Avid 2005 Annual Report Download - page 83

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69
I. CAPITAL STOCK
Authorized Capital Stock
In July 2005, the stockholders of Avid approved an amendment to the Third Amended and Restated Certificate of Incorporation
of the Company to increase the total number of authorized shares of the Company’s capital stock from 51,000,000 shares to
101,000,000 shares and increasing the number of authorized shares of the Company’s common stock from 50,000,000 shares to
100,000,000 shares.
Preferred Stock
The Company has authorized up to one million shares of preferred stock, $0.01 par value per share for issuance. Each series of
preferred stock shall have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as shall be determined by the Board of Directors.
Shareholder Rights Plan
In February 1996, the Board of Directors approved a Shareholder Rights Plan. The rights were distributed in March 1996 as a
dividend at the rate of one right for each share of common stock outstanding. No value was assigned to these rights. The rights
were exercisable for the purchase of shares of a new series of $0.01 par value, junior participating preferred stock or to purchase a
number of shares of the Company’s common stock which equaled the exercise price of the right, $115, divided by one-half of the
then-current market price, upon occurrence of certain events, including the purchase of 20% or more of the Company’s common
stock by a person or group of affiliated or associated persons. The rights were redeemable by the Company for $0.01 each at any
time prior to the tenth day following a change in control and in certain other circumstances. These rights expired on February 28,
2006.
Common Stock
In 2004, the Company granted 20,000 shares of restricted common stock to certain employees under Company stock option and
award plans. The shares vest annually in 25% increments over a period of four years. Unvested restricted shares may not be sold,
transferred or assigned and are subject to forfeiture in the event that an employee ceases to be employed by the Company.
The Company initially recorded, as a separate component of stockholders’ equity, deferred compensation of $1.1 million in 2004
with respect to the restricted stock under this program. The deferred compensation amounts for the restricted stock awards
represent the fair value of the Company’s common stock at the date of the award less par value, which represents the purchase
price paid by the holders, and are recorded as compensation expense ratably as the shares vest. For the years ended December 31,
2005, 2004 and 2003, $0.3 million, $0.1 million and $0.2 million, respectively, was recorded as compensation expense related to
the 2004 and certain 2000 restricted stock arrangements.
The Company generally allows employees to satisfy any withholding tax obligation under certain award plans by tendering to the
Company a portion of the common stock received under the award. During the year ended December 31, 2005, the Company
received approximately 1,588 shares of its common stock in exchange for $0.1 million of employee withholding liabilities paid
by the Company. During the year ended December 31, 2004, the Company did not receive any shares to satisfy tax withholding
obligations. During the year ended December 31, 2003, the Company received approximately 6,332 shares of its common stock in
exchange for $0.2 million in connection with these non-cash transactions.
Warrant
In connection with the acquisition of Softimage Inc., the Company issued to Microsoft a ten-year warrant to purchase 1,155,235
shares of the Company’s common stock, valued at $26.2 million. The warrant became exercisable on August 3, 2000, at a price of
$47.65 per share, and expires on August 3, 2008.
J. STOCK PLANS
Employee Stock Purchase Plans
The Company’s 1996 Employee Stock Purchase Plan, as amended through May 25, 2003, authorizes the issuance of a maximum of
1,700,000 shares of common stock in quarterly offerings to employees at a price equal to 95% of the closing price on the applicable
offering termination date. As of December 31, 2005, 327,750 shares remain available for issuance under this plan.