TNS (TNS)

In accordance with his Employment Agreement, Mr. Mudd will continue to serve as the Company’s Executive Vice President, Chief Development Officer. Mr. Mudd’s annual base salary was initially set at $291,750, subject to any increase as determined by the Board of Directors based upon the achievement of budgetary or other objectives set by the Board. In addition, Mr. Mudd is eligible for an annual incentive bonus targeted to equal 35% of his annual base salary (and capped at 70% of his annual base salary) and an annual long term incentive bonus award targeted to equal 150% of his annual base salary (and capped at 300% of his annual base salary), based upon the achievement of budgetary and other objectives set by the Board. Finally, Mr. Mudd is entitled to certain insurance, leave, automobile and other fringe benefits and is eligible to participate in all other employee benefit plans and programs offered by the Company to its senior executives generally, in accordance with the terms of those plans and programs.

        TNS Holdings, L.L.C. and Transaction Network Services, Inc. entered into a senior management agreement with Mr. Mudd, dated April 3, 2001, containing terms and conditions related to his employment and provisions related to securities ownership. Pursuant to his senior management agreement, Mr. Mudd purchased 250 common units of TNS Holdings, L.L.C., each at a price of $100 per unit, which units are subject to vesting in equal monthly installments over 60 months. In connection with our initial public offering, TNS Holdings, L.L.C. dissolved, and Mr. Mudd received a distribution of 309,576 shares of our common stock in return for his common units. His senior management agreement was amended and restated to add us as a party and to provide that substantially the same rights and restrictions apply to the shares of our common stock that Mr. Mudd received under the amended agreement as applied to the TNS Holdings, L.L.C. common units that Mr. Mudd surrendered upon the dissolution of TNS Holdings, L.L.C.

        The senior management agreement provides that Mr. Mudd will serve as our Executive Vice President, Technology until his resignation, disability or death, or the decision by the board of directors to terminate his employment with or without cause. Mr. Mudd's annual base salary was initially set at $200,000, subject to any increase as determined by the board of directors based on the achievements of budgetary or other objectives set by the board, and Mr. Mudd is eligible for an annual bonus of up to 35% of his annual base salary, based upon the achievement of budgetary and other objectives set by the board. If Mr. Mudd's employment is terminated without cause or he resigns for good reason, during the one year period following his termination (or any extension to the period which may apply), Mr. Mudd would be entitled to receive an amount equal to his annual base salary.

        Mr. Mudd's senior management agreement requires him to protect the confidentiality of our proprietary and confidential information. Mr. Mudd has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is terminated without cause or resigns for good reason, or for a period of two years if he is terminated for any other reason. Under the agreement, good reason means that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. Mudd that are substantially inconsistent with his responsibilities as our Executive Vice President, Technology or we make a substantial adverse alteration to those responsibilities, we reduce Mr. Mudd's annual base salary, or we materially reduce the benefits we provide Mr. Mudd. We are entitled to extend the non-competition and non-solicitation periods for an additional year, upon written notice to Mr. Mudd at least 90 days prior to the conclusion of the initial period.

22

        As of March 31, 2005, 247,661 shares of common stock were vested, and the remaining 61,915 shares will vest in 12 monthly installments on the last day of each month. Mr. Mudd's common stock is subject to the same conditions and restrictions as those described above for Mr. McDonnell's common stock.