<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
BOX HILL SYSTEMS CORP.
- --------------------------------------------------------------------------------
(NAME OF THE ISSUER)
COMMON STOCK, $.01 PAR VALUE PER SHARE
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
10316R108
- --------------------------------------------------------------------------------
(CUSIP NUMBER)
PHILIP BLACK
BOX HILL SYSTEMS CORP.
161 AVENUE OF THE AMERICAS
NEW YORK, NY 10013
(212) 989-4455
- --------------------------------------------------------------------------------
(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 filled 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).
(Page 1 of 13 Pages)
(Continued on following pages)
1.
<PAGE> 2
- ------------------- ---------------------------
CUSIP NO. 10316R108 13D Page 2 of 13 Pages
- ------------------- ---------------------------
- --------- ----------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ARTECON, INC.
- --------- ----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------- ----------------------------------------------------------------------
3 SEC USE ONLY
- --------- ----------------------------------------------------------------------
4 SOURCE OF FUNDS
N/A
- --------- ----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
- --------- ----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------- ----------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER
OF -0-
SHARES ------- ------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,705,059
REPORTING ------- ------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------- ----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,705,059
- --------- ----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES[ ]
- --------- ----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.7%*
- --------- ----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- --------- ----------------------------------------------------------------------
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, and based on 14,361,328 shares of Issuer Common Stock outstanding on
April 29, 1999.
2.
<PAGE> 3
ITEM 1. SECURITY AND THE ISSUER
(a) TITLE OF SECURITY:
Common Stock, $.01 par value per share.
(b) NAME OF THE ISSUER:
Box Hill Systems Corp., a New York corporation.
(c) THE ISSUER'S PRINCIPAL EXECUTIVE OFFICE:
161 Avenue of the Americas
New York, NY 10013
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is filed by Artecon, Inc., a Delaware
corporation ("Artecon"). Artecon is principally in the business of
design, manufacture, marketing and support of high performance data
storage systems for open systems network applications.
(b) The address of the principal business offices of Artecon is
6305 El Camino Real, Carlsbad, California 92009-1606.
(c) Set forth in Schedule I to this Schedule 13D is the name and
present principal occupation or employment of each of Artecon'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 Artecon, or, to the best knowledge of Artecon, 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 Artecon nor, to the best
knowledge of Artecon, 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 the best knowledge of Artecon, all of the directors and
executive officers of Artecon named in Schedule I to this Schedule 13D
are citizens of the United States.
3.
<PAGE> 4
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
To facilitate the Merger (as defined in Item 4 below), certain
stockholders of the Issuer have entered into "Voting Agreements" with
Artecon as described in Item 4. These Voting Agreements do not
contemplate a purchase of the Common Stock of the Issuer by Artecon.
ITEM 4. PURPOSE OF THE TRANSACTION
(a) - (b) Pursuant to that certain Agreement and Plan of Merger
dated as of April 29, 1999 (the "Merger Agreement"), among Artecon,
the Issuer and BH Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of the Issuer ("Merger Sub"), and subject to
the conditions set forth therein (including any required regulatory
approval and the approval of the stockholders of the Issuer and
Artecon), Merger Sub will be merged with and into Artecon (the
"Merger") and Artecon will become a wholly owned subsidiary of the
Issuer. Each share of Common Stock of Artecon outstanding immediately
prior to the effective time of the Merger will be converted into 0.40
(the "Exchange Rate") fully paid and non-assessable shares of Common
Stock of the Issuer (the "Merger Shares"). In addition, each share of
Preferred Stock of Artecon outstanding immediately prior to the
effective time of the Merger will be converted into the right to
receive that number of fully paid and non-assessable shares of Common
Stock of the Issuer as is determined by dividing (x) the number
obtained by dividing (1) $4,988,318 by (2) the closing sales price per
share of Common Stock of the Issuer as traded on the New York Stock
Exchange Composite Transactions Tape on the last trading day
immediately preceding the closing of the Merger, by (y) 2,494,159.
Outstanding options to purchase Artecon common stock will be assumed
by Box Hill in the Merger and will become options to purchase Company
Common Stock. The exercise price and number of shares underlying such
option will be adjusted to give effect to the Exchange Rate. In
addition, under the terms of the Merger Agreement, effective upon
consummation of the Merger, the Issuer will amend its certificate of
incorporation pursuant to a Certificate of Amendment to change its
name to a name to be mutually agreed upon between the Issuer and
Artecon and establish a classified board of directors.
In addition to the approvals of the shareholders of Artecon and
the Issuer of the Merger, the consummation of the Merger is subject to
customary closing conditions as well as certain regulatory approvals.
The parties anticipate the Merger to close by the third quarter of
1999.
The Merger Agreement may be terminated by the Issuer or Artecon
under certain circumstances. If the Merger Agreement is terminated by
the Issuer or Artecon pursuant to Section 7.1(e) therein, Artecon 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 and Merger Sub)
4.
<PAGE> 5
incurred or accrued by the Issuer 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 the Issuer or Artecon pursuant to Section
7.1(d) therein, the Issuer will pay Artecon 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 Artecon)
incurred or accrued by Artecon 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 Artecon pursuant to
Section 7.1(f)(i) therein, or by the Issuer pursuant to Section 7.1(i)
therein, the Issuer will pay to Artecon a nonrefundable fee in the
amount of $2,500,000. If the Merger Agreement is terminated by the
Issuer pursuant to Section 7.1(f)(ii) therein, or by Artecon pursuant
to Section 7.1(h) therein, Artecon shall pay to the Issuer a
nonrefundable fee in the amount of $2,500,000.
The foregoing summary of the Merger 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 Benjamin Monderer, as individual, Benjamin Monderer as
trustee for Monderer 1999 GRAT u/a/d March 1999, and Mark A. Mays
(individually, a "Voting Agreement Stockholder" and, collectively, the
"Voting Agreement Stockholders") has entered into a Voting Agreement
dated as of April 29, 1999 (individually, a "Voting Agreement" and,
collectively, the "Voting Agreements") with Artecon. The number of
shares of Common Stock of the Issuer 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
Common Stock of the Issuer over which such person has voting power or
control (the "Subject Shares") to be voted in favor of (i) the
approval of the issuance of the Merger Shares, (ii) the approval and
adoption of the Merger Agreement and approval of the Merger, (iii)
approval of the Certificate of Amendment, and (iv) 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 Artecon
irrevocable proxies to vote the Subject Shares in favor of the
approval of the issuance of the Merger Shares and the approval of the
Merger Agreement, the Merger, the Certificate of Amendment and any
other matter that could reasonably be expected to facilitate the
Merger.
5.
<PAGE> 6
The foregoing summary of the Voting Agreements is qualified in
its entirety by reference to the form of Voting Agreement 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, the Issuer's Certificate of
Incorporation and Bylaws will be amended to provide for a classified
Board of Directors whereby the directors of the Issuer 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 Artecon (or another
outside director chosen by Artecon), and Philip Black, a current
director of the Issuer; the Class I directors will serve until the
2000 annual meeting of stockholders of the Issuer. The second class of
directors ("Class II") will consist of Chong Sup Park, a current
director of Artecon (or another outside director chosen by Artecon),
Benjamin Monderer, a current director of the Issuer, and Benjamin
Brussel, 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 the Issuer. The third class of
directors ("Class III") will consist of W. R. Sauey (who will act as
Chairman of the Board) and James L. Lambert, each a current director
of Artecon, and Carol Turchin, a current director of the Issuer; the
Class III directors will serve until the 2002 annual meeting of
stockholders of the Issuer.
In addition, as a result of the Merger:
James L. Lambert, the current President and Chief Executive
Officer of Artecon, will become the Co-Chief Executive Officer,
President and Chief Operating Officer of the Issuer;
Philip Black, the current Chief Executive Officer of the Issuer,
will become the Co-Chief Executive Officer and Executive Vice
President-International Sales of the Issuer;
Dana Kammersgard, the current Vice President, Engineering and
Secretary of Artecon, will become the Chief Technical Officer of the
Issuer;
Carol Turchin, the current Executive Vice President of the
Issuer, will become the Executive Vice President, Sales of the Issuer;
Benjamin Monderer, the current Chairman of the Board and
President of the Issuer, will become the Executive Vice President,
Technology Services/Engineering Applications of the Issuer; and
Mark Mays, the current Secretary and a Vice President of the
Issuer, will become Secretary of the Issuer.
(e) See Item 4(a) above.
6.
<PAGE> 7
(f) Upon consummation of the Merger, Artecon will become a wholly
owned subsidiary of the Issuer.
(g) Upon approval of the Merger Agreement and the Merger by the
stockholders of the Issuer, the Certificate of Incorporation of the
Issuer shall be amended to change the name of the Issuer to a name
mutually agreed upon by the Issuer and Artecon, and the Certificate of
Incorporation and Bylaws of the Issuer shall be amended to provide for
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, Artecon 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 Artecon reserves
the right to develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (b) As a result of the Voting Agreements, Artecon has
shared power to vote an aggregate of 7,705,059 shares of Common Stock
of the Issuer for the limited purposes described in Item 4 above. Such
shares constitute approximately 53.7% of the issued and outstanding
shares of Common Stock of the Issuer as of April 29, 1999.
To Artecon's knowledge, no shares of Common Stock of the Issuer
are beneficially owned by any of the persons named in Schedule I,
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 of and
certain information regarding each person or entity with whom Artecon
shares the power to vote or to direct the vote or to dispose or direct
the disposition of Common Stock of the Issuer.
During the past five years, to Artecon's knowledge, no person
named in Schedule III to this Schedule 13D, has been convicted in a
criminal proceeding.
During the past five years, to Artecon's 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 Artecon's knowledge, all persons named in Schedule III to this
Schedule 13D are citizens of the United States.
7.
<PAGE> 8
(c) Neither Artecon nor, to Artecon's knowledge, any person named
in Schedule I, has effected any transaction in Common Stock of the
Issuer during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
In connection with the Merger Agreement, James L. and Pamela
Lambert, Dana Kammersgard, W. R. Sauey, Flambeau Corporation, Flambeau
Products Corporation, Seats, Inc., the W.R. and Floy A. Sauey
Grandparents Trust, Jason C. Sauey, Chong Sup Park, Maxtor
Corporation, Brian D. Fitzgerald, CP Acquisition L.P. No. 4A, CP
Acquisition L.P. No. 4B, Capital Partners, Inc., FGS, Inc., Norman R.
Farquhar and William J. Filip (each an "Affiliate") will be requested
to enter into Affiliate Agreements with the Issuer. Pursuant to
Section 2 thereof, each Affiliate will agree that such Affiliate will
not dispose of the shares of the Issuer's Common Stock received by
such Affiliate as a result of the Merger unless at the time of such
transfer (i) the Issuer shall have published financial results
covering at least 30 days of post-merger combined operations of the
Company and Issuer, and (ii) either (A) such transfer shall be in
conformity with the provisions of Rule 145 under the Securities Act of
1933, as amended (the "Act") (or any successor rule then in effect) or
(B) a registration statement under the Act covering the proposed
offer, sale, pledge, transfer or other disposition shall be effective
under the Act.
Other than as described in the foregoing paragraph and in Item 4
above, to Artecon's knowledge, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons
named in Item 2 and between such persons and any person with respect
to any securities of the Issuer, 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. MATERIAL 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 Artecon, Inc. and each of Benjamin Monderer, as
individual, Benjamin Monderer as trustee for Monderer 1999 GRAT
u/a/d March 1999 and Mark A. Mays.
8.
<PAGE> 9
99.3 Form of Affiliate Agreement to be entered into by and between Box
Hill Systems Corp. and each of James L. and Pamela Lambert, Dana
Kammersgard, W. R. Sauey, Flambeau Corporation, Flambeau Products
Corporation, Seats, Inc., the W.R. and Floy A. Sauey Grandparents
Trust, Jason C. Sauey, Chong Sup Park, Maxtor Corporation, Brian
D. Fitzgerald, CP Acquisition L.P. No. 4A, CP Acquisition L.P.
No. 4B, Capital Partners, Inc., FGS, Inc., Norman R. Farquhar and
William J. Filip.
9.
<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 7, 1999
------------------------------------
(Date)
ARTECON, INC.,
a Delaware corporation
By: /s/ JAMES L. LAMBERT
---------------------------------
James L. Lambert
President and Chief Executive
Officer
10.
<PAGE> 11
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS OF ARTECON, INC.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ----------------------------------
<S> <C>
W. R. Sauey Chairman of the Board and Director
James L. Lambert President, Chief Executive Officer and Director
Norman R. Farquhar Director
William J. Filip Director
Brian D. Fitzgerald Director
Chong Sup Park Director
Jason Sauey Director
Dana Kammersgard Vice President, Engineering and Secretary
</TABLE>
All individuals in the above table are employed at, or retained as directors by,
Artecon, Inc., 6305 El Camino Real, Carlsbad, California 92009-1606.
11.
<PAGE> 12
SCHEDULE II
<TABLE>
<CAPTION>
PERCENTAGE OF OUTSTANDING
NUMBER OF SHARES OF ISSUER SHARES OF ISSUER COMMON
VOTING AGREEMENT STOCKHOLDER COMMON STOCK BENEFICIALLY OWNED STOCK AS OF APRIL 29, 1999*
- ---------------------------- ------------------------------- ---------------------------
<S> <C> <C>
Benjamin Monderer 2,476,753 17.2%
Benjamin Monderer as ttee for the 2,476,653 17.2%
Monderer 1999 GRAT u/a/d March 1999
Mark A. Mays 2,751,653 19.6%
TOTAL 7,705,059
</TABLE>
* Based upon 14,361,328 shares of Issuer Common Stock outstanding on April
29, 1999
12.
<PAGE> 13
SCHEDULE III
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ----------------------------------
<S> <C>
Benjamin Monderer Chairman of the Board, President and Chief Technical Officer
Mark A. Mays Vice President, Secretary and Director
Benjamin Monderer as trustee
for the Monderer 1999 GRAT
u/a/d March 1999
</TABLE>
Benjamin Monderer and Mark Mays are employed at Box Hill Systems Corp., 161
Avenue of the Americas, New York, NY 10013.
13.
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------
<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 Artecon, Inc. and each of Benjamin Monderer, Benjamin
Monderer as trustee for the Monderer 1999 GRAT u/a/d March 1999
and Mark A. Mays.*
99.3 Form of Affiliate Agreement to be entered into by and between Box
Hill Systems Corp. and each of James L. and Pamela Lambert, Dana
Kammersgard, W. R. Sauey, Flambeau Corporation, Flambeau Products
Corporation, Seats, Inc., the W.R. and Floy A. Sauey Grandparents
Trust, Jason C. Sauey, Chong Sup Park, Maxtor Corporation, Brian
D. Fitzgerald, CP Acquisition L.P. No. 4A, CP Acquisition L.P.
No. 4B, Capital Partners, Inc., FGS, Inc., Norman R. Farquhar and
William J. Filip.
</TABLE>
- ----------
* Incorporated by reference from Issuer's Current Report on Form 8-K filed with
the Securities and Exchange Commission on May 7, 1999.
1.
<PAGE> 1
EXHIBIT 99.3
FORM OF
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 BOX HILL SYSTEMS CORP., a New York corporation ("Parent") and
ARTECON, INC., a Delaware corporation (the "Company").
RECITALS
A. Stockholder is a stockholder of, and/or is an officer and/or director
of, the Company.
B. Parent, the Company and BH Acquisition Corp., a wholly owned
subsidiary of Parent ("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 the Company (the "Merger"). The Merger Agreement
contemplates that, upon consummation of the Merger, (i) holders of shares of the
common stock of the Company and preferred stock of the Company will receive
shares of common stock of Parent (the "Parent Shares") in exchange for their
shares of capital stock of the Company and (ii) the Company will become a wholly
owned subsidiary of Parent. It is accordingly contemplated that Stockholder will
receive Parent Shares in the Merger.
C. Stockholder understands that the Parent Shares being issued in the
Merger will be issued pursuant to a registration statement on Form S-4, and that
Stockholder may be deemed an "affiliate" of Parent: (i) as such term is defined
for purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act of
1933, as amended (the "Securities Act"); and (ii) for purposes of determining
Parent'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 Parent 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 Parent 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 Parent pursuant to the proxy granted to Parent in connection
with the Merger.
1
<PAGE> 2
(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 Parent 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."
(c) Stockholder does not own, of record or beneficially, directly
or indirectly, any securities of the Company other than the Company Securities.
(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, the Parent Shares, any other securities of the Company that
stockholder may acquire after the date hereof, and the options to purchase
shares of Parent Common Stock that Stockholder is to receive in respect of the
Company Options in connection with the Merger. 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 and securities of Parent.
(e) Stockholder understands that the representations, warranties
and covenants set forth in this Affiliate Agreement will be relied upon by
Parent and its counsel and accountants for purposes of determining Parent's
eligibility to account for the Merger as a "pooling of interests" and for
purposes of determining whether Parent and the Company should proceed with the
Merger.
2. PROHIBITIONS AGAINST TRANSFER.
(a) 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 Parent and the Company have been published by Parent (within the meaning of
the applicable "pooling of interests" accounting requirements):
(i) 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, 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;
and
(ii) 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 shares of capital
2
<PAGE> 3
stock of Parent (including without limitation the Parent Shares and any
additional shares of capital stock of Parent acquired by Stockholder,
whether upon exercise of a stock option or otherwise), or (B) any option
or other right to purchase any shares of capital stock of Parent.
(b) Stockholder agrees that Stockholder shall not effect any
sale, transfer or other disposition of any Parent Shares unless:
(i) such sale, transfer or other disposition is effected
pursuant to an effective registration statement under the Securities
Act; or
(ii) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 145 under the Securities Act.
3. STOP TRANSFER INSTRUCTIONS; LEGEND.
Stockholder acknowledges and agrees that (a) stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Shares, and (b) each certificate representing any of such shares shall bear a
legend identical or similar in effect to the following legend (together with any
other legend or legends required by applicable state securities laws or
otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT OF 1933
APPLIES AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH RULE AND IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED AS OF MAY__, 1999, BETWEEN THE REGISTERED HOLDER
HEREOF AND THE ISSUER, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICES OF THE ISSUER."
4. 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 Parent, on the other. The existence of any claim or
cause of action by Stockholder against the Company or Parent shall not
constitute a defense to the enforcement of any of such covenants or obligations
against Stockholder.
5. 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, Parent and the Company shall be
entitled (in addition to any other remedy that may be available to Parent) 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 Parent, the Company nor any other person or entity
shall be required to obtain, furnish or
3
<PAGE> 4
post any bond or similar instrument in connection with or as a condition to
obtaining any remedy referred to in this Section 5, and Stockholder irrevocably
waives any right Stockholder may have to require the obtaining, furnishing or
posting of any such bond or similar instrument.
6. OTHER AGREEMENTS. Nothing in this Affiliate Agreement shall limit any
of the rights or remedies of Parent or the Company under the Merger Agreement,
or any of the rights or remedies of Parent or the Company or any of the
obligations of Stockholder under any agreement between Stockholder and Parent or
the Company or any certificate or instrument executed by Stockholder in favor of
Parent 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 Parent or the Company or any of the obligations of Stockholder under this
Affiliate Agreement.
7. NOTICES. Any notice or other communication required or permitted to
be delivered to Stockholder, Parent 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 PARENT:
BOX HILL SYSTEMS CORP.
161 Avenue of the Americas
New York, NY 10013
Attn: Philip Black
Fax: (212) 645-4756
IF TO THE COMPANY:
ARTECON, INC.
6305 El Camino Real
Carlsbad, CA 92009-1606
Attn: James Lambert
Fax: (760) 431-4419
IF TO STOCKHOLDER:
____________________________________
____________________________________
____________________________________
Attn:_______________________________
Fax: (___) _________________________
4
<PAGE> 5
8. 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 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.
9. 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.
10. WAIVER; TERMINATION. No failure on the part of Parent or the Company
to exercise any power, right, privilege or remedy under this Affiliate
Agreement, and no delay on the part of Parent 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 Parent 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 Parent 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.
11. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to Parent and the Company such instruments and other documents and
shall take such other actions as Parent or the Company may reasonably request to
effectuate the intent and purposes of this Affiliate Agreement.
12. ENTIRE AGREEMENT. This Affiliate Agreement, the Merger Agreement and
any Voting Agreement between Stockholder, Parent and the Company collectively
set forth the entire understanding of Parent, the Company and Stockholder
relating to the subject matter hereof and thereof and supersede all other prior
agreements and understandings between Parent, the Company and Stockholder
relating to the subject matter hereof and thereof.
13. NON-EXCLUSIVITY. The rights and remedies of Parent and the Company
hereunder are not exclusive of or limited by any other rights or remedies which
Parent or the Company may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative).
5
<PAGE> 6
14. 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 Parent, the Company and Stockholder.
15. 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. Parent 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.
16. BINDING NATURE. Subject to Section 15, this Affiliate Agreement will
inure to the benefit of Parent 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.
17. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Affiliate Agreement shall survive the consummation
of the Merger.
6
<PAGE> 7
Stockholder has executed this Affiliate Agreement on May __, 1999.
___________________________________
[Name]
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:
_______________________________
