SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 10)*
TELOS CORPORATION
----------------------------------------------------------------------
(Name of Issuer)
12% Cumulative Exchangeable Redeemable Preferred Stock, $.01 par value
----------------------------------------------------------------------
(Title of Class of Securities)
8796B200
----------------------------------------------------------------------
(CUSIP Number)
Andrew R. Siegel
Costa Brava Partnership III, LP
237 Park Avenue, Suite 900
New York, New York 10017
(212) 692-6395
----------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 8, 2006
----------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes)
Page 2 of 12
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Costa Brava Partnership III, LP
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 506,811
SHARES ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 506,811
WITH ----------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
506,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 12
SCHEDULE 13D
CUSIP NO. 8796B200
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Roark, Rearden & Hamot, LLC
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 506,811
EACH ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------
10 SHARED DISPOSITIVE POWER
506,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
506,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 12
SCHEDULE 13D
CUSIP NO. 8796B200
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Seth W. Hamot
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 506,811
EACH ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------
10 SHARED DISPOSITIVE POWER
506,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
506,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 12
SCHEDULE 13D
CUSIP NO. 8796B200
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
White Bay Capital Management, LLC
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 506,811
EACH ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------
10 SHARED DISPOSITIVE POWER
506,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
506,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 12
SCHEDULE 13D
CUSIP NO. 8796B200
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Andrew R. Siegel
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
[ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 14,476
SHARES ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 506,811
EACH ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 14,476
WITH ----------------------------------------------
10 SHARED DISPOSITIVE POWER
506,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
521,287
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
[ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.4%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 12
AMENDMENT NO. 10 to SCHEDULE 13D
This amendment ("Amendment No. 10") amends the Schedule 13D previously
filed on March 25, 2005, and amended by Amendment No. 1 filed on May 9, 2005 and
further amended by Amendment No. 2 filed on June 6, 2005, and further amended by
Amendment No. 3 filed on July 13, 2005, and further amended by Amendment No. 4
filed on September 13, 2005, and further amended by Amendment No. 5 filed on
September 26, 2005, and further amended by Amendment No. 6 filed on October 18,
2005, and further amended by Amendment No. 7 filed on November 14, 2005, and
further amended by Amendment No. 8 filed on December 29, 2005, and further
amended by Amendment No. 9 filed on January 13, 2006 (collectively, the
"Schedule"), by Costa Brava Partnership III, LP ("Costa Brava"), Roark, Rearden
& Hamot, LLC ("Roark"), Seth W. Hamot ("Hamot"), White Bay Capital Management,
LLC ("White Bay"), and Andrew R. Siegel ("Siegel") with the Securities and
Exchange Commission with respect to the 12% Cumulative Exchangeable Redeemable
Preferred Stock, $0.01 par value ("Redeemable Preferred Stock") of Telos
Corporation, a Maryland corporation (the "Issuer"). All defined terms refer to
terms defined herein or in the Schedule. This Amendment No. 10 speaks only as of
its date. Costa Brava, Roark, Mr. Hamot, White Bay and Mr. Siegel are
collectively referred to herein as the "Costa Brava Reporting Persons". The
Schedule is amended only to the extent set forth below:
ITEM 4 PURPOSE OF TRANSACTION
Item 4. Purpose of Transaction appearing in the Schedule is
hereby amended and supplemented to add the following:
On October 17, 2005, Costa Brava filed a direct and derivative
lawsuit in the Circuit Court for Baltimore City in the State
of Maryland against the Issuer, each director of the Issuer,
and certain of the Issuer's executive officers (the "Lawsuit")
alleging breaches by the Issuer if its obligations to the
holders of the Redeemable Preferred Stock and by the directors
and name executive officers of their fiduciary duties to the
Issuer and the holders of the Redeemable Preferred Stock. A
copy of the complaint filed in the Lawsuit (the "Complaint")
was previously filed as Exhibit 99.4 and incorporated herein
by reference. On February 8, 2006, Costa Brava and the
Partnership (defined below) entered into a Joint Litigation
Agreement whereby the Partnership agreed to join Costa Brava
as co-plaintiffs in the Lawsuit (see Item 6 herein). Each of
Costa Brava and the Partnership has retained its own counsel
in connection with the Lawsuit. On February 8, 2006, the
Partnership filed a Motion for Leave to Intervene along with a
copy of a proposed Amended Complaint, which, if allowed,
would, among other things, add the Partnership as plaintiff in
the Lawsuit (the "Motion and Amended Complaint"). Any
descriptions herein of the Complaint and the Motion and
Amended Complaint are qualified in their entirety by reference
to the Complaint and the Motion and Amended Complaint.
The "Wynnefield Reporting Persons" are Wynnefield Partners
Small Cap Value, L.P. (the "Partnership"), Wynnefield Small
Cap Value Offshore Fund, Ltd. (the "Fund"), Wynnefield
Partners Small Cap Value, L.P. I (the "Partnership-I"),
Channel Partnership II, L.P. ("Channel"), Wynnefield Capital
Management, LLC ("WCM"), Wynnefield Capital, Inc. ("WCI"),
Nelson Obus ("Mr. Obus") and Joshua H. Landes.
None of the Costa Brava Reporting Persons nor the Wynnefield
Reporting Persons (collectively, the "Reporting Persons") have
any agreements or understandings between them relating to the
acquisition, disposition, holding or voting of the Redeemable
Preferred Stock held by them and each expressly disclaims
beneficial ownership for all purposes of the Redeemable
Preferred Stock held by the others. The Costa Brava Reporting
Page 8 of 12
Persons and the Wynnefield Reporting Persons each disclaim
membership in a "group" with the other Reporting Persons. The
Costa Brava Reporting Persons and the Wynnefield Reporting
Persons have each filed an amendment to their respective
Schedule 13D solely as a result of Costa Brava's and the
Partnership's agreement to file and pursue the Lawsuit.
Each of the Reporting Persons reserve the right to change its
plans and intentions at any time, as it deems appropriate. In
particular, the Costa Brava Reporting Persons or the
Wynnefield Reporting Persons may, among other things, sell or
otherwise dispose of their respective holdings of the
Redeemable Preferred Stock, including the redemption amount of
the Redeemable Preferred Stock and accrued and unpaid
dividends, purchase additional Redeemable Preferred Stock, in
each case in public or private transactions, and/or may enter
into negotiated derivative transactions to hedge the market
risk of some or all of their positions in, or to obtain
greater exposure to, the Redeemable Preferred Stock, as the
members of the Costa Brava Reporting Persons or the Wynnefield
Reporting Persons may determine, in light of circumstances
existing from time to time, subject to any applicable
limitations imposed on the sale of the Redeemable Preferred
Stock or an interest therein by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and
applicable state securities or "blue sky" laws.
Except as set forth above, no member of the Reporting Persons
has any present plans or intentions which would result in or
relate to any of the transactions described in subparagraphs
(a) through (j) of Item 4 of the instructions to Schedule 13D.
ITEM 5 INTEREST OF THE SECURITIES OF THE ISSUER.
"Item 5. Interest in Securities of the Issuer." appearing in
the Schedule 13D filed by the Costa Brava Reporting Persons is
supplemented by adding the following disclosure to the end of
such item:
To the best knowledge of the Costa Brava Reporting
Persons, in the event the Reporting Persons are deemed to be a
"group" for purposes of Regulation 13D-G under the Act as a
result of their agreement to file and pursue the Lawsuit, the
Reporting Persons may be deemed to beneficially own
collectively an aggregate of 880,311 of the Redeemable
Preferred Stock, representing 27.6% of the 3,185,586
outstanding Redeemable Preferred Stock (the percentage of
shares owned being based upon 3,185,586 Redeemable Preferred
Stock outstanding on November 21, 2005, as set forth in the
Issuer's most recent report on Form 10-Q for the period ended
September 30, 2005, filed with the Commission on November 21,
2005). The Costa Brava Reporting Persons and the Wynnefield
Reporting Persons each expressly disclaims beneficial
ownership for all purposes of the Redeemable Preferred Stock
held by each of the other Reporting Persons and each disclaim
membership in a "group" with the other Reporting Persons.
Although the Redeemable Preferred Stock is non-voting
stock, it has the exclusive right to vote as a class for up to
two directors to the Board of Directors of the Issuer if at
any time or times dividends payable on the Redeemable
Preferred Stock shall be in arrears and unpaid for three
consecutive full semi-annual periods. The two directors that
may be elected by the holders of the Redeemable Preferred
Stock constitute a minority of the total Board of Directors of
the Issuer, which results in the holders of the Redeemable
Preferred Stock being unable to exercise control over the
Issuer.
Page 9 of 12
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
"Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer."
appearing in the Costa Brava Schedule 13D is supplemented by
adding the following disclosure to the end of such item:
Each of Costa Brava and the Partnership are a party
to a Joint Litigation Agreement, dated as of February 8, 2006,
pursuant to which the parties agreed to cooperate with each
other in the prosecution of the Lawsuit.
Except for the agreement described above, to the best
knowledge of the Reporting Persons, there are no contracts,
arrangements, understandings or relationships (legal or
otherwise) between the Reporting Persons, and any other
person, with respect to any securities of the Issuer,
including, but not limited to, transfer or voting of any of
the securities, finder's fees, joint ventures, loan or option
agreements, puts or calls, guarantees of profits, divisions of
profits or loss, or the giving or withholding of proxies.
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 dated June 30, 2005*
Exhibit 99.3 Letter dated September 20, 2005 to Mr. Joel
Flax, Partner in Charge, Goodman & Company,
LLP*
Exhibit 99.4 Complaint filed in the Circuit Court for
Baltimore City in the State of Maryland on
October 17, 2005*
Exhibit 99.5 Goodman Letter dated November 11, 2005*
Exhibit 99.6 Form of Warner Stevens Audit Committee Demand
Letter dated December 27, 2005*
Exhibit 99.7 Form of Warner Stevens Board Demand Letter
dated December 27, 2005*
Exhibit 99.8 Form of Warner Stevens CEO/CFO Demand Letter
dated December 27, 2005*
Exhibit 99.9 Owsley Letter dated December 27, 2005*
Exhibit 99.10 Motion for Judgment filed in the Circuit
Court of the County of Fairfax in the State
of Virginia on December 28, 2005*
*Filed with an earlier version of this Schedule 13D.
Page 10 of 12
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 10 to the Schedule
13D is true, complete and correct.
Dated: February 9, 2006 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 11 of 12
EXHIBIT INDEX
-------------
Exhibit 1 Joint Filing Agreement, dated as of February 9, 2006
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 dated June 30, 2005*
Exhibit 99.3 Letter dated September 20, 2005 to Mr. Joel Flax, Partner in
Charge, Goodman & Company, LLP*
Exhibit 99.4 Complaint filed in the Circuit Court for Baltimore City in the
State of Maryland on October 17, 2005*
Exhibit 99.5 Goodman Letter dated November 11, 2005*
Exhibit 99.6 Form of Warner Stevens Audit Committee Demand Letter dated
December 27, 2005*
Exhibit 99.7 Form of Warner Stevens Board Demand Letter dated December 27,
2005*
Exhibit 99.8 Form of Warner Stevens CEO/CFO Demand Letter dated December
27, 2005*
Exhibit 99.9 Owsley Letter dated December 27, 2005*
Exhibit 99.10 Motion for Judgment filed in the Circuit Court of the County
of Fairfax in the State of Virginia on December 28, 2005
*Filed with an earlier version of this Schedule 13D.
Page 12 of 12
EXHIBIT 1 - JOINT FILING STATEMENT
Pursuant to Rule 13d-1(k)(1), we, the undersigned, hereby express our
agreement that the Amendment No. 10 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: February 9, 2006
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