Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
AVID TECHNOLOGY, INC.
This Executive Employment Agreement (this
“Agreement”) is entered into as of December
19, 2007, by and between Avid Technology, Inc., a Delaware
corporation with its principal executive offices at Avid Technology
Park, One Park West, Tewksbury, Massachusetts 01876 (the
“Company”), and Gary Greenfield
(“Executive”).
Article 1. Services
1.1.
Service . Commencing on
December 19, 2007 (the “Effective Date”) and throughout
the Term (as defined below), Executive shall serve as the Chief
Executive Officer of the Company upon the terms and conditions set
forth below.
1.2.
Duties . During the
Term, Executive agrees to perform such executive duties consistent
with his position as may be assigned to him from time to time by
the Board of Directors of the Company (the “Board” or
“Board of Directors”) and to devote his full working
time and attention to such duties.
Following the Effective Date, Executive shall be
permitted to continue serving on, and only on, the boards of
directors (and committees thereof) of three companies on which
Executive serves as of the Effective Date (the “Existing
Directorships”); provided, however, that if Executive resigns
or otherwise ceases to serve with respect to any Existing
Directorship, Executive shall not serve on the boards of directors
or advisory committees of more than two companies (public or
private) without prior Board approval. Executive’s service on
the Board shall not be taken into account for purposes of the
limitations set forth in this paragraph.
1.3.
No Conflicting Commitments . During the Term, Executive will not undertake any
commitments, engage or have an interest in any outside business
activities or enter into any consulting agreements which, in the
good faith determination of the Board of Directors (excluding
Executive), conflict with the Company’s interests or which
might reasonably be expected to impair the performance of
Executive’s duties as a full-time employee of the Company.
Notwithstanding the foregoing, Executive may pursue personal
interests (including, without limitation, industry, civic and
charitable activities), attend to his personal investments, so long
as such activities do not interfere with the performance of his
duties hereunder, and, until December 31, 2007, continue to satisfy
obligations with respect to his prior employer.
1.4.
Board Membership .
Executive shall be appointed a member of the Board of Directors as
of the Effective Date and shall serve as a member of the Board
without additional compensation. During the Term, at each annual
meeting of the Company’s stockholders at which
Executive’s membership on the Board has expired, the Company
will nominate Executive to serve as a member of the Board.
Executive’s service as a member of the Board will be subject
to any required stockholder approval. Upon termination of
Executive’s employment with the
Company for any reason, unless the Board
affirmatively requests that Executive remain on the Board,
Executive will be deemed to have resigned from the Board
voluntarily as of the last day of employment with the Company; and
at the Board’s request, Executive will execute any documents
necessary to reflect such resignation.
1.5.
Chairman of Board .
Executive will be named Chairman of the Board within 12 months
after the Effective Date.
Article 2. Term
2.1.
Term . The term of this
Agreement (the “Term”) shall commence on the Effective
Date and shall expire on December 31, 2012 unless sooner
terminated when the Executive’s employment terminates
pursuant to Section 4.1 hereof. Notwithstanding the foregoing, (i)
in the event that a Change-in-Control of the Company (as defined in
Section 4.2.2) should occur during the calendar year 2012 and
Executive is still an employee of the Company at that time, then
the Term shall be deemed to expire on the date that is 12 months
after the date of such Change-in-Control of the Company, (ii) in
the event a Potential Change-in-Control Period (as defined in
Section 4.2.6) exists at December 31, 2012 and Executive is still
an employee of the Company at that date, the Term shall be deemed
to expire on the date that 12 months after the commencement of such
Potential Change-in-Control Period and (iii) the expiration of the
Term shall not adversely affect Executive’s rights under this
Agreement which have accrued prior to such expiration. For the
avoidance of doubt, if a Potential Change-in-Control Period shall
commence in 2012 and a Change-in-Control of the Company shall also
occur in 2012, and if Executive is still an employee of the Company
on the date of the Change-in-Control of the Company, the Term shall
be deemed to expire 12 months after the date of such
Change-in-Control. Unless the services of the Executive have
terminated prior to or upon the end of the Term in accordance with
the provisions of this Agreement, from and after the end of the
Term, Executive shall be an employee-at-will.
Article 3. Payments
3.1.
Base Compensation .
During the Term, the Company shall pay Executive an annual base
salary (the “Base Salary”) of Nine Hundred Thousand
Dollars ($900,000), payable in regular installments in accordance
with the Company’s usual payment practices. The Base Salary
shall be reviewed by the Board of Directors’ Compensation
Committee during the Term and increased (but not decreased)
accordingly at the discretion of the Compensation
Committee.
3.2.
Incentive Payments .
Commencing with the Company’s fiscal year ending December 31,
2008 and thereafter during the remainder of the Term, Executive
shall be eligible to participate in an annual performance bonus
plan pursuant to which he shall be eligible to receive a target
annual bonus (the “Annual Incentive Bonus”) equal to
One Hundred percent (100%) of his then Base Salary for full
attainment of his performance objectives (which may include
company-wide objectives), with a maximum annual bonus equal to One
Hundred Thirty-Five percent (135%) of his then Base Salary for
extraordinary performance on all or nearly all of his performance
objectives. The total cash compensation payable to Executive with
respect to fiscal year 2008, including his Annual Incentive Bonus
for 2008 (but excluding the bonus
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payable under Section 3.8), shall not exceed Two
Million One Hundred Fifteen Thousand Dollars
($2,115,000).
The amount of Executive’s Annual Incentive
Bonus, if any, shall be based on the degree to which
Executive’s performance objectives for a fiscal year have
been met. Within 70 days after the Effective Date, Executive and
the Compensation Committee of the Board (after receiving input from
the Board) shall have mutually determined and established
Executive’s performance objectives for fiscal year 2008.
Thereafter, during the Term, Executive’s performance
objectives for each fiscal year shall be mutually established by
the Compensation Committee of the Board and Executive during
Executive’s annual performance review; provided, that in no
event shall the percentages set forth in the first paragraph of
this Section 3.2 to be used in calculating Executive’s Annual
Incentive Bonus be reduced. The Compensation Committee of the Board
shall determine, for each fiscal year, the extent to which
Executive’s performance objectives for such fiscal year have
been attained and the amount of the Annual Incentive Bonus, if any,
for such fiscal year. Any Annual Incentive Bonus earned by
Executive with respect to a fiscal year shall be paid to him
promptly after the filing of the Company's Annual Report on Form
10-K for such fiscal year but in no event later than 90 days after
the end of such fiscal year. The amount of, and Executive’s
entitlement to receive, the Annual Incentive Bonus for a fiscal
year shall be determined without regard to whether Executive is
employed on the date that such Annual Incentive Bonus is
payable.
3.3.1. Option
Grant . Effective as of the Effective
Date, pursuant to a stock option agreement, Executive will be
awarded an option to purchase Seven Hundred Twenty-Five Thousand
(725,000) shares of Avid Technology, Inc. common stock (the
“Stock Option”). The exercise price will be the closing
price of the stock on the Effective Date (the “Start
Price”).
a) One
Hundred Thousand (100,000) shares of the Stock Option will vest on
a time-based schedule in equal 6.25% increments every three months,
with the first vesting date on March 19, 2008 and the last vesting
date on December 19, 2011, as long as Executive is employed by the
Company on each such vesting date.
b) Three Hundred
Thousand (300,000) shares of the Stock Option will vest on a
performance-based schedule, as follows:
(1) One Hundred
Fifty Thousand (150,000) shares of the Stock Option will vest at
the end of the first 20 consecutive trading day period following
the Effective Date during which the common stock of the Company, as
quoted on Nasdaq (or on such other exchange as such shares may be
traded), trades (without regard to the closing price) at a price
per share of at least twice the Start Price, as adjusted for stock
splits and stock dividends; and
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(2)
An additional One Hundred Fifty Thousand (150,000)
shares of the Stock Option will vest at the end of the first 20
consecutive trading day period following the Effective Date during
which the common stock of the Company, as quoted on Nasdaq (or on
such other exchange as such shares may be traded), trades (without
regard to the closing price) at a price per share of at least three
times the Start Price, as adjusted for stock splits and stock
dividends.
c) Three
Hundred Twenty-Five Thousand (325,000) shares of the Stock Option
(the “ROE Option Shares”) will vest in accordance with
the following table, based upon improvement in the Company’s
Return on Equity, or ROE (as defined below), in calendar year
periods, commencing with calendar year 2008. Improvements for each
calendar year shall be measured against a baseline ROE for the
12-month period ended September 30, 2007
(“Baseline”).
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ROE Percentage Point
Improvement in
Calendar Year
Compared to Baseline
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Percentage of
ROE Option
Shares to Vest
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14%
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100%
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12%
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90%
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10%
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75%
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8%
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60%
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6%
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45%
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4%
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30%
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2%
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15%
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0%
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0%
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The Board (excluding Executive if he is a member of
the Board) shall make the final determination of ROE and the ROE
percentage point improvement for purposes hereof for each calendar
year no later then the 1st day of March following the end of such
calendar year. The determination of ROE shall be derived upon the
Company’s audited financial statements for the applicable
calendar year and the unaudited financial statements for the
Baseline period. The ROE Option Shares, if any, that are not vested
at the end of the seventh calendar year (2014) shall be
forfeited.
“Return on Equity” or “ROE”
shall be determined using the Company’s non-GAAP net income
as published in an earning release, adding the provision for income
taxes and subtracting the non-GAAP related tax
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adjustments for the applicable period
and dividing by the average common stockholder equity during
the same period.
Notwithstanding the foregoing, the ROE Option Shares
will vest in full at the end of the first 20 consecutive trading
day period following the Effective Date during which the common
stock of the Company, as quoted on Nasdaq (or on such other
exchange as such shares may be traded), trades (without regard to
the closing price) at a price per share at least four times the
Start Price, as adjusted for stock splits and stock
dividends.
3.3.2. Restricted Stock Grant . Effective as
of the Effective Date, pursuant to a restricted stock agreement,
Executive will be granted One Hundred Thousand (100,000) shares of
Avid Technology, Inc. common stock (the “Restricted Stock
Grant”), which will vest as to 25% of the shares on January
1, 2009 and in equal 6.25% increments every three months
thereafter, commencing on March 19, 2009, until fully vested on
December 19, 2011, as long as Executive is employed by the Company
on each such vesting date.
3.3.3. Representation Regarding Grant Date .
The Company represents and warrants that the Company has taken all
corporate action necessary to create legally binding rights on the
part of Executive, as of the Effective Date, to the Stock Option
and the Restricted Stock Grant and that the Effective Date is the
grant date for all purposes, including (without limitation) for
purposes of Section 409A of the United States Internal Revenue Code
of 1986, as amended (the “Code”).
3.3.4. Covenant Regarding Registration . The
Company covenants and agrees that as soon as practicable after the
Effective Date, but in any event no later than March 31, 2008 to
register the shares of stock of the Company covered by the Stock
Option and the Restricted Stock Grant under the Securities Act of
1933, as amended, by filing a registration statement on Form S-8,
or on such other form as may be appropriate, and shall use its best
efforts to maintain the effectiveness of such registration
statement or statements for so long as the Stock Option and
Restricted Stock Grant are in effect and for so long as any of the
shares of stock covered by the Stock Option and Restricted Stock
Grant remain outstanding.
3.4.
Benefits; Expenses .
During the Term, the Company shall provide Executive and his
dependents with medical insurance and such other cash and noncash
benefits, on the same terms and conditions, as amended from time to
time, as are generally made available by the Company to its
full-time executive officers. Executive shall be entitled to six
(6) weeks of paid vacation per year. The Company shall pay, or
reimburse Executive for, all business expenses incurred by
Executive which are related to the performance of Executive's
duties, subject to timely submission by Executive of payment or
reimbursement requests and appropriate documentation, in accordance
with the Company’s reimbursement policies.
3.5.
Participation in Equity Incentive
Plans . During the Term, in addition to
the Stock Option and Restricted Stock Grant, Executive shall be
entitled to participate in the Company’s stock incentive
plans to the extent and in the manner
determined by the Board of Directors in its absolute
discretion.
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3.6.
Establishment of Residence . Executive agrees to establish a residence in the Greater
Boston area no later than June 30, 2008. The Company will reimburse
Executive and his spouse for up to six (6) round-trip flights
between Maryland and Boston to assist them with searching for a
house and establishing a residence. The Company will also reimburse
Executive for the reasonable costs incurred by Executive in moving
personal belongings from Maryland to the Greater Boston area.
Reimbursement for such expenses (except for tax deductible amounts)
will also include a one-time gross-up of 40% to cover any income
taxes associated with such reimbursement. Executive shall submit
requests for reimbursements in a timely fashion consistent with
Company policy.
3.7.
Commuting Expense and Temporary
Housing . Until such time as Executive
establishes a residence in the Greater Boston area, but no later
than June 30, 2008, the Company shall reimburse Executive for all
travel expenses which he incurs between his home in Maryland and
the Greater Boston area and will provide Executive with a furnished
corporate apartment of the Executive’s choosing (at a cost
not to exceed $10,000 per month) in the Greater Boston
area.
3.8.
One-Time Bonus . On
January 7, 2008, the Company shall pay Executive a bonus of Six
Hundred Thousand Dollars ($600,000), net of applicable taxes and
withholding. If Executive’s employment with the Company is
terminated prior to the first anniversary of the Effective Date
pursuant to either Section 4.1.3 or Section 4.1.5, Executive hereby
authorizes the Company to deduct the amount of such bonus from
monies otherwise due to him and to the extent that the bonus is not
so repaid in full, he agrees to pay the remaining amount to the
Company within 60 days after the effective date of the termination
of his employment.
Article 4. Termination
4.1.
Termination .
Executive’s employment hereunder shall terminate upon the
occurrence of any of the following events:
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4.1.1.
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Immediately upon the Executive’s
death;
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4.1.2. The
termination of the Executive’s employment by the Company for
Disability (as defined below), to be effective immediately upon
delivery of notice thereof;
4.1.3. The
termination of Executive’s employment by the Company for
Cause (as defined below), to be effective immediately upon delivery
of notice thereof ;
4.1.4. The
termination of Executive’s employment by the Company, without
Cause and not as a result of Executive’s death or Disability,
to be effective 30 days after the Company delivers written notice
thereof to the Executive;
4.1.5. The
termination of Executive’s employment by Executive without
Good Reason (as defined below) to be effective 30 days after
Executive delivers written notice thereof from Executive to the
Company; or
4.1.6. The
termination of Executive’s employment by Executive with Good
Reason (as defined below), to be effective as set forth
below.
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4.2.
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For purposes of this Agreement, the following
definitions shall apply:
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4.2.1. “Cause” shall mean (i) Executive’s
willful and material failure to perform (other than by reason of
death or illness or other physical or mental incapacity) his duties
and responsibilities as assigned by the Board in accordance with
Section 1.2 above, which is not remedied after
30 days’ written notice from the Board (if such failure
is susceptible to cure), (ii) a breach of any of the
provisions of this Agreement or any other material written
agreement (including the Company’s employee nondisclosure and
invention assignment agreement) between Executive and the Company,
which is not cured after 10 days’ written notice from
the Board (if such breach is susceptible to cure), (iii)
Executive’s material violation of a material Company policy
(for purposes of this clause, the Company’s Conflicts of
Interest policy shall be deemed a material policy), which is not
cured after 10 days’ written notice from the Board (if
such violation is susceptible to cure), (iv) fraud,
embezzlement or other material dishonesty with respect to the
Company, (v) conviction of a crime constituting a felony
(which shall not include any crime or offense related to traffic
infractions or as a result of vicarious liability) or conviction of
any other crime involving fraud, dishonesty or moral turpitude or
(vi) failing or refusing to cooperate, as reasonably requested in
writing by the Board, in any internal or external investigation of
any matter in which the Company has a material (financial or
otherwise) in the outcome of the investigation.
4.2.2. “Change-in-Control of the Company” shall be deemed
to have occurred only if any of the following events
occur:
a) The
acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (i) the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”)
or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
Section 4.2.2, the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition pursuant to
a transaction which satisfies the criteria set forth in clauses (A)
and (B) of Section 4.2.2(c); or
b) Individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequently to the
Effective Date whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be
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considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
operating assets of the Company (a “Business
Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 40% of,
respectively, the then-outstanding shares of common stock (or other
equity interests, in the case of an entity other than a
corporation), and the combined voting power of the then-outstanding
voting securities of the corporation or other entity resulting from
such Business Combination (which as used in this Section 4.2.2(c)
shall include, without limitation, a corporation or other entity
which as a result of such transaction owns all or substantially all
of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, and (B) no Person (excluding
any corporation or other entity resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more
of, respectively, the then outstanding shares of common stock (or
other equity interests, in the case of an entity other than a
corporation) of the corporation or other entity resulting from such
Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation or other
entity.
provided, however, that as used in Section 4.3 and
Article 5, a “Change-in-Control of the Company” shall
be deemed to occur only if any of the foregoing events occur and
such event that occurs is a “change in the ownership or
effective control of a corporation, or a change in the ownership of
a substantial portion of the assets of a corporation” as
defined in Treasury Reg. § 1.409A-3(i)(5).
4.2.3. “Date of Termination” shall mean the date of
Executive’s “separation from service” with the
Company, as determined under Treasury Reg. §
1.409A-1(h).
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4.2.4.
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“Disability” shall mean
Executive’s absence from the full-time
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performance of his duties with the Company for more
than 180 days during a 365 day period as a result of incapacity due
to mental or physical illness, as a result of which Executive is
deemed “disabled” by the institution appointed by the
Company to administer its long-term disability plan (or any
successor plan).
4.2.5. “Good Reason” shall mean any material breach of
this Agreement by the Company and/or the occurrence of any one or
more of the following without Executive’s prior express
written consent: (i) a material diminution in Executive’s
authority, duties or responsibility from those in effect as of the
Effective Date (including, without limitation, (x) the failure to
appoint Executive to the position of Chairman of the Board, as
provided in Section 1.5, or (y) the removal or failure to reappoint
Executive to the position of Chairman of the Board at any time
during the Term); (ii) a requirement that Executive report to
any person or entity other than the Board; (iii) in connection
with a Change-in-Control of the Company (or in connection with any
other Business Combination, as defined in Section 4.2.2(c), or any
other transfer or other disposition of the Company’s stock,
without regard to whether such Business Combination or transfer of
the Company’s stock qualifies as a Change-in-Control of the
Company), in which either the Company is not the surviving entity
or the stock or assets of the Company are acquired by another
entity, Executive not being appointed as Chief Executive Officer
and Chairman of the Board of the surviving or acquiring entity;
(iv) a material change in Executive’s office location (it
being agreed that as of the Effective Date such office location
shall be deemed to be Tewksbury, Massachusetts); provided, however,
that a termination for Good Reason by Executive can occur only if
(a) Executive has given the Company a notice of the existence of a
condition giving rise to Good Reason within 90 days after the
initial occurrence of the condition giving rise to Good Reason and
(b) the Company has not cured the condition giving rise to Good
Reason within 30 days after receipt of such notice. A
termination for Good Reason shall occur 30 days after the end of
such 30-day cure period.
4.2.6. A
“Potential Change-in-Control Period” shall be deemed to
exist (A) commencing upon the date on which the Company shall have
announced that it has entered into a merger, acquisition or similar
agreement, the consummation of which would result in the occurrence
of a Change-in-Control of the Company and ending on the earlier of
(x) the date on which the transaction governed by such agreement
has been consummated or (y) the Com
