STEC Stec, Inc. (MM)

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON [                    ], 2013

A special meeting of shareholders (the “special meeting”) of sTec, Inc., a California corporation (“sTec”), will be held on [                    ], 2013, at [8:00 a.m.], local time at [                    ], for the following purposes, as more fully described in the proxy statement accompanying this notice:

No other business may be transacted at the special meeting other than as described above.

The proxy statement accompanying this notice describes each of these items of business in more detail. Our board of directors unanimously recommends that you vote “FOR” the proposal to approve and adopt the merger agreement, “FOR” the proposal to approve, by an advisory, non-binding vote, the compensation that may become payable to sTec’s named executive officers in connection with the completion of the merger and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve and adopt the merger agreement.

The board of directors has fixed the close of business on [                    ], 2013 as the record date for determining the shareholders entitled to notice of and to vote at the special meeting and any adjournment or postponement thereof. Approval and adoption of the merger agreement requires the affirmative vote of the holders of a majority of the shares of sTec common stock outstanding on the record date.

All shareholders are cordially invited to attend the special meeting in person. Whether or not you plan to attend the special meeting in person, you are urged to mark, date, sign and return the enclosed proxy card in the pre-addressed, pre-paid envelope provided or submit your proxy electronically over the Internet or by telephone, or, if your shares are held by a broker, bank or other nominee, you should vote by following the instructions provided by such party, as promptly as possible to ensure your representation and the presence of a quorum at the special meeting. If you submit your proxy and then decide to attend the special meeting, you may still vote your shares in person by following the procedures described in the proxy statement. Your proxy is revocable in accordance with the procedures set forth in the attached proxy statement. If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions received from your broker, bank or other nominee to change your instructions. Only shareholders of record as of the close of business on [                    ], 2013 are

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entitled to receive notice of, to attend and to vote at the special meeting, but if you are a beneficial holder as of that date, you will receive communications from your broker, bank or other nominee about the special meeting and how to direct the vote of your shares, and are welcome to attend the special meeting, all as described in more detail in the related questions and answers in the attached proxy statement.

Under California law, sTec shareholders who vote against the proposal to approve and adopt the merger agreement will be entitled to receive the fair market value of the shares of sTec common stock owned by them in lieu of the consideration payable in the merger, if the merger is completed, but only if they submit a written demand that sTec pay them the fair market value of their shares prior to the vote on the proposal to approve and adopt the merger agreement and comply with other California law procedures explained in the attached proxy statement.

For more information about the merger and other transactions contemplated by the merger agreement, please review the accompanying proxy statement, including the merger agreement attached as Annex A .

Please do not send your stock certificates with your proxies. A letter of transmittal with instructions for the surrender of our common stock certificates will be mailed to you as soon as practicable after completion of the merger.

If you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:

MACKENZIE PARTNERS, INC.

105 Madison Avenue

New York, New York 10016

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

By Order of the Board of Directors,

Mark Moshayedi

President and Chief Executive Officer

Santa Ana, California

[                    ], 2013

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers are provided for your convenience and address some commonly asked questions about the special meeting and the proposed merger. These questions and answers do not address all questions that may be important to you as a shareholder. You should still carefully read this entire proxy statement, including each of the annexes, and the documents to which we refer you in this proxy statement. You may obtain the documents incorporated by reference in this proxy statement without charge by following the instructions in the section titled “Where You Can Find More Information” beginning on page 86.

Throughout this proxy statement, “sTec,” “we,” “our” and “us” refer to sTec, Inc., “WDC” refers to Western Digital Corporation, and “Merger Sub” refers to Lodi Ventures, Inc., a wholly-owned subsidiary of WDC. Also, we refer to the merger between sTec and Merger Sub as the “merger,” and the agreement and plan of merger, dated as of June 23, 2013, by and among WDC, Merger Sub and sTec, as the same may be amended, as the “merger agreement.”

Q: Why am I receiving this proxy statement and proxy card?

A: You are receiving this proxy statement and the enclosed proxy card because our board of directors is soliciting your proxy to vote at a special meeting of sTec’s shareholders in connection with proposals set forth in the notice of meeting, including the following:

You are invited to attend the special meeting in person, although you do not need to attend the special meeting to have your shares voted. You may vote through proxy by completing, dating, signing and returning the enclosed proxy card in the return enclosed envelope or submit your proxy electronically over the Internet or by telephone, or, if your shares are held by a broker, bank or other nominee, you should vote by following the instructions provided by such party.

Q: When and where will the special meeting be held?

A: The special meeting is scheduled to be held at [8:00 a.m.], local time, at [                    ], on [                    ], 2013.

Q: By what date and time must be proxy be received?

Your proxy to vote your shares should be submitted as promptly as possible so that your shares may be represented at the special meeting. If you mail your proxy, your proxy must be received no later than 11:59 p.m. Eastern time on [                      ] , 2013. If you submit your proxy electronically over the Internet or by telephone, your proxy must be received no later than 11:59 p.m. Eastern time on [                      ] , 2013. If you hold your shares through a broker, bank or other nominee, you should provide such party with your voting instructions by the deadline provided by such party.

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Q: What will I receive in the merger?

A: If the merger is completed, you will be entitled to receive $6.85 in cash, without interest and less applicable withholding taxes, for each share of our common stock, par value $0.001 per share, that you own at the effective time of the merger. For example, if you own 100 shares of our common stock, you will receive $685.00 in cash, without interest and less applicable withholding taxes, in exchange for those shares.

Q: Will I own any shares of common stock or other equity interest of WDC as a result of the merger?

A: No. You will only receive cash for your shares of sTec common stock and you will not have the option to receive any equity interests of WDC or any other entity in exchange for your shares.

Q: If the merger is completed, what will happen to stock options that I hold to acquire sTec common stock or sTec restricted stock units?

A: All vested and unvested sTec stock options (other than unvested sTec stock options that are out-of-the-money) will be assumed by WDC and converted into stock options to purchase WDC common stock. All unvested sTec stock options that are out-of-the-money will not be assumed and will be cancelled as of the effective time of the merger. All sTec restricted stock units (“RSUs”) will be assumed by WDC and converted into and become rights with respect to WDC common stock. The stock options assumed by WDC and the RSUs will be converted into rights with respect to WDC common stock based on an exchange ratio (defined as $6.85 divided by the fair market value of a share of WDC common stock at the effective time of the merger). The vesting conditions of the WDC stock options and RSUs issued in exchange for sTec stock options and RSUs will remain unchanged and will not be accelerated solely on account of the merger.

Q: How does sTec’s Board of Directors recommend I vote on the proposals?

A: Our board of directors, upon the unanimous recommendation of a special committee of our board of directors, unanimously approved and adopted the merger agreement and the merger, determining that the merger agreement and the terms and conditions of the merger are in the best interests of sTec and its shareholders and resolved that the merger agreement and the principal terms of the merger be submitted for approval by the shareholders of sTec. Our board of directors unanimously recommends that our shareholders, including you, vote as follows:

Q: What is the Special Committee?

A: Our board of directors established a special committee of independent directors (the “special committee”) to review strategic alternatives relating to sTec, including the potential sale of sTec, and to make recommendations to the full board of directors with respect to such matters. The special committee unanimously recommended that the board of directors approve and adopt the merger and the merger agreement. Prior to its recommendation, the special committee reviewed the merger agreement and had discussions with sTec management and its advisors regarding the merger and the merger agreement.

Q: Who will own sTec after the merger?

A: After the merger, sTec will be a wholly-owned subsidiary of WDC. As a result of the receipt of cash in exchange for your shares of sTec common stock, you will no longer benefit from any increase in sTec’s value, nor will you acquire an ownership interest in WDC. However, all of our vested and unvested stock options (other than our unvested stock options that are out-of-money) will be assumed by WDC and converted into stock options to purchase WDC common stock based upon the exchange ratio described above. All of our RSUs will be assumed by WDC and converted into and become rights with respect to WDC common stock based upon the exchange ratio described above.

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Q: What do I need to do now?

A: We urge you to read this proxy statement carefully, including its annexes, and the documents to which we refer you in this proxy statement and to consider how the merger affects you, and then mail your completed, dated and signed proxy card in the enclosed return envelope or submit your proxy electronically over the Internet or by telephone as soon as possible so that your shares of sTec common stock can be voted at the special meeting. If your shares are held by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or other nominee in order to vote your shares at the special meeting.

Q: What vote is needed to approve and adopt the merger agreement?

A: The affirmative vote of a majority of the outstanding shares of our common stock is required to approve and adopt the merger agreement. Each holder of our common stock is entitled to one vote per share. Proxies returned to us that are properly signed and dated but not marked to indicate voting preference will be counted as votes FOR approval and adoption of the merger agreement. The failure to return your proxy card or submit your proxy electronically over the Internet or by telephone or vote in person (in the case of shareholders of record) or follow the instructions provided by your broker, bank or other nominee will have the same effect as voting against the merger.

In connection with the merger agreement, our executive officers and directors each entered into voting agreements with WDC, pursuant to which our executive officers and directors agreed, among other matters, to vote all of the shares of our common stock held by them in favor of the proposal to approve and adopt the merger agreement. As of July 18, 2013, these shares represented approximately 12.37% of our issued and outstanding shares of common stock.

Q: Who is soliciting my vote?

A: This proxy solicitation is being made and paid for by sTec. We have also retained MacKenzie Partners, Inc. (“MacKenzie Partners”) to assist with the solicitation. We will pay MacKenzie Partners approximately $25,000 for its assistance. Our directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or by other means of communication. Our directors, officers and employees will not be paid any remuneration for their solicitation efforts. We will also request brokers and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of shares of sTec common stock that the brokers and other custodians, nominees and fiduciaries hold of record. We will reimburse them for their reasonable out-of-pocket expenses in doing so.

Q: Why is sTec asking that its shareholders approve the say-on-golden-parachute proposal, on an advisory, non-binding basis?

A: Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and rules adopted by the Securities and Exchange Commission (the “SEC”), we are required to provide our shareholders with the opportunity to vote to approve, on an advisory, non-binding basis, the compensation arrangements between sTec and its named executive officers that are based on or that otherwise relate to the merger. Approval of these compensation arrangements is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only. Accordingly, the vote will not be binding on sTec or WDC, or their respective boards of directors or compensation committees.

Q: What vote is needed to approve the say-on-golden-parachute proposal?

A: The affirmative vote of a majority of shares present at the special meeting, in person or by proxy, and voting on the proposal is required to approve the say-on-golden-parachute proposal.

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Q: What vote is needed to approve the adjournment proposal?

A: The affirmative vote of a majority of the shares present in person or represented by proxy at the special meeting and entitled to vote, even if less than a quorum, is required to approve the adjournment proposal.

Q: May I vote in person?

A: Yes, but only if your shares are not held in “street name” through a broker, bank or other nominee. If you are the record holder of your shares you may attend the special meeting and vote your shares in person, rather than signing and returning your proxy card or submitting your proxy electronically over the Internet or by telephone. If your shares are held in “street name,” you must follow the instructions provided your broker, bank or other nominee in order to vote your shares at the special meeting. Whether or not you plan to attend the special meeting in person, you are urged to complete and return the enclosed proxy card or submit your proxy electronically over the Internet or by telephone as promptly as possible to ensure your representation and the presence of a quorum at the special meeting.

Q: Do I need to attend the special meeting in person?

A: No. You do not have to attend the special meeting in order to vote your shares of our common stock. Your shares can be voted at the special meeting without attending by mailing your completed, dated and signed proxy card in the enclosed return envelope or submitting your proxy electronically over the Internet or by telephone, in the case of record holders, or by following the instructions provided by your broker, bank or other nominee, in the case of shares held in “street name.”

Q: What if I do not return my proxy or vote in person at the special meeting or follow the instructions provided by my broker, bank or other nominee in order to vote my shares?

A: If you are a shareholder of record and you do not complete and return your proxy card or submit your proxy electronically over the Internet or by telephone or vote in person at the special meeting, your shares of common stock will not be voted. If you are not a shareholder of record but hold shares of common stock in “street name” and you do not follow the instructions provided by your broker, bank or other nominee in order to vote your shares, your shares will not be voted. The failure to return your proxy card or submit your proxy electronically over the Internet or by telephone or vote in person (in the case of shareholders of record) or follow the instructions provided by your broker, bank or other nominee will have the same effect as voting against the merger.

Q: May I appoint a proxy over the Internet or by telephone?

A: Yes. If you are a record holder, you may appoint a proxy over the Internet or by telephone by following the instructions contained herein.

Q: May I change my vote after I have delivered my proxy or have provided my broker, bank or other nominee with voting instructions?

A: Yes. If you are a record holder, you may change your vote at any time before your proxy is voted at the special meeting. You can do this in one of three ways. First, you can send a written, dated notice to our Corporate Secretary stating that you would like to revoke your proxy. Second, you can complete, date, and submit a new proxy card or submit another proxy electronically over the Internet or by telephone. Third, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions received from your broker, bank or other nominee to change your instructions.

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Q: If my broker, bank or other nominee holds my shares in “street name,” will my broker, bank or other nominee vote my shares for me?

A: No. Your broker, bank or other nominee will not be able to vote your shares without instructions from you. You should instruct your broker, bank or other nominee to vote your shares by following the procedures provided by such party. Without instructions, your shares will not be voted, which will have the same effect as voting against the merger.

Q: Should I send in my sTec stock certificates now?

A: No. After the merger is completed, you will receive written instructions for exchanging your shares of our common stock for the merger consideration of $6.85 in cash, without interest and less applicable withholding taxes, for each share that you own at the effective time of the merger, subject to the terms of the merger agreement.

Q: When do you expect the merger to be completed?

A: We are working toward completing the merger as quickly as possible. The merger is expected to be completed in the third or fourth quarter of 2013. However, we cannot assure you when or if the merger will occur. In addition to shareholder approval, other closing conditions contained in the merger agreement must be satisfied or waived prior to the closing of the merger. Either WDC or we may terminate the merger agreement if the merger has not occurred by December 31, 2013 (the “termination date”), provided that the right to terminate the merger agreement is not available to a party if any action of that party or the failure of that party to perform or comply with the covenants and agreements of such party set forth in the merger agreement directly caused the failure of the merger to be consummated by the termination date. In addition, the termination date may be extended to February 28, 2014 by either sTec or WDC in the event that the conditions to closing are not met on by December 31, 2013 as a result of a regulatory injunction that prohibits the merger, or if the applicable waiting period relating to the merger shall not have expired or terminated under antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The merger agreement may also be terminated unilaterally by sTec or WDC under certain circumstances.

Q: What if the proposed merger is not completed?

A: If the merger agreement is not approved by sTec’s shareholders, or if the merger is not completed for any other reason, sTec’s shareholders will not receive any payment for their shares under the merger agreement. Instead, sTec will continue as a public company and our common stock will continue to be registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and listed and traded on Nasdaq Global Select Market. Under certain circumstances specified in the merger agreement, in connection with termination of the merger agreement, we may be required to pay WDC a termination fee of $9,400,000, or WDC may be required to pay us a reverse termination fee of $17,000,000.

Q: Am I entitled to dissenters’ rights?

A: Yes. Under California law, sTec shareholders who vote against the merger and who properly exercise dissenters’ rights under Chapter 13 of the California General Corporation Law (the “CGCL”), a copy of which is attached to this proxy statement as Annex D , will be entitled to receive the fair market value of the shares of common stock owned by them in lieu of the consideration payable in the merger. If you desire to exercise dissenters’ rights and receive the fair market value of your shares instead of the merger consideration, your shares must be voted “AGAINST” the merger proposal and you must deliver to sTec or its transfer agent prior to the vote on the merger proposal a written demand for the purchase of your shares and payment to you of the fair market value of your shares in lieu of the consideration payable in the merger. You must also take certain other actions required by Chapter 13 of the CGCL. Note that it is not sufficient to abstain from voting or for your shares to be subject to a broker non-vote if you wish to exercise your dissenters’ rights.

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Q: Will the merger be a taxable transaction for me?

A: If you are a U.S. taxpayer, your receipt of cash in the merger will be treated as a taxable sale of your sTec common stock for U.S. federal income tax purposes. In general, you will recognize gain or loss equal to the difference between (1) the amount of cash you receive in the merger in exchange for your shares and (2) the adjusted tax basis of your shares of our common stock. You should consult your tax advisor on how specific tax consequences of the merger apply to you.

Q: How will I receive the merger consideration to which I am entitled?

A: As promptly as practicable following the consummation of the merger, and in any event not later than the third business day thereafter, the paying agent will mail to you written instructions, including a letter of transmittal, that explain how to exchange your shares for the merger consideration of $6.85 in cash, without interest and less any applicable withholding taxes, for each share of sTec common stock. When you properly return and complete the required documentation described in the written instructions, you will promptly receive from the paying agent a payment of the merger consideration for your shares.

Q: What if I sell my shares of sTec common stock before the special meeting?

A: The record date of [                      ] , 2013 determines the shareholders entitled to vote at the special meeting. This date is earlier than the date of the special meeting and the expected closing date of the merger. If you transfer your shares of sTec common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote those shares at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares.

Q: What should I do if I receive more than one set of voting materials?

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy cards or multiple sets of voting instructions from your broker, bank or other nominee. For example, if you hold your shares of sTec common stock in more than one brokerage account, you will receive separate voting instructions for each brokerage account in which you hold shares. If you are a holder of record and your shares of common stock are registered in more than one name, you will receive more than one proxy card. Please submit each proxy and follow each set of voting instructions that you receive, as applicable.

Q: Who can help answer my questions?

A: If you would like additional copies, without charge, of this proxy statement or if you have questions about the merger, including the procedures for voting your shares, you should contact our proxy solicitor at:

MACKENZIE PARTNERS, INC.

105 Madison Avenue

New York, New York 10016

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

Or you can contact us at:

sTec, Inc.

Attention: Corporate Secretary

3001 Daimler Street

Santa Ana, California 92705-5812

(949) 476-1180

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this proxy statement are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Exchange Act, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements often can be, but are not always, identified by the use of words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” and similar expressions, or the negative of such expressions. They include, but are not limited to, statements whether and when the proposed merger with WDC will close, regarding sTec’s projected financial results, concerning litigation in connection with the merger and whether conditions to the proposed merger will be satisfied. There can be no assurance that the merger will in fact be consummated. We base these forward-looking statements on our current expectations and projections about future events, our assumptions regarding these events and our knowledge of facts at the time the statements are made.

These forward-looking statements are subject to various risks and uncertainties, including, but not limited to:

Some of these risks and uncertainties are outside our control and our actual results could differ materially from our projected results. We are not able to predict all of the factors that may affect future results. Forward-looking statements speak only as of the date of this proxy statement. Except as required by applicable laws or regulations, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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THE SPECIAL MEETING

We are furnishing this proxy statement to our shareholders as part of the solicitation of proxies by our board of directors for use at the special meeting, and at any adjournments or postponements of the special meeting.

Date, Time and Place

We will hold the special meeting at [8:00 a.m.], local time, at [                    ], on [                     ], 2013.

Purpose of Special Meeting

At the special meeting, we will ask holders of our common stock to approve and adopt the merger agreement. Our board of directors has approved resolutions approving and adopting the merger agreement and the merger, determining that the merger agreement and the terms and conditions of the merger are in the best interests of sTec and our shareholders and directing that the merger and the merger agreement be submitted for approval and adoption at a special meeting of our shareholders. Our board of directors recommends that our shareholders vote:

Record Date; Stock Entitled to Vote; Quorum

Only holders of record of our common stock at the close of business on [                    ], 2013, which is the record date for the special meeting, are entitled to notice of and to vote at the special meeting. As of the record date, [            ] shares of our common stock were outstanding and held by approximately [            ] holders of record. A quorum will be present at the special meeting if a majority of the shares of our common stock outstanding and entitled to vote on the record date are present in person or represented by proxy at the special meeting. Shares of our common stock represented at the special meeting but not voting, including “broker non-votes,” discussed below, and shares of our common stock for which proxies have been received but for which shareholders have abstained, will be treated as present at the special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business at the special meeting.

A broker non-vote occurs when a broker, dealer, commercial bank, trust company or other nominee does not vote on a particular matter because such broker, dealer, commercial bank, trust company or other nominee does not have the discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. Brokers, dealers, commercial banks, trust companies and other nominees will not have discretionary voting power with respect to any of the proposals to be considered at the special meeting, as they are all considered “non-routine.”

In the event that a quorum is not present, or if there are insufficient votes to approve and adopt the merger agreement at the time of the special meeting, it is expected that the meeting will be adjourned or postponed to solicit additional proxies. Our bylaws and the CGCL provide that, except as otherwise expressly required by law, notice of any adjourned meeting of the shareholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken and if the special meeting is adjourned for 45 days or less.

Votes Required

The proposal to approve and adopt the merger agreement requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding on the record date. If a holder of our common stock abstains from voting or does not vote, either in person or by proxy, it will have the effect of a vote against the

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merger proposal. If you hold your shares in “street name” through a broker, bank or other nominee, you must direct your broker, bank or other nominee to vote in accordance with the instructions you have received from your broker, bank or other nominee. Brokers, banks or other nominees who hold shares of our common stock in street name for customers who are the beneficial owners of those shares may not give a proxy to vote those customers’ shares in the absence of specific instructions from those customers. These non-voted shares will have the effect of votes against the approval and adoption of the merger agreement.

The say-on-golden-parachute proposal requires the affirmative vote of a majority of shares present at the special meeting, in person or by proxy, and voting on the proposal. Abstentions and broker non-votes will not count as shares voting on this proposal, and thus will not impact the outcome of the vote on this proposal. Approval of the say-on-golden-parachute proposal is on an advisory, non-binding basis, and approval of these compensation arrangements is not a condition to completion of the merger. Accordingly, the vote will not be binding on sTec or WDC, or their respective boards of directors or compensation committees.

The adjournment proposal requires the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the special meeting and entitled to vote, even if less than a quorum. Accordingly, not voting at the special meeting and broker non-votes will have no effect on the outcome of this proposal, but abstentions will have the effect of a vote against this proposal.

Holders of record of our common stock on the record date are entitled to one vote per share on each matter to be considered at the special meeting.

As of the record date, directors and executive officers of sTec, and their affiliates, had the right to vote [            ] shares of sTec common stock, or [    ]% of the outstanding sTec common stock at that date. In connection with the merger agreement, our executive officers and directors entered into voting agreements with WDC, pursuant to which our executive officers and directors agreed, among other things, to vote all of their shares of our common stock held by them as of June 23, 2013, in favor of the proposal to approve and adopt the merger agreement.

Voting of Proxies

All shares represented by properly executed proxies received in time for the special meeting will be voted at the special meeting in the manner specified by the holders thereof. Properly executed proxies that do not indicate how you want your shares of our common stock to be voted with regard to a particular proposal will be voted FOR the approval and adoption of the merger proposal, FOR the say-on-golden parachute proposal and FOR approval of the adjournment proposal, if determined necessary or appropriate by sTec, to facilitate the approval and adoption of the merger proposal, including to permit the solicitation of additional proxies if there are not sufficient votes at the time of the special meeting to approve and adopt the merger proposal. No proxy that is specifically marked AGAINST approval and adoption of the merger proposal will be voted FOR the adjournment proposal, unless it is specifically marked FOR the proposal to adjourn the special meeting to a later date.

No business may be transacted at the special meeting other than the proposal to approve and adopt the merger agreement, the say-on-golden-parachute proposal to approve, on an advisory basis, the merger-related executive compensation arrangements of sTec’s named executive officers, the adjournment proposal to adjourn the special meeting (if necessary) and such other business as may properly come before the special meeting pursuant to our bylaws.

Revocability of Proxies

The grant of a proxy on the enclosed form of proxy or electronically over the Internet or by telephone does not preclude a shareholder from voting in person at the special meeting. A shareholder may revoke a proxy at any time prior to its exercise by:

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Your most current proxy card or telephone or Internet proxy is the one that is counted. Please note that to be effective, your new proxy card, whether submitted by mail or electronically over the Internet or telephone, or written notice of revocation must be received by our Corporate Secretary prior to the special meeting. If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions received from your broker, bank or other nominee to change your instructions.

sTec shareholders who require assistance should contact our proxy solicitor:

MACKENZIE PARTNERS, INC.

105 Madison Avenue

New York, New York 10016

(212) 929-5500 (Call Collect)

or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

Delivery of Proxy Materials to Households Where Two or More sTec Shareholders Reside

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost-savings for companies.

In connection with the special meeting, a number of brokers with account holders who are sTec shareholders will be householding sTec’s proxy materials. As a result, a single proxy statement will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the applicable shareholders. Once a sTec shareholder receives notice from his, her or its broker that it will be householding communications to such shareholder’s address, householding will continue until such shareholder is notified otherwise or until such shareholder revokes his, her or its consent. If, at any time, a sTec shareholder no longer wishes to participate in householding and would prefer to receive a separate proxy statement, such shareholder should notify his, her or its broker or contact sTec, Inc., 3001 Daimler Street, Santa Ana, California 92705-5812, Attention: Corporate Secretary, or via phone at (949) 476-1180. sTec shareholders who currently receive multiple copies of this proxy statement at their address and would like to request householding of their communications should contact their broker.

Solicitation of Proxies

All costs incurred in connection with filing, printing and mailing this proxy statement (other than attorneys’ fees), will be shared equally between sTec and WDC. We have retained MacKenzie Partners to assist in connection with the solicitation of proxies from shareholders. Under the agreement between sTec and MacKenzie Partners relating to the retention of MacKenzie Partners to solicit proxies for voting at the special meeting, we will pay MacKenzie Partners a fee of $25,000 and will reimburse MacKenzie Partners for reasonable out-of-pocket expenses related to the solicitation. In addition, our directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or by other means of communication. Our directors, officers and employees will not be paid any remuneration for their solicitation efforts. We will also

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request brokers and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of shares of sTec common stock that the brokers and other custodians, nominees and fiduciaries hold of record. We will reimburse them for their reasonable out-of-pocket expenses in doing so. You should be aware that certain members of our board of directors and our officers have interests in the merger that are different from, or in addition to, your interests. See “The Merger—Interests of sTec’s Executive Officers and Directors in the Merger.”

To the extent necessary in order to ensure sufficient representation at the special meeting, sTec may request the return of proxy cards electronically over the Internet or by telephone. The extent to which these proxy soliciting efforts will be necessary depends entirely upon how promptly proxies are received. You should send in your proxy by mail or electronically over the Internet or by telephone without delay. We will also reimburse brokers and other custodians, nominees and fiduciaries for their expenses in sending these materials to you and obtaining your voting instructions.

Stock Certificates

Shareholders should not send stock certificates with their proxies. A letter of transmittal with instructions for the surrender of our common stock certificates will be mailed to our shareholders as soon as practicable after completion of the merger.

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THE MERGER

(Proposal 1)

Description of the Merger

Our board of directors has approved and adopted a merger agreement and a merger whereby sTec will become a wholly-owned subsidiary of WDC upon completion of the merger. If the merger agreement is approved and adopted by sTec shareholders, and subject to other closing conditions as described below in the section captioned “The Merger Agreement—Conditions to the Closing of the Merger,” Merger Sub, a newly formed, wholly-owned subsidiary of WDC will be merged with and into sTec, and sTec will be the surviving company in the merger. We strongly encourage you to read carefully the merger agreement in its entirety, a copy of which is attached as Annex A to this proxy statement, because it is the legal contract that governs the merger.

If the merger is completed, you will be entitled to receive the cash merger consideration of $6.85, without interest and less applicable withholding taxes, in exchange for each share of our common stock that you own at the effective time of the merger. Please see “The Merger Agreement” for additional and more detailed information regarding the merger agreement.

After the merger is completed, you will have the right to receive the merger consideration but you will no longer have any rights as a shareholder of sTec. In the case of shares of our common stock represented by certificates, you will receive your portion of the merger consideration after exchanging your stock certificates in accordance with the instructions contained in a letter of transmittal to be sent to you promptly after completion of the merger. In the case of shares of our common stock held in book-entry form, you will receive your portion of the merger consideration as promptly as practicable following the merger without the requirement to deliver a letter of transmittal.

Our common stock is currently registered under the Exchange Act and is designated for trading on the Nasdaq Global Select Market under the symbol “STEC.” Following the merger, our common stock will be delisted from the Nasdaq Global Select Market and will no longer be publicly traded, and the registration of our common stock under the Exchange Act will be terminated.

Vote Required and sTec Board Recommendation

The affirmative vote of the holders of a majority of the shares of our common stock outstanding on the record date is required to approve and adopt the merger agreement. Proxies returned to us that are properly signed and dated but not marked to indicate voting preference will be counted as votes FOR approval and adoption of the merger agreement.

Our board of directors unanimously recommends that shareholders vote “FOR” the approval and adoption of the merger agreement.

Background of the Merger

Over the last few years, as developments in enterprise Solid State Drives (“SSDs”) created challenges to the company’s performance and prospects, management and our board of directors regularly reviewed and assessed the company’s strategy with the goal of maximizing shareholder value. As a result of these reviews, our board of directors considered a number of potential strategic alternatives, including strategic acquisitions and divestitures, investment in and creation of a parallel sales and marketing group focusing on new customers, a sale of the company and licensing opportunities for the company’s intellectual property.

In addition, from time-to-time, sTec’s board and management have received informal approaches from third parties indicating an interest in discussing a potential acquisition of the company. The company’s policy is to respond to such inquiries in a manner that our board of directors considers consistent with its fiduciary duties;

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however, prior to the process described below, such approaches have been general and exploratory in nature, and no specific transaction terms were proposed. In addition, in 2011, while attending an industry event, Mr. Manouch Moshayedi, our Founder, and then Chief Executive Officer and Chairman of the Board, attended a lunch meeting with Mr. John Coyne, the then CEO of WDC. This meeting was in keeping with Mr. Moshayedi’s practice of meeting from time-to-time with other executives in the storage industry. During their lunch conversation, among other topics discussed, Mr. Coyne noted that WDC was interested in exploring potential ways of expanding in SSDs. In the months that followed, sTec’s management did not receive any further communications from WDC, and sTec’s management had no further discussions with WDC management until the following year. In the summer of 2012, Mr. Moshayedi attended a lunch meeting at the invitation of Mr. Michael Hajeck, then WDC’s Senior Vice President and General Manager, Solid State Business Unit. At the lunch meeting with Mr. Manouch Moshayedi, Mr. Hajeck inquired about the interest of Mr. Manouch Moshayedi and Mr. Mark Moshayedi, our then President, Chief Operating Officer and Chief Technical Officer, in continuing to run sTec and whether they had any plans to retire, but there was no further discussion between WDC and sTec until the communications described below.

In the fourth quarter of 2011, sTec generated a net loss, as the company continued to face a number of challenges, particularly increasing competition in its core OEM business. In response, the company began to implement a new business strategy, initially by hiring key industry veterans in late 2011 to assist with the strategy’s development and execution. Under the new business strategy, in addition to targeting OEM customers, from which historically all of sTec’s SSD sales were derived, the company began pursuing enterprise end-user customers directly. This new business strategy was an effort to increase and diversify sTec’s customer base, increase sTec’s value contribution by providing more highly integrated solutions and generate additional pull-through demand of its products by providing these solutions directly to the end customer. sTec implemented this strategy through, among other actions, investing in the expansion of its sales channels and increasing its enterprise sales and marketing force. While sTec began to see results from this new business strategy in the second half of 2012, when for the first time, one of sTec’s non-OEM customers generated over 10% of its SSD revenue, the lead time for a stable base of recurring sales from these new customers proved to be longer than anticipated, product adoption was difficult to forecast and the company’s losses continued.

In response, by the fourth quarter of 2012, our board of directors was considering a number of further strategic alternatives presented by management, including a plan to significantly reduce expenses to align our cost structure with our reduced revenues by scaling down head count and resources in a number of functional areas, including operations, research and development, and general and administrative. As it evaluated the advisability and potential long-term impacts of the cost reductions, our board of directors determined that it would be beneficial to undertake a formal review of strategic alternatives, including exploring a potential sale of sTec. In particular, our board of directors determined that it would be beneficial to perform a market check to determine if potential acquirers would present a better opportunity to maximize shareholder value, than would result from continuing to operate the company on a standalone basis under the cost reduction plan. Consequently, in mid-November, 2012, our board of directors authorized management to contact potential financial advisors to explore their interest in representing the company in its exploration of strategic alternatives, including a potential sale of the company. During this timeframe, management contacted two financial advisors about the prospect of working with the company, however, both responded that they were not in a position to advise the company at that time. Although sTec did not engage a financial advisor at that time, our board of directors made a determination to continue to review sTec’s strategic alternatives.

On November 14, 2012, an investment bank representing Company A contacted our management to request a preliminary meeting between sTec and Company A. Company A’s financial advisor followed up on the preliminary contact to provide a proposed agenda for the meeting, covering topics related to our operations and technology, and a draft non-disclosure agreement for the purpose of evaluating a possible business transaction between sTec and Company A. A meeting was scheduled between Company A and sTec, however, it was subsequently cancelled because of concerns expressed by non-management board members, which were communicated to Company A, that the management of Company A had not demonstrated any involvement in the process.

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On November 29, 2012, our board of directors held a regularly scheduled in-person board meeting, at which the board of directors further discussed, among other matters, potential strategic alternatives in response to the company’s financial performance, including the potential for both acquisitions and divestitures in several areas relevant to the company’s strategy. In addition, a representative from the law firm of Gibson, Dunn & Crutcher LLP (“Gibson Dunn”), which had been engaged in October 2012 as the company’s outside corporate counsel, was present telephonically for a portion of the meeting and delivered a presentation that reviewed the company’s defensive profile and the relevant fiduciary duties of the board of directors in connection with a review of strategic alternatives. Management also reported to our board of directors on the feedback received from the two financial advisors that had declined to be engaged by sTec earlier in the month.

Around this timeframe, Balch Hill Partners, L.P. (“Balch Hill”), an activist investor in the technology sector, reported its acquisition of 6.4% of sTec’s outstanding shares. Balch Hill filed its first Schedule 13D with the SEC on November 16, 2012. Balch Hill was later joined by Potomac Capital Partners II, L.P. (“Potomac”), and Balch Hill and Potomac subsequently jointly increased their beneficial holdings to 9.8%. Then, on December 6, 2012, Balch Hill filed an amendment to its Schedule 13D, and concurrently issued a letter to our board of directors urging our board to reduce costs, focus on products with a SAS interface, and explore strategic alternatives. Balch Hill, and later Potomac, advocated a reversal of sTec’s new go-to-market strategy, at a critical period in the strategy transition. Until the time that the merger with WDC was publicly announced, Balch Hill and Potomac continued this activist campaign, which also included the nomination of three persons for election to our board of directors at our 2013 annual meeting of shareholders.

During the fourth quarter of 2012, in order to help reduce our losses and focus our business, we commenced a reduction in our workforce by 42 employees worldwide, and in January of 2013, we further reduced our workforce by 23 employees, an aggregate reduction of approximately 7% of our workforce.

Our board of directors met telephonically on February 11, 12 and 13, 2013. During the meeting on February 13, our board of directors established a special committee of the board, initially composed of Dr. Daly, and Messrs. Colpitts and Witte, and subsequently expanded to four members on March 26, 2013. The mandate of the special committee was to conduct a review of sTec’s strategic alternatives, including a possible sale of the company, as well as the alternative of continuing as a standalone company with further reductions in our workforce and other cost reduction initiatives. The board believed that it was prudent to appoint a special committee of independent directors to provide an objective analysis of all strategic alternatives available to the company. The special committee was also authorized to engage advisors, including a financial advisor. At that meeting, the board of directors also delegated to the non-management members of the board (Dr. Daly and Messrs. Bahri, Ball, Colpitts and Witte, the “independent directors”), the review and evaluation of potential responses to Balch Hill and Potomac.

On February 13, 2013, Mr. Manouch Moshayedi met with the President of Company B, a participant in the electronics industry. Company B’s President stated that the following week Company B was holding a management meeting at which Company B would be discussing its SSD opportunities, and the President intended to present sTec as a possible acquisition target to the management of Company B.

On February 14, 2013, the board of directors held a telephonic special meeting, which only the independent directors attended. Mr. Robert M. Saman, our Chief Legal Officer, General Counsel and Secretary, and a representative from Gibson Dunn also attended the meeting. The directors discussed the appointment of the special committee, and actions to be taken by the special committee in connection with reviewing the company’s strategic alternatives. The representative from Gibson Dunn reviewed the fiduciary duties of the board of directors and the special committee under California law in connection with the review of the company’s strategic alternatives. The directors also discussed potential strategic alternatives and the current challenges facing the company. The directors also discussed with Mr. Saman a number of potential financial advisors for engagement by the special committee to assist it and our board of directors with the strategic review, as well as the process for selection. The directors discussed a number of factors to be considered in any potential

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engagement of an investment banking firm, including a potential lack of interest of larger advisors in light of the size of sTec, the complexities arising from having activist participation in sTec’s common stock, which for many financial advisors required additional specialist advisory resources on their deal teams, and potential conflicts. The directors directed Mr. Saman, with Mr. Luis Morales, our Vice President of Corporate Development, to make preliminary inquiries of nine investment banking firms identified by the board of directors, including the two firms previously contacted and BofA Merrill Lynch, to gauge their interest in advising the board of directors in the review of strategic alternatives and in responding to the activist campaign of Balch Hill and Potomac. The directors also directed Mr. Saman to inquire as to the specific deal team that would be assigned by each financial advisor, other key proposed terms of engagement, and any potential conflicts. The directors also discussed the recent communications received by sTec’s management from Company B regarding its exploration of a potential strategic acquisition of an SSD business, and its interest in exploring whether sTec may be a potential acquisition target for Company B.

The company forwarded to the President of Company B a presentation on sTec’s technology and overall business. Approximately two weeks later, the President of Company B contacted Mr. Manouch Moshayedi to inform Mr. Moshayedi that he had shared sTec’s information with Company B’s executive management, but that Company B’s management had determined that it was not interested in acquiring sTec and believed that it could independently develop the technology it needed to compete in enterprise SSDs.

The special committee met telephonically on February 17, 2013, to discuss, among other matters, the engagement of advisors to assist our board of directors and the special committee in the review of strategic alternatives. Messrs. Morales and Saman also attended the meeting.

Over the following weeks, Messrs. Saman and Morales discussed the potential engagement with the financial advisors identified by our board of directors. From these contacts, the special committee identified three investment banking firms to interview, including BofA Merrill Lynch. These interviews occurred during the weeks of February 18 and February 25, 2013.

On March 8, 2013, the special committee met telephonically to review, among other matters, the status of the strategic review process, including selection of a financial advisor. Mr. Saman and representatives from Gibson Dunn also attended the meeting.

On March 11, 2013, sTec entered into amended and restated severance and change in control agreements with Mr. Raymond D. Cook, our Executive Vice President and Chief Financial Officer, and Mr. Saman. Each officer’s agreement was amended to provide for, among other matters, a retention bonus payable to the officer equal to the sum of eighteen-months of base salary and 150% of the 2013 target bonus if the executive remains employed by sTec from the date of the agreement until the applicable vesting date, with 50% vesting nine months after March 11, 2013 and the remaining 50% vesting eighteen months after March 11, 2013.

On March 13, 2013, Mr. Mark Moshayedi and Mr. Manouch Moshayedi met with representatives of Company C, a participant in the semiconductor industry, as part of the ongoing business relationship of sTec and Company C. At that meeting, the representatives of Company C, among other matters, expressed a potential interest in exploring an acquisition of particular assets of sTec’s business. These representatives informed Messrs. Moshayedi that Company C was considering the submission of an acquisition proposal to sTec. Mr. Mark Moshayedi reported the communication to Dr. Kevin Daly, our Chairman of the Board.

Also on March 13, 2013, three independent directors, Dr. Daly and Messrs. Ball and Colpitts, held a conference call with Mr. Saman, representatives from Gibson Dunn and representatives from MacKenzie Partners, sTec’s proxy solicitor, at which, among other matters, Dr. Daly asked Mr. Saman to report on the meeting earlier in the day between Messrs. Moshayedi and the representatives of Company C, and the independent directors discussed considerations relating to such an expression of interest.

On March 14, 2013, sTec issued its earnings release for the fourth quarter and 2012 fiscal year.

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In mid-March, 2013, the head of corporate development for Company D, a participant in the storage industry, contacted our management to express the interest of Company D in exploring a potential acquisition of the company. At the direction of the special committee, members of our management met with representatives of Company D to discuss their potential interest. On March 26, 2013, sTec received a draft non-disclosure agreement from Company D.

On March 26, 2013, a regularly scheduled board meeting was held. Members of the company’s senior management also attended portions of the meeting. At the meeting, our board of directors discussed, among other matters, the company’s 2013 annual operating plan, the state of the company’s business and its strategic alternatives, including the company’s standalone financial plans, and considerations related to the potential engagement of a financial advisor. In addition, our board of directors added Mr. Bahri to the special committee. At the same meeting and upon the recommendation of the special committee, the board approved retaining BofA Merrill Lynch to act as sTec’s financial advisor in connection with the company’s general review of strategic alternatives and defensive preparedness. Representatives of BofA Merrill Lynch attended a portion of the meeting, and our board of directors discussed with the representatives of BofA Merrill Lynch a potential strategic review process. In addition, our board of directors discussed potential benefits and risks associated with approaching various potential buyers, including the risk of leaks to the market and to the company’s key employees, the company’s prior communications with potential financial buyers and the lack of interest from financial buyers in light of the company’s recent financial performance and the potential difficulties this created for financial buyers to use debt to finance a purchase of the company, and the fact that strategic buyers would likely attribute the greatest value to the company and its business, and considerations related to potential sales or divestitures of assets of one or more business lines or functional areas. In light of these and other factors, our board of directors determined that it was in the best interests of the company and its shareholders to confidentially approach strategic buyers that the board believed would be most likely to have interest in a potential acquisition of the company to explore their interest, but to also further conduct a limited confirmatory exploration of interest of financial buyers.

On March 28, 2013, sTec entered into an engagement letter with BofA Merrill Lynch to provide financial advisory services.

In addition, in early April, the company began to populate a virtual data room with certain financial and operational information.

Our management thereafter discussed with BofA Merrill Lynch a number of potential acquirers, and determined a list of persons to contact. On April 1, 2013, as directed by the special committee, BofA Merrill Lynch began contacting potential acquirers of sTec. In total, BofA Merrill Lynch had discussions with 18 prospective acquirers, 17 of which were technology companies and one of which was a financial sponsor. Of these, three prospective acquirers (WDC, Company H, a participant in the storage industry, and Company D) submitted written indications of interest for a complete purchase of sTec, six potential strategic acquirers expressed an interest in purchasing limited, select assets of sTec, and nine prospective acquirers, including the financial sponsor and Company A, indicated they were not interested in a potential transaction.

On April 3, 2013, the board of directors held a telephonic special meeting, attended only by the independent directors. Mr. Saman and representatives from Gibson Dunn also attended the meeting. The independent directors discussed, among other matters, the status of the strategic review process.

From April 1 through April 17, 2013, sTec negotiated non-disclosure agreements and scheduled management presentations with interested parties. On April 4, 2013, sTec entered into a non-disclosure agreement with Company E, a participant in the storage industry, on April 10, it entered into a non-disclosure agreement with Company D, on April 11, it entered into a non-disclosure agreement with Company F, another participant in the storage industry, and on April 17, it entered into a non-disclosure agreement with Company G, a participant in the storage industry. Also on April 17, 2013, sTec entered into an addendum to its existing non-

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disclosure agreement with WDC. In total sTec executed six non-disclosure agreements related to the exploration of a potential sale of the company. Each of the non-disclosure agreements with Company E, Company F and Company H, included a term prohibiting the counterparty from asking sTec to waive the standstill provision in the agreement (such provision, often referred to as a “don’t ask, don’t waive” provision). None of the other non-disclosure agreements contained such a “don’t ask, don’t waive” provision that continued in effect after sTec entered into an acquisition agreement.

During the weeks of April 8 through April 22, 2013, sTec held management presentations with representatives of WDC, Company D, Company G and Company E. On April 15, 2013, Company C indicated that it was only interested in purchasing limited, select assets of the company, and as a result, the special committee decided not to continue discussions with Company C. In addition, on April 24, Company F declined the invitation to schedule a management presentation, indicating it was only interested in purchasing limited, select assets of sTec, and Company F had no further communications with BofA Merrill Lynch or sTec regarding a possible transaction. Shortly thereafter, Company E indicated it was also only interested in purchasing limited, select assets of sTec, and as a result the special committee decided not to continue discussions with Company E.

On April 18, 2013, members of our management held a meeting with representatives of WDC, at which our management provided a presentation on sTec, and the attendees discussed matters related to a possible transaction between the two companies.

During the weeks of April 22 and April 29, 2013, sTec provided follow-up due diligence materials to, and at the direction of the special committee, BofA Merrill Lynch held additional discussions with, WDC, Company D, and Company G.

On April 23, 2013, at the direction of the special committee, BofA Merrill Lynch sent process letters to WDC and Company D requesting non-binding indications of interest by May 3, 2013. Also on April 23, 2013, Messrs. Mark Moshayedi, Morales and Saman, a representative of BofA Merrill Lynch and representatives of Company D held a call to discuss Company D’s interest in a potential transaction and certain diligence requests. On the call, Company D provided a verbal indication of its interest to pursue a transaction at a price greater than $5.60 per share and detailed their additional diligence requirements for submitting a written indication of interest.

On April 25, 2013, a meeting of the special committee was held telephonically. Messrs. Ball and Saman and representatives from BofA Merrill Lynch and Gibson Dunn were present at the meeting. The special committee reviewed with the representatives of BofA Merrill Lynch the status of discussions with parties remaining in the process, upcoming meetings and the feedback that BofA Merrill Lynch had received to date. BofA Merrill Lynch also discussed with the special committee financial matters related to the transaction. BofA Merrill Lynch also reported on the additional diligence requests by Company D, and the directors discussed management’s confidentiality concerns relating to such requests.

Also on April 25, 2013, immediately after the special committee meeting, the board of directors held a telephonic special meeting, attended only by the independent directors. Mr. Saman and representatives from Gibson Dunn were in attendance. Among other matters, the directors discussed the strategic review process and the additional diligence requests received from Company D.

On April 26, 2013, a special board meeting was held. Members of the company’s senior management also attended portions of the meetings. At the meeting, our board of directors discussed, among other matters, the status of the strategic review process.

Also on April 26, 2013, at the direction of our chairman on behalf of the special committee, BofA Merrill Lynch sent a process letter to Company G requesting a non-binding indication of interest by May 3, 2013.

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On May 1, 2013, Company H contacted representatives of BofA Merrill Lynch expressing an interest in a potential transaction with sTec. BofA Merrill Lynch reported that contact to our chairman and management, and, on May 2, 2013, at the direction of our chairman on behalf of the special committee, BofA Merrill Lynch sent a non-disclosure agreement to Company H.

On May 2, 2013, at the direction of the special committee, representatives of BofA Merrill Lynch had discussions with representatives of Company D. Company D’s representatives indicated they would need an additional week to confirm their verbal indication of interest in writing.

On May 3, 2013, WDC submitted a written indication of interest to acquire the company at a purchase price in the range of $6.60 – $7.10 per share in cash. Also on May 3, 2013, Company G indicated it would not continue in the process.

Thereafter, on May 3, 2013, at the direction of Dr. Daly, BofA Merrill Lynch provided the special committee with an update of the status of discussions with potential acquirers.

On May 6, 2013, our board of directors held a telephonic special meeting, attended only by the independent directors. The independent directors discussed, among other matters, the status of the strategic review process.

On May 8, 2013, sTec announced its results for the first quarter of fiscal year 2013.

Also on May 8, 2013, sTec entered into a non-disclosure agreement with Company H.

Also on May 8, 2013, the special committee held a telephonic meeting. Messrs. Cook, Saman and Morales and representatives from Gibson Dunn were in attendance. The special committee discussed in detail sTec’s standalone financial projections prepared by management and the further review that needed to be undertaken with management on management’s financial model. Gibson Dunn reviewed certain considerations related to the special committee’s fiduciary duties in connection with the strategic review process. Representatives of BofA Merrill Lynch joined for a portion of the meeting and reported on BofA Merrill Lynch’s interactions to date with potential acquirers and the special committee discussed with the representatives of BofA Merrill Lynch the preliminary proposal received from WDC and a number of financial matters relating to the proposal.

On May 10, 2013, sTec held a management presentation with Company H.

Also on May 10, 2013, sTec granted access to WDC to the virtual data room.

Also on May 10, 2013, Company D submitted a written non-binding indication of interest to acquire the company at a purchase price of $5.75 per share in cash, along with a draft exclusivity agreement.

On May 14, 2013, sTec granted access to Company D to the virtual data room.

On May 15, 2013, Company H submitted a written non-binding indication of interest to acquire the company at a purchase price in the range of $5.00 – $5.75 per share in cash.

Also on May 15, 2013, at the direction of our chairman on behalf of the special committee, representatives of BofA Merrill Lynch had a call with representatives of Company D in which they informed Company D’s representatives that Company D would be allowed to continue in the process with the understanding that Company D would need to meaningfully increase its proposal after being provided additional information and access to the management team.

During the weeks of May 13 and May 20, 2013, sTec, representatives of Latham & Watkins LLP (“Latham & Watkins”), litigation counsel to sTec and Mr. Manouch Moshayedi, held due diligence calls and meetings with WDC and Company D, which representatives of BofA Merrill Lynch also attended.

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Also during this time period, at the direction of our chairman on behalf of the special committee, representatives of BofA Merrill Lynch contacted Company H and indicated that the price range Company H had submitted was not sufficient to move them forward in the process. The Company H representative was told that Company H could submit a revised indication of interest, which would be considered by the special committee.

On May 16, 2013, our board of directors held a special meeting. Messrs. Cook, Saman and Morales and representatives from BofA Merrill Lynch were in attendance. Our board of directors discussed with representatives of BofA Merrill Lynch the status of the process, preliminary valuation considerations and next steps in the process.

After the meeting, at the direction of the board, BofA Merrill Lynch sent final round process letters and a draft merger agreement to WDC and Company D, requesting a response by May 28, 2013.

On May 23, 2013, representatives of Company H contacted a representative of BofA Merrill Lynch and indicated that Company H remained interested in a potential acquisition of the company but that Company H was not able to increase its indicated value range.

On May 28, 2013, WDC submitted a written second-round indication of interest at a price per share of $9.15 in cash, with a mark-up of the merger agreement and drafts of ancillary agreements, including a voting agreement to be entered into by each of sTec’s officers and directors, a covenant not to sue to be entered into by Mr. Manouch Moshayedi, a technical services agreement to be entered into by Mr. Mark Moshayedi, a non-competition agreement to be entered into by each of Mr. Manouch Moshayedi and Mr. Mark Moshayedi, and a landlord’s consent to assignment to be entered into by an affiliate of Messrs. Moshayedi. The technical services agreement to be entered into by Mr. Mark Moshayedi did not contain any financial terms. This indication of interest contemplated signing definitive documentation with respect to a transaction by no later than June 3, 2013.

Also on May 28, 2013, a representative of Company D contacted representatives of BofA Merrill Lynch and indicated that Company D continued to have an interest in a potential acquisition and understood they needed to move meaningfully on value; however, the representative stated that Company D needed approximately two weeks of additional time to continue its ongoing due diligence review and to submit a written indication of interest and mark-up of the merger agreement.

On May 29, 2013, our board of directors held a telephonic special meeting. Messrs. Cook, Saman and Morales, Mr. Mike Higa, our Senior Vice President of Finance, and representatives from BofA Merrill Lynch and Gibson Dunn also attended the meeting. The board discussed the company’s updated financial model on a standalone basis. The BofA Merrill Lynch representative reported on communications with both Company D and WDC in response to sTec’s request for non-binding proposals on May 28, 2013, and on the most recent communications with Company H. BofA Merrill Lynch reported that WDC had presented an indication of interest of $9.15 per share, which the representative of WDC had described as the highest price that WDC was willing to offer and that the WDC representative had also disclosed that there were internal concerns regarding the price at WDC. BofA Merrill Lynch further reported that Company D had stated that it continued to be interested in an acquisition but that it needed approximately two weeks to continue its ongoing due diligence review and to submit a proposal. The board of directors then discussed with BofA Merrill Lynch financial aspects of WDC’s proposal. The board of directors discussed with Messrs. Moshayedi the terms of the ancillary agreements that WDC had requested be executed by Messrs. Moshayedi and their affiliates. Finally, the board of directors also discussed the legal considerations related to the process with Gibson Dunn. After discussion, our board of directors directed BofA Merrill Lynch to request a “best and final” proposal from WDC and a “best and final” written proposal from Company D by May 30, 2013. Messrs. Moshayedi were also reminded of the direction that had been discussed with them from time-to-time during the strategic review process that they

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should not negotiate any financial terms relating to their agreements with an acquirer, including WDC, prior to final agreement with the potential acquirer on the price to be paid to the company’s shareholders. Later that day, as directed by the board of directors, BofA Merrill Lynch requested a “best and final” proposal from WDC and a “best and final” written proposal from Company D.

On May 30, 2013, representatives of WDC verbally indicated that WDC’s indication of interest to acquire the company at a price of $9.15 per share was WDC’s best possible price, and reiterated the concern of WDC regarding the price. The WDC representative also stated that WDC continued to be focused on being in a position to announce a transaction on June 3, 2013.

Also on May 30, 2013 representatives of Company D reconfirmed they would require additional time to submit a written indication of interest, however, the Company D representatives also indicated they continued to believe they could be competitive on price if given additional time.

Also on May 30, 2013, the board of directors held a telephonic special meeting. Messrs. Cook, Saman, Higa and Morales, and representatives from BofA Merrill Lynch, Latham & Watkins and Gibson Dunn also attended the meeting. The BofA Merrill Lynch representative reported on the communications from both WDC and Company D in response to BofA Merrill Lynch’s communication on May 29, 2013 seeking the “best and final” proposals from those companies. The representative from Latham & Watkins discussed the implications of entry into the covenant not to sue that WDC had requested be executed by Mr. Manouch Moshayedi. Mr. Manouch Moshayedi indicated that his lawyers were continuing to review the proposed ancillary agreements. Our board of directors unanimously determined to move forward with WDC on their proposed terms, including endeavoring to complete diligence and negotiation of the merger agreement and ancillary agreements to be in a position to announce a transaction on June 3, 2013. The board directed that representatives of BofA Merrill Lynch communicate the board’s decision to WDC.

Later, on May 30, 2013, as directed by the board, representatives of BofA Merrill Lynch informed WDC that sTec would move forward to effect a transaction at a purchase price of $9.15 per share, subject to satisfactory negotiations of the merger agreement and ancillary agreements.

On May 31, 2013, a representative of WDC communicated to BofA Merrill Lynch that WDC was reevaluating its interest in acquiring sTec, and that WDC was not prepared to move forward with a transaction with sTec at that time. In addition, WDC discontinued their due diligence efforts with the company at that time. BofA Merrill Lynch then contacted the company’s officers and Dr. Daly to report the communication from WDC.

On May 31, 2013, our board of directors held a telephonic special meeting, attended by four independent directors, Dr. Daly and Messrs. Bahri, Ball and Colpitts. Mr. Saman and a representative from Gibson Dunn were also in attendance. Dr. Daly reported on the communications from WDC that WDC had decided to reconsider its interest in acquiring sTec and that it was not prepared to move forward with a transaction with sTec at that time. Our board of directors then discussed potential next steps. Gibson Dunn reviewed certain legal considerations related to the process.

At the request of our board of directors, representatives of BofA Merrill Lynch had a call with representatives of Company D on which they informed Company D’s representatives that timing for sTec’s process had been delayed, and that Company D had an opportunity to continue in the process. The Company D representatives indicated that they would consider this opportunity.

On June 1, 2013, sTec posted materials responsive to the diligence requests of Company D to the data room.

Over the period from June 1 to June 10, 2013, at the direction of the board, representatives of BofA Merrill Lynch had several discussions with representatives of WDC. WDC indicated that a difference of opinion had

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emerged internally, that WDC’s prior bidding approach to an acquisition of sTec had been rejected, and that they were reconsidering their interest in a transaction with sTec. The representatives of BofA Merrill Lynch reported these discussions to our chairman and the company’s officers.

On June 5, 2013 representatives of Company D contacted representatives of BofA Merrill Lynch and indicated that Company D would not be in a position to actively conduct due diligence for more than two weeks and was disengaging from the process. The representatives of BofA Merrill Lynch reported these discussions to our chairman and the company’s officers.

On June 10, 2013, WDC submitted a revised written indication of interest to acquire the company at a price range of $6.60 – $7.10 per share in cash. The representative from WDC also communicated to BofA Merrill Lynch that WDC had given serious consideration to not proceeding with a transaction, that WDC did not view the acquisition of sTec as essential to its SSD strategy in light of other available alternatives (including internal development efforts), and that certain business factors related to the company had also influenced WDC’s decision to lower the price from its May 30, 2013 written indication of interest at $9.15 per share in cash, as well as a change in its bidding strategy from the prior approach it had adopted. The representative from WDC also communicated that WDC was otherwise prepared to move forward on the transaction terms previously proposed on May 28, 2013.

On June 11, 2013, our board of directors held a telephonic special meeting. Messrs. Saman, Higa and Morales, and representatives from BofA Merrill Lynch and Gibson Dunn also attended the meeting. The board of directors reviewed WDC’s written indication of interest to acquire sTec at a purchase price in the range of $6.60 to $7.10 per share in cash and recent communications with WDC. The board of directors discussed with BofA Merrill Lynch the indication of interest and the related communications with WDC. Our board of directors discussed the legal considerations related to the process with Gibson Dunn. Our board of directors then discussed potential responses to WDC, and the considerations related to each. The board of directors directed BofA Merrill Lynch to communicate to WDC the board of directors’ disappointment in the latest proposal and the significant change from its prior proposal, that the board would not respond to a proposal with a range, and that if WDC desired to proceed, WDC must submit a proposal reflecting its best offer, and provide confirmation that such offer was supported by WDC’s senior management.

Later that day, as directed by the board of directors, representatives of BofA Merrill Lynch informed WDC that our board of directors would not consider a proposal with a range of value and requested that WDC submit a specific proposal reflecting its best offer and provide confirmation that such offer was supported by WDC’s senior management.

On June 14, 2013, WDC submitted a written indication of interest of $6.85 per share in cash and indicated it could be in a position to announce a transaction on June 24, 2013. In communicating the revised proposal to BofA Merrill Lynch, the WDC representative again stated that WDC was only interested in proceeding with the transaction at a purchase price of $6.85 per share, WDC’s best and final price, for the reasons previously noted, and otherwise on the transaction terms previously proposed on May 28, 2013.

On June 15, 2013, the special committee of the board of directors held a telephonic meeting. Messrs. Cook, Saman and Morales and representatives from BofA Merrill Lynch and Gibson Dunn were in attendance. BofA Merrill Lynch reported on their communications with WDC, including WDC’s indication of interest on June 14, 2013 to acquire the company at a purchase price of $6.85 per share in cash. The members of the special committee then discussed sTec’s outlook for the second and third quarters of 2013 and over the next 12 to 24 months, including the timing and impact of sTec’s proposed cost reductions on the go-forward operations of the company, and the projected impact on sTec’s cash position if sTec entered into an acquisition agreement with WDC and was contractually unable to make the proposed cost reductions. Gibson Dunn discussed certain legal considerations related to the process. The members of the special committee discussed with BofA Merrill Lynch certain financial matters relating to WDC’s proposal. The committee continued discussion of sTec’s alternative

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options to accepting WDC’s proposal, including the benefits and risks of such alternatives, and the potential responses to WDC’s proposal, including the possibility of making a counterproposal to WDC. The special committee determined, based on the communications from WDC, that it was unlikely that WDC would raise its price further and there was a significant risk that WDC would withdraw the indication of interest if sTec responded with a counterproposal. After further discussion, the special committee unanimously determined that they believed that it was in the best interests of sTec and its shareholders to move forward with a transaction with WDC on the terms set forth in WDC’s indication of interest received on June 14, 2013, subject to negotiating final terms of the merger agreement and ancillary agreements relating to such transaction, and voted to recommend the same to the board of directors.

Also on June 15, 2013, immediately after the special committee meeting, our board of directors held a telephonic special meeting. Messrs. Cook, Saman, Higa and Morales and representatives from BofA Merrill Lynch and Gibson Dunn were in attendance. Dr. Daly reported on the special committee’s decision. BofA Merrill Lynch reported on their recent communications with WDC, as shared with the special committee, including that WDC had communicated that $6.85 per share was its best and final price. The board of directors then discussed certain considerations relating to the company’s business. The board of directors then discussed certain legal considerations related to the process with the representatives of Gibson Dunn. The board of directors discussed with BofA Merrill Lynch certain financial matters relating to WDC’s indication of interest. The board of directors further discussed with Messrs. Mark Moshayedi and Manouch Moshayedi the terms of the ancillary agreements that they were being requested to execute. After further discussion, the board members present unanimously determined that they believed that it was in the best interests of sTec and its shareholders to move forward with a transaction with WDC on the terms set forth in WDC’s proposal received on June 14, 2013, subject to negotiating final terms of the merger agreement and ancillary agreements relating to such transaction, with a goal of announcing a transaction on June 24, 2013 and instructed BofA Merrill Lynch to communicate the board’s authorization to move forward to WDC.

On June 16, 2013, as directed by our board of directors, representatives of BofA Merrill Lynch informed WDC that our board of directors had authorized moving forward with a transaction with WDC on the terms set forth in WDC’s proposal received June 14, 2013, at a price of $6.85 per share, subject to negotiating final terms of the merger agreement and ancillary agreements relating to such transaction.

From June 16 to June 22, 2013, WDC conducted additional due diligence, including confirmatory due diligence calls. Also, on June 18, 2013, sTec and WDC entered into a “clean team agreement” to allow certain representatives of WDC access to further information in the data room.

On June 17, 2013, representatives from Paul Hastings LLP (“Paul Hastings”), counsel to Messrs. Moshayedi, and Shearman & Sterling LLP (“Shearman”), counsel to WDC, commenced negotiating the terms of the covenant not to sue, and the other agreements that Messrs. Moshayedi were being asked to execute. Negotiations of such agreements continued through June 23, 2013. The draft covenant not to sue provided by WDC required Mr. Manouch Moshayedi to relinquish all rights to indemnification under his existing arrangements with the company, but also provided that WDC would continue to pay Mr. Moshayedi’s legal fees in connection with the civil action filed against Mr. Moshayedi by the SEC on July 29, 2012 and release him from any obligation to reimburse the company for such legal fees under his indemnification agreement with sTec. Among other matters, in the negotiations that commenced on June 17, 2013, Paul Hastings negotiated for the continued right of indemnification for Mr. Moshayedi, subject to a cap of $20 million with respect to indemnification (other than for defense costs) related to the SEC’s civil action. Thereafter, Messrs. Moshayedi proposed that the company enter into letter agreements to conform their existing severance and change in control agreements to the arrangements negotiated with WDC.

On June 19, 2013, Gibson Dunn submitted to Shearman proposed revisions to the merger agreement markup received from Shearman on May 28, 2013. On June 20, 2013, Shearman circulated a revised draft of the merger agreement to Gibson Dunn, indicating that WDC was not willing to further negotiate the terms of the merger

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agreement. Among other matters, Gibson Dunn communicated to Shearman sTec’s desire to include in the merger agreement a general waiver of all “don’t ask don’t waive” provisions in its non-disclosure agreements with potential bidders. Shearman communicated that WDC would not agree to this waiver, and in addition, WDC would view it as improper if sTec unilaterally waived these provisions, indicating that WDC may not move forward with the transaction if sTec unilaterally waived these provisions. Gibson Dunn discussed this communication from WDC and other proposed changes to the merger agreement with Dr. Daly and Mr. Saman. Based on the history of the discussions with the potential bidders with “don’t ask don’t waive” provisions in their non-disclosure agreements that would continue in effect after sTec entered into an acquisition agreement, Dr. Daly, on behalf of the special committee, believed the possibility that any of these potential bidders would be willing and able to make a superior proposal was remote. Specifically, Company E and Company F had expressed an interest solely in purchasing certain assets of sTec, and Company H had repeatedly stated it could not increase its price above the range of $5.00 to $5.75 per share. Based upon direction from Dr. Daly in view of WDC’s indication that it was not willing to negotiate further, and may not proceed with the transaction if sTec did not agree to certain terms, Gibson Dunn focused on a limited number of issues in the merger agreement in its continued discussions with Shearman through June 23, 2013.

On June 23, 2013, the special committee held a telephonic meeting. Messrs. Cook, Saman and Morales and representatives from BofA Merrill Lynch and Gibson Dunn were in attendance. Gibson Dunn reviewed with the directors the terms and conditions of the proposed form of merger agreement. The special committee reviewed with representatives of BofA Merrill Lynch the process that had been conducted and the contacts with the potential acquirers. The special committee discussed the potential ability and interest of Company E, Company F and Company H to make a superior proposal to the $6.85 per share proposal of WDC, and the special committee determined that the possibility of such a proposal was remote and that it was in the best interests of the shareholders to continue with the WDC transaction notwithstanding the “don’t ask don’t waive” provisions in such parties’ non-disclosure agreements. BofA Merrill Lynch then reviewed its financial analysis of the merger consideration. Gibson Dunn reviewed the significant terms and conditions of the ancillary agreements to be entered into by Messrs. Moshayedi, including the covenant not to sue and the consulting agreements, and the financial terms thereof. The directors discussed the terms of the merger agreement, such ancillary agreements and the letter agreements proposed by Messrs. Moshayedi to be entered into relating to the terms and conditions of payments under their existing severance and change in control agreements. Following further discussion, the special committee unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, were in the best interests of the company’s shareholders, and approved and adopted the merger agreement, and unanimously determined to recommend to our board of directors that the board approve and adopt the merger and the merger agreement and that the board recommend that the shareholders vote in favor of the approval and adoption of the merger agreement and the merger.

Immediately thereafter, on June 23, 2013, our board of directors held a telephonic special meeting. Messrs. Cook, Saman, Higa and Morales and representatives from BofA Merrill Lynch and Gibson Dunn were in attendance. Dr. Daly reported on the special committee’s decision. The board reviewed with BofA Merrill Lynch the process that had been conducted at the board’s direction and the contacts with each of the potential acquirers. BofA Merrill Lynch then reviewed its financial analysis of the merger consideration and delivered to our board of directors an oral opinion, which was confirmed by delivery of a written opinion dated June 23, 2013, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the merger consideration to be received by holders of sTec common stock (other than sTec, WDC, Merger Sub and their respective affiliates and dissenting shareholders) was fair, from a financial point of view, to such holders. Gibson Dunn reviewed the significant terms and conditions of the merger agreement, including, but not limited to, certain operating restrictions on sTec from the signing date of the merger agreement until the closing date of the transaction, the ability of and conditions under which our board of directors could terminate the agreement to accept a superior proposal or change its recommendation of the merger, the situations in which sTec may have to pay a termination fee, the amount of such a termination fee, the situations in which WDC may have to pay a termination fee, the amount of such a termination fee and related considerations, and the conditions to closing of the transaction. Gibson Dunn reviewed with our board of directors its fiduciary duties and related

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terms and conditions of the merger agreement and other transaction considerations. Our board of directors discussed the potential ability and interest of Company E, Company F and Company H to make a superior proposal to the $6.85 per share proposal of WDC, and our board of directors determined that the possibility of such a proposal was remote and that it was in the best interests of the shareholders to continue with the WDC transaction notwithstanding the “don’t ask don’t waive” provisions in such parties’ non-disclosure agreements. Gibson Dunn then reviewed with our board of directors the terms of the ancillary agreements, including the voting agreements, and the shares subject to such agreements, and the ancillary agreements to be entered into by WDC with Messrs. Moshayedi, including the covenant not to sue and the consulting agreements, and the financial terms thereof. Finally, Gibson Dunn reviewed the terms of the letter agreements proposed by Messrs. Moshayedi to be entered into relating to the terms and conditions of payments under their existing severance and change in control agreements. The directors discussed the terms of the merger agreement, the ancillary agreements and the letter agreements. Following further discussion, our board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, were in the best interests of the company’s shareholders, and approved and adopted the merger agreement. Our board of directors also unanimously recommended that the company’s shareholders approve and adopt the merger agreement.

On June 23, 2013, sTec, WDC, and Merger Sub executed the merger agreement; each of our officers and directors executed their respective voting agreements with WDC; Mr. Manouch Moshayedi and WDC executed the covenant not to sue, the consulting services agreement and a non-competition agreement; Mr. Mark Moshayedi and WDC executed the technical services agreement and a non-competition agreement; sTec and Messrs. Moshayedi executed the letter agreements; and an affiliate of Messrs. Moshayedi and WDC executed a landlord’s consent to assignment.

On June 24, 2013, prior to the opening of trading on the U.S. stock exchanges, WDC and sTec announced in a joint press release the execution of the merger agreement.

sTec’s Reasons for the Merger

On June 23, 2013, our board of directors, upon the unanimous recommendation of the special committee:

In the course of reaching the determinations and making the recommendation described above, our board of directors consulted with its outside legal and financial advisors and with sTec’s management and considered a number of factors that it believed supported its decision, including the following (which are not listed in any relative order of importance):

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Our board of directors also considered a variety of potential risks and other potentially negative factors relating to the transaction, including the following, but concluded that the anticipated benefits of the transaction outweigh these considerations (which are not listed in any relative order of importance):

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In addition, our board of directors was aware of and considered the interests that sTec directors and executive officers may have with respect to the transaction that differ from, or are in addition to, their interests as shareholders of sTec generally, as described in the section entitled “The Merger—Interests of sTec’s Directors and Executive Officers in the Merger.”

The foregoing discussion of the information and factors considered by our board of directors is not intended to be exhaustive, but includes the material factors considered by our board of directors in reaching its determination and recommendation. In view of the variety of factors considered in connection with its evaluation of the merger, our board of directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. Our board of directors unanimously recommended the merger agreement and the merger based upon the totality of the information it considered.

sTec Board of Directors’ Recommendation

After careful consideration, our board of directors, upon the unanimous recommendation the special committee, adopted resolutions approving and adopting the merger and the merger agreement, determining that the merger agreement and the terms and conditions of the merger are in the best interests of sTec and its shareholders and resolved that the merger agreement be submitted for approval and adoption by the shareholders of sTec.

Accordingly, our board of directors recommends that all of our shareholders vote:

Financial Advisor’s Opinion

sTec has retained BofA Merrill Lynch to act as sTec’s financial advisor in connection with the merger. BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. sTec selected BofA Merrill Lynch to act as sTec’s financial advisor in connection with the merger on the basis of BofA Merrill Lynch’s experience in transactions similar to the merger, and its reputation in the investment community.

On June 23, 2013, at a meeting of sTec’s board of directors held to evaluate the merger, BofA Merrill Lynch delivered to sTec’s board of directors an oral opinion, which was confirmed by delivery of a written opinion dated June 23, 2013, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its opinion, the merger consideration to be received by holders of sTec common stock (other than sTec, WDC, Merger Sub and their respective affiliates and dissenting shareholders) was fair, from a financial point of view, to such holders.

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The full text of BofA Merrill Lynch’s written opinion to sTec’s board of directors, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to sTec’s board of directors for the benefit and use of sTec’s board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to sTec or in which sTec might engage or as to the underlying business decision of sTec to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any shareholder as to how to vote or act in connection with the proposed merger or any related matter.

In connection with rendering its opinion, BofA Merrill Lynch:

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the management of sTec that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the sTec management forecasts, BofA Merrill Lynch was advised by sTec, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of sTec as to the future financial performance of sTec. With respect to the sTec public forecasts, BofA Merrill Lynch was advised by sTec, and assumed, that such forecasts were a reasonable basis upon which to evaluate the future financial performance of sTec. BofA Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or

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otherwise) of sTec, nor did it make any physical inspection of the properties or assets of sTec. BofA Merrill Lynch did not evaluate the solvency or fair value of sTec or WDC or any of their respective affiliates under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the direction of sTec, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on sTec or the merger (including the contemplated benefits of the merger). With respect to any litigation in which sTec or any of its affiliates is or may be engaged, BofA Merrill Lynch assumed, with sTec’s consent and without independent verification, that neither any such litigation nor any outcome of any such litigation will affect sTec or the merger (including the contemplated benefits of the merger) or its analyses or opinion in any material respect. BofA Merrill Lynch also assumed, at the direction of sTec, that the final executed merger agreement would not differ in any material respect from the draft agreement reviewed by BofA Merrill Lynch.

BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects or implications of the merger (other than the merger consideration to the extent expressly specified in its opinion), including, without limitation, the form or structure of the merger or any terms, aspects or implications of the voting agreements, the non-competition agreements, the release and covenant not to sue, the technical services and consulting services agreements (each as defined or described in the merger agreement) or any other agreement, arrangement or understanding entered into in connection or related to the merger or otherwise. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the merger consideration to be received by the holders of sTec common stock (other than sTec, WDC, Merger Sub and their respective affiliates and dissenting shareholders) and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any other class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration or otherwise. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to sTec or in which sTec might engage or as to the underlying business decision of sTec to proceed with or effect the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the merger or any related matter. Except as described above, sTec imposed no other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee.

The following represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to sTec’s board of directors in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

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sTec Financial Analyses.

Selected Publicly Traded Companies Analysis. BofA Merrill Lynch reviewed publicly available financial and stock market information for sTec and the following seven publicly traded companies that participate in the computer storage industry:

BofA Merrill Lynch reviewed enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices on June 21, 2013, plus total debt, minority interest and preferred stock, less cash and cash equivalents, as a multiple of calendar year 2013 estimated revenues. The range of revenue multiples for the selected publicly traded companies was 0.17x to 2.54x and the mean and median revenue multiples for the selected publicly traded companies were 1.49x and 1.82x, respectively. BofA Merrill Lynch then applied estimated revenue multiples of 0.20x to 1.85x derived from the selected publicly traded companies to sTec’s calendar year 2013 estimated revenue, using both the sTec public forecasts (Street Case) and the sTec management forecasts (Management Case).

Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates, and estimated financial data of sTec were based on the sTec public forecasts and the sTec management forecasts.

This analysis indicated the following approximate implied per share equity value reference ranges for sTec, rounded to the nearest $0.25, as compared to the merger consideration:

No company used in this analysis is identical or directly comparable to sTec. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which sTec was compared.

Selected Precedent Transactions Analysis . BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to the following seven selected transactions involving companies in the storage device industry since January 1, 2009:

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BofA Merrill Lynch reviewed transaction values, calculated as the enterprise value implied for the target company (or its business segment being sold) based on the consideration payable in the selected transaction, as a multiple of the target company’s last twelve months, or LTM, revenue (or if applicable such revenue of the business segment being sold). Based on such LTM revenue, the range of revenue multiples for the selected transactions was 0.11x to 16.35x (or 0.11x to 5.37x, excluding the multiple of 16.35x from the acquisition of Pliant Technology, Inc. by SanDisk Corporation) and the mean and median revenue multiples for the selected transactions were 1.59x and 0.71x, respectively (excluding from the calculation of the mean and median multiples the multiple for the acquisition of Pliant Technology, Inc. by SanDisk Corporation due to certain attributes of Pliant Technology, Inc. that rendered that acquisition less relevant for the analysis ). BofA Merrill Lynch then applied LTM revenue multiples of 0.70x to 2.50x derived from the selected transactions to sTec’s LTM revenue as of the end of the first quarter of 2013. Financial data of the selected transactions were based on publicly available information at the time of announcement of each relevant transaction. This analysis indicated the following approximate implied per share equity value reference ranges for sTec, rounded to the nearest $0.25, as compared to the merger consideration:

No company, business or transaction used in this analysis is identical or directly comparable to sTec or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which sTec and the merger were compared.

Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of sTec to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that sTec was forecasted to generate during sTec’s fiscal years 2013 through 2017 based on the sTec management forecasts. BofA Merrill Lynch calculated terminal values for sTec by applying terminal forward multiples of 4.0x – 6.0x to sTec’s fiscal year 2018 EBITDA based on a 20.0% long-term EBITDA margin applied to estimated 2018 revenue (with 2018 revenue growth estimated by sTec management to be 5.0%). The cash flows and terminal values were then discounted to present value as of June 30, 2013 (utilizing a mid-point discounting convention), using discount rates ranging from 14.0% to 18.0%, which were based on an estimate of sTec’s weighted average cost of capital.

This analysis indicated the following approximate implied per share equity value reference ranges for sTec, rounded to the nearest $0.25, as compared to the merger consideration:

Other Factors. In rendering its opinion, BofA Merrill Lynch also reviewed and considered for informational purposes only other factors, including:

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BofA Merrill Lynch identified, to the extent publicly available, selected transactions for publicly traded companies in the technology industry, announced since January 1, 2009. BofA Merrill Lynch calculated the premium over the target company’s closing stock price one day, one month and three months prior to the announcement of each transaction, or to the extent applicable, the target company’s unaffected stock price, of the per share price paid in each selected transaction, and calculated the premium over the target company’s enterprise value one day, one month and three months prior to the announcement of the transaction, or to the extent applicable, the target company’s enterprise value based on its unaffected stock price, of the price paid in each selected transaction.

BofA Merrill Lynch then applied a range of calculated premiums from 30% – 50% to the price per share of $3.59 of sTec common stock as of the close of trading on the trading day immediately prior to the announcement of the merger, and applied a range of 35% – 55% of calculated premiums to the enterprise value of sTec based on the price per share of $3.59 of sTec common stock as of the close of trading on the trading day immediately prior to the announcement of the merger. This analysis indicated the following approximate per share equity value reference ranges, rounded to the nearest $0.25, for sTec, as compared to the merger consideration:

No company used in this analysis is identical or directly comparable to sTec. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which sTec was compared.

Miscellaneous. As noted above, the discussion set forth above is a summary of the material financial analyses presented by BofA Merrill Lynch to sTec’s board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

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In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of sTec and WDC. The estimates of the future performance of sTec and WDC in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the merger consideration and were provided to sTec’s board of directors in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual values of sTec or WDC.

The type and amount of consideration payable in the merger was determined through negotiations between sTec and WDC, rather than by any financial advisor, and was approved by sTec’s board of directors. The decision to enter into the merger agreement was solely that of sTec’s board of directors. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by sTec’s board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of sTec’s board of directors or management with respect to the merger or the merger consideration.

sTec has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee of approximately $4.3 million, $250,000 of which was payable in connection with its opinion and the remainder of which is contingent upon the completion of the merger, subject to certain initial and quarterly retainer fee payments which will be credited against the portion of the fee that will be paid upon completion of the merger. sTec also has agreed to reimburse BofA Merrill Lynch for its expenses incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in the equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of sTec, WDC and certain of their respective affiliates.

BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide investment banking, commercial banking and other financial services to WDC and certain of its affiliates and have received or in the future may receive compensation for the rendering of these services, including (a) having acted or acting as administrative agent, lead arranger and bookrunner for, and/or as a lender under, certain term loans, letters of credit and credit and leasing facilities and other credit arrangements of WDC and certain of its affiliates (including acquisition financing), (b) having acted as financial advisor to WDC in connection with an acquisition transaction, (c) having provided or providing certain derivatives, foreign exchange and other trading services to WDC and certain of its affiliates, and (d) having provided or providing certain treasury management products and services to WDC and certain of its affiliates. From January 1, 2011 through June 30, 2013, BofA Merrill Lynch and its affiliates received aggregate revenues from WDC and certain of its affiliates of approximately $45 million for corporate, commercial and investment banking services.

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Certain Financial Projections

Due to the inherent unpredictability of underlying assumptions and estimates, sTec does not as a matter of course publicly disclose projections as to its future financial performance or earnings for future periods, except for limited guidance each quarter of expected revenue and EPS ranges for the ensuing quarter. However, sTec’s management provided certain internal financial projections of sTec’s operating performance to our board of directors in connection with their consideration of strategic alternatives and a possible merger with WDC. The projections were also provided to certain participants during the strategic review process.

The following projections were not prepared with a view towards public disclosure and are included in this proxy statement only because such projections were made available as follows:

In addition, the projections were not prepared with a view towards compliance with published guidelines of the SEC regarding projections, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or United States generally accepted accounting principles (“GAAP”). Furthermore, sTec’s independent auditor has not examined, compiled or otherwise applied procedures to the projections and, accordingly, assumes no responsibility for, and expresses no opinion on, them.

In connection with our board of directors’ strategic review, sTec’s management prepared the following two alternative sets of financial projections for fiscal years 2013 to 2017:

The Operating Projections were provided to bidders because they included all costs and revenues associated with sTec’s current business, whether or not such revenues and costs would be expected to continue after sTec’s proposed restructuring. sTec believed the Operating Projections would be more useful for potential bidders in connection with any evaluation of an acquisition proposal, in part because they permitted bidders to apply their own assumptions regarding synergies, cost reductions and sales mix depending on their intended post-acquisition strategy for sTec’s business.

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The Cost-Reduction Projections are referred to as the “sTec management forecasts” in the section above entitled “—Financial Advisor’s Opinion,” were used by BofA Merrill Lynch at the direction of our board of directors for purposes of its financial analyses of sTec in connection with its opinion described above and were considered by our board of directors in its determination to enter into the merger agreement. The Cost-Reduction Projections were also provided to WDC and Wells Fargo Securities, LLC, WDC’s financial advisor, on June 19, 2013, after the parties had agreed upon the per share merger consideration.

The following is a summary of the financial projections for fiscal years 2013 to 2017 prepared by sTec’s management.

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Although the projections are presented with numerical specificity, the projections are forward-looking statements that reflect numerous estimates and assumptions made by sTec with respect to sTec’s business, results of operations and financial condition, customer requirements, competition, general business, economic, market, regulatory and financial conditions and other future events, all of which are difficult to predict and many of which are beyond sTec’s control. Such forward-looking statements were based on expectations of sTec’s management at the time of preparation of the projections and involve inherent risks and uncertainties, including factors that could cause actual outcomes and results to differ materially from those expressed or implied in the projections. Such factors, include, but are not limited to, those described under “Risk Factors” incorporated herein by reference from Item 1A of sTec’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as well as in Part II, Item 1A of sTec’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. Further, the projections cover multiple years and such information by its nature becomes less reliable with each successive quarter and year. For the foregoing reasons, the inclusion of projections in this proxy statement should not be regarded as an indication that sTec, WDC, Merger Sub or their respective affiliates or representatives considered or consider the projections to be a prediction of actual future events, and the projections should not be relied upon as such.

sTec believes that the assumptions sTec’s management used as a basis for the projections were reasonable at the time the projections were prepared, given the information available to sTec’s management at the time. The projections do not take into account any circumstances or events occurring after the date they were prepared, including the transactions contemplated by the merger agreement. Similarly, the projections do not take into account the effect of any failure of the merger to occur and thus should not be viewed as accurate in that context. The revenue projections and other assumptions upon which these projections were based are subjective in many respects and are subject to various interpretations. The projections do not give effect to the merger. None of sTec, WDC, Merger Sub or any of their respective affiliates or representatives, intends to, and, except to the extent required by applicable law, each of them expressly disclaims any obligation to, update, revise or correct the projections to reflect circumstances existing or arising after the date such projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the projections are shown to be in error.

Readers of this proxy statement are cautioned not to place undue reliance on the summary of the financial projections set forth above.

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The following table presents the reconciliation of Operating Projections GAAP EPS to Non-GAAP EPS:

The following table presents the reconciliation of Operating Projections GAAP EBITDA to Non-GAAP EBITDA: