Adaptec Stockholders Must Reject Steel Partners Consent Solicitation

THE PRESS RELEASE OF ADAPTEC

Adaptec, Inc. reported that Glass, Lewis & Co. has recommended that stockholders reject all of the proposals solicited by Steel Partners II, L.P., a minority investor in Adaptec. Stockholders may follow the recommendation of this leading proxy advisor by submitting the GOLD consent revocation card.

The report by Glass, Lewis & Co. said Steel has “[no] substantive plan for improvement other than a sale of the Company’s operating business.” Glass, Lewis & Co. said that, in its view, now is not the right time to sell the company.

The Oct. 9 report also said Glass, Lewis & Co. “is not convinced that Steel is the appropriate candidate to address the Company’s performance challenges. Given that the Steel Partners nominees have served on the Company’s board since December 2007, with seemingly little improvement in the Company’s operational performance, we see no reason to believe that their re-appointment to the board through the removal of directors [CEO Subramanian] Sundaresh and [Robert J.] Loarie would have a more significant impact at this time.”

“We agree with Glass, Lewis: Steel is proposing the wrong approach at the wrong time. We are encouraged by the improvements in the performance of our operations in the wake of the initiatives the Board launched in 2005. Under CEO Sundaresh, Adaptec has refocused its business and its legacy technologies, added to its cash position and launched new products that are being well received by customers,” said Douglas E. Van Houweling, Chairman of Adaptec’s Governance and Nominating Committee. “The Board is considering additional steps to drive Adaptec to the next level. Already, it has strengthened its oversight of management through the appointment of a Chairman with extensive technology experience, and it has engaged a financial advisor to consider value-creating strategies. The Board remains open to considering options that might deliver value to stockholders, including an acquisition or a sale at the right time, or a return of cash to stockholders.”

Adaptec urges stockholders to follow the recommendation of this independent advisory firm and NOT give consent or sign a white consent card. Instead, mark the ‘Yes, Revoke My Consent’ boxes on the GOLD Consent Revocation card and mail it immediately. If you already have given your consent on a white card, you may revoke it by signing, dating and mailing the GOLD Consent Revocation card immediately.

The company did not seek nor obtain permission from Glass, Lewis & Co. for the disclosure of the information contained herein.

THE PRESS RELEASE OF STEEL PARTNERS

Steel Partners II, L.P., a wholly-owned subsidiary of SPH, announced that Glass Lewis & Co. has issued a proxy report in which it states that Steel Partners has “correctly identified a pattern of underperformance” at Adaptec, Inc. and that “the Company’s deteriorating financial performance and poor handling of the recent Aristos Logic acquisition call into question whether the Company’s Board has provided sufficient oversight in recent years.”

Steel Partners today issued the following statement.

“We are pleased that Glass Lewis agrees with us that the Company’s poor financial results and underperformance warrant a change to the Adaptec Board and/or management team. Importantly, Glass Lewis acknowledges certain failures of the Company under the control of the Legacy Directors and Mr. Sundaresh that have led to steadily declining revenue, large and continuing operating losses and a continued decline in the market value of the Company’s stock. Glass Lewis also says it is ‘troubled by the Company’s execution of the acquisition of Aristos Logic’ and is concerned that ‘this acquisition has contributed to the Company’s recent losses.’

“Unfortunately, Glass Lewis failed to appreciate that this consent solicitation is not about Steel Partners substituting its judgment regarding the timing of strategic transactions for that of the Board. It is about our commitment to follow the Board-approved recommendation of the Company’s independent financial advisor, which Mr. Sundaresh and certain Legacy Directors now oppose in favor of continuing to run the Company’s failing operating business while pursuing a risky, large-scale acquisition. In saying that “it would be premature to push through a sale of the Company without first taking steps to rectify the Company’s performance problems,” Glass Lewis is essentially substituting its own judgment for that of the Company’s financial advisor, who conducted a comprehensive strategic review process, and the Board of Directors.

“It also appears that Glass Lewis did not give appropriate consideration or weight to the massive corporate governance failures at Adaptec under the control of the Legacy Directors. Specifically, the proxy report fails to take into account that the Legacy Directors.

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  Took hostile actions against our director representatives, Jack Howard and John Quicke, to diminish our influence on the Board and preserve Mr. Sundaresh’s position as CEO;
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  Refused to waive the nomination deadline to avoid the consent solicitation and allow stockholders to have a choice and level playing field at the Annual Meeting;
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  Permitted Mr. Sundaresh to personally recruit three new director nominees who collectively lack experience and qualifications to serve on the Board; and
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  Own less than 1% of the Company’s outstanding shares and have little “skin in the game.”

“Unfortunately, rather than hold accountable the Legacy Directors, who have effectively controlled the Board for the past several years, Glass Lewis instead notes that the Company’s operational performance has not improved since our director representatives joined the Board. We are disappointed that Glass Lewis failed to recognize the positive impact our director representatives have had on the Board since December 2007 despite the oppressive control of the Legacy Directors. Among other things, Messrs. Howard and Quicke have.

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  Pushed management to come up with a business plan that would generate growing revenues and eliminate operating losses in order for the Company to become profitable;
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  Recommended on several occasions the return of capital to Adaptec stockholders through stock buybacks at less than cash value; and
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  Moved the Company toward pay for performance for senior management, using restricted stock awards that vest based on meeting performance based criteria, versus the previously granted time-based restricted stock."

Steel Partners recommends that all Adaptec stockholders sign, date and return the WHITE consent card today! We urge you not to revoke your consent by signing any gold consent revocation card sent to you by Adaptec or otherwise, and to revoke any consent revocation you may have already submitted to Adaptec.