ISS Recommends That Shareholders Vote the WHITE Proxy Card in Support of All Qualstar Board Nominees

Qualstar Corporation

, a manufacturer of data storage solutions and high-efficiency power supplies, today announced that Institutional Shareholder Services (ISS), a leading independent proxy advisory service, has recommended to its clients that shareholders vote the WHITE proxy card FOR all five of the Qualstar Board of Directors' very experienced and highly qualified director nominees, Allen H. Alley, Chester Baffa, Lawrence D. Firestone, Gerald J. Laber and Daniel C. Molhoek, at Qualstar's Annual Meeting of Shareholders to be held on June 28, 2013. ISS' clients include institutional investors, mutual funds, pension funds and other fiduciaries. In addition, last week, Glass Lewis & Co., another leading independent proxy advisory service, also recommended that shareholders vote FOR all five of Qualstar's Board nominees on the WHITE proxy card. With ISS and Glass Lewis making the same recommendation, both of the leading proxy advisory firms have now advised Qualstar's shareholders to support Qualstar's Board nominees and reject the attempts by BKF Capital Group, Inc. and its controlling shareholder, Steven N. Bronson, to take control of the Qualstar board. In recommending that shareholders vote the WHITE proxy card FOR all five of the director nominees recommended by the Qualstar Board, ISS recognized that the replacement of the entire Qualstar Board being sought by BKF and Bronson was unwarranted given all the changes that have already been made to the composition of Qualstar's Board over the past year. If shareholders elect the Qualstar Board's highly qualified and very experienced nominees -- Allen H. Alley, Chester Baffa, Lawrence D. Firestone, Gerald J. Laber and Daniel C. Molhoek, the entire membership of the Qualstar Board, other than Mr. Firestone, Qualstar's Chief Executive Officer, will have been replaced since the 2012 Annual Meeting. In its report, ISS referenced the "transformative changes that have taken place in the boardroom and throughout the company since June 2012" and highlighted the failure of BKF and Bronson to "make a compelling case that further change in the reconstituted board and management team is warranted." ISS also noted the risk to shareholders if BKF and Bronson were to replace the entire membership of the Qualstar Board, stating as follows: "In this case, the disruptive risk to shareholders caused by further sweeping change at the board level may be real and could jeopardize management's recently implemented strategic plan." Discussing the failure of BKF and Bronson to make a "compelling case" and articulate a detailed plan or strategy that would be likely to deliver greater shareholder value than the continued execution of the strategy being followed by Qualstar's Board and management, the ISS report stated as follows: "[N]or did BKF provide detailed plan or strategy that is likely to deliver greater shareholder value than the continued execution of the reconstituted management team's strategy "In this case, it is both clear that the board has been responsive to shareholders, and unclear what else the board and new management team can do." "It is perhaps especially telling that the key parts of the dissidents plan appear to be actions the new board has already identified and begun implementing." ISS also commented on the adoption by the Qualstar Board of a shareholder rights plan following the commencement by BKF and Mr. Bronson of its unsolicited, coercive, partial tender offer last January and recommended that shareholders vote the WHITE proxy card FOR the ratification of the rights plan. While BKF's and Mr. Bronson's abrupt termination of their unsolicited, coercive, partial tender offer eliminated the need for the Qualstar Board to make a recommendation, it was the unanimous view of the Qualstar Board that the partial tender offer was inadequate and was not in the best interests of Qualstar and all of its shareholders. In recommending that shareholders vote the WHITE proxy card FOR the ratification of the shareholder rights plan, the ISS report stated: "In light of the company's implementation of its strategic turnaround plan, BKF's solicitation efforts to replace Qualstar's board with its proposed slate of nominees, its prior attempts to gain control of the company and our support for management's nominees, ratification of the proposed rights plan warrants support." "We are very pleased that both of the leading independent, third-party proxy advisory firms have carefully reviewed the voting alternatives and recommend that shareholders vote for Qualstar's director nominees, selected by Qualstar for their extensive governance experience and outstanding qualifications," said Lawrence D. Firestone, Qualstar's President and Chief Executive Officer. "We are also gratified that both of the ISS and Glass Lewis reports support the decision of our Board, after careful consideration, to adopt a rights plan so as to protect our shareholders against BKF's and Mr. Bronson's unsolicited, coercive, partial tender offer. This Board and our nominees remain committed to taking the actions necessary to protect our shareholders against abusive or coercive tactics used by a potential acquirer seeking to gain control of Qualstar without paying all shareholders a fair price for their shares." To protect the value of their investment, Qualstar strongly recommends that all shareholders vote for their Board's highly qualified nominees on the WHITE proxy card TODAY -- by telephone, Internet, or by signing, dating and returning the WHITE proxy card.