UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TRANSACTION NETWORK SERVICES, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
89341402
(CUSIP Number)
David N. Kunkel, Esq.
Executive Vice President
Richard F. Langan, Jr., Esq. and General Counsel
Nixon Peabody LLP PSINet Inc.
437 Madison Avenue 510 Huntmar Park Drive
New York, New York 10022-7001 Herndon, Virginia 20170-5100
John J. McDonnell, III
Jeffrey E. Jordan, Esq. General Counsel and Secretary
Arent Fox Kintner Plotkin & Kahn, PLLC Transaction Network Services, Inc.
1050 Connecticut Avenue, N.W. 1939 Roland Clarke Place
Washington, D.C. 20036-5339 Reston, Virginia 20191
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 22, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f), or (g), check the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
<PAGE>
*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 the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
<PAGE>
- - -------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
PSINet Inc.
16-1353600
- - ----------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - ----------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
- - ----------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
--------------------------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,004,116*
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,241,669*
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- - ----------- --------------------------------------------------------------
**PSINet Inc., William L. Schrader and Harold S. Wills were each named as proxy
and attorney-in-fact to vote certain shares of the common stock of Transaction
Network Services, Inc. ("TNI") with respect to certain matters relating to the
merger of TNI with and into a wholly-owned subsidiary of PSINet Inc. Includes
237,553 shares that the TNI Filing Stockholders have the right to acquire
through the exercise of stock options held by the TNI Filing Stockholders.
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
William L. Schrader
- - ----------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - --------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- -------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,004,116*
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,241,669*
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- - --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- - ----------- --------------------------------------------------------------
**PSINet Inc., William L. Schrader and Harold S. Wills were each named as proxy
and attorney-in-fact to vote certain shares of the common stock of Transaction
Network Services, Inc. ("TNI") with respect to certain matters relating to the
merger of TNI with and into a wholly-owned subsidiary of PSINet Inc. Includes
237,553 shares that the TNI Filing Stockholders have the right to acquire
through the exercise of stock options held by the TNI Filing Stockholders.
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Harold S. Wills
- - ----------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - ---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - ----------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------
<PAGE>
8 SHARED VOTING POWER
2,004,116*
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
0
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
2,241,669*
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ----------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- - ----------- --------------------------------------------------------------
**PSINet Inc., William L. Schrader and Harold S. Wills were each named as proxy
and attorney-in-fact to vote certain shares of the common stock of Transaction
Network Services, Inc. ("TNI") with respect to certain matters relating to the
merger of TNI with and into a wholly-owned subsidiary of PSINet Inc. Includes
237,553 shares that the TNI Filing Stockholders have the right to acquire
through the exercise of stock options held by the TNI Filing Stockholders.
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
McDonnell & Associates L.P.
- - ---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - ----------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- -----------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
- - ----------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- -------------------------------------------
<PAGE>
8 SHARED VOTING POWER
375,000
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
375,000
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
375,000
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ----------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.8%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- - ----------- --------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
The John J. McDonnell, Jr. and Marian J. McDonnell Charitable
Foundation
- - ----------- -------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - ----------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
- - ----------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------
<PAGE>
8 SHARED VOTING POWER
16,500
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
16,500
--------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
16,500
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ----------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- - ----------- --------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
Jurgen Manchot
- - ----------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ----------- --------------------------------------------------------------
3 SEC USE ONLY
- - ----------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
- - ----------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------
<PAGE>
8 SHARED VOTING POWER
707,800
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
735,300
----------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
735,300
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- - ----------- --------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
William N. Melton
- - ----------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ---------- --------------------------------------------------------------
3 SEC USE ONLY
- - ----------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ----------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ----------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - ---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------
<PAGE>
8 SHARED VOTING POWER
710,000
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
737,500
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
0
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
737,500
- - ----------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ----------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6%
- - ----------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- - ----------- --------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
CUSIP NO. 89341402
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSON
IRS NO. OF ABOVE PERSON (ENTITIES ONLY)
John J. McDonnell, Jr.
- - ---------- --------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) / /
(B) / X /
- - ---------- --------------------------------------------------------------
3 SEC USE ONLY
- - ---------- --------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- - ---------- --------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- - ---------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- - ---------- --------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
---------- --------------------------------------------
7 SOLE VOTING POWER
0
---------- --------------------------------------------
<PAGE>
8 SHARED VOTING POWER
586,316
---------- --------------------------------------------
9 SOLE DISPOSITIVE POWER
377,369
---------- --------------------------------------------
10 SHARED DISPOSITIVE POWER
391,500
---------- --------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING
PERSON
768,869*
- - ---------- --------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- - ---------- --------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8%
- - ---------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- - ---------- --------------------------------------------------------------
* Mr. McDonnell disclaims beneficial ownership of the 16,500 shares of Common
Stock held by The John J. McDonnell, Jr. and Marion J. McDonnell Charitable
Foundation.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule relates to shares of the Common Stock, par value $.01 per
share ("Common Stock") of Transaction Network Services, Inc. (the "Issuer" or
"TNI"). The Issuer's principal executive office is located at 1939 Roland Clarke
Place, Reston, Virginia 20191-1406.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed by (a) PSINet Inc., William L Schrader,
Chairman and Chief Executive Officer of PSINet Inc. and Harold S. Wills,
President and Chief Operating Officer of PSINet Inc. and (b) Jurgen Manchot,
William N. Melton, John J. McDonnell, Jr., the John J. McDonnell, Jr. and Marian
J. McDonnell Charitable Foundation, and McDonnell & Associates L.P.
(collectively, the "TNI Filing Stockholders") in connection with (i) an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of August 22,
1999, by and among PSINet Inc., its wholly owned subsidiary PSINet Shelf I Inc.,
and TNI, and (ii) the Stockholders' Voting and Proxy Agreement (the
"Stockholders' Agreement") among PSINet Inc., PSINet Shelf I Inc. and the TNI
Filing Stockholders, dated as of August 22, 1999, which grants each of PSINet
Inc. and William L. Schrader and Harold S. Wills in their respective capacities
as officers of PSINet Inc. (collectively, the "PSINet Proxyholders") the right,
as proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of the TNI Filing Stockholders, to vote such Stockholders'
shares of Common Stock or grant any consent or approval with respect to such
Stockholders' shares of Common Stock under certain circumstances described
below. The Merger Agreement is incorporated by reference as an exhibit to this
Schedule 13D. The Stockholders' Agreement is filed as an exhibit to and is
incorporated by reference in this Schedule 13D.
PSINet Inc. is organized as a corporation under the laws of the State
of New York, and its principal business address is 510 Huntmar Park Drive,
Herndon, Virginia 20170. PSINet Inc. is a global facilities-based Internet
Protocol (IP) data communications carrier focused on the business marketplace.
The names, business addresses, principal occupations and citizenship of the
directors and executive officers of PSINet Inc. are set forth in Annex A hereto
and are incorporated herein by reference.
Certain additional information regarding the individual PSINet
Proxyholders and the TNI Filing Stockholders is set forth below:
<TABLE>
<CAPTION>
Name Business or Occupation, Employer; Citizenship or
Residence Address Business and Address Jurisdiction
- - ----- ------------------ ---------------------- ----------------
<S> <C> <C> <C>
1. William L. Schrader 510 Huntmar Park Drive Chairman and Chief United States
Herndon, VA 20170 Executive Officer
PSINet Inc.
510 Huntmar Park Drive
Herndon, VA 20170
An independent
facilities-based
commercial ISP
2. Harold S. Wills 510 Huntmar Park Drive President, United States
Herndon, VA 20170 Chief Operating Officer
PSINet Inc.
510 Huntmar Park Drive
Herndon, VA 20170
An independent
facilities-based
commercial ISP
3. John J. McDonnell, Jr. 1939 Roland Clarke Place President and United States
Reston, VA 20191 Chief Executive Officer
Transaction Network
Services, Inc.
1939 Roland Clarke
Place Reston, VA 20191
Provides data
communications
services
<PAGE>
for transaction-oriented
applications
4. William N. Melton 2086 Hunters Crest Way Chairman and
Vienna, VA 22182 Chief Executive Officer
CyberCash, Inc.
2100 Reston Parkway
Reston, VA 20919
Provides software
products and services
allowing merchants,
billers, financial
institutions and
consumers to conduct
secure transactions
and other e-commerce
functions
5. Jurgen Manchot Kraumenshausweg 3 Private Investor Germany
D-40822 Mettmann
Germany
6. McDonnell & 8401 Brookewood Court Investment management Virginia
Associates L.P. McLean, VA 22102
McDonnell Holdings, Same Investment management Virginia
Inc., sole general partner
of McDonnell & Associates, L.P.
John J. McDonnell, Jr. Same President and director United States
of McDonnell
Holdings, Inc.
Marian J. McDonnell Same Vice President and United States
(wife of John J. director of McDonnell
McDonnell, Jr.) Holdings, Inc.
7. The John J. 8401 Brookewood Court Philanthropy Virginia
McDonnell, Jr. McLean, VA 22101
and Marian J.
McDonnell Charitable
Foundation
John J. McDonnell, Jr. Same Director, President United States
and Treasurer
Marian J. McDonnell Same Director, Vice United States
President and Secretary
</TABLE>
None of (a) the individual PSINet Proxyholders, (b) the individual TNI
Filing Stockholders, (c) PSINet Inc., its directors or executive officers, or
(d) the entities that are TNI Filing Stockholders, their directors, executive
officers, or general partners has, during the last five years, been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he, she or it
is or was 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
In consideration of and as a condition to PSINet Inc. entering into the
Merger Agreement, PSINet Inc. and William L. Schrader and Harold S. Wills have
each been appointed proxy and attorney-in-fact to vote the shares of TNI Common
Stock owned by the TNI Filing Stockholders as of August 22, 1999 and which may
be acquired pursuant to outstanding options as of such date, and have been
granted certain other rights under the Stockholders' Agreement.
<PAGE>
ITEM 4. PURPOSE OF THE TRANSACTION
On August 22, 1999, PSINet Inc., PSINet Shelf I Inc. and TNI entered
into the Merger Agreement pursuant to which TNI will merge with and into PSINet
Shelf I Inc. Upon consummation of the merger, the directors and officers of
PSINet Shelf I Inc. immediately prior to the merger will be the directors and
officers of the surviving corporation after the merger, the separate existence
of TNI will cease, and all of the outstanding shares of the surviving
corporation will be held by PSINet Inc. The aggregate purchase price payable by
PSINet Inc. consists of approximately $351 million in cash and 7.8 million
shares of PSINet Inc. common stock, assuming all of the outstanding options for
TNI Common Stock are exercised prior to the merger. For each share of TNI Common
Stock, TNI Stockholders may elect to receive cash consideration of $45, a share
of PSINet Inc. common stock, or a combination of cash and stock, subject to
certain limitations. Completion of the merger is subject to customary
conditions, including the approval by TNI Stockholders and regulatory approvals.
The Merger Agreement may be terminated under certain circumstances including if
(a) TNI does not obtain the required stockholder approval, (b) the merger is not
consummated by February 29, 2000, or (c) TNI receives and its board of directors
approves a proposal to acquire more than 50% of TNI's common stock or all or
substantially all of TNI's assets, which TNI's board concludes is materially
more favorable to TNI's stockholders from a financial point of view than the
transactions contemplated by the Merger Agreement, subject to certain conditions
and limitations. The terms of the Merger Agreement are incorporated herein by
reference.
PSINet Inc., PSINet Shelf I Inc. and the TNI Filing Stockholders
entered into the Stockholders' Agreement as a condition of PSINet Inc. entering
into the Merger Agreement. Pursuant to the terms of the Stockholders' Agreement,
the TNI Filing Stockholders have each agreed that at any meeting of stockholders
of TNI, however called, or any action by written consent of the stockholders of
TNI in lieu of a meeting, the TNI Filing Stockholders will vote all of their
shares of TNI Common Stock: (i) in favor of the adoption and approval of the
Merger Agreement and the transactions contemplated by the Merger Agreement (the
"Merger Proposal"), (ii) against any merger agreement or merger (other than the
merger contemplated by the Merger Agreement), consolidation, combination, share
exchange, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by TNI, and (iii) against any
amendment to TNI's certificate of incorporation or by-laws or other proposal or
transaction involving TNI or any of its subsidiaries, which amendment or other
proposal or transaction would be reasonably likely to impede, frustrate,
prevent, hinder, delay or nullify the Merger Agreement or the Stockholders'
Agreement or the transactions contemplated thereby or change the voting rights
of securities of TNI. The TNI Filing Stockholders also appointed each of PSINet
Inc., William L. Schrader and Harold S. Wills as proxy and attorney-in-fact to
vote their TNI Common Stock in the same manner for the Merger Proposal and
against contrary proposals. The TNI Filing Stockholders also agreed not to (a)
transfer ownership of their shares of TNI stock, (b) enter into any contract,
option or arrangement with respect to the transfer of their shares, or (c) enter
into any other voting arrangement with respect to their shares during the term
of the Stockholders' Agreement. The Stockholders' Agreement will terminate upon
the termination of the Merger Agreement in accordance with its terms.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
<TABLE>
<CAPTION>
Shares Owned Beneficially Power to Vote Power to Direct Disposition
Reporting Person Class Number % of Class Sole Shared Sole Shared
- - ---------------- ----- ------ ---------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
PSINet Inc. (1) Common 2,241,669 16.7 0 2,004,116 0 0
William L. Schrader (1) Common 2,241,669 16.7 0 2,004,116 0 0
Harold S. Wills (1) Common 2,241,669 16.7 0 2,004,116 0 0
John J. McDonnell, Jr. (2) Common 768,869 5.8 0 586,316 377,369 391,500
The John J. McDonnell, Jr.
and Marian J. McDonnell
Charitable Foundation Common 16,500 0.1 0 16,500 16,500 0
McDonnell & Associates
L.P. Common 375,000 2.8 0 375,000 375,000 0
<PAGE>
Jurgen Manchot (3) Common 735,300 5.6 0 707,800 735,300 0
William N. Melton (4) Common 737,500 5.6 0 710,000 737,500 0
(1) PSINet Inc., William L. Schrader and Harold S. Wills have each been
named as proxy and attorney-in-fact to vote the shares of TNI Common
Stock held by the TNI Filing Stockholders as described herein.
(2) 768,869 shares of Common Stock beneficially owned, representing
5.8% of the Issuer's outstanding Common Stock, which are subject to the
Stockholders' Agreement. Includes: (i) 194,816 shares owned directly,
(ii) the right to acquire 182,553 shares through the exercise of stock
options, (iii) 375,000 shares owned by McDonnell & Associates, L.P.,
and (iv) 16,500 shares owned by The John J. McDonnell, Jr. and Marian
J. McDonnell Charitable Foundation, described below, as to which Mr.
McDonnell disclaims beneficial ownership. Mr. McDonnell has shared
power to vote the following shares of Common Stock, which are subject
to the Stockholders' Agreement: 586,316 shares. Includes: (i) 194,816
shares owned directly by Mr. McDonnell; (ii) 375,000 shares owned by
McDonnell & Associates, L.P., the general partner of which is McDonnell
Holdings, Inc., the executive officers and directors of which are John
J. McDonnell, Jr. and Marian J. McDonnell; and (iii) 16,500 shares
owned by The John J. McDonnell, Jr. and Marian J. McDonnell Charitable
Foundation, the executive officers and directors of which are John J.
McDonnell, Jr. and Marian J. McDonnell.
John J. McDonnell, Jr. purchased 67,447 shares on August 23,
1999 directly from the Issuer through the exercise of stock options.
Marian J. McDonnell as of August 22, 1999 owned directly 26,200 shares.
On August 23, 1999, in open market sales through a broker, she sold
13,200 shares at a price of $43.28 per share and on August 24, 1999, in
open market sales through a broker, she sold the remaining 13,000
shares at a price of $44.00 per share.
(3) 735,300 shares of Common Stock beneficially owned, representing
5.6% of the Issuer's outstanding Common Stock, which are subject to the
Stockholders' Agreement. Includes: (i) 707,800 shares owned directly
and (ii) the right to acquire 27,500 shares through the exercise of
stock options.
Mr. Manchot sold a total of 92,200 shares of Common Stock in open market sales through a broker as follows:
Date Number Of Shares Price Per Share
7-26-99 4,500 $29.04
7-27-99 45,500 $29.02
7-28-99 34,200 $29.11
8-2-99 6,900 $29.06
8-4-99 1,100 $29.06
(4) 737,500 shares, of Common Stock beneficially owned, representing
5.6% of the Issuer's outstanding Common Stock, which are subject to the
Stockholders' Agreement. Includes: (i) 710,000 shares owned directly,
and (ii) the right to acquire 27,500 shares through the exercise of
stock options.
</TABLE>
The percentages of ownership set forth in this Schedule 13D are based
upon 13,162,617 shares of the Issuer's Common Stock outstanding as of August 11,
1999, as reported in the Issuer's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999.
Each of PSINet Inc., William L. Schrader and Harold S. Wills declares
that the filing of this Schedule 13D shall not be construed as an admission that
such person is, for the purposes of Section 13(d) of the Act, the beneficial
owner of any TNI Common Stock, as to which he or it disclaims beneficial
ownership.
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Other than the Merger Agreement described in response to Item 4 (which
response is incorporated in this Item 6 by reference), and the Stockholders'
Agreement described in response to Items 3 and 4 (which responses are
incorporated in this Item 6 by reference) and the transactions contemplated
thereby, there are no contracts, arrangements, understandings or relationships
among the persons named in Item 2 or between such person and any other person
with respect to the shares of TNI Common Stock or, to the best knowledge of
PSINet Inc., among any of PSINet Inc.'s executive officers and directors or, to
the best knowledge of PSINet Inc., between any of PSINet Inc.'s executive
officers and directors and any other person, with respect to the shares of TNI
Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Joint Filing Agreement, dated as of September 1, 1999, among the
PSINet Proxy Holders and the TNI Filing Stockholders.
2. Agreement and Plan of Merger dated as of August 22, 1999 among
PSINet Inc., PSINet Shelf I Inc. and TNI. Incorporated by reference to Exhibit
2.1 of PSINet Inc.'s Form 8-K filed August 24, 1999.
3. Stockholder's Voting and Proxy Agreement dated as of August 22, 1999
between PSINet Inc., PSINet Shelf I Inc. and each of the TNI Filing
Stockholders.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief I certify that the information set forth in this statement is true,
complete and correct.
/s/ William L. Schrader
Dated: September 1, 1999 William L. Schrader
/s/ Harold S. Wills
Dated: September 1, 1999 Harold S. Wills
Dated: September 1, 1999 PSINet Inc.
By: /s/ William L. Schrader
William L. Schrader
Chairman and Chief Executive Officer
/s/ Jurgen Manchot
Dated: September 1, 1999 Jurgen Manchot
/s/ William N. Melton
Dated: September 1, 1999 William N. Melton
/s/ John J. McDonnell, Jr.
Dated: September 1, 1999 John J. McDonnell, Jr.
Dated: September 1, 1999 McDonnell & Associates L.P.
By: McDonnell Holdings, Inc.
Its general partner
By: /s/ John J. McDonnell, Jr.
John J. McDonnell, Jr., President
Dated: September 1, 1999 The John J. McDonnell, Jr. and
Marian J. McDonnell Charitable Foundation
By: /s/ John J. McDonnell, Jr.
John J. McDonnell, Jr., President
<PAGE>
Schedule A
EXECUTIVE OFFICERS OF PSINET INC. (all with business addresses at 510 Huntmar
Park Drive, Herndon, VA 20170):
<TABLE>
<CAPTION>
Name Citizen Title
<S> <C> <C>
William L. Schrader United States Chairman of the Board of Directors and Chief Executive Officer (Founder)
Harold S. Wills United States President, Chief Operating Officer and Director
David N. Kunkel United States Executive Vice President, General Counsel and Director
Edward D. Postal United States Senior Vice President and Chief Financial Officer
E. A. Davis United States Senior Vice President and President, PSINetworks Company
Harry G. Hobbs United States Senior Vice President and President, PSINet Europe
Philippe J. Kuperman United States Senior Vice President and President, PSINet Latin America
Chi H. Kwan United States Senior Vice President and President, PSINet Asia/Pacific
Michael J. Malesardi United States Vice President and Controller
NON-EXECUTIVE DIRECTORS OF PSINET INC. (all with business addresses at 510 Huntmar Park Drive, Herndon, VA 20170):
William H. Baumer United States Director of PSINet Inc., Professor of Philosophy, University at Buffalo
Ian P. Sharp Canada Director of PSINet Inc., Retired, former President of I.P Sharp Associates
Ralph J. Swett United States Director of PSINet Inc., Vice Chairman of IXC Communications Inc.
</TABLE>
<PAGE>
Exhibit 1
Joint Filing Agreement
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, as amended, each of the persons named below agrees to the
joint filing of this Schedule 13D, including amendments thereto, with respect to
the shares of Common Stock, par value $.01 per share, of Transaction Network
Services, Inc. and further agrees that this Joint Filing Agreement be filed with
the Securities and Exchange Commission as an exhibit to such filings, provided,
however, that no person shall be responsible for the completeness or accuracy of
the information concerning the other persons making the filing, unless such
person knows or has reason to believe such information is inaccurate (as
provided in Rule 13d-1(k)(1)(ii)). This Joint Filing Agreement may be executed
in one or more counterparts, all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the persons named below have executed this Joint
Filing Agreement on the dates set forth below.
/s/ William L. Schrader
Dated: September 1, 1999 William L. Schrader
/s/ Harold S. Wills
Dated: September 1, 1999 Harold S. Wills
Dated: September 1, 1999 PSINet Inc.
By: /s/ William L. Schrader
William L. Schrader
Chairman and Chief Executive Officer
/s/ Jurgen Manchot
Dated: September 1, 1999 Jurgen Manchot
/s/ William N. Melton
Dated: September 1, 1999 William N. Melton
/s/ John J. McDonnell, Jr.
Dated: September 1, 1999 John J. McDonnell, Jr.
Dated: September 1, 1999 McDonnell & Associates L.P.
By: McDonnell Holdings, Inc.
Its general partner
By: /s/ John J. McDonnell, Jr.
John J. McDonnell, Jr., President
Dated: September 1, 1999 The John J. McDonnell, Jr. and
Marian J. McDonnell Charitable Foundation
By: /s/ John J. McDonnell, Jr.
John J. McDonnell, Jr., President
<PAGE>
STOCKHOLDERS' VOTING AND PROXY AGREEMENT
STOCKHOLDERS' VOTING AND PROXY AGREEMENT, dated as of August 22, 1999,
among PSINET INC. ("Parent"), a New York corporation, PSINET SHELF I INC.
("Merger Subsidiary"), a Delaware corporation and a wholly-owned subsidiary of
Parent, and each of the stockholders of TRANSACTION NETWORK SERVICES, INC. (the
"Company"), a Delaware corporation, who are listed on and execute the signature
pages attached hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, each Stockholder is the record and beneficial owner of the
number of shares of the Company set forth opposite his name on Schedule A
attached hereto (such shares, together with any other shares of capital stock of
the Company acquired by such Stockholder after the date hereof and during the
term of this Agreement (including through the exercise of any stock options,
warrants or similar instruments) being collectively referred to herein as the
"Subject Shares" of such Stockholder);
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Company with and into
Merger Subsidiary (the "Merger") in accordance with the laws of the State of
Delaware and the provisions of a certain Agreement and Plan of Merger dated as
of August 22, 1999 (as the same may be amended, supplemented or otherwise
modified in accordance with its terms, the "Merger Agreement");
WHEREAS, Section 7.10 of the Merger Agreement requires the Stockholders
to execute and deliver this Agreement to Parent and Merger Subsidiary;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Representations and Warranties of Each Stockholder. Each Stockholder
hereby, severally and not jointly, represents and warrants to Parent and Merger
Subsidiary that, except as disclosed in the Company Disclosure Schedule which
was delivered to Parent in connection with the Merger Agreement:
(1) Authority Relative to this Agreement. Such Stockholder has
the necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
such Stockholder have been duly and validly authorized and approved by all
necessary action on the part of such Stockholder. This Agreement has been duly
executed and delivered by such Stockholder, and assuming the due authorization,
execution and delivery by Parent and Merger Subsidiary, constitutes the valid
and binding obligation of such Stockholder enforceable against such Stockholder
in accordance with its terms except as such enforceability may be limited by
general principles of equity or principles applicable to creditors' rights
generally.
(2) No Conflicts. None of the execution and delivery of this
Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated
<PAGE>
-2-
hereby or the compliance by such Stockholder with any of the provisions hereof
will result in a violation or breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien, charge, security
interest, pledge or encumbrance of any kind or nature on the Subject Shares
pursuant to any agreement, instrument or indenture to which such Stockholder is
a party or by which such Stockholder or any of such Stockholder's properties
(including the Subject Shares) may be bound or affected.
(3) Required Filings and Consents. None of the execution and
delivery of this Agreement by such Stockholder, the consummation by such
Stockholder of the transactions contemplated hereby or the compliance by such
Stockholder with any of the provisions hereof will require any consent, waiver,
license, approval, authorization, order or permit of, or registration or filing
with or notification to, any government or subdivision thereof or any
administrative, governmental or regulatory authority, agency, commission, court,
tribunal or body, except for compliance with (i) any applicable requirements of
the Securities Act and the Exchange Act, and (ii) certain state takeover,
securities and "blue sky" statutes. If such Stockholder is married and the
Subject Shares of such Stockholder constitute community property or otherwise
require spousal or other approval to be valid and binding, this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized, executed and delivered by such Stockholder's spouse, and assuming
the due authorization, execution and delivery by Parent and Merger Subsidiary,
constitutes the valid and binding obligation of such spouse enforceable against
such spouse in accordance with its terms except as such enforceability may be
limited by general principles of equity or principles applicable to creditors'
rights generally. No trust of which such Stockholder is a trustee requires the
consent of any beneficiary for the execution and delivery of this Agreement or
for the consummation of the transactions contemplated hereby.
(4) The Subject Shares. Such Stockholder is the record and
beneficial owner of, or is the trustee that is the record holder of, and whose
beneficiaries are the beneficial owners of, and has good and valid title to, the
Subject Shares set forth opposite his name on Schedule A attached hereto, free
and clear of any and all claims, liens, encumbrances, security interests,
options, charges and restrictions of any kind. Such Stockholder does not own, of
record or beneficially, any shares of capital stock of the Company other than
the Subject Shares set forth opposite his name on Schedule A attached hereto.
Such Stockholder has the sole right to vote such Subject Shares and none of such
Subject Shares are subject to any voting trust or other agreement, arrangement
or restriction with respect to the voting of such Subject Shares, except as
contemplated by this Agreement.
<PAGE>
-3-
2. Covenants of Each Stockholder. Each Stockholder hereby, severally
and not jointly, covenants and agrees as follows:
(1) At any meeting of stockholders of the Company called to
vote upon the Merger and/or the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and/or the Merger
Agreement is sought, each Stockholder shall cause the Subject Shares to be
present at any such meeting for purposes of establishing and maintaining a
quorum and shall vote (or cause to be voted) the Subject Shares of such
Stockholder, including by executing a written consent solicitation if requested
by Parent or Merger Subsidiary, in respect of which such Stockholder then has or
exercises voting control, in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the terms thereof, each of the
transactions contemplated thereby and such other matters, if any, as may be
requested by Parent and/or Merger Subsidiary.
(2) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which such Stockholder's
votes, consents or other approvals are sought, such Stockholder shall vote (or
cause to be voted) the Subject Shares of such Stockholder, including by
executing a written consent solicitation if requested by Parent or Merger
Subsidiary, in respect of which such Stockholder then has or exercises voting
control, against (i) any merger agreement, merger (other than the Merger
Agreement and the Merger), consolidation, combination, share exchange, sale of
substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by the Company (collectively, a "Takeover Proposal"), and
(ii) any amendment of the Company's certificate of incorporation or by-laws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would be reasonably likely to
impede, frustrate, prevent, hinder, delay or nullify the Merger Agreement, the
Merger, this Agreement or any of the transactions contemplated thereby or hereby
or change in any manner the voting rights of any class of common stock or other
voting securities of the Company. Such Stockholder further agrees not to commit
or agree to take any action or enter into any agreement inconsistent with the
foregoing.
(3) Such Stockholder hereby consents to and authorizes and
approves the actions taken by the Board of Directors of the Company in approving
the Merger Agreement, the Merger, this Agreement and the transactions
contemplated thereby and hereby. Such Stockholder hereby waives, and agrees not
to exercise, any appraisal rights under the Delaware General Corporation Law in
connection with the Merger.
3. Restrictions on Transfer. Each Stockholder, severally and not
jointly, covenants and agrees with Parent and Merger Subsidiary that, prior to
the Effective Time, neither such Stockholder nor any of his affiliates shall,
directly or indirectly, (1) give, offer, sell, transfer, assign, pledge,
hypothecate or otherwise dispose of the record or beneficial ownership of (any
such act, a "Transfer"), or consent to any Transfer of, any or all of the
Subject Shares of Stockholder or any interest therein, (2) enter into any
contract, option, commitment or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of the Subject Shares, or (3) enter
into any other voting arrangement, whether by proxy, voting agreement, voting
trust, power-of-attorney or otherwise with respect to the Subject Shares.
<PAGE>
-4-
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(1) Each Stockholder hereby irrevocably and severally grants
to, and appoints, Parent and William L. Schrader and Harold S. Wills, or any of
them, in their respective capacities as officers of Parent, and any individual
who shall hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to vote
such Stockholder's Subject Shares, or grant a consent or approval in respect of
such Subject Shares, in a manner consistent with Section 2(1) and 2(2) hereof.
(2) Each Stockholder severally represents that any proxies
heretofore given in respect of such Stockholder's Subject Shares are not
irrevocable, or if irrevocable that, upon execution and delivery of this
Agreement, the valid consent to the revocation of such proxies from the party or
parties to whom such proxies were heretofore granted will be obtained and any
such proxies are hereby revoked to the extent necessary to effect the
transactions contemplated by this Agreement. Each Stockholder understands and
acknowledges that Parent and Merger Subsidiary are entering into the Merger
Agreement in reliance upon such Stockholder's execution, delivery and
performance of this Agreement.
(3) Each Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of such Stockholder in accordance with this Agreement.
Such Stockholder hereby further affirms that his irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
applicable provisions of the Delaware General Corporation Law. Such irrevocable
proxy shall be valid until termination of this Agreement pursuant to Section 5
hereof.
5. Termination. This Agreement shall terminate immediately upon the
termination of the Merger Agreement by Parent, Merger Subsidiary and/or the
Company in accordance with the terms of the Merger Agreement; provided, however,
that no termination of this Agreement shall relieve any party hereto from
liability for breach of this Agreement prior to such termination.
Notwithstanding the foregoing, Section 8 hereof shall survive any termination of
this Agreement.
6. Several Obligations. Notwithstanding any other provision hereof,
each Stockholder's obligations hereunder are several, and not joint and several.
Upon execution hereof by Parent, Merger Subsidiary and any Stockholder, this
Agreement shall be binding upon and inure to the benefit of Parent, Merger
Subsidiary and each such Stockholder, regardless of the failure of any other
party listed on the signature page hereto to execute this Agreement.
7. General Provisions.
(1) Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed to the parties at their respective addresses
as
<PAGE>
-5-
set forth in Section 10.2 of the Merger Agreement or on Schedule A attached
hereto, as applicable, or to such other address as any party may have furnished
to the other parties in writing in accordance with this Section 7(1).
(2) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
(3) Entire Agreement. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
(4) Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, its successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any person not a party hereto any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
including to confer third party beneficiary rights.
(5) Governing Law. This Agreement, except to the extent that
provisions of Delaware Law (with respect principally to Sections 2 and 4 hereof)
are mandatorily applicable, shall be governed in all respects by the laws of the
State of New York (without giving effect to the provisions thereof relating to
conflicts of law). The exclusive venue for the adjudication of any dispute or
proceeding arising out of this Agreement or the performance hereof shall be the
courts located in the County of New York, State of New York and the parties
hereto and their affiliates each consents to and hereby submits to the
jurisdiction of any court located in the County of New York, State of New York
or Federal courts in the Southern District of New York.
(6) Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
(7) Certain Rules of Construction. References in this
Agreement to any gender shall include references to all genders. Unless the
context otherwise requires, references in the singular include references in the
plural and vice versa. References to a party to this Agreement or to other
agreements described herein means those persons executing such agreements. This
Agreement is the joint drafting product of Parent, Merger Subsidiary and each
Stockholder and each provision has been subject to negotiation and agreement and
shall not be construed for or against any party as drafter thereof. Capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Merger Agreement.
<PAGE>
-6-
(8) Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
(9) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
8. Confidentiality; Public Announcements. Each Stockholder recognizes
that successful consummation of the transactions contemplated by this Agreement
(including the Merger) may be dependent upon confidentiality with respect to the
matters referred to herein. In this connection, pending public disclosure
thereof by Parent, Merger Subsidiary and/or the Company pursuant to the terms of
the Merger Agreement, each Stockholder hereby agrees not to issue any press
release or make any other public statement or disclose or discuss such matters
with anyone not a party to this Agreement (other than such Stockholder's counsel
and advisors, if any) without the prior written consent of Parent, except as
required by law.
IN WITNESS WHEREOF, Parent, Merger Subsidiary and each Stockholder
listed on the attached signature pages have caused this Agreement to be signed
as of the date first written above.
PSINET INC.
By: /s/ William L. Schrader
-------------------------------
William L. Schrader
Chairman and Chief Executive Officer
PSINET SHELF I INC.
By: /s/ William L. Schrader
-------------------------------
William L. Schrader
Chairman and Chief Executive Officer
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER'S VOTING AND PROXY AGREEMENT
Name of Stockholder: Jurgen Manchot
/s/ Jurgen Manchot
--------------------------
Jurgen Manchot
Number of Subject Shares Owned as of
August 22, 1999
Number of Shares of Common Stock
Beneficially Owned 707,800
Options to Purchase
27,500 shares of TNSI Stock
Notice Address:
Kraumenhausweg 3
D-40822 Mettmann
Germany
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER'S VOTING AND PROXY AGREEMENT
Name of Stockholder: William N. Melton
/s/ William N. Melton
---------------------------------
William N. Melton
Number of Subject Shares Owned as of
August 22, 1999
Number of Shares of Common Stock
Beneficially Owned 710,000
Options to Purchase
27,500 shares of Common Stock
Notice Address:
2086 Hunter Crest Way
Vienna, VA 22181
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER'S VOTING AND PROXY AGREEMENT
Name of Stockholder: John J. McDonald, Jr.
/s/ John J. McDonnell, Jr.
-----------------------------------
John J. McDonald, Jr.
Number of Subject Shares Owned as of
August 22,1999
Number of Shares of Common Stock
Beneficially Owned 194,816
Options to Purchase
182,553 shares of Common Stock
Notice Address:
8401 Brookewood Court
McLean, VA 22102
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER'S VOTING AND PROXY AGREEMENT
Name of Stockholder:
The John J. McDonnell and Marian J.
McDonnell Charitable Foundation
By: /s/ John J. McDonnell, Jr.
--------------------------------
John J. McDonnell, Jr.
President
Number of Subject Shares Owned as of
August 23, 1999
Number of Shares of Common Stock
Beneficially Owned 16,500
Options to Purchase
0 shares of Common Stock
Notice Address:
8401 Brookewood Court
McLean, Virginia 22101
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER'S VOTING AND PROXY AGREEMENT
Name of Stockholder:
McDonnell & Associates, L.P.
By: McDonnell Holdings, Inc., its
General Partner
By: /s/ John J. McDonnell, Jr.
---------------------------------
John J. McDonnell, Jr.
President
Number of Subject Shares Owned as of
August 23, 1999
Number of Shares of Common Stock
Beneficially Owned 375,000
Options to Purchase
0 shares of Common Stock
Notice Address:
8401 Brookewood Court
McLean, Virginia 22102
<PAGE>
SCHEDULE A
NAME AND ADDRESS OWNED SUBJECT SHARES
Jurgen Manchot 707,800
Kraumenshausweg 3
D-40822 Mettmann
Germany
William N. Melton 710,000
2086 Hunters Crest Way
Vienna, Virginia 22182
John H. McDonnell, Jr. 194,816
8401 Brookewood Court
McLean Virginia
McDonnell & Associates L.P. 375,000
8401 Brookewood Court
McLean Virginia
The John J. McDonnell, Jr. and Marian J. McDonnell
Charitable Foundation 16,500
8401 Brookewood Court
McLean Virginia
