# **Exhibit 10.1**

# **EMPLOYMENTAGREEMENT**

**THISEMPLOYMENT AGREEMENT** dated as of March 10, 2006(“Agreement”), is by and between Transaction Network Services, Inc., aDelaware corporation (the “Company”), and its parent, TNS, Inc., aDelaware corporation (“Parent”), on the one hand (collectively, “TNS”), andJohn J. McDonnell, Jr. (“Executive”), on the other hand. (The Company,Parent and Executive will be referred to collectively as the “Parties” and mayeach be referred to individually as a “Party”).

**WHEREAS,**Executive has been employed as Chairman and Chief Executive Officer of TNS; and

**WHEREAS,**the Board of Directors of TNS (the “Board” or “Board of Directors”) hasdetermined that it is in the best interest of TNS and its shareholders tocontinue to employ Executive in such capacity and Executive desires to continuehis employment in such capacity;

**NOWTHEREFORE,** in consideration of the mutual covenants andpromises contained herein, the receipt and adequacy of which are acknowledged,the parties agree as follows:

1.    **Acceptance of Employment.**Subjectto the terms and conditions set forth below, the Company agrees to employExecutive and Executive accepts such employment.

2.    **Term**. Theperiod of employment and term of this Agreement will be from January 1,2006 through December 31, 2009, unless further extended or soonerterminated as hereinafter set forth (the “Term”). The Term shall automaticallybe extended for successive one (1) year periods unless one Party heretohas provided the other with at least three (3) months’ prior writtennotice of its intention to allow this Agreement to expire at the end of suchinitial or extended Term, in which event the employment period will terminateon the last day of such Term. If the Company provides Executive such notice of itsintention to allow this Agreement to expire without thereafter providingExecutive with a timely written notice of termination for Cause (as defined inSection 6(e) of this Agreement) and otherwise complying with the

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procedures set forth inSection 6(e), the expiration of the Agreement will be considered atermination “for other than Cause” as provided in Section 6(f). TheCompany hereby acknowledges that Executive has been employed by the Companysince April 1, 1990.

3.    **Position and Duties**.Executive shall serve as Chairman and Chief Executive Officer of TNS and willperform such duties as are set forth in the job description for such position,as it may be amended by TNS from time-to-time, and such other reasonablyrelated duties consistent with such position that are assigned to Executive bythe Board. Subject to reasonable business travel requirements, Executive shallgenerally perform his duties from the TNS’ general and administrative officesin Reston, Virginia and shall not be required by TNS to be personally based ortransferred anywhere other than the metropolitan area in which his office inTNS’ general and administrative offices is now located, without Executive’sprior written consent. Executive will perform his duties in a professional andcompetent manner. Executive shall devote all of his working time and attentionand his reasonable best efforts and skills to the business and affairs of TNS,except (i) with respect to incidental business activities, including themanagement of his personal investments, outside directorships, and civic andcharitable activities, which shall be fully disclosed to the Board of Directorsprior to engaging in such activities and which, in the determination of theBoard of Directors, do not cause a conflict of interest or interfere withExecutive’s performance of his duties under this Agreement; and (ii) asotherwise approved by the Board of Directors.

During the Term,TNS shall nominate and take such action as may be necessary or appropriate toseek stockholder election of Executive to the Board of Directors. Executiveagrees to resign from the Board of Directors in connection with, and effectiveupon, termination of his employment with the Company, unless specificallyrequested by the Board of Directors in writing to complete his term.

4.    **Base Salary and Incentives**.

(a)            **Base Salary.**Duringthe Term, the Company will pay Executive a base salary at the rate of $650,000per annum, less customary withholdings and deductions (the “Base

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Salary”) payable inaccordance with the payroll procedures for the Company’s salaried employees ineffect during the Term. Beginning in January 2007 and annually thereafter,the Base Salary shall be subject to annual review and possible increase by theBoard of Directors, but it shall not be decreased during the Term of thisAgreement.

(b)           **Annual Incentive AwardOpportunity**. Executive shall be eligible to participate in theCompany’s Annual Incentive Plan (the “AIP”), in accordance with the terms ofthe AIP as they may be amended by the Board from time-to time. Executive’starget annual award opportunity under the AIP shall be 100% of the Base Salary(the “AIP Annual Target”) and shall be subject, in accordance with the terms ofthe AIP, to an annual cap equal to 2 times the AIP Annual Target. Actual awardswill be based on the achievement of specified performance objectives, asdetermined by the Board.

(c)            **Long-Term Incentive PlanOpportunity.**Executive shall be eligible to participate in theParent’s Long-Term Incentive Plan (the “LTIP”), in accordance with the terms ofthe LTIP, as they may be amended by the Board from time-to time. Executive’starget annual award opportunity under the LTIP shall be 250% of the Base Salary(the “LTIP Annual Target”) and shall be subject, in accordance with the termsof the LTIP, to an annual cap equal to 2 times the LTIP Annual Target. Awardswill be comprised of a combination of long-term incentive vehicles, asdetermined by the Board. Awards under the AIP and LTIP will be referred tocollectively as “Incentive Awards.”

5.    **Benefits.**Duringthe Term, Executive will be eligible for the following benefits in connectionwith his employment (collectively, the “Benefits”):

(a)            **Retirement Benefits**.Executive will be eligible to participate in the Company’s 401(k) Plan inaccordance with the terms of that plan, as they may be amended fromtime-to-time by the Company.

(b)           **Other Fringe Benefits**.In addition to any other benefits specifically set forth herein, Executive(i) shall be entitled to the benefits set forth in the Summary ofExecutive

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Benefits attached to thisAgreement as Appendix 1 (and incorporated herein) and (ii) shall also beeligible to participate in all other employee benefit plans and programsoffered by the Company to its senior executives generally, in accordance withthe terms of those plans and programs ((i) and (ii) collectivelybeing the “Fringe Benefits”), as the Fringe Benefits may be amended orterminated from time-to-time by the Company.

(c)            **Business and TravelExpenses**. Executive shall be entitled to reimbursement of allreasonable and necessary business-related expenses he incurs in performing hisduties, in accordance with and to the extent permitted by the Company’spolicies in effect from time to time.

(d)           **Indemnification**.Executive shall be entitled to such indemnification rights as are set forth inthe Indemnification Agreement between Executive and the Parent, a copy of whichis attached hereto and incorporated by reference as Appendix 2.

6.    **Termination of Employmentand Effect of Termination**.

(a)            **By Company for Death**.Executive’s employment hereunder shall terminate upon his death, in which eventTNS shall have no further obligation to Executive or his estate other than thepayment of accrued and/or vested but unpaid Base Salary, pro-rated IncentiveAwards (calculated and paid when such awards are paid to other employeesgenerally), vacation pay and other Benefits as of the termination date, unlessotherwise required by law or plan documents.

(b)           **By Company for Disability**.If Executive incurs a Disability and such Disability continues for a period oftwelve (12) consecutive months, then the Company may, to the extent permittedby applicable law, terminate Executive’s employment upon written notice toExecutive, in which event TNS shall have no further obligation to Executiveother than the payment of accrued and/or vested but unpaid Base Salary,pro-rated Incentive Awards (calculated and paid when such awards are paid toother employees generally), vacation pay and other Benefits as of thetermination date, unless otherwise required by law or plan documents.

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For the purposes of thisAgreement, a “Disability” means a physical or mental impairment thatsubstantially limits a major life activity and that precludes Executive fromperforming all of the essential functions of his position, with or withoutreasonable accommodation, as such applicable terms are defined by the federalAmericans with Disabilities Act, as it may be amended from time-to-time.

(c)            **By Executive for GoodReason**. Executive may terminate his employment hereunder forGood Reason after giving at least 30 days’ notice to the Company. The date ofsuch termination must be no more than 90 days from the date of the occurrencegiving rise to the Good Reason. For purposes of this Agreement, Good Reasonmeans that, without Executive’s prior written consent: (i) the Companyrelocates its general and administrative offices or Executive’s place ofemployment to an area other than the Washington, D.C. Standard MetropolitanStatistical Area; (ii) Executive is assigned duties substantiallyinconsistent with his responsibilities as described in Section 3 of thisAgreement or a substantial adverse alteration is made to the nature or statusof such responsibilities; (iii) Executive’s title is diminished;(iv) the Company reduces Executive’s Base Salary as in effect on the datehereof or as the same may be increased from time to time; or (v) anymaterial reduction in Benefits provided to Executive pursuant to Sections 4 and5 of this Agreement, other than in connection with a reduction in benefitsgenerally applicable to senior executives of the Company. In the event thatExecutive elects to terminate this Agreement for Good Reason, Executive shallbe entitled to:  (aa) payment of accruedand/or vested but unpaid Base Salary, pro-rated Incentive Awards (calculatedand paid when such awards are paid to other employees generally), vacation payand other Benefits as of the termination date, unless otherwise required by lawor plan documents; (bb) payment of two years of Base Salary at the rate ineffect as of the date of termination in installments in accordance with theCompany’s payroll practices in effect at the time; and (cc) continuation ofFringe Benefits for two years after the date of termination. In the event theCompany’s Fringe Benefit plans do not permit continued participation byExecutive after his termination, then Executive will instead be entitled to alump sum payment from the Company of the expected cost to Executive to purchaseand continue all such Fringe Benefit programs, as an individual or familypolicyholder, grossed up for all local, state and Federal taxes at the maximumtax rates. Executive’s entitlement to the Base Salary described in (bb) and

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the Fringe Benefitsdescribed in (cc) is conditional on his execution of a Severance Agreement andGeneral Release in substantially the same form attached hereto as Appendix 3.TNS agrees to provide to Executive within ten (10) days of termination theSeverance Agreement and General Release for execution.

(d)           **By Executive without GoodReason**. Executive may terminate this Agreement without GoodReason upon ninety (90) days’ prior written notice to the Company. In the eventExecutive’s employment is terminated pursuant to this Section 6(d), theCompany may in its discretion relieve Executive of his duties and provide himwith Base Salary and Benefits through the date of termination. In the eventExecutive terminates his employment without Good Reason, Executive shall beentitled to payment of accrued and/or vested but unpaid Base Salary, pro-ratedIncentive Awards (calculated and paid when such awards are paid to otheremployees generally), vacation pay and other Benefits as of the terminationdate, unless otherwise required by law or plan documents.

(e)            **By Company for Cause**.The Board of Directors of the Company may terminate this Agreement for Causeupon written notice to Executive. “Cause” shall be defined as: (i) thecommission of a felony or a crime involving moral turpitude or the commissionof any other act or omission involving dishonesty or fraud with respect to theCompany or any of its affiliates or any of their customers or suppliers;(ii) substantial failure on the part of Executive in his performance ofthe duties of the office held by him as reasonably directed by the Board (otherthan any such failure resulting from Executive’s incapacity due to physical ormental illness), after notice to Executive and a reasonable opportunity tocure; (iii) gross negligence or willful misconduct by Executive withrespect to the Company or any of its affiliates (including, without limitation,disparagement that adversely affects the reputation of the Company or any ofits affiliates); or (iv) any material breach by Executive of Sections 3, 7or 8 of this Agreement. For purposes of this Agreement, an act, or failure toact, on the Executive’s part shall be considered “gross negligence” or “willfulmisconduct” only if done, or omitted, by him not in good faith and withoutreasonable belief that his action or omission was in the best interest of theCompany and its affiliates. The Executive’s employment shall not be deemed tohave been terminated for “Cause” unless the Company shall have given ordelivered to the Executive (A)

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reasonable notice settingforth the reasons for the Company’s intention to terminate the Executive’semployment for “Cause”; (B) a reasonable opportunity, at any time duringthe 30 day period after the Executive’s receipt of such notice, for theExecutive, together with his counsel, to be heard before the Board; and(C) a notice of termination stating that, in the good faith opinion of notless than a majority of the entire membership of the Board, the Executive wasguilty of the conduct set forth in clauses (i), (ii), (iii) or (iv) ofthe first sentence of this Section 6(e).

In the eventExecutive is terminated for Cause, TNS’ only obligation to Executive will bethe payment of accrued and/or vested but unpaid Base Salary, vacation pay andother Benefits as of the termination date, unless otherwise required by law orplan documents.

(f)            **By the Company for Otherthan Cause**. The Board of Directors may terminate this Agreementfor reasons other than Cause after giving at least ninety (90) days’ priorwritten notice of such termination to Executive. In the event the Companyterminates Executive pursuant to this Section 6(f), Executive shall beentitled to:  (aa) payment of accruedand/or vested but unpaid Base Salary, pro-rated Incentive Awards (calculatedand paid when such awards are paid to other employees generally), vacation payand other Benefits as of the termination date, unless otherwise required by lawor plan documents; (bb) payment of two years of Base Salary at the rate ineffect as of the date of termination in installments in accordance with theCompany’s payroll practices in effect at the time; and (cc) continuation ofFringe Benefits for two years after the date of termination. In the event theCompany’s Fringe Benefit plans do not permit continued participation by Executiveafter his termination, then Executive will instead be entitled to a lump sumpayment from the Company of the expected cost to Executive to purchase andcontinue all such Fringe Benefit programs, as an individual or familypolicyholder, grossed up for all local, state and Federal taxes at the maximumtax rates. Executive’s entitlement to the Base Salary described in (bb) and theFringe Benefits described in (cc) is conditional on his execution of aSeverance Agreement and General Release in substantially the same form attachedhereto as Appendix. TNS agrees to provide to Executive within ten(10) days of termination the Severance Agreement and General Release forexecution.

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(g)           **Termination Following aChange in Control**. If the Executive’s employment is terminatedby the Company during the Protection Period other than for Cause, Disability oras a result of the Executive’s death, or if the Executive terminates hisemployment during the Protection Period for Good Reason, the Company shall,subject to Section 7 of this Agreement, provide Executive with thefollowing within then (10) days of the effective date of the SeveranceAgreement and General Release described below (the “Effective Date”) unlessotherwise indicated below:

(i)   The Executive’s Base Salary and vacation pay (forvacation not taken) accrued but unpaid through the date of termination ofemployment;

(ii)   a lump sum severance payment in an amount equalto the product of 2.99 times the Executive’s “Average AnnualCompensation.”  For the purposes of thisAgreement, “Average Annual Compensation” shall be an amount equal to the annualaverage of the sums of (x) the Executive’s annual Base Salary from theCompany plus (y) the amount of Incentive Awards accrued by TNS for theExecutive, in each case for the three calendar years that ended immediatelybefore (or, if applicable, coincident with) the Change in Control Date;

(iii)   within 30 days of the Effective Date, uponsurrender by the Executive of the outstanding options to purchase shares of commonstock (“Shares”) of Parent granted to the Executive by the Parent (the“Outstanding Options”) and any stock appreciation rights granted to theExecutive by the Parent (“SARs”), an amount with respect to each OutstandingOption and SAR (whether vested or not) equal to the difference between theexercise price of such Outstanding Options and SARs and the higher of(x) the fair market value of the Shares on the date of such termination(but not less than the closing price for the Shares on the New York StockExchange, or such other national stock exchange on which such shares may belisted, on the last trading day such shares traded prior to the date oftermination); and (y) the highest price paid for Shares or, in the casesof securities convertible into Shares or carrying a right to acquire Shares,the highest effective price (based on the prices paid for such securities) atwhich such securities are convertible into Shares or at which Shares may beacquired, by any person or group whose acquisition of voting securities hasresulted in a Change in Control of the Parent; provided, however, that thisSection 6(g)(iii) shall not apply to the surrender of any

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Outstanding Option that is an incentive stock option (within themeaning of Section 422 of the Internal Revenue Code of 1986, as amended(the “Code”));

(iv)   the Company shall provide continuation of FringeBenefits for three years after the date of termination. In the event theCompany’s Fringe Benefit plans do not permit continued participation by Executiveafter his termination, then Executive will instead be entitled to a lump sumpayment from the Company of the expected cost to Executive to purchase andcontinue all such Fringe Benefit programs, as an individual or familypolicyholder, grossed up for all local, state and Federal taxes at the maximumtax rate;

(v)   all of the Executive’s Benefits accrued under anysupplemental retirement plans, excess retirement plans, and deferredcompensation plans maintained by the Company or any of its affiliates shallbecome immediately vested in full;

(vi)   all of the Executive’s Outstanding Options shallbecome immediately vested and exercisable in full; and

(vii)   all of the Executive’s outstanding shares ofrestricted stock shall become immediately vested in full.

Executive’s entitlementto the foregoing benefits described in (g) is conditional on his executionof a Severance Agreement and General Release in substantially the same form asis attached hereto as Appendix 3. TNS agrees to provide to Executive within ten(10) days of termination the Severance Agreement and General Release forexecution.

For the purposes of thisSection 6(g) and Section 6(h) of this Agreement, thefollowing terms are defined below:

“Change inControl” shall mean a change in control of a nature that would be required tobe reported in response to Item 6(e) of Schedule 14A of Regulation 14Apromulgated under the Securities and Exchange Act of 1934, as amended (the“Exchange Act”), whether or not the Parent is then subject to such reportingrequirements; provided that, without limitation, a Change in Control shall bedeemed to have occurred if (i) any person (as such term is used in section13(d) and 14(d) of the Exchange Act) is or becomes beneficial owner(as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of securities of the Parent representing 25 percent or more of thecombined voting power of the Parent’s then outstanding securities; or (ii)

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during any period of twoconsecutive years, the following persons (the “Continuing Directors”) cease forany reason to constitute a majority of the Board: individuals who at thebeginning of such period constitute the Board and new directors each of whoseelection to the Board or nomination for election to the Board by the Parent’ssecurity holders was approved by a vote of at least two thirds of the directorsthen still in office who either were directors at the beginning of the periodor whose election or nomination for election was previously so approved; or(iii) the securityholders of the Parent approve a merger or consolidationof the Parent with any other corporation, other than a merger or consolidationthat would result in the voting securities of the Parent outstandingimmediately before the merger or consolidation continuing to represent (eitherby remaining outstanding or by being converted into voting securities of suchsurviving entity) a majority of the voting securities of the Parent or of suchsurviving entity outstanding immediately after such merger or consolidation; or(iv) the security holders of the Parent approve a plan of completeliquidation of Parent or the Company or an agreement for the sale ordisposition by the Parent or the Company of all or substantially all of itsassets.

The “Change inControl Date” shall be any date during the term of this Agreement on which aChange in Control occurs. Notwithstanding any contrary provision in thisAgreement, if the Executive’s employment or status as an elected or appointedofficer with the Company is terminated by the Company within six months beforethe date on which a Change in Control occurs, and it is reasonably demonstratedthat such termination (i) was at the request of a third party who hastaken steps reasonably calculated or intended to effect a Change in Control or(ii) otherwise arose in connection with or anticipation of a Change inControl, then for the purposes of this Agreement the “Change in Control Date”shall mean the date immediately before the date of such termination.

“Good Reason”means:

(i)   the assignment to theExecutive within the Protection Period of any duties inconsistent in anyrespect with the Executive’s position (including status, offices, titles andreporting requirements, authority, duties, or responsibilities) or any other actionthat results in a diminution in such position, authority, duties, orresponsibilities excluding for

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this purpose an isolated, insubstantial, and inadvertent action that isnot taken in bad faith and is remedied by TNS promptly after receipt of noticegiven by the Executive;

(ii)   a reduction by the Company in the Executive’sBase Salary in effect immediately before the beginning of the Protection Periodor as increased from time to time after the beginning of the Protection Period;

(iii)   a failure by TNS to maintain plans providingBenefits at least as beneficial as those provided by any benefit orcompensation plan (including, without limitation, any incentive compensationplan, bonus plan, or program, retirement, pension or savings plan, life insuranceplan, health and dental plan, or disability plan) in which the Executive isparticipating immediately before the beginning of the Protection Period or anyaction taken by TNS that would adversely affect the Executive’s participationin, or reduce the Executive’s opportunity to benefit under, any of such plansor deprive the Executive of any material fringe benefit enjoyed by himimmediately before the beginning of the Protection Period; provided, however,that a reduction in benefits under TNS’ tax qualified retirement, pension, orsavings plans or its life insurance plan, health and dental plan, disabilityplans, or other insurance plans, which reduction applies generally toparticipants in the plans and has a de minimis effect on the Executive shall notconstitute “Good Reason” for termination by the Executive;

(iv)   the Company requiring the Executive, without theExecutive’s written consent, to be based at any office or location in excess of25 miles from his office location immediately before the beginning of theProtection Period, except for travel reasonably required in the performance ofthe Executive’s responsibilities;

(v)   any purported termination by the Company of theExecutive’s employment for Cause otherwise than as provided in Section 6(e) ofthis Agreement; or

(vi)   any failure by TNS to obtain the assumption ofthe obligations contained in this Agreement by any successor as contemplated inSection 9(c) of this Agreement.

“ProtectionPeriod” means the period beginning on the Change in Control Date and ending onthe last day of the 24th calendar month following the Change in Control Date.

 

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h)           **Adjustment in Benefits.**In the event that Executive becomes entitled to the payments and benefitsdescribed in this Section 6 (together with any other benefits to whichExecutive is entitled hereunder following a termination entitling Executive tothe payments and benefits of this Section 6, the “Severance Benefits”), if(x) the Severance Benefits equal or exceed 110% of three times Executive’s“base amount” determined for purposes of Section 280G of the Code, theCompany shall pay to Executive an additional amount (the “Gross-Up Payment”)equal to the sum of any excise tax imposed under Section 280G of the Code(“Excise Tax”) on Executive by reason of receiving the Severance Benefits plusthe amount necessary to place Executive in the same after-tax position (takinginto account any and all applicable federal, state and local excise, income andother taxes on the Gross-Up Payment) as if no Excise Tax had been imposed onthe Severance Befits and no Gross-Up Payment had been made to Executive, and if(y) the Severance Benefits are less than 110% of three times Executive’s“base amount” determined for purposes of Section 280G of the Code, theSeverance Benefits shall be limited to no more than 2.99 times Executive’s“base amount” determined for purposes of Section 280G of the Code. Forpurposes of determining whether any of the Severance Benefits will be subjectto the Excise Tax and the amount of such Excise Tax, (i) any otherpayments or benefits received or to be received by Executive in connection witha Change in Control or Executive’s termination of employment (whether pursuantto the terms of this Agreement or any other plan, arrangement or agreement withTNS, any person whose actions result in a change in control or any personaffiliated with the Company or such person) shall be treated as “parachutepayments” within the meaning of Section 280G(b)(2) of the Code, andall “excess parachute payments” within the meaning ofSection 280G(b)(1) of the Code shall be treated as subject to theExcise Tax, unless in the opinion of tax counsel selected by TNS’ independentauditors and reasonably acceptable to Executive such other payments or benefits(in whole or in part) do not constitute parachute payments, including withoutlimitation by reason of Section 280G(b)(4)(A) of the Code, or suchexcess parachute payments (in whole or in part) represent reasonablecompensation for services actually rendered, within the meaning ofSection 280G(b)(4)(B) of the Code in excess of the Base Amount asdefined in Section 280G(b)(3) of the Code allocable to suchreasonable compensation, or are otherwise not subject to the Excise Tax,(ii) the amount of the Severance Benefits that shall be treated as subjectto the Excise Tax shall be equal to the lesser of (a) the total amount of theSeverance Benefits or (b) the amount of excess parachute payments within 

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the meaning ofSection 280G(b)(1) of the Code (after applying clause(i) above), and (iii) the value of all non-cash benefits or anydeferred payment or benefit shall be determined by TNS’ independent auditors inaccordance with the principles of Section 280G(d)(3) and (4) ofthe Code. For purposes of determining the amount of the Gross-Up Payment,Executive shall be deemed to pay federal income taxes at the highest marginalrate of federal income taxation in the calendar year in which the Gross-UpPayment is to be made and state and local income taxes at the highest marginalrate of taxation in the state and locality of his residence on the date oftermination, net of the maximum reduction in federal income taxes which couldbe obtained from deduction of such state and local taxes. In the event that theExcise Tax is subsequently determined to be less than the amount taken intoaccount hereunder in the computation of the Gross-Up Payment, Executive shallrepay to the Company (without interest), at the time that the amount of suchreduction in Excise Tax is finally determined, the portion of the Gross-UpPayment attributable to such reduction (plus that portion of the Gross-Up Paymentattributable the Excise tax and federal, state and local income and employmenttax imposed on the portion of the Gross-Up Payment being repaid by Executive tothe extent that such repayment results in a reduction in the Excise Tax and/orin a federal, state or local income or employment tax deduction). In the eventthat the Excise Tax is determined to exceed the amount taken into accounthereunder at the time of the computation of the Gross-Up Payment (including byreason of any payment the existence or amount of which cannot be determined atthe time of the Gross-Up payment), the Company shall make an additionalGross-Up Payment in respect of such excess (plus any interest, penalties oradditions payable by Executive with respect to such excess) at the time thatthe amount of such excess is finally determined. Executive and TNS shall eachreasonably cooperate with the other in connection with any administrative orjudicial proceedings concerning the existence or amount of liability for ExciseTax with respect to the Severance Benefits.

(i)           **Notice of Termination**.Termination of this Agreement by TNS or termination of this Agreement byExecutive shall be communicated by written notice to the other Party hereto,specifically indicating the termination provision relied upon.

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(j)           **Property**.Upon the termination of Executive’s employment under this Agreement, for anyreason, or at any time upon request from the Company, Executive shall returnall property of TNS, and all copies, excerpts or summaries of such property inwhatever form, that are in his possession, custody or control.

7.    **Noncompetitionand Nonsolicitation**. Executive acknowledges that in the courseof his employment with the Company he has and will become familiar with theCompany’s and its affiliates’ trade secrets and with other confidentialinformation concerning The Company and its affiliates and that his serviceswill be of special, unique and extraordinary value to the Company and itsaffiliates. Therefore, Executive agrees that:

(a)          Noncompetition.During the Term and (i) in the case of termination by the Company withoutCause or resignation by Executive for Good Reason, for a period of two yearsthereafter, or (ii) in the case of termination or resignation for anyother reason, for a period of one year thereafter (as applicable, the“Noncompete Period”), Executive shall not, directly or indirectly, either aloneor in association with others, own, manage, operate, sell, control orparticipate in the ownership, management, operation, sales or control of, beinvolved with the development efforts of, serve as a technical advisor to,license intellectual property to, provide services to or in any manner engagein any business that competes with any business in which the Company or any ofits affiliates is engaged as of the date of Executive’s termination orresignation; provided, however, that Executive may own as a passiveinvestor up to 5.0% of any class of an issuer’s publicly traded securities.

(b)         Nonsolicitation.During the Noncompete Period, Executive shall not, directly or indirectly,alone or in association with others, (i) induce or attempt to induce anyemployee of the Company or any of its affiliates to leave the employ of theCompany or such affiliate, or in any way interfere with the relationshipbetween the Company and any of its affiliates and any employee thereof;(ii) hire any person who was an employee of the Company or any of itsaffiliates within one year prior to the time such employee was hired byExecutive; (iii) induce or attempt to induce any customer, supplier,licensee or other business relation of the Company or any of its affiliates tocease doing business with the Company or such affiliate or in

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anyway interfere with the relationship between any such customer, supplier, licenseeor business relation and the Company or any of its affiliates; or(iv) acquire or attempt to acquire an interest in any business whichrelates to any business of the Company or any of its affiliates and with whichthe Company and any of its affiliates has entered into substantive negotiationsor has requested and received confidential information relating to theacquisition of such business by the Company or any of its affiliates in thetwo-year period immediately preceding the termination of employment.

(c)          Business Scope andGeographical Limitation. Executive acknowledges (i) that the businessof the Company and its affiliates is, and is expected to remain, internationalin scope and without geographical limitation; (ii) notwithstanding thestate of incorporation or principal office of the Company or any of itsaffiliates, or any of their respective executives or employees (includingExecutive), it is expected that the Company and its affiliates will havebusiness activities and have valuable business relationships within itsindustry throughout the world; and (iii) as part of his responsibilities,Executive will travel around the world in furtherance of the Company’s and itsaffiliates’ businesses and their relationships. Accordingly, the restrictionsset forth in this Section 7 shall be effective in all cities, counties andstates of the United States and all countries in which the Company or any ofits affiliates has an office or is engaged in business as of the date ofExecutive’s termination or resignation.

(d)         Enforcement.If, at the time of enforcement of this Section 7, a court holds that therestrictions stated herein are unreasonable under circumstances then existing,the parties hereto agree that the maximum duration, scope or geographical areareasonable under such circumstances shall be substituted for the stated period,scope or area and that the court shall be allowed to revise the restrictionscontained herein to cover the maximum duration, scope and area permitted bylaw.

(e)          AdditionalAcknowledgments. Executive acknowledges that the provisions of thisSection 7****are in considerationof employment with the Company and the additional good and valuableconsideration as set forth in this Agreement. Executive acknowledges that hehas carefully read this Agreement and has given careful consideration to

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therestraints imposed upon Executive by this Agreement, and is in full accord asto their necessity for the reasonable and proper protection of confidential andproprietary information of the Company and its affiliates now existing or to bedeveloped in the future. Executive expressly acknowledges and agrees that eachand every restraint imposed by this Agreement was discussed in good faithbetween the parties hereto and is reasonable with respect to subject matter,time period and geographical area. During the Term and the Noncompete Period,Executive agrees to provide the Company (upon the Company’s reasonable request)with such information as may be necessary to demonstrate Executive’s compliancewith the terms and provisions of this Agreement.

8.    **Confidential Information.**

(a)          Obligation toMaintain Confidentiality. Executive acknowledges that the information,observations and data obtained by him during the course of his performanceunder this Agreement concerning the business and affairs of the Company and itsaffiliates are the property of the Company or such affiliates, includinginformation concerning acquisition opportunities in or reasonably related tothe Company’s or any of its affiliates’ business or industry of which Executivebecomes aware during the Term. Therefore, Executive agrees that he will notdisclose to any unauthorized person or use for his own account any of suchinformation, observations or data without the prior written consent of theBoard, unless, and then only to the extent that, the aforementioned mattersbecome generally known to and available for use by the public other than as aresult of Executive’s acts or omissions to act. Executive agrees to deliver tothe Company upon termination of employment, or at any other time the Companymay request in writing, any and all property belonging to the Company and itsaffiliates in his possession or under his control including, but not limitedto, any memoranda, notes, plans, records, reports, documents, discs and otherdata storage media (and any copies thereof).

(b)         Ownership ofProperty. Executive expressly understands and agrees that any and allright, title or interest he has or obtains in any documentation, trade secrets,technical specifications, data, know-how, inventions, concepts, ideas,techniques, innovations, discoveries, improvements, developments, methods,processes, programs, designs, analyses, drawings, 

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reports,memoranda, marketing plans, and all similar or related information  (whether or not patentable) conceived,devised, developed, contributed to, made, reduced to practice or otherwise hador obtained by Executive (either solely or jointly with others) during the Termthat relate to the Company’s or any of its affiliates’ actual or anticipatedbusiness, research and development, or existing or future products or services,or that arise out of Executive’s employment with the Company or any of itsaffiliates (including any of the foregoing that constitutes any proprietaryinformation or records) (“Work Product”) belong to the Company or therespective affiliate, and Executive hereby assigns, and agrees to assign, allof the above Work Product to the Company or to such affiliate. Anycopyrightable work prepared in whole or in part by Executive in the course ofhis work for any of the foregoing entities shall be deemed a “work made forhire” under the copyright laws, and the Company or such affiliate shall own allrights therein. To the extent that any such copyrightable work is not a “workmade for hire,” Executive hereby assigns, and agrees to assign, to the Companyor the respective affiliate all of his right, title and interest in and to suchcopyrightable work. Executive shall promptly disclose such Work Product andcopyrightable work to the Board and perform all actions reasonably requested bythe Board (whether during or after the Employment Period) to establish andconfirm the Company’s or the respective affiliate’s ownership therein(including executing and delivering any assignments, consents, powers ofattorney and other instruments).

(c)          Third PartyInformation. Executive understands that the Company and its affiliates willreceive from third parties confidential or proprietary information (“Third PartyInformation”) subject to a duty on the Company’s and such affiliates’ part tomaintain the confidentiality of such information and to use it only for certainlimited purposes. During the Term and thereafter, and without in any waylimiting the provisions of Section 8(a) above, Executive will holdThird Party Information in the strictest confidence and will not disclose toanyone (other than personnel of the Company or its affiliates who need to knowsuch information in connection with their work for the Company or suchaffiliates) or use, except in connection with his work for the Company or suchaffiliates, Third Party Information without the prior written consent of theBoard.

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(d)         Use of Informationof Prior Employers. During the Term, Executive will not improperly use ordisclose any confidential information or trade secrets, if any, of any formeremployers or any other person to whom Executive has an obligation ofconfidentiality, and will not bring onto the premises of the Company or any ofits affiliates any unpublished documents or any property belonging to anyformer employer or any other person to whom Executive has an obligation ofconfidentiality unless consented to in writing by the former employer orperson. Executive will use in the performance of his duties only informationwhich is (i)(x) common knowledge in the industry or (y) is otherwiselegally in the public domain; (ii) is otherwise provided or developed bythe Company or its affiliates; or (iii) in the case of materials, propertyor information belonging to any former employer or other person to whomExecutive has an obligation of confidentiality, approved for such use inwriting by such former employer or person.

9.    **Arbitration.**Alldisputes concerning the application, interpretation or enforcement of thisAgreement or otherwise arising out of the relationship between Executive, onthe one hand, and the Company or Parent, on the other hand, except for thosearising under Section 7 or 8 of this Agreement, shall be resolved exclusivelyby final and binding arbitration before a single arbitrator in accordance withthe Employment Rules of the American Arbitration Association then ineffect. The arbitration shall be held in Washington, D.C., and the arbitratorshall have the authority to permit the parties to engage in reasonablepre-hearing discovery. In any litigation or arbitration to enforce thisAgreement, the prevailing party will be awarded reasonable attorneys’ fees andcosts. Each Party knowingly and voluntarily waives its right to a trial by jurywith respect to disputes that are covered by this Section 9.

10.  **Notices.**Anynotice provided for or required by this Agreement must be in writing and mustbe either personally delivered, mailed by first class mail (postage prepaid andreturn receipt requested) or sent by reputable overnight courier service(charges prepaid) to the recipient at the addresses indicated below or to suchother address as a Party may designate in writing to the other Party:

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If to the Company or Parent:

Transaction Network Services, Inc.11480 Commerce Park DriveSuite 600Reston, VA  20191Attention:  General Counsel

With a copy to:

Arent Fox PLLC1050 Connecticut Avenue, N.W.Washington, D.C. 20036Attention:  Jeffrey E. Jordan, Esquire

If to Executive:To his last known home address on file with the Company

11.  **No Waiver**.The failure of either Party at any time to enforce any provision of thisAgreement or to exercise any remedy, option, right, power or privilege providedfor herein, or to require the performance by the other party of any of theprovisions hereof, shall in no way be deemed a waiver of such provision at thesame or at any prior or subsequent time.

12.  **Governing Law**.This Agreement is governed by and shall be construed in accordance with thelaws of the Commonwealth of Virginia, without reference to the principles ofconflict of laws therein. Executive agrees to submit to personal jurisdictionand venue in the Commonwealth of Virginia.

13.  **Validity**.The invalidity or unenforceability of any provision or provisions of thisAgreement shall not be deemed to affect the validity or enforceability of anyother provision of this Agreement, which shall remain in full force and effect.The court or arbitrator will modify any invalid or unenforceable provision tomake it valid and enforceable to the maximum extent permitted by law.

14.  **Successors**.This Agreement shall be binding upon TNS, its successors and assigns, includingany corporation or other business entity which may acquire all or substantially

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all of TNS’ assets orbusiness, or within which TNS may be consolidated or merged, or any survivingcorporation in a merger involving TNS.

15.  **Waiver or Modification ofAgreement**. No waiver or modification of this Agreement shall bevalid unless in writing and duly executed by both Parties.

16.  **Counterparts**.This Agreement may be executed in one or more counterparts, each of which andtogether will constitute one and the same instrument.

17.  **Entire Agreement**.   This Agreement represents the entireagreement, and supersedes all other agreements, discussions or understandingsconcerning the subject matter. The Amended and Restated Senior ManagementAgreement among Executive, the Company and Parent, dated March 19, 2004,is hereby terminated (except for any provisions relating to the continuedvesting of Carried Shares after the date hereof).

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**IN WITNESS WHEREOF**, the partieshave duly executed this Agreement as of the date and year first above written.
| TRANSACTION  NETWORK SERVICES, INC.: |                          | EXECUTIVE: |
|--------------------------------------|-------------------------------|------------|
|                                 |                          |       |   |
|                                 |                          |       |   |
| By:                                  | /s/ Henry H. Graham, Jr. |       |    /s/ John J.  McDonnell, Jr. |
|                                 | Henry H. Graham, Jr.     |       |    John J.  McDonnell, Jr. |
|                                 |                          |       |   |
|                                 |                          |       |   |
| TNS, INC.:                           |                          |       |
|                                 |                          |       |   |
|                                 |                          |       |   |
| By:                                  | /s/ Henry H. Graham, Jr.      |       |   |
|                                 | Henry H. Graham, Jr.          |       |   |

 

 

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