VALUE PARTNERS, LTD.
2200 Ross Avenue
Suite 4660 West
Dallas, Texas 75201
(214) 999-1900
June , 1998
Dear Fellow Preferred Stockholder:
Value Partners, Ltd., ("Value Partners") is the beneficial owner of
714,317, or 19.87%, of the issued and outstanding shares of the 12% Cumulative
Exchangeable Redeemable Preferred Stock, $.01 par value per share (the
"Preferred Stock") of Telos Corporation (the "Company"). Value Partners is
soliciting your support to elect two Class D directors to the Board of Directors
of the Company that are independent of, and have not been selected by,
management of the Company.
The Company has not declared or paid dividends on the Preferred Stock
since 1991. The Company's Articles of Amendment and Restatement of its Articles
of Incorporation ("Articles") provide that if dividends are in arrears and
unpaid for three full semi-annual periods, then the number of directors
constituting the Company's Board of Directors shall, without further action, be
increased by two directors (designated as "Class D" directors) and the holders
of the Preferred Stock (the "Preferred Stockholders") shall have the exclusive
right to elect such directors. Notwithstanding the requirements of the Articles,
the Company has failed to call, or permit the Preferred Stockholders to call, a
special meeting to elect the two Class D directors. Value Partners, through the
registered holder of its shares, Cede & Co. ("Cede"), made demand upon the
Company to hold such meeting, was sued by the Company in a declaratory judgment
proceeding and counter-claimed to enforce the rights of the Preferred
Stockholders to obtain a Special Meeting of the Preferred Stockholders (the
"Special Meeting") to elect the Class D directors. On April 22, 1998, the U.S.
District Court for the Eastern District of Virginia (the "Court"), decided that
the Company was required to hold the Special Meeting for the election of the
Class D directors and prohibited the Company from interfering with the meeting
or the election.
As a result of the Court's decision, the Special Meeting of the
Preferred Stockholders to elect the two Class D directors will be held at the
law offices of McGuire, Woods, Battle & Boothe, LLP, at the Army Navy Building,
1627 I ("Eye") Street, N.W., Washington, D.C. 20006, on Friday, July 31, 1998,
at 10:00 a.m.
Value Partners has taken a stand for the Preferred Stockholders by
obtaining a decision protecting the rights of all Preferred Stockholders. Value
Partners is soliciting your vote in order to elect two nominees, Mr. Julio E.
Heurtematte, Jr. and Mr. Malcolm M.B.
Letter to Preferred Stockholders
Page 2
Sterrett (the "Nominees"), as the two Class D directors on the Company's Board
of Directors. In December 1996, Value Partners became concerned that the Company
was failing to live up to its obligations to the Preferred Stockholders, as set
forth in the Articles. Value Partners believes that the placement of these two
Nominees on the Board of Directors will provide to the holders of the Preferred
Stock an ability to participate in the actions of the Board and the executive
officers of the Company ("Management") and to, at least, have a voice in the
affairs and governance of the Company.
If elected, the Nominees would seek to --
- ensure that the Company takes all appropriate steps to enable it
to comply with its contractual obligations to the holders of the
Preferred Stock;
- provide quality leadership and consistent focus;
- conduct a thorough review of the Company's strategic objectives
and current operations; and
- ensure that Management is actively working to promote the best
interests of the Company's shareholders, both Common and
Preferred.
These Nominees will provide something that Telos Corporation has needed
for a long time -- independent, outside directors who are not involved in the
management of the Company and who will work to hold Management more accountable
to the preferred owners of the Company, its Preferred Stockholders.
We need your help to implement necessary representation of the Preferred
Stockholders on Telos Corporation's Board in order to enhance its corporate
governance. If you agree with us that the Preferred Stockholders have the right
to ensure that there is independent oversight of the Company's Board now, then
we urge you to vote FOR the Nominees on the enclosed WHITE proxy card.
It is very important that you be represented at the Special Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign and date your WHITE proxy card
today and return it in the envelope provided, even if you plan to attend the
Special Meeting.
Please vote the Value Partners WHITE proxy card today. In the event that
you receive proxy cards sent to you by Mr. Litsinger, Mr. Calhoun or Dr.
Greenblatt (each a "Challenger"), please do not sign or return them. Value
Partners believes that its Nominees
Letter to Preferred Stockholders
Page 3
have the unique ability to best represent the Preferred Stockholders, as set
forth in detail in the attached Proxy Statement. If you voted a Challenger's
proxy card, you have every right to change your vote simply by signing, dating
and mailing the enclosed WHITE proxy card. This will automatically cancel your
earlier vote since only the latest dated proxy card will count at the Special
Meeting.
We need your support to enable us to provide effective leadership and
oversight on behalf of all the Company's Preferred Stockholders.
Sincerely,
VALUE PARTNERS, LTD.
By: Ewing & Partners,
General Partner
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By: Timothy G. Ewing
General Partner of Ewing |
