<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)
Common Stock, $.005 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
043003102
-------------------------
(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
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<TABLE>
<CAPTION>
- ------------------------------------------- --------------------------
CUSIP NO. 043003102 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.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
NOT APPLICABLE
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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7 SOLE VOTING POWER
NUMBER OF
-0-
SHARES --------------------------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 10,157,402 SHARES OF COMMON STOCK, $.005 PAR VALUE
--------------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
--------------------------------------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH -0-
- ------------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,157,402 SHARES OF COMMON 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)
46.6%*
- ------------------------------------------------------------------------------------------------------------------------------------
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 21,779,307 shares of Issuer Common Stock outstanding on
April 29, 1999.
<PAGE> 3
PART II TO SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
<TABLE>
<S> <C>
(a) TITLE OF SECURITY: Shares of Common Stock, $.005 par value
(b) NAME OF ISSUER: Artecon, Inc., a Delaware corporation (the "Issuer")
(c) THE ISSUER'S PRINCIPAL 6305 El Camino Real
EXECUTIVE OFFICE: Carlsbad, California 92009-1606
</TABLE>
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 Preferred Stock is the subject of a
separate Schedule 13D filed by Box Hill 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, the 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 Company 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., Ted Loomis and Daniel
Kalagher (each an "Affiliate") will be requested to enter
into Affiliate Agreements with Box Hill and the Issuer.
Each Affiliate has agreed that such Affiliate shall not
dispose of the shares of Box Hill's Common Stock during the
thirty (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-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
Schedulen 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.
333-81873 (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 amd 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.
Page 8 of 13 Pages
<PAGE> 9
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.
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 Executive Vice President of Sales
Tom Loomis Vice President of Customer 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
Voting Agreement Stockholder Percentage Beneficially Owned* as of April 29, 1999
- ---------------------------- ---------------------------------------------------
Issuer Issuer
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 Grandparents Trust 1,038,103 4.8%
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>
- ---------------
* 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 Pages
<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
