subsidiary or between Avid subsidiaries.

 

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STOCK OWNERSHIP

 

The following table sets forth information regarding the beneficial ownership of Avid common stock as of [        ], 2023 (unless otherwise indicated below) for:

 

each person, or group of affiliated persons, known to Avid to own beneficially 5% or more of the outstanding shares of Avid common stock.

 

each of Avid’s directors;

 

each of Avid’s named executive officers; and

 

all of Avid’s directors and executive officers as a group.

 

The table is based on information Avid received from the directors and executive officers and filings made with the SEC. Avid is not aware of any other beneficial owner of more than 5% of the number of outstanding shares of Avid common stock as of [       ], 2023.

 

Avid has determined beneficial ownership in accordance with the rules of the SEC. Under these rules, beneficial ownership of a class of capital stock includes any shares of such class as to which a person, directly or indirectly, has or shares voting power or investment power and also any shares as to which a person has the right to acquire such voting or investment power within 60 days through the exercise of any options, warrants or other rights. Shares subject to options, warrants or other rights are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Except as indicated below and under applicable community property laws, Avid believes that the beneficial owners identified in this table have sole voting and investment power with respect to all shares shown below.

 

For the purpose of calculating the percentage of shares beneficially owned by any Avid stockholder, this table lists applicable percentage ownership based on [         ] shares of Avid common stock outstanding as of [         ], 2023.

 

Unless otherwise indicated below, the address for each director and named executive officer is c/o Avid Technology, Inc., 75 Blue Sky Drive, Burlington, Massachusetts 01803.

 

Name 

Amount and Nature of Beneficial Ownership of Common Stock(1) 

Percent of Class 

5% Stockholders    
Impactive Capital LP(2) 7,168,370 [       ]%
BlackRock, Inc.(3) 5,543,117 [       ]%
Fidelity Management & Research Co. LLC(4) 4,796,108 [       ]%
Royce & Associates LP(5) 2,307,871 [       ]%
The Vanguard Group, Inc.(6) 2,501,518 [       ]%
STG Partners, LLC(7) 7,168,370 [       ]%
     
Directors and Named Executive Officers    
Christian A. Asmar(2) 7,168,370 [       ]%
Robert M. Bakish(8) 711,732 [       ]%
Paula E. Boggs(9) 122,431 *
Tim Claman 78,700 *
Tom Cordiner 195,899 *
Elizabeth M. Daly 149,426 *
Kenneth L. Gayron 321,869 *
Nancy Hawthorne 121,538 *
Kevin W. Riley 33,292 *
Jeff Rosica 1,141,368 [       ]%
Daniel B. Silvers 68,800 *
John P. Wallace 86,048 *
Peter M. Westley 62,586 *
All directors and executive officers as a group (15 persons) 10,195,181 [       ]%

 

 

115  

 

 

 

*Less than 1%

 

(1)The inclusion of any shares of Avid common stock deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. The persons named in the table have, to Avid’s knowledge, sole voting and investment power with respect to all shares shown as beneficially owned by them, except as noted in the footnotes below.

(2)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13D/A filed with the SEC by Impactive Capital LLC, Impactive Capital GP LLC, Impactive Capital LP, Lauren Taylor Wolfe and Christian Asmar on August 10, 2023. Ms. Wolfe and Mr. Asmar are each managing members of Impactive Capital LLC, Impactive Capital GP LLC and Impactive Capital LP. As of August 9, 2023, the Impactive Capital stockholders had shared voting power over 7,168,370 shares of Avid common stock and shared dispositive power over 7,168,370 shares of Avid common stock. The business address of the Impactive Capital stockholders is 152 West 57th Street, 17th Floor, New York, NY 10019. The amount of ownership listed does not include 6,203 unvested RSU awards that do not vest in 60 days or less unless the merger agreement closes during that time, in which case any unvested RSU awards will automatically be cancelled and converted solely into converted cash awards as described in more detail in the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81.

(3)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 26, 2023. As of December 31, 2022, BlackRock, Inc. had sole voting power over 5,490,902 shares of Avid common stock and sole dispositive power over 5,543,117 shares of Avid common stock. The business address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

(4)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by Fidelity Management & Research Co. LLC on February 10, 2023. As of December 31, 2022, Fidelity Management & Research Co. LLC had sole voting power over 4,795,338 shares of Avid common stock and sole dispositive power over 4,796,108 shares of Avid common stock. The business address of Fidelity Management & Research Co. LLC is 245 Summer Street Boston, MA 02210.

(5)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by Royce & Associates, LP on January 23, 2023. As of December 31, 2022, Royce & Associates, LP had sole voting power over 2,307,871 shares of Avid common stock and sole dispositive power over 2,307,871 shares of Avid common stock. The business address of Royce & Associates LP is 745 Fifth Avenue New York, NY 10151.

(6)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13G/A filed with the SEC by The Vanguard Group on February 9, 2023. As of December 30, 2022, The Vanguard Group had sole voting power over 0 shares of Avid common stock and sole dispositive power over 2,426,505 shares of Avid common stock. The business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.

(7)Amount and nature of ownership listed is based solely upon information contained in a Schedule 13D filed with the SEC by (i) Artisan Topco LP, a Delaware limited partnership (“Topco”), (ii) Artisan Parent, Inc., a Delaware corporation and wholly-owned subsidiary of Topco (“AP”), (iii) Artisan Midco, Inc., a Delaware corporation and wholly-owned subsidiary of AP (“Midco”), (iv) Parent, (v) Merger Sub, (vi) STG VII, L.P., a Delaware limited partnership and general partner of Topco (“STG VII”), (vii) STG VII-A, L.P., a Delaware limited partnership (“STG VII-A”), (viii) STG VII Executive Fund, L.P., a Delaware limited partnership (“STG VII Executive Fund”), (ix) STG AV, L.P., a Delaware limited partnership (“STG AV”), (x) STG VII GP, L.P., a Delaware limited partnership (“STG VII GP”), as the general partner of STG VII, STG VII-A and STG VII Executive Fund, (xi) STG VII UGP, LLC, a Delaware limited liability company (“STG VII UGP”), as the general partner of STG AV and STG VII GP, and (xii) STG Partners, LLC, a Delaware limited liability company (“STG Partners”), as the managing member of STG VII UGP (collectively, the “STG Reporting Persons”) on August 18, 2023. As of August 9, 2023, the STG Reporting Persons had sole voting power and sole dispositive power over 0 shares of Avid common stock and shared voting power and shared dispositive power over 7,168,370 shares of Avid common stock by virtue of the voting agreement with the Impactive Capital stockholders. The amount of ownership listed does not include 6,203 unvested RSU awards held be Mr. Asmar that do not vest in 60 days or less unless the merger agreement closes during that time, in which case any unvested RSU awards will automatically be cancelled and converted solely into converted cash awards as described in more detail in the section of this proxy statement entitled “The Agreement and Plan of Merger—Treatment of Outstanding Equity Awards and Equity Plans” beginning on page 81.

(8)Consists of 648,732 shares of Avid common stock held by Mr. Bakish and 27,000 shares of Avid common stock held by a family member of Mr. Bakish.

(9)Consists of 105,931 shares of Avid common stock held by Ms. Boggs and 16,500 shares of Avid common stock held by Boggs LLC, which is managed by Ms. Boggs.

 

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THE VOTING AGREEMENT

 

The summary of the material provisions of the voting agreement set forth below and elsewhere in this proxy statement is qualified in its entirety by reference to the voting agreement, a copy of which is attached to this proxy statement as Annex C and is incorporated by reference in this proxy statement. This summary does not purport to be complete and may not contain all of the information about the voting agreement that is important to you. We encourage you to read the voting agreement carefully in its entirety, as well as this proxy statement in its entirety, including the annexes attached to this proxy statement and the documents and information incorporated by reference in this proxy statement, before making any decisions regarding the merger.

 

In connection with the execution of the merger agreement, the Impactive Capital stockholders entered into a voting agreement with Avid and Parent. The Impactive Capital stockholders in the aggregate beneficially owned approximately 16.3% of the outstanding Avid common stock as of the close of business on the record date for the special meeting. In the event any Impactive Capital stockholder acquires record ownership or beneficial ownership of any shares of Avid common stock after the execution of the voting agreement, such additional shares will automatically become subject to the restrictions under the voting agreement.

 

Voting Provisions

 

Under the voting agreement, the Impactive Capital stockholders agreed during the term of the voting agreement to vote or cause to be voted all of their shares of Avid common stock owned at the time of the voting agreement, or at any time after, as of the applicable record date (i) for the adoption of the merger agreement and any action in furtherance of the adoption of the merger agreement, (ii) against any action or agreement that would reasonably be expected to result in a material breach of any representation, warranty, covenant or obligation of Avid in the merger agreement and (iii) against any proposal involving Avid or any of its subsidiaries that would reasonably be expected to materially impede, interfere with, delay, postpone or adversely affect the consummation of the merger or any of the other transactions contemplated by the merger agreement. The Impactive Capital stockholders also agreed to not revoke or modify the proxy or other instructions granted to vote their shares of Avid common stock prior to the earlier of (x) the completion of the special meeting and (y) the expiration of the voting agreement, except as necessary to comply with the voting obligations in the voting agreement.

 

Restrictions on Transfer

 

Pursuant to the voting agreement, each Impactive Capital stockholder agreed that, during the term of the voting agreement, such Impactive Capital stockholder will not, directly or indirectly, cause or permit any transfer of such Impactive Capital stockholder ‘s shares of Avid common stock. However, the Impactive Capital stockholders may transfer their shares of Avid common stock (i) pursuant to, and in compliance with, a written plan that meets the requirements of Rule 10b5-1 under the Exchange Act in effect prior to the date of the voting agreement, (ii) in connection with the payment of the exercise price or the payment or satisfaction of taxes or tax withholding obligations applicable to the exercise, vesting, settlement or conversion of any RSU awards or other equity awards granted pursuant to the Avid stock plan or the Avid stock purchase plan or (iii) to any affiliate of the Impactive Capital stockholders or to any family member (including a trust for such family member’s benefit) of the Impactive Capital stockholders, if, in each case, the assignee or transferee agrees to be bound by the terms of the voting agreement.

 

Waiver of Appraisal Rights; Termination

 

Under the voting agreement, the Impactive Capital stockholders waived and may not assert any statutory rights to demand appraisal of their shares of Avid common stock in connection with the merger.

 

The voting agreement terminates and expires upon the earliest of: (i) the termination of the merger agreement; (ii) the effective time; (iii) any amendment, modification or supplement to the merger agreement that (A) decreases the merger consideration (other than any such decrease in accordance with the merger consideration adjustment provisions contained in the merger agreement), (B) changes the form of the merger consideration, (C) imposes any additional material restrictions on , or additional conditions on, the payment of the merger consideration, (D) imposes any additional material restrictions or obligations on the Impactive Capital stockholders or (E) could materially affect or delay the consummation of the merger; (iv) a change of Avid recommendation; and (v) with respect to any Impactive Capital stockholder, the termination of the voting agreement by written agreement of each of Parent, Avid and such Impactive Capital stockholder.

 

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OTHER MATTERS

 

Other Matters for Action at the Special Meeting

 

As of the date of this proxy statement, the Board knows of no matters that will be presented for consideration by Avid stockholders at the special meeting other than as described in this proxy statement.

 

118  

 

FUTURE STOCKHOLDER PROPOSALS

 

In order for an Avid stockholder proposal to be eligible to be included in Avid’s proxy statement and proxy card for the 2024 annual meeting of Avid stockholders, the proposal must be submitted to Avid’s Corporate Secretary at Avid’s principal offices in Burlington, Massachusetts, on or before December 29, 2023, and concern a matter that may be properly considered and acted upon at the annual meeting in accordance with Rule 14a-8 under the Exchange Act.

 

Under the advance notice provisions in Avid’s by-laws, Avid stockholders are required to provide notice to Avid’s Corporate Secretary at its principal offices in Burlington, Massachusetts, of the nomination of directors or to introduce an item of business at an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the anniversary date of Avid’s prior annual meeting. However, if Avid’s annual meeting is called for a date that is not within 25 days before or after the anniversary date of the prior year’s annual meeting, notice by the stockholder must be received no later than the close of business on the tenth day following the earlier of either the day on which the notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever occurs first.

 

In addition to satisfying the applicable requirements under Avid’s by-laws, to comply with the universal proxy rules, Avid stockholders who intend to solicit proxies in support of director nominees other than Avid’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 26, 2024.

 

Stockholder proposals and nominations should be sent to:

 

Avid Technology, Inc.
75 Blue Sky Drive
Burlington, Massachusetts 01803

Attention: Corporate Secretary

 

119  

 

HOUSEHOLDING OF PROXY MATERIAL

 

The rules promulgated by the SEC permit companies, brokers, banks or other intermediaries to deliver a single copy of proxy statements to households at which two or more stockholders reside. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Stockholders sharing an address who have been previously notified by their broker, bank or other intermediary and have consented to householding will receive only one copy of this proxy statement. If you would like to opt out of this practice for future mailings and receive separate proxy statements for each stockholder sharing the same address, please contact your broker, bank or other intermediary. You may also obtain a separate copy of proxy statements without charge by sending a written request to Avid Technology, Inc., 75 Blue Sky Drive, Burlington, Massachusetts 01803, Attention: Corporate Secretary. Avid will promptly send additional copies of the proxy statement upon receipt of such request. Stockholders sharing an address that are receiving multiple copies of proxy statements can request delivery of a single copy of proxy statements by contacting their broker, bank or other intermediary or sending a written request to Avid at the address above.

 

120  

 

WHERE YOU CAN FIND MORE INFORMATION

 

Avid files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information regarding issuers that file electronically with the SEC. Accordingly, you can obtain the annual, quarterly and current reports, proxy statements and other information Avid files with the SEC, including the documents incorporated by reference in this proxy statement, without charge through the SEC’s website at www.sec.gov.

 

Statements contained in this proxy statement, or in any document incorporated in this proxy statement by reference, are not necessarily complete, and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows Avid to “incorporate by reference” into this proxy statement documents Avid files with the SEC. This means that Avid can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement. This proxy statement and the information that Avid later files with the SEC may update and supersede the information incorporated by reference. Similarly, the information that Avid later files with the SEC may update and supersede the information in this proxy statement. Avid also incorporates by reference the documents listed below and any documents filed by Avid pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and before the date of the special meeting (provided that Avid is not incorporating by reference any information furnished to, but not filed with, the SEC):

 

  Avid’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 1, 2023;

 

  Avid’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023 and June 30, 2023, filed on May 4, 2023 and August 9, 2023, respectively;

 

  Avid’s Definitive Proxy Statement for its 2023 annual meeting of stockholders, filed on April 28, 2023; and

 

  Avid’s second Current Report on Form 8-K filed on August 9, 2023 and Avid’s Current Reports on Form 8-K filed on August 10, 2023.

 

Copies of any of the documents Avid files with the SEC may be obtained free of charge either on Avid’s website, by contacting Avid at 75 Blue Sky Drive, Burlington, Massachusetts 01803 or by calling (978) 275-2032. The information provided on Avid’s website is not part of this proxy statement and is not incorporated by reference in this proxy statement.

 

If you would like to request documents from Avid, please do so at least five business days before the date of the special meeting in order to receive timely delivery of those documents prior to the special meeting.

 

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. AVID HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [         ], 2023. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO THE CONTRARY.

 

121  

 

 

PRELIMINARY COPY—SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 2023

  

 

  

 

 

ANNEX A

 

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

 

among

 

ARTISAN BIDCO, INC.,

 

ARTISAN MERGER SUB, INC.

 

and

 

AVID TECHNOLOGY, INC.

 

Dated as of August 9, 2023

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I THE MERGER 2
Section 1.01   The Merger 2
Section 1.02   Closing 2
Section 1.03   Effective Time 2
Section 1.04   Organizational Documents; Directors and Officers of the Surviving Corporation 3
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK 3
Section 2.01   Conversion of Securities 3
Section 2.02   Exchange of Certificates; Payment for Shares 4
Section 2.03   Treatment of Outstanding Equity Awards 6
Section 2.04   Dissenting Shares 8
Section 2.05   Withholding Taxes 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 10
Section 3.01   Organization and Qualification; Subsidiaries 10
Section 3.02   Capitalization 11
Section 3.03   Authority 13
Section 3.04   No Conflict; Required Filings and Consents 14
Section 3.05   Permits; Compliance with Laws 15
Section 3.06   Company SEC Documents; Financial Statements 15
Section 3.07   Information Supplied 17
Section 3.08   Internal Controls and Disclosure Controls 17
Section 3.09   Absence of Certain Changes 17
Section 3.10   Undisclosed Liabilities 17
Section 3.11   Litigation 18
Section 3.12   Employee Benefits 18
Section 3.13   Employees and Labor 21
Section 3.14   Tax Matters 22
Section 3.15   Properties 24
Section 3.16   Title to Tangible Assets 24
Section 3.17   Environmental Matters 25
Section 3.18   Intellectual Property 25
Section 3.19   Company Material Contracts 28
Section 3.20   Material Customers, Channel Partners and Suppliers 31
Section 3.21   Company Products 31
Section 3.22   Privacy and Data Security 32
Section 3.23   Anti-Corruption 33
Section 3.24   International Trade Laws 34
Section 3.25   Insurance 34
Section 3.26   Opinion of Financial Advisor 35
Section 3.27   Takeover Statutes 35

 

i 

 

 

Section 3.28   Vote Required 35
Section 3.29   Brokers 35
Section 3.30   Related Person Transactions 35
Section 3.31   Government Contracts 36
Section 3.32   Acknowledgement of No Other Representations or Warranties 37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 37
Section 4.01   Organization 37
Section 4.02   Authority 37
Section 4.03   No Conflict; Required Filings and Consents 38
Section 4.04   Information Supplied 39
Section 4.05   Litigation 39
Section 4.06   Capitalization and Operations of Merger Sub 39
Section 4.07   Financing 40
Section 4.08   Guarantee 41
Section 4.09   Solvency 41
Section 4.10   Brokers 41
Section 4.11   Absence of Certain Arrangements 41
Section 4.12   Ownership of Company Common Stock 42
Section 4.13   Foreign Ownership and Control 42
Section 4.14   Acknowledgement of No Other Representations or Warranties 43
ARTICLE V COVENANTS 43
Section 5.01   Conduct of Business by the Company Pending the Merger 43
Section 5.02   Agreements Concerning Parent and Merger Sub 48
Section 5.03   No Solicitation; Change of Company Recommendation 49
Section 5.04   Preparation of the Proxy Statement; Company Stockholder Meeting 53
Section 5.05   Access to Information 55
Section 5.06   Appropriate Action; Consents; Filings 56
Section 5.07   Financing 58
Section 5.08   Public Announcements 62
Section 5.09   Directors & Officers Indemnification and Insurance 63
Section 5.10   Takeover Statutes 65
Section 5.11   Employee Matters 65
Section 5.12   Expenses 66
Section 5.13   Rule 16b-3 Matters 67
Section 5.14   Defense of Litigation 67
Section 5.15   Stock Exchange Delisting and Deregistration 67
Section 5.16   Payoff Letter 67
ARTICLE VI CONDITIONS TO THE MERGER 68
Section 6.01   Conditions to Obligations of Each Party to Effect the Merger 68
Section 6.02   Additional Conditions to Obligations of Parent and Merger Sub 69

 

ii 

 

 

Section 6.03   Additional Conditions to Obligations of the Company 69
Section 6.04   Frustration of Closing Conditions 70
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 70
Section 7.01   Termination 70
Section 7.02   Effect of Termination 72
Section 7.03   Amendment 74
Section 7.04   Waiver 74
Section 7.05   Procedure for Termination, Amendment, Extension or Waiver 75
ARTICLE VIII GENERAL PROVISIONS 75
Section 8.01   Non-Survival of Representations and Warranties 75
Section 8.02   Notices 75
Section 8.03   Severability 76
Section 8.04   Entire Agreement 76
Section 8.05   Assignment