<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ARTECON, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Series A Preferred Stock, $.005 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
N/A
-----------------------------
(CUSIP Number)
James L. Lambert
Artecon, Inc.
6305 El Camino Road
Carlsbad, California 92009-1606
(760) 431-4400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
April 29, 1999
--------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
The remainder of this cover page shall be filed out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
Page 1 of 13 Pages
<PAGE> 2
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CUSIP NO. N/A 13D Page 2 of 13 Pages
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BOX HILL SYSTEMS CORP.
- -------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
NOT APPLICABLE
- -------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- -------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 2,494,159 SHARES OF SERIES A PREFERRED STOCK, $.005 PAR VALUE
REPORTING ------------------------------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-0-
------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,494,159 SHARES OF SERIES A PREFERRED STOCK, $.005 PAR VALUE
- -------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- -------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
100%*
- -------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, and based on 2,494,159 shares of Issuer Preferred Stock outstanding on
April 29, 1999.
Page 2 of 13 Pages
<PAGE> 3
PART II TO SCHEDULE 13D
ITEM
1. SECURITY AND ISSUER
(a) TITLE OF SECURITY: Shares of Series A Preferred
Stock, $.005 par value
(b) NAME OF ISSUER: Artecon, Inc., a Delaware
corporation (the "Issuer")
(c) THE ISSUER'S PRINCIPAL
EXECUTIVE OFFICE: 6305 El Camino Real
Carlsbad, California 92009-1606
ITEM 2. IDENTITY AND BACKGROUND
(1) (a) This statement is filed by Box Hill Systems Corp., a
New York corporation ("Box Hill"). Box Hill is
principally in the business of design, manufacture,
marketing and support of high performance data
storage back-up Storage Area Network solutions.
(b) The address of the principal business offices of Box
Hill is 161 Avenue of the Americas, New York, New
York 10013.
(c) Set forth in Schedule I to this Schedule 13D is the
name and present principal occupation or employment
of each of Box Hill's executive officers and
directors and the name, principal business and
address of any corporation or other organization in
which employment is conducted.
(d) During the last five years, there have been no
criminal proceedings against Box Hill, or, to the
best knowledge of Box Hill, any of the other persons
with respect to whom information is given in response
to this Item 2.
(e) During the last five years, neither Box Hill nor, to
the best knowledge of Box Hill, any of the other
persons with respect to whom information is given in
response to this Item 2, has been a party to any
civil proceeding of a judicial or administrative body
of competent jurisdiction resulting in a judgment,
decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to,
federal or state securities laws or finding any
violation with respect to such laws.
(f) To Box Hill's best knowledge, all of the directors
and executive officers of Box Hill named in Schedule
I to this Schedule 13D are citizens of the United
States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
To facilitate the Merger (as defined in Item 4 below) and as
an inducement to Box Hill entering into the Merger Agreement
(as defined in Item 4 below), certain stockholders of the
Issuer have entered into "Voting Agreements" with Box Hill
as described in Item 4. These Voting Agreements do not
contemplate a purchase by
Page 3 of 13 Pages
<PAGE> 4
Box Hill of either the Common Stock of the Issuer ("Issuer
Common Stock") or the Series A Preferred Stock of the Issuer
("Issuer Preferred Stock", and together with the Issuer Common
Stock, collectively referred to herein as the "Issuer Capital
Stock").
ITEM 4.PURPOSE OF TRANSACTION
(a)-(b) On April 30, 1999, Box Hill announced that it has signed a
merger agreement with the Issuer, in connection with a tax-free,
stock-for-stock transaction in what is intended to be accounted
for as a pooling of interests (the "Merger"). Under the terms
of the Agreement and Plan of Merger dated April 29, 1999 (the
"Merger Agreement") among Box Hill, BH Acquisition Corp., a
Delaware corporation ("Merger Sub"), and the Issuer, each
outstanding share of Issuer Common Stock will be converted into
0.40 (the "Exchange Rate") of a fully paid and non-assessable
share of Common Stock of Box Hill ("Box Hill Common Stock").
In accordance with the terms of the Merger Agreement,
outstanding options to purchase Issuer Common Stock will be
assumed by the Box Hill in the Merger and will become options to
purchase Box Hill Common Stock. The exercise price and number
of shares underlying such options will be adjusted to give
effect to the Exchange Rate.
Unless converted in accordance with their terms prior to the
consummation of the Merger, each issued and outstanding share of
the Issuer Preferred Stock will be converted into the right to
receive that number of shares of Box Hill Common Stock equal to
the quotient obtained by dividing (i)(1) $4,988,318, divided by
(2) the closing sales price of Box Hill Common Stock as traded
on the New York Stock Exchange Composite Transaction Tape on the
last trading day immediately prior to the closing of the Merger,
by (ii) 2,494,159.
The holders of the Issuer Preferred Stock have the right to vote
with the holders of the Issuer Common Stock and are entitled to
that number of votes as they would have shares of Issuer Common
Stock if the Issuer Preferred Stock was converted on the date of
the vote. The Issuer Preferred Stock is convertible, at the
option of the holder thereof, without the payment of additional
consideration, at any time after January 1, 1999, into such
number of fully paid and non-assessable shares of Issuer Common
Stock determined by dividing two dollars ($2.00) by the greater
of (A) $6.00 and (B) the then applicable Conversion Price.
"Conversion Price" is the average of the closing price per share
of Issuer Common Stock as traded on the National Market System
of the Nasdaq Stock Market, Inc. under the ticker symbol
"ARTE". The Issuer Common Stock is the subject of a separate
Schedule 13D filed with the Securities and Exchange Commission
on the date hereof.
The Merger was approved unanimously by the boards of directors
of both Box Hill and the Issuer. If the Merger Agreement is
approved by the shareholders of each of Box Hill and the Issuer
and the other conditions contained in the agreement are timely
satisfied or waived, the Merger Sub will be merged with and into
the Issuer, with the Issuer being the surviving corporation.
After giving effect to the transactions contemplated by the
Merger Agreement, Box Hill will be the sole shareholder of the
Issuer.
Page 4 of 13 Pages
<PAGE> 5
The Merger is subject to customary closing conditions as well as
certain regulatory approval and approval by the shareholders of
both the Issuer and Box Hill. The parties anticipate the
transaction to close by the third quarter of 1999.
The Merger Agreement may be terminated by Box Hill or the Issuer
under certain circumstances. If the Merger Agreement is
terminated by Box Hill or the Issuer pursuant to Section 7.1(e)
therein, the Issuer will pay Box Hill a cash fee equal to 120%
of all out-of-pocket expenses and fees (including, without
limitation, fees and expenses payable to all investment banking
firms structuring the Merger and related transactions and all
reasonable fees and expenses of counsel, accountants, experts
and consultants to Box Hill and Merger Sub) incurred or accrued
by Box Hill and Merger Sub in connection with the negotiation,
preparation, execution and performance of the Merger Agreement
(not to exceed, in the aggregate, $2,500,000). If the Merger
Agreement is terminated by Box Hill or the Issuer pursuant to
Section 7.1(d) therein, Box Hill will pay the Issuer a cash fee
equal to 120% of all out-of- pocket expenses and fees
(including, without limitation, fees and expenses payable to all
investment banking firms structuring the Merger and related
transactions and all reasonable fees and expenses of counsel,
accountants, experts and consultants to the Issuer) incurred or
accrued by the Issuer in connection with the negotiation,
preparation, execution and performance of the Merger Agreement
(not to exceed, in the aggregate, $2,500,000).
If the Merger Agreement is terminated by Box Hill pursuant to
Section 7.1(f)(ii) therein or by the Issuer pursuant to Section
7.1(h) therein, the Issuer shall pay Box Hill a cash fee in the
amount of $2,500,000. If the Merger Agreement is terminated by
the Issuer pursuant to Section 7.1(i) or by Box Hill pursuant to
Section 7.1(i), Box Hill shall pay the Issuer a cash fee in the
amount of $2,500,000.
The foregoing summary of the Merger and the Merger Agreement is
qualified in its entirety by reference to the copy of the Merger
Agreement included as Exhibit 99.1 to this Schedule 13D and
incorporated herein in its entirety by reference.
Each of W.R. Sauey, individually; Seats, Inc.; Flambeau
Corporation; Flambeau Products Corporation; Gerald Ward and Dick
Cross as trustees for the W.R. and Floy A. Sauey Grandparents
Trust; James L. Lambert, individually; Pam Lambert,
individually; and Dana W. Kammersgard, individually
(individually, a "Voting Agreement Shareholder" and,
collectively, the "Voting Agreement Shareholders") has entered
into a Voting Agreement dated as of April 29, 1999
(individually, a "Voting Agreement" and, collectively, the
"Voting Agreements") with Box Hill. The number of shares of the
Issuer Capital Stock beneficially owned by each of the Voting
Agreement Stockholders is set forth on Schedule II to this
Schedule 13D. Pursuant to Section 1 of the Voting Agreements,
the Voting Agreement Stockholders have agreed to cause all
shares of the Issuer Capital Stock over which such person has
voting power or control and any shares that they may acquire in
the future (the "Subject Shares") to be voted in favor of (i)
the approval and adoption of the Merger Agreement and approval
of the Merger, and (ii) any matter that could reasonably be
expected to facilitate the Merger. In addition, each Voting
Agreement Stockholder has agreed not to enter into any agreement
or understanding with any person to vote or give instructions in
any manner inconsistent with the foregoing.
Pursuant to Section 2 of the Voting Agreements, the Voting
Agreement Stockholders also executed and delivered to Box Hill
irrevocable proxies to vote the Subject Shares in favor of the
approval of the Merger Agreement, the Merger and any other
matter that could reasonably be expected to facilitate the
Merger.
Page 5 of 13 Pages
<PAGE> 6
The foregoing description of the Voting Agreements is qualified
in its entirety by reference to the form of the Voting
Agreements, included as Exhibit 99.2 to this Schedule 13D and
incorporated herein in its entirety by reference.
(c) Not applicable.
(d) As a result of the Merger, Box Hill's certificate of
incorporation will be amended and restated to provide for a
classified Board (as described in Item 4(g) below) whereby the
directors of Box Hill will be separated into three classes, with
the members of each class serving for a three-year term. The
first class of directors ("Class I") will consist of Norman
Farquhar, a current director of the Issuer, and Philip Black, a
current director of Box Hill; the Class I directors will serve
until the 2000 annual meeting of stockholders of Box Hill. The
second class of directors ("Class II") will consist of Benjamin
Monderer, a current director of Box Hill, Benjamin Brussel, a
current director of Box Hill and Chong Sup Park, a current
director of the Issuer (or another outside director chosen by
the Issuer). The Class II directors will serve until the 2001
annual meeting of stockholders of Box Hill. The third class of
directors ("Class III") will consist of W.R. Sauey (who will act
as Chairman of the Board), and James Lambert, each a current
director of the Issuer, and Carol Turchin, a current director of
Box Hill. The Class III directors will serve until the 2002
annual meeting of stockholders of Box Hill.
In addition, as a result of the Merger:
James L. Lambert, the current President and Chief Executive
Officer of the Issuer, will become the Co-Chief Executive
Officer, President and Chief Operating Officer of Box Hill;
Philip Black, the current Chief Executive Officer of Box
Hill, will become the Co-Chief Executive Officer and
Executive Vice President - International Sales of Box Hill;
Dana Kammergard, the current Vice President, Engineering and
Secretary of the Issuer, will become the Chief Technical
Officer of Box Hill;
Carol Turchin, an Executive Vice President of Box Hill, will
become the Executive Vice President, Sales, of Box Hill;
Benjamin Monderer, the current Chairman of the Board,
President and Chief Technical Officer of Box Hill, will
become the Executive Vice President, Technology
Services/Engineering Applications of Box Hill; and
Mark A. Mays, the current Secretary and Vice President,
Technical Consultant of Box Hill will become the Secretary
of Box Hill.
(e) See Item 4(a) above.
(f) Upon consummation of the Merger, the Issuer will become a wholly
owned subsidiary of Box Hill.
(g) Upon approval of the Merger Agreement and the Merger by the
shareholders of Box Hill, Certificate of Incorporation of Box
Hill shall be amended to change the name of Box Hill to a name
mutually agreed upon by the Issuer and Box Hill, and the
Certificate of Incorporation and Bylaws of Box Hill shall be
amended to provide for
Page 6 of 13 Pages
<PAGE> 7
a classified Board of Directors whereby the directors shall
be separated into three classes, with the members of each
class serving for a three-year term (as described in Item
4(d) above).
(h) Not applicable.
(i) Not applicable.
(j) Other than as described above, Box Hill has no plan or
proposal which relates to, or may result in, any of the
matters listed in Items 4(a) - (i) of this Schedule 13D
(although Box Hill reserves the right to develop such
plans).
ITEM 5. INTEREST IN SECURITIES OF BOX HILL
(a)-(b) As a result of the Voting Agreements, Box Hill has the
shared power to vote an aggregate of 10,157,402 shares of
Issuer Common Stock and 2,494,159 shares of Issuer
Preferred Stock for the limited purposes described in Item
4 above. Such shares constitute approximately 52.3% of the
issued and outstanding voting securities of the Issuer
(assuming the conversion of the Issuer Preferred Stock to
Issuer Common Stock in accordance with its terms) as of
April 29, 1999.
To Box Hill's knowledge, no shares of Issuer Capital Stock
are beneficially owned by any of the persons named in
Schedule II, except for such beneficial ownership, if any,
arising solely from the Voting Agreements.
Set forth in Schedule III to this Schedule 13D is the name
and certain information regarding each person or entity
with whom Box Hill shares the power to vote or to direct
the vote or to dispose or direct the disposition of Issuer
Capital Stock.
During the past five years, to Box Hill's best knowledge,
no person named in Schedule III to this Schedule 13D has
been convicted in a criminal proceeding.
During the past five years, to Box Hill's best knowledge,
no person named in Schedule III to this Schedule 13D was a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which such
person was or is subject to a judgment, decree or final
order enjoining future violations of or prohibiting or
mandating activity subject to federal or state securities
laws or finding any violation with respect to such laws.
To Box Hill's best knowledge, all persons named in Schedule
III to this Schedule 13D are citizens of the United States.
(c) Neither Box Hill nor, to Box Hill's best knowledge, any
person named in Schedule I, has effected any transaction in
Issuer Capital Stock during the past 60 days, except as
disclosed herein.
(d) Not applicable.
(e) Not applicable.
Page 7 of 13 Pages
<PAGE> 8
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF BOX HILL
In connection with the Merger Agreement, Philip Black, Benjamin
Monderer, Carol Turchin, Mark A. Mays, Mischa Schwartz, Benjamin
Brussell, Monderer 1999 GRAT u/a/d March 1999, Robert C. Miller,
Elizabeth Strong, Adam T. Temple, Kenneth Pitz, R. Robert
Rebmann, Jr., Tom Loomis, and Daniel Kalagher (each an
"Affiliate") will be requested to enter into Affiliate
Agreements with the Issuer. Pursuant to Section 2 thereof,
each Affiliate has agreed that such Affiliate shall not dispose
of the shares of Box Hill's Common Stock during the period which
is thirty (30) days prior to the date of consummation of the
Merger through the date on which financial results covering at
least thirty (30) days of post-combined operations of Box Hill
and the Issuer have been published.
The foregoing summary of the Affiliate Agreements is qualified
in its entirety by reference to the form of the Affiliate
Agreements included as Exhibit 99.3 to this Schedule 13D and
incorporated herein in its entirety by reference.
Benjamin Monderer, Carol Turchin and Mark Mays entered into a
voting agreement on July 31, 1997 with respect to the shares of
Box Hill owned by each of them. Pursuant to said agreement,
such shareholders have agreed to vote their respective shares
for the election of each thereof as a director of Box Hill and
will vote their shares in accordance with the determination of
the holders of a majority of their shares as to any proposal to
merge, consolidate, liquidate or sell substantially all the
assets of the Company. The agreement, which pursuant to its
terms is to terminate on December 31, 2009, or upon the deaths
of Dr. Monderer and Ms. Turchin, prohibits the transfer of their
shares other than (a) to a member of the transferor's family who
agrees to be bound by the agreement, (b) pursuant to a sale
exempt from registration pursuant to Rule 144 of the Securities
Act of 1933, as amended, or (3) in a merger, consolidation or
sale of substantially all the assets of Box Hill. This voting
agreement, which was filed as an exhibit to Box Hill's
Registration Statement No. 333-31873 (and the foregoing summary
is qualified in its entirety by reference thereto) will be
terminated upon the consummation of the Merger.
Other than as described in the foregoing paragraphs and in Item
4 above, to Box Hill's best knowledge there are no contracts,
arrangements, understandings or relationships (legal or
otherwise) among the Shareholders and between such persons and
any person with respect to any securities of Box Hill, including
but not limited to transfer or voting of any securities,
finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of profits, division of profits or loss, or
the giving or withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
99.1 Agreement and Plan of Merger dated as of April 29,
1999 by and among Box Hill Systems Corp., BH
Acquisition Corp. and Artecon, Inc.
99.2 Form of Voting Agreement dated as of April 29, 1999 by
and between Box Hill Systems Corp. and each of W.R.
Sauey, individually; Seats, Inc.; Flambeau Corp.;
Flambeau Corporation; Flambeau Products Corporation;
Gerald Ward and Dick Cross as trustees for W.R. and
Floy A. Sauey Grandparents Trust; James L. Lambert,
individually; Pam Lambert, individually; and Dana W.
Kammersgard, individually.
99.3 Form of Affiliate Agreement to be entered into by and
between Box Hill Sytems Corp., Artecon, Inc. and each
of Philip Black, Benjamin Monderer, Carol Turchin,
Page 8 of 13 Pages
<PAGE> 9
Mark A. Mays, Mischa Schwartz, Benjamin Brussell,
Monderer 1999 GRAT u/a/d March 1999, Robert C. Miller,
Elizabeth Strong, Adam T. Temple, Kenneth Pitz, R.
Robert Rebmann, Jr., Tom Loomis and Daniel Kalagher.
Page 9 of 13 Pages
<PAGE> 10
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
May 10, 1999
-------------------------------------------
(Date)
BOX HILL SYSTEMS CORP.
a New York corporation
By: /s/ Philip Black
---------------------------------------
Philip Black, Chief Executive Officer
Page 10 of 13 Pages
<PAGE> 11
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF BOX HILL SYSTEMS CORP.
<TABLE>
<CAPTION>
Name Principal Occupation or Employment
- ---- ----------------------------------
<S> <C>
Philip Black Chief Executive Officer and Director
Benjamin Monderer Chairman of the Board, President, Chief
Technology Officer and Director
Carol Turchin Executive Vice President and Director
Mark A. Mays Vice President, Technical Consultant,
Secretary and Director
Elizabeth Strong Vice President of Sales
Tom Loomis Vice President of Custom Support
Daniel Kalagher Vice President of Marketing
Mischa Schwartz Director
Benjamin Brussell Director
</TABLE>
All individuals in the above table are employed at, or retained as directors
and/or officers by, Box Hill Systems Corp., 161 Avenue of the Americas, New
York, New York 10013.
Page 11 of 13 Pages
<PAGE> 12
SCHEDULE II
<TABLE>
<CAPTION>
Number of Shares of Issuer Capital Stock and
Percentage Beneficially Owned(1) as of April 29, 1999
----------------------------------------------------
Issuer Issuer
Voting Agreement Stockholder Common Stock % Preferred Stock %
- ---------------------------- ------------ - --------------- -
<S> <C> <C> <C> <C>
W.R. Sauey 3,079,790 14.1% 247,877 9.9%
Seats, Inc. 38,333 .2% 169,074 6.8%
Flambeau Corporation 891,151 4.1% 1,038,604 41.6%
Flambeau Products Corporation 235,507 1.1% 1,038,604 41.6%
W.R. and Floy A. Sauey 1,038,103 4.8%
Grandparents Trust
James L. Lambert 3,175,787 14.6%
Pam Lambert 316,894 1.5%
Dana W. Kammergard 1,381,837 6.3%
========== ===== ========== =====
Total 10,157,402 46.6% 2,494,159 100%
</TABLE>
(1) Based upon 21,779,307 shares of Issuer Common Stock and 2,494,159 shares
of Issuer Preferred Stock outstanding on April 29, 1999.
Page 12 of 13 Pages
<PAGE> 13
SCHEDULE III
<TABLE>
<CAPTION>
Name Principal Occupation or Employment
- ---- ----------------------------------
<S> <C>
W. R. Sauey Chairman of the Board
James L. Lambert President and Chief Executive Officer
Dana Kammersgard Vice President, Engineering, and Secretary
Pam Lambert
Seats, Inc.
Flambeau Corporation
Flambeau Products Corporation
W.R. and Floy A. Sauey
Grandparents Trust
</TABLE>
Page 13 of 13 Pages
<PAGE> 14
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
99.1 Agreement and Plan of Merger dated as of April
29, 1999 by and among Box Hill Systems Corp., BH
Acquisition Corp. and Artecon, Inc.*
99.2 Form of Voting Agreement dated as of April 29,
1999 by and between Box Hill Systems Corp., and
each of W.R. Sauey, individually; Seats, Inc.;
Flambeau Corp.; Flambeau Products Corporation;
Gerard Ward and Dick Cross as trustees for W.R.
and Floy A. Sauey Grandparents Trust; James L.
Lambert, individually; Pam Lambert,
individually; and Dana W. Kammersgard,
individually.*
99.3 Form of Affiliate Agreement to be entered into
by and between Box Hill Systems Corp., Artecon,
Inc. and each of Philip Black, Benjamin
Monderer, Carol Turchin, Mark A. Mays, Mischa
Schwartz, Benjamin Brussell, Monderer 1999 GRAT
u/a/d March 1999, Robert C. Miller, Elizabeth
Strong, Adam T. Temple, Kenneth Pitz, R. Robert
Rebmann, Jr., Tom Loomis And Daniel Kalagher
</TABLE>
*Incorporated by reference from Issuer's Current Report on Form 8-K filed with
the Securities and Exchange Commission on May 7, 1999.
Page 1 of 1
<PAGE> 1
Exhibit 99.3
AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT ("Affiliate Agreement") is being executed and
delivered as of May __, 1999 by _________ ("Stockholder") in favor of and for
the benefit of ARTECON, INC., a Delaware corporation ("Artecon") and BOX HILL
SYSTEMS CORP., a New York corporation (the "Company").
RECITALS
A. Stockholder is a stockholder of, and/or is an officer and/or
director of, the Company.
B. Artecon, the Company and BH Acquisition Corp., a wholly owned
subsidiary of the Company ("Merger Sub"), have entered into an Agreement and
Plan of Merger dated as of April 29, 1999 (the "Merger Agreement"), providing
for the merger of Merger Sub into Artecon (the "Merger").
C. Stockholder understands that Stockholder may be deemed an
"affiliate" of the Company for purposes of determining the Company's eligibility
to account for the Merger as a "pooling of interests" under Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange Commission (the
"SEC"), and under other applicable "pooling of interests" accounting
requirements.
AGREEMENT
Stockholder, intending to be legally bound, agrees as follows:
1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
represents and warrants to Artecon and the Company as follows:
(a) Stockholder is the holder and "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
the number of outstanding shares of common stock of the Company set forth
beneath Stockholder's signature on the signature page hereof (the "Company
Shares"), and Stockholder has good and valid title to the Company Shares, free
and clear of any liens, pledges, security interests, adverse claims, equities,
options, proxies (other than that certain proxy granted to Artecon in connection
with the Merger), charges, encumbrances or restrictions of any nature.
Stockholder has the sole right to dispose of the Company Shares and shares the
right to vote the Company Shares with Artecon pursuant to the proxy granted to
Artecon in connection with the Merger.
(b) Stockholder is the holder of options to purchase the number
of shares of common stock of the Company set forth beneath Stockholder's
signature on the signature page hereof (the "Company Options"), and Stockholder
has good and valid title to the Company Options, free and clear of any liens,
pledges, security interests, adverse claims, equities, options, proxies (other
than that certain proxy granted to Artecon in connection with the Merger),
charges, encumbrances or restrictions of any nature. The Company Shares and the
Company Options are referred to herein collectively as the "Company Securities."
1
<PAGE> 2
(c) Stockholder does not own, of record or beneficially,
directly or indirectly, any securities of the Company other than the Company
Securities and any other securities of the Company that Stockholder may acquire
after the date hereof.
(d) Stockholder has carefully read this Affiliate Agreement
and, to the extent Stockholder felt necessary, has discussed with counsel the
limitations imposed on Stockholder's ability to sell, transfer or otherwise
dispose of or reduce the Stockholder's interest in or risk related to the
Company Securities. Stockholder fully understands the limitations this Affiliate
Agreement places upon Stockholder's ability to sell, transfer or otherwise
dispose of or reduce the Stockholder's interest in or risk related to the
securities of the Company.
(e) Stockholder understands that the representations,
warranties and covenants set forth in this Affiliate Agreement will be relied
upon by the Company and its counsel and accountants for purposes of determining
the Company's eligibility to account for the Merger as a "pooling of interests"
and for purposes of determining whether Artecon and the Company should proceed
with the Merger.
2. PROHIBITIONS AGAINST TRANSFER. Stockholder agrees that, during the
period from the date 30 days prior to the date of consummation of the Merger
through the date on which financial results covering at least 30 days of
post-Merger combined operations of Artecon and the Company have been published
by the Company (within the meaning of the applicable "pooling of interests"
accounting requirements), Stockholder shall not sell, transfer, pledge,
hypothecate (including without limitation for margin accounts or hedge the value
of the shares) or otherwise dispose of, or reduce Stockholder's interest in or
risk relating to, (A) any capital stock of the Company (including, without
limitation, the Company Shares and any additional shares of capital stock of the
Company acquired by Stockholder after the date hereof, whether upon exercise of
a stock option or otherwise), except pursuant to and upon consummation of the
Merger, or (B) any Company Options or other right to purchase any shares of
capital stock of the Company, except pursuant to and upon consummation of the
Merger.
3. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Company or Artecon, on the other. The existence of any claim
or cause of action by Stockholder against the Company or Artecon shall not
constitute a defense to the enforcement of any of such covenants or obligations
against Stockholder.
4. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach or threatened breach by Stockholder of any covenant, obligation or other
provision contained in this Affiliate Agreement, Artecon and the Company shall
be entitled (in addition to any other remedy that may be available to Artecon or
the Company) to: (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision; and (b) an injunction restraining such breach or threatened breach.
Stockholder further agrees that neither Artecon, the Company nor any other
person or entity shall be required to obtain, furnish or post any bond or
similar instrument in connection with or as a condition to obtaining any remedy
referred to in this Section 4, and Stockholder irrevocably
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waives any right Stockholder may have to require the obtaining, furnishing or
posting of any such bond or similar instrument.
5. OTHER AGREEMENTS. Nothing in this Affiliate Agreement shall limit
any of the rights or remedies of Artecon or the Company under the Merger
Agreement, or any of the rights or remedies of Artecon or the Company or any of
the obligations of Stockholder under any agreement between Stockholder and
Artecon or the Company, or any certificate or instrument executed by Stockholder
in favor of Artecon or the Company; and nothing in the Merger Agreement or in
any other agreement, certificate or instrument shall limit any of the rights or
remedies of Artecon or the Company or any of the obligations of Stockholder
under this Affiliate Agreement.
6. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder, Artecon or the Company under this Affiliate
Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered to the address or facsimile telephone number set forth
beneath the name of such party below (or to such other address or facsimile
telephone number as such party shall have specified in a written notice given to
the other party):
IF TO THE COMPANY:
Box Hill Systems Corp.
161 Avenue of the Americas
New York, NY 10013
Attn: Philip Black
Fax: (212) 645-4756
IF TO ARTECON:
Artecon, Inc.
6305 El Camino Real
Carlsbad, CA 92009
Attn: James Lambert
Fax: (760) 431-4419
IF TO STOCKHOLDER:
_______________
c/o Box Hill Systems Corp.
161 Avenue of the Americas
New York, NY 10013
Fax: (212) 645-4756
7. SEVERABILITY. If any provision of this Affiliate Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or
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enforceability of such provision or part thereof under any other circumstances
or in any other jurisdiction, and (c) the invalidity or unenforceability of such
provision or part thereof shall not affect the validity or enforceability of the
remainder of such provision or the validity or enforceability of any other
provision of this Affiliate Agreement. Each provision of this Affiliate
Agreement is separable from every other provision of this Affiliate Agreement,
and each part of each provision of this Affiliate Agreement is separable from
every other part of such provision.
8. APPLICABLE LAW.. This Affiliate Agreement is made under, and shall
be construed and enforced in accordance with, the laws of New York applicable to
agreements made and to be performed solely therein, without giving effect to
principles of conflicts of law.
9. WAIVER; TERMINATION. No failure on the part of Artecon or the
Company to exercise any power, right, privilege or remedy under this Affiliate
Agreement, and no delay on the part of Artecon or the Company in exercising any
power, right, privilege or remedy under this Affiliate Agreement, shall operate
as a waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or remedy.
Neither the Company nor Artecon shall be deemed to have waived any claim arising
out of this Affiliate Agreement, or any power, right, privilege or remedy under
this Affiliate Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of Artecon or the Company, as the case may be; and any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given. If the Merger Agreement is terminated, this
Affiliate Agreement shall thereupon terminate.
10. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to Artecon and the Company such instruments and other documents and
shall take such other actions as Artecon and the Company may reasonably request
to effectuate the intent and purposes of this Affiliate Agreement.
11. ENTIRE AGREEMENT. This Affiliate Agreement, the Merger Agreement
and any Voting Agreement between Stockholder, Artecon and the Company
collectively set forth the entire understanding of Artecon, the Company and
Stockholder relating to the subject matter hereof and thereof and supersede all
other prior agreements and understandings between Artecon and the Company on the
one hand and Stockholder on the other hand, relating to the subject matter
hereof and thereof.
12. NON-EXCLUSIVITY. The rights and remedies of Artecon and the
Company hereunder are not exclusive of or limited by any other rights or
remedies which Artecon or the Company may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
13. AMENDMENTS. This Affiliate Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Artecon, the Company and Stockholder.
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14. ASSIGNMENT. This Affiliate Agreement and all obligations of
Stockholder hereunder are personal to Stockholder and may not be transferred or
delegated by Stockholder at any time. Artecon and the Company may freely assign
any or all of their respective rights under this Affiliate Agreement, in whole
or in part, to any other person or entity without obtaining the consent or
approval of Stockholder.
15. BINDING NATURE. Subject to Section 14, this Affiliate Agreement
will inure to the benefit of Artecon and the Company and their respective
successors and assigns and will be binding upon Stockholder and Stockholder's
representatives, executors, administrators, estate, heirs, successors and
assigns.
16. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Affiliate Agreement shall survive the consummation
of the Merger.
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Stockholder has executed this Affiliate Agreement on May __, 1999.
------------------------------------------
NUMBER OF OUTSTANDING SHARES OF
COMMON STOCK OF THE COMPANY
HELD BY STOCKHOLDER:
- -------------------------------
NUMBER SHARES OF COMMON STOCK OF THE COMPANY
SUBJECT TO OPTIONS HELD BY STOCKHOLDER:
- -------------------------------
6
