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Balch Hill And Potomac Capital Deliver Open Letter To Shareholders Of STEC, Inc.

 Balch Hill And Potomac Capital Deliver Open Letter To Shareholders Of STEC,
                                     Inc.

Settlement Negotiations with STEC Fall Apart

Believe Manouch Moshayedi and Mark Moshayedi Must Resign from the Board

New CEO Search Must Begin Immediately

PR Newswire

NEW YORK, March 14, 2013

NEW YORK, March 14, 2013 /PRNewswire/ -- Balch Hill Partners, L.P., a Delaware
limited partnership, together with its affiliates, and Potomac Capital
Partners II, L.P., together with its affiliates, with approximately 9.8% of
the outstanding common stock of STEC, Inc., a California corporation (the
"Company"), announced today that they have delivered an open letter to
shareholders of the Company to announce that settlement negotiations with the
Company have broken down.

The full text of the letter is included below:

Dear Fellow Shareholders,

Balch Hill Partners, L.P., a Delaware limited partnership (together with its
affiliates, "Balch Hill"), and Potomac Capital Partners II, L.P. (together
with its affiliates, "Potomac"), currently own in the aggregate, approximately
9.8% of the outstanding common stock of STEC, Inc., a California corporation
(the "Company" or "STEC").

On February 8, 2013, Balch Hill and Potomac met with Manouch Moshayedi, Mark
Moshayedi, Kevin Daly and Christopher Colpitts to express our concerns with
the Company. In that meeting, we delivered a clear message. Manouch
Moshayedi had lost the trust of STEC's key OEM customers and shareholders and
his continued presence at the Company was detrimental to STEC. We further
stated that Mark Moshayedi could not rebuild that trust because he is too
closely aligned with his brother Manouch, and that we believe the Company's
continued underperformance clearly indicates that both Mark and Manouch
Moshayedi should resign from the Company's Board of Directors (the "Board").

Also on February 8, 2013, Balch Hill nominated a slate of seven (7)
highly-qualified directors for election to the Board at the 2013 annual
meeting of shareholders (the "Annual Meeting"). We nominated seven (7)
directors in order to preserve our rights at the Annual Meeting.

Though STEC's initial public response immediately following our nomination was
not encouraging, subsequent communications between Balch Hill, Potomac and the
Company appeared to give us hope for a constructive settlement.
Unfortunately, settlement discussions, which once looked so promising, have
broken down. We believe a constructive settlement is still possible and we
encourage the Board to work with us to find a constructive path forward that
includes truly new and independent leadership.

STEC has very valuable assets, including world class products and a strong
balance sheet. However, we believe the Company would greatly benefit from
eliminating the Moshayedi stronghold on the Company.

We encourage shareholders to make their wishes known. We believe shareholders
broadly wish for and understand the need for new leadership. We believe we
are close to a major positive change for the Company and we ask that other
shareholders join us in pushing for the change in leadership that is so
clearly critical to the Company's future success.

 Balch Hill Partners, L.P.

 By: Balch Hill Capital, LLC, General Partner
 By:       /s/ Simon Michael
           Name:       Simon Michael
           Title:      Manager
 Potomac Capital Partners II, L.P.

 By: Potomac Capital Management II, L.L.C.
 By:       /s/ Eric Singer
           Name:       Eric Singer
           Title:      Co-Managing Member

CERTAIN INFORMATION CONCERNING PARTICIPANTS

Balch Hill Partners, L.P., a Delaware limited partnership ("Balch Hill
Partnership"), together with the other Participants (as defined below),
intends to make a preliminary filing with the Securities and Exchange
Commission ("SEC") of a proxy statement and accompanying proxy card to be used
to solicit proxies for the election of its slate of director nominees at the
2013 annual meeting of shareholders of STEC, Inc., a California corporation
(the "Company").

BALCH HILL PARTNERSHIP STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO
READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE
AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF
THE PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD
BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR, OKAPI PARTNERS, TOLL-FREE AT
(877) 285-5990 OR VIA EMAIL AT INFO@OKAPIPARTNERS.COM.

The Participants in the proxy solicitation are anticipated to be Balch Hill
Partnership, Balch Hill Capital, LLC, a Delaware limited liability company
("Balch Hill"), Simon J. Michael, ("Mr. Michael" and, together with the Balch
Hill Partnership and Balch Hill, the "Balch Hill Entities"), Potomac Capital
Partners L.P., a Delaware limited partnership ("PCP I"), Potomac Capital
Management, L.L.C., a New York limited liability company ("Potomac Management
I"), Potomac Capital Partners II, L.P., a Delaware limited partnership ("PCP
II"), Potomac Capital Management II, L.L.C., a Delaware limited liability
company ("Potomac Management II"), Potomac Capital Partners III, L.P., a
Delaware limited partnership ("PCP III"), Potomac Capital Management III,
L.L.C., a Delaware limited liability company ("Potomac Management III"), Paul
J. Solit ("Mr. Solit"), Eric Singer ("Mr. Singer" and, together with PCP I,
Potomac Management I, PCP II, Potomac Management II, PCP III, Potomac
Management III, and Mr. Solit, the "Potomac Entities"), Martin Colombatto,
Adam Leventhal, Clark Masters, Mark Schwartz, Dilip Singh, and Bernard Xavier
(collectively, the "Participants").

As of the date hereof, the Participants collectively own an aggregate of
4,574,485 shares of common stock of the Company, consisting of the following:
(1) 4,100,000 shares owned directly by the Balch Hill Entities, (2) 408,170
shares owned directly by the Potomac Entities, (3) 25,000 shares owned
directly by Mr. Colombatto, and an additional 4,000 shares of common stock of
the Company which are held in a trust for Mr. Colombatto's child who shares
the same household that Mr. Colombatto may be deemed to beneficially own, (4)
2,100 shares owned by Mr. Leventhal, (5) 1,200 shares owned by Mr. Masters,
(6) 3,725 shares owned by Mr. Schwartz, (7) 20,000 shares owned by Mr. Singh,
and (8) 10,290 shares owned by Mr. Xavier. Balch Hill is the general partner
of, and investment adviser to, the Balch Hill Partnership. Mr. Michael is the
sole manager of Balch Hill. Potomac Management I is the general partner of
PCP I. Potomac Management II is the general partner of PCP II. Potomac
Management III is the general partner of PCP III. Mr. Solit is the managing
member of Potomac Management I and co-managing member of each of Potomac
Management II and Potomac Management III. Mr. Singer is the co-managing
member of each of Potomac Management II and Potomac Management III.

As members of a "group" for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, each of the Participants may be deemed to
beneficially own the shares of common stock of the Company owned in the
aggregate by the other Participants. Each of the Participants disclaims
beneficial ownership of such shares of common stock except to the extent of
his or its pecuniary interest therein.

Contact:

Simon J. Michael
Balch Hill Partners, L.P.
(415) 474-7055

Eric Singer
Potomac Capital Partners II, L.P.
(212) 257-6082

Geoff Sorbello/Charles Garske
Okapi Partners LLC
(212) 297-0720 or (877) 566-1922



SOURCE Balch Hill Partners, L.P.; Potomac Capital Partners II, L.P.