-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PTUsJf9aouDhzy8ydUOc4e68WUskVZ7ol7iewVei7xlApMhWUMHyuFSRtZIvgiAb mnOwPlQc9yRj7Viz/7z3lg== 0000936392-99-000530.txt : 19990511 0000936392-99-000530.hdr.sgml : 19990511 ACCESSION NUMBER: 0000936392-99-000530 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990510 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BOX HILL SYSTEMS CORP CENTRAL INDEX KEY: 0001042783 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 133460176 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-52895 FILM NUMBER: 99614707 BUSINESS ADDRESS: STREET 1: 161 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2129894455 MAIL ADDRESS: STREET 1: 161 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10013 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ARTECON INC /DE/ CENTRAL INDEX KEY: 0001027032 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 770324887 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1656 MCCARTHY BOULEVARD CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4089540710 FORMER COMPANY: FORMER CONFORMED NAME: ARTECON CA DATE OF NAME CHANGE: 19980410 FORMER COMPANY: FORMER CONFORMED NAME: ARTECON INC/DE DATE OF NAME CHANGE: 19980410 FORMER COMPANY: FORMER CONFORMED NAME: STORAGE DIMENSIONS INC DATE OF NAME CHANGE: 19961114 SC 13D 1 SCHEDULE 13D 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 11 SCHEDULE I EXECUTIVE OFFICERS AND DIRECTORS OF ARTECON, INC.
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT - ---- ---------------------------------- 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
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. 12 SCHEDULE II
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* - ---------------------------- ------------------------------- --------------------------- 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
* Based upon 14,361,328 shares of Issuer Common Stock outstanding on April 29, 1999 12. 13 SCHEDULE III
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT - ---- ---------------------------------- 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
Benjamin Monderer and Mark Mays are employed at Box Hill Systems Corp., 161 Avenue of the Americas, New York, NY 10013. 13. 14 EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT - ------- ----------------------- 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.
- ---------- * Incorporated by reference from Issuer's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 7, 1999. 1. EX-99.3 2 EXHIBIT 99.3 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 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 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 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 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 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 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: _______________________________ -----END PRIVACY-ENHANCED MESSAGE-----