I think these guys are pissed:
Item 4. Purpose of Transaction appearing in the Schedule is hereby
amended to add the following:
On September 9, 2005, Warner Stevens L.L.P., as counsel to, and on
behalf of, Costa Brava, sent a letter to the Issuer and to Corporation
Trust Incorporated, the Issuer's registered agent for service of
process in the State of Maryland (the "Demand Letter"). Attached to the
Demand Letter was a draft complaint (the "Draft Complaint"), which
Costa Brava is contemplating filing in the Circuit Court for Baltimore
City in the State of Maryland. Through the Demand Letter, Costa Brava
has demanded that the Issuer's Board of Directors immediately take the
corrective steps enumerated in the Draft Complaint. Specifically, Costa
Brava has demanded that the Issuer do the following:
(1) Provide a full and complete accounting;
(2) Cancel or prohibit the exercise of 1,310,000 stock options
granted to John B. Wood, and recover $1,600,000 paid in cash
bonuses to Mr. Wood;
(3) Cancel or prohibit the exercise of 750,000 stock options
granted to Michael P. Flaherty, and recover $992,792 paid in
cash bonuses to Mr. Flaherty;
(4) Cancel or prohibit the exercise of 742,000 stock options
granted to Robert J. Marino, and recover $675,659 paid in cash
bonuses to Mr. Marino;
(5) Cancel or prohibit the exercise of 450,000 stock options
granted to Edward L. Williams, and recover $906,000 paid in
cash bonuses to Mr. Williams;
(6) Cancel or prohibit the exercise of 450,000 stock options
granted to John M. McDuffie, and recover $250,000 paid in cash
bonuses to Mr. McDuffie; and
(7) Recover $166,500 paid in cash bonuses to Richard Tracy.
In the Demand Letter, to the extent these actions cannot be addressed
informally, Costa Brava has demanded that the Issuer initiate a lawsuit
to address and resolve the concerns enumerated in the Draft Complaint.
While Costa Brava believes it had no obligation to make a formal demand
before filing the Draft Complaint, nevertheless, Costa Brava made its
formal demand through the Demand Letter in the event that a court
should determine such a demand to be necessary.
According to the Demand Letter, a refusal by the Issuer to take
appropriate measures as enumerated in the Demand Letter no later than
thirty (30) days from the Issuer's receipt thereof will result in Costa
Brava pursuing appropriate legal and equitable relief.
<PAGE>
Page 8 of 11
In addition, Costa Brava and the other Reporting Persons continue to
review and reconsider their positions and formulate plans and proposals
that may result in, or relate to, one or more of the actions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Specifically, Costa Brava is considering filing the Draft Complaint, or
some derivation thereof, on its own behalf to seek damages for breaches
of fiduciary duty and extraordinary remedies such as injunctive relief,
receivership proceedings and/or dissolution of the Issuer.
As of the date of this Amendment No. 4, except as set forth above, and
as otherwise set forth in the Schedule, none of the Reporting Persons
has any present plan or intention which may result in, or relate to,
any of the actions described in subparagraphs (a) through (j) of Item 4
of Schedule 13D.
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Joint Filing Agreement
Exhibit 99.1 Letter dated May 3, 2005 to the Committee of Independent
Directors of the Board of Directors of the Issuer*
Exhibit 99.2 Costa Brava Letter*
*Filed with an earlier version of this Schedule 13D.
<PAGE>
Page 9 of 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 4 to the Schedule
13D is true, complete and correct.
Dated: September 13, 2005 COSTA BRAVA PARTNERSHIP III, LP
By: Roark, Rearden & Hamot, LLC
Its General Partner
By: /s/ SETH W. HAMOT
-------------------------------------
Name: Seth W. Hamot
Title: Manager
ROARK, REARDEN & HAMOT, LLC
By: /s/ SETH W. HAMOT
-------------------------------------
Name: Seth W. Hamot
Title: Manager
/s/ SETH W. HAMOT
-----------------------------------------
Seth W. Hamot
WHITE BAY CAPITAL MANAGEMENT, LLC
By: /s/ ANDREW R. SIEGEL
-------------------------------------
Name: Andrew R. Siegel
Title: Manager
/s/ ANDREW R. SIEGEL
-----------------------------------------
Andrew R. Siegel
<PAGE>
Page 10 of 11
EXHIBIT INDEX
-------------
Exhibit 1 Joint Filing Agreement, dated as of September 13, 2005.
Exhibit 99.1 Letter dated May 3, 2005 to the Committee of Independent
Directors of the Board of Directors of the Issuer*
Exhibit 99.2 Costa Brava Letter*
*Filed with an earlier version of this Schedule 13D.
<PAGE>
Page 11 of 11
EXHIBIT 1 - JOINT FILING STATEMENT
Pursuant to Rule 13d-1(k)(1), we, the undersigned, hereby express our
agreement that the Amendment No. 4 to Schedule 13D for Telos Corporation is
filed on behalf of each of us. This agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Dated: September 13, 2005 COSTA BRAVA PARTNERSHIP III, LP
By: Roark, Rearden & Hamot, LLC
Its General Partner
By: /s/ SETH W. HAMOT
-------------------------------------
Name: Seth W. Hamot
Title: Manager
ROARK, REARDEN & HAMOT, LLC
By: /s/ SETH W. HAMOT
-------------------------------------
Name: Seth W. Hamot
Title: Manager
/s/ SETH W. HAMOT
-----------------------------------------
Seth W. Hamot
WHITE BAY CAPITAL MANAGEMENT, LLC
By: /s/ ANDREW R. SIEGEL
-------------------------------------
Name: Andrew R. Siegel
Title: Manager
/s/ ANDREW R. SIEGEL
-----------------------------------------
Andrew R. Siegel |
