-----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, D9kY6liQyeSxjKa/B0pe9mAOUCtozRywokR80xotez1sByAZ3q2Q9i8lpENvagVv JcV59npp5Sq1VtldiW7ZBg== 0000950123-99-004418.txt : 19990512 0000950123-99-004418.hdr.sgml : 19990512 ACCESSION NUMBER: 0000950123-99-004418 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990511 SUBJECT COMPANY: 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 SEC ACT: SEC FILE NUMBER: 005-52129 FILM NUMBER: 99616371 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 FILED BY: 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 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 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 ARTECON, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Series A Preferred Stock, $.005 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) N/A ----------------------------- (CUSIP Number) James L. Lambert Artecon, Inc. 6305 El Camino Road Carlsbad, California 92009-1606 (760) 431-4400 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 29, 1999 -------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. The remainder of this cover page shall be filed out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following pages) Page 1 of 13 Pages 2
- ------------------------------------------------------------------------------------------------------------------------- CUSIP NO. N/A 13D Page 2 of 13 Pages - ------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON BOX HILL SYSTEMS CORP. - ------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - ------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK - ------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ------------------------------------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 2,494,159 SHARES OF SERIES A PREFERRED STOCK, $.005 PAR VALUE REPORTING ------------------------------------------------------------------------------------ PERSON 9 SOLE DISPOSITIVE POWER WITH -0- ------------------------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,494,159 SHARES OF SERIES A PREFERRED STOCK, $.005 PAR VALUE - ------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - ------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 100%* - ------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------------------------------------------------
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, and based on 2,494,159 shares of Issuer Preferred Stock outstanding on April 29, 1999. Page 2 of 13 Pages 3 PART II TO SCHEDULE 13D ITEM 1. SECURITY AND ISSUER (a) TITLE OF SECURITY: Shares of Series A Preferred Stock, $.005 par value (b) NAME OF ISSUER: Artecon, Inc., a Delaware corporation (the "Issuer") (c) THE ISSUER'S PRINCIPAL EXECUTIVE OFFICE: 6305 El Camino Real Carlsbad, California 92009-1606 ITEM 2. IDENTITY AND BACKGROUND (1) (a) This statement is filed by Box Hill Systems Corp., a New York corporation ("Box Hill"). Box Hill is principally in the business of design, manufacture, marketing and support of high performance data storage back-up Storage Area Network solutions. (b) The address of the principal business offices of Box Hill is 161 Avenue of the Americas, New York, New York 10013. (c) Set forth in Schedule I to this Schedule 13D is the name and present principal occupation or employment of each of Box Hill's executive officers and directors and the name, principal business and address of any corporation or other organization in which employment is conducted. (d) During the last five years, there have been no criminal proceedings against Box Hill, or, to the best knowledge of Box Hill, any of the other persons with respect to whom information is given in response to this Item 2. (e) During the last five years, neither Box Hill nor, to the best knowledge of Box Hill, any of the other persons with respect to whom information is given in response to this Item 2, has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) To Box Hill's best knowledge, all of the directors and executive officers of Box Hill named in Schedule I to this Schedule 13D are citizens of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION To facilitate the Merger (as defined in Item 4 below) and as an inducement to Box Hill entering into the Merger Agreement (as defined in Item 4 below), certain stockholders of the Issuer have entered into "Voting Agreements" with Box Hill as described in Item 4. These Voting Agreements do not contemplate a purchase by Page 3 of 13 Pages 4 Box Hill of either the Common Stock of the Issuer ("Issuer Common Stock") or the Series A Preferred Stock of the Issuer ("Issuer Preferred Stock", and together with the Issuer Common Stock, collectively referred to herein as the "Issuer Capital Stock"). ITEM 4.PURPOSE OF TRANSACTION (a)-(b) On April 30, 1999, Box Hill announced that it has signed a merger agreement with the Issuer, in connection with a tax-free, stock-for-stock transaction in what is intended to be accounted for as a pooling of interests (the "Merger"). Under the terms of the Agreement and Plan of Merger dated April 29, 1999 (the "Merger Agreement") among Box Hill, BH Acquisition Corp., a Delaware corporation ("Merger Sub"), and the Issuer, each outstanding share of Issuer Common Stock will be converted into 0.40 (the "Exchange Rate") of a fully paid and non-assessable share of Common Stock of Box Hill ("Box Hill Common Stock"). In accordance with the terms of the Merger Agreement, outstanding options to purchase Issuer Common Stock will be assumed by the Box Hill in the Merger and will become options to purchase Box Hill Common Stock. The exercise price and number of shares underlying such options will be adjusted to give effect to the Exchange Rate. Unless converted in accordance with their terms prior to the consummation of the Merger, each issued and outstanding share of the Issuer Preferred Stock will be converted into the right to receive that number of shares of Box Hill Common Stock equal to the quotient obtained by dividing (i)(1) $4,988,318, divided by (2) the closing sales price of Box Hill Common Stock as traded on the New York Stock Exchange Composite Transaction Tape on the last trading day immediately prior to the closing of the Merger, by (ii) 2,494,159. The holders of the Issuer Preferred Stock have the right to vote with the holders of the Issuer Common Stock and are entitled to that number of votes as they would have shares of Issuer Common Stock if the Issuer Preferred Stock was converted on the date of the vote. The Issuer Preferred Stock is convertible, at the option of the holder thereof, without the payment of additional consideration, at any time after January 1, 1999, into such number of fully paid and non-assessable shares of Issuer Common Stock determined by dividing two dollars ($2.00) by the greater of (A) $6.00 and (B) the then applicable Conversion Price. "Conversion Price" is the average of the closing price per share of Issuer Common Stock as traded on the National Market System of the Nasdaq Stock Market, Inc. under the ticker symbol "ARTE". The Issuer Common Stock is the subject of a separate Schedule 13D filed with the Securities and Exchange Commission on the date hereof. The Merger was approved unanimously by the boards of directors of both Box Hill and the Issuer. If the Merger Agreement is approved by the shareholders of each of Box Hill and the Issuer and the other conditions contained in the agreement are timely satisfied or waived, the Merger Sub will be merged with and into the Issuer, with the Issuer being the surviving corporation. After giving effect to the transactions contemplated by the Merger Agreement, Box Hill will be the sole shareholder of the Issuer. Page 4 of 13 Pages 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 6 The foregoing description of the Voting Agreements is qualified in its entirety by reference to the form of the Voting Agreements, included as Exhibit 99.2 to this Schedule 13D and incorporated herein in its entirety by reference. (c) Not applicable. (d) As a result of the Merger, Box Hill's certificate of incorporation will be amended and restated to provide for a classified Board (as described in Item 4(g) below) whereby the directors of Box Hill will be separated into three classes, with the members of each class serving for a three-year term. The first class of directors ("Class I") will consist of Norman Farquhar, a current director of the Issuer, and Philip Black, a current director of Box Hill; the Class I directors will serve until the 2000 annual meeting of stockholders of Box Hill. The second class of directors ("Class II") will consist of Benjamin Monderer, a current director of Box Hill, Benjamin Brussel, a current director of Box Hill and Chong Sup Park, a current director of the Issuer (or another outside director chosen by the Issuer). The Class II directors will serve until the 2001 annual meeting of stockholders of Box Hill. The third class of directors ("Class III") will consist of W.R. Sauey (who will act as Chairman of the Board), and James Lambert, each a current director of the Issuer, and Carol Turchin, a current director of Box Hill. The Class III directors will serve until the 2002 annual meeting of stockholders of Box Hill. In addition, as a result of the Merger: James L. Lambert, the current President and Chief Executive Officer of the Issuer, will become the Co-Chief Executive Officer, President and Chief Operating Officer of Box Hill; Philip Black, the current Chief Executive Officer of Box Hill, will become the Co-Chief Executive Officer and Executive Vice President - International Sales of Box Hill; Dana Kammergard, the current Vice President, Engineering and Secretary of the Issuer, will become the Chief Technical Officer of Box Hill; Carol Turchin, an Executive Vice President of Box Hill, will become the Executive Vice President, Sales, of Box Hill; Benjamin Monderer, the current Chairman of the Board, President and Chief Technical Officer of Box Hill, will become the Executive Vice President, Technology Services/Engineering Applications of Box Hill; and Mark A. Mays, the current Secretary and Vice President, Technical Consultant of Box Hill will become the Secretary of Box Hill. (e) See Item 4(a) above. (f) Upon consummation of the Merger, the Issuer will become a wholly owned subsidiary of Box Hill. (g) Upon approval of the Merger Agreement and the Merger by the shareholders of Box Hill, Certificate of Incorporation of Box Hill shall be amended to change the name of Box Hill to a name mutually agreed upon by the Issuer and Box Hill, and the Certificate of Incorporation and Bylaws of Box Hill shall be amended to provide for Page 6 of 13 Pages 7 a classified Board of Directors whereby the directors shall be separated into three classes, with the members of each class serving for a three-year term (as described in Item 4(d) above). (h) Not applicable. (i) Not applicable. (j) Other than as described above, Box Hill has no plan or proposal which relates to, or may result in, any of the matters listed in Items 4(a) - (i) of this Schedule 13D (although Box Hill reserves the right to develop such plans). ITEM 5. INTEREST IN SECURITIES OF BOX HILL (a)-(b) As a result of the Voting Agreements, Box Hill has the shared power to vote an aggregate of 10,157,402 shares of Issuer Common Stock and 2,494,159 shares of Issuer Preferred Stock for the limited purposes described in Item 4 above. Such shares constitute approximately 52.3% of the issued and outstanding voting securities of the Issuer (assuming the conversion of the Issuer Preferred Stock to Issuer Common Stock in accordance with its terms) as of April 29, 1999. To Box Hill's knowledge, no shares of Issuer Capital Stock are beneficially owned by any of the persons named in Schedule II, except for such beneficial ownership, if any, arising solely from the Voting Agreements. Set forth in Schedule III to this Schedule 13D is the name and certain information regarding each person or entity with whom Box Hill shares the power to vote or to direct the vote or to dispose or direct the disposition of Issuer Capital Stock. During the past five years, to Box Hill's best knowledge, no person named in Schedule III to this Schedule 13D has been convicted in a criminal proceeding. During the past five years, to Box Hill's best knowledge, no person named in Schedule III to this Schedule 13D was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of or prohibiting or mandating activity subject to federal or state securities laws or finding any violation with respect to such laws. To Box Hill's best knowledge, all persons named in Schedule III to this Schedule 13D are citizens of the United States. (c) Neither Box Hill nor, to Box Hill's best knowledge, any person named in Schedule I, has effected any transaction in Issuer Capital Stock during the past 60 days, except as disclosed herein. (d) Not applicable. (e) Not applicable. Page 7 of 13 Pages 8 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF BOX HILL In connection with the Merger Agreement, Philip Black, Benjamin Monderer, Carol Turchin, Mark A. Mays, Mischa Schwartz, Benjamin Brussell, Monderer 1999 GRAT u/a/d March 1999, Robert C. Miller, Elizabeth Strong, Adam T. Temple, Kenneth Pitz, R. Robert Rebmann, Jr., Tom Loomis, and Daniel Kalagher (each an "Affiliate") will be requested to enter into Affiliate Agreements with the Issuer. Pursuant to Section 2 thereof, each Affiliate has agreed that such Affiliate shall not dispose of the shares of Box Hill's Common Stock during the period which is thirty (30) days prior to the date of consummation of the Merger through the date on which financial results covering at least thirty (30) days of post-combined operations of Box Hill and the Issuer have been published. The foregoing summary of the Affiliate Agreements is qualified in its entirety by reference to the form of the Affiliate Agreements included as Exhibit 99.3 to this Schedule 13D and incorporated herein in its entirety by reference. Benjamin Monderer, Carol Turchin and Mark Mays entered into a voting agreement on July 31, 1997 with respect to the shares of Box Hill owned by each of them. Pursuant to said agreement, such shareholders have agreed to vote their respective shares for the election of each thereof as a director of Box Hill and will vote their shares in accordance with the determination of the holders of a majority of their shares as to any proposal to merge, consolidate, liquidate or sell substantially all the assets of the Company. The agreement, which pursuant to its terms is to terminate on December 31, 2009, or upon the deaths of Dr. Monderer and Ms. Turchin, prohibits the transfer of their shares other than (a) to a member of the transferor's family who agrees to be bound by the agreement, (b) pursuant to a sale exempt from registration pursuant to Rule 144 of the Securities Act of 1933, as amended, or (3) in a merger, consolidation or sale of substantially all the assets of Box Hill. This voting agreement, which was filed as an exhibit to Box Hill's Registration Statement No. 333-31873 (and the foregoing summary is qualified in its entirety by reference thereto) will be terminated upon the consummation of the Merger. Other than as described in the foregoing paragraphs and in Item 4 above, to Box Hill's best knowledge there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Shareholders and between such persons and any person with respect to any securities of Box Hill, including but not limited to transfer or voting of any securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS 99.1 Agreement and Plan of Merger dated as of April 29, 1999 by and among Box Hill Systems Corp., BH Acquisition Corp. and Artecon, Inc. 99.2 Form of Voting Agreement dated as of April 29, 1999 by and between Box Hill Systems Corp. and each of W.R. Sauey, individually; Seats, Inc.; Flambeau Corp.; Flambeau Corporation; Flambeau Products Corporation; Gerald Ward and Dick Cross as trustees for W.R. and Floy A. Sauey Grandparents Trust; James L. Lambert, individually; Pam Lambert, individually; and Dana W. Kammersgard, individually. 99.3 Form of Affiliate Agreement to be entered into by and between Box Hill Sytems Corp., Artecon, Inc. and each of Philip Black, Benjamin Monderer, Carol Turchin, Page 8 of 13 Pages 9 Mark A. Mays, Mischa Schwartz, Benjamin Brussell, Monderer 1999 GRAT u/a/d March 1999, Robert C. Miller, Elizabeth Strong, Adam T. Temple, Kenneth Pitz, R. Robert Rebmann, Jr., Tom Loomis and Daniel Kalagher. Page 9 of 13 Pages 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 11 SCHEDULE I EXECUTIVE OFFICERS AND DIRECTORS OF BOX HILL SYSTEMS CORP.
Name Principal Occupation or Employment - ---- ---------------------------------- Philip Black Chief Executive Officer and Director Benjamin Monderer Chairman of the Board, President, Chief Technology Officer and Director Carol Turchin Executive Vice President and Director Mark A. Mays Vice President, Technical Consultant, Secretary and Director Elizabeth Strong Vice President of Sales Tom Loomis Vice President of Custom Support Daniel Kalagher Vice President of Marketing Mischa Schwartz Director Benjamin Brussell Director
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 12 SCHEDULE II
Number of Shares of Issuer Capital Stock and Percentage Beneficially Owned(1) as of April 29, 1999 ---------------------------------------------------- Issuer Issuer Voting Agreement Stockholder Common Stock % Preferred Stock % - ---------------------------- ------------ - --------------- - W.R. Sauey 3,079,790 14.1% 247,877 9.9% Seats, Inc. 38,333 .2% 169,074 6.8% Flambeau Corporation 891,151 4.1% 1,038,604 41.6% Flambeau Products Corporation 235,507 1.1% 1,038,604 41.6% W.R. and Floy A. Sauey 1,038,103 4.8% Grandparents Trust James L. Lambert 3,175,787 14.6% Pam Lambert 316,894 1.5% Dana W. Kammergard 1,381,837 6.3% ========== ===== ========== ===== Total 10,157,402 46.6% 2,494,159 100%
(1) Based upon 21,779,307 shares of Issuer Common Stock and 2,494,159 shares of Issuer Preferred Stock outstanding on April 29, 1999. Page 12 of 13 Pages 13 SCHEDULE III
Name Principal Occupation or Employment - ---- ---------------------------------- 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
Page 13 of 13 Pages 14 Exhibit Index
Exhibit Description - ------- ----------- 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
*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 EX-99.3 2 AFFILIATE AGREEMENT 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 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 2 3 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 3 4 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. 4 5 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. 5 6 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 -----END PRIVACY-ENHANCED MESSAGE-----