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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.
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(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
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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
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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.
000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
IF TO THE COMPANY:
ARTECON, INC.
0000 Xx Xxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
IF TO STOCKHOLDER:
____________________________________
____________________________________
____________________________________
Attn:_______________________________
Fax: (___) _________________________
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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).
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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.
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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:
_______________________________
