-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DaXZLLTuNe9cA9GFTqYbF5fjIXg+EcEbQa/t0fWQgqRexlLS+zWYVLGBPUsxAi8v dbe6G6Ff3nQSHVUSksAy2g== 0001104659-07-004036.txt : 20070124 0001104659-07-004036.hdr.sgml : 20070124 20070124060214 ACCESSION NUMBER: 0001104659-07-004036 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20070124 DATE AS OF CHANGE: 20070124 GROUP MEMBERS: ABRY PARTNERS LLC GROUP MEMBERS: DUNLUCE ACQUISITION CORPORATION GROUP MEMBERS: JOHN J MCDONNELL III GROUP MEMBERS: ROYCE YUDKOFF SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TNS INC CENTRAL INDEX KEY: 0001268671 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 364430020 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-79770 FILM NUMBER: 07548076 BUSINESS ADDRESS: STREET 1: 11480 COMMERCE PARK DR. STREET 2: SUITE 600 CITY: RESTON STATE: VA ZIP: 20191-1406 BUSINESS PHONE: 7034538300 MAIL ADDRESS: STREET 1: 11480 COMMERCE PARK DR. STREET 2: SUITE 600 CITY: RESTON STATE: VA ZIP: 20191-1406 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MCDONNELL JOHN J JR CENTRAL INDEX KEY: 0000928323 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: TRANSACTION NETWORK SERVICES INC STREET 2: 1939 ROLAND CLARK PLACE STE 405 CITY: RESTON STATE: VA ZIP: 26191 BUSINESS PHONE: 7034538300 MAIL ADDRESS: STREET 1: 8401 BROOKEWOOD CT CITY: MCLEAN STATE: VA ZIP: 22102 SC 13D/A 1 a07-2476_1sc13da.htm SC 13D/A

 

 

UNITED STATES

OMB APPROVAL

 

SECURITIES AND EXCHANGE
COMMISSION

OMB Number:
3235-0145

 

Washington, D.C. 20549

Expires: February 28, 2009

 

SCHEDULE 13D
(Rule 13d-101)

Estimated average burden hours per response. . 14.5

 

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

 

Under the Securities Exchange Act of 1934
(Amendment No. 1)*

 

TNS, INC.

(Name of Issuer)

 

COMMON STOCK

(Title of Class of Securities)

 

872960109

(CUSIP Number)

 

John J. McDonnell, Jr.

c/o Wilson Sonsini Goodrich & Rosati,

Professional Corporation

1700 K Street, N.W.
Fifth Floor
Washington, D.C. 20006-3817


Copy to:

Trevor J. Chaplick

Wilson Sonsini Goodrich & Rosati,

Professional Corporation

1700 K Street, N.W.
Fifth Floor
Washington, D.C. 20006-3817

Telephone: (202) 973-8800

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

January 22, 2007

(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 that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-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 ("Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes).

 

 




 

CUSIP No.   872960109

 

 

1.

Names of Reporting Persons.
John J. McDonnell, Jr.

I.R.S. Identification Nos. of above persons (entities only)
N/A

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
PF, BK, OO — see Item 3

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
936,752 (1)(2)(3)(4)

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
936,752 (1)(2)(3)(4)

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
936,752 (1)(2)(3)(4)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x

 

 

13.

Percent of Class Represented by Amount in Row (11)
3.9%

 

 

14.

Type of Reporting Person (See Instructions)
IN

 


(1)   Excludes the shares of Common Stock held by other Reporting Persons as to which John J. McDonnell, Jr. disclaims beneficial ownership.  This report shall not be construed as an admission that John J. McDonnell, Jr. is the beneficial owner of such securities.

(2)   Excludes a to-be-determined number of shares of Common Stock that vested under the terms of the Issuer’s 2006 Long-Term Incentive Plan prior to the termination of John J. McDonnell, Jr.’s employment with the Issuer on December 27, 2006. The number of such shares will be determined and pro-rated in accordance with the terms of the Issuer’s 2006 Long-Term Incentive Plan.

(3)   Includes 879,652 shares owned by McDonnell & Associates, L.P., an entity controlled by John J. McDonnell, Jr.

(4)   Includes 10,000 shares that are owned by John J. McDonnell, Jr.’s spouse.

2




 

 

1.

Names of Reporting Persons.
John J. McDonnell III

I.R.S. Identification Nos. of above persons (entities only)
N/A

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
PF, BK, OO — see Item 3

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
283,351 (1)(2)(3)

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
283,351 (1)(2)(3)

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
283,351 (1)(2)(3)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x

 

 

13.

Percent of Class Represented by Amount in Row (11)
1.2%

 

 

14.

Type of Reporting Person (See Instructions)
IN

 


(1)   Excludes the shares of Common Stock held by other Reporting Persons hereto as to which John J. McDonnell III disclaims beneficial ownership.  This report shall not be construed as an admission that John J. McDonnell III is the beneficial owner of such securities.

(2)   Includes 11,000 shares of Common Stock held in trust for the minor children of John J. McDonnell III, for which John J. McDonnell III disclaims beneficial ownership.  This report shall not be construed as an admission that John J. McDonnell III is the beneficial owner of such securities.

(3)   Excludes a to-be-determined number of shares of Common Stock that vested under the terms of the Issuer’s 2006 Long-Term Incentive Plan prior to the termination of John J. McDonnell III’s employment with the Issuer on December 27, 2006. The number of such shares will be determined and pro-rated in accordance with the terms of the Issuer’s 2006 Long-Term Incentive Plan.

3




 

 

1.

Names of Reporting Persons.
ABRY Partners, LLC

I.R.S. Identification Nos. of above persons (entities only)
04-3597417

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
OO, AF — see Item 3

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 (1)

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
0 (1)

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
0

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x

 

 

13.

Percent of Class Represented by Amount in Row (11)
0%

 

 

14.

Type of Reporting Person (See Instructions)
OO

 


(1)          Excludes shares of Common Stock held by other Reporting Persons as to which ABRY Partners, LLC disclaims beneficial ownership.  This report shall not be construed as an admission that ABRY Partners, LLC is the beneficial owner of such securities.

4




 

 

1.

Names of Reporting Persons.
Royce Yudkoff

I.R.S. Identification Nos. of above persons (entities only)
N/A

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
OO, AF — see Item 3

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0 (1)

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
0 (1)

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
0

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x

 

 

13.

Percent of Class Represented by Amount in Row (11)
0%

 

 

14.

Type of Reporting Person (See Instructions)
IN

 


(1)   Excludes shares of Common Stock held by other Reporting Persons as to which Royce Yudkoff disclaims beneficial ownership.  This report shall not be construed as an admission that Royce Yudkoff is the beneficial owner of such securities.

5




 

 

1.

Names of Reporting Persons. I.R.S.
Dunluce Acquisition Corporation

Identification Nos. of above persons (entities only)
20-8052978

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
OO, AF, BK — see Item 3

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
United States of America

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
0

 

8.

Shared Voting Power
0

 

9.

Sole Dispositive Power
0

 

10.

Shared Dispositive Power
0

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
1,220,103 (1)(2)

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x

 

 

13.

Percent of Class Represented by Amount in Row (11)
5.1%

 

 

14.

Type of Reporting Person (See Instructions)
CO

 


(1)   Excludes shares of Common Stock held by other Reporting Persons as to which Dunluce Acquisition Corporation disclaims beneficial ownership.  This report shall not be construed as an admission that Dunluce Acquisition Corporation is the beneficial owner of such securities.

(2)   Includes 936,752 shares beneficially owned by John J. McDonnell, Jr., the Chairman, Chief Executive Officer and sole stockholder of Dunluce Acquisition Corporation, and 283,351 shares beneficially owned by John J. McDonnell III, the President and Secretary of Dunluce Acquisition Corporation.

6




 

Item 1.

Security and Issuer

The class of equity securities to which this Statement relates is the common stock (the “Common Stock”) of TNS, Inc., a Delaware corporation (the “Issuer” or “TNS”).  The principal executive offices of TNS are located at 11480 Commerce Park Drive, Suite 600, Reston, VA  20191.

 

 

Item 2.

Identity and Background

This amended Statement is being filed by John J. McDonnell, Jr. (“Mr. McDonnell, Jr.”), John J. McDonnell III (“Mr. McDonnell III”), Dunluce Acquisition Corporation (“Dunluce”), ABRY Partners, LLC (“ABRY”) and Royce Yudkoff  (“Mr. Yudkoff” and together with Mr. McDonnell, Jr., Mr. McDonnell III, Dunluce and ABRY, collectively, the “Reporting Persons”).  The Reporting Persons are filing this amended Statement because they may be deemed to be a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the proposed transaction described in Item 4 of this amended Statement.  Except as expressly set forth in this amended Statement, each Reporting Person expressly disclaims beneficial ownership with respect to any shares other than shares held of record or held in street name by such Reporting Person.  An amended and restated joint filing agreement (the “Joint Filing Agreement”) has been filed as Exhibit 7.01 to this amended Statement pursuant to Rule 13d-1(k)(1) promulgated under the Exchange Act.

The name, citizenship, business address and present principal occupation or employment of each of Mr. McDonnell, Jr., Mr. McDonnell III and Mr. Yudkoff is set forth on Appendix A hereto, which Appendix A is incorporated by reference herein.

The name, state or place of organization, principal business, and principal office address of ABRY is set forth on Appendix B hereto, which Appendix B is incorporated by reference herein.  Also set forth on Appendix B hereto, and incorporated by reference herein, is a list of executive officers of ABRY for this transaction, which contains the following information with respect to each such person: (i) name; (ii) business address; (iii) present principal occupation or employment and the name and business address of each corporation or organization in which each such employment is conducted; and (iv) citizenship.

The name, state or place of organization, principal business, and principal office address of Dunluce is set forth on Appendix C hereto, which Appendix C is incorporated by reference herein.  Also set forth on Appendix C hereto, and incorporated by reference herein, is a list of executive officers of Dunluce for this transaction, which contains the following information with respect to each such person: (i) name; (ii) business address; (iii) present principal occupation or employment and the name and business address of each corporation or organization in which each such employment is conducted; and (iv) citizenship.

The principal business of ABRY is to manage private equity funds that make and oversee investments in equity and other interests in business organizations, including businesses the securities of which have no established market and may be restricted with respect to transfer, the principal objective being the appreciation of and return on capital invested.

The principal business of Dunluce is to effect the transactions contemplated by the Revised Offer (as defined in Item 4).  Dunluce has not engaged in any other business or activity since the date of its formation.

During the last five years none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

During the last five years, to the knowledge of ABRY, none of the persons named on Appendix B hereto has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

During the last five years, none of the persons named on Appendix C hereto has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 3.

Source and Amount of Funds or Other Consideration

The shares of Common Stock deemed to be beneficially owned by the Reporting Persons were acquired in the initial public offering of TNS, through open-market purchases using personal funds, by means of gift, inheritance or other gratuitous transfer, or through their service as officers and/or directors of TNS.

With respect to the proposed transaction described in Item 4 of this Schedule 13D (which Item 4 is incorporated herein by reference), the Reporting Persons estimate that the amount of funds that would be required to purchase all of the shares of outstanding Common Stock (without giving effect to the shares held by the Reporting Persons but including estimated transaction fees) reported in TNS’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, at the Offer Price (as defined in Item 4) is approximately $391 million.  The Reporting Persons estimate that an additional amount of approximately $121.4 million will be required to repay the existing debt of TNS.  The Reporting Persons anticipate that the funds required to consummate the proposed transaction will be provided by some combination of the following, the precise amounts of each, if any, to be determined at a later date: (i) Mr. McDonnell, Jr. and Mr. McDonnell III, (ii) the equity capital of investment fund affiliates of ABRY, (iii) by Dunluce through one or more borrowings under the credit commitments described in the Debt Commitments (as defined in Item 4) or through other borrowing, including potential capital markets transactions, and/or (iv) investment by other as yet unidentified institutional investors or other similar parties.

The information set forth in response to this Item 3 is qualified in its entirety by reference to the Revised Offer (as defined in Item 4), which is incorporated herein by reference.

 

7




 

Item 4.

Purpose of Transaction

As set forth in a letter dated January 22, 2007 (the “Revised Commitment Letter”), ABRY will make an equity investment of up to $125 million representing the full amount of the outside equity required for Dunluce to acquire all of the issued and outstanding Common Stock of TNS.  Pursuant to an agreement set forth in the Revised Commitment Letter (the “Exclusivity Agreement”), ABRY, Mr. McDonnell, Jr. and Dunluce have agreed to work together exclusively in connection with the Revised Offer (as defined herein) until the occurrence of one of more of the events specified in the Exclusivity Agreement.  ABRY, Mr. McDonnell, Jr. and Dunluce also entered into an agreement set forth in the Revised Commitment Letter with respect to the reimbursement of certain fees and expenses of the parties as set forth in the Revised Commitment Letter.  The Revised Commitment Letter terminates and supersedes ABRY’s prior commitment letter dated December 20, 2006.  A copy of the Revised Commitment Letter is being filed herewith as Exhibit 7.02 and is incorporated herein by reference.

As set forth in a letter dated December 20, 2006, Dunluce submitted to the TNS Board of Directors (the “Board of Directors”) a conditional offer to acquire all issued and outstanding shares of TNS Common Stock (the “Offer”) at a valuation equal to $20.00 per share (the “Offer Price”).  During the due diligence process that occurred following submission of the Offer to the Board of Directors, TNS disclosed certain facts of which the Reporting Persons were previously unaware.  Based entirely on these new facts, in a letter dated January 22, 2007 to the Board of Directors (the “Revised Offer Letter”), Dunluce submitted to the Board of Directors a revised conditional offer (the “Revised Offer”) to acquire all issued and outstanding shares of TNS Common Stock at a valuation equal to $16.00 per share (the “Revised Offer Price”).  A copy of the Revised Offer Letter is being filed herewith as Exhibit 7.03, and is incorporated herein by reference.

Mr. McDonnell, Jr. and Mr. McDonnell III contemplate contributing some or all of the respective shares of Common Stock owned by them in connection with the Revised Offer.  The form and structure of any transaction, the terms of Dunluce’s equity and the treatment of restricted and deferred shares of Common Stock and options exercisable for shares of Common Stock will be determined at a later date.  ABRY, Mr. McDonnell, Jr., Mr. McDonnell III and/or their representatives have had preliminary discussions about these issues amongst themselves and anticipate continuing such discussions in the future although the parties have not entered into any definitive agreements on these issues.

It is anticipated that up to $450 million of the funds required to complete the acquisition will be borrowed by Dunluce pursuant to one or more credit facilities provided by J.P. Morgan Securities Inc. and JP Morgan Chase Bank, N.A. (collectively, “JP Morgan”) and/or Sun Trust Capital Markets, Inc. and Sun Trust Bank (collectively, “Sun Trust”).  In a letter to Dunluce dated January  22, 2007, JP Morgan has conditionally committed to provide up to $450 million in debt financing for the acquisition (the “JP Morgan Debt Commitment”).  A copy of the JP Morgan Debt Commitment is being filed herewith as Exhibit 7.04, and is incorporated herein by reference.  In a letter to Dunluce dated January 22, 2007, Sun Trust has conditionally committed to provide up to $435 million in debt financing for the acquisition (the “Sun Trust Debt Commitment” and together with the JP Morgan Debt Commitment, collectively the “Debt Commitments”).  A copy of the Sun Trust Debt Commitment is being filed herewith as Exhibit 7.05, and is incorporated herein by reference.

It is anticipated that any acquisition of TNS by the Reporting Persons will be subject to the approval of the Board of Directors and other customary conditions as may be negotiated between the parties, and the Revised Commitment Letter shall not create any agreement, arrangement or understanding among any of the Reporting Persons or other parties with respect to TNS or the Common Stock for purposes of any law, rule, regulation, agreement or otherwise, until such time as definitive documentation and any agreement, arrangement or understanding has been approved by the Board of Directors and thereafter executed and delivered by TNS and all other appropriate parties.  Any proposed acquisition would also require the approval of the TNS stockholders.  The Reporting Persons collectively beneficially own approximately 5.1% of the total outstanding shares of the Common Stock entitled to vote on any agreement, and, if and when a final proposal from Dunluce, or a definitive agreement between Dunluce and TNS is submitted to the stockholders for their approval, intend to vote in favor of such proposal or agreement.

If an acquisition of TNS is consummated by the Reporting Persons, the Reporting Persons contemplate that the Common Stock would be delisted from the New York Stock Exchange and deregistered under the Exchange Act.

It is further contemplated that, subsequent to an acquisition, the composition of the TNS Board of Directors would be changed in a manner to be determined at a later date.

The foregoing is a summary of the Reporting Persons’ current conditional offer to the Issuer and should not be construed as an offer to purchase shares of Common Stock directly from TNS stockholders.  Additional information will be distributed to the TNS stockholders if and when definitive agreements are entered into by and among TNS, Dunluce and/or any other appropriate parties.  Stockholders should read such additional information and other relevant documents regarding the transaction filed with the Securities and Exchange Commission (the “Commission”) when they become available because they will contain important information relevant to stockholders’ decisions with respect to any such transaction.  Stockholders will be able to receive these documents (when they become available), as well as other documents filed by the Reporting Persons, free of charge at the Commission’s web site, www.sec.gov.

 

 

8




Other than as set forth in the Revised Commitment Letter and the Revised Offer Letter or otherwise in this statement, the Reporting Persons have no plans or proposals that relate to or would result in any of the events set forth in Items 4(a) through (j) of Schedule 13D.  However, if the Offer is not consummated for any reason, the Reporting Persons intend to review continuously TNS business affairs, capital needs and general industry and economic conditions, and, based on such review, the Reporting Persons may, subject to their obligations under the Standstill Agreement (as defined herein), from time to time, determine to increase their ownership of Common Stock, vote to approve an extraordinary corporate transaction with regard to TNS or engage in any of the events set forth in Items 4(a) through (j) of Schedule 13D, except that the Reporting Persons currently have no intention to sell any shares of Common Stock. Notwithstanding the foregoing, pursuant to a standstill provision (the “Standstill Agreement”) contained in nondisclosure agreements dated January 10, 2007 by and among the Issuer and ABRY, Mr. McDonnell, Jr., Mr. McDonnell III and Dunluce (collectively, the “Restricted Reporting Persons”), for as long as the Issuer is acting in good faith to provide materials and otherwise assist the Restricted Reporting Persons in their completion of due diligence necessary to submit a firm proposal to acquire the Issuer and negotiate the related definitive agreement, the Restricted Reporting Persons and their affiliates have agreed to refrain in any manner, directly or indirectly, from the following activities:  (i) purchase or otherwise acquire, or publicly offer, seek, propose or agree to acquire, ownership (including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the Exchange Act) of any securities of the Issuer; (ii) make, or in any way participate, directly or indirectly, in any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Commission) or consents to vote any voting securities of the Issuer or any of its affiliates; (iii) except in pursuit of a negotiated transaction with the Issuer, form, join or in any way participate in a “group” (as defined under the Exchange Act) with respect to the Common Stock or any other voting securities of the Issuer or otherwise act in concert with any person in respect of any such securities; (iv) otherwise act, alone or in concert with others, to seek to control or influence the management, the Board of Directors or policies of the Issuer; or (v) enter into any discussions or arrangements with any third party (other than directors, officers, employees, representatives, advisors, contractors or agents of the Restricted Reporting Persons) with respect to any of the foregoing. The Restricted Reporting Persons have also agreed during such period not to request the Issuer (or any of its advisors or representatives), directly or indirectly, to amend or waive any provision of the Standstill Agreement. If the Restricted Reporting Persons complete their due diligence but decline to make an offer to acquire the Issuer, or if the Board of Directors opposes a proposed offer to acquire Issuer, then the Restricted Reporting Persons will abide by the provisions of the foregoing requirements until January 10, 2009; provided, however, nothing shall prohibit the Restricted Reporting Persons from making, with or without the participation of TNS management, a non-public proposal to the Board of Directors regarding any transaction or proposed transaction between the Issuer (or its security holders) and the Restricted Reporting Persons, with or without the participation of TNS management, including, but not limited to any acquisition, tender or exchange offer, merger, sale of assets or securities, or other business combination.

The information set forth in response to this Item 4 is qualified in its entirety by reference to the Revised Commitment Letter, the Revised Offer Letter and the Debt Commitments which are incorporated herein by reference.

9




 

Item 5.

Interest in Securities of the Issuer

A.    John J. McDonnell, Jr.

(a)   As of January 23, 2007, Mr. McDonnell, Jr. beneficially owned 936,752 shares of Common Stock.  Mr. McDonnell, Jr.’s Common Stock includes 879,652 shares of Common Stock owned by McDonnell & Associates, L.P., an entity controlled by Mr. McDonnell, Jr., and 10,000 shares of Common Stock owned by Mr. McDonnell, Jr.’s spouse.  Mr. McDonnell, Jr.’s Common Stock excludes a to-be-determined number of shares of Common Stock that vested under the terms of the Issuer’s 2006 Long-Term Incentive Plan prior to the termination of Mr. McDonnell, Jr.’s employment with the Issuer on December 27, 2006.  The shares deemed to be beneficially owned by Mr. McDonnell, Jr. represent approximately 3.9% of the total outstanding votes of the Common Stock as a single class.

(b)   1.               Sole power to vote or direct vote: 936,752

2.               Shared power to vote or direct vote: 0

3.               Sole power to dispose or direct the disposition: 936,752

4.               Shared power to dispose or direct the disposition: 0

(c)   The number of shares acquired by Mr. McDonnell, Jr. within the last 60 days is 0.

(d)   No person other than Mr. McDonnell, Jr. is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of Common Stock.

(e)   Not applicable.

B.     John J. McDonnell III

(a)   As of January 23, 2007, Mr. McDonnell III beneficially owned 283,351 shares of Common Stock.  Mr. McDonnell III’s Common Stock includes 11,000 shares of Common Stock held in trust for the minor children of Mr. McDonnell III.  Mr. McDonnell III’s Common Stock excludes a to-be-determined number of shares of Common Stock that vested under the terms of the Issuer’s 2006 Long-Term Incentive Plan prior to the termination of Mr. McDonnell III’s employment with the Issuer on December 27, 2006.  The shares deemed to be beneficially owned by Mr. McDonnell III represent approximately 1.2% of the total outstanding votes of the Common Stock as a single class.

(b)   1.               Sole power to vote or direct vote: 283,351

2.               Shared power to vote or direct vote: 0

3.               Sole power to dispose or direct the disposition: 283,351

4.               Shared power to dispose or direct the disposition: 0

(c)   The number of shares acquired by Mr. McDonnell III within the last 60 days is 0.

(d)   Mr. McDonnell III has entered into a credit facility with Merrill Lynch & Co., Inc. pursuant to which Mr. McDonnell III has pledged 272,351 shares of his Common Stock as collateral.  The occurrence of contingencies pursuant to this account could result in Mr. McDonnell III losing voting power and investment power with respect to those pledged shares of Common Stock.  Other than as described in the immediately preceding sentence, no person other than Mr. McDonnell III is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of Common Stock.

(e)   Not applicable.

C.     Royce Yudkoff

(a)   As of January 23, 2007, Mr. Yudkoff did not beneficially own any shares of Common Stock.

(b)   1.               Sole power to vote or direct vote: 0

2.               Shared power to vote or direct vote: 0

3.               Sole power to dispose or direct the disposition: 0

4.               Shared power to dispose or direct the disposition: 0

(c)   The number of shares acquired by Mr. Yudkoff within the last 60 days is 0.

(d)   Not applicable.

(e)   Not applicable.

D.     ABRY Partners, LLC

(a)   As of January 23, 2007, ABRY did not beneficially own any shares of Common Stock.

(b)   1.               Sole power to vote or direct vote: 0

2.               Shared power to vote or direct vote: 0

3.               Sole power to dispose or direct the disposition: 0

4.               Shared power to dispose or direct the disposition: 0

 

10




 

(c)   The number of shares acquired by ABRY within the last 60 days is 0.

(d)   Not applicable.

(e)   Not applicable.

E.     Dunluce Acquisition Corporation

(a)   As of January 23, 2007, Dunluce beneficially owned 1,220,103 shares of Common Stock.  The Common Stock deemed to be beneficially owned by Dunluce consists of the 936,752 shares of Common Stock beneficially owned by Mr. McDonnell, Jr. and 283,351 shares of Common Stock beneficially owned by Mr. McDonnell III as reported on this Statement.  Dunluce does not have the power, sole or shared, to vote any of the shares of Common Stock Dunluce is deemed to own beneficially.

(b)   1.               Sole power to vote or direct vote: 0

2.               Shared power to vote or direct vote: 0

3.               Sole power to dispose or direct the disposition: 0

4.               Shared power to dispose or direct the disposition: 0

(c)   The number of shares acquired by Dunluce within the last 60 days is 0.

(d)   Dunluce does not have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of Common Stock, which right and power are held solely by Mr. McDonnell, Jr.

(e)   Not applicable.

The Reporting Persons may be deemed to beneficially own an aggregate of 1,220,103 shares of Common Stock, which represent approximately 5.1% of the total outstanding votes of the Common Stock as a single class.  Each of the Reporting Persons disclaims beneficial ownership of the securities held by the other Reporting Persons, and this report shall not be deemed to be an admission that such person if the beneficial owner of such securities.

The percentage of Common Stock set forth for each Reporting Person in this Item 5 was calculated based upon (i) 24,107,988 shares of Common Stock outstanding as of September 30, 2006, as reported in TNS’s quarterly report on Form 10-Q for the quarter ended September 30, 2006; and (ii) the number of shares of Common Stock issuable upon the exercise of options to purchase Common Stock held by such Reporting Persons that are exercisable within 60 days, if any.  The percentage of the total outstanding votes of the Common Stock as a single class set forth for each Reporting Person in this Item 5 was calculated based on the outstanding shares of Common Stock set forth in clause (i) above.

Except as otherwise provided in this Item 5, each of the Reporting Persons has the sole power to vote or to direct the vote, and the sole power to dispose or to direct the disposition of, the shares of Common Stock deemed to be beneficially owned by him or it, if any.

Each of the Reporting Persons may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Act) the securities of TNS that any other Reporting Person directly beneficially owns.  Except as otherwise provided in this Item 5, each Reporting Person disclaims beneficial ownership of such Shares for any and all other purposes.

 

 

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

On January 10, 2007 the Restricted Reporting Persons and the Issuer entered into nondisclosure agreements that contained the Standstill Agreement which is described in Item 4 hereof.

On January 22, 2007, ABRY, Mr. McDonnell, Jr. and Dunluce entered into the Revised Commitment Letter which is described in Item 4 hereof and attached as an exhibit hereto and incorporated herein by reference.  The Revised Commitment Letter terminates and supersedes ABRY’s prior commitment letter dated December 20, 2006.

On January 22, 2007, ABRY, Mr. McDonnell, Jr., Mr. McDonnell III, Mr. Yudkoff and Dunluce entered into the Amended and Restated Joint Filing Agreement in which the parties agreed to the joint filing on behalf of each of them of the statements on Schedule 13D with respect to the securities of TNS to the extent required by applicable law.  The Amended and Restated Joint Filing Agreement amends and supersedes the Joint Filing Agreement dated December 20, 2006 by and among such parties.  The Amended and Restated Joint Filing Agreement is attached as an exhibit hereto and is incorporated by reference.

On January 22, 2007, JP Morgan provided to Dunluce the JP Morgan Debt Commitment which is described in Item 4 hereof and attached as an exhibit hereto and incorporated herein by reference.

On January 22, 2007, Sun Trust provided to Dunluce the Sun Trust Debt Commitment which is described in Item 4 hereof and attached as an exhibit hereto and incorporated herein by reference.

Other than described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of TNS.

 

11




 

Item 7.

Material to Be Filed as Exhibits

 

Exhibit 7.01:           Amended and Restated Joint Filing Agreement

Exhibit 7.02:           Revised Commitment Letter

Exhibit 7.03:           Revised Offer Letter

Exhibit 7.04            JP Morgan Debt Commitment

Exhibit 7.05            Sun Trust Debt Commitment

 

12




 

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: January 23, 2007

By:

/s/ John J. McDonnell, Jr.

 

 John J. McDonnell, Jr.

 

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.  If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.  The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations
(See 18 U.S.C. 1001)

13




SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: January 23, 2007

By:

 /s/ John J. McDonnell III

 

 John J. McDonnell III

 

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.  If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.  The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations
(See 18 U.S.C. 1001)

14




SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: January 23, 2007

By:

/s/ Royce Yudkoff

 

 Royce Yudkoff

 

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.  If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.  The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations
(See 18 U.S.C. 1001)

15




SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: January 23, 2007

ABRY Partners, LLC

 

 

 

By:

/s/ Royce Yudkoff

 

 

 

Name:

Royce Yudkoff

 

 

 

Title:

Managing Partner

 

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.  If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.  The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations
(See 18 U.S.C. 1001)

16




SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Date: January 23, 2007

DUNLUCE ACQUISITION CORPORATION

 

 

 

By:

/s/ John J. McDonnell, Jr.

 

 

 

Name:

John J. McDonnell, Jr.

 

 

 

Title:

Chief Executive Officer

 

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative.  If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of this filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference.  The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

 

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations
(See 18 U.S.C. 1001)

17




APPENDIX A

John J. McDonnell, Jr.

John J. McDonnell III

Royce Yudkoff

The following sets forth the name, business address, present principal occupation and citizenship of John J. McDonnell, Jr., John J. McDonnell III and Royce Yudkoff.

Name/Citizenship

 

Principal Business/Principal Office Address

 

Principal Occupation/Principal Business

 

Employed

John J. McDonnell, Jr./
Citizen of the United
States of America

 

c/o Wilson Sonsini Goodrich & Rosati, P.C.
1700 K Street, N.W.
Washington, D.C. 20006-3817

 

Private Investor

 

N/A

John J. McDonnell III/
Citizen of the United
States of America

 

c/o Wilson Sonsini Goodrich & Rosati, P.C.
1700 K Street, N.W.
Washington, D.C. 20006-3817

 

Private Investor

 

N/A

Royce Yudkoff/
Citizen of the United States of America

 

c/o ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

President of ABRY Partners, LLC

 

ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

A-1




APPENDIX B

ABRY Partners, LLC

ABRY Partners, LLC is a Delaware limited liability company with its principal place of business at 111 Huntington Avenue, 30th Floor, Boston, Massachusetts 02199.  The following is a list of ABRY’s executive officers:

Name/Citizenship

 

Principal Business/Principal Office Address

 

Principal Occupation/Principal Business

 

Employed

Royce Yudkoff/
Citizen of the United
States of America

 

c/o ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

President

 

ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

Jay Grossman/
Citizen of the United
States of America

 

c/o ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

Managing Partner

 

ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

Penny Koenig/
Citizen of the United
States of America

 

c/o ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

Managing Partner

 

ABRY Partners, LLC
111 Huntington Avenue
30th Floor
Boston, MA 02199

 

B-1




APPENDIX C

Dunluce Acquisition Corporation

Dunluce Acquisition Corporation is a Delaware corporation with its principal place of business at 7984 Georgetown Pike, McLean, Virginia 22102.  The following is a list of Dunluce’s executive officers:

Name/Citizenship

 

Principal Business/Principal Office Address

 

Principal Occupation/Principal Business

 

Employed

John J. McDonnell, Jr./
Citizen of the United
States of America

 

c/o Wilson Sonsini Goodrich & Rosati, P.C.
1700 K Street, N.W.
Washington, D.C. 20006-3817

 

Private Investor

 

N/A

John J. McDonnell III/
Citizen of the United
States of America

 

c/o Wilson Sonsini Goodrich & Rosati, P.C.
1700 K Street, N.W.
Washington, D.C. 20006-3817

 

Private Investor

 

N/A

 

C-1



EX-7.1 2 a07-2476_1ex7d1.htm EX-7.1

Exhibit 7.01

AMENDED AND RESTATED JOINT FILING AGREEMENT

The undersigned hereby agree that the Amendment No. 1 to the statement on Schedule 13D, dated January 23, 2007, with respect to the common stock of TNS, Inc., is, and any amendments thereto executed by each of us shall be, filed on behalf of each of us pursuant to and in accordance with the provisions of Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, and that this Amended and Restated Joint Filing Agreement (this “Agreement”) shall be included as an exhibit to the Amendment No. 1 to the Schedule 13D.  Each of the undersigned agrees to be responsible for the timely filing of the Amendment No. 1 to the Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning itself contained therein.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. This Agreement amends and restates in its entirety the Joint Filing Agreement by and among the undersigned dated December 20, 2006 and filed as Exhibit 7.01 to the Schedule 13D dated December 20, 2006.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 23rd day of January, 2007.

 

 

 

/s/ John J. McDonnell, Jr.

 

 

 

John J. McDonnell, Jr.

 

 

 

 

 

/s/ John J. McDonnell III

 

 

 

John J. McDonnell III

 

 

 

 

 

/s/ Royce Yudkoff

 

 

 

Royce Yudkoff

 

 

ABRY Partners, LLC

 

By:

/s/ Royce Yudkoff

 

 

Name:

Royce Yudkoff

 

 

Title:

Managing Partner

 




 

DUNLUCE ACQUISITION CORPORATION

 

 

 

By:

/s/ John J. McDonnell, Jr.

 

 

Name:

John J. McDonnell, Jr.

 

 

Title:

Chairman & CEO

 

2



EX-7.2 3 a07-2476_1ex7d2.htm EX-7.2

Exhibit 7.02

January 22, 2007

Mr. John J. McDonnell, Jr.
Chairman and CEO
Dunluce Acquisition Corporation
7984 Georgetown Pike
McLean, Virginia 22102

Dear Jack:

This letter confirms the commitment of ABRY Partners, LLC (“ABRY”) to pursue the acquisition of TNS, Inc. (“TNS” or the “Company”) with Dunluce Acquisition Corporation (“Dunluce”) and its principals (the “Transaction”).

1.             We are prepared to make an equity investment of up to $125 million, constituting the full amount of the outside equity required for an acquisition vehicle or vehicles to be formed by Dunluce for the purpose of acquiring all of the issued and outstanding securities of the Company. Our interest in the Transaction is not conditioned on the participation of any co-investor.  At this time, we would support an offer, subject to confirmatory due diligence, for all of the shares of TNS at a price per share of $16.00 (the “Offer Price”), representing a market equity value for TNS of $394 million based on current, fully diluted shares outstanding of 24.6 million.  This implies an enterprise value of approximately $503 million based on net debt outstanding of $109 million as of September 30, 2006.

ABRY acknowledges the debt commitments that Dunluce has received from JP Morgan and SunTrust Robinson Humphrey.

It is our expectation that Jack McDonnell will invest 100% of his existing holdings in TNS and other members of returning management, including John J. McDonnell III, will invest a material portion of their current holdings. 

2.             Contemporaneous with entering into this letter, ABRY understands that Dunluce is submitting an offer letter to the TNS board of directors (the “Board’) for the acquisition of TNS at the Offer Price.  ABRY is prepared to work under an aggressive timetable in support of such offer.  In consideration of this effort and the substantial expense that ABRY is prepared to incur in pursuit of the Transaction, effective upon the execution of this letter, Dunluce and Jack McDonnell agree to work exclusively with ABRY for the purpose of pursuing an acquisition of TNS or control thereof.  The period of this exclusivity will begin upon the execution of this letter agreement and may be terminated as described below after any of the following events:

 

1

 

 




 

·                  Dunluce elects to pursue the Transaction, and it is formally opposed, and continues to be opposed, by the Board;

·                  A larger amount of equity is required to complete the Transaction and ABRY is unwilling to increase its investment to the amount required; or

·                  June 15, 2007, if Dunluce, ABRY and the Board are not engaged in active diligence or negotiations, unless the negotiations are not occurring as the result of actions taken by the stockholders of TNS in support of an offer or to remove the current Board or an offer has been made directly to the stockholders of the Company.

Either Dunluce or ABRY may terminate such exclusivity period by delivering written notice to the other to the effect that one or more of the three conditions set forth above has been satisfied and, absent a reasonable and good faith assertion by the receiving party that no such condition has been satisfied, such exclusivity period will end at the close of business on the third business day following receipt of such notice.  The parties will exercise best efforts in good faith to resolve any dispute regarding termination of the exclusivity period.

During the exclusivity period, Jack McDonnell and Dunluce will not, and will cause Dunluce’s officers and direct and indirect stockholders, and its financial advisor, Signal Hill Capital Group, LLC and any other advisors, representatives and affiliates to not, directly or indirectly, initiate or engage in any conversations, negotiations or discussions with any prospective equity backer other than ABRY, and Dunluce will promptly notify ABRY if any of the foregoing receives any inquiry or proposal from any prospective equity backer.

3.             In the event the Transaction is consummated, the fees and expenses of Dunluce and ABRY incurred in connection with the Transaction, including without limitation, reasonable out-of-pocket, financial advisory, legal and accounting expenses, will be paid by the Company or its successor at closing; provided, reimbursement  by the Company for legal fees and expenses incurred by Jack McDonnell in connection with his employment and equity compensation arrangements will be limited to $50,000.  ABRY also agrees that if the Transaction is consummated, the Company or its successor will pay the fees and expenses of advisors engaged by Jack McDonnell that (i) were incurred in 2006 related to the acquisition of TNS, including in connection with the challenge by Jack McDonnell of the actions by the Board rejecting prior offers to acquire the Company, and (ii) have been disclosed and agreed to by ABRY.

In the event the Transaction does not occur, each party will be responsible for its own expenses, provided that ABRY will be fully responsible for all legal and accounting costs in connection with the Transaction incurred after the execution of this letter by advisors retained with ABRY’s approval.  Notwithstanding the foregoing, ABRY shall not be responsible for the fees and expenses of counsel and other advisors representing Dunluce

 

2

 

 




and/or Jack McDonnell that are incurred (i) in connection with matters unrelated to the Transaction, or (ii) are incurred on behalf of Jack McDonnell and/or other members of the intended post-Transaction management of the Company or its successor (collectively, “Management”) in connection with the negotiation and documentation of equity, governance, stockholder, employment, incentive and other arrangements to be put in place in connection with the Transaction among the Company, its successor and/or parent company, ABRY and its affiliates and Management.

In the event a break-up fee becomes available to Dunluce, ABRY or any related party, it will be applied to pay the fees and expenses of Dunluce and ABRY incurred or paid in connection with the Transaction, pro rata according to the amounts incurred or paid by them, and any proceeds remaining after the payment of each party’s expenses will be divided in proportion to the proposed equity investments amounts of (i) ABRY as set forth in this letter, and (ii) Dunluce based upon the amount of shares of Common Stock of the Company that Jack McDonnell and other members of returning management elect to invest in connection with the Transaction.

4.             If Dunluce, Jack McDonnell or any related party participates in an acquisition of the Company or control thereof not involving ABRY that is consummated pursuant to an agreement entered into or tender offer made prior to or within 12 months after the date the exclusivity period terminates as set forth in Section 2 above, then Dunluce and Jack McDonnell will cause the Company or the acquiring person to reimburse ABRY for all fees and expenses in connection with the Transaction incurred or paid by ABRY.  For the avoidance of doubt, the provisions of this Section 4 will apply in the event of any acquisition of a type described in the preceding sentence, whether or not a breach of Section 2 above has occurred, and the right to reimbursement pursuant to this Section 4 is not intended to limit the remedies of ABRY in the event of any such breach.

5.             Except as set forth in this letter agreement, the parties have not agreed upon the specific terms and conditions governing the structure and investment by ABRY in respect of the Transaction, but will negotiate such terms and conditions in good faith in connection with effecting the Transaction.

Except for the obligations set forth in Sections 2, 3 and 4 above (which are intended to be legally binding), this letter shall not constitute a binding offer or agreement.  Rather it is intended as a general outline of the terms under which ABRY is prepared to complete a Transaction.  This letter may be executed (by original or facsimile) in several counterparts, each of which so executed shall be deemed to be an original, and such counterparts together shall constitute but one and the same agreement.    The letter agreement among us dated December 20, 2006 is hereby terminated.

 

3

 

 




 

 

Yours truly,

 

 

 

ABRY Partners, LLC  

 

 

 

 

 

 

 

By:

 /s/ Jay Grossman

 

 

Jay Grossman

 

 

Managing Partner

 

 

 

 

 

 

 

Agreed and accepted as of this 22nd day of January, 2007

 

 

 

Dunluce Acquisition Corporation

 

 

 

 

By:

/s/ John J. McDonnell, Jr.

 

 

John J. McDonnell, Jr.

 

 

Chairman and CEO

 

 

 

 

 

 

 

 

 

 

 

/s/ John J. McDonnell, Jr.

 

 

John J. McDonnell, Jr.

 

 

 

4

 

 



EX-7.3 4 a07-2476_1ex7d3.htm EX-7.3

Exhibit 7.03

DUNLUCE ACQUISITION CORPORATION

 

 

January 22, 2007

TNS, Inc.
c/o Mr. Jean Manas
Deutsche Bank Securities, Inc.
60 Wall Street
New York, NY 10005

Dear Jean:

Pursuant to the letter dated January 9, 2007 from Henry Graham, we are pleased to present this offer to acquire all of the outstanding shares of common stock (the “Common Stock”) of TNS, Inc. (the “Company”) at a cash purchase price of $16.00 per share (the “Merger Consideration”) through a new acquisition vehicle, Dunluce Acquisition Corporation (“Dunluce”), a Delaware corporation. This offer is fully financed and contemplates all-cash consideration predicated on all stockholders being treated equally. As requested, our “mark-up” of the draft merger agreement provided to us by the Company will be sent to you under separate cover. We stand ready to discuss that mark-up with the Company and its advisors and to proceed swiftly to attempt to resolve any issues that it raises.

We recognize that this offer is significantly lower than our December 20, 2006 offer. The reduction is based entirely on facts of which we were previously unaware that were presented to us by the Company during the due diligence process. When considering such items as recurring increases in access charges and the price reductions in several customers contracts as specifically outlined by management, the Company’s run-rate EBITDA is approximately $10 million lower than we previously calculated based on analyst reports and publicly available information. In addition, our valuation is negatively impacted by the assumption of significantly higher liabilities due to a number of items identified to us by the Company during due diligence, including higher levels of senior debt estimated at closing as well as higher transaction costs than incorporated in our previous proposal.

Our price reduction is exclusively due to the above-mentioned items, and taking into account the Company’s revised forecast, represents an EBITDA multiple that is actually higher now than in our original offer. Based upon our due diligence review, we believe that our offer is fair and in the best interest of the Company’s shareholders.

Dunluce has received commitments to underwrite the entire purchase price through a combination of debt and equity.  The equity for the transaction has been committed to, in its entirety, by ABRY Partners, LLC (“ABRY”). Additionally, we have secured debt commitments from each of JP Morgan and SunTrust to fully underwrite the debt upon closing of the transaction. Commitment letters from ABRY and each of the lenders are enclosed herewith.




Our financing sources have completed their confirmatory due diligence with three exceptions: (i) review of the Company’s 2006 unaudited financial statements; (ii) satisfactory customer and vendor interviews; and (iii) understanding certain TNS tax practices. ABRY’s tax experts are currently working with the Company’s accountants to understand the outstanding tax issues, and we stand ready to complete customer calls and review the unaudited financial statements as soon as we are provided with the opportunity to do so by TNS.  Additionally, we are prepared to negotiate the merger agreement as we complete these final diligence items. The definitive merger agreement will not contain any financing contingencies.

This offer will not create a binding obligation on the part of either the Company or Dunluce with respect to any transaction unless and until such time as definitive documentation is approved, executed and delivered by the respective parties. The offer set forth in our December 20, 2006 letter is hereby withdrawn.

We look forward to working with the Company and its legal and financial advisors in a mutual effort to complete a transaction to benefit the Company’s public stockholders.  If we do not hear from you regarding definitive next steps with respect to a transaction process by 5:00pm EST on Wednesday, January 31, 2007, please consider this offer to be withdrawn. Your prompt consideration of this offer is requested.  Should you have any questions, please contact us or our financial advisor, Signal Hill Capital Group, LLC.

Sincerely,

 

 

 

/s/ John J. McDonnell, Jr.

 

John J. McDonnell, Jr.

 

Chairman and Chief Executive Officer

 

Dunluce Acquisition Corporation

 

Enclosures



EX-7.4 5 a07-2476_1ex7d4.htm EX-7.4

Exhibit 7.04

J.P. MORGAN SECURITIES INC.
270 Park Avenue
New York, New York 10017

JPMORGAN CHASE BANK, N.A.
270 Park Avenue
New York, New York 10017

January 22, 2007

$310,000,000 Senior First Lien Credit Facilities
$140,000,000 Senior Second Lien Term Facility
Commitment Letter

Dunluce Acquisition Corporation
7984 Georgetown Pike
McLean, Virginia 22102

Attention:  

Ladies and Gentlemen:

Dunluce Acquisition Corporation (“Holdings”), and certain former members of the Target’s (as defined below) management team, including Jack McDonnell, supported by ABRY Partners LLC (together with its affiliates, the “Sponsor”), have advised J.P. Morgan Securities Inc. (“JPMorgan”) and JPMorgan Chase Bank, N.A. (“JPMorgan Chase Bank”; together with JPMorgan, the “Commitment Parties”) that Holdings and a newly formed, wholly owned subsidiary of Holdings (the “Borrower”), intend to enter into an acquisition agreement (the “Transaction Agreement”) pursuant to which Holdings will acquire (the “Transaction”) TNS, Inc. (the “Target”).  In the event that as anticipated the Borrower merges with the Target, the survivor of such merger shall assume all rights and obligations of the Borrower hereunder and under the Fee Letter referred to below and references herein and therein to the “Borrower” shall, unless the context otherwise requires, be deemed to be references to such survivor.

You have also advised us that you propose to finance the Transaction and the related fees and expenses from the following sources: (a) $310,000,000 from first lien credit facilities (the “First Lien Facilities”) comprised of a $285,000,000 term loan facility and a $25,000,000 revolving facility and (b) $140,000,000 from a second lien term facility (the “Second Lien Term Facility”; together with the First Lien Facilities, the “Credit Facilities”).

JPMorgan (in such capacity, the “Arranger”) is pleased to advise you that its is willing to act as the sole bookrunner and sole-lead arranger for the Credit Facilities, and JPMorgan Chase Bank (in such capacity, the “Committing Lender”) is pleased to advise you of its commitment to provide the entire amount of the Credit Facilities.  This Commitment Letter and the Summary of Terms and Conditions attached as Exhibit A hereto (the “Term Sheet”) set forth the principal terms and conditions on and subject to which the Committing Lender is willing to make available the Credit Facilities.




It is agreed that the Arranger will act as the sole bookrunner and sole-lead arranger in respect of the Credit Facilities.  It is further agreed that JPMorgan Chase Bank will act as the sole administrative agent in respect of the First Lien Facilities.  You agree that, as a condition to the commitments and agreements hereunder, no other agents, co-agents or arrangers will be appointed, no other titles will be awarded and no compensation (other than that expressly contemplated by the Term Sheet and the Fee Letter referred to below) will be paid in connection with the Credit Facilities unless you and we shall so agree.

We intend to syndicate the Credit Facilities to a group of lenders (together with the Committing Lender, the “Lenders”) identified by us and subject to your consent (not to be unreasonably withheld); provided, that any assignment of commitments prior to the date of initial funding of the Credit Facilities and the closing of the Transaction (the “Closing Date”) shall not reduce the obligations of the Committing Lender to fund the Credit Facilities pursuant to its commitment hereunder if any assignee fails to fulfill its obligations under any such assignment.  We intend to commence syndication efforts promptly, and you agree actively to assist us in completing a syndication satisfactory to us.  Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit from the existing banking relationships of the Sponsor and the Target, (b) direct contact between senior management and advisors of the Sponsor and the proposed Lenders and your using commercially reasonable efforts to facilitate direct contact between senior management and advisors of the Target and the proposed Lenders, (c) as set forth in the next paragraph, assistance in the preparation of materials to be used in connection with the syndication (collectively, with the Term Sheet, the “Information Materials”), (d) your using commercially reasonable efforts to obtain, prior to the launch of the syndications, ratings for each of the Credit Facilities from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”), and (e) the hosting, with us and senior management of the Sponsor and the Target, of one or more meetings of prospective Lenders.  You also agree to provide us with reasonable prior notice of the syndication of any credit facility in connection with any other investment of Holdings, the Borrower or the Target or its subsidiaries and, upon our request, coordinate the syndication of such credit facility with the syndication of the Credit Facilities.  It is understood that the Commitment Parties’ commitments and agreements hereunder are not subject to syndication of the Credit Facilities.

You will assist us in preparing Information Materials, including Confidential Information Memoranda, for distribution to prospective Lenders.  If requested, you also will assist us in preparing an additional version of the Information Materials (the “Public-Side Version”) to be used by prospective Lenders’ public-side employees and representatives (“Public-Siders”) who do not wish to receive material non-public information (within the meaning of United States federal securities laws) with respect to you, the Borrower, the Target, their respective affiliates and any of their respective securities (“MNPI”) and who may be engaged in investment and other market related activities with respect to any such entity’s securities or loans.  Before distribution of any Information Materials, you agree to execute and deliver to us (i) a letter in which you authorize distribution of the Information Materials to a prospective Lender’s employees willing to receive MNPI (“Private-Siders”) and (ii) a separate letter in which you authorize distribution of the Public-Side Version to Public-Siders and represent that no MNPI is contained therein.

You agree that the following documents may be distributed to both Private-Siders and Public-Siders, unless you advise the Arranger in writing (including by email) within a reasonable time prior to their intended distribution that such materials should only be distributed to Private-Siders:  (a) administrative materials prepared by the Commitment Parties for prospective Lenders (such as a lender meeting invitation, lender allocation, if any, and funding and closing memoranda), (b) notification of changes in the terms of the Credit Facilities and (c) other materials intended for prospective Lenders after the initial distribution of Information Materials.  If you advise us that any of the foregoing should be distributed

2




only to Private-Siders, then Public-Siders will not receive such materials without further discussions with you.

You hereby authorize the Commitment Parties to distribute drafts of definitive documentation with respect to the Credit Facilities to Private-Siders and Public-Siders.

JPMorgan, in its capacity as Arranger, will manage, in consultation with you, all aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocation of the commitments among the Lenders and the amount and distribution of fees among the Lenders.  In its capacity as Arranger, JPMorgan will have no responsibility other than to arrange the syndication as set forth herein and in no event shall be subject to any fiduciary or other implied duties.  Additionally, you  acknowledge and agree that, as Arranger, JPMorgan is not advising you or the Borrower as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.  Each of you and the Borrower shall consult with your and its own advisors concerning such matters and shall be responsible for making your and its own independent investigation and appraisal of the transactions contemplated hereby, and the Arranger shall have no responsibility or liability to you or the Borrower with respect thereto.

To assist us in our syndication efforts, you agree promptly to, and, with respect to the Target, to use commercially reasonable efforts to, provide to us all information with respect to you, the Borrower, the Target and their respective subsidiaries, the Transaction and the other transactions contemplated hereby, including all financial information and projections (the “Projections”), as we may reasonably request in connection with the arrangement and syndication of the Credit Facilities.  You hereby represent and covenant that to your knowledge (a) all information other than the Projections concerning you, the Borrower and the Target (the “Information”) that has been or will be made available to us by you or any of your representatives is or will be, when taken as a whole, when furnished, complete and correct in all material respects and does not or will not, when taken as a whole, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (b) the Projections that have been or will be made available to us by you or any of your representatives have been or will be prepared in good faith based upon assumptions that you believe to be reasonable at the time made in light of the circumstances under which such assumptions were made.  You understand that in arranging and syndicating the Credit Facilities we may use and rely on the Information and Projections without independent verification thereof.

As consideration for the commitments and agreements of the Commitment Parties hereunder, you agree to cause to be paid the nonrefundable fees described in the Fee Letter dated the date hereof and delivered herewith (the “Fee Letter”).

Each Commitment Party’s commitments and agreements hereunder are subject to (a)  since September 30, 2006, there not occurring or becoming known to such Commitment Party any event, change, occurrence or development of a state of facts or circumstances that has had or could reasonably be expected to have a Material Adverse Effect;  for purposes hereof, a “Material Adverse Effect” means any event, change, circumstance, effect or state of facts that is materially adverse to the financial condition, business, prospects, assets, liabilities or results of operations of the Target and its subsidiaries taken as a whole, other than those arising solely as a result of (i) general economic conditions, (ii) conditions generally affecting industries in which the Target or its subsidiaries operates, (iii) the financial markets, (iv) the entering into or the public announcement or disclosure of the Transaction Agreement or the transactions contemplated thereby and the consummation thereof, (v) any natural disaster or any acts

3




of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, (vi) any litigation brought or threatened by stockholders of the Target (whether on behalf of the Target or otherwise) in respect of the announcement of the Transaction Agreement or the consummation of the Merger (as defined in the Transaction Agreement), (vii) any change in Applicable Law (as that term is defined in the Transaction Agreement), (viii) any failure by the Target to meet analysts’ revenue or earning projections or (ix) decline in the price of the Common Stock (as defined in the Transaction Agreement) unless, in the case of (i) through (iii) above, such change could reasonably be expected to have a disproportionate impact on the Target, (b) the closing of the Credit Facilities on or before June 30, 2007, (c) the Arranger having been afforded at least 15 business days following the date of the holding of the meeting of the Lenders and prior to the Closing Date to attempt to syndicate the Credit Facilities, and (d) the other conditions set forth in Annex II hereto; provided that, notwithstanding anything in this Commitment Letter, the Fee Letter, the definitive documentation for the Credit Facilities or any other letter agreement or other undertaking concerning the financing of the Transaction to the contrary, (i) the only representations relating to the Target, its subsidiaries and their businesses the making of which shall be a condition to availability of the Credit Facilities on the Closing Date shall be (A) such of the representations made by the Target in the Transaction Agreement as are material to the interests of the Lenders, but only to the extent that you have the right to terminate your obligations under the Transaction Agreement as a result of a breach of such representations in the Transaction Agreement and (B) the Specified Representations (as defined below) and (ii) the terms of the definitive documentation for the Credit Facilities shall be in a form such that they do not impair availability of the Credit Facilities on the Closing Date if the conditions set forth herein and in the Term Sheet are satisfied (it being understood that, to the extent any Collateral (as defined in Exhibit A hereto) (other than the pledge and perfection of the security interests in the capital stock of subsidiaries held by Holdings, the Borrower and the Guarantors (as defined in Exhibit A) (to the extent required by the Term Sheet) and other assets pursuant to which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code) is not provided on the Closing Date after your use of commercially reasonable efforts to do so, the delivery of such Collateral shall not constitute a condition precedent to the availability of the Credit Facilities on the Closing Date but shall be required to be delivered after the Closing Date pursuant to arrangements and timing to be mutually agreed)).  For purposes hereof, “Specified Representations” means the representations and warranties set forth in the Term Sheets relating to corporate power and authority, the enforceability of the definitive documentation for the Credit Facilities, Federal Reserve margin regulations, the Investment Company Act, solvency, no conflicts, and status of the Credit Facilities as senior debt.  All conditions to the commitments of the Commitment Parties hereunder are set forth in this Commitment Letter and in Annex II hereto.

You agree (a) to indemnify and hold harmless the Commitment Parties, their affiliates and their respective directors, employees, advisors, and agents (each, an “indemnified person”) from and against any and all losses, claims, damages and liabilities to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Credit Facilities, the use of the proceeds thereof, the Transaction or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, and to reimburse each indemnified person upon demand for any reasonable legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they are found by a final judgment of a court to arise from (i) the willful misconduct or gross negligence of such indemnified person or (ii) the breach by such indemnified person of its obligations hereunder, and (b) if the transactions contemplated herein are consummated and the Credit Facilities close and are funded, to reimburse each Commitment Party and its affiliates upon presentation of a summary statement for all reasonable out-of-pocket expenses (including due diligence

4




expenses, syndication expenses, travel expenses, and reasonable fees, charges and disbursements of one counsel) incurred in connection with the Credit Facilities and any related documentation (including this Commitment Letter and the definitive financing documentation).  No indemnified person nor you shall be liable for any damages arising from the use by others of Information or other materials obtained through electronic, telecommunications or other information transmission systems or for any special, indirect, consequential or punitive damages in connection with the Credit Facilities, except to the extent any such damages are found by a final, non-appealable judgment of a court to arise from the gross negligence or willful misconduct of such indemnified person or such indemnified person’s affiliates, directors, employees, advisors or agents.

You acknowledge that each Commitment Party and its affiliates (the term “Commitment Party” as used below in this paragraph being understood to include such affiliates) may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise.  No Commitment Party will use confidential information obtained from you by virtue of the transactions contemplated hereby or its other relationships with you in connection with the performance by such Commitment Party of services for other companies, and no Commitment Party will furnish any such information to other companies.  You also acknowledge that no Commitment Party has any obligation to use in connection with the transactions contemplated hereby, or to furnish to you, confidential information obtained from other companies.  You further acknowledge that JPMorgan is a full service securities firm and JPMorgan may from time to time effect transactions, for its own or its affiliates’ account or the account of customers, and hold positions in loans, securities or options on loans or securities of the Borrower and its affiliates and of other companies that may be the subject of the transactions contemplated by this Commitment Letter.

Each Commitment Party may employ the services of its affiliates that agree to the confidentiality provisions below in providing certain services hereunder and, in connection with the provision of such services, may exchange with such affiliates information concerning you and the other companies that may be the subject of the transactions contemplated by this Commitment Letter, and, to the extent so employed, such affiliates shall be entitled to the benefits afforded such Commitment Party hereunder.

None of this Commitment Letter or the Fee Letter shall be assignable by you without the prior written consent of each Commitment Party (and any purported assignment without such consent shall be null and void).  This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the indemnified persons.  This Commitment Letter may not be amended or waived except by an instrument in writing signed by you and each Commitment Party.  This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement.  Delivery of an executed signature page of this Commitment Letter by facsimile transmission or other electronic transmission (i.e. a “pdf”) shall be effective as delivery of a manually executed counterpart hereof.  This Commitment Letter, the Fee Letter and the Sponsor Letter of even date herewith are the only agreements that have been entered into among us with respect to the Credit Facilities and set forth the entire understanding of the parties with respect thereto.  This Commitment Letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of their terms or substance shall be disclosed, directly or indirectly, to any other person (including, without limitation, other potential

5




providers or arrangers of financing) except (a) to the Sponsor and its and your officers, employees, agents, affiliates, directors and advisors and, on a confidential basis, those of the Target, who are directly involved in the consideration of this matter (except that the Fee Letter may not be disclosed to the Target without our consent), and Holdings (or one of its affiliates) may file this Commitment Letter (but not the Term Sheet, other than Annex II thereto) with the SEC or (b) as may be compelled in a judicial or administrative proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof), provided, that the foregoing restrictions shall cease to apply (except in respect of the Fee Letter and their terms and substance) after this Commitment Letter has been accepted by you.

Each of the Commitment Parties agrees not to disclose any information provided to it by you in connection with the transactions contemplated hereby (other than to officers, employees, agents, affiliates, advisors or representatives of the Commitment Parties or potential or actual syndicate members, each of which will be subject to confidentiality arrangements) except such information that (a) is compelled in a judicial or administrative proceeding or as otherwise required by law (in which case the relevant Commitment Party agrees to inform you promptly thereof), (b) has been publicly disclosed other than in breach of this letter, (c) is available to the Commitment Parties on a non-confidential basis from a source other than you, (d) was available to Commitment Parties on a non-confidential basis prior to its disclosure by you, or (e) with your prior written consent.

The indemnification and confidentiality provisions contained herein and in the Fee Letter and any other provision herein or therein which by its terms expressly survives the termination of this Commitment Letter shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the commitments hereunder; provided, that your obligations under this Commitment Letter (other than (i) provisions relating to titles awarded in connection with the Credit Facilities and assistance to be provided by you in connection with the syndication thereof and (ii) the confidentiality provisions set forth above) shall automatically terminate and be superseded by the provisions of the definitive documentation relating to the Credit Facilities upon the initial funding thereunder, and you shall automatically be released from all liability in connection therewith at such time.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in City of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Commitment Letter or the transactions contemplated hereby, or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court, or to the extent permitted by law, in such Federal court, (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Commitment Letter or the transactions contemplated hereby in any New York State court or in any such Federal court and (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action nor proceeding in any such court.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER.

6




The Arranger and the Committing Lender hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), the Arranger and each Lender is required to obtain, verify and record information that identifies the Borrower, which information includes the name, address, tax identification number and other information regarding the Borrower that will allow the Arranger or such Lender to identify the Borrower in accordance with the PATRIOT Act.  This notice is given in accordance with the requirements of the PATRIOT Act and is effective as to the Arranger and each Lender.

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by returning to us executed counterparts hereof, of the Fee Letter not later than 5:00 p.m., New York City time, on January 31, 2007.  This offer will automatically expire at such time if we have not received such executed counterparts in accordance with the preceding sentence.

7




We are pleased to have been given the opportunity to assist you in connection with this important financing.

 

Very truly yours,

 

 

 

 

 

 

J.P. MORGAN SECURITIES INC.

 

 

 

 

 

 

By:

/s/ Robert Anastasio

 

 

Name:

Robert Anastasio

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

 

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

By:

/s/ Robert Anastasio

 

 

Name:

Robert Anastasio

 

 

Title:

Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accepted and agreed to as of

 

 

the date first above written:

 

 

 

 

 

DUNLUCE ACQUISITION CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

John J. McDonnell, Jr.

 

 

Title:

Chief Executive Office

 

 

 

8




Annex II

The availability of each of the Credit Facilities shall be subject to the satisfaction of the following conditions:

(a)  Each Loan Party shall have executed and delivered definitive Credit Documentation consistent with the terms hereof and otherwise reasonably acceptable to the Administrative Agents and the Borrower and the Lenders shall have executed and delivered a Intercreditor Agreement reasonably satisfactory to the Administrative Agents.

(b)  The Borrower shall have received as common equity an amount equal to 25% of its total capitalization, which amount shall have been received by Holdings from its issuance of non-redeemable equity to the Sponsor, certain former members of the management of the Target, including Jack McDonnell, certain current members of the management of the Target and its Subsidiaries and other persons reasonably acceptable to the Administrative Agents (“Investors”) and/or by the issuance of debt securities of Holdings to the Investors, which will be (i) subordinated on terms satisfactory to the Administrative Agents, mandatorily convertible into common equity upon the maturity date of any credit facility or acceleration of the Loans, (ii) not be payable without the consent of the Lenders and (iii) otherwise on terms satisfactory to the Administrative Agents (the “Holdings Loans”).

(c)  The Transaction shall have been consummated in accordance with applicable law in all material respects and on reasonably satisfactory (to the Administrative Agents) terms.  The Transaction Agreement shall be in the form of the mark-up of the January 10, 2007 draft submitted on January 22, 2007 and provided to the Commitment Parties and all related material documentation (including all disclosure schedules, which were not included in the draft submitted on January 22, 2007) shall be reasonably satisfactory (to the Administrative Agents), and no provision of such documentation shall have been waived, amended, supplemented (including by the addition of schedules to the Transaction Agreement) or otherwise modified in any material respect in a manner materially adverse to the Lenders without approval of the Administrative Agents.  Substantially all of the existing indebtedness of the Borrower and its subsidiaries shall have been repaid on reasonably satisfactory terms, other than indebtedness in an amount to be agreed.  The capitalization and structure of each Loan Party after the Transaction shall be reasonably satisfactory in all material respects.

(d)  The Lenders, the Administrative Agents and the Arrangers shall have received all fees required to be paid, and all expenses required to be paid for which invoices have been presented, on or before the Closing Date.

(e)  All governmental approvals necessary in connection with the Transaction, the financing thereof and the continuing operations of the Borrower and its subsidiaries (including shareholder approvals, if any) shall have been obtained and shall be in full force and effect, and all applicable waiting periods shall have expired, except for those approvals the failure of which to obtain could not reasonably be expected to have a material adverse effect on the Borrower, the Transaction, the financing thereof or the continuing operations of the Borrower.

(f)  The Lenders shall have received (i) audited financial statements of the Target for each of the 2004, 2005 and, to the extent available, the 2006 fiscal years, (ii) unaudited interim consolidated financial statements of the Target for each quarterly period ended after the

 

Term Sheet - Conditions




latest fiscal year referred to in clause (i) above and at least 45 days prior to the Closing Date or otherwise available and (iii) as soon as available to management, monthly financial data generated by the Target’s internal accounting systems for use by senior and financial management (the “Monthly Reports”) for each month ended after the latest fiscal quarter referred to in clause (ii) above and ended at least 30 days prior to the Closing Date or otherwise available.

(g)  The Lenders shall have received a pro forma consolidated balance sheet of the Borrower and its subsidiaries as at the date of the most recent quarterly consolidated balance sheet delivered pursuant to the preceding paragraph and a pro forma statement of operations for the most recent fiscal year and interim quarter and for the four quarter period ending on the last day of such interim quarter, in each case adjusted to give effect to the consummation of the Transaction and the financings contemplated hereby as if such transactions, with respect to the pro forma balance sheet, had occurred on such date or with respect to the pro forma statements of operations, had occurred on the first day of the most recently completed fiscal year, prepared in a manner reasonably acceptable to the Administrative Agents.

(h)  The Administrative Agents shall have received projections through 2014.

(i)  The Administrative Agents shall have received the results of a recent lien search in each relevant jurisdiction with respect to the Target and its subsidiaries, and such search shall reveal no liens on any of the assets of the Target and its subsidiaries except for liens permitted by the Credit Documentation or liens to be discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory to the Administrative Agents.

(j)  Subject to the proviso to paragraph 12 of the Commitment Letter, all documents and instruments required to perfect the first or second priority security interest, as applicable, in the collateral under the Credit Facilities (including delivery of stock certificates and undated stock powers executed in blank) shall have been executed and be in proper form for filing, and, in connection with the material fee owned real estate collateral, the Administrative Agents shall have received reasonably satisfactory title insurance policies, surveys and other customary documentation to the extent reasonably requested by it.

(k)  The Administrative Agents shall have received a reasonably satisfactory solvency certificate from the Borrower and signed by the chief financial officer that shall document the solvency of the Borrower and its subsidiaries after giving effect to the Transaction and the other transactions contemplated hereby.

(l)  The Administrative Agents shall have received such legal opinions (including opinions (i) from counsel to the Borrower and its subsidiaries, and (ii) from such  local counsel as may be required by the Administrative Agents), documents and other instruments as are customary for transactions of this type or as they may reasonably request.

(m)  The Arrangers shall have received, prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act and requested by the Arranger.

(n)  Subject to the proviso to paragraph 12 of the Commitment Letter, there being no default or event of default in existence under the definitive credit documentation at the time of, or after giving effect to, the making of the initial extension of credit thereunder.

 

Term Sheet - Conditions

2



EX-7.5 6 a07-2476_1ex7d5.htm EX-7.5

Exhibit 7.05

January 22, 2007

Dunluce Acquisition Corporation
7984 Georgetown Pike
McClean, Virginia 22102

Attention:  C.J. Brucato and John J. McDonnell, Jr.

Re:                             $315,000,000 First Lien Credit Facilities for ___________________ (the “Acquisition Borrower”), Transaction Network Services, Inc. (the “US Borrower”) and [Transaction Network Services (UK)] (the “UK Borrower”; the UK Borrower, together with the Acquisition Borrower and the US Borrower, the “Borrowers”) and $120,000,000 Second Lien Facility for the US Borrower

Ladies and Gentlemen:

Dunluce Acquisition Corporation (“You” or “Holdings”) have informed SunTrust Robinson Humphrey, a division of SunTrust Capital Markets, Inc. (the “Arranger”) and SunTrust Bank (SunTrust Bank, together with the Arranger, “SunTrust”) that you and the Acquisition Borrower, a newly formed, wholly owned subsidiary of Holdings, intend to enter into an acquisition agreement (the “Transaction Agreement”) pursuant to which Holdings will acquire (the “Transaction”) TNS, Inc., a Delaware corporation (the “Target”).  In the event that as anticipated the Acquisition Borrower merges with the Target, the Target shall assume all rights and obligations of the Acquisition Borrower hereunder and under the Fee Letter referred to below.   The proceeds of the Credit Facilities shall be used (i) together with the proceeds of an equity capital contribution from [ABRY Partners LLC] (the “Sponsor”; the Sponsor, together with Dunluce Acquisition Corporation, the “Sponsor Entities”) and rollover equity from certain former members of management of the Target, to purchase all of the outstanding shares of capital stock of the Target, (ii) to refinance certain existing indebtedness of the Target and its subsidiaries, (iii) to pay certain costs and expenses relating to such Transaction and (iv) for permitted acquisitions, capital expenditures, working capital and other general corporate purposes.

SunTrust Bank is pleased to commit to provide (a) first lien credit facilities to the Borrowers comprised of a $25,000,000 revolving credit facility in favor of the US Borrower (the “Revolver”) and a $290,000,000 term loan B facility (such term loan B facility, collectively with the Revolver, the “First Lien Facility”) described in the summary of terms and conditions attached as Annex I (the “First Lien Term Sheet”) and (b) a $120,000,000 second lien term loan facility to the US Borrower (the “Second Lien Facility”) described in the summary of terms and conditions attached as Annex II (the “Second Lien Term Sheet” and, collectively with the First Lien Term Sheet, the “Term Sheets”). The First Lien Facility and the Second Lien Facility are collectively referred to as the “Credit Facilities.”  The Credit Facilities shall be subject to the terms and conditions set forth in this letter and in the Term Sheets (collectively, this “Commitment Letter”).

You hereby appoint SunTrust Bank to act, and SunTrust Bank agrees to act, as sole agent for the Credit Facilities, subject to the terms and conditions of this Commitment Letter.  You each also appoint the Arranger to act, and the Arranger agrees to act, as lead arranger and book manager for the Credit Facilities, subject to the terms and conditions of this Commitment Letter. 




In consideration for the undertakings and obligations of SunTrust under this Commitment Letter, you agree that SunTrust Bank will act as the sole and exclusive agent for the Credit Facilities, that the Arranger will act as the sole and exclusive arranger and book manager for the Credit Facilities and that no other agents, co-agents or arrangers will be appointed, or other titles conferred, without the prior written consent of the Arranger and you.

A.            Terms and Conditions of the Credit Facilities

The principal terms and conditions of the Credit Facilities shall include those set forth in the Term Sheets and otherwise shall be mutually satisfactory to the Arranger and you.

B.           Syndication

SunTrust Bank reserves the right, before or after the execution of the Loan Documents (as defined below), to syndicate all or a portion of its commitments to one or more financial institutions that will become parties to the Loans Documents pursuant to a syndication to be managed by SunTrust.  You understand that SunTrust will commence such syndication prior to the Closing Date; provided, that any assignment of commitments prior to the Closing Date shall neither reduce the obligations of SunTrust Bank to fund the Credit Facilities pursuant to its commitments hereunder if any assignee fails to fulfill its obligations under any such assignment nor serve to grant or delegate to any other Lender any discretion reserved to SunTrust Bank with respect to the conditions precedent to funding on the Closing Date (it being agreed and understood that the commercial relationship of Holdings, the Borrowers and the Sponsor shall be limited to SunTrust Bank (and not any assignee).  It is understood that SunTrust Bank’s commitments and agreements hereunder are not subject to syndication of the Credit Facilities. As a material inducement to SunTrust Bank’s issuing its commitment hereunder, you hereby agree  to cooperate, and to use commercially reasonable efforts to cause the Borrowers to cooperate, in such syndication process and to take all action as SunTrust may reasonably request to assist the Arranger in forming a syndicate of Lenders.  Your assistance and the Borrowers’ assistance shall include (but not be limited to) using commercially reasonable efforts to (i) making senior management and representatives of the Borrowers and the Sponsor available to participate in meetings with, and to provide information to, potential lenders under the Credit Facilities and ratings agencies, at such reasonable times and places as the Arranger may reasonably request; (ii) using existing lending relationships of the Borrowers and the Sponsor to assist in the syndication process; and (iii) providing to the Arranger all information reasonably deemed necessary by the Arranger to complete the syndication, including an information memorandum with respect to the Credit Facilities, the Borrowers and the Sponsor and pro forma and projected financial statements with respect to the Borrowers and the transactions contemplated by this Commitment Letter (the “Projections”).

Promptly after acceptance by you of the terms of this Commitment Letter and the Fee Letter (as defined below), the Arranger intends to commence syndication of the Credit Facilities to a syndicate of lenders and other investors (collectively, including SunTrust Bank, the “Lenders”).   The Arranger will manage all aspects of the syndication of the Credit Facilities in consultation with SunTrust Bank and you, including the timing of all offers to potential Lenders, the allocation of commitments, and the determination of compensation and titles (such as co-agent, managing agent, etc.) given, if any, to such Lenders.  You agree that no Lender will receive any compensation for its commitment to, or participation in, the Credit Facilities except as expressly set forth in the Term Sheets or the Fee Letter, or as otherwise agreed to and offered

2




by the Arranger; provided, that no such compensation to be paid by you will be offered to any other Lender without your consent.

C.            Fees

The fees payable to SunTrust Bank and the Arranger in connection with their obligations hereunder are set forth in that certain letter agreement dated as of the date hereof, executed by SunTrust Bank and the Arranger and acknowledged and agreed to by the Sponsor Entities (the “Fee Letter”), relating to this Commitment Letter.  The obligations of SunTrust pursuant to this Commitment Letter are subject to the execution and delivery of the Fee Letter by the Sponsor Entities, which Fee Letter constitutes an integral part of this Commitment Letter.

D.            Conditions Precedent

The undertakings and obligations of SunTrust under this Commitment Letter are subject to: (i) the preparation, execution and delivery of loan and security documentation (the “Loan Documents”), including credit agreements incorporating the terms and conditions outlined in this Commitment Letter and otherwise mutually acceptable to the Arranger and you; (ii) since December 31, 2005, and other than matters specifically disclosed in the Target’s public filings with the Securities and Exchange Commission through the date hereof, there shall not have occurred or become known to SunTrust any event, circumstance, development, change or effect that has had or would reasonably be expect to have a Material Adverse Effect(as defined below); (iii) your compliance in all material respects with the terms of this Commitment Letter; (iv) the payment in full of all fees, expenses and other amounts payable hereunder and under the Fee Letter; (v) a closing of the Credit Facilities on a date (the “Closing Date”) on or prior to June 30, 2007; and (vi) the satisfaction of the other conditions set forth in Annex III hereto; provided that, notwithstanding anything in this Commitment Letter, the Fee Letter, the definitive documentation for the Credit Facilities or any other letter agreement or other undertaking concerning the financing of the Transaction to the contrary, (i) the only representations relating to the Target, its subsidiaries and their businesses the making of which shall be a condition to availability of the Credit Facilities on the Closing Date shall be (A) such of the representations made by the Target in the Transaction Agreement, but only to the extent that you have the right to terminate your obligations under the Transaction Agreement as a result of a breach of such representations in the Transaction Agreement and (B) the Specified Representations (as defined below) and (ii) the terms of the definitive documentation for the Credit Facilities shall be in a form such that they do not impair availability of the Credit Facilities on the Closing Date if the conditions set forth herein (including the Annex III hereto) and in the Term Sheets are satisfied (it being understood that, to the extent any collateral (other than the pledge and perfection of the security interests in the capital stock of subsidiaries held by Holdings, the US Borrower and the Guarantors (as defined in Annex I) and other assets pursuant to which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code) is not provided on the Closing Date after your use of commercially reasonable efforts to do so, the delivery of such collateral shall not constitute a condition precedent to the availability of the Credit Facilities on the Closing Date but shall be required to be delivered after the Closing Date pursuant to arrangements and timing to be mutually agreed)).  For purposes hereof, (i) “Specified Representations” means the representations and warranties set forth herein and in the Term Sheets relating to corporate existence, power and authority, the enforceability of the definitive documentation for the Credit Facilities, Federal Reserve margin regulations, the Investment Company Act, solvency, no conflicts, and status of the Credit Facilities as senior debt and (ii) “Material Adverse Effect

3




means any event, change, circumstance, effect or state of facts that is materially adverse to the financial condition, business, prospects, assets, liabilities or results of operations of the Target and its subsidiaries taken as a whole, other than those arising solely as a result of (i) general economic conditions, (ii) conditions generally affecting industries in which the Target or its subsidiaries operates, (iii) the financial markets, (iv) the entering into or the public announcement or disclosure of the Transaction Agreement or the transactions contemplated thereby and the consummation thereof, (v) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, (vi) any litigation brought or threatened by stockholders of the Target (whether on behalf of the Target or otherwise) in respect of the announcement of the Transaction Agreement or the consummation of the merger contemplated thereby, (vii) any change in Applicable Law (as that term is defined in the Transaction Agreement), (viii) any failure by the Target to meet analysts’ revenue or earning projections or (ix) decline in the price of the Common Stock of the Target unless, in the case of (i) through (iii) above, such change could reasonably be expected to have a disproportionate impact on the Target.  All conditions to the commitments of SunTrust Bank hereunder are set forth in this Commitment Letter and in Annex III hereto.

E.             Clear Market.

To ensure an orderly and effective syndication of the Credit Facilities, you agree (individually and on behalf of the Borrowers) that until the earlier of (i) termination of this Commitment Letter and (ii) successful syndication, as defined in the Fee Letter, you will not, and will not cause or permit the Borrowers or their respective subsidiaries to, arrange, sell, syndicate or issue, attempt to arrange, sell, syndicate or issue, announce or authorize the announcement of the arrangement, sale, syndication or issuance of, or engage in discussions concerning the arrangement, sale, syndication or issuance of, any competing debt facility or debt security (including any renewals thereof) except with the prior written consent of the Arranger.

F.             Representations/Information

(a)           You represent and warrant to SunTrust that to your knowledge (i) all information that has been or will be made available to SunTrust by the Sponsor Entities, the Target or subsidiaries of the Target or any representatives of the foregoing in connection with the transactions contemplated by this Commitment Letter (other than the Projections) (the “Information”) is or will be, when furnished, when taken as a whole, complete and correct in all material respects and does not or will not, when furnished, when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements were or will be made, (ii) the Projections have been or will be prepared in good faith based upon reasonable assumptions and (iii) this Commitment Letter has been duly authorized, executed and delivered by you.  You agree to supplement, or cause to be supplemented, the Information and the Projections from time to time so that the representation and warranty contained in this clause (a) remains correct.  In issuing the commitments and undertakings hereunder and in arranging and syndicating the Credit Facilities, SunTrust Bank and the Arranger are relying on the accuracy of the Information and the Projections without independent verification thereof.

4




(b)           Upon the request of SunTrust you will (i) provide, or use commercially reasonable efforts to cause the Target and its subsidiaries to provide, all information reasonably requested to assist the Arranger and each Lender in their evaluation of the transactions contemplated by this Commitment Letter, (ii) provide to the Arranger, or use commercially reasonable efforts to cause the Target and its subsidiaries to provide to the Arranger,  Information, Projections, and marketing materials and presentations (collectively, the “Informational Materials”) and assist in the preparation of materials to be used in connection with marketing and presentation of the Credit Facilities, (iii) designate Informational Materials (A) that are either available to the public or not material with respect to the Target, the other Borrowers and their subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (B) that are not Public Information as “Private Information”, and (iv) you shall have the sole responsibility to review the Informational Material, which the Arranger shall make available to you, and to confirm or designate to the Arranger and any Lender, Informational Material as Public Information or Private Information.

(c)           SunTrust will make available the Informational Materials, marketing materials and presentations to the potential Lenders by posting on Intralinks or by other comparable electronic means (collectively, the “Electronic Means”).  Potential Lenders, who identify themselves as “public lenders” for the purpose of compliance with securities laws, may choose not to receive Private Information and potential Lenders who determine that they are permitted for purpose of compliance with securities laws to receive Private Information, and who have identified themselves as such, may access Private Information.

(d)           You authorize the Arranger and its affiliates, including SunTrust Bank, to share with each other, on a confidential basis, and to use, credit and other confidential or non-public information regarding the Target and its subsidiaries to the extent permitted by applicable laws and regulations and for the sole purpose of performing their obligations under this Commitment Letter and the Credit Facilities.

G.            Indemnities, Expenses, Etc.

1.             Indemnification.  Each of the Sponsor Entities jointly and severally agrees to indemnify and hold harmless the Arranger, SunTrust Bank, each other Lender, their respective affiliates and their respective directors, officers, employees, agents, representatives, legal counsel, and consultants (each, an “Indemnified Person”) against, and to reimburse each Indemnified Person upon its demand for, any losses, claims, damages, liabilities or other expenses (“Losses”) incurred by such Indemnified Person or asserted against such Indemnified Person by you, the Sponsor, any third party or by the Target or any of its affiliates, insofar as such Losses arise out of or in any way relate to or result from this Commitment Letter, the Fee Letter, the Credit Facilities and other transactions contemplated by this Commitment Letter or the use or proposed use of the proceeds of the Credit Facilities, including, without limitation, (i) all Losses arising out of any legal proceeding relating to any of the foregoing (whether or not such Indemnified Person is a party thereto) and (ii) Losses that arise out of untrue statements made or statements omitted to be made by you, the Target or any of its subsidiaries, or with your consent or the consent of the Target or its subsidiaries in conformity with your actions or omissions or those of the Target or its subsidiaries), in each case whether or not such Indemnified Person is a party to any such proceeding and whether or not you, the Sponsor, the Target or any of its affiliates is bringing the claim against an Indemnified Party; provided that you shall not be liable pursuant to this indemnity for any Losses (x) to the extent that a court having competent jurisdiction shall have determined by a final judgment (not subject to further appeal) that such Losses resulted from the

5




gross negligence or willful misconduct of such Indemnified Person or (y) resulting from a claim brought by you against an Indemnified Person for breach in bad faith of such Indemnified Person’s obligations hereunder.  None of the Indemnified Persons shall be liable to you, the Sponsor, your or their affiliates or any other person for any indirect, consequential or punitive damages that may be alleged as a result of this Commitment Letter or any element of the transactions contemplated hereby or in respect of transmission of Informational Materials by Electronic Means.

2.             CONSEQUENTIAL DAMAGES.    NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO YOU OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF THIS COMMITMENT LETTER, THE FEE LETTER, THE CREDIT FACILITIES OR ANY OF THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED BY THIS COMMITMENT LETTER.

3.             Expenses.  In further consideration of the commitments and undertakings of SunTrust hereunder, and recognizing that in connection herewith SunTrust will be incurring certain costs and expenses (including, without limitation, fees and disbursements of counsel, and costs and expenses for due diligence, syndication, transportation, duplication, mailings, messenger services, dedicated web page on the internet for the transactions contemplated by this Commitment Letter, appraisal, audit and insurance), each of the Sponsor Entities hereby jointly and severally agrees to pay, or to reimburse SunTrust on demand for, all such reasonable costs and expenses (whether incurred before or after the date hereof), regardless of whether any of the transactions contemplated hereby are consummated.  Each of the Sponsor Entities also jointly and severally agrees to pay all costs and expenses of SunTrust (including, without limitation, fees and disbursements of counsel) incurred in connection with the enforcement of any of their rights and remedies hereunder.

H.            Special Disclosure

The Arranger is a wholly owned subsidiary of SunTrust Banks, Inc. (“STBI”) and an affiliate of SunTrust Bank.  The Arranger is a broker/dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers, Inc. and the Securities Investor Protection Corporation (“SIPC”).  Although it is a subsidiary of STBI, the Arranger is not a bank and is separate from SunTrust Bank or any banking affiliate of SunTrust Bank.  The Arranger is solely responsible for its contractual obligations and commitments.  Securities and financial instruments sold, offered, or recommended by the Arranger are not bank deposits, are not insured by the Federal Deposit Insurance Corporation, SIPC or any governmental agency and are not obligations of or endorsed or guaranteed in any way by any bank affiliated with the Arranger or any other bank unless otherwise stated.

I.              Miscellaneous

1.             Effectiveness.  This Commitment Letter shall constitute a binding obligation of SunTrust for all purposes immediately upon the acceptance hereof by the Sponsor Entities in the manner specified below. Notwithstanding any other provision of this Commitment Letter, the commitments and undertakings of SunTrust set forth herein shall not be or become effective for any purpose unless and until this Commitment Letter and the Fee Letter shall have been accepted by the Sponsor Entities in the manner specified below.

6




2.             Acceptance by you.  If you agree with the foregoing, each of you and the Sponsor shall sign and return the enclosed copy of this Commitment Letter and Fee Letter by fax and overnight courier service to

 

SunTrust Capital Markets, Inc.

 

 

303 Peachtree Street, 24th Floor

 

 

Atlanta, GA 30308

 

 

Attention:

 

Todd Koetje

 

 

Fax:

 

(404) 827-6514

 

3.             Termination.  Unless this Commitment Letter and the Fee Letter have been executed by the Sponsor Entities and delivered to SunTrust prior to 5:00 p.m., Atlanta, Georgia time, on February 2, 2007, the commitments and obligations of SunTrust under this Commitment Letter shall terminate on such date.  If this Commitment Letter and the Fee Letter executed and delivered to the Arranger in accordance with the preceding sentence, this Commitment Letter, and the commitments and obligations of SunTrust under this Commitment Letter, shall terminate on June 30, 2007, unless definitive credit agreements, note purchase agreements and other legal documents related to the Credit Facilities have been executed and delivered on or prior to such date.    Furthermore, by acceptance of this Commitment Letter, any other commitments outstanding with respect to the Credit Facilities by SunTrust will be terminated.

4.             No Third-Party Beneficiaries.  This Commitment Letter is solely for your benefit, the benefit of SunTrust and the Indemnified Persons; no provision hereof shall be deemed to confer rights on any other person or entity.

5.             No Assignment; Amendment.  This Commitment Letter and the Fee Letter may not be assigned by either of the Sponsor Entities to any other person or entity, but all of the obligations of the Sponsor Entities hereunder and under the Fee Letter shall be binding upon the successors and assigns of the Sponsor Entities.  This Commitment Letter and the Fee Letter may not be amended or modified except in writing executed by each of the parties hereto.

6.             Use of Name and Information.  You agree that any references to SunTrust or any of its affiliates made in connection with the Credit Facilities are subject to the prior approval of SunTrust, which approval shall not be unreasonably withheld.  SunTrust shall be permitted to use information related to the syndication and arrangement of the Credit Facilities in connection with marketing, press releases or other transactional announcements or updates provided to investor or trade publications; including, but not limited to, the placement of “tombstone” advertisements in publications of its choice at its own expense, subject to your review and consent (such consent not to be unreasonably withheld).

7.             GOVERNING LAWTHIS COMMITMENT LETTER AND THE FEE LETTER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

8.             WAIVER OF TRIAL BY JURYTO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF YOU AND SUNTRUST WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS COMMITMENT LETTER, THE FEE LETTER OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY.  Each of the Sponsor Entities irrevocably and unconditionally submits to the exclusive jurisdiction of any state court in the State of New York or the United States

7




District Court for the Southern District of New York for the purpose of any suit, action or proceeding arising out of or relating to this Commitment Letter or the Fee Letter.  Service of any process, summons, notice or document may be made by registered mail addressed in accordance with paragraph 11. immediately below.  Each of the Sponsor Entities and SunTrust irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction the Sponsor Entities or SunTrust are or may be subject, by suit upon judgment.

9.             Survival.  The obligations and agreements of the Sponsor Entities, as applicable, contained in Section G and paragraphs 4, 6, 7, 8 and 10 of this Section I shall survive the expiration and termination of this Commitment Letter.  In addition, the obligations and agreements in the Fee Letter shall survive termination of this Commitment Letter and the Closing Date.

10.           Confidentiality.  The Sponsor Entities will not disclose or permit disclosure of this Commitment Letter, the Fee Letter or the contents of the foregoing to any person or entity (including, without limitation, any Lender other than SunTrust), either directly or indirectly, orally or in writing, except (i) to the Sponsor Entities’ affiliates, officers, directors, employees, agents, accountants, legal counsel and advisors who are directly involved in the transactions contemplated hereby, in each case on a confidential basis, (ii) you or Holdings may file this Commitment Letter with the SEC or (iii) as required by law (in which case you agree to inform SunTrust promptly thereof), provided, that the foregoing restrictions shall cease to apply (except in respect of the Fee Letter and their terms and substance) after this Commitment Letter has been accepted by you.  SunTrust hereby notifies you that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”), it and its affiliates are required to obtain, verify and record information that identifies you, which information includes the name, address, tax identification number and other information regarding you that will allow SunTrust to identify you in accordance with the Patriot Act.  This notice is given in accordance with the requirements of the Patriot Act and is effective for SunTrust and its affiliates.

The Arranger and SunTrust Bank each agree not to disclose any information provided to it by you in connection with the transactions contemplated hereby (other than to their officers, employees, accountants, directors, legal counsel, agents, affiliates, advisors or representatives or potential or actual syndicate members, on a confidential basis) except such information that (a) is compelled in a judicial or administrative proceeding or as otherwise required by law (in which case the relevant party agrees to inform you promptly thereof), (b) has been publicly disclosed other than in breach of this letter, (c) is available to the Arranger or SunTrust Bank on a non-confidential basis from a source other than you, (d) was available to SunTrust Bank or the Arranger on a non-confidential basis prior to its disclosure by you, or (e) with your prior written consent.

11.           Notices.  Any notice given pursuant to any of the provisions of this Commitment Letter shall be in writing and shall be mailed or delivered (i) if to you or the Sponsor, at the addresses set forth on page one of this Commitment Letter to the attention of C.J. Brucato and (ii)

8




if to SunTrust Bank or STRH, at the offices of STRH, of 303 Peachtree Street, 24th Floor, Atlanta, GA  30308, Attention: Todd Koetje.

12.           Severability of Provisions.  Any provision of this Commitment Letter which is prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

13.           Counterparts.  This Commitment Letter and the Fee Letter may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement.  Delivery of a counterpart hereof via facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

14.           Entire Agreement.  Upon acceptance by the Companies as provided herein, this Commitment Letter and the Fee Letter referenced herein shall supersede all understandings and agreements between the parties to this Commitment Letter in respect of the transactions contemplated hereby.

15.           US Dollars.  As used herein and in the Fee Letter, “$” shall mean the legal currency of the United States of America.

16.           Conflicts; No Agency Relationship.  The Sponsor Entities hereby acknowledge (i) that the Arranger, SunTrust Bank and their respective affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other persons in respect of which the Sponsor Entities or the Target may have conflicting interests and (ii) that SunTrust has no obligation to use in connection with the transactions contemplated herein, or to furnish to you, confidential information obtained by SunTrust from other persons.  The Sponsor Entities further acknowledge that (a) SunTrust is not acting as an agent, partner, joint venturer or fiduciary for you or the Target in connection with the Credit Facilities and both you and the Target have the capacity to evaluate and negotiate the terms of the Credit Facilities on an arms’ length basis and (b) SunTrust may act as a principal in various aspects of the Credit Facilities.  SunTrust will not use confidential information obtained from you by virtue of the transactions contemplated hereby or its other relationships with you in connection with the performance by it of services for other companies.

[Signatures continued on following page]

9




We look forward to working with you on this important transaction.

 

Very truly yours,

 

 

 

 

 

 

 

 

 

 

 

 

SUNTRUST BANK

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Timothy M. O’Leary

 

 

Name:

 

Timothy M. O’Leary

 

 

Title:

 

Director

 

 

 

 

 

 

 

 

 

 

 

 

SUNTRUST CAPITAL MARKETS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Todd M. Koetje

 

 

Name:

 

Todd M. Koetje

 

 

Title:

 

Director

ACCEPTED AND AGREED

 

 

 

 

this ____ day of __________, 2007:

 

 

 

 

 

 

 

 

 

DUNLUCE ACQUISITION CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

10




 

 

ANNEX III
CLOSING CONDITIONS

[Capitalized terms used in this Annex but not defined herein shall have the meanings provided in the Commitment Letter to which this Annex is attached]

 

(1)

 

Delivery of duly executed payoff letters, in form and substance reasonably satisfactory to Agent, executed by each lender holding indebtedness to be refinanced at closing, together with all releases, terminations or other documents reasonably required by Agent to evidence the payoff of such indebtedness.

 

 

 

(2)

 

Delivery of certificate or articles of incorporation, material good standing certificates and certified copies of other organizational documents, including bylaws, necessary authorizing resolutions, and incumbency certificates for the Borrowers and all guarantors.

 

 

 

(3)

 

Delivery of customary favorable opinion of counsel for the Borrowers (including an opinion from UK counsel with respect to the UK Borrower) and all guarantors, including local counsels where reasonably requested by the Agent.

 

 

 

(4)

 

Delivery of a duly executed customary closing certificate, notice of initial borrowing and funds disbursement instructions.

 

 

 

(5)

 

Delivery of material governmental approvals, authorizations, registrations, or filings required to be made or obtained by the Borrowers and all guarantors in connection with the Credit Facilities and each transaction being financed with the proceeds of the Credit Facilities, and such governmental approvals, authorizations, registrations, filings and orders shall be in full force and effect and all applicable waiting periods shall have expired.

 

 

 

(6)

 

Receipt by the Agent of (i) the consolidated and consolidating financial statements of the Borrowers and their subsidiaries for the fiscal year ended 2006, including balance sheets, income and cash flow statements audited, to the extent audited statements are available, by independent public accountants of recognized national standing and prepared in conformity with GAAP and (ii) a pro forma consolidated balance sheet of the Target and its subsidiaries as of, and a pro forma statement of operations of the Target and its subsidiaries for, the most recent four fiscal quarter period ending prior to the Closing Date for which financial statements are available, in each case adjusted to give effect to the consummation of the Transaction and the funding of the Credit Facilities as if such transactions, with respect to the pro forma balance sheet, had occurred on such date or with respect to the pro forma statements of operations, had occurred on the first day of such four quarter period.

 

 

 

(7)

 

Delivery of customary certificate of insurance issued on behalf of insurers of the Borrowers and all guarantors, describing in reasonable detail the types and amounts of insurance (property and liability) maintained by the Borrowers and all guarantors, naming Agent as additional insured and loss payee, as appropriate.

 

 

 

(8)

 

Evidence that the second lien debt has been invested in the US Borrower in an amount and under terms and conditions reasonably satisfactory to Agent and Arranger.

 

 

 

III-1




 

 

 

 

(9)

Evidence that Holdings and/or the Acquisition Borrower shall have received cash proceeds from contributions in respect of its common equity by the Sponsor Entities and certain former members management shall have retained rollover equity in the Target which together shall comprise not less than 25% of the pro forma total capitalization of the Target after giving effect to the Transaction, in each case under terms and conditions reasonably satisfactory to Agent and Arranger.

 

 

(10)

Evidence satisfactory to the Agent and the Arranger that as of the Closing Date after giving effect to the Transaction and the Credit Facilities, (i) the first lien leverage ratio of the Target and its subsidiaries on a consolidated basis is less than 4.25:1.00 and (ii) the total leverage ratio of the Target and its subsidiaries on a consolidated basis is less than 6.00:1.00 each based on the pro forma EBITDA as of the most recently ended four fiscal quarter period for which financial statements are available, subject to certain adjustments to be agreed upon.

 

 

(11)

The Transaction shall have been consummated in accordance with applicable law in all material respects and on terms reasonably satisfactory to the Arranger.  The Transaction Agreement shall be in the form of the draft thereof dated [         ], 2007 and provided to the Arranger and all related material documentation shall have reasonably satisfactory (to the Arranger) terms and conditions, and no provision of such documentation shall have been waived, amended, supplemented or otherwise modified in any material respect in a manner materially adverse to the Lenders without approval of the Arranger.

 

 

(12)

Delivery of material lien searches.

 

 

(13)

Delivery of a customary solvency certificate by the chief accounting officer of the Target on behalf of the Target as to the solvency of the Target and its subsidiaries, on a consolidated basis.

 

 

(14)

The Borrowers shall have used their commercially reasonable efforts to obtain corporate ratings and ratings of the Credit Facilities from both of Moody’s Investor Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Group (“S&P”) with respect to the capital structure after giving effect to the Transaction and the funding of the Credit Facilities.

 

 

 

III-2



GRAPHIC 7 g24761nai001.gif GRAPHIC begin 644 g24761nai001.gif M1TE&.#EA"P`,`'<`,2'^&E-O9G1W87)E.B!-:6-R;W-O9G0@3V9F:6-E`"'Y E!`$`````+``````+``L`@````/___P(+1(YHR>T/HYRTQ@(`.S\_ ` end
-----END PRIVACY-ENHANCED MESSAGE-----