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Public Offering Registration - DELTEK, INC - 5-8-2007

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Public Offering Registration - DELTEK, INC - 5-8-2007 Powered By Docstoc
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As filed with the Securities and Exchange Commission on May 8, 2007 Registration No. 333—

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

DELTEK, INC.
(Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 7372 (Primary Standard Industrial Classification Code Number) 54-1252625 (I.R.S. Employer Identification Number)

13880 Dulles Corner Lane Herndon, VA 20171 (703) 734-8606 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Kevin T. Parker Chairman, President and Chief Executive Officer Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 (703) 734-8606 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to: Richard A. Steinwurtzel, Esq. Vasiliki B. Tsaganos, Esq. Fried, Frank, Harris, Shriver & Jacobson LLP 1001 Pennsylvania Avenue, N.W., Suite 800 Washington, DC 20004 Tel: (202) 639-7000 Fax: (202) 639-7003 David R. Schwiesow Senior Vice President, General Counsel and Secretary Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 Tel: (703) 734-8606 Fax: (703) 880-0260 Kris F. Heinzelman, Esq. Damien R. Zoubek, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, NY 10019 Tel: (212) 474-1000 Fax: (212) 474-3700

Approximate date of commencement of proposed sale to the public: As soon as practicable after effectiveness of this registration statement.

box.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. 

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered Common stock, par value $0.001 per share

Proposed maximum aggregate offering amount (1) $ 200,000,000

Amount of registration fee $ 6,140

(1)

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MAY 8, 2007

Shares

Deltek, Inc. Common Stock
Immediately prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We will apply to list our common stock on The Nasdaq Global Market under the symbol “PROJ.” We are selling shares of common stock and the selling shareholders, including our senior management and directors, are selling shares of common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling shareholders. The underwriters have an option to purchase a maximum of over-allotments of shares. additional shares from the selling shareholders to cover

Investing in our common stock involves risks. See “ Risk Factors ” on page 8.
Underwriting Discounts and Commissions Proceeds to Deltek, Inc. Proceeds to the Selling Shareholders

Price to Public

Per Share Total

$ $ $

$ $ , 2007.

$ $

$

Delivery of the shares of common stock will be made on or about

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Credit Suisse
JPMorgan
Wachovia Securities

Lehman Brothers
William Blair & Company

Merrill Lynch & Co.
Montgomery & Co., LLC

The date of this prospectus is

, 2007.

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TABLE OF CONTENTS
Page

P ROSPECTUS S UMMARY R ISK F ACTORS F ORWARD -L OOKING S TATEMENTS U SE OF P ROCEEDS D IVIDEND P OLICY C APITALIZATION D ILUTION S ELECTED C ONSOLIDATED F INANCIAL D ATA M ANAGEMENT ‘ S D ISCUSSION AND A NALYSIS OF F INANCIAL C ONDITION AND R ESULTS OF O PERATIONS B USINESS M ANAGEMENT C ERTAIN R ELATIONSHIPS AND R ELATED P ARTY T
RANSACTIONS

1 8 24 25 26 27 28 29 30 52 64
Page

91 103 106 110 113 117 123 125 125 125 F-1

P RINCIPAL AND S ELLING S HAREHOLDERS D ESCRIPTION OF C APITAL S TOCK S HARES OF C OMMON S TOCK E LIGIBLE FOR F UTURE S
ALE

C ERTAIN M ATERIAL U.S. F EDERAL I NCOME T AX C
ONSIDERATIONS

U NDERWRITING N OTICE TO C ANADIAN R ESIDENTS L EGAL M ATTERS E XPERTS W HERE Y OU C AN F IND A DDITIONAL I NFORMATION I NDEX TO THE C ONSOLIDATED F INANCIAL S TATEMENTS

You should rely only on the information contained in this document or any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation Until , 2007 (25 days after the commencement of this offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus carefully, including the section describing the risks of investing in our common stock under “Risk Factors” and our financial statements contained elsewhere in this prospectus before making an investment decision. Some of the statements in this summary constitute forward-looking statements. See “Forward-Looking Statements.” Unless the context otherwise indicates or requires, as used in this prospectus, references to “we,” “us,” “our” or the “company” refer to Deltek, Inc., its subsidiaries and predecessors. Our Company We are a leading provider of enterprise applications software and related services designed specifically for project-focused organizations. Project-focused organizations generate revenue from defined, discrete, customer-specific engagements or activities, rather than from mass-producing or distributing products. These organizations typically require specialized software to help them automate complex business processes around the engagement, execution and delivery of projects. Our software enables them to greatly enhance the visibility they have over all aspects of their operations by providing them increased control over their critical business processes, accurate project-specific financial information and real-time performance measurements. With our software applications, project-focused organizations can better measure business results, optimize performance and streamline operations, thereby enabling them to win new business. As of May 1, 2007, we had over 12,000 customers worldwide that spanned numerous industries and ranged in size from small organizations to large enterprises. We serve customers primarily in the following markets: architecture and engineering (A/E), government contracting, aerospace and defense, information technology services, consulting, discrete project manufacturing, grant-based not-for-profit organizations and government agencies. Since our founding in 1983, we have established a leading position within the applications software market designed specifically for project-focused organizations and created strong brand recognition and market share within our target markets. In the A/E market, as of December 2006, our products were deployed by over 80% of the top 500 A/E firms in the United States. In addition, as of May 2006, 67% of the top 100 federal information technology contractors were our customers, including nine of the top ten companies. For the year ended December 31, 2006, our total revenue increased 49% to $228.3 million, and our net income increased 75% to $15.3 million, in each case from the prior year. Our Industry We believe the potential market for enterprise applications software for project-focused organizations is large and growing. Project-focused firms span numerous industries and range in size from small- and medium-sized local and regional firms to Fortune 100 global organizations. A prominent industry research firm estimates the size of the worldwide enterprise software market for project-focused organizations at $17.4 billion in 2005 and projects it to grow to $22.9 billion by 2010. We believe that spending on software and technology in this market is increasing in large part due to strong growth in the services-based economy and the fact that enterprise applications software has generally become more affordable and accessible to small- and medium-sized businesses. The unique characteristics of project-focused organizations create special requirements for their business applications that frequently exceed the capabilities of generic applications software packages (for example, those designed primarily for manufacturing or financial services firms). Project-focused organizations require sophisticated, highly integrated software applications that automate end-to-end business processes across each 1

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stage of the project lifecycle. Project lifecycles vary significantly in length and complexity and can be difficult to forecast accurately. These projects need to be managed within the context of a company‘s complete portfolio of existing and potential future projects. Project-focused organizations often operate in environments or industries that pose unique challenges for their managers, who are required to maintain specific business processes and accounting methodologies. For example, government contractors are subject to oversight by various U.S. federal government agencies, such as the General Accounting Office (GAO) and the Defense Contract Audit Agency (DCAA), which have regulations that require these companies to have the ability to audit specific project performance in detail and to accurately maintain and report compliance to their government agency customers. Our Products and Services We typically license our software either as a comprehensive solution or as individual stand-alone applications. Our software solutions are industry-specific and ―purpose-built‖ for businesses that plan, forecast and otherwise manage their business processes based on projects, as opposed to generic software solutions that are generally designed for repetitive, unit-production-style businesses. Our broad portfolio of software applications includes: • Comprehensive financial management solutions that integrate project control, financial processing and accounting functions, providing business owners and project managers with real-time access to information needed to track the revenue, costs and profitability associated with the performance of any project or activity; Business applications that enable employees across project-focused organizations to more effectively manage and streamline business processes, including resource management, sales generation, human resources, corporate governance and performance management; and Enterprise project management solutions to manage project costs and schedules, measure earned value, evaluate, select and prioritize projects based on strategic business objectives and facilitate compliance with regulatory reporting requirements.

•

•

Our applications portfolio is comprised of four major product families, each designed to meet the specific functionality and scalability requirements of the project-focused industries and customers we serve: • Deltek Costpoint. Costpoint provides a comprehensive financial management solution that tracks, manages and reports on key aspects of a project: planning, estimating, proposals, budgets, expenses, indirect costs, purchasing, billing, regulatory compliance and materials management. Costpoint is designed for sophisticated, medium- and large-scale project-focused organizations such as government contractors and commercial project-focused organizations. Deltek Vision. Vision is an integrated solution that incorporates critical business functions, including project accounting, customer relationship management, resource management, time and expense capture and billing. Vision is designed for professional services firms of all sizes, including A/E, information technology and management consulting firms. Deltek GCS Premier. GCS Premier is a robust accounting and project management solution that provides a full view of project and financial information, enabling firms to respond quickly and accurately to variations in plans and profit projections. GCS Premier is designed for small and medium-sized government contractors. Enterprise Project Management Solutions. Our enterprise project management solutions help firms select the right projects, allocate resources across projects, mitigate risks and ultimately complete projects on time and on budget. This software is designed for professional services firms of all sizes that manage complex project portfolios. 2

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In addition to our product offerings, we provide a full range of consulting and technical services, including solution architecture, applications implementation, technology architecture design and project team and end-user training. Our Competitive Strengths We believe our competitive strengths position us to take advantage of the under-penetrated and growing opportunities in the enterprise applications software market for project-focused organizations. These capabilities, in combination with our highly referenceable customer base, provide us with a strong competitive position. Our key competitive advantages include the following: • Superior Value Proposition. Our software applications offer built-in project functionality at their core, making them faster and less costly to deploy, use and maintain. Our modular software architecture also enables our products to be deployed as a comprehensive solution or as individual applications, which gives our customers the flexibility to select the applications that are relevant to them. Built-In Processes and Compliance. Project-focused organizations are often challenged with tracking and complying with intricate accounting policies and procedures, auditing requirements, contract terms and customer expectations. Our software is designed to make it easy for project managers and business executives to accurately monitor and measure specific project performance in detail with consistent application of business processes. Our applications also enable our customers to maintain and report compliance with contract requirements to government agencies and their customers. Deep Domain Expertise. For more than 20 years, our exclusive focus on meeting the complex needs of project-focused organizations has provided us with extensive knowledge and industry expertise. Our significant subject matter expertise enables us to develop, implement, sell and support applications that are tailored to the existing and future needs of our customers. Leading Market Position. We are a leading provider of enterprise applications software designed specifically for project-focused organizations. As of May 1, 2007, we had over 12,000 customers, including over 80% of the top 500 A/E firms in the United States and 67% of the top 100 federal information technology contractors. This has helped us develop a widely recognized brand within our target markets. We also have leveraged our market position to foster a network of alliance partners to help us market, sell and implement our software and services. Our Business Strategy and Growth Opportunities We plan to focus on the following objectives to enhance our position as a leading provider of enterprise software applications to project-focused organizations: • Expanding Penetration of Established Markets . We believe that our strong brand recognition and leading market position within the project-focused software market, particularly among the A/E and government contracting industries, provide us with significant opportunities to expand our sales within these markets. Expanding Within Existing Customer Base . We are continuously looking to increase our sales to our existing customers, both by increasing the number of our applications utilized by them and by offering upgrades from our legacy applications to our current portfolio. Expanding Our Network of Alliance Partners . We plan to expand our ecosystem of alliance partners. Specifically, we anticipate expanding current relationships and establishing new partnerships with reseller, consulting and technology partners in the United States and international markets. This expanding network of alliance partners should enable us to enhance our penetration into new markets and increase our geographical sales force coverage. 3

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Growing Our Presence in New Markets . We are building upon our track record of customer successes outside our established markets in industries such as consulting, information technology services, discrete project manufacturing and grant-based not-for-profits. We continue to develop additional industry-specific product functionality and are investing in targeted sales and marketing activities for new markets. Growing Internationally . We intend to further expand our presence outside the United States, initially targeting countries where English is the primary business language. We believe project-focused organizations in Canada, the United Kingdom, Europe and the Asia-Pacific region are currently underserved for the products we offer. Making Strategic Acquisitions . We plan to continue to pursue acquisitions that present a strong strategic fit with our existing operations and are consistent with our overall growth strategy. We may also target future acquisitions to expand or add product functionality and capabilities to our existing product portfolio, add new products or solutions to our product portfolio or further expand our services team. Our Principal Equity Investor

•

•

Our principal shareholders are New Mountain Partners II, L.P. (New Mountain Partners), New Mountain Affiliated Investors II, L.P. (New Mountain Affiliated Investors) and Allegheny New Mountain Partners, L.P. (Allegheny New Mountain), three private equity funds affiliated with New Mountain Capital, L.L.C. (New Mountain Capital). Three of the members of our board of directors were nominated by New Mountain Partners and Allegheny New Mountain. As of May 1, 2007, New Mountain Partners, New Mountain Affiliated Investors and Allegheny New Mountain collectively owned approximately 74% of our outstanding common stock and 100% of our outstanding Class A common stock. Following completion of this offering, these funds will own approximately % of our common stock and 100% of our outstanding Class A common stock. Unless otherwise indicated, as used in this prospectus, ―New Mountain Funds‖ refers collectively to New Mountain Partners, New Mountain Affiliated Investors and Allegheny New Mountain. See ―Certain Relationships and Related Party Transactions.‖ Company Information We were initially incorporated in the Commonwealth of Virginia in December 1983 as Contract Data Systems, Inc. We changed our name to Deltek Systems, Inc. in August 1984. In 1985, we introduced our first product, System I. In 1997, we completed an initial public offering of our common stock, and in May 2002, we became a privately held company through a going private transaction. In April 2005, we completed a recapitalization in which the New Mountain Funds acquired their interest in our company. In April 2007, we reincorporated in the State of Delaware as Deltek, Inc. Our principal executive office is located at 13880 Dulles Corner Lane, Herndon, Virginia 20171, and our telephone number at that address is (703) 734-8606. Our website address is www.deltek.com. The information contained on, or that may be accessed through, our website is not part of, and is not incorporated into, this prospectus.

The names Cobra , Costpoint , Deltek , Deltek Vision , Deltek wInsight , GCS Premier , Open Plan , Welcom , Wind2 , wInsight and our logo are trademarks, service marks or trade names owned by us. All other trademarks, service marks or trade names appearing in this prospectus are owned by their respective holders.
® ® ® ® ™ ® ® ® ® ®

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The Offering Common stock offered by us Common stock offered by the selling shareholders Total common stock offered shares shares

shares (or over-allotment option in full) shares

shares if the underwriters

exercise their

Common stock outstanding after this offering Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately $ million (based on the midpoint of the range set forth on the cover page of this prospectus). We intend to use the net proceeds that we receive in this offering to repay indebtedness under our credit agreement, which had an aggregate principal amount outstanding of $229.5 million as of May 1, 2007. Affiliates of Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc. and Wachovia Capital Markets, LLC, underwriters for this offering, are lenders, and will receive a portion of the net proceeds used to repay debt, under our credit agreement. We will pay New Mountain Capital a transaction fee in connection with this offering. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The selling shareholders include our senior management and directors. See ―Use of Proceeds.‖ We currently do not intend to pay cash dividends, and our investor rights agreement requires the prior written consent of the New Mountain Funds if we wish to pay or declare any dividend on our capital stock. See ―Risk Factors‖ on page 8 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock. PROJ

Dividend policy

Risk factors

Proposed Nasdaq Global Market symbol

The number of shares of common stock to be outstanding immediately after this offering is based on 39,447,102 shares of our common stock outstanding as of May 1, 2007 plus shares of our common stock to be issued upon the exercise of options immediately prior to the closing of this offering. This number excludes: • shares of common stock issuable upon the exercise of options that were outstanding under our 2005 Stock Option Plan at May 1, 2007, with a weighted exercise price of $ per share and that will not be exercised prior to the closing of this offering; 1,840,000 shares of common stock reserved for future issuance under our 2007 Stock Incentive and Award Plan (2007 Plan); and 750,000 shares of common stock reserved for future issuance under our Employee Stock Purchase Plan (ESPP).

• • to

Unless otherwise indicated, all information in this prospectus assumes no exercise by the underwriters of their right to purchase up shares of common stock from the selling shareholders to cover over-allotments. 5

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Summary Consolidated Financial Data The following table provides a summary of our consolidated financial data for the periods indicated. The summary consolidated financial data for each of the years ended December 31, 2004, 2005 and 2006 have been derived from our audited consolidated financial statements. This information should be read in conjunction with ―Capitalization,‖ ―Selected Consolidated Financial Data,‖ ―Management‘s Discussion and Analysis of Financial Condition and Results of Operations‖ and our consolidated financial statements contained elsewhere in this prospectus.
2004 Year Ended December 31, 2005 (dollars in thousands, except per share data) 2006

Statement of Operations Data: REVENUES: Software license fees Consulting services Maintenance and support services Other revenues Total revenues COST OF REVENUES: Cost of software license fees Cost of consulting services Cost of maintenance and support services Cost of other revenues Total cost of revenues GROSS PROFIT Research and development Sales and marketing General and administrative Recapitalization expenses Total operating expenses INCOME FROM OPERATIONS Interest and other income (expense), net Income tax (benefit) expense NET INCOME DILUTED EARNINGS PER SHARE Unaudited Pro Forma Data: Pro forma net income (loss) assuming C-corporation treatment (1) Pro forma earnings (loss) per share - diluted (1) Cash Flow Data: Net cash provided by operating activities Depreciation and amortization Stock-based compensation expense Purchase of property and equipment Cash paid during the year for interest Balance Sheet Data (end of period): Cash and cash equivalents Working capital (deficit) (2) Long-term debt

$

34,934 28,585 54,178 3,516 121,213

$

45,923 41,212 63,709 2,112 152,956

$

74,958 66,573 83,172 3,565 228,268

4,860 23,397 11,287 4,114 43,658 77,555 22,944 16,680 11,367 — 50,991 26,564 202 (1,117 ) $ $ 27,883 0.33 $ $

4,591 32,659 11,969 2,002 51,221 101,735 26,246 19,198 15,181 30,853 91,478 10,257 (10,623 ) (9,098 ) 8,732 0.17 $ $

6,867 54,676 15,483 4,634 81,660 146,608 37,293 37,807 26,622 — 101,722 44,886 (19,619 ) 9,969 15,298 0.38

$ $ $

15,707 0.19 40,625 4,413 — 1,218 74 13,129 3,511 —

$ $ $

(3,569 ) (0.07 ) 11,243 3,944 — 1,511 5,249 17,679 (4,825 ) 213,275

$ $ $

15,298 0.38 18,442 8,097 1,686 4,671 22,352 6,667 (22,562 ) 210,375

$

$

$

(1) (2)

Unaudited pro forma net income (loss) and diluted earnings (loss) per share reflects adjustments to 2004 and the portion of 2005 prior to the recapitalization in April 2005 to reflect what the income tax effects might have been had the company not been treated as an S corporation. Working capital (deficit) represents current assets minus current liabilities.

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Other Unaudited Financial Data: Adjusted EBITDA
(3)

2004 $ 37,288

2005 $ 49,015

2006 $ 58,094

(3)

We define adjusted EBITDA as net income before depreciation, amortization, interest expenses (net of interest income and other), provision for (benefit from) income taxes, stock-based compensation expenses, New Mountain Capital advisory and transaction fees, recapitalization expenses and retention payments associated with our recapitalization. We believe that the presentation of adjusted EBITDA provides useful information to investors and our lenders because these measures enhance their overall understanding of our financial performance and prospects for the future of our ongoing business operations. Specifically, we believe that by reporting adjusted EBITDA, we provide insight and consistency in our financial reporting and present a basis for comparison of our business operations between current, past and future periods. Adjusted EBITDA is used by our management team to plan and forecast our business because it removes the impact of our capital structure (interest expense), asset base (amortization and depreciation), stock-based compensation expenses and taxes from our results of operations. We also use adjusted EBITDA to assess our performance because it excludes certain non-cash items and advisory and transaction fees, which are only incurred in connection with significant acquisitions and financings. In addition, it is a metric our board considers in determining the fair value of our stock option grants and provides a basis for us to compare our financial results to those of other comparable publicly traded companies. Adjusted EBITDA also is required to determine compliance with our debt covenants and assess our ability to borrow additional funds to finance or expand our operations. Adjusted EBITDA should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Some of the limitations of using adjusted EBITDA as an analytical tool include: • • • • • • it does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; it does not reflect changes in our cash requirements; it does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; it does not reflect any income tax payments we may be required to make; although depreciation and amortization are non-cash expenses in the period recorded, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect the cash requirements of such replacements; and it does not adjust for all non-cash income or expense items that are reflected in our consolidated statements of cash flows.

A reconciliation of our reported net income to adjusted EBITDA is as follows: Year Ended December 31, 2004 2005 2006 (dollars in thousands) $ 27,883 $ 8,732 $ 15,298 (334 ) 10,861 19,701 (1,117 ) (9,098 ) 9,969 4,413 3,944 8,097 — 333 2,500 — 30,853 — 6,443 2,721 1,686 — 669 843 $ 37,288 $ 49,015 $ 58,094

Net income Interest expense (income), net Income tax (benefit) expense Depreciation and amortization NMC advisory and transaction fees Recapitalization expense Stock-based compensation expense Retention awards expense in connection with the recapitalization Adjusted EBITDA

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RISK FACTORS Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, in addition to the other information in this prospectus, including our consolidated financial statements, before making an investment decision. Our business, operating results and financial condition could be seriously harmed by any of the risks described below. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. Risks Related To Our Business Our continued success depends upon our ability to manage our anticipated future growth successfully. Managing our growth is one of our greatest challenges. Between 2004 and 2006, our total revenue increased from $121.2 million to $228.3 million, or approximately 88%, and our license revenue increased from $34.9 million to $75.0 million, or approximately 115%. During this same period, our total headcount has increased from 681 employees to 1,041 employees worldwide. Approximately one-third of our most senior employees (executive officers, vice presidents and managing directors) were hired during this period. Although some executive officers have been with us for a number of years, and our chief executive officer and chief financial officer have been with us since June 2005 and October 2005, respectively, a significant portion of our most senior managers have been with us for less than a full year. Past and future growth will continue to place significant demands on our management, financial and accounting systems, information technology systems and other components of our infrastructure. To meet our growth and related demands, we continue to invest in enhanced or new systems, including enhancements to our accounting, billing and information technology systems. We may also need to hire additional personnel, particularly in our sales, marketing, professional services, finance, administrative, legal and information technology groups. If we do not correctly anticipate our needs as we grow, if our senior managers are ineffective, if we fail to successfully implement our enhanced or new systems and other infrastructure improvements effectively and timely or if we encounter delays or unexpected costs in hiring, integrating, training and guiding our new employees, our operating results, financial condition and business reputation could be materially adversely affected. Our quarterly and annual operating results may fluctuate in the future and we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline. Historically, our operating results have varied from quarter to quarter and from year to year. Consequently, we believe that investors should not view our historical revenue and other operating results as accurate indicators of our future performance. A number of factors contribute to the variability in our revenue and other operating results, including the following: • • • • • • • • the number and timing of major customer contract wins, which tend to be unpredictable and which may disproportionately impact our operating results; the higher concentration of our license sales in the last month of each quarter resulting in diminished predictability of our quarterly results; varying demand for our products and services; the discretionary nature of our customers‘ purchases, varying budget cycles and amounts available to fund purchases; delays or deferrals of customer implementations, including as a result of difficulties in hiring and retaining sufficient company personnel or obtaining sufficient external resources to complete these implementations; the level of product and price competition; the length of our sales cycles; any change in the number of customers renewing or terminating maintenance agreements with us; 8

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• • • • • • •

our ability to develop and market new software enhancements and products; announcements of technological innovations by us or our competitors; introduction and success of new products; the mix of products and services we sell; developments with respect to our intellectual property rights or those of our competitors; our ability to attract and retain personnel on a timely basis; and global and domestic economic conditions.

As a result of these and other factors, our operating results may fluctuate significantly and may not meet or exceed the expectations of securities analysts or investors. In that event, the price of our common stock could be adversely affected. Our revenues and related operating results are typically strongest in the fourth quarter, and, therefore, an adverse operating performance in the fourth quarter could have a disproportionate material adverse impact on our results for the entire year. Historically, our revenues and operating results are strongest in the fourth quarter. As a result, our performance in the fourth quarter of any particular year should not be viewed as indicative of results that we will achieve in any other quarter. In addition, if we experience adverse results in the fourth quarter of any particular year, our operating results for the entire year could be disproportionately affected in a materially adverse manner. Management has identified material weaknesses and other deficiencies in our internal controls which, if not remediated successfully, could cause investors to lose confidence in our financial reporting and our stock price to decline. As described in ―Management‘s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls over Financial Reporting,‖ we have identified material weaknesses and other deficiencies in our internal controls. Also, during the course of the audit of our financial statements for the year ended December 31, 2006, which did not include an audit of our internal control over financial reporting, our independent registered public accounting firm communicated to our audit committee the existence of material weaknesses in our internal controls. While we have taken certain remedial actions and are taking further remedial actions, additional controls must be implemented and each newly designed control must be tested successfully before we can be reasonably assured that our internal controls and disclosure controls and procedures will be effective. In addition, remediating control deficiencies depends on several factors, including our success in hiring and training new personnel, retaining existing qualified personnel and implementing and testing new accounting or other software. Our implementation of changes to our internal controls in connection with our remediation plans also are expected to require substantial expenditures, could take a significant period of time to complete and could distract our officers and employees from the operation of our business. As a result, we cannot estimate at this time how long it will take to complete the necessary remedial actions or predict whether these actions will prevent us from having new or repeated material weaknesses or other deficiencies in our internal controls or ineffective disclosure controls and procedures. If we continue to experience material weaknesses and other control deficiencies in our internal controls or conclude that we have ineffective disclosure controls and procedures, investors could lose confidence in our financial reporting and our stock price could decline. Material weaknesses in our internal controls may impede our ability to produce timely and accurate financial statements, which could cause us to fail to file our periodic reports timely, result in inaccurate financial reporting or restatements of our financial statements, subject our stock to delisting and materially harm our business reputation and stock price. As a public company, we will be required to file annual and quarterly periodic reports containing our financial statements with the Securities and Exchange Commission within prescribed time periods. As part of The Nasdaq 9

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Global Market listing requirements, we are also required to provide our periodic reports, or make them available, to our shareholders within prescribed time periods. In light of our existing material weaknesses and other deficiencies in our internal controls, and notwithstanding our ongoing efforts to remediate our control weaknesses, we may not be able to produce reliable financial statements or to file these financial statements as part of a periodic report in a timely manner with the Securities and Exchange Commission and to comply with The Nasdaq Global Market listing requirements. We have had to restate our financial statements in the past, in part due to inadequate internal controls, and we could face potential restatements in the future. The impact of our prior restatement is described in ―Management‘s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls over Financial Reporting.‖ If we are required to restate our financial statements in the future, any specific adjustment may be adverse and may cause our operating results and financial condition, as restated, on an overall basis to be materially and adversely impacted. As a result, we or members of our management could be the subject of adverse publicity, investigations and sanctions by such regulatory authorities as the Securities and Exchange Commission and subject to shareholder lawsuits. Any of the above consequences could cause our stock price to decline materially and could impose significant unanticipated costs on us. In our Form 10-K for the year ending December 31, 2007, our management will be required to evaluate our internal control over financial reporting and to furnish its assessment of our internal controls to our shareholders. In addition, as of each year end beginning with the year ending December 31, 2008, our registered independent public accounting firm will be required to evaluate and test our internal control over financial reporting, to report its own assessment of our controls and to attest as to management‘s assessment of those controls. To the extent we have material weaknesses or other deficiencies in our internal controls, we may determine that we have ineffective internal controls as of December 31, 2007 or any subsequent year end and, as to 2008 and any subsequent year, we may receive an adverse assessment of our internal controls from our auditors. Moreover, any material weaknesses or other deficiencies in our internal controls may delay the conclusion of an annual audit, including the 2007 audit, or a review of our quarterly financial results. If we are not able to issue our financial statements in a timely manner, or if we are not able to obtain the required audit or review of our financial statements by our registered independent public accounting firm in a timely manner, we will not be able to comply with the periodic reporting requirements of the Securities and Exchange Commission and the listing requirements of The Nasdaq Global Market. If these events occur, our common stock listing on The Nasdaq Global Market could be suspended or terminated and our stock price could materially suffer. Absent a waiver, we also would be in default under our credit agreement and our lenders could accelerate any obligation we have to them. In addition, we or members of our management could be subject to investigation and sanction by the Securities and Exchange Commission and other regulatory authorities and to shareholder lawsuits, which could impose significant additional costs on us, divert management attention and materially harm our operating results, financial condition, business reputation and stock price. We may be unsuccessful in entering new markets or further penetrating our existing markets, which could have a material adverse effect on our revenue and financial condition. Our future results depend, in part, on our ability to successfully penetrate new markets, as well as to expand further into our existing markets. In order to grow our business, we expect to expand to other project-focused markets in which we have less experience, such as management consulting, information technology services, discrete project manufacturing and grant-based not-for-profits. Expanding into new markets requires both considerable investment of technical, financial and sales resources and coordinated management of the process. We also will continue to focus on maintaining and increasing our market share in our existing markets. Although we strive to add functionality to our products to address the specific needs of both existing customers and new customers, we may be unable to track developments, develop appropriate products, devote sufficient resources to add all desirable functionality or to pursue product development and marketing activities and strategies effectively. Moreover, our products may not appeal to potential customers in new or existing markets. If we are unable to execute upon this element of our business strategy, our operating results and financial condition may be materially adversely impacted. 10

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Our existing customers may not buy additional software and services from us, which could materially adversely impact our revenue or revenue growth and our operating results and financial condition. Our business model depends, in part, on the success of our efforts to increase sales to our existing customers. In 2006, approximately 65% of total license revenue was derived from sales to existing customers. Traditionally, our installed customer base has generated additional new license, professional service and maintenance revenue. We may be unsuccessful in increasing sales to our existing customers for any number of reasons, including our inability to deploy new applications and features for our existing products or to introduce new products and services that are responsive to the business needs of our customers. If we fail to generate additional business from our customers, our revenue could grow at a slower rate or even decrease in material amounts and our operating results could be materially adversely affected. We may not be successful in expanding our international business. While we currently have customers in approximately 40 countries, we generated less than 5% of our total license revenue in 2006 from international markets. Our ability to expand internationally will depend upon our ability to deliver product functionality and foreign language translations that are responsive to the needs of the international customers that we target. Additionally, we conduct our international business through our direct sales force and also through independent reseller partners. If we cannot identify beneficial strategic alliance partners, or are unable to negotiate favorable alliance terms, our international growth may be hampered. Our failure to expand successfully in international markets could have a material adverse effect on our operating results and financial condition. We also are dependent upon our key offshore development operations in the Philippines and other resources in India. Our inability to maintain and grow those development capacities could seriously impede our business or increase our product development costs. Expansion internationally will require significant attention from our management and substantial financial resources and will require us to add additional management in these markets. If we are unable to grow our international operations in a cost-effective and timely manner, our operating results and financial condition could be materially adversely affected. If we do not successfully address the risks inherent in our international operations, our operating results and financial condition could suffer materially. We currently have customers in approximately 40 countries, including the United Kingdom and other countries in Europe and the Asia-Pacific region, and we intend to expand our international markets. Doing business internationally involves additional risks or challenges that could adversely affect our operating results and financial condition in a significant manner, including: • • • • • • • • our inexperience in international markets and managing international operations; difficulties in staffing and effectively managing a global workforce; conforming software to local business practices or standards, including developing multi-lingual compatible software; potential difficulties in collecting accounts receivable and longer collection periods; unstable political and economic conditions, including in those countries in which development operations occur; higher operating costs due to local laws and regulations; foreign currency controls and fluctuation; potential adverse tax consequences; 11

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• • • • • • • • •

reduced protection for intellectual property rights in a number of countries; dependence on local vendors; trade restrictions; compliance with multiple, conflicting and changing governmental laws and regulations; seasonal reductions in business activity specific to various markets; potentially longer sales cycles; restrictions on repatriation of earnings; restrictive privacy regulations; and restrictions on the export of technologies such as data security and encryption.

We may be subject to integration and other risks from acquisition activities, which could impair our operating results and financial condition. As part of our business strategy, we may acquire or invest in complementary businesses, technologies, product lines and services organizations. In the recent past, we acquired Wind2 Software, Inc. (Wind2) (October 2005), WST Corporation (Welcom) (March 2006), C/S Solutions, Inc. (CSSI) (July 2006) and assets of Applied Integration Management Corporation (AIM) (April 2007). We may not realize the anticipated benefits of past or future acquisitions, and consequently our operating results and financial condition could be materially adversely affected due to a variety of factors, including the following: • • • • • • • • • • • • • difficulty integrating acquired products and technology into our software applications and business strategy; inability to achieve the desired or anticipated cost synergies and benefits; difficulty in coordinating and integrating our sales, marketing, services, support and development activities, successfully cross selling products and managing the combined organizations; retaining strategic alliance partners on attractive terms; difficulty retaining, integrating and training key employees of the acquired business; difficulty and cost of establishing and integrating controls, procedures and policies; difficulty in predicting and responding to issues related to product transition, such as development, distribution and customer support; the possibility that customers of the acquired business may dislike our new ownership, may transition to different technologies offered by our competitors, or may attempt to renegotiate contract terms or relationships, including maintenance agreements; disruption of our ongoing business and diversion of management from day-to-day operations due to integration issues; impairment of relationships with customers, employees and strategic alliance partners of the acquired business; the possibility that goodwill or other intangible assets may become impaired and will need to be written off; potential failure of the due diligence process to identify significant issues, including product quality, architecture and development issues or legal and financial contingencies (including ongoing maintenance or service contract concerns); and claims by third parties relating to intellectual property. 12

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If our customers fail to renew or terminate their maintenance services agreements for our products, or if they successfully renegotiate terms that are not favorable to us, our operating results and financial condition could be materially harmed. Our customers contract with us for ongoing product maintenance and support services. Historically, maintenance services revenues have represented a significant portion of our total revenue, constituting approximately 45%, 42% and 36% of our total revenue in 2004, 2005 and 2006, respectively. Our maintenance services have generally increased year-to-year, contributing to the growth of our maintenance revenue in 2005 and 2006 . Our maintenance services are billed quarterly and paid in advance. A customer may cancel its maintenance services agreement on 30 days notice prior to the beginning of any quarter. At the end of a contract term, or at the time a customer has quarterly cancellation rights, any customer could insist on a modification of its maintenance services agreement terms, including modifications that result in lower maintenance fees or us providing additional services without associated fee increases. A customer may also elect to terminate its maintenance services agreement and contract with another service provider or rely on its in-house technical staff. If our maintenance services business declines, or we are unsuccessful in increasing our maintenance fees, or we are forced to offer pricing or other maintenance terms that are unfavorable to us, our operating results and financial condition could be materially adversely affected. We may be required to defer recognition of license revenue for a significant period of time after entering into a license agreement, which could increase the volatility of our operating results and could materially adversely affect our operating results in any particular quarter. We may defer recognizing license revenue from a license agreement with a customer if, for example: • • • • • • the software transactions include both currently deliverable software products and software products that are under development or require other undeliverable elements; a particular customer requires services that include significant modifications, customizations or complex interfaces that could delay product delivery or acceptance; the software transactions involve acceptance criteria that may preclude revenue recognition; there are identified product-related issues, such as known defects; the software transactions involve payment terms that are longer than our standard payment terms or fees that depend upon contingencies; or we are no longer able to establish historical pricing and maintenance renewal rates to satisfy the applicable accounting rules allowing us to recognize revenue as planned.

Deferral of license revenue can result in significant timing differences between the completion of a sale and the actual recognition of the revenue related to that sale. However, we generally recognize commission and other sales-related expenses associated with sales at the time they are incurred. As a result, if we experience significant deferrals of revenue in accordance with our accounting policies, our operating results in any quarter could be materially adversely affected. If we fail to forecast our revenues accurately, or if we fail to match our expenditures with corresponding revenues, our operating results could be materially adversely affected. We use a variety of factors in our forecasting and planning processes, including historical trends, recent customer history, expectations of customer buying decisions, customer implementation schedules and plans, analyses by our sales and service teams, maintenance renewal rates, our assessment of economic or market conditions and other factors. While these analyses may provide us with some guidance in business planning and 13

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expense management, these estimates are inherently imprecise and may not accurately predict our revenue in a particular quarter or over a longer period of time. A variation in any or all of these factors could cause us to inaccurately forecast our revenues and could result in expenditures without corresponding revenue. As a result, our operating results could be materially adversely affected. To compete effectively against other software providers, we may be forced to reduce prices or limit price increases, which could result in reduced margins, net income or market share, any of which could have a material adverse effect on our operating results and financial condition. We face significant competition across all of our product lines from a variety of sources, including larger multi-national software companies, smaller start-up organizations, point solution application providers, specialized consulting organizations, systems integrators and internal information technology departments of existing or potential customers. Many competitors may have significantly greater financial, technical and marketing resources than we have. Our largest competitors include Oracle, SAP AG, Microsoft and Lawson Software. Several of these competitors have refocused their marketing and sales efforts to the middle market in which we actively market our products. These competitors may implement increasingly aggressive marketing programs, product development plans and sales programs targeted toward our specific industry markets. In addition, some of our competitors have well-established relationships with our current and prospective customers and with major accounting and consulting firms that may prefer to recommend those competitors over us. Our competitors may also seek to influence some customers‘ purchase decisions by offering more comprehensive horizontal product portfolios, superior global presence and more sophisticated multi-national product capabilities. If we do not compete effectively against these potential alternatives, we may experience price reductions, reduced margins and net income or loss of market share, any of which could have a material adverse effect on our operating results and financial condition. Our existing and potential customers may prefer in the future to acquire software on a subscription basis, and if we are required to operate our business on a subscription fee basis to meet this customer preference, our operating results, cash flow and financial condition could be materially adversely affected. Our license revenues are generally derived from the sale of perpetual licenses for software products. Each license fee generally is paid on a one-time basis either on a per-seat basis or as an enterprise license, and related revenue is generally recognized at the time the license is executed. Nearly all of our 2006 license fee revenue was generated from the sale of perpetual licenses. Under our business model, our license fees are typically invoiced and recognized as revenue immediately upon delivery even though the customers‘ use of the software product occurs over time. Some software providers operate under a different business model under which license fees are paid periodically over a defined contract term beginning on the date the customer commences use of the software. If our competitors offer software on a subscription basis, and if our customers prefer that purchasing model, we could be required to change our business model in whole or in part to a subscription business model, a model with which we have little experience. As a result, we may not successfully price, market or otherwise execute a subscription-based model. If we are required to operate our software business in whole or in part on a subscription fee basis, we could experience materially reduced revenues and cash flows, and our financial condition could be materially adversely affected. We may not receive adequate return from our investments in product development, which could materially adversely affect our operating results and financial condition. We expect to commit significant resources to maintain and improve our existing products and to develop new products. For example, in 2006 our product development expenses were approximately $37.3 million, or 16% of 14

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revenue. Our current and future product development efforts may not deliver product features or new products that achieve market acceptance and, as a result, we may not achieve the revenues we anticipate for our investments. We may also be required to price our product enhancements, product features or new products at levels below those anticipated during the product development stage, which could result in lower margins for that product than we originally anticipated. We also may experience unforeseen or unavoidable delays in delivering product enhancements, product features or new products due to factors within or outside of our control. If we do not generate the anticipated future revenues and margins from our investment in product development, our operating results and financial condition could be materially adversely affected. If we fail to adapt to changing technology, market demand for our applications may decline and our business and operating results could be materially adversely affected. The business application software market is characterized by rapidly changing technologies, evolving industry standards, frequent new product introductions and short product lifecycles. The development of new technologically advanced software products is a complex and uncertain process requiring high levels of innovation, as well as accurate anticipation of technological and market trends. Our future success will largely depend upon our ability to develop and introduce timely new products and new product features and enhancements that meet changing customer requirements, market competition and emerging and evolving industry standards and maintain or enhance our competitive position. The introduction of enhanced or new products requires us to manage the transition from, or integration with, older products in order to minimize disruption in sales of existing products and to manage the overall process in a cost-effective manner. Our failure to successfully anticipate changing technological and market trends and to enhance or develop products timely and effectively could materially adversely affect our business and operating results. If our existing or prospective customers prefer an application software architecture other than the standards-based technology and platforms upon which we build or support our products, or if we fail to develop our new product enhancements or products to be compatible with the application software architecture preferred by existing and prospective customers, we may not be able to compete effectively and our operating results and financial condition could suffer materially. Many of our customers operate their information technology infrastructure on standards-based application software platforms such as Java 2 Platform, Enterprise Edition (J2EE) and Microsoft.NET (.NET). A significant portion of our product development is devoted to enhancing our products that deploy these and other standards-based application software platforms. Although the standards and technologies that we have chosen for our products (J2EE and .NET) have been adopted by our customers, there may be existing or new technologies and platforms that achieve industry standard status that are not compatible with our products and that will require us to spend material development resources to develop products that are deployable on these platforms. In addition, if our customers utilizing legacy products migrate to new products, they may choose competing products other than our offerings based upon their preference for a new or different standards-based application software than the software or platforms on which our products operate or are supported. Any of these adverse developments could injure our competitive position and could cause our operating results and financial condition to be materially adversely affected. 15

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Our software products depend upon operating platforms and software developed and supplied by third parties. As a result, changes in the availability of, support for or features of any of these third party platforms or software could materially adversely affect our operating results and financial condition. Our software products depend upon operating platforms and software developed by third parties such as Microsoft, Oracle, Cognos, Actuate, BEA Systems and Sun Microsystems. Our software is built upon underlying operating systems and relational database management system platforms and our software also may be integrated with third party vendor products for the purpose of providing or enhancing necessary functionality. If any of these operating platforms or software products ceases to be supported by its third party provider, or if a provider enhances its product in a manner that prevents us from timely adapting our products to the enhancement, our existing customers may migrate to a new platform incompatible with our offerings and subsequently cease to utilize our products and new customers may seek alternative competitive solutions. While we seek to anticipate these types of third party developments, we may not be successful in developing, marketing and selling our products to replace legacy products no longer desired by our customers. In addition, third parties may not remain in business, cooperate with us to support our software products or make their product available to us, commercially price their offerings or provide an effective substitute product to us and our customers. Any of these adverse developments could have a material adverse effect upon our operating results and financial condition. If we lose access to, or fail to obtain, third party software development tools on which our product development efforts depend, we may be unable to develop additional applications and functionality and our ability to maintain our existing applications may be diminished, and this may adversely impact our operating results and financial condition materially. We license software development tools from third parties and use those tools in the development of our products. Consequently, we depend upon third parties‘ abilities to deliver quality products, correct errors, support their current products, develop new and enhanced products on a timely and cost-effective basis and respond to emerging industry standards and other technological changes. If any of these third party development tools become unavailable, if we are unable to maintain or renegotiate our licenses with third parties to use the required development tools, or if third party developers fail to adequately support or enhance the tools, we may be forced to establish relationships with alternative third party providers and to rewrite our products using different development tools. Although we believe that we could obtain other development tools with comparable functionality from other third parties, we may not be able to obtain them on reasonable terms or in a timely fashion. In addition, we may not be able to successfully rewrite our products using different development tools, or we may encounter substantial delays in doing so. If we do not adequately replace these software development tools in a timely manner, our operating results and financial condition could be adversely affected. If our products fail to perform properly due to undetected defects or similar problems, and if we fail to develop an enhancement to resolve any defect or other software problem, we could be subject to product liability, performance or warranty claims or incur significant costs, our reputation may be harmed and our operating results and financial condition could be materially adversely impacted. Our software applications are complex and, as a result, defects or other software problems may be found during development, product testing, implementation or deployment. In the past, we have encountered defects in our products as they are introduced or enhanced. If our software contains defects or other software problems: • • • • • • we may not be paid; a customer may bring a warranty claim against us; a customer may bring a claim for their losses caused by our product failure; we may face a delay or loss in the market acceptance of our products; our reputation and competitive position may be damaged; and significant customer relations problems may result. 16

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Our customers may use our software together with software and hardware applications and products from other companies. As a result, when problems occur, it may be difficult to determine the cause of the problem, and our software, even when not the ultimate cause of the problem, may be misidentified as the problem. The existence of these defects or other software problems, even when our software is not the source of the problem, might cause us to incur significant costs, divert the attention of our technical personnel from our product development efforts for a lengthy time period, require extensive consulting resources, hurt our reputation and cause significant customer relations problems. In addition, our customers deploy our applications and products in critical parts of their organizations‘ business processes. If our products fail to perform properly, we may face liability claims notwithstanding that our standard customer agreements contain limitations of liability provisions. A material claim or lawsuit against us could result in significant legal expense, harm our reputation, damage our customer relations, divert management‘s attention from our business and expose us to the payment of material damages or settlement amounts. In addition, interruption in the functionality of our products or other defects could materially adversely affect future sales of licenses and services and our operating results. A breach in the security of our software could subject us to claims and significant additional costs and could harm our reputation. Fundamental to the use of our software is the ability to collect, secure, store and transmit confidential information. Third parties may attempt to breach the security of our applications, third party applications upon which our products are based or those of our customers and their databases. We may be responsible, including for liability purposes, to our customers for certain breaches in the security of our software products. Any security breaches for which we are, or are perceived to be, responsible, in whole or in part, could materially harm our operating results and our reputation. Computer viruses, physical or electronic break-ins and similar disruptions could lead to interruptions and delays in customer processing or a loss of data. We might be required to expend significant financial and other resources to protect further against security breaches or to rectify problems caused by any security breach. Our future success depends upon our ability to retain and hire key employees. Our future success depends, in part, upon our ability to retain and attract highly skilled managerial, professional service, sales, development, marketing, accounting, administrative and infrastructure-related personnel. The market for highly skilled employees is competitive in the labor markets in which we operate. Our business could be adversely affected if we are unable to retain key employees or recruit qualified personnel in a timely fashion, or if we are required to incur unexpected increases in compensation costs to retain key employees or meet our hiring goals. If we are not able to retain and attract the personnel we require, or do so on a cost-effective basis, our operating results and financial condition could be materially adversely affected. The loss of key members of our senior management team could disrupt the management of our business and materially impair our operating results and financial condition. We believe that our success depends on the continued contributions of the members of our senior management team. We rely on our executive officers and other key managers for the successful performance of our business. The loss of the services of one or more of our executive officers or key managers could have an adverse effect on our operating results and financial condition. Although we have employment arrangements with several members of our senior management team, none of these arrangements prevents any of our employees from leaving us. We do not maintain key man life insurance on any of our members of senior management. The loss of any member of our senior management team could materially impair our ability to perform successfully, including achieving satisfactory operating results, maintaining our financial condition and maintaining our growth. 17

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We will incur significantly higher costs as a result of being a public company. As a public company, we will incur significantly higher accounting, legal and other expenses than we did as a private company. The Sarbanes-Oxley Act of 2002, as well as similar or related rules adopted by the Securities and Exchange Commission and The Nasdaq Global Market, have imposed substantial requirements on public companies, including requiring changes in corporate governance practices and adding requirements relating to internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act. We expect these rules and regulations to increase our accounting, legal and other costs and to make some activities more time-consuming. In addition, we expect our directors‘ and officers‘ liability insurance to become more costly for us, and we may need to accept reduced policy limits and coverage unless we are prepared to expend greater amounts to maintain coverage similar to our coverage today. If we fail to predict these costs accurately or to manage these costs effectively, our operating results and financial condition could be materially adversely affected. We may not be able to protect adequately our intellectual and other proprietary rights. Our success and ability to compete is dependent in significant degree on our intellectual property, particularly our proprietary software. We rely on a combination of copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to establish and protect our rights in our software and other intellectual property. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy, design around or reverse engineer aspects of our products or to obtain and use information that we regard as proprietary. Our competitors may independently develop software that is substantially equivalent or superior to our software. Furthermore, we have no patents and existing copyright law affords only limited protection for our software and may not protect such software in the event competitors independently develop products similar to ours. We take significant measures to protect the secrecy of our proprietary source code. Despite these measures, unauthorized disclosure of some of or all of our source code could occur. Such unauthorized disclosure could potentially cause our source code to lose trade secret protection and make it easier for third parties to compete with our products by copying their functionality, structure or operation. In addition, the laws of some countries may not protect our proprietary rights to the same extent as do the laws of the United States. Therefore, we may not be able to protect our proprietary software against unauthorized third party copying or use, which could adversely affect our competitive position, operating results and financial condition. Any litigation to protect our proprietary rights could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources and could be unsuccessful. Claims that we infringe upon third parties’ intellectual property rights could be costly to defend or settle. Third parties could claim that we have infringed upon their intellectual property rights. Such claims, whether or not they have merit, could be time-consuming to defend, result in costly litigation, divert our management‘s attention and resources from day-to-day operations or cause significant delays in our delivery or implementation of our products. We could also be required to cease to develop, use or market infringing or allegedly infringing products, to develop non-infringing products or to obtain licenses to use infringing or allegedly infringing technology. We may not be able to develop alternative software or to obtain such licenses or, if a license is obtainable, we cannot be certain that the terms of such license would be commercially acceptable. If a claim of infringement were threatened or brought against us, and if we were unable to license the infringing or allegedly infringing product or develop or license substitute software, or were required to license 18

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such software at a high royalty, our operating results and financial condition could be materially adversely affected. In addition, we agree, from time to time, to indemnify our customers against certain claims that our software infringes upon the intellectual property rights of others. We could incur substantial costs in defending our customers against such claims. Catastrophic events may disrupt our business. We are a highly automated business and rely on our network infrastructure and enterprise applications and internal technology systems for our development, marketing, operational, support and sales activities. A disruption or failure of any or all of these systems in the event of a major telecommunications failure, cyber-attack, terrorist attack, fire, earthquake, severe weather conditions or other catastrophic event could cause system interruptions, delays in our product development and loss of critical data, could prevent us from fulfilling our customer contracts, change customer purchasing intentions or expectations, create delays or postponements of scheduled implementations or other services engagements or otherwise disrupt our relationships with current or potential customers. We have developed disaster recovery plans and backup systems to reduce the potentially adverse effect of catastrophic events, but these plans and systems may not be effective in addressing a catastrophic event that results in the destruction or disruption of any of our critical business or information technology systems. As a result of any of these events, we may not be able to conduct normal business operations and our operating results and financial condition could be materially adversely affected. Our business is partially dependent upon federal government contractors and the need for compliance with federal government contract accounting standards. Our failure to anticipate or adapt timely to changes in those standards could materially adversely affect our operating results and financial condition. We derive a significant portion of our revenues from federal government contractors. In 2006, approximately half of our license revenue was generated from federal government contractor customers. Our government contractor customers utilize our Deltek Costpoint, Deltek GCS Premier or our enterprise project management applications to manage their contracts with the federal government in a manner that accounts for expenditures in accordance with the federal government contracting accounting standards. A key function of our software is to enable government contractors to enter, review and organize accounting data in a compliant and auditable fashion. If the federal government alters these standards, or if there were any significant problem with our software from a compliance perspective, we may be required to enhance our software products to satisfy any new or altered standards. Our inability to effectively and efficiently modify our applications to resolve any compliance issue could materially adversely impact our operating results and our financial condition. Changes in the federal government’s budget or spending priorities could materially reduce government contractors’ demand for our products and services. The federal government‘s budget is subject to annual renewal and may be increased or decreased, whether on an overall basis or on a basis that could disproportionately injure our customers. Any significant downsizing, consolidation or insolvency of our federal government contractor customers as the result of changes in procurement policies, budget reductions, loss of government contracts, delays in contract awards or other similar procurement obstacles could materially adversely impact our customers‘ demand for our software products and related services and maintenance. Restrictive covenants in our credit agreement may materially adversely affect our financial flexibility. Our credit agreement governing our term loan and revolving credit facility contains covenants that, among other things, restrict our and our subsidiaries‘ ability to dispose of assets, incur additional indebtedness, incur 19

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guarantee obligations, pay dividends, create liens on assets, enter into sale and leaseback transactions, make investments, loans or advances, make acquisitions, engage in mergers or consolidations, change the business conducted by us and engage in certain transactions with affiliates. The credit agreement also requires us to comply with financial ratios related to fixed charge coverage, interest coverage and leverage ratios. Over time, the ratios become more restrictive. We may not be able to comply with these financial covenants, and the restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. Our ability to comply with the covenants and restrictions contained in our credit agreement may be affected by economic, financial, industry or other conditions, some of which may be beyond our control. For the year ended December 31, 2006, we did not comply with the covenant requiring us to submit audited annual financial statements by March 31, 2007, although we were able to provide the audited financial statements within the 30-day grace period provided under the credit agreement. The breach of any of the covenants or restrictions contained in our credit agreement, unless cured within the applicable grace period, could result in a default under the credit agreement that would permit the lenders to declare all amounts outstanding to be due and payable, together with accrued and unpaid interest. In such an event, we may not have sufficient assets to repay such indebtedness. As a result, any default could have serious consequences to our financial condition and operating results. Risks Related to this Offering and Ownership of Our Common Stock There was no public market for our common stock immediately prior to this offering, and our stock price could be volatile and could decline for a variety of reasons following this offering, resulting in a substantial loss on your investment. Our common stock has not been bought or sold publicly since 2002. We cannot predict the extent to which investor interest will lead to an active trading market for our common stock or the prices at which our common stock will trade following this offering. If an active trading market does not develop, you may have difficulty selling any common stock that you buy and the value of your shares may be impaired. The initial public offering price for our shares of common stock will be determined by negotiations between the representatives of the underwriters and us. This price may not reflect the market price of our common stock following this offering. You may be unable to resell the common stock you purchase at or above the initial public offering price. The stock markets generally have experienced extreme volatility, often unrelated to the operating performance of the individual companies whose securities are traded publicly. Broad market fluctuations and general economic conditions may materially adversely affect the trading price of our common stock. Significant price fluctuations in our common stock could result from a variety of other factors, including: • • • • • actual or anticipated fluctuations in our operating results or financial condition; our competitors‘ announcements of significant contracts, acquisitions or strategic investments; changes in our growth rates or our competitors‘ growth rates; conditions of the project-focused software industry; and any other factors described in this ―Risk Factors‖ section of this prospectus.

If securities analysts do not publish research or reports about our company and our industry, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline. The trading market for our common stock will depend in part on the research and reports that securities analysts publish about our company and our industry. We do not control these analysts. One or more analysts 20

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could downgrade our stock or issue other negative commentary about our company or our industry. In addition, we may be unable or slow to attract research coverage, and the analysts who publish information about our common stock will have had relatively little recent experience with our company, which could affect their ability to accurately forecast our results or make it more likely that we fail to meet their estimates. Alternatively, if one or more of these analysts cease coverage of our company, we could lose visibility in the market. As a result of one or more of these factors, the trading price for our stock could decline. Future sales of our common stock by existing shareholders could cause our stock price to decline. Upon completion of this offering, we will have shares of common stock outstanding, of which shares will be held by our current shareholders, assuming no exercise of the underwriters‘ over-allotment option. If our existing shareholders, including members of our executive team, sell substantial amounts of our common stock in the public market or if the market perceives that shareholders may sell shares of common stock, the market price of our common stock could decrease significantly. In connection with this offering, shareholders holding substantially all of our common stock have entered into lock-up agreements that prevent the sale of shares of our common stock for up to 180 days after the date of this prospectus, subject to an extension in certain circumstances as set forth in ―Underwriting.‖ Following the expiration of the lock-up period, the New Mountain Funds will have the right, subject to certain conditions, to require us to register the sale of their shares under the federal securities laws. If this right is exercised, holders of other shares and, in certain circumstances, options may sell their shares along side the New Mountain Funds, which could cause the prevailing market price of our common stock to decline. Approximately shares of our common stock will be, directly or indirectly, subject to a registration rights agreement upon completion of this offering. We intend to file a registration statement with the Securities and Exchange Commission covering all of the shares subject to options outstanding under our 2005 Stock Option Plan, but not exercised, as of the closing of this offering and 2,590,000 shares reserved for issuance under our 2007 Plan and our ESPP. A decline in the trading price of our common stock due to the occurrence of any future sales might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities and may cause you to lose part or all of your investment in our shares of common stock. We do not expect to pay any cash dividends in the foreseeable future. We do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future. The terms of our credit agreement include provisions that restrict the payment of cash dividends on our common stock. In addition, we currently need the consent of the New Mountain Funds before we pay a dividend. Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase our common stock. Our largest shareholders and their affiliates will continue to have substantial control over us after this offering and could limit your ability to influence the outcome of key transactions, including any change of control. Upon the completion of this offering, we anticipate that our largest shareholders, the New Mountain Funds, will own, in the aggregate, % of our outstanding common stock and 100% of our Class A common stock. As a result, the New Mountain Funds would be able to control all matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other significant corporate transactions. The New Mountain Funds will retain the right to elect a majority of our directors so long as they own their Class A common stock and at least one-third of our outstanding common stock. In addition, the New Mountain Funds 21

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will have the benefit of the rights conferred by the investor rights agreement and New Mountain Capital will continue to have certain rights under the advisory agreement. See ―Certain Relationships and Related Party Transactions—Recapitalization—Investor Rights Agreement‖ and ―Certain Relationships and Related Party Transactions—Recapitalization—Advisory Agreement.‖ The New Mountain Funds may have interests that differ from your interests, and they may vote in a way with which you disagree and that may be adverse to your interests. The concentration of ownership of our common stock may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of our company and may adversely affect the market price of our common stock. You will experience immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you purchase shares of our common stock in this offering, you will experience immediate dilution of $ per share based on an assumed initial public offering price of $ , the midpoint of the range set forth on the cover of this prospectus, because the price that you pay will be substantially greater than the adjusted net tangible book value per share of common stock that you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the price of the shares being sold in this offering when they purchased their shares of our common stock. If outstanding options to purchase our common stock are exercised, you will experience additional dilution. See ―Dilution.‖ We are a “controlled company” within the meaning of The Nasdaq Global Market’s standards and, as a result, will qualify for, and may rely on, exemptions from several corporate governance requirements. Upon completion of this offering, our controlling shareholders, the New Mountain Funds, are expected to control a majority of our outstanding common stock and will have the ability to elect a majority of our board of directors. As a result, we are a ―controlled company‖ within the meaning of the rules governing companies with stock quoted on The Nasdaq Global Market. Under these rules, a company as to which an individual, a group or another company holds more than 50% of the voting power is considered a ―controlled company‖ and is exempt from several corporate governance requirements, including requirements that: • • • a majority of the board of directors consist of independent directors; compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors; and director nominees be selected or recommended for election by a majority of the independent directors or by a nominating committee that is composed entirely of independent directors.

Following this offering, we intend to avail ourselves of these exemptions. In addition, because we are listing our common stock in connection with an initial public offering, following this offering our audit committee will not consist entirely of independent directors. Accordingly, you will not have the same protections afforded to shareholders of other companies that are subject to all of The Nasdaq Global Market corporate governance requirements as long as the New Mountain Funds own a majority of our outstanding common stock. Anti-takeover provisions in our charter documents, Delaware law and our Shareholder’s Agreement could discourage, delay or prevent a change in control of our company and may adversely affect the trading price of our common stock. We are a Delaware corporation, and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us (as a public company with common stock listed on The Nasdaq Global Market) from engaging in a business combination with an interested shareholder for a period of three years after the person becomes an interested shareholder, even if a change in control would be beneficial to our existing shareholders. In addition, our certificate of incorporation and bylaws may discourage, 22

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delay or prevent a change in our management or control over us that shareholders may consider favorable. Our certificate of incorporation and bylaws: • • • • • • • • authorize the issuance of ―blank check‖ preferred stock that could be issued by our board of directors to thwart a takeover attempt; provide the New Mountain Funds, through their stock ownership, with the ability to elect a majority of our directors if they beneficially own one-third or more of our common stock; do not provide for cumulative voting; provide that vacancies on the board of directors, including newly created directorships, may be filled only by a majority vote of directors then in office (subject to the rights of the Class A shareholders); limit the calling of special meetings of shareholders; permit shareholder action by written consent if the New Mountain Funds and its affiliates own one-third or more of our common stock; require supermajority shareholder voting to effect certain amendments to our certificate of incorporation; and require shareholders to provide advance notice of new business proposals and director nominations under specific procedures.

In addition, certain provisions of our shareholder‘s agreement require that each shareholder party to the shareholder‘s agreement vote its shares of our common stock in favor of certain transactions in which the New Mountain Funds propose to sell all or any of portion of their shares of our common stock or in which we propose to sell or otherwise transfer for value all or substantially all of the stock, assets or business of the company. See ―Description of Capital Stock—Anti-takeover Effects of Provisions of Our Certificate of Incorporation and Bylaws, Delaware Law and Shareholder‘s Agreement.‖ 23

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FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as ―anticipate,‖ ―believe,‖ ―could,‖ ―estimate,‖ ―expect,‖ ―intend,‖ ―may,‖ ―plan,‖ ―potential,‖ ―should,‖ ―will,‖ ―would‖ or similar words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under ―Risk Factors,‖ as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this prospectus could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 24

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USE OF PROCEEDS We estimate that the net proceeds from the sale of shares of our common stock to be sold by us in this offering will be approximately $ million, assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, including a transaction fee of $ payable to New Mountain Capital. We will not receive any of the proceeds from the sale of common stock by the selling shareholders. The selling shareholder include our senior management and directors. We expect to use the net proceeds to repay indebtedness outstanding under our revolving credit facility and to repay a portion of our indebtedness under the term loan of our credit agreement. As of May 1, 2007, we had $17.5 million of principal outstanding under our revolving credit facility and $212.0 million of principal outstanding on our term loan. The term loan was initially incurred on April 22, 2005 to finance our recapitalization. In 2006, we borrowed under our revolving credit facility primarily to repay a liability owed to the selling shareholders in the recapitalization and finance part of the CSSI acquisition. An additional term loan in the amount of $100 million was incurred on April 28, 2006 to finance the repayment of our 8% subordinated debentures due 2015. As of May 1, 2007, the interest rate was 7.6% for the term loan and 7.82% for the revolving credit facility. The term loan matures on April 22, 2011, and the revolving credit facility matures on April 22, 2010. Affiliates of Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc. and Wachovia Capital Markets, LLC, underwriters for this offering, are lenders, and will receive a portion of the net proceeds used to repay debt, under our credit agreement. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of the prospectus) would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. However, upon an increase in the assumed initial public offering price, we may determine to sell fewer shares in this offering, in which event the selling shareholders may sell more shares. 25

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DIVIDEND POLICY We have never declared nor paid any cash dividends on our capital stock. The terms of our credit agreement include provisions that restrict the payment of cash dividends on our common stock. In addition, the terms of our investor rights agreement with the New Mountain Funds and certain other persons require the prior written consent of the New Mountain Funds if we wish to pay or declare any dividend on our capital stock until the New Mountain Funds and any assignee of the New Mountain Funds own less than 15% of our outstanding common stock. See ―Certain Relationships and Related Party Transactions—Recapitalization—Investor Rights Agreement.‖ We currently intend to retain any future earnings, if any, for use in the operation and expansion of our business. As a result, we do not anticipate paying cash dividends in the foreseeable future. Any future determination related to our dividend policy will be at the discretion of our board of directors and will depend on then-existing conditions, business prospects and other factors our board of directors may deem relevant. 26

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CAPITALIZATION The following table presents cash and cash equivalents and our capitalization at December 31, 2006: • • on an actual basis; and on an adjusted basis to reflect: • our receipt of the estimated net proceeds from this offering based on an assumed initial public offering price of $ share (the midpoint of the range set forth on the cover of this prospectus) after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us; and our repayment of indebtedness with such net proceeds as described in ―Use of Proceeds.‖ per

•

You should read this table together with ―Management‘s Discussion and Analysis of Financial Condition and Results of Operations‖ and our consolidated financial statements, each contained elsewhere in this prospectus.
As of December 31, 2006 As Adjusted (1)

Actual

Cash and cash equivalents Long-term debt, including current portion Shareholders‘ deficit: Preferred stock $0.001 par value—authorized, 2,000,000 shares; outstanding, 100 shares, actual and as adjusted Common stock, $0.001 par value—authorized, 90,000,000 shares; outstanding, 39,405,993 shares actual, shares as adjusted Additional paid-in-capital Accumulated deficit Accumulated other comprehensive income Total shareholders‘ equity Total capitalization

$ $

6,667 230,525

$ $

— 39 112,350 (275,943 ) (511 ) (164,065 ) $ 66,460 $

—

(1)

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of the prospectus) would increase or decrease, as applicable, the amount of additional paid-in capital and total shareholders equity by approximately $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. However, upon an increase in the assumed initial offering price, we may determine to sell fewer shares in this offering, in which event the selling shareholders may determine to sell more shares.

of

The outstanding share information is based on 39,447,102 shares of our common stock outstanding as of May 1, 2007 plus the issuance shares of our common stock upon the exercise of options immediately prior to the closing of this offering. This number excludes: • • • shares of common stock issuable upon the exercise of options that were outstanding under our 2005 Stock Option Plan at May 1, 2007, with a weighted exercise price of $ per share and that will not be exercised prior to the closing of this offering; 1,840,000 shares of common stock reserved for future issuance under our 2007 Plan; and 750,000 shares of common stock reserved for future issuance under our ESPP. 27

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DILUTION If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock after this offering. As of , our as adjusted net tangible book value was approximately $ million, or $ per share of common stock. Our as adjusted net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of our common stock outstanding as of , after giving effect to the exercise of options prior to completion of this offering to acquire shares of our common stock. After giving effect to our sale in this offering of shares of our common stock at an assumed initial public offering of $ per share (the midpoint of the range set forth on the cover of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of would have been approximately $ million, or $ per share of our common stock. This represents an immediate increase in as adjusted net tangible book value of $ per share to our existing shareholders and an immediate dilution of $ per share to investors purchasing shares in this offering. The following table illustrates this per share dilution: Assumed initial public offering price per share As adjusted net tangible book value per share as of , before giving effect to this offering Increase in as adjusted net tangible book value per share attributable to investors purchasing shares in this offering As adjusted net tangible book value per share after giving effect to this offering Dilution in as adjusted net tangible book value per share to investors in this offering $ $ $

The following table summarizes, as of December 31, 2006, the differences between the number of shares of common stock purchased from us, after giving effect to the exercise of options immediately prior to completion of this offering to acquire shares of our common stock, the total cash consideration paid and the average price per share paid by our existing shareholders and by our new investors purchasing stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of the prospectus) before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us:
Shares Purchased Numbe r Percent Total Consideration Amount Percent Average Price Per Share

Existing shareholders New public investors Total

% $ % $

% $ $ %

The above discussion and table assume no exercise of stock options outstanding as of , including shares of common stock issuable upon exercise of options with a weighted-average exercise price of $ per share (other than those that will be exercised immediately prior to the completion of this offering). If all other options were exercised, then our existing shareholders, including the holders of these options, would own % and our new investors would own % of the total number of shares of our common stock outstanding upon the closing of this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover of the prospectus) would increase or decrease, as applicable, our as adjusted net tangible book value after this offering by $ million and increase or decrease, as applicable, the dilution to new investors by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. 28

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SELECTED CONSOLIDATED FINANCIAL DATA The statement of operations data for the years ended December 31, 2004, 2005 and 2006 and the balance sheet data as of December 31, 2005 and 2006 are derived from and are qualified by reference to, our audited consolidated financial statements that have been audited by Deloitte & Touche LLP, independent registered public accountants, and are included in this prospectus. The statement of operations data for the years ended December 31, 2002 and 2003 and the balance sheet data as of December 31, 2002, 2003 and 2004 are derived from our unaudited consolidated financial statements that are not contained in this prospectus and, in the opinion of management, have been prepared in accordance with accounting principles generally accepted in the United States and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of results for these periods. Historical results are not necessarily indicative of the results to be expected in any future period. In addition, our historical results for each of the years presented in this table may not be comparable due to certain significant transactions that the company undertook in the periods presented, including the impact of the recapitalization in 2005 and the change to our C corporation tax status in 2005. The following selected consolidated financial data should be read in conjunction with ―Management‘s Discussion and Analysis of Financial Condition and Results of Operations‖ and our consolidated financial statements contained elsewhere in this prospectus.
2002 Statement of Operations Data: REVENUES: Software license fees Consulting services Maintenance and support services Other revenues Total revenues COST OF REVENUES: Cost of software license fees Cost of consulting services Cost of maintenance and support services Cost of other revenues Total cost of revenues GROSS PROFIT Research and development Sales and marketing General and administrative Recapitalization expenses Operating expenses INCOME FROM OPERATIONS Interest income Interest expense Other (expense) income, net INCOME (LOSS) BEFORE INCOME TAXES Income tax (benefit) expense NET INCOME EARNINGS PER SHARE: Basic Diluted Unaudited Pro Forma Data: Pro forma net income (loss) assuming C corporation treatment (1) Pro forma diluted earnings (loss) per share—diluted (1) COMMON SHARES AND EQUIVALENTS OUTSTANDING: Basic weighted average shares Diluted weighted average shares 112,989 113,989 84,741 84,741 $ Year Ended December 31, 2003 2004 2005 (in thousands, except per share data) 2006

$

23,742 18,063 43,987 4,512 90,304

$

36,636 22,842 47,778 2,091 109,347

$

34,934 28,585 54,178 3,516 121,213

$

45,923 41,212 63,709 2,112 152,956

$

74,958 66,573 83,172 3,565 228,268

7,032 16,164 10,281 3,075 36,552 53,752 22,521 14,819 11,061 — 48,401 5,351 443 (635 ) 17 5,176 3,156 2,020 $

4,269 17,164 10,504 1,972 33,909 75,438 22,305 15,108 10,416 — 47,829 27,609 438 (632 ) 954 28,369 3,594 24,775 $

4,860 23,397 11,287 4,114 43,658 77,555 22,944 16,680 11,367 — 50,991 26,564 408 (74 ) (132 ) 26,766 (1,117 ) 27,883 $

4,591 32,659 11,969 2,002 51,221 101,735 26,246 19,198 15,181 30,853 91,478 10,257 436 (11,297 ) 238 (366 ) (9,098 ) 8,732 $

6,867 54,676 15,483 4,634 81,660 146,608 37,293 37,807 26,622 — 101,722 44,886 397 (20,098 ) 82 25,267 9,969 15,298

$ $

0.02 0.02

$ $

0.29 0.29

$ $

0.33 0.33

$ $

0.17 0.17

$ $

0.39 0.38

$ $

15,707 0.19 84,741 84,741

$ $

(3,569 ) (0.07 ) 52,910 52,910

$ $

15,298 0.38 39,332 40,262

2002 Balance Sheet Data:

2003

At December 31, 2004 (in thousands)

2005

2006

Cash and cash equivalents Working capital (deficit) (2) Total assets Deferred revenue Long-term debt, net of current portion Total shareholders‘ equity (deficit)

$

6,417 (7,405 ) 53,793 23,732 12,069 966

$

16,613 5,100 59,930 16,835 3,319 20,003

$

13,129 3,511 56,331 22,541 — 14,044

$

17,679 (4,825 ) 95,650 27,253 213,275 (183,109 )

$

6,667 (22,562 ) 134,488 26,612 210,375 (164,065 )

(1) (2)

Unaudited pro forma net income (loss) and diluted earnings (loss) per share reflects adjustments to 2004 and the portion of 2005 prior to the recapitalization in April 2005 to reflect what the income tax effects might have been had the company not been treated as an S corporation. Working capital (deficit) represents current assets minus current liabilities.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion together with our financial statements contained elsewhere in this prospectus. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business, operations and financial position. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those we discuss under “Risk Factors” and elsewhere in this prospectus. Company Overview We are a leading provider of enterprise applications software and related services designed specifically for project-focused organizations. These organizations include A/E firms, government contractors, aerospace and defense contractors, information technology services firms, consulting companies, discrete project manufacturing companies, grant-based not-for-profit organizations and government agencies, among others. Project-focused organizations generate revenue from defined, discrete, customer-specific engagements or activities, rather than from mass-producing or distributing products. Project-focused organizations typically require specialized software to help them automate complex business processes around the engagement, execution and delivery of projects. Our software enables them to greatly enhance the visibility they have over all aspects of their operations by providing them increased control over their critical business processes, accurate, project-specific financial information and real-time performance measurements. With our software applications, project-focused organizations can better measure business results, optimize performance and streamline operations, thereby enabling them to win new business. We have experienced significant growth in recent years. Our future success depends, in part, on many factors, including: • • • • • • Our ability to expand our presence and penetration of existing markets in which we already have a leading position. The extent to which we can sell new products to existing customers and sell upgrades to applications from legacy products in our current portfolio. Our success in expanding our ecosystem of alliance partners. Our ability to broaden our reach geographically with project-focused organizations. Our ability to expand our presence in new markets. The pursuit and successful integration of strategic acquisitions.

In 2005, we increased our investments in product development, sales and marketing to increase our presence in our targeted markets and compete more aggressively. We believe that these additional investments have been instrumental in further improving our competitive position and driving our revenue growth from 2005 to 2006. Consistent with our growth plans, we expect to continue to increase our spending on sales, marketing and product development in the future. Our international expansion plans, in particular, will require significant investment in local marketing initiatives and translation of our products and related user documentation into local languages. We may acquire businesses in foreign countries to facilitate our international growth objectives in those locations or to provide capabilities in adapting our products to local markets. History We were founded in 1983 to develop and sell accounting software solutions for organizations and firms that contract with the U.S. federal government. Since our founding, we have continued our focus on providing solutions to federal contractors as well as to other project-focused organizations, and at the same time we have 30

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broadened our product offerings by developing new software products, selectively acquiring businesses with attractive project-focused applications and services and partnering with third parties. Our two founders were Donald and Kenneth deLaski. In April 2005, the New Mountain Funds purchased the majority ownership of our company from the deLaski shareholders through a recapitalization. Immediately after this transaction, we implemented a strategy to recruit additional management talent and significantly improve our competitive position and growth prospects through increased investments in sales, marketing and product development initiatives, complemented by strategic acquisitions aimed at broadening our customer base and our product offerings. In October 2005, we acquired Wind2, an enterprise software provider serving project-focused A/E and other professional services firms. The acquisition of Wind2 enabled us to expand our presence in the A/E market with the addition of over 2,500 customers, primarily small- and medium-sized engineering firms, to our existing installed base of more than 8,000. In March 2006, we acquired Welcom, a leading provider of project portfolio management solutions, focused on earned value management, planning and scheduling, portfolio analysis, risk management and project collaboration products. The acquisition of Welcom increased our presence among a number of multinational aerospace, defense and government clients, augmenting our existing installed base of customers. This acquisition complemented our core product offerings and created opportunities for additional sales to our existing customer base. In July 2006, we acquired CSSI, a leading provider of business intelligence tools for the earned value management marketplace. The acquisition of CSSI built upon our leadership position in the enterprise project management sector by incorporating collaborative earned value management analytics delivered by CSSI‘s wInsight software with our own earned value management engine, Cobra, and Costpoint, our enterprise resource planning solution for mid- to large-size government contractors. In addition, in April 2007, we acquired the business assets of AIM, a provider of project management consulting services. This acquisition supplemented our existing project portfolio management systems implementation expertise and capabilities and allowed us to provide additional project portfolio management consulting, training and implementation services. Our 2005 and 2006 revenue growth was driven primarily by the investments we made in product development, sales and marketing and our strengthened management team. In 2006, we experienced license revenue growth of $29.0 million or 69% over 2005. Approximately 27% of the total $29.0 million increase was attributable to acquisitions and 73% to organic growth. We believe these investments will continue to position us well for the future. In April 2007, we reincorporated in the State of Delaware as Deltek, Inc. Critical Accounting Policies and Estimates In presenting our financial statements in conformity with accounting principles generally accepted in the United States, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates and assumptions on historical experience or on various other factors that we believe to be reasonable and appropriate under the circumstances. On an ongoing basis, we reconsider and evaluate our estimates and assumptions. Actual results may differ significantly from these estimates. Future results may differ from our estimates under different assumptions or conditions. We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our consolidated financial statements. 31

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For further information on our critical and other significant accounting policies, see Note 1, Organization and Summary of Significant Accounting Policies, of our consolidated financial statements contained elsewhere in this prospectus. Revenue Recognition We recognize revenue in accordance with the provisions of The American Institute of Certified Public Accountants Statement of Position (SOP) 97-2, Software Revenue Recognition , as amended by SOP 98-9, Modifications of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions , as well as Technical Practice Aids issued from time to time by the AICPA, and in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition . We derive revenues from three primary sources, or elements: software license fees for our products; maintenance and support for those products; and consulting services, including training, related to those products. A typical sales agreement includes both software licenses and maintenance and may also include consulting services, including training. Software License Fee Revenue s: For sales arrangements involving multiple elements where the software does not require significant modification or customization, we recognize software license revenues using the residual method as described in SOP 98-9 because to date we have not established vendor specific objective evidence (VSOE) of fair value for the license element. Under the residual method, we allocate revenue to, and defer recognition of, undelivered elements based on their VSOE of fair value and recognize the difference between the total arrangement fee and the amount deferred for the undelivered elements as revenue for the delivered elements. The objectively determined fair value of the undelivered elements in multiple element arrangements is based on the price charged when such elements are sold separately. Our typical undelivered elements (maintenance and consulting services) are priced consistently at stated amounts in a high percentage of our arrangements. If VSOE exists to allow the allocation of a portion of the total fee to undelivered elements of the arrangement, the residual amount in the arrangement allocated to software license fee is recognized as revenue when all of the following are met: • • • Persuasive evidence of an arrangement exists. It is our practice to require a contract signed by both the customer and Deltek or an accepted purchase order for existing customers. Delivery has occurred. We deliver software by both physical and secure electronic means. Both means of delivery transfer title and risk to the customer. Shipping terms are generally FOB shipping point. The license fee is fixed and determinable. We recognize revenue for the license component of multiple element arrangements only when the fair value of any undelivered elements is known, any uncertainties surrounding customer acceptance are resolved and there are no refund, return or cancellation rights associated with the delivered elements. License fees are generally considered fixed and determinable when payment terms are less than six months. Collectibility is probable. Amounts receivable must be collectible. For license arrangements that do not meet our collectibility standards, revenue is recognized as cash is received.

•

Consulting Services Revenues: Our consulting services revenues, which include software implementation, training and other consulting services, are generally billed based on hourly rates plus reimbursable out-of-pocket expenses. These services are generally not essential to the functionality of our software and are usually completed in three to six months, though larger implementations may take longer. We generally recognize revenues for these services as they are performed. In rare situations in which the services are deemed essential to the functionality of our software in the customer‘s environment, we recognize the software and services revenue together in accordance with SOP 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1). 32

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We sell training at a fixed rate for each specific class, at a per attendee price, or at a packaged price for several attendees, and revenue is recognized only when the customer attends and completes the training. To the extent that our customers pay for the training services in advance of delivery, the amounts are recorded in deferred revenue until such time as the training is provided. Maintenance and Support Services Revenues: Maintenance revenues include fees for software updates on a when-and-if-available basis, telephone, online and web-based support and software defect fixes or patches. Maintenance revenues are recognized ratably over the term of the customer maintenance and support agreement. The significant judgments and estimates for revenue recognition typically relate to the timing of and amount recognized for software license revenue, including whether collectibility is deemed probable, fees are fixed and determinable and services are essential to the functionality of the software. Changes to these assumptions would generally impact the timing and amount of revenue recognized for software license fee revenues versus other revenue categories. Stock-Based Compensation Prior to January 1, 2006, we accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees , and related interpretations. Accordingly, compensation cost for stock options generally was measured as the excess, if any, of the estimated fair value of our common stock over the amount an employee must pay to acquire the common stock (exercise price) on the date that both the exercise price and the number of shares to be acquired pursuant to the option were fixed (the date of grant). Accordingly, because the exercise price for our grants was equal to the estimated fair market value of our common stock on the date of grant, we recorded no compensation cost in our income statement for stock options. We did, however, disclose in our financial statements what the resultant expense would have been had we elected to account for stock options in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation , which required the fair value method of valuing stock options. Prior to the recapitalization in April 2005, we granted stock appreciation rights (SARs). Because the SARs were to be settled in cash and not equity, we recorded SAR compensation expense for all exercisable and vested SARs in accordance with APB Opinion No. 25 and related interpretations. To determine the amount of expense to record, a SAR valuation was calculated quarterly based upon a model that utilized an eight-quarter rolling financial history. Accordingly, we recorded $6.4 million and $25.3 million in 2004 and 2005 related to SAR-based compensation expense. Of the $25.3 million recorded in 2005, $22.6 million was directly related to payments associated with vested SARs at the time of the recapitalization. All remaining SARs were cancelled at the time of the recapitalization. On January 1, 2006, we adopted SFAS No. 123R, Share-Based Payments . SFAS No. 123R is a revision of SFAS No. 123 and supersedes APB Opinion No. 25 and its related implementation guide. SFAS No. 123R requires the measurement of the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the measurement date of grant. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award. Effective January 1, 2006, we began recognizing stock-based compensation expense in our income statement using the modified prospective transition method. The modified prospective method for transitioning from our prior accounting practice does not require restatement of prior periods to recognize compensation cost for amounts previously reported only in pro forma note disclosures to the financial statements. Under this transition method, stock-based compensation costs recorded in the income statement include the portion related to stock options vesting in the period for all options granted prior to, but not vested as of, January 1, 2006, 33

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based upon the grant date fair value previously estimated in accordance with SFAS 123 and all options granted subsequent to January 1, 2006, based on the grant date fair value in accordance with SFAS 123R. We determined the fair value of options granted using the Black-Scholes option-pricing model. In accordance with SFAS 123R, we recorded $1.7 million in stock-based compensation expense for options vesting during 2006. Because we had primarily issued SARs to employees instead of stock options prior to January 1, 2006, and we therefore had recorded stock-based compensation expense associated with vesting of SARs for those periods, we did not experience a significant increase in stock-based compensation expense from the adoption of SFAS 123R as compared to prior periods. Had we adopted SFAS 123R for the periods 2004 and 2005, net income would have been lower in those periods by $0.1 million and $0.4 million, respectively. The key assumptions used by management in the Black-Scholes option-pricing model include the fair value of our common stock at the grant date, which is also used to determine the option exercise price, the expected life of the option, the expected volatility of our common stock over the life of the option and the risk-free interest rate. In determining the amount of stock-based compensation to record, management must also estimate expected forfeitures of stock options over the expected life of the options. Given the absence of an active market for our common stock, our board of directors was required to estimate the fair value of our common stock at the time of each option grant. Our board of directors considered numerous objective and subjective factors in estimating the value of our common stock at each option grant date, including valuations performed by a third-party valuation firm which, in certain circumstances during 2006, were received subsequent to the granting of options. Based on these factors, our board of directors granted employee stock options during 2006 at exercise prices ranging from $7.22 to $11.48. In addition, based, in part, upon subsequently received independent valuations, the board of directors and compensation committee reassessed the fair value of our common stock for awards granted during the first ten months of 2006. As a result, awards granted to 24 employees and directors were deemed to have been made at exercise prices below fair value on the date of grant and were modified to increase the exercise price to be equal to the revised assessment of the fair value on the date of grant. As a result, the option prices for those grants were adjusted upward from prices ranging from $7.22 to $10.19 to prices ranging from $7.91 to $11.48. No incremental compensation cost resulted from the modifications since the exercise prices were increased. The weighted average intrinsic value of all stock options at the modification date, where applicable, was zero. The following table represents all stock option grants made in 2006, their exercise prices and weighted average fair values:
Weighted Average Exercise Price at Grant Date Weighted Average Exercise Price at Modification Date Weighted Average Common Stock Fair Value per Share

Grant Date

Number of Options Granted

Modification Date

January 26, 2006 March 9, 2006 April 26, 2006 May 30, 2006 June 2, 2006 October 23, 2006 November 20, 2006 November 21, 2006 December 4, 2006

62,330 302,500 22,000 125,000 113,100 200,000 494,100 170,000 150,666

$ 7.22 $ 7.22 $ 7.22 $ 7.22 $ 7.22 $10.19 $11.48 $11.48 $11.48 34

December 4, 2006 December 4, 2006 December 4, 2006 December 4, 2006 December 4, 2006 December 4, 2006 N/A N/A N/A

$ 7.91 $ 7.91 $ 8.41 $ 9.00 $ 9.00 $11.48 N/A N/A N/A

$ 7.91 $ 7.91 $ 8.41 $ 9.00 $ 9.00 $11.48 $11.48 $11.48 $11.48

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Valuation Methodology The valuation method that we used with the assistance of our third-party appraiser to estimate the fair value of our common stock utilized a combination of a market multiple methodology and a comparable transaction methodology. The market multiple methodology considered market valuation multiples of enterprise application software firms. We applied those multiples to comparable values for our cumulative earnings before interest, taxes, depreciation, amortization, recapitalization expenses and stock-based compensation expense (adjusted EBITDA) for the four quarters ended prior to the valuation date, our estimated adjusted EBITDA for 2006, determined as of the valuation date based on management‘s estimates and for periods beginning in October 2006, management‘s estimated adjusted EBITDA for 2007. The result of this calculation was an estimate of our enterprise value using market multiples of comparable software firms. The comparable transaction methodology considered market valuation multiples of over 20 acquisition transactions announced since early 2003 involving software companies. The factors considered in our comparable transaction methodology analysis were the target company‘s enterprise value to revenue multiple and the target company‘s enterprise value to adjusted EBITDA ratio. After analysis of the range of values of those comparable transactions as well as their mean and median values, a range of comparable enterprise value multiples was applied to our revenue and adjusted EBITDA levels that considered our growth rate and adjusted EBITDA margin levels. We further adjusted this value to remove the impact of the control premium from the market multiples used. The result of this calculation was an estimate of our enterprise value using comparable transaction multiples of other software firms. The average of the application of the market multiple methodology and the comparable transaction methodology yielded an estimated enterprise value which we adjusted for cash and debt balances to determine the aggregate value of our common stock, as if it were publicly traded. We then adjusted that valuation for a marketability discount to reflect the fact that our shares were not publicly tradable. The resulting amount was used to determine the fair value of our common stock at the valuation date. Because we did not have significant history associated with our stock options in order to determine the expected volatility of our options, we calculated expected volatility as of each grant date under both SFAS 123 and SFAS 123R using an implied volatility method based on reported data for a peer group of publicly traded software companies for which historical information was available. We will continue to use peer group volatility information until sufficient historical volatility of our common stock is available to measure expected volatility for future option grants. The average expected life of our stock options was determined according to the ―SEC simplified method‖ as described in SAB No. 107, Share Based Payments , which is the mid-point between the vesting date and the end of the contractual term. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve rates with the remaining term equal to the expected life assumed at the date of grant. Forfeitures were estimated based on our historical analysis of actual stock option forfeitures. Determining the value of our common stock and other inputs to the Black-Scholes option-pricing model required our board of directors and management to make subjective judgments, assumptions and estimates. A 10% increase in the estimated fair value of our common stock or the expected volatility or a 10% change in the expected option term, which represents the most sensitive and judgmental assumptions, would not have a material effect on our financial statements. Income Taxes We are required to estimate our income taxes in each of the jurisdictions in which we operate. We record this amount as a provision or benefit for taxes in accordance with SFAS No. 109, Accounting for Income Taxes . This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits and assessing temporary differences resulting from different treatment of items for tax and accounting purposes. 35

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These temporary differences result in deferred tax assets and liabilities. As of December 31, 2006, we had deferred tax assets of approximately $9.9 million, which were primarily related to differences in the timing of recognition of revenue and expenses for book and tax purposes, and the value of foreign net operating loss carry-forwards. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe recovery is not likely, we establish a valuation allowance. As of December 31, 2006, we maintained a valuation allowance equal to the $0.6 million of deferred tax assets related to foreign net operating loss carryforwards as there is not sufficient evidence to enable us to conclude that it is more likely than not that the deferred tax assets will be realized. Prior to our recapitalization in April 2005, we were organized as an S corporation under the Internal Revenue Code of 1986, as amended (the Code) and as a result were not subject to federal income taxes. As an S corporation, we made periodic distributions to our shareholders that covered the shareholders‘ anticipated tax liability. In connection with the recapitalization in April 2005, we converted our U.S. taxable status from an S corporation to a C corporation as defined by the Code. Consequently, since April 2005 we have been subject to federal and state income taxes. Upon the conversion, we recorded a one-time benefit of $8.9 million to establish a deferred tax asset relating to differences between the book and tax basis of certain operating assets and liabilities and the acquired tax net operating loss carryforwards of Semaphore, Inc., which we acquired in August 2000. Under the terms of the April 2005 recapitalization agreement, the tax benefit portion of the recapitalization expenses attributable to the settlement of certain stock appreciation rights held by employees is payable to the selling shareholder group in the recapitalization. The liability to the selling shareholder group is reflected as ―Accrued liability for redemption of stock in recapitalization‖ in the accompanying balance sheet and is included in ―Redemption of stock in recapitalization‖ in the statement of changes in shareholders‘ deficit. Our deferred tax assets and liabilities are recorded at an amount based upon a U.S. federal income tax rate of 35%. If a change to the expected tax rate is determined to be appropriate due to differences between our assumptions and actual results of operations or statutory tax rates, it will affect the provision for income taxes during the period that the determination is made. Allowances for Doubtful Accounts Receivable We maintain allowances for doubtful accounts and sales allowances to provide adequate provision for potential losses from collecting less than full payment on our accounts receivable. We record provisions for sales allowances, which generally result from credits issued to customers in conjunction with cancellations of maintenance agreements or billing adjustments, as a reduction to revenues. We record provisions for bad debt, or credit losses, as a general and administrative expense in our income statement. We base these provisions on a review of our accounts receivable aging, individual overdue accounts, historical write-offs and adjustments of customer accounts due to service or other issues and an assessment of the general economic environment. Valuation of Purchased Intangible Assets and Acquired Deferred Revenue We allocate the purchase price paid in a business combination to the assets acquired, including intangible assets, and liabilities assumed at their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. To assist us in this effort, we engage independent third party appraisal firms. Management, with the assistance of the independent appraiser, makes estimates of fair value based upon assumptions and estimates we believe to be reasonable. These estimates are based upon a number of factors, including historical experience, market conditions and information obtained from the management of the acquired company. Critical estimates in valuing certain of the intangible assets include, but are not limited to, historical and projected customer retention rates, anticipated growth in revenue from the acquired customer and product base and the expected use of the acquired assets. 36

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We amortize acquired intangible assets using either accelerated or straight-line methods depending upon which best approximates the proportion of future cash flows estimated to be generated in each period of the estimated useful life of the specific asset. Management must estimate the expected life and future cash flows from the acquired asset, both of which are inherently uncertain and unpredictable. Changes in the assumptions used in developing these estimates could have a material impact on the amortization expense recorded in our financial statements. Unanticipated events and circumstances may occur which may affect the accuracy or validity of our assumptions and estimates. As an example, for all of the acquisitions made during 2005 and 2006, we are amortizing the customer relationship intangible assets on an accelerated method using lives of seven to nine years. The use of an accelerated method was based upon our estimates of the projected cash flows from the assets and the proportion of those cash flows received over the estimated life. Had we used a straight-line method of amortization, amortization expense for 2006 would have been approximately $1.0 million less than the amount recorded. If we were to continue to use the same accelerated method, but reduce the estimated useful lives of those assets by one year, total amortization expense would have been higher by $0.3 million for 2006. We amortize acquired technology from our acquisitions using a straight-line method over three to four years. If the useful lives for those assets were reduced by one year, amortization expense for 2006 would have been $0.4 million higher. In addition, during 2005 and 2006, we acquired maintenance obligations (and the associated deferred revenue) with our acquisitions. Emerging Issues Task Force (EITF) Issue No. 01-3 and EITF Issue No. 04-11 clarified different methods to determine the fair value of deferred revenue in a business combination. In accordance with EITF guidance, we valued acquired deferred revenue based on estimates of the cost of providing solution support services and software error corrections plus a reasonable profit margin. The impact of our valuation was a write down of the acquired deferred revenue balances to an average of 50% of their book value on the date of acquisition, from a total of $5.9 million to $2.9 million. This reduced amount will be recognized as revenue over the remaining contractual period of the obligation, generally no more than one year from the date of acquisition. Changes in the estimates used in determining these valuations could result in more or less revenue being recorded. Impairment of Identifiable Intangible and Other Long-Lived Assets and Goodwill We review identifiable intangible and other long-lived assets for impairment in accordance with SFAS No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets , whenever events or changes in circumstances indicate the carrying amount may be impaired or unrecoverable. We assess the impairment of goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible Assets . Accordingly, we test our goodwill for impairment annually in the fourth quarter or whenever events or changes in circumstances indicate an impairment may have occurred by comparing its fair value to its carrying value. Factors that indicate the carrying amount of goodwill, identifiable intangible assets or other long-lived assets may not be recoverable include, under-performance relative to historical or projected operating results, significant changes or limitations in the manner of our use of the acquired assets, changes in our business strategy, adverse market conditions, changes in applicable laws or regulations and a variety of other factors and circumstances. If we determine that the carrying value of a long-lived asset may not be recoverable, we determine the recoverability by comparing the carrying amount of the asset to our current estimates of net future undiscounted cash flows that the asset is expected to generate (or fair market value). We recognize an impairment charge, as an operating expense, equal to the amount by which the carrying amount exceeds the fair market value of the asset in the period the determination is made. Internal Controls over Financial Reporting Effective internal controls over financial reporting are necessary for us to provide reliable annual and interim financial reports and to prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results and financial condition could be materially misstated and our reputation could be significantly harmed. As a 37

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private company, we were not subject to the same standards applicable to a public company. As a public company, we will be subject to requirements and standards set by the Securities and Exchange Commission and the Public Company Accounting Oversight Board. Under current standards, a ―material weakness‖ in internal controls is defined as a single deficiency, or a combination of deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Since August 2006, we have been engaged in a program to evaluate our system of internal controls over financial reporting with the assistance of a third-party consulting firm. This program has consisted of a detailed review of current processes and controls, identification of deficiencies and evaluation of the deficiencies‘ effect on our financial statements. A number of material weaknesses and deficiencies identified were exacerbated by inadequately trained staff and limited resources, particularly in the financial close and reporting area. As of March 2007, and through our own assessment of our internal controls over financial reporting, we believe we have the following material weaknesses: Financial Close and Reporting • Lack of formal financial policies and procedures We did not have formally documented and communicated policies and procedures in areas that have an affect on our financial statements, such as the recording of time and expenses, journal entry review and approval and the preparation and review of balance sheet reconciliations. Inadequate account reconciliation and analysis process We did not have adequate review procedures and monitoring controls to ensure the timely and accurate completion of balance sheet reconciliations and other critical accounting analyses, thereby adversely impacting our ability to produce accurate financial statements in a timely manner. Lack of spreadsheet controls We relied on a large number of spreadsheets and reports to prepare our financial statements. We did not have adequate procedures and controls regarding the accuracy and completeness of, and access to, these spreadsheets and reports.

•

•

Revenue • Inadequate controls around accuracy of billing and revenue recognition We did not have adequate controls or monitoring procedures related to the accuracy of maintenance and consulting services invoices and related revenue recognition. These processes were manual and sometimes were performed by individuals recently hired by us. Inadequate documentation and review of software revenue recognition decisions Software revenue recognition decisions were not adequately documented and reviewed. As a result, material adjustments were not identified in a timely manner by management but were identified by our independent registered public accounting firm in connection with their audit of our financial statements.

•

Information Technology • Inadequate systems access and change management controls Our information technology environment had design and operating effectiveness deficiencies. Due to informal policies and procedures over the granting and modification of user access, we had excessive or inappropriate access rights to, and insufficient segregation of duties within, our financial system. Many user accounts on the financial system had access rights that were not commensurate with the user‘s job requirements. We also had inadequate procedures and controls over systems change management and program development.

For 2006, we were not required to have, nor was our independent registered public accounting firm engaged to perform, an audit of our internal control over financial reporting. Our independent registered public accounting firm‘s audit included consideration of internal control over financial reporting as a basis for designing audit 38

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procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of our internal control over financial reporting. Accordingly, no such opinion was expressed. However, in connection with the audit of our financial statements for 2006, our independent registered public accounting firm informed our audit committee and management that there were material weaknesses during 2006 in our accounting for complex transactions and our design of internal controls over financial reporting. We believe that the conclusions of our independent registered public accounting firm are consistent with management‘s findings. Errors identified in testing software revenue during the 2006 audit resulted in the restatement of our 2005 financial statements. The resulting restatement increased revenue previously reported in 2005 by $1.3 million and increased net income by $0.8 million. This error did not impact the 2004 consolidated financial statements. The restatement related to an interpretation of SOP 97-2 in 2005 whereby we inappropriately deferred software revenue for extended warranties included in software revenue arrangements. Previously, revenue related to software arrangements with warranties in excess of our normal three-month warranty period was deferred until the warranty period expired. However, for the items associated with the restatement, these warranties were routine, short-term and relatively minor, and therefore the related revenue should have been recognized upon delivery of the software since all other criteria of SOP 97-2 had been met. We have outlined a detailed plan to improve the effectiveness of our internal controls and processes related to the weaknesses described above. Some of the actions taken or expected to be taken in accordance with this plan are as follows: Overall • Beginning in the first quarter of 2006 and into 2007, we have increased the size and improved the skill base of our finance and accounting organization. Throughout 2006, we hired additional experienced, senior level accounting personnel. Most of these individuals are certified public accountants and possess significant experience with publicly traded companies. Several of the individuals also have significant experience applying generally accepted accounting principles related to software revenue recognition. We are continuing to augment our finance and accounting staff during 2007 and will continue to hire the necessary skilled resources needed.

Financial Close and Reporting • We are developing and communicating a comprehensive list of detailed accounting policies and procedures, including those related to balance sheet reconciliation and review processes, so that all policies are adequately documented and communicated and serve as a basis for reviewing and monitoring our accounting processes. We are in the process of identifying all financially significant spreadsheets and reports used in the preparation of our financial statements, after which we will develop appropriate controls related to those spreadsheets.

•

Revenue • • We are in the process of implementing a new software and maintenance billing system that will reduce our reliance on manual processes and spreadsheets for maintenance billing and revenue recognition. We are developing new processes to ensure adequate documentation and review of software revenue recognition decisions.

Information Technology • • We have established and implemented program development and change management policies and procedures to prevent unauthorized changes to systems and related technology. We are performing a comprehensive review of system access rights and establishing appropriate access to assure proper segregation of duties by functional area. 39

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We believe that each of these actions will strengthen our internal controls over financial reporting. Although underway, our plan to improve the effectiveness of our internal controls and processes is not yet complete. While we have designed new controls to address certain of our identified material weaknesses, we have not yet implemented new controls for all the weaknesses we have identified. Under current requirements, our independent registered public accounting firm is not required to evaluate our internal controls over financial reporting or management‘s assessment of those controls until its audit of our 2008 financial statements. Consequently, we will not be evaluated independently in respect of our controls for a substantial period of time after this offering is completed. As a result, we may not become aware of other material weaknesses or significant deficiencies in our internal controls that may be identified by our independent registered public accounting firm as part of the evaluation. The measures or activities we have taken to date, or any future measures or activities we will take, may not remediate the material weaknesses we have identified. See ―Risk Factors—Management has identified material weaknesses and other deficiencies in our internal controls which, if not remediated successfully, could cause investors to lose confidence in our financial reporting and our stock price to decline‖ and ―Risk Factors—Material weaknesses in our internal controls may impede our ability to produce timely and accurate financial statements, which could cause us to fail to file our periodic reports timely, result in inaccurate financial reporting or restatements of our financial statements, subject our stock to delisting and materially harm our business reputation and our stock price.‖ Results of Operations The following table sets forth our statements of operations data expressed as a percentage of total revenue for the periods indicated:
2004 Year Ended December 31, 2005 2006

Revenues Software license fees Consulting services Maintenance and support services Other revenues Total revenues Cost of revenues Cost of software license fees Cost of consulting services Cost of maintenance and support services Cost of other revenues Total cost of revenues Gross profit Research and development Sales and marketing General and administrative Recapitalization expenses Total operating expenses Income from operations Interest income Interest expense Other (expense) income, net Income (loss) before income taxes Income tax (benefit) expense Net income

28.8 % 23.6 44.7 2.9 100.0 4.0 19.3 9.3 3.4 36.0 64.0 18.9 13.8 9.4 0.0 42.1 21.9 0.3 0.0 (0.1 ) 22.1 (0.9 ) 23.0 %

30.0 % 26.9 41.7 1.4 100.0 3.0 21.4 7.8 1.3 33.5 66.5 17.2 12.5 9.9 20.2 59.8 6.7 0.3 (7.4 ) 0.2 (0.2 ) (5.9 ) 5.7 %

32.8 % 29.2 36.4 1.6 100.0 3.0 24.0 6.8 2.0 35.8 64.2 16.3 16.6 11.7 0.0 44.6 19.7 0.2 (8.8 ) 0.0 11.1 4.4 6.7 %

40

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Revenues
2004 2005 2006 2004 versus 2005 $ Change (dollars in millions) % Change 2005 versus 2006 $ Change % Change

Revenues Software license fees Consulting services Maintenance and support services Other revenues Total revenues Software License Fees

$

34.9 28.6 54.2 3.5

$

45.9 41.2 63.7 2.1

$

75.0 66.6 83.2 3.5

$

11.0 12.6 9.5 (1.4 ) 31.7

31 % 44 18 (40 ) 26

$

29.1 25.4 19.5 1.4 75.4

63 % 62 31 67 49

$ 121.2

$ 152.9

$ 228.3

$

$

Our software applications are offered on a stand-alone basis and are generally licensed to end-user customers under perpetual license agreements. We sell our software applications to end-user customers mainly through our direct sales force as well as indirectly through our network of alliance partners and resellers. License fees revenue increased 31% to $45.9 million from 2004 to 2005 and 63% to $75.0 million from 2005 to 2006. The increase in license fees in both years was primarily the result of increased sales of our new version 5.1 of our Costpoint product introduced in July 2004, as well as increased sales of our Deltek Vision applications. The $29.1 million increase in 2006 also reflected $6.1 million of license fee growth from our project portfolio management products obtained with the Welcom and CSSI acquisitions. Consulting Services Our consulting services revenues are generated from implementation, training, education and other consulting services associated with our software applications and are typically provided on a time-and-materials basis. Consulting services revenue increased 44% to $41.2 million from 2004 to 2005 and 62% to $66.6 million from 2005 to 2006. The increases in services revenues were the result of increased sales of Costpoint and Vision licenses, which drove increased demand for consulting services. Over 50% of the increase in 2005 and 2006 was attributable to Costpoint implementation services. Of the 2006 increase in Costpoint services, 40%, or $5.1 million, related to the recognition of services revenue previously deferred during 2005 due to undelivered elements in software arrangements. The remaining increases in 2005 and 2006 were attributable to Vision and other product implementation and training services. Maintenance and Support Services Our maintenance and support revenues are comprised of fees derived from new maintenance contracts associated with new software license sales and annual renewals of existing maintenance contracts. These contracts typically allow our customers to obtain updates, enhancements and upgrades to our software, as well as online, telephone and internet-based support. Maintenance services are typically billed on a quarterly basis and generally represent between 15% and 25% of the list price of the underlying software applications at the time of sale. Maintenance fees are generally subject to contractually permitted annual rate increases. Maintenance revenues increased 18% to $63.7 million from 2004 to 2005 and 31% to $83.2 million from 2005 to 2006. The increase in maintenance revenues was the direct result of increasing license sales during the same period resulting in an increase in the installed base of customers paying for support, plus increases in maintenance rates charged to customers on their annual support contract renewals. In addition, approximately $7.4 million, or 37%, of the $19.5 million increase from 2005 to 2006 was from products or customers acquired through our acquisitions of Wind2 in late 2005 and Welcom and CSSI in 2006. 41

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Other Revenues Our other revenues consist of reimbursements for third party equipment and software purchased for customers as well as fees collected for our annual user conference. The decrease in other revenues from 2004 to 2005 of $1.4 million was due to a decrease in user conference revenues as we held a smaller conference in 2005. The $1.4 million increase from 2005 to 2006 is the result of an increase in user conference revenues associated with a larger conference in 2006. Cost of Revenues
2004 2005 2006 2004 versus 2005 $ Change % Change (dollars in millions) 2005 versus 2006 $ Change % Change

Cost of revenues Cost of software license fees $ Cost of consulting services Cost of maintenance and support services Cost of other revenues Total cost of revenues Cost of Software License Fees 4.9 23.4 11.3 4.1 $ 4.6 32.6 12.0 2.0 $ 6.9 54.7 15.5 4.6 $ (0.3 ) 9.2 0.7 (2.1 ) 7.5

) (6 % 39 6 (51 ) 17

$

2.3 22.1 3.5 2.6 30.5

50 % 68 29 130 59

$ 43.7

$ 51.2

$ 81.7

$

$

Our cost of software license fees consists of third-party software royalties, costs of product fulfillment, amortization of acquired technology and amortization of capitalized software. Cost of software license fees decreased 6% to $4.6 million from 2004 to 2005 and increased 50% to $6.9 million from 2005 to 2006. Cost of license fees in 2005 remained relatively unchanged compared to 2004, but declined as a percentage of license fee revenue, because the effective royalty rates paid on products resold or embedded with our products decreased in 2005 over 2004 based upon newly negotiated royalty agreements. Over 40% of the $2.3 million increase in the cost of software license fees during 2006 was the result of the amortization of technology acquired in connection with our acquisitions of Welcom and CSSI, with the remainder attributable to increased royalties on third-party software products embedded or resold with our own products based on increased product sales. These royalties remained unchanged as a percentage of software license fees revenues in both 2005 and 2006. Cost of Consulting Services Our cost of consulting services is comprised of the salaries, benefits, incentive compensation and stock-based compensation expense of services-related employees as well as third-party contractor expenses, travel and reimbursable expenses and classroom rentals. Cost of services also includes an allocation of our facilities and other costs incurred for providing implementation, training and other consulting services to our customers. Cost of consulting services increased 39% to $32.6 million from 2004 to 2005 and 68% to $54.7 million from 2005 to 2006. The increase in the cost of services in each year was the result of increased costs for salaries, benefits, incentive compensation and travel as staffing levels were increased to meet increasing customer demand for our implementation services. This increase in demand was driven by the increase in license sales in both 2005 and 2006, as well as an increase in the number of larger, more complex project implementations in which we were engaged. Approximately 50% of the 2006 increase was associated with salaries, benefits and incentive compensation for implementation services personnel and over 20% was for travel costs for those engagements. Gross margins on services revenues were 18% during 2004, 21% during 2005 and 18% during 2006. The increase in margin on services revenues from 2004 to 2005 was particularly impacted by a decrease in stock42

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based compensation expense for SARs of $0.8 million. The decrease in margin on services revenues during 2006 was due to an increase in non-billable costs of $3.0 million, or 5% of 2006 services revenues. These non-billable costs were associated with training time for newly hired staff to meet the increase in demand. During 2006, $2.3 million of costs were recognized which had previously been deferred during 2005. These costs were deferred as the corresponding $5.1 million of revenues were also deferred due to undelivered elements in software revenue arrangements. The favorable gross margin on these services partially offset the increase in non-billable time. Cost of Maintenance and Support Services Our cost of maintenance and support services is primarily comprised of salaries, benefits, stock-based compensation, incentive compensation and third-party contractor expenses, as well as facilities and other expenses incurred in providing support to our customers. Cost of maintenance services increased 6% to $12.0 million from 2004 to 2005 and 29% to $15.5 million from 2005 to 2006. The increase in the cost of maintenance services during 2005 and 2006 was primarily the result of increased costs for salaries and related benefits as we increased our maintenance staff to meet greater demand for these services. Over 50% of the 2006 increase in cost of maintenance services was the result of increased headcount to meet demand and 28% of the increase was associated with increased costs due to acquisitions made during the current year. Cost of maintenance services as a percentage of maintenance revenue remained flat at 19% for both 2005 and 2006 and represented a slight decrease from 21% in 2004. Cost of Other Revenues Our cost of other revenues includes the cost of third-party equipment and software purchased for customers as well as the cost associated with our annual users conference. The decrease from 2004 to 2005 of $2.1 million was due to a decrease in user conference expenses as we held a smaller conference in 2005. The $2.6 million increase from 2005 to 2006 is the result of an increase in user conference expenses associated with a larger conference in 2006. Operating Expenses
2004 2005 2006 2004 versus 2005 $ Change % Change (dollars in millions) 2005 versus 2006 $ Change % Change

Operating expenses Research and development Sales and marketing General and administrative Recapitalization expenses Total operating expenses Research and Development

$ 22.9 16.7 11.4 — $ 51.0

$ 26.2 19.2 15.2 30.9 $ 91.5

$

37.3 37.8 26.6 —

$

3.3 2.5 3.8 30.9 40.5

14 % 15 33 — 79

$

11.1 18.6 11.4 (30.9 ) 10.2

42 % 97 75 — 11

$ 101.7

$

$

Our product development expenses consist primarily of salaries, benefits, stock-based compensation, incentive compensation and related expenses, including third-party contractor expenses, and other expenses associated with the design, development and testing of our software applications. Research and development expenses increased 14% to $26.2 million from 2004 to 2005 and 42% to $37.3 million from 2005 to 2006. The increase in 2005 was primarily driven by increased investment levels for our Costpoint Web initiative and by costs to deliver our new release of Vision. The increase in 2006 was due to significant hiring to deliver additional product features and functionality requested by our larger customers. This increased investment was across all of our product lines. 43

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Sales and Marketing Our sales and marketing expenses consist primarily of salaries, benefits, and related expenses, including stock-based compensation, incentive compensation, facilities allocation, sales commissions and commissions paid to resellers and consulting partners. Sales and marketing expenses also include amortization expense for acquired intangible assets associated with customer relationships. In addition, our sales and marketing expenses include the cost of marketing programs (including our demand generation efforts, advertising, events, marketing and corporate communications, field marketing and product marketing) as well as facilities and other expenses associated with our sales and marketing activities. Sales and marketing expenses increased 15% to $19.2 million from 2004 to 2005 and 97% to $37.8 million from 2005 to 2006. The increase in both 2005 and 2006 was due to increased salaries, benefits and support costs for additional sales and marketing personnel and additional commissions paid on increased license sales. The increase in 2006 was also due to increased spending in marketing for specific lead generation and corporate branding programs aimed at further stimulating our revenue growth. As a percentage of total revenues, sales and marketing expense increased from 13% during 2005 to 17% during 2006. Over 2% of the increase as a percentage of revenues was associated with increased spending for marketing efforts as well as amortization for acquired customer relationship intangible assets. General and Administrative Our general and administrative expenses consist primarily of salaries, benefits, stock-based compensation, incentive compensation, facilities allocation and other costs for general corporate functions, including executive, finance, accounting, legal and human resources. General and administrative costs also include New Mountain Capital advisory fees, insurance premiums and third-party legal and other professional services fees, facilities and other expenses associated with our administrative activities. General and administrative expenses increased 33% to $15.2 million from 2004 to 2005 and 75% to $26.6 million from 2005 to 2006. General and administrative expenses remained flat at 9% and 10% during 2004 and 2005 as a percentage of revenues, and increased to 12% during 2006. Twenty-four percent of the overall increase in expenses in 2005 over 2004 was due to increased salaries and benefits for key management and other administrative employees that we hired during 2005. In addition, 8% of the increase was due to advisory fees incurred for New Mountain Capital, 13% was professional fees including outside recruiting fees paid for key hires made during 2005 and 8% for increased insurance premiums. Of the total increase from 2005 to 2006, 20% was associated with increased salary costs in the finance, accounting and legal functions to prepare us for operating as a public company, 19% was associated with consulting costs incurred to begin identification and remediation of control weaknesses, and 19% was associated with advisory fees paid to New Mountain Capital in connection with the refinancing of our shareholder notes in April 2006. Also contributing to the increase were incremental increases in facilities related expenses and new hires in senior management and other general and administrative cost increases. Recapitalization Expenses The recapitalization costs in 2005 relate to the settlement of outstanding stock appreciation rights in connection with our April 2005 recapitalization, plus the related legal, due diligence and other professional services costs incurred in the recapitalization. Interest Income Interest income in all periods reflects interest earned on our invested cash balances. Prior to the recapitalization, excess cash from operations was generally disbursed to the shareholders. Since the recapitalization, cash flow from operations has been used for investment in acquisitions, capital expenditures and mandatory reductions in the principal outstanding on our term loan. Interest income did not fluctuate significantly from 2004 to 2006. 44

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Interest Expense
2004 2005 2006 2004 versus 2005 $ Change % Change (dollars in millions) 2005 versus 2006 $ Change % Change

Interest expense

$ 0.1

$ 11.3

$ 20.1

$

11.2

15,166 %

$

8.8

78 %

Interest expense increased $11.2 million from 2004 to 2005 to 11.3 million and 78% to $20.1 million from 2005 to 2006. The increase in 2005 was primarily due to interest expense on our term loan facility that we entered into in connection with our recapitalization in April 2005. The increase in 2006 included $5.1 million due to the inclusion of a full year of interest expense on our term loan and shareholder debentures, $2.3 million for the write-off of previously deferred debt issuance costs and $1.4 million related to incremental borrowings on our credit facility, used to finance the purchase of CSSI and for other purposes. The write-off of debt issuance costs resulted from the refinancing in April 2006 of $100 million of notes issued to shareholders with incremental borrowings on our credit facility. Income Taxes
2004 2005 2006

Income tax expense (benefit) (dollars in millions) Change from prior year

$ (1.1 )

$ (9.1 ) 715 %

$ 10.0 ) (210 %

Our income tax expense increased $19.1 million from 2005 to 2006 from a tax benefit of $9.1 million to an income tax expense of $10.0 million. During 2004, we reached a favorable settlement with respect to the audit of its 2001 federal income tax return. In addition, during 2004, the U.S. Treasury issued additional guidance on accounting for deferred revenue. As a result of these two developments, we determined that a $1.3 million accrual for C corporation income taxes was no longer required, which created an income tax benefit for 2004 when we relieved the liability. Effective with the recapitalization, on April 22, 2005, we were no longer eligible for Subchapter S treatment, and we converted to a C corporation for federal and state income tax purposes. The recapitalization expenses incurred as of April 22, 2005, were not available for deduction for an S corporation and therefore resulted in a permanent difference. Our tax benefit increased $8.0 million, from $1.1 million in 2004 to $9.1 million in 2005. The increase was primarily due to the tax benefit of the deferred tax asset we realized upon conversion from an S corporation to a C corporation for federal income tax purposes and the net operating loss created by the deductibility of the recapitalization expenses in the C corporation period. The recapitalization expenses primarily include SAR-related compensation expense (see Note 2 to our consolidated financial statements). Our tax rate in 2006 reflects a full year of C corporation status. We expect our effective tax rate to remain relatively constant in 2007 at 39.5%. Recapitalization In April 2005, we underwent a recapitalization in which we issued 29,079,580 shares of common stock to the New Mountain Funds for $105.0 million. We also sold $75.0 million of subordinated debentures to the New Mountain Funds and $25.0 million of subordinated debentures to one of the selling shareholders (collectively, the subordinated debentures or the debentures). In addition, we secured a $115.0 million term loan as part of the recapitalization. See Note 2, ―Recapitalization‖ and Note 10, ―Debt‖ of our consolidated financial statements contained elsewhere in this prospectus. The $320.0 million total proceeds from the term loan and the issuance of the common stock and subordinated debentures were primarily used to repurchase common stock from the selling shareholders to 45

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reduce their aggregate holdings to 25% of the outstanding shares, to make payments of approximately $31 million to holders of stock appreciation rights issued under our stock appreciation rights plan (SAR Plan) and to pay for the costs of the recapitalization, totaling approximately $8.2 million, and to pay $5.8 million for debt issuance costs. 46

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In connection with the recapitalization, we issued to the New Mountain Funds 100 shares of Series A preferred stock, par value $0.001 per share, as to which the holders had no voting rights, but were entitled to elect a majority of the members of our board of directors until such time that the common stock owned by the New Mountain Funds constituted less than one-third of our outstanding common stock. After such time, the holders of Series A preferred stock had the right to elect one or more directors, declining in number as the holder‘s common stock ownership declines. In connection with our reincorporation in Delaware, our Series A preferred stock was converted into Class A common stock with the same substantive terms. The Series A preferred stock carried no other voting rights, no dividend entitlement and no liquidation preferences. Pursuant to the recapitalization, we became obligated to make a payment to the selling shareholders equal to the amount of income taxes that we would be required to pay, but for the availability of deductions related to the SAR payments made in connection with the recapitalization. The amount and timing of the additional payments to the selling shareholders was contingent on the use and timing of the SAR deductions to offset cash tax payments that we would otherwise have made. In March 2007, we paid $4.8 million of the remaining balance of our obligations, which was $5.3 million at December 31, 2006. In addition to the $31.0 million in SAR payments, we agreed to vest $1.8 million associated with the value of unvested SARs for certain executives that are payable in varying increments through January 2008. This entire amount was expensed as part of ―Recapitalization Expenses‖ in 2005. We also agreed to convert employee unvested SARs into retention bonuses totaling $4.1 million, which are earned and are being expensed over the four-year period beginning May 2005. The retention amounts are paid in equal installments annually in April of each year through 2009. After taking into account reductions for terminated employees, $2.6 million remained to be paid at December 31, 2006. Credit Agreement In connection with the recapitalization, we entered into a credit agreement with a syndicate of lenders led by Credit Suisse that provided for a $115 million term loan and a $30 million revolving credit facility. In April 2006, we added $100 million to the term loan to repay the outstanding debentures. The term loan matures on April 22, 2011, and the revolving credit facility terminates on April 22, 2010. All the loans under the credit agreement accrue interest at 2.25% above the British Banker‘s Association Interest Settlement Rates for dollar deposits (the LIBO Rate). The revolving credit facility can accrue interest at 1.25% above the LIBO rate depending on the type of borrowing. The spread above the LIBO Rate decreases as our leverage ratio, as defined in the credit agreement, decreases. The credit agreement also provides for mandatory prepayments of the term loan based on annual cash flow and leverage levels, as well as scheduled principal repayments of $0.5 million each quarter through June 30, 2010. At the end of each of the quarters ending September 30, 2010, December 31, 2010, March 31, 2011 and at April 22, 2011, a scheduled principal payment of $51.3 million is due. All the loans under the credit agreement are collateralized by substantially all of our assets (including our subsidiaries‘ assets) and require us to comply with financial covenants, including a maximum leverage ratio, minimum interest coverage and minimum fixed charges coverage. In addition, the credit agreement requires us to comply with non-financial covenants. One such covenant requires us to submit audited annual financial statements by March 31 of each year, for the preceding calendar year, together with certain certifications as to our compliance with the financial covenants described above. For the year ended December 31, 2006, we did not comply with that requirement, but we provided the audited financial statements and related certifications on April 23, 2007, which was within the 30-day grace period provided under the credit agreement. Costs incurred in connection with securing the credit agreement and the debentures were approximately $5.8 million in 2005, and costs incurred in connection with securing the 2006 addition to the term loan were $1.3 47

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million in 2006. The debt issuance costs are being amortized and reflected in interest expense over the respective lives of the loans. At December 31, 2005 and 2006, $0.8 million and $0.9 million of the unamortized debt issuance costs are reflected in ―prepaid expenses and other current assets‖ in the balance sheets and $4.4 million and $2.7 million were reflected in ―other assets.‖ During 2005 and 2006, $0.6 million and $3.1 million of costs were amortized and recorded in interest expense. Included in the $3.1 million of costs amortized in 2006 were costs of $2.3 million associated with shareholder debt issuance costs that were accelerated upon repayment of the debentures in April 2006. We intend to use net proceeds from the sale of shares by us in this offering to repay all indebtedness outstanding under our revolving credit facility and to use the balance to repay indebtedness under the term loan. For every $1.0 million we repay under the term loan, we will accelerate the amortization of $14,000 of the deferred debt issuance costs to interest expense in the period in which we make the repayment. Liquidity and Capital Resources Historically, we have financed our activities and capital expenditures primarily from net cash provided by operating activities. Cash required to complete our recent acquisitions has been funded through a combination of borrowings on our revolving credit facility and cash provided by operating activities. We use cash provided by operating activities to reduce borrowings under our revolving credit facility to the extent not required for near-term operating needs. At December 31, 2006, we had $6.7 million in cash and cash equivalents and $12.0 million available for borrowing under our revolving credit facility. Our largest source of operating cash flows is cash collections from our customers for the purchase of our software, consulting services and maintenance services. Amounts due from customers for software license and maintenance services are generally billed at the beginning of the contract term. Our primary uses of cash from operating activities are for personnel-related expenditures, payment of taxes and facilities-related costs. Net cash provided by operating activities was $40.6 million, $11.2 million and $18.4 million in 2004, 2005 and 2006, respectively. In 2005, cash generated from operating activities decreased from 2004 primarily due to the costs of the recapitalization. Net cash provided by operating activities increased in 2006 over 2005 primarily due to a significant increase in payments from customers ($58.2 million higher) offset in part by increased payments to employees and vendors for salaries, costs of revenues as well as higher overall operating expenses ($27.4 million), increased interest payments ($17.1 million higher in 2006) and increased tax payments ($7.4 million higher). The increase in tax payments reflects higher levels of taxable income in 2006 plus the impact of the change in 2005 from taxation as an S Corporation to a C Corporation. Net cash used in investing activities was $2.4 million, $13.5 million and $38.3 million in 2004, 2005 and 2006, respectively. Cash used in investing activities was primarily due to the acquisitions of Wind2 in 2005 and Welcom and CSSI in 2006. In addition, cash used in investing activities includes $1.2 million, $1.5 million, and $4.7 million for 2004, 2005 and 2006 for purchases of property and equipment. These capital expenditures are primarily related to internal information technology infrastructure costs. Net cash used in financing activities was $41.7 million in 2004. In 2005 and 2006, net cash provided by financing activities was $7.2 million and $8.8 million, respectively. In 2004, $34.1 million of cash used in financing activities was for shareholder distributions and $7.6 million was for repayment of debt. In 2005, cash generated by financing activities was primarily due to the net impact of the recapitalization. In 2006, we retired our subordinated debentures with $100 million of additional borrowings under our credit agreement. We also incurred $18 million of net borrowings under our revolving credit facility and received $1.0 million in proceeds from the sale of common stock. These borrowings financed the payment of a $7.0 million liability to certain of the selling shareholders arising from the 2005 recapitalization, and the payment of $1.9 million in principal reductions on the term loan and $1.3 million in debt issuance costs. The net cash provided by these borrowings was also used to finance part of the cost of the CSSI acquisition. As of May 1, 2007, we had $12.5 million available for use under our revolving credit facility. After the repayment of outstanding borrowings under the revolving credit facility upon consummation of this offering, we expect to have $30 million available for borrowing. 48

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Based on our current estimates of revenues and expenses, we believe that anticipated cash flows from operations and available sources of funds (including available borrowings under our revolving credit facility) will provide sufficient liquidity for us to fund our business and meet our obligations for the next 12 months and the forseeable future. We may not be able to generate sufficient cash flow from operations to fund our business and our assumptions regarding revenues and expenses may not be accurate. We may need to raise additional funds in the future, including funds for acquisitions or investments in complementary businesses or technologies or if we decide to retire or further decrease existing debt obligations. If additional financing is required, we may not be able to obtain it on acceptable terms or at all. Additional sources may include equity and debt financing and other financing arrangements. If we raise additional funds through the issuance of equity or convertible securities, our shareholders may experience dilution of their ownership interest. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense. Any inability to generate or obtain the funds that we may require could limit our ability to develop or enhance our products and services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operation. Impact of Seasonality Fluctuations in our quarterly license fee revenues reflect in part, seasonal fluctuations driven by our customers‘ procurement cycles for enterprise software and other factors. These factors typically yield a peak in license revenue in the fourth quarter due to increased spending by our customers during that time. In 2006, our fourth quarter license revenues were higher than the next highest quarter in 2006 by 21%. Our consulting services revenues are largely driven by the availability of our consulting resources to work on customer implementations and the adequacy of our contracting activity to maintain full utilization of our available resources. As a result, services revenues are less subject to seasonal fluctuations. Our maintenance revenues are not subject to seasonal fluctuations. Contractual Obligations and Commitments We have various contractual obligations and commercial commitments. Our material capital commitments consist of debt obligations and commitments under facilities and operating leases. We generally do not enter into binding purchase commitments. The following table summarizes our existing contractual obligations and contractual commitments as of December 31, 2006:
Contractual Obligations Payments Due By December 31, 2008 2009 2010 (dollars in thousands)

Total

2007

2011

Thereafter

Term loan Revolving credit facility Operating leases Liability for redemption of stock in recapitalization

$ 212,525 18,000 27,994 5,349

$ 2,150 — 6,266 5,349

$ 2,150 — 5,919 —

$ 2,150 — 5,668 —

$ 103,575 18,000 5,393 —

$ 102,500 — 3,849 —

— — 899 —

The table above does not include interest payments with respect to outstanding loans, which are variable and therefore fluctuate with interest rate fluctuations. Based on the variable rate debt outstanding as of December 31, 2006, a hypothetical 1% increase in interest rates would increase interest expense by approximately $2.3 million on an annual basis. 49

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We anticipate that we will experience an increase in our capital expenditures and lease commitments consistent with our anticipated growth in operations, infrastructure and personnel during 2007. Off-Balance Sheet Arrangements As of December 31, 2006, we had no off-balance sheet arrangements. Indemnification We provide limited indemnification to our customers against intellectual property infringement claims made by third parties arising from the use of our software products. Due to the established nature of our primary software products and the lack of intellectual property infringement claims in the past, we cannot estimate the fair value nor determine the total nominal amount of the indemnification, if any. Estimated losses for such indemnification are evaluated under SFAS No. 5, Accounting for Contingencies , as interpreted by FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others . We have secured copyright and trademark registrations for our software products with the U.S. Patent and Trademark Office, and we have intellectual property infringement indemnification from our third-party partners whose technology may be embedded or otherwise bundled with our software products. Therefore, we generally consider the probability of an unfavorable outcome in an intellectual property infringement case to be relatively low. We have not encountered material costs as a result of such obligations and have not accrued any liabilities related to such indemnifications. Newly Adopted and Recently Issued Accounting Standards In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB Statement No. 109. FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We are required to adopt the provisions of FIN 48 in 2007. We believe that the impact of FIN 48 on our consolidated results of operations and financial position will be immaterial. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We currently are evaluating the potential impact of SFAS 157 on our consolidated results of operations and financial condition. Qualitative and Quantitative Disclosures about Market Risk Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our outstanding debt and cash and cash equivalents consisting primarily of funds held in money-market accounts on a short-term basis. At December 31, 2006, we had $6.7 million in cash and cash equivalents. Our interest expense associated with our term loan and revolving credit facility will vary with market rates. As of December 31, 2006, we had approximately $230.5 million in variable rate debt outstanding. Based upon the variable rate debt outstanding as of December 31, 2006, a hypothetical 1% increase in interest rates would increase interest expense by approximately $2.3 million on an annual basis, and likewise decrease our earnings and cash flows. 50

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We cannot predict market fluctuations in interest rates and their impact on our variable rate debt, or whether fixed-rate long-term debt will be available to us at favorable rates, if at all. Consequently, future results may differ materially from the hypothetical 1% increase discussed above. In order to provide us with protection against significant increases in market interest rates, in June 2005 we entered into an interest rate cap covering $60 million of principal outstanding under our credit agreement. The agreement provides for payment to us equal to the excess, if any, of the LIBO Rate over 6.25% times $60 million. At December 31, 2006, the fair value of the interest rate cap was reduced to a nominal amount. This agreement expires on December 31, 2007. Based on the investment interest rate and our cash and cash equivalents balance as of December 31, 2006, a hypothetical 1% decrease in interest rates would decrease interest income by approximately $60,000 on an annual basis, and likewise decrease our earnings and cash flows. We do not use derivative financial instruments in our investment portfolio. Foreign Currency Exchange Risk Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British pound and the Philippine peso. As our international operations continue to grow, we may choose to use foreign currency forward and option contracts to manage currency exposures. We do not currently have any such contracts in place, nor did we have any such contracts during 2004, 2005 or 2006. To date, exchange rate fluctuations have had little impact on our operating results and cash flows given our limited international presence. 51

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BUSINESS Company Overview We are a leading provider of enterprise applications software and related services designed specifically for project-focused organizations. Project-focused organizations generate revenue from defined, discrete, customer-specific engagements or activities, rather than from mass-producing or distributing products. These organizations typically require specialized software to help them automate complex business processes around the engagement, execution and delivery of projects. Our software enables them to greatly enhance the visibility they have over all aspects of their operations by providing them increased control over their critical business processes, accurate project-specific financial information and real-time performance measurements. With our software applications, project-focused organizations can better measure business results, optimize performance and streamline operations, thereby enabling them to win new business. We believe the potential market for enterprise applications software for project-focused organizations is large and growing. Project-focused firms span numerous industries and range in size from small- and medium-sized local and regional firms to Fortune 100 global organizations. A prominent industry research firm estimates the size of the worldwide enterprise software market for project-focused organizations at $17.4 billion in 2005 and projects it to grow to $22.9 billion by 2010. We believe that spending on software and technology in this market is increasing in large part due to strong growth in the services-based economy and the fact that enterprise applications software has generally become more affordable and accessible to small- and medium-sized businesses. Our enterprise applications software products provide end-to-end business process functionality designed to streamline and manage the complex business processes of project-focused organizations. Our software solutions are industry-specific and ―purpose-built‖ for businesses that plan, forecast and otherwise manage their business processes based on projects, as opposed to generic software solutions that are generally designed for repetitive, unit-production-style businesses. Our broad portfolio of software applications includes: • Comprehensive financial management solutions that integrate project control, financial processing and accounting functions, providing business owners and project managers with real-time access to information needed to track the revenue, costs and profitability associated with the performance of any project or activity; Business applications that enable employees across project-focused organizations to more effectively manage and streamline business processes, including resource management, sales generation, human resources, corporate governance and performance management; and Enterprise project management solutions to manage project costs and schedules, measure earned value, evaluate, select and prioritize projects based on strategic business objectives and facilitate compliance with regulatory reporting requirements.

•

•

As of May 1, 2007, we had over 12,000 customers worldwide that spanned numerous industries and ranged in size from small organizations to large enterprises. We serve customers primarily in the following markets: A/E, government contracting, aerospace and defense, information technology services, consulting, discrete project manufacturing, grant-based not-for-profit organizations and government agencies. In many of these markets, we have established strong brand recognition and market share. In the A/E market, as of December 2006, our products were deployed by over 80% of the top 500 A/E firms in the United States. In addition, as of May 2006, 67% of the top 100 federal information technology contractors were our customers, including nine of the top ten companies. In 2006, our total revenue increased 49% to $228.3 million and our net income increased 75% to $15.3 million, in each case from the prior year. Industry Overview Enterprise applications software provides organizations with the ability to streamline, automate and integrate a variety of business processes, including financial management, supply chain management, human capital management, project and resource management, customer relationship management, manufacturing and business performance management. 52

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General purpose enterprise application vendors often are not able to meet the needs of project-focused businesses because they lack project-focused capabilities and market functionality. Adapting general purpose software to meet the needs of project-focused businesses and organizations frequently results in significantly higher deployment costs and longer implementation times and can require increased levels of ongoing support. It can also result in missing or inaccurate metrics that are critical to driving better business performance. In 2007, Forrester Research, a leading industry research firm, identified the project-focused business software market as a separate category of enterprise applications software. Their findings indicated that project-focused organizations are inadequately served by existing generic enterprise software applications developed for the manufacturing world. According to Forrester Research, business process and applications professionals seeking a project-focused solution remain frustrated with many project management, enterprise resource planning and/or customer relationship management solutions that are ill-equipped to address the project needs of an industry. Forrester also observed that business process and applications professionals will continue to seek solutions that align interactive processes and streamline how users can deliver on engagements, projects and programs. Forrester Research concluded that project-focused organizations require highly specialized applications software that automates and streamlines project-focused engagements, projects and programs. The unique characteristics of project-focused organizations create special requirements for their business applications that frequently surpass the capabilities of generic applications software packages (for example, those designed primarily for manufacturing or financial services firms). Project-focused organizations require sophisticated, highly integrated software applications that automate end-to-end business processes across each stage of the project lifecycle. Project lifecycles vary significantly in length and complexity and can be difficult to forecast accurately. These projects need to be managed within the context of a company‘s complete portfolio of existing and potential future projects. Project-focused organizations often operate in environments or industries that pose unique challenges for their managers, who are required to maintain specific business processes and accounting methodologies. For example, government contractors are subject to oversight by various U.S. federal government agencies, such as the GAO and the DCAA, which have regulations that require these companies to have the ability to audit specific project performance in detail and to accurately maintain and report compliance to their government agency customers. Our Competitive Strengths Our key competitive strengths include the following: • Superior Value Proposition . Our software applications offer built-in project functionality at their core, making them faster and less costly to deploy, use and maintain. Our modular software architecture also enables our products to be deployed as a comprehensive solution or as individual applications, which provides our customers with the flexibility to select the applications that are relevant to them. Conversely, generic ―one-size fits all‖ applications software often requires extensive customization to add the specific functionality needed to manage complex project-focused organizations. This customization often requires significantly more time and expense for the customer to install, operate and maintain the software. Built-In Processes and Compliance . Project-focused organizations are often challenged with tracking and complying with intricate accounting policies and procedures, auditing requirements, contract terms and customer expectations. Our software is designed to make it easy for project managers and business executives to accurately monitor and measure specific project performance in detail with consistent application of business processes. Our applications also enable our customers to maintain and report compliance with contract requirements to government agencies and their customers. 53

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Deep Domain Expertise . For more than 20 years, our exclusive focus on meeting the complex needs of project-focused organizations has provided us with extensive knowledge and industry expertise. Our significant subject matter expertise enables us to develop, implement, sell and support applications that are tailored to the existing and future needs of our customers. Leading Market Position . We are a leading provider of enterprise applications software designed specifically for project-focused organizations. As of May 1, 2007, we had over 12,000 customers, including over 80% of the top 500 A/E firms in the United States and 67% of the top 100 federal information technology contractors. We believe our strong market position has helped us develop a widely recognized brand within our target markets. We also have leveraged our market position to foster a network of alliance partners to help us market, sell and implement our software and services.

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Our Business Strategy and Growth Opportunities We plan to focus on the following objectives to enhance our position as a leading provider of enterprise software applications to project-focused organizations: • Expanding Penetration of Established Markets . We believe that our strong brand recognition and leading market position within the project-focused software market, particularly among the A/E and government contracting industries, provide us with significant opportunities to expand our sales within these markets. For example, while we currently have approximately 7,000 A/E customers as of December 31, 2006, we estimate that there are an additional 42,000 U.S.-based A/E firms with greater than 10 employees that are potential new business prospects for us. According to the DCAA, during the federal government‘s fiscal years 2005 and 2006, approximately 5,100 new government contractors became subject to audit by the federal government for the first time, providing us with a significant growth opportunity. This primarily has occurred as a result of the changing needs of the federal government for goods and services, and the federal government‘s desire to encourage and foster small organizations to do business with the federal government. Expanding Within Existing Customer Base . As of May 1, 2007, we had an installed base of over 12,000 customers, each utilizing at least one of our applications. We are continuously looking to increase our sales to our existing customers, both by increasing the number of our applications utilized by them and by offering upgrades from our legacy applications to our current portfolio. We offer a broad range of project-focused software applications addressing a variety of business processes and regularly introduce additional functionality to further expand the capabilities of our applications as well as simplify and accelerate deployment of our existing products. We also introduce new products through internal development, acquisitions and partnering with third parties. We believe that customers experiencing the benefits afforded by our applications will look to us as they expand the scope of business processes that they seek to automate. Expanding Our Network of Alliance Partners . We currently have an established network of alliance partners which provides us with assistance in marketing, selling and implementing our applications. In order to meet the diverse solution requirements of our customers and to reach new markets and penetrate further into existing markets, we plan to expand our ecosystem of alliance partners. We anticipate expanding current relationships and establishing new partnerships with reseller, consulting and technology partners in the United States and international markets. This expanding network of alliance partners should enable us to enhance our penetration into new markets and increase our geographical sales force coverage. Growing Our Presence in New Markets . We believe that our experience and success in attaining leadership in a number of key project-focused industries provides us with the opportunity to penetrate additional project-focused markets. We are building upon our track record of customer successes outside our established markets in industries such as consulting, information technology services, 54

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discrete project manufacturing and grant-based not-for-profits. We continue to develop additional industry-specific product functionality and are investing in targeted sales and marketing activities for new markets. • Growing Internationally . We intend to further expand our presence outside the United States, initially targeting countries where English is the primary business language. We believe project-focused organizations in Canada, the United Kingdom, Europe and the Asia-Pacific region are currently underserved for the products we offer. We are increasing the size of our international sales, consulting, support and marketing organizations, as well as modifying existing products to meet the needs of our existing and future international customers. Making Strategic Acquisitions . Since October 2005, we have acquired three companies to broaden our product portfolio and expand our customer base. In addition, in April 2007, we acquired certain assets of a fourth company to expand our services team. We plan to continue to pursue acquisitions that present a strong strategic fit with our existing operations and are consistent with our overall growth strategy. We may also target future acquisitions to expand or add product functionality and capabilities to our existing product portfolio, add new products or solutions to our product portfolio or further expand our services team.

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Our Products and Services Products We provide integrated solutions that are designed to meet the evolving needs of project-focused organizations of various sizes and complexity. These organizations use our software to automate critical business processes across all phases of the project lifecycle, including business development, project selection and prioritization, resource allocation, project planning and scheduling, team collaboration, risk mitigation, accounting, reporting and analysis. Our portfolio of applications are designed to provide the following benefits to our customers: • • Improving Business Decisions . Our applications enable decision makers to analyze multiple facets of their businesses in real-time and improve decision-making by providing reporting, business intelligence, planning and analytical capabilities. Optimizing Resources . Our applications enable automation of scheduling, allocation, budgeting and forecasting of resources dispersed across projects based on skills, location, availability and other attributes. As a result, resource planners can determine whether proposed fees are accurate, appropriate staff is available and utilized effectively, and projects are completed on time and on budget. Winning New Business . Our customer relationship management applications enable our customers‘ sales and marketing groups to generate demand for their services, build stronger customer relationships, manage their project pipeline, more accurately forecast revenue, automate proposals and create accurate estimates for proposed services. Streamlining Business Operations . Our applications help organizations lower their transaction processing costs, improve billing processes, improve cash flow and reduce administrative burdens on employees through automation of a variety of key business processes, including time collection, expense management and employee self-service. Facilitating Compliance and Governance . Our applications help organizations comply with complex accounting and auditing requirements and report compliance to government agencies and their customers and maintain standardized controls around key business processes. Managing, Evaluating and Prioritizing Projects . Our applications enable our customers to efficiently manage project profitability, monitor project schedule and progress and evaluate, select and prioritize projects based on strategic business objectives. In addition, our earned value management applications enable organizations to plan and monitor the complex relationships between actual and forecasted project costs, schedules, physical progress and earned revenue. 55

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Our applications portfolio is comprised of four major product families, each designed to meet the specific functionality and scalability requirements of the project-focused industries and customers we serve. The following table outlines our major product families:
Product Family Targeted Customers and Value Proposition Features and Functionality

Deltek Costpoint

• Sophisticated, medium- and large-scale project-focused organizations such as government contractors and commercial project-focused organizations. • Customers purchase Costpoint to manage complex project portfolios, and to facilitate compliance with detailed, regulatory requirements. The Costpoint product family includes a broad set of scalable, integrated applications that streamline project-focused business processes across multiple disciplines and geographic locations.

• Provides a comprehensive financial management solution that tracks, manages and reports on key aspects of a project: planning, estimating, proposals, budgets, expenses, indirect costs, purchasing, billing, regulatory compliance and materials management. • Includes a portfolio of business applications which deliver specialized functionality such as time collection, expense management, employee self-service, business performance management and human capital management. • Scales to support complex business processes and large numbers of concurrent users. • An integrated solution that incorporates critical business functions, including project accounting, customer relationship management, resource management, time and expense capture and billing. • Provides decision makers with real-time information across all business processes, allowing them to identify project trends and risks to facilitate decision making, improve business performance and align users around common goals. • Highlights key performance indicators to determine project health and provides ―one-click‖ access to project details needed to pinpoint and quickly resolve root causes of issues.

Deltek Vision

• Professional services firms of all sizes, including A/E, information technology and management consulting firms. • Customers purchase Vision for its ability to automate end-to-end business processes for project-focused firms, its intuitive Web-based interface and its innovative capabilities such as mobile device support and executive dashboards.

Deltek GCS Premier

• Small and medium-sized government contractors who find that the limitations of spreadsheets and traditional small-business accounting packages prevent them from meeting government audit requirements in a cost effective way. • Customers purchase GCS for its ease of installation, built-in functionality and compliance with government regulations and reporting requirements and proven track record of customer success. 56

• Provides a robust accounting and project management solution that is cost effective, easy to use and helps firms comply with DCAA and other regulatory requirements. • Provides a full view of project and financial information, enabling firms to respond quickly and accurately to variations in plans and profit projections.

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Targeted Customers and Value Proposition

Product Family

Features and Functionality

Enterprise Project Management Solutions

• Professional services firms of all sizes that manage complex project portfolios. Our enterprise project management solutions help firms select the right projects, allocate resources across projects, mitigate risks and ultimately complete projects on time and on budget. • Customers purchase our enterprise project management software for its ability to offer an end-to-end project selection, planning, risk assessment, resource balancing and earned value management reporting.

• Provides a comprehensive solution for enterprise project management. • Includes Deltek Cobra, the market-leading system for managing project costs, measuring earned value and analyzing budgets, actuals and forecasts. With Cobra, businesses can measure the health and performance of projects and satisfy government-mandated regulations. • Includes Deltek Open Plan, an enterprise-grade project management system and Deltek wInsight, a leading tool for calculating, analyzing, sharing, consolidating and reporting on earned value data. • Our enterprise project management solutions offer risk management and reporting tools and support many industry-standard third party project scheduling tools.

Consulting Services We employ a dedicated services team that provides a full range of consulting and technical services, from the early planning and design stages of an implementation to end user training. Our services team is comprised of application consultants, project managers and technical applications specialists who work closely with our customers to implement and maintain our software solutions. Our primary consulting services offerings can be categorized into the following activities: • • • • Solution architecture services that align our applications and software solutions with our customers‘ business processes. Application implementation services for our products, including business process design, software installation and configuration, application security, data conversion, integration with legacy applications and project management. Technology architecture design and optimization of our applications and related third party software and hardware configuration in our customers‘ specific technology environments. Project team and end-user training for our customers and partners in the functionality, configuration, administration and use of our products, including classroom training at various internal facilities, which we refer to as Deltek University; classroom training at customer sites; public seminars and webinars; and self-paced, self-study e-learning modules.

Technical Maintenance and Support We receive maintenance services fees from customers for product support, upgrades and other customer services. Our technical support organization is aimed at answering questions, resolving issues and keeping our customers‘ operations running efficiently. We offer technical support through in-person unlimited phone-based support six days a week, and also provide 24x7 access to our web support system. Our comprehensive support program also includes on-going product development and software updates, which includes minor enhancements, such as tax and other regulatory updates, as well as major updates such as new functionality and technology upgrades. Our maintenance services revenues have been growing given the contractual nature of this revenue stream, strong customer satisfaction with our products, low customer turnover, low voluntary termination of maintenance 57

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and our customers‘ need to purchase additional licenses as their businesses grow. In 2006, we experienced nearly a 100% maintenance attachment rate, with each license sale, whether to a new or existing customer, providing incremental maintenance revenue. In 2006, we experienced a retention rate in excess of 90% in our maintenance customer base. Initial annual maintenance fees are set as a percentage of the software list price at the time of the initial license sale. Maintenance services are billed quarterly and paid in advance. Customers We consider a customer to be an organization that purchases a software license, or licenses, for the right to use one or more of our products. As of May 1, 2007, we had over 12,000 customers worldwide representing a wide range of industries including A/E firms, government contractors, aerospace and defense contractors, information technology services firms, consulting companies, discrete project manufacturing companies, grant-based not-for-profit organizations and government agencies, among others. Our software is used by organizations of various sizes, from small businesses to large enterprises. In 2004, 2005 and 2006, no single customer accounted for five percent or more of our total revenue. The following table provides a sample cross section of customers as of December 31, 2006 by primary markets:
Aerospace & Defense Architecture & Engineering Consulting Companies Discrete Project Manufacturing

• Concurrent Technologies • L-3 Communications • Orbital Sciences • BAE Systems

• ARCADIS • HOK • TKDA • URS Corporation

• The Durant Group • Fuld & Company • Garver Engineers • The Pragma Corporation

• Applied Geo Technology • Northrop Grumman • Teledyne Brown Engineering • Telephonics

Government Agencies

Government Contractors

Grant-Based Not-for-Profit

Information Technology Services

• U.S. Air Force • U.S. Army • U.S. Department of Health and Human Services • U.S. Navy Customer Case Studies

• CACI • CSC • General Physics Corporation • SRA International

• The Brookings Institution • National Democratic Institute • National Fish and Wildlife Federation • Research Triangle Institute

• Optimation Technology • Perot Systems • SM Consulting • Triton Services

The following case studies illustrate how various customers use our four product lines to more efficiently manage their project-focused organizations. HOK Group, Inc. (HOK) Vision: With over 2,100 employees in 24 offices on four continents, HOK is a large A/E firm. In 2003, HOK implemented Deltek Vision to streamline its operations to maintain its market position while expanding globally. HOK needed to gain better understanding of how its global resources were being utilized to optimize staffing across numerous projects, thereby increasing profitability. Before implementing Vision, HOK‘s resource utilization reporting was a time-consuming, manually intensive effort that utilized a variety of legacy systems. With its implementation of Vision, most of its manual processes have been automated, allowing project 58

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managers to better identify and mitigate project cost and scheduling issues. HOK executives now have up-to-date, accurate visibility into their global workforce, which they have stated is contributing to greater firm profitability. Today, HOK‘s entire portfolio of projects, including some of the largest and most high-profile projects in the world, such as Dubai Marina City in the United Arab Emirates, LAC USC Hospital in Los Angeles, OMNI Hotel in Dallas, and the Barts and the London Hospital in the United Kingdom, is managed with Deltek Vision. Orbital Sciences Corporation (Orbital) Costpoint: Orbital Sciences Corporation has been a Deltek Costpoint customer since 2001. Orbital develops and manufactures small rockets and space systems for commercial, military and civil government customers and other U.S. government agencies. Orbital‘s primary products are satellites and launch vehicles, including low-orbit, geosynchronous-orbit and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds software-based transportation management systems for public transit agencies and private vehicle fleet operators. Orbital uses our products as an accounting system to assist with automating, collecting and analyzing project data and complying with mandated regulatory reporting requirements. Orbital also uses our products to assist with streamlining financial reporting, bidding on future projects with greater consistency and accuracy, and improving operational efficiency across its organization. Applied Geo Technologies, Inc. (AGT) GCS Premier: As a premier, tribally owned provider of aerospace and defense services, AGT was looking to further diversify its business. AGT, which is certified by the U.S. Small Business Administration as a tribally owned 8(a), HUBZone and Small Disadvantaged Business, was seeking a software solution that would enable it to make the transition into the prime federal government contracting market, as well as a partner that would help it navigate the complex requirements of that market. In order to achieve this goal, AGT chose us to assist it through the beginning stages of competing for its first DOD prime contract to implementing an accounting system that provided out-of-the-box functionality to manage its project-focused organization. Through the use of our software products and consulting expertise, AGT has stated that it has been able to win new business, improve data accuracy and increase project cash flow and profitability. Sales and Marketing We sell our products primarily through a combination of our own sales force complemented by an established network of indirect sales partners. Our direct sales force consists of experienced software sales professionals organized by customer type (for example, new vs. existing) under common leadership. The sales teams all operate under a common sales methodology that focuses on the individual markets and customers we serve. Our network of alliance partners complements our direct sales efforts by selling our products and providing implementation services and support to our customers. These alliance partners primarily serve our Vision product family, support our international sales activity and provide sales and implementation support for our products sold to the entry level government contracting and A/E markets. Our indirect sales channel is comprised of approximately 30 independent reseller partners who primarily cover entry level markets. In 2006, our sales force directly generated approximately 90% of our license revenue sales and our indirect channel was responsible for the remaining 10 %. In 2005 and 2006, more than 95% of our total revenue was generated from customers inside the United States and less than 5% of our revenue was generated from international customers. For 2004, we did not record international revenue separately. 59

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We engage in a variety of marketing activities in order to optimize our market position, enhance lead generation, increase overall brand awareness, increase our revenues within key markets and promote our new and existing products. Our specific marketing activities include demand generation, market research and development of our market strategy, advertising, participation at industry conferences and trade-shows, promoting our product capabilities to industry analysts and the press, publication of corporate brochures, white papers and other marketing collateral, field marketing campaigns and managing our annual and periodic customer conferences. Strategic Alliances A significant component of our business strategy is to maintain and form alliances to assist us in marketing, selling and implementing our software and services. Our existing alliances encompass a wide variety of technology companies, business services firms, value-added resellers, accounting firms, specialized consulting firms, software vendors, business process outsourcers and other service providers. The following table outlines our various types of strategic alliances and is a cross-section of our strategic alliance partners as of December 31, 2006:
Type of Alliance Role Examples

Technology Infrastructure Partners

• Provide infrastructure technologies on which our products operate, including database, hardware and platform solutions. • Enable us to provide applications that leverage our customers‘ existing information technology infrastructure. • Provide applications that complement and integrate with our products. • Enable us to provide our customers with additional point solution functionality complementing their Deltek applications.

• BEA Systems • Hewlett-Packard • Microsoft • Oracle

Independent Software Vendors

• Actuate • Applimation • Cognos • Central Consulting Group • Innovative Solutions Group • SilverEdge Systems Software • Beason & Nalley • Beers & Cutler • MorganFranklin • ZweigWhite

Resellers

• Provide sales, implementation, consulting, support, training and customization services. • Assist us in selling our products into new markets and geographies.

Consulting

• Offer implementation, consulting, support, training and customization services and refer potential customers. • Promote wider acceptance and adoption of our solutions.

CPA Accountant Network

• Recommend and refer our solutions when providing accounting, tax and related advisory services.

• Aronson & Company • Cherry, Bekaert & Holland • Watkins, Meegan, Drury & Company

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Type of Alliance Role Examples

Hosting & Business Process Outsourcing

• Provide off-site hosting and/or managed infrastructure services. • Offer an alternative to our customers that would rather outsource systems administration and information technology management.

• Compass Connections • Green Kelly • NeoSystems • Technology & Business Solutions

Business Service

• Provide products and business services that complement back-office systems, such as forms and checks. • Allow us to offer additional products and features to our customer base.

• Deluxe Corporation • Foremost • Visibility Software

Research and Development Our research and development organization is structured to optimize our efforts around the design, development and release of our products. Specific disciplines within research and development include engineering, programming, quality control, product management, documentation, design and project management/software quality assurance. Our research and development expenses were $22.9 million, $26.2 million and $37.3 million in 2004, 2005 and 2006, respectively. The increased spending in 2006 is primarily related to investments for future applications to drive growth across our business. As of December 31, 2006, we had approximately 350 employees in research and development, of which approximately 230 were in the United States and approximately 120 were in Manila, Philippines. In addition, there are approximately 55 software and product developers in Bangalore, India trained on our products and available on an outsourced basis. As we continue to expand our development efforts, we anticipate that we will add both domestic and international resources in order to leverage technical expertise available around the world. Technology In the development of our software, we use broadly adopted, standards-based software technologies in order to create, maintain and enhance our project-focused solutions. Our solutions are both scalable and are easily integrated into our customers‘ existing information technology infrastructure. Our software design and engineering efforts are tailored to meet specific requirements of project-focused enterprises and provide the optimal experience for end users who interact with our software to accomplish their job requirements. The specific architecture and platform for each of our major product families is as follows: Vision offers a full range of highly integrated applications, which incorporate critical business functions, including project accounting, customer relationship management, resource management, time and expense capture and billing. Vision is a completely web-native software application based on the latest Microsoft platform technologies, including .NET, Microsoft SQL Server and the Microsoft Office System. Designed for small- and medium-sized businesses, Vision is intended to minimize the technology burden on firms with limited information technology staff. Costpoint is designed to automate and manage complex project-focused business processes. Built using J2EE technology, Costpoint is highly configurable and modular, allowing our customers the ability to support project-centric business processes and large workloads. Costpoint‘s modular architecture supports seamless integration of business applications which deliver specialized functionality such as time collection, expense management, business performance management, employee self-service and human capital management. GCS Premier is a turnkey Windows application designed for small government contracting organizations. The software is designed to be easy to install, learn and maintain with minimal information technology support. 61

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Our enterprise project management product line provides a comprehensive solution for enterprise project management, including earned value management throughout the project lifecycle. Built using .NET and Web-based technologies, these solutions integrate with our own applications, as well as third party applications such as Microsoft Project and Primavera P3/SureTrak. This product line also includes a secure, web-based collaboration portal that provides the ability for distributed team members to collaborate on a project. Our products are designed for easy deployment and integration with third party technologies within a company‘s enterprise, including application servers, security systems and portals. Costpoint and Vision also provide web services interfaces and support for Service-Oriented Architectures to facilitate enhanced integration within the enterprise. Competition The global enterprise applications market for project-focused organizations is competitive and fragmented. When competing for large enterprise customers with over 1,000 employees, we face the greatest competition from large, well-capitalized competitors such as Oracle, SAP and Lawson Software. These companies have recently refocused their marketing and sales efforts to the middle market, in which we have a substantial market position. These vendors seek to influence customers‘ purchase decisions by emphasizing their more comprehensive horizontal product portfolios, greater global presence and more sophisticated multi-national product capabilities. In addition, these vendors commonly bundle their ERP solutions with a broader set of software applications including, middleware and database applications and often significantly discount their individual solutions as part of a potentially larger sale. When competing for middle-market customers, which range in size from 100 to 1,000 employees, we often compete with vendors such as Epicor, Lawson Software and Primavera. Mid-market customers are typically searching for industry specific functionality, ease of deployment and a lower total cost of ownership with the ability to add functionality over time as their businesses continue to grow. When competing in the small business segment, which consists of organizations with fewer than 100 employees, we face fewer competitors, including JAMIS, BST Global and Microsoft. Customers in the small business segment typically are searching for solutions which provide out-of-the-box functionality that help them automate all of their business processes and improve operational efficiency. Although some of our competitors are larger organizations, have greater marketing resources and offer a broader range of applications and infrastructure, we believe that we compete effectively on the basis of our superior value proposition, built-in compliance functionality, domain expertise, leading market position and highly referenceable customer base. Intellectual Property We rely upon a combination of copyright, trade secret and trademark laws and non-disclosure and other contractual arrangements to protect our proprietary rights. We provide our software to customers pursuant to license agreements, including shrink-wrap and click-wrap licenses. These measures may afford only limited protection of our intellectual property and proprietary rights associated with our software. We also enter into confidentiality agreements with employees and consultants involved in product development. We routinely require our employees, customers and potential business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our software, technology or business plans. We also incorporate a number of third party software products into our technology platform pursuant to relevant licenses. We use third party software, in certain cases, to meet the business requirements of our customers. We are not materially dependent upon these third party software licenses, and we believe the licensed software is generally replaceable, by either licensing or purchasing similar software from another vendor or building the software functions ourselves. 62

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Employees As of December 31, 2006, we had 1,041 employees worldwide, including 152 in sales and marketing, 350 in product development, 408 in customer services and support and 131 in general and administrative positions. Of our 1,041 worldwide employees, 908 were located in the United States and 133 were located internationally. None of our employees is represented by a union or party to a collective bargaining agreement. Facilities Our corporate headquarters is located in Herndon, Virginia, where we lease approximately 108,000 square feet of space under two leases expiring in 2012. In addition, we have offices in California, Colorado, Florida, Massachusetts, Minnesota, Oregon and Texas. Internationally, our offices are located in Canada, Hong Kong, the Philippines and the United Kingdom. As of the years ended December 31, 2004, 2005 and 2006, $0.3 million, $0.5 million and $0.6 million of our total long-lived assets of $20.1 million, $38.0 million and $76.1 million, respectively, were held outside of the United States. Legal Proceedings On August 31, 2006, C.H. Fenstermaker & Associates, Inc. (Fenstermaker) filed suit in the 15th Judicial District Court for the Parish of Lafayette, State of Louisiana, alleging that we converted certain visualization technology, allegedly created by Fenstermaker and referred to as the ―BLINK technology.‖ Fenstermaker seeks unspecified damages stemming from alleged injuries caused by our supposed conversion of the BLINK technology. Fenstermaker asserts these claims under Louisiana tort law and the Louisiana Unfair Trade Practices and Consumer Protect Law. Following our removal of the case to federal court, the action is currently pending in the U.S. District Court for the Western District of Louisiana (Civil Action No. 6:06-CV-1801 W.D. La.). We are involved in various legal proceedings from time to time that are incidental to the ordinary conduct of our business. We are not currently involved in any legal proceeding in which the ultimate outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business, financial condition or results of operations. 63

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MANAGEMENT Executive Officers and Directors Set forth below is information concerning our executive officers and directors as of May 1, 2007.
Name Age Position(s)

Kevin T. Parker Eric J. Brehm William D. Clark Richard M. Lowenstein Richard P. Lowrey Carolyn J. Parent James C. Reagan Holly C. Kortright David R. Schwiesow Alok Singh (1) Michael B. Ajouz Nanci E. Caldwell (1)(2) Kathleen deLaski (1) Joseph M. Kampf (1) Steven B. Klinsky Albert A. Notini (2) Janet R. Perna (2) (1) (2)

47 48 47 44 47 41 48 40 56 53 33 49 47 62 50 50 58

Chairman, President and Chief Executive Officer Executive Vice President of Product Development Executive Vice President and Chief Marketing Officer Executive Vice President of Professional Services Executive Vice President of Products and Strategy Executive Vice President of Worldwide Sales Executive Vice President, Chief Financial Officer and Treasurer Senior Vice President of Human Resources Senior Vice President, General Counsel and Secretary Lead Director Director Director Director Director Director Director Director

Member of our compensation committee. Member of our audit committee.

Kevin T. Parker has served as our President and Chief Executive Officer since June 2005 and as Chairman of the board since April 2006. Prior to joining Deltek, Mr. Parker served as Co-President of PeopleSoft, Inc., an enterprise applications software company, from October 2004 to December 2004, and as the Executive Vice President of Finance and Administration and Chief Financial Officer of PeopleSoft from January 2002 to October 2004. Prior to January 2002, Mr. Parker has held various positions, including as the Senior Vice President and Chief Financial Officer of PeopleSoft, the Senior Vice President and Chief Financial Officer of Aspect Communications Corporation, a customer relationship management software company, and the Senior Vice President of Finance and Administration at Fujitsu Computer Products of America. He currently serves on the board of directors of Polycom, Inc. Mr. Parker received his B.S. in Accounting from Clarkson University, where he serves on the board of trustees. Eric J. Brehm has served as our Executive Vice President of Product Development since June 2006. From November 2001 to June 2006, Mr. Brehm served as our Executive Vice President and General Manager of the Professional Services Market Group. Previously, Mr. Brehm served as the Vice President of Development for Harper and Shuman, Inc., a software company that we acquired in 1998. Mr. Brehm received his B.A. in Economics from Brandeis University and his Master of Information Sciences from Northeastern University in Massachusetts. William D. Clark has served as our Executive Vice President and Chief Marketing Officer since October 2005. From February 2005 to October 2005, Mr. Clark served as Vice President of Global Product Marketing at Novell, Inc., an enterprise applications software developer. Prior to joining Novell, from May 2003 to September 2004, Mr. Clark served as Executive Vice President and Chief Marketing Officer of Mantas, Inc., a financial services software developer, and, from December 2001 to May 2003, he served as Vice President of Marketing of Bang Networks, Inc., a computer technology and service firm. Mr. Clark also has held various positions at IBM Corporation and JP Morgan & Co. Mr. Clark received his B.S. in Business Administration from Drexel University. 64

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Richard M. Lowenstein has served as our Executive Vice President of Professional Services since June 2006. From August 2003 to March 2006, Mr. Lowenstein served as Vice President of Professional Services of Agile Software Corporation, a product lifecycle management software developer. From September 2002 to July 2003, Mr. Lowenstein served as Managing Director of Alberdale Capital, a private equity firm. Prior to joining Alberdale Capital, Mr. Lowenstein held various management positions at PeopleSoft, Workscape, Inc., Sybase, Inc. and Accenture Ltd. Mr. Lowenstein received his B.S. in Industrial and Systems Engineering from the University of Florida. Richard P. Lowrey has served as our Executive Vice President of Products and Strategy since June 2006. Mr. Lowrey joined us as a systems consultant in 1995 and has since served as Managing Consultant, Director of Training, Director of Time Collection Product Group, Business Development Director, Vice President of Strategy and Business Development and, most recently, as Executive Vice President and General Manager of Enterprise Solutions Group for the company. Prior to joining our company Mr. Lowrey held financial positions at Titan Corporation, Digicon Corporation and SRA International. Mr. Lowrey received his B.S. in Public Administration from George Mason University. Carolyn J. Parent has served as our Executive Vice President of Worldwide Sales since March 2006. From March 2004 to March 2006, Ms. Parent served as National Sales Director at BearingPoint, Inc., a management and technology consulting firm. From January 2002 to March 2004, Ms. Parent served as Executive Vice President of Sales at Sequation, Inc., a software company. Prior to joining Sequation, Ms. Parent held various executive positions at Enterworks, Inc. and Xacta Corporation, a division of Telos Corporation, a software company. Ms. Parent received her B.A. in English from Villanova University. James C. Reagan has served as our Executive Vice President, Chief Financial Officer and Treasurer since October 2005. From December 2004 to September 2005, Mr. Reagan served as Executive Vice President and Chief Financial Officer of Aspect Communications Corporation, a customer relationship management software company. Prior to joining Aspect, from May 2002 to May 2004, Mr. Reagan held various senior financial positions at American Management Systems, Inc. Prior to May 2002, Mr. Reagan served as Vice President, Finance and Administration at Nextel Communications. Mr. Reagan received his B.B.A. from the College of William and Mary and his M.B.A. from Loyola College in Baltimore. Mr. Reagan is a Certified Public Accountant in the Commonwealth of Virginia. Holly C. Kortright has served as our Senior Vice President of Human Resources since October 2006. From March 2006 to October 2006, Ms. Kortright was Vice President of Human Resources for Capital One Financial Corporation, a global diversified financial services provider. From August 1999 through March 2006, she held various positions at Capital One, including Director of Human Resources, Director of Leadership Development and Senior Management Development Consultant. Ms. Kortright received her B.S. in Industrial Engineering from Lehigh University and her M.B.A. from Indiana University. David R. Schwiesow has served as our Senior Vice President and General Counsel since May 2006. From December 2000 to May 2006, Mr. Schwiesow, at different times, served as Deputy General Counsel, Managing Director and Vice President of BearingPoint, Inc., a management and technology consulting firm. Prior to December 2000, Mr. Schwiesow served as Vice President and Associate General Counsel for The Rouse Company. He received his B.S. in Economics from The Wharton School of the University of Pennsylvania and his J.D. from Stanford Law School. Alok Singh has served as a director since April 2005, and as lead director since April 2006. Mr. Singh‘s duties as lead director are to assist the chairman in establishing the agenda for meetings of the board of directors, to preside, in the absence of the chairman, at meetings consisting solely of the non-executive members of the board of directors and to act as a liaison between the board and shareholders or other third parties who request direct communications with the board. Mr. Singh is a Managing Director of New Mountain Capital, a private equity investment firm based in New York. Prior to joining New Mountain Capital in September 2002, Mr. Singh 65

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served as a Partner and Managing Director of Bankers Trust and established and led the Corporate Financial Advisory Group for the Americas for Barclays Capital. Mr. Singh is non-executive Chairman of Overland Solutions, Inc. and serves on the boards of directors of Apptis, Inc., Ikaria Holdings, Inc. and Validus Holdings, Ltd. He also serves on the advisory board of investment bank Sonenshine Partners. Mr. Singh received both his B.A. in Economics and History and his M.B.A. in Finance from New York University. Michael B. Ajouz has served as a director since April 2005. Mr. Ajouz joined New Mountain Capital in 2000 as an Associate and is currently a Managing Director of New Mountain Capital. Prior to 2000, Mr. Ajouz served as an Associate at the private equity firm of Kohlberg Kravis Roberts & Co., where he conducted analytical evaluations in various industries and in various analyst positions at Goldman, Sachs & Co. and Cornerstone Research. Mr. Ajouz serves as a director of Connextions, Inc., Apptis, Inc. and National Medical Health Card Systems, Inc. Mr. Ajouz received his B.S. in Economics from The Wharton School of the University of Pennsylvania. Nanci E. Caldwell has served as a director since August 2005. Ms. Caldwell has been a technology consultant since January 2005. From April 2001 to December 2004, Ms. Caldwell worked at PeopleSoft, serving as Senior Vice President and Chief Marketing Officer from April 2001 to January 2002, and as Executive Vice President and Chief Marketing Officer from January 2002 to December 2004. Prior to joining PeopleSoft in 2001, Ms. Caldwell held various senior management positions at Hewlett-Packard Company. Ms. Caldwell serves on the boards of directors of Live Ops, Inc. and Network General Central Corporation. Ms. Caldwell received her B.A. in Psychology from Queen‘s University, Kingston, Canada and completed the University of Western Ontario‘s Executive Marketing Management Program. Kathleen deLaski has served as a director since April 2006. She is also currently President of The Sallie Mae Fund, a charitable organization sponsored by SLM Corporation (generally known as Sallie Mae), aimed at increasing access to higher education. From April 2001 to February 2005, Ms. deLaski held various other positions at Sallie Mae, including Senior Vice President, Chief Communications Officer and Senior Vice President of Consumer Marketing. Prior to April 2001, Ms. deLaski served as AOL Group Director for America Online, Inc. Ms. deLaski received her B.A. degree in political science and English from Duke University and her Masters of Public Administration from the J.F. Kennedy School of Government of Harvard University. Ms. deLaski is the sister of Kenneth E. deLaski and daughter of Donald deLaski, our co-founders. Joseph M. Kampf has served as a director since April 2006. Mr. Kampf has served as Chairman and Chief Executive Officer of Covant Management, Inc., a technology investment company, since July 2006. From 1996 until June 2006, Mr. Kampf served as President and Chief Executive Officer of Anteon International Corporation, an information technology and engineering service company. Prior to 1996, Mr. Kampf served as a senior partner of Avenac Corporation, a consulting firm providing management and strategic planning advice to middle market companies. He served as Chairman of the Professional Services Council from 2003 to 2004 and as a member of its Executive Committee. Mr. Kampf serves on the board of directors of the Wolf Trap Foundation for the Performing Arts. He received his B.A. in Economics from the University of North Carolina, Chapel Hill. Steven B. Klinsky has served as a director since April 2005. Mr. Klinsky is a Managing Director of New Mountain Capital and has served as its Founder and Chief Executive Officer since its inception in 1999. Prior to 1999, Mr. Klinsky served as a General Partner and an Associate Partner with Forstmann Little & Co. and co-founded Goldman, Sachs & Co.‘s Leveraged Buyout Group. He serves on the boards of directors of MailSouth, Inc., Ikaria Holdings, Inc., Overland Solutions, Inc., Apptis, Inc. and National Medical Health Card Systems, Inc. Mr. Klinsky received his B.A. in economics and political philosophy from the University of Michigan. He received his M.B.A. from Harvard Business School and his J.D. from Harvard Law School. Albert A. Notini has served as a director since August 2005. Mr. Notini has served as President and Chief Operating Officer of Sonus Networks, Inc., a voice infrastructure product provider, since April 2004. From May 2000 to March 2004, Mr. Notini served as the Chief Financial Officer and a member of the board of directors of Manufacturers‘ Services Limited, a global electronics and supply chain services company. Prior to May 2000, 66

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Mr. Notini served as Executive Vice President of information technology services provider Getronics NV, following its acquisition of technology services provider Wang Global, Inc., where Mr. Notini had served as Executive Vice President of Corporate Development and Administration and General Counsel. Mr. Notini serves on the boards of directors of Sonus Networks, ePresence, Inc., Apptis, Inc. and Saints Memorial Hospital. He received his A.B. in 1983 from Boston College, his M.A. in 1980 from Boston University and his J.D. from Boston College Law School. Janet R. Perna has served as a director since June 2006. Ms. Perna served as General Manager of Information Management for IBM‘s Software Group from November 1996 until her retirement on January 2006. Prior to November 1996, she held various other system programming and management positions at IBM. Ms. Perna serves on the board of directors for Cognos Incorporated. Ms. Perna received her B.S. degree in Mathematics from the State University of New York at Oneonta. Composition of the Board of Directors Our board of directors currently consists of nine members, eight of whom are non-management members. Each director holds office until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Messrs. Ajouz, Klinsky and Singh, each a Managing Director of New Mountain Capital, were appointed to our board of directors pursuant to an investor rights agreement under which New Mountain Partners has a right to designate a certain number of the members of our board of directors (ranging from a majority of the board of directors to one director, depending on the collective stock ownership percentage of the New Mountain Funds). Ms. deLaski was appointed to our board of directors pursuant to the investor rights agreement under which the deLaski shareholders, who include Kenneth E. deLaski and Donald deLaski, have a right to designate a certain number of the members of our board of directors (either two directors or one director, depending on their stock ownership percentage). See ―Certain Relationships and Related Party Transactions—Recapitalization—Investor Rights Agreement.‖ We will be deemed to be a ―controlled company‖ under the rules established by The Nasdaq Global Market, and we will qualify for, and intend to rely on, the ―controlled company‖ exception to the board of directors and committee composition requirements under the rules of The Nasdaq Global Market. Pursuant to this exception, we will be exempt from the rule that requires our board of directors to be comprised of a majority of ―independent directors‖ and our compensation committee to be comprised solely of ―independent directors,‖ as defined under the rules of The Nasdaq Global Market. The ―controlled company‖ exception does not modify the independence requirements for the audit committee, and we intend to comply with the requirements of the Sarbanes-Oxley Act and The Nasdaq Global Market rules, which require that our audit committee be composed of at least three members, each of whom will be independent within one year from the date of this prospectus. Committees of the Board of Directors Our board of directors has established an audit committee and a compensation committee. The members of each committee are appointed by the board of directors and serve until their successor is elected and qualified, unless they are earlier removed or resign. Audit Committee We have an audit committee consisting of Ms. Caldwell, Ms. Perna and Mr. Notini. Mr. Notini chairs the committee. We believe that Ms. Caldwell and Ms. Perna currently meet the independence requirements under the applicable listing standards of The Nasdaq Global Market. The audit committee assists our board of directors in fulfilling its responsibility to shareholders, the investment community and governmental agencies that regulate our activities in its oversight of: • the integrity of our financial reporting process and financial statements and systems of internal controls; 67

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• • •

our compliance with legal and regulatory requirements; the independent registered public accountants qualifications and independence and performance; and when we establish an internal audit function, the performance of our internal audit function.

The audit committee may study or investigate any matter of interest or concern that the committee determines is appropriate and may retain outside legal, accounting or other advisors for this purpose. Compensation Committee We have a compensation committee consisting of Ms. Caldwell, Ms. deLaski and Messrs. Kampf and Singh. Mr. Singh chairs the committee. We believe that Ms. Caldwell and Mr. Kampf currently meet the independence requirements under the applicable listing standards of The Nasdaq Global Market. The purpose of the compensation committee is to: • • discharge the responsibilities of our board relating to compensation of our officers and employees, including our incentive compensation and equity-based plans, policies and programs; and review the compensation discussion and analysis to be included in our filings with the Securities and Exchange Commission, discuss the compensation discussion and analysis with management and approve a report of the committee for inclusion in our annual report or annual proxy statement.

Our compensation committee is expected to have a subcommittee consisting of Ms. Caldwell and Mr. Kampf for purposes of complying with the requirements of Section 162(m) of the Code and Section 16 of the Securities Exchange Act of 1934, as amended (Exchange Act). Compensation Committee Interlocks and Insider Participation During 2006, our board of directors or our compensation committee that was formed in July 2006 determined the compensation of our executive officers. Messrs. Ajouz, Klinsky and Singh each served as officers of our company in 2006 but received no compensation from us for service in that capacity. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board or compensation committee. Director Compensation for Year Ended December 31, 2006 The following table summarizes the compensation of each member of our board of directors in 2006:
Fees Earned or Paid in Cash ($) Option Awards ($) Total ($)

Name

Michael B. Ajouz Nanci E. Caldwell Kathleen deLaski Kenneth E. deLaski Joseph M. Kampf Steven B. Klinsky Albert A. Notini Janet R. Perna Alok Singh (1) (2)

$ $ $ $ $ $

— 28,000 (1) 20,000 18,750 (2) 20,000 (3) — 33,000 (4) 20,000 —

$ $ $ $ $

— 9,702 (5) 31,098 (5) — 31,098 (5) — 9,702 (5) 31,098 (5) —

— 37,702 51,098 18,750 51,093 — $ 42,703 $ 51,098 — $ $ $ $

Ms. Caldwell received $8,000 in meeting fees, in addition to the $20,000 annual retainer. Mr. deLaski was paid a prorated portion of his annual fee for the portion of the year that he served on our board. 68

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(3) (4) (5)

Mr. Kampf elected to receive the $20,000 annual retainer in common stock. He received 2,222 shares and cash in lieu of a fractional share. Mr. Notini received $5,000 for serving as chair of the audit committee, plus $8,000 in meeting fees, in addition to the $20,000 annual retainer. At December 31, 2006, Ms. Caldwell and Mr. Notini each had 27,700 options outstanding, and Ms. deLaski, Mr. Kampf and Ms. Perna each had 48,235 options outstanding. The grant date fair value of the options held by Ms. Caldwell and Mr. Notini is $38,808, and the grant date fair value of the options held by Ms. deLaski, Mr. Kampf and Ms. Perna is $269,835. See Note 1 to our Consolidated Financial Statements for the assumptions made in the valuation of the options.

In 2006, non-employee directors, other than those who are affiliated with New Mountain Capital, received an annual retainer of $20,000 for service on our board, payable at their election 100% in cash or 100% in shares of our common stock. All of our directors, except Mr. Kampf, elected to receive this retainer, as well as any other board or committee fees, in cash. Non-employee directors, other than those who are affiliated with New Mountain Capital, also received $2,000 for each board meeting attended, beginning with the fifth meeting attended. Mr. Notini, who serves as the chairman of our audit committee, received an additional annual cash retainer of $5,000 for his service on the committee. Directors who are employees of New Mountain Capital did not receive any fees for their services as either directors or committee members. All directors were entitled to reimbursement for reasonable travel and other business expenses incurred in connection with attending meetings of the board of directors or committees of the board of directors. All of our non-employee directors, other than those who are affiliated with New Mountain Capital, received a grant of stock options upon commencement of their board service. All options were granted under our 2005 Stock Option Plan and have a term of ten years. All options granted have a per share exercise price equal to the fair value of a share of our common stock underlying the options at the time of grant. Certain options, however, were granted in 2006 at a price below the fair value of a share of our common stock, and the exercise price of these options was subsequently adjusted in December 2006 to reflect the fair value of a share of our common stock on the date of grant. In December 2006, additional options at fair value were granted to these directors to compensate them for the loss in value resulting from this adjustment. See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Option Grants to Executive Officers and Directors.‖ Options vest in equal annual installments over four years, subject to the director‘s continued service on our board. During 2005 and 2006, our non-employee directors were provided with the opportunity to purchase shares of our common stock at a per share price equal to the fair value of a share of our common stock on the date of purchase as part of their compensation package, in addition to receiving the annual retainer and board meeting fees. Certain share purchases made by directors in June 2006, or acquired upon election to receive the director‘s annual retainer in stock, however, were determined, in light of independent valuations, to have been made at a per share price below the fair value of a share of our common stock at the time of these purchases or acquisition of shares. In December 2006, the affected directors returned the excess shares to us in light of this valuation difference. See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Stock Purchase by Executive Officers and Directors.‖ Mr. deLaski, our former chairman of the board, received a fee at an annual rate of $50,000 in cash for his service on the board. Mr. deLaski received this fee totaling $46,112 from July 21, 2005 until April 26, 2006, the date on which Mr. deLaski resigned from the board. 2007 Director Compensation On February 21, 2007, our board of directors modified the director compensation program so that our directors are compensated in a manner consistent with directors of comparable companies. Effective January 1, 2007, each director who is neither an officer nor an employee of us nor affiliated with New Mountain Capital will receive an annual retainer of $50,000, an annual retainer of $5,000 for service on 69

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each committee and in lieu of the $5,000 committee fee, an annual retainer of $10,000 for the compensation committee chair and $15,000 for the audit committee chair. All retainers are paid quarterly and in cash. In addition, directors will receive a grant of 20,000 options that vest 25% per year upon initial election as a director and an annual stock option grant of 7,500 options that vest 100% on the first anniversary of the date of grant. A special grant of 20,000 options each to Mr. Notini and Ms. Caldwell was approved at the February 21, 2007 compensation committee meeting. This grant was made so that their equity interests would be comparable to those of the other non-employee directors. The per share exercise price of these stock options is $13.10 per share. These stock options have a four-year vesting period. Compensation Discussion and Analysis Overview The compensation committee of our board of directors has overall responsibility for the compensation program for our executive officers. Members of the committee are appointed by the board. Currently, the committee consists of four members of the board, none of whom are executive officers of the company. Our executive compensation program is designed to encourage our executives to think and act like owners of the company, focusing on increasing shareholder value in the short and long term by thinking strategically and maximizing bottom line results, while mitigating risks. Our objective is to provide a competitive total compensation package to attract and retain key personnel and drive effective results. Our executive compensation program provides for the following elements: • • • • base salaries, which are designed to allow us to attract and retain qualified candidates in the geographic market where the job is being performed; variable compensation, which provides additional cash compensation and is designed to support our pay-for-performance philosophy; equity compensation, principally in the form of stock options, which are granted to incentivize executive behavior that results in increased shareholder value; and a benefits package that is available to all of our employees.

A detailed description of these components is provided below. Our named executive officers as of December 31, 2006 are Kevin T. Parker (Chairman, President and Chief Executive Officer), James C. Reagan (Executive Vice President, Chief Financial Officer and Treasurer), Richard P. Lowrey (Executive Vice President of Products and Strategy), Carolyn J. Parent (Executive Vice President of Worldwide Sales) and Eric J. Brehm (Executive Vice President of Product Development). 2006 Executive Compensation In 2006, benchmark and market compensation information was provided from two external sources. First, we received compensation information from a survey of executive compensation by Culpepper and Associates. Second, we engaged an international search firm (Heidrick and Struggles) for the purpose of identifying candidates to fill certain executive positions within the company. As a component of the hiring process, compensation packages were established for our executive officers when they were initially hired. The only exceptions were Messrs. Lowrey and Brehm, who had been employees of the company prior to the recapitalization. 70

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In December 2006, Frederic W. Cook & Co., Inc. (Frederic Cook) was retained to independently advise the compensation committee and to assist management regarding executive compensation matters. We supplement the information provided to the compensation committee by Frederic Cook with data we obtain from participation in market surveys that target the high technology, software and consulting industries and provide other market information. Compensation Philosophy The compensation committee has determined that our executive compensation program is to achieve the following objectives: • • • establish a framework for executive compensation that matches the strategic needs of our business (i.e., executive pay is aligned with company goals); assure that the components of our pay system are working concertedly to influence executive behavior in support of our organization‘s imperatives (i.e., individual components are linked together); and have the mechanics of our executive compensation structure reinforce the corporate culture and management style of the organization (i.e., provide compensation consistent with our culture).

The overall goal of our compensation philosophy is to provide a clear linkage between compensation and contributions, so as to keep our executives engaged and motivated. The company‘s elements of compensation, and its decisions regarding those elements, are intended to provide an appropriate balance between fixed and variable compensation, short- and long-term performance horizons, and cash and equity compensation. We expect our compensation programs to allow us to attract, retain and motivate executives who: • • • • • think and act like owners; focus on strategic objectives; achieve bottom line results; mitigate risks; and create shareholder value.

We use a combination of base salary, bonus and equity working together to determine total compensation for each of our named executives. • • • Base salary is utilized to provide financial stability, recognize immediate contributions, compensate for significant responsibility and provide an interim bridge until equity has value. Bonus is leveraged to ensure that executives deliver on short-term financial and operating goals and to ensure that we pay for performance. Equity is utilized to balance executives‘ short-term thinking with long-term perspective, reward for innovation and risk-taking, ensure alignment with shareholder interests and attract and retain key talent.

We expect our executives‘ performance to exceed that of our peer group (as described in greater detail below), and our compensation philosophy reflects that expectation. As a result, our total cash compensation (base salary and bonus) is targeted to be above average relative to the identified peer group and our understanding of the market. Essentially, we are willing to pay at an above average level for top performance. 71

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Base Salaries We utilize base salary as a principal means of providing compensation for performing the essential elements of an executive officer‘s job. We believe our base salaries are set at levels that allow us to attract and retain executives in the markets where we compete for talent. We believe that base salaries for our named executive officers are competitive with companies of a similar size in the software/technology industry. Our benchmarking process consists of direct comparisons between the 50 and 75 percentiles of our peer companies‘ base salaries, cash bonuses and equity compensation with those of our executives, as well as comparisons of the financial performance of our peer companies with our performance. The following is our current list of peer companies: TIBCO Software, Ansys, MicroStrategy, Quest Software, Lawson Software, Blackbaud, Blackboard, Manhattan Associates, Altiris, Witness Systems, Concur Technologies, RightNow Technologies, Equinix, Neustar, Digital River, WebEx, J2 Global and Websense. The final peer group analysis was completed by Frederic Cook and was reviewed and accepted by our compensation committee.
th th

Incentive Compensation The company‘s named executive officers participate in our Employee Incentive Compensation Program (EICP), along with all employees not covered by another plan (Sales or Consulting). The EICP is designed to reward executives for the achievement of our financial and strategic goals. This program links executive rewards to activities that drive measurable success and progress. This program provides a direct and measurable way to align the executive‘s goals with our corporate objectives of increasing revenue and profit and creating long-term shareholder value. Achievement of the goals requires a high level of performance. The EICP provides monetary compensation when quarterly financial and individual objectives are achieved. That compensation is generally a pre-established percentage of an executive‘s base salary. Our chief executive officer reviews each quarter‘s financial results with the compensation committee and the board of directors and provides a recommendation for payout based on company performance against the established quarterly objectives. The board approves the final payout percentage for the EICP program. The individual payment to our chief executive officer is recommended by the chairman of the compensation committee and approved by the compensation committee. The individual payments to our executive officers, other than our chief executive officer, are reviewed by our chief executive officer and approved by the chairman of the compensation committee. Payout of the EICP is based on the following components: Plan Structure The 2006 EICP target ranged between 50 – 60% of annual base salary for each of our named executive officers. The EICP amounts are earned and paid quarterly based on quarterly performance against our financial goals and individual objectives. Quarterly EICP payments are earned ratably, with a target ranging between 12% and 15% of an executive‘s annual base salary. The quarterly EICP payout is calculated based on two components: company performance against specific financial targets and personal performance against identified quarterly goals and objectives. In addition, as an incentive to join the company, certain executive officers were guaranteed that their quarterly payout for the first two quarters after their start date would be a minimum of 100% of their target. In 2006, Mr. Parker approved the individual goals and objectives for each named executive officer. Mr. Parker‘s goals are set annually and reviewed by the board of directors. Company Performance: The EICP is funded based on achievement of quarterly financial goals relating to revenue, EBITDA and our EBITDA margin performance as a percentage of revenue. 72

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EBITDA for purposes of the EICP calculation is earnings before interest, taxes, depreciation, amortization, severance costs, stock-based compensation expense and costs associated with our initial public offering and compliance with the Sarbanes-Oxley Act. The quarterly achievement is measured against our annual budget, forecast and other pre-established objectives. These financial metrics were specifically selected to focus participants across the company on achieving profitable growth of the company. Personal Performance: Performance against individual goals is used in determining the individual quarterly EICP payout. For example, an executive with 90% personal performance against his or her goals would have a multiplier of 90% of his or her individual EICP target compensation opportunity. We believe that the achievement of our EICP financial targets (based on our corporate revenue, EBITDA and EBITDA margin performance as a percentage of revenue) as supplemented by quarterly individual goals identified by our executives and approved by our chief executive officer requires significant effort on the part of each of our executives. For 2007, we believe that the EICP goals and the individual performance goals will be at least partially achieved, thus making a payout likely. In addition, it is possible under the plan for an executive to receive a partial payment because the executive has reached his or her individual objectives even though the company as a whole has failed to meet its financial objectives (or vice versa). Furthermore, our compensation committee and chief executive officer retain the discretion to increase or decrease any payouts under the EICP in connection with the review of performance of an executive against the company‘s financial goals and his or her personal goals. Quarterly EICP Payout Calculation: As indicated above, the calculation of an executive‘s quarterly bonus is based on the product of both company performance against objectives and individual performance against quarterly goals. The quarterly EICP calculation is as follows: Quarterly X Company X Personal Target Performance Performance Quarterly Target = EICP quarterly target opportunity for each executive = Quarterly Payout

• • •

Company Performance = The company‘s achievement against revenue, EBITDA and EBITDA margin goals Personal Performance = Achievement of executive‘s individual quarterly goals

As illustrated in the above calculation, the amount of payout may increase or decrease based on the Board‘s assessment of our EBITDA margin performance and other financial results as well as individual performance. Timeline The EICP is a calendar-year program. Code Section 162(m) Section 162(m) of the Code was not applicable to us in 2006 because we are not a public company. When we become a public company, we intend to rely on an exemption from Section 162(m) for a plan adopted prior to the time a company becomes a public company. This pre-initial public offering exemption will no longer be available to us after the date of our annual meeting that occurs after the third calendar year following the year of our initial public offering, or if we materially modify the plan before such time. 73

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Equity We use equity awards in the form of stock options as a means of incentivizing behavior that results in increased shareholder value, to foster a long-term commitment to us and our shareholders and as a means of attracting and retaining executives. A number of factors are considered when determining the size of all grants, including competitive market intelligence, internal comparisons and a review of the executive‘s overall compensation package. The initial grants are designed to attract experienced executives with established records of success and significant public company experience. In 2006, the size and terms of the stock options that were awarded to our executive officers were determined by the compensation committee, upon recommendation from our chief executive officer, and approved by the board of directors. In April 2007, we implemented our 2007 Plan that provides for the potential award of various equity instruments, including stock options, restricted stock, stock appreciation rights and dividend equivalent rights. Our 2007 Plan was approved by the compensation committee and our shareholders. Our 2007 Plan will replace our 2005 Stock Option Plan pursuant to which the equity awards described in this section were made. All of our option awards to our named executive officers vest ratably at 25% per year and have a 10-year maximum term. Vesting occurs on each anniversary date of the grant, except for the initial grant, which vests on each anniversary date of employment. The portion of an option that is vested must be exercised within 180 days after the date of termination of an executive. Share Purchase Upon hire, each of our executive officers was given the opportunity to purchase shares for cash at the then-current fair value of the company‘s stock. This opportunity was intended to encourage the executives to make a personal investment in company stock. See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Stock Purchases by Executive Officers and Directors.‖ Valuation Until September 2006, the stock option exercise prices and share purchase prices were based on our board‘s internal estimates of the fair value of the company‘s common stock at the time of each option grant or share purchase. In November 2006, the board of directors determined our common stock‘s estimated fair value after considering the valuation performed by our independent third-party valuation firm. A third party valuation firm was retained to perform independent valuations of our stock‘s estimated fair value. As part of the valuation process, we asked the valuation firm to review the internally prepared valuations of fair value that we had originally prepared. The independent valuations determined that the internally prepared valuations understated the estimated fair value of our stock at several points in the period from January 1, 2006 through October 31, 2006. As a result, all individuals (including one executive officer) who had purchased stock in 2006 voluntarily returned a number of shares so that the resulting final number of shares held by the affected individuals had a per share purchase price that equated to the estimated fair value per share as reflected in the independent valuations. In addition, in light of the independent valuations, our board of directors reassessed the fair value of our common stock underlying stock options granted during the first ten months of 2006. Our board determined that options awarded to certain executive officers (including one named executive officer) had been granted at exercise prices below the fair value of the underlying stock on the dates of grant, and the exercise prices of these options subsequently were increased to be equal to the fair value of our stock on the dates of grant. Secondary grants of options were separately provided as a means of compensating the affected executive officers for the value lost due to the increase in the exercise price. In total, executive officers received options with respect to 76,891 shares to offset the impact of the modification of exercise prices of the stock options. 74

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See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions.‖ Stock Appreciation Rights Our SAR Plan was in effect prior to the acquisition of 75% of our common stock by the New Mountain Funds in April 2005. This plan was discontinued at that time, though fixed payments under the plan pertaining to Mr. Lowrey will continue until January 2008. The payments are made in installments and are based on the share price as of the acquisition date. The value of the SARs was fixed on April 22, 2005, the recapitalization date, with payments occurring according to the terms of the initial SAR grant. Mr. Lowrey is the last executive officer receiving payments under this plan. He received a payment in January 2007 and is scheduled to receive payments in July 2007 and January 2008. See ―Management—Executive Compensation—Employment Agreements and Arrangements.‖ Benefits Our executives participate in our standard benefit plans, which are offered to all U.S.-based employees and include our 401(k) plan. We currently provide a matching contribution to our 401(k) plan of 4% of an employee‘s salary up to a maximum of $4,000 per calendar year. Our contribution is made on a quarterly basis and cannot exceed $1,000 per quarter per employee. Our executives have the opportunity to participate in our health and welfare benefit programs which include a group medical program, a group dental program, a vision program, life insurance, disability insurance and flexible spending accounts. These benefits are the same as those offered to all other U.S.-based employees. Through our benefit programs, each of our named executive officers received group term life insurance equivalent to 100% of their annual base salary. While provided as a benefit, the cost of the group term life insurance is included in the ―All Other Compensation‖ column of the Summary Compensation Table. Employment Agreements and Arrangements We have entered into employment agreements or arrangements with Messrs. Parker and Reagan and Ms. Parent. These employment agreements or arrangements are currently in effect. The employment agreements or arrangements are intended to establish the key employment terms (including reporting responsibilities, base salary and annual bonus, the initial stock option grant and other benefits), to provide for severance benefits and to establish a Non-Competition Agreement. See ―Executive Compensation—Employment Agreements and Arrangements.‖ Additional Compensation Actions taken in 2007 Based upon a successful 2006, and in preparation for this offering, the compensation committee undertook a review of the compensation of the executive management team, including the named executive officers, in March 2007. This review included a detailed examination of our executive compensation compared to a peer group as well as surveys that cover the high-technology software industry, and review and comment by Frederic Cook. The peer group is comprised of 13 software and four high technology companies, all of which are public companies. The peer group was established by identifying other companies that have similar financial parameters to Deltek based on revenue, net income, market capitalization and number of employees. The peer group will be re-evaluated by the compensation committee on an annual basis to ensure that we are using the appropriate companies for benchmarking purposes. 75

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As a result of its review, the compensation committee confirmed that the various components of compensation that were provided in 2006 continued to be appropriate. The compensation committee, however, approved changes to compensation to recalibrate the various components to market levels for each executive officer. Specifically, the following base salary and bonus adjustments went into effect as of April 1, 2007.
Executive Previous Annual Salary Annual Salary effective April 1, 2007

Kevin Parker James Reagan Richard Lowrey Carolyn Parent Eric Brehm
Executive

$ $ $ $ $

450,000 275,000 275,000 275,000 250,000
Previous Annual Bonus Opportunity

$ $ $ $ $

490,000 285,000 300,000 300,000 275,000
Annual Bonus Opportunity effective April 1, 2007

Kevin Parker James Reagan Richard Lowrey Carolyn Parent Eric Brehm

$ $ $ $ $

300,000 160,000 160,000 200,000 125,000

$ $ $ $ $

441,000 175,000 200,000 225,000 165,000

The compensation committee also reviewed the equity holdings of each executive officer and provided an additional grant of stock options as appropriate. This grant was made to ensure that the executive officers held sufficient equity, as well as to provide an internal calibration of equity positions. The equity was granted effective March 15, 2007 with an exercise price of $13.10 per share, the then-current fair value of the company‘s common stock as determined by an independent valuation.
Executive Stock Options Granted March 15, 2007

Kevin Parker James Reagan Richard Lowrey Carolyn Parent Eric Brehm Change in Control Provisions

160,000 40,000 100,000 100,000 75,000

Prior to April 2007, we had several different change in control provisions for our executive officers. As part of the maturation and refinement of our compensation programs, we recalibrated our change in control program to ensure external market competitiveness and internal equity among our executive officers. We benchmarked our change in control program against other companies and had Frederic Cook analyze the costs associated with the new change in control provisions. In April 2007, the compensation committee established new change in control provisions for each of our named executive officers. See ―Potential Payments Upon Termination or Change in Control.‖ Executive Compensation The following tables and narrative set forth information concerning the compensation paid to, awarded to or earned by our chief executive officer, our chief financial officer and the three other most highly compensated executive officers who served in such capacities as of December 31, 2006. We refer to these officers collectively as our ―named executive officers.‖ The information contained in the following tables and the related descriptions regarding the compensation of our named executive officers has been adjusted to reflect our 9:1 stock dividend on January 26, 2006 on the outstanding shares of our common stock. 76

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Summary Compensation Table for Year Ended December 31, 2006 The following table sets forth information regarding compensation earned by our named executive officers during 2006:
Option Awards (2) ($) Non-Equity Incentive Plan Compensation ($) All Other Compensation (3) ($)

Name and Principal Position

Year

Salary ($)

Bonus ($)

Total ($)

Kevin T. Parker Chairman, President and Chief Executive Officer James C. Reagan Executive Vice President, Chief Financial Officer and Treasurer Richard P. Lowrey Executive Vice President of Products and Strategy Carolyn J. Parent Executive Vice President of Worldwide Sales Eric J. Brehm Executive Vice President of Product Development

2006 $ 450,000

—

$ 301,608 $

400,000 $

629,328 (4)

$

1,780,936

2006 $ 275,000 $

40,000 (1)

$

96,698 $

107,140 $

4,356

$

523,194

2006 $ 271,250

—

$

96,698 $

181,260 $

246,799 (5)

$

796,007

2006 $ 217,708 $ 100,000 (1)

$ 126,149 $

123,033 $

4,215

$

571,105

2006 $ 251,517

—

$

62,130 $

121,053 $

4,317

$

439,017

(1) The amounts shown reflect a minimum EICP payment that was guaranteed at time of hire, per the offer of employment. (2) See Note 1 to our Consolidated Financial Statements for the assumptions made in the valuation of the options. (3) Includes our matching contributions to our 401(k) plan up to $1,000 per quarter and group life contributions on behalf of the named executive officers. (4) This amount includes $4,000 of 401(k) plan matching contributions, $632 of group life contributions, $363,006 for reimbursement of relocation expenses (based on the actual value of expenses incurred by Mr. Parker) and $261,690 for a tax gross-up related to the reimbursement of the relocation expenses. (5) The compensation for Mr. Lowrey includes $242,443 as a result of SAR payments of $134,488 on January 1, 2006 and $107,954 on July 1, 2006, $4,000 of 401(k) matching contributions and $356 of group life contributions. The amounts and timing of these payments were fixed in April 2005 when our SAR Plan was terminated. We have not issued SARs since then. See ―Management—Executive Compensation—Employment Agreements and Arrangements.‖ Grants of Plan-Based Awards for Year Ended December 31, 2006 The following table sets forth each grant of plan-based awards to our named executive officers during 2006. No equity incentive plan awards were made to our named executive officers in 2006.
All Other Option Awards: Number of Securities Underlying Options (#) Grant Date Fair Value of Stock and Option Awards (2)

Name

Grant Date

Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Target ($)

Exercise or Base Price of Option Awards ($/Sh)

Kevin T. Parker James C. Reagan Richard P. Lowrey Carolyn J. Parent Eric J. Brehm (1)

N/A N/A N/A 3/9/2006 12/4/2006 N/A

$ $ $ $ $

250,000 160,000 160,000 200,000 125,000

— — — 135,000 14,623 —

$ $

N/A N/A N/A 7.91 11.48 N/A

N/A N/A N/A $ 606,624 $ 90,464 N/A

There are no thresholds or maximum payouts under the EICP. The information provided relates to the targets that were in effect during 2006 and for the first quarter of 2007. Effective April 1, 2007, the target cash bonus for each of the named executive officers changed.

(2)

See ―Management—Compensation Discussion and Analysis—Additional Compensation Actions taken in 2007.‖ See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Option Grants to Executive Officers and Directors.‖ 77

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Employment Agreements and Arrangements The following is a description of the material terms of the employment agreements and arrangements with our named executive officers during 2006 and of the plans under which awards were granted to our named executive officers in 2006. This description is being provided to explain the quantitative data disclosed above in the Summary Compensation Table for Year Ended December 31, 2006 and the Grants of Plan-Based Awards Table for Year Ended December 31, 2006. This summary is not a complete description of all the terms and conditions of the employment agreements and arrangements or the plans under which awards were granted and is qualified in its entirety by reference to the actual agreements and plans. Kevin T. Parker In June 2005, we entered into an employment agreement with Kevin T. Parker, our Chairman, President and Chief Executive Officer. We amended Mr. Parker‘s agreement on May 7, 2007. The term of the agreement, as amended, ends on June 27, 2009. At the end of the term, the agreement automatically extends for additional one-year periods unless either party gives notice of non-renewal to the other at least six months prior to the expiration of the relevant period. Under the original agreement, Mr. Parker‘s annual base salary was set at a rate of $450,000. As amended, the agreement provides that for the period beginning on April 1, 2007 and ending on March 31, 2008, Mr. Parker‘s annual base salary will be $490,000. For any period beginning after March 31, 2008, our compensation committee will review Mr. Parker‘s annual base salary and may adjust it upwards but not downwards. Mr. Parker‘s target bonus under his original employment agreement was $250,000 for 2006, and his actual bonus was $400,000, paid in various quarterly amounts, on account of our achievement of the performance targets set for such year. The employment agreement, as amended, provides that for the period beginning on April 1, 2007 and thereafter, Mr. Parker is entitled to receive a bonus of not less than 90% of his annual base salary if we meet the performance targets set by our board of directors for the respective year. See ―Management—Compensation Discussion and Analysis—Incentive Compensation.‖ Mr. Parker also is eligible to receive additional bonuses, in the board of directors‘ discretion, based upon the achievement of other company and individual performance goals established by our board of directors. On March 15, 2007, our compensation committee reviewed and adjusted Mr. Parker‘s base salary and 2007 bonus target to $490,000 and $441,000, respectively. In connection with his employment, Mr. Parker purchased 138,500 shares of our common stock at an aggregate purchase price of $499,985 (or $3.61 per share). See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Stock Purchases by Executive Officers and Directors.‖ Under his agreement, when our common stock becomes publicly traded, we are required to maintain an effective registration statement covering the resale of shares purchased by Mr. Parker or ensure that we satisfy the requirements of Rule 144 of the Securities Act so that Rule 144 is available for Mr. Parker to sell his shares. We are also required to file and maintain an effective registration statement covering the issuance and resale of all shares of our common stock underlying Mr. Parker‘s stock options. Information regarding these options is set forth in the Outstanding Equity Awards table below. Any shares of our common stock or options held by Mr. Parker, however, remain subject to the contractual and legal restrictions on resale set forth in our shareholder‘s agreement. See ―Certain Relationships and Related Party Transactions—Shareholder‘s Agreement and Director Shareholder‘s Agreement.‖ James C. Reagan and Carolyn J. Parent Between October 2005 and February 2006, we entered into employment letter agreements with each of: • • James C. Reagan, our Executive Vice President, Chief Financial Officer and Treasurer; and Carolyn J. Parent, our Executive Vice President of Worldwide Sales.

The letter agreements have no set term, and employment under them is at will. The letter agreements provide for an annual base salary of $275,000 for both Ms. Parent and Mr. Reagan. In addition, each executive is 78

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eligible to receive performance-based bonuses, to be paid quarterly, based on the satisfaction of agreed-upon targets. Ms. Parent‘s annual bonus target is $200,000, and she was guaranteed a minimum payment of $100,000 in the aggregate for the first two quarterly bonus payments in 2006. For more information regarding the 2006 financial targets, see ―Management—Compensation Discussion and Analysis—Incentive Compensation.‖ On March 15, 2007, our compensation committee reviewed and adjusted Ms. Parent‘s target annual bonus opportunity for 2007 to $225,000. Mr. Reagan‘s employment letter agreement does not generally set forth the annual bonus to be received by him upon satisfaction of the agreed-upon targets. Pursuant to his employment letter agreement, however, for the first two quarters of his employment, Mr. Reagan received guaranteed bonuses of $80,000 in the aggregate as part of a total bonus of $96,660 that was paid for these quarters. On March 15, 2007, our compensation committee reviewed and adjusted Mr. Reagan‘s target annual bonus opportunity for 2007 to $175,000. Richard P. Lowrey and Eric J. Brehm Messrs. Lowrey and Brehm have not entered into written employment agreements with us. In 2006, we paid Messrs. Lowrey and Brehm a base salary of $271,250 and $251,517, respectively, and, based on the satisfaction of agreed-upon targets, they received bonuses of $181,260 and $121,053, respectively. For more information regarding the 2006 financial targets, see ―Management—Compensation Discussion and Analysis—Incentive Compensation.‖ On March 15, 2007, our compensation committee reviewed and adjusted Messrs. Lowrey‘s and Brehm‘s target annual bonus opportunities for 2007 to $200,000 and $165,000, respectively. Prior to the recapitalization in April 2005, Mr. Lowrey was a participant under our SAR Plan. In connection with the recapitalization, all outstanding SARs were cancelled, and SARs holders became entitled to receive cash payments, payable in accordance with the original vesting schedules of the applicable SARs. Pursuant to this arrangement, Mr. Lowrey received $242,442 in the aggregate during 2006, and he will receive payments totaling $242,443 and $134,489 in 2007 and 2008, respectively. 2005 Stock Option Plan Our board of directors adopted our 2005 Stock Option Plan on July 20, 2005. In connection with the reincorporation and name change of Deltek Systems, Inc., a Virginia corporation, to Deltek, Inc., a Delaware corporation, which occurred on April 10, 2007, the options to acquire Deltek Systems, Inc. common stock became options to acquire Deltek, Inc. common stock on the same terms, for the same number of shares and at the same exercise price as applied to the options prior to the reincorporation. The converted options are subject to our 2005 Stock Option Plan (as amended and restated in connection with the reincorporation) and to the related stock option agreements. The plan provides for the grant of options to purchase shares of our common stock to employees, directors and consultants of the company or our subsidiaries. These options are not intended to qualify as incentive stock options. Prior to the establishment of our compensation committee, the plan was administered by our board of directors. The plan is now administered by the compensation committee of our board of directors, and the committee sets the terms and conditions of the options. The plan provides that the compensation committee has the authority to adjust the maximum number of shares of common stock issuable under the plan, the number of shares covered by outstanding options, the applicable exercise price of an existing option and any other terms of an outstanding option as a result of any change in the number of shares of common stock resulting from a merger, consolidation, reorganization, recapitalization, stock dividend, stock split-up or other similar transaction. The plan also gives our board the right to amend or terminate the plan, except that, to the extent necessary under any applicable law, no amendment will be effective unless approved by our shareholders. In addition, no amendment may adversely affect the rights of any optionee without the optionee‘s consent. Notwithstanding the foregoing sentence, an amendment to increase the number of shares of common stock available for issuance under the plan will not be deemed to adversely affect any optionee. The plan was approved by our shareholders. 79

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Each option granted under the plan has a per share exercise price equal to the fair value of one share of our common stock underlying the option on the date of grant. The exercise prices of certain options granted in 2006 at a price below the fair value of a share of our common stock were subsequently changed in December 2006 to reflect the fair value of a share of our common stock on the dates of grant. See ―Certain Relationships and Related Party Transactions—Other Related Party Transactions—Option Grants to Executive Officers and Directors.‖ The form of stock option agreement provides that options generally vest and become exercisable in equal installments on each of the first four anniversaries of the grant date. Options granted under the plan have a maximum term of ten years from the date of grant, unless terminated earlier. For a discussion regarding vesting of options upon a change of control and the effect of a termination of an optionee‘s employment, see ―Management—Potential Payments upon Termination or Change in Control—2005 Stock Option Plan.‖ Under the plan, each optionee is required to execute a shareholder‘s agreement, among other conditions, prior to being deemed the holder of, or having any rights with respect to, any shares of our common stock. In accordance with the shareholder‘s agreement, shareholders which are party to the agreement are entitled to participate proportionately in an offering of common stock by the New Mountain Funds. If the number of shares of our common stock which the optionee is entitled to sell in this offering exceeds the number of shares of common stock held by the optionee, any options held by the optionee (including unvested options) may be exercised to the extent of the excess. A shareholder may choose any combination of shares and options (if vested) in determining the securities the shareholder will sell in the public or private offering. Any unvested options may only be exercised to the extent there is an amount of securities that such shareholder may sell that has not been covered by shares or vested options. See ―Certain Relationships and Related Party Transactions—Shareholder‘s Agreement and Director Shareholder‘s Agreement.‖ Prior to the adoption of our 2007 Plan (described in more detail below), a total of 6,310,000 shares of common stock issuable upon exercise of options were authorized under the plan. As of April 11, 2007, options to purchase a total of 5,788,756 shares of common stock had been granted under the plan. No further grants will be made under this plan after April 11, 2007. Future equity grants will be made under our 2007 Plan. Employee Incentive Compensation Program The company‘s named executive officers participate in our EICP. The EICP provides monetary compensation that is generally a pre-established percentage of an executive‘s base salary. The 2006 EICP ranged between 50-60% of annual base salary for each of our named executive officers. The EICP amounts are earned and paid quarterly and are calculated based on two components: company performance against specific targets and personal performance against identified quarterly goals and objectives. As an incentive to join our company, certain named executive officers were guaranteed that their quarterly payout for the first two quarters after their start date would be a minimum of 100% of their target. We have adopted a similar bonus structure for 2007. See ―Management—Compensation Discussion and Analysis—Incentive Compensation.‖ 80

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Outstanding Equity Awards at December 31, 2006 The following table sets forth outstanding equity awards for each of our named executive officers at December 31, 2006. No stock awards were held by our named executive officers as of December 31, 2006. Option Awards
Number of Securities Underlying Unexercised Options (#) Exercisable(1) Number of Securities Underlying Unexercised Options (#) Unexercisable(1)

Name

Option Exercise Price ($)

Option Expiration Date

Kevin T. Parker James C. Reagan Richard P. Lowrey Carolyn J. Parent Eric J. Brehm

207,755 17,312 62,500 15,000 62,500 15,000 — — 40,000 10,000

623,265 51,938 187,500 45,000 187,500 45,000 135,000 14,623 120,000 30,000

$ $ $ $ $ $ $ $ $ $

3.61 7.22 3.61 7.22 3.61 7.22 7.91 11.48 3.61 7.22

7/19/2015 7/19/2015 11/2/2015 11/2/2015 11/2/2015 11/2/2015 3/8/2016 12/3/2016 11/2/2015 11/2/2015

(1)

With respect to Ms. Parent and Messrs. Parker and Reagan, their options vest 25% on each anniversary of their hire dates. Ms. Parent‘s hire date is March 1, 2006. Mr. Parker‘s hire date is June 27, 2005, and Mr. Reagan‘s hire date is October 6, 2005. With respect to Messrs. Brehm and Lowrey, their options vest 25% beginning on May 1, 2006 and each anniversary thereof.

Potential Payments Upon Termination or Change in Control Change in Control Arrangements Overview In April 2007, our compensation committee approved a change in control policy that supersedes all prior change in control arrangements that had been in place during 2006, including the change in control provisions contained in employment agreements and/or stock option agreements. For purposes of our policy, a ―change in control‖ will occur if: • any third party not affiliated with the New Mountain Funds or any of their affiliates, but excluding Kenneth E. deLaski and persons and entities related to him, owns, directly or indirectly, more of our voting capital stock than the New Mountain Funds or any of their affiliates own, or a third party not affiliated with the New Mountain Funds or any of their affiliates has or obtains the right to elect a majority of the board.

•

Kevin T. Parker Upon a termination of his employment, Mr. Parker is entitled to certain severance payments pursuant to his employment agreement with us, regardless of whether a change in control occurs. For more information concerning these severance payments, see ―Management—Potential Payments Upon a Termination or Change in Control—Employment Agreements and Arrangements.‖ Under our change in control policy, the options held by Mr. Parker will immediately be accelerated and deemed to be vested and exercisable in full upon a change in control. If any payments or distributions due to Mr. Parker in connection with a change in control of us, including by reason of his termination of employment, would be subject to the excise tax imposed by Section 4999 of the Code, we will provide Mr. Parker with a gross-up payment so that he will be made whole for any excise tax imposed on the payments or distributions resulting from the change in control. 81

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James C. Reagan Under our change in control policy, if Mr. Reagan‘s employment is terminated prior to a change in control either by us without ―cause‖ or by Mr. Reagan for ―good reason‖ (as such terms are defined below), Mr. Reagan will receive as severance six months‘ salary continuation at the executive‘s then-current base salary rate and continuation of medical benefits for twelve months at active-employee rates. If Mr. Reagan‘s employment is terminated either by us or our successor without ―cause‖ or by Mr. Reagan for ―good reason‖ on the date of or within eighteen months following a change in control, Mr. Reagan will receive as severance eighteen months‘ salary continuation at his then-current base salary rate, a lump sum payment equal to one and one-half times his target annual bonus for the year in which termination occurs and continuation of medical benefits for eighteen months at active-employee rates. The options held by Mr. Reagan that were granted to him upon commencement of his employment will immediately be accelerated and deemed to be vested and exercisable in full upon a change in control. With respect to options that were subsequently granted to Mr. Reagan, if Mr. Reagan‘s employment is terminated either by us or our successor without ―cause‖ or by Mr. Reagan for ―good reason‖ on the date of or within eighteen months following a change in control, the options will be accelerated and deemed to be vested and exercisable in full. For purposes of our change in control policy, and with respect to Mr. Reagan, ―cause‖ is defined as: • • • • a conviction for a felony; fraud or gross misconduct on Mr. Reagan‘s part that causes material damage to us; a material violation by Mr. Reagan of his non-competition agreement; or a breach by Mr. Reagan of a material term of his employment letter agreement that is not cured within thirty days after written notice to him.

―Good reason‖ is defined as: • • • • a material reduction in the nature and scope of Mr. Reagan‘s authorities, powers, functions or duties (which reduction will be assumed if Mr. Reagan no longer serves as our sole chief financial officer or if we become a subsidiary of an operating company); a reduction in Mr. Reagan‘s compensation (including base salary or target bonus opportunity); an office relocation resulting in a commute that is more than seventy-five miles from Mr. Reagan‘s residence or more than 120% (in miles) of Mr. Reagan‘s prior commute, whichever is greater; or our material breach of Mr. Reagan‘s employment letter agreement.

If any payments or distributions due to Mr. Reagan in connection with a change in control of us would be subject to the excise tax imposed by Section 4999 of the Code, we will provide Mr. Reagan with a gross-up payment so that he will be made whole for the excise tax imposed on the payments or distributions resulting from the change in control. Richard P. Lowrey, Carolyn J. Parent and Eric J. Brehm Under our change in control policy, if the employment of any one of Messrs. Lowrey and Brehm and Ms. Parent is terminated prior to a change in control either by us without ―cause‖ or by the executive for ―good reason‖ (as such terms are defined below), the executive will receive as severance six months‘ salary continuation at the executive‘s then-current base salary rate and continuation of medical benefits for twelve months at active-employee rates. If, on the date of or within eighteen months following a change in control, the employment of any one of Messrs. Lowrey and Brehm and Ms. Parent is terminated either by us or our successor without ―cause‖ or by the 82

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executive for ―good reason‖ the executive will receive as severance eighteen months‘ salary continuation at the executive‘s then-current base salary rate, a lump sum payment equal to one and one-half times the executive‘s target annual bonus for the year in which termination occurs and continuation of medical benefits for eighteen months at active-employee rates. In addition, under our change in control policy, if the employment of any of Messrs. Lowrey and Brehm and Ms. Parent is terminated either by us or our successor without ―cause‖ or by the executive for ―good reason‖ on the date of or within eighteen months following a change in control, the options held by the executive will immediately be accelerated and deemed to be vested and exercisable in full. For purposes of our change in control policy, and with respect to each of Messrs. Lowrey and Brehm and Ms. Parent, ―cause‖ is defined as: • • • • a conviction for a felony; fraud or gross misconduct on the executive‘s part that causes material damage to us; the executive‘s material violation of the executive‘s non-competition agreement; or the executive‘s breach of a material term of the executive‘s employment letter agreement that is not cured within thirty days after written notice to the executive.

―Good reason‖ is defined as: • a material reduction in the nature and scope of the executive‘s authorities, powers, functions or duties (provided, however, that neither a change in the executive‘s reporting responsibilities nor our ceasing to be a publicly registered company will automatically constitute ―good reason‖ unless, as a result thereof, there is a material reduction, without the executive‘s consent, of the nature and scope of the executive‘s authorities, powers, functions or duties); a reduction in the executive‘s compensation (including base salary or target bonus opportunity); an office relocation resulting in a commute that is more than seventy-five miles from the executive‘s residence or more than 120% (in miles) of the executive‘s prior commute, whichever is greater; or our material breach of the executive‘s employment letter agreement.

• • •

If any payments or distributions due to any of the executives in connection with a change in control of us would be subject to the excise tax imposed by Section 4999 of the Code, the executive will receive either the full amount of the severance payments or a reduced amount such that no excise tax is payable, whichever is more favorable to the executive. Employment Agreements and Arrangements Kevin T. Parker Under Mr. Parker‘s amended employment agreement, if we terminate Mr. Parker‘s employment without ―cause‖ or give a notice of non-renewal of the agreement or if Mr. Parker terminates his employment for ―good reason‖ (as such terms are defined below) (collectively, a ―qualifying termination‖), Mr. Parker will be entitled to receive as severance two years‘ salary continuation at his then-current base salary rate, a lump sum payment equal to two times his target annual bonus for the year in which termination occurs and continuation of medical benefits for eighteen months at active-employee rates. If Mr. Parker‘s employment is terminated due to his death or disability, he will receive as severance salary continuation at his then-current base salary rate for twelve months, a lump sum payment equal to two times his target annual bonus for the year in which termination occurs and continuation of medical benefits for eighteen months at active-employee rates. If we terminate Mr. Parker‘s employment for ―cause,‖ Mr. Parker will be entitled to receive only accrued base salary and benefits as of the date of termination. Upon a ―qualifying termination,‖ the options held by Mr. Parker will become exercisable as to those portions that would have become exercisable had Mr. Parker been employed during the entirety of the one-year period following termination. 83

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For purposes of Mr. Parker‘s amended employment agreement, ―cause‖ is defined as: • • • a conviction for a felony; fraud or gross misconduct on Mr. Parker‘s part that causes material damage to us; or Mr. Parker‘s breach of a material term of his employment agreement that is not cured within thirty days after written notice to him.

―Good reason‖ is defined as: • • • • a reduction in the nature and scope of Mr. Parker‘s authorities, powers, functions or duties (which reduction will be assumed if Mr. Parker no longer serves as our sole chief executive officer and a voting member of our board of directors); a reduction in Mr. Parker‘s compensation (including base salary or target bonus opportunity); an office relocation resulting in a commute that is more than seventy-five miles from Mr. Parker‘s residence or more than 120% (in miles) of Mr. Parker‘s prior commute, whichever is greater; or our material breach of Mr. Parker‘s employment agreement.

Mr. Parker is bound by obligations of confidentiality during the term of his employment and thereafter. The agreement contains non-solicitation provisions that apply during the term of Mr. Parker‘s employment and for a period of twelve months following termination of his employment for any reason. A restrictive covenant relating to non-competition applies during the term of Mr. Parker‘s employment and for a period of twelve months thereafter, if Mr. Parker is terminated for any reason prior to a change in control, or for six months thereafter, if Mr. Parker is terminated for any reason on or after a change in control. For a definition of a ―change in control,‖ see ―Management—Potential Payments Upon Termination or Change in Control—Change in Control Arrangements.‖ James C. Reagan and Carolyn J. Parent Under the employment letter agreements with Mr. Reagan and Ms. Parent, if we terminate the covered executive‘s employment for ―cause,‖ the executive will be entitled to receive only accrued base salary and benefits as of the date of termination. For a definition of ―cause‖ and information concerning the severance payments due to either Mr. Reagan or Ms. Parent upon a termination of their employment before or after a change in control, see ―Management—Potential Payments Upon Termination or Change in Control—Change in Control Arrangements.‖ Pursuant to their employment letter agreements, both Mr. Reagan and Ms. Parent were required to enter into a non-competition agreement with us as a condition to their employment. Under the non-competition agreements, the executives are bound by obligations of confidentiality during the term of their employment and thereafter. The non-competition agreements also require each of the executives to abide by restrictive covenants relating to non-solicitation and non-competition during the term their employment and for a period of twelve months following termination of their employment. 2005 Stock Option Plan Unless otherwise set forth in a stock option agreement, our 2005 Stock Option Plan (as amended and restated) and the form of stock option agreement state that all unvested options will terminate upon the termination of an optionee‘s employment for any reason. In addition, the form of stock option agreement provides that vested options may be exercised during the 180-day period following termination, but in no event after the expiration of the term of the options. Any portion of vested options not exercised during this 180-day period will terminate and be of no further force and effect. If an optionee‘s employment is terminated by us for cause, the options held by the optionee will immediately terminate, regardless of vesting. 84

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The plan provides that in the event of the liquidation or dissolution of our company or a merger or consolidation of our company, and unless otherwise provided in a stock option agreement, all options issued under the plan will continue in effect in accordance with their respective terms, except that following such transactions: • • each outstanding option will be treated as provided for in the operative plan or agreement; or if not so provided in the plan or agreement, each optionee will be entitled to receive upon exercise of any outstanding option, the same number and kind of stock, securities, cash, property or other consideration that each holder of our common stock was entitled to receive in the transaction. Any consideration received will remain subject to all of the conditions applicable to the options prior to the transaction.

In addition, the plan provides that upon the merger or consolidation of our company, liquidation of our company, the sale to a third party of all or substantially all of our assets or the sale to a third party of our common stock (other than through a public offering) that results in the New Mountain Funds ceasing to beneficially own any of our voting securities, the unexercised portion of any outstanding options will terminate, unless otherwise provided in writing. In the case of a sale by the New Mountain Funds of any of their shares of our common stock to a third party, the form stock option agreement provides that any options held by an optionee may be exercised to the extent of the excess, if any, of: • • the number of shares with respect to which the optionee is entitled to, or is being required to, participate in the sale; over the number of shares previously issued to the optionee upon exercise of any options held by the optionee that have not been previously disposed of.

If the sale is not consummated, any options held by the optionee will be exercisable thereafter only to the extent they would have been exercisable if notice of the sale had not been given. The form of stock option agreement currently in use under the 2005 Stock Option Plan prohibits each optionee from: • • • disclosing or furnishing to any other person any confidential or proprietary information about us or any of our affiliates; directly or indirectly soliciting for employment any of our employees or any employee of any of our affiliates at any time before the second anniversary of the optionee‘s termination of employment; and selling, transferring, assigning, exchanging, pledging, encumbering or otherwise disposing of any option.

The form of stock option agreement also provides that, at our discretion, we will be entitled to terminate the options, or any unexercised portion of the options, held by the optionee if any optionee: • engages in any prohibited disclosure (or breaches the holder‘s obligations under any non-disclosure or non-use of confidential information provision contained in any employment agreement to which the optionee is a party), prohibited solicitation (or breaches any non-solicitation obligations under any employment agreement to which the optionee is a party) or prohibited transfer of the holder‘s options; owns, manages or is employed by any of our competitors or is a competitor of the company in an individual capacity; or is convicted of a felony against us or our affiliates.

• •

With respect to the treatment of outstanding options upon an optionee‘s termination of employment or a change in control of us, the options held by our named executive officers are subject to additional or different terms than those summarized above. See ―Management—Payments Upon Termination or Change in Control—Change in Control Arrangements‖ and ―Management—Payments Upon Termination or Change in Control—Employment Agreements and Arrangements.‖ 85

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Payments Upon Termination or Change in Control The following table sets forth information concerning the payments that would be received by each named executive officer upon a termination of employment (including by reason of death or disability) or a change in control. The table assumes: • • the termination and/or change in control took place on December 31, 2006; and all options were cancelled in exchange for the right to receive, for each share subject to the option, the excess of $12.24 (the fair market value of our common stock on December 31, 2006) over the exercise price of the option.
Termination Immediately Following a Change in Control Without Cause or for Good Reason

Name

Benefit

Termination Without Cause or for Good Reason

Termination Upon Death or Disability

Termination for Cause

Change in Control

Kevin T. Parker

Severance Payment Payment for Options —Vested Options —Unvested Options Continued Medical Total

$

1,500,000 1,879,834 5,639,503 18,081

$

1,050,000 1,879,834 1,879,834 18,081

$

— — — —

$

1,500,000 1,879,834 5,639,503 18,081

$

— 1,879,834 5,639,503 —

$ $

9,037,418 137,500 614,675 — 12,054 —

$ $

4,827,749 — 614,675 — — —

$ $

— — — — — —

$ $

9,037,418 652,500 614,675 1,844,025 18,081 396,449

$ $

7,519,337 — 614,675 1,844,025 — —

James C. Reagan

Severance Payment Payment for Options —Vested Options —Unvested Options Continued Medical Excise Tax Gross Up Total

$ $

764,229 137,500 614,675 — 12,054

$ $

614,675 — 614,675 — —

$ $

— — — — —

$ $

3,525,730 652,000 614,675 1,844,025 18,081

$ $

2,458,700 — 614,675 — —

Richard P. Lowrey

Severance Payment Payment for Options —Vested Options —Unvested Options Continued Medical Total

$ $

764,229 137,500 — — 12,054

$ $

614,675 — — — —

$ $

— — — — —

$ $

3,128,781 712,500 — 595,663 18,081

$ $

614,675 — — — —

Carolyn J. Parent

Severance Payment Payment for Options —Vested Options —Unvested Options Continued Medical Total

$

149,554

$

—

$

—

$

1,326,244

$

—

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Termination Immediately Following a Change in Control Without Cause or for Good Reason

Name

Benefit

Termination Without Cause or for Good Reason

Termination Upon Death or Disability

Termination for Cause

Change in Control

Eric J. Brehm

Severance Payment Payment for Options —Vested Options —Unvested Options Continued Medical Total

$

125,000 395,400 — 12,054

$

— 395,400 — —

$

— — — —

$

562,500 395,400 1,186,200 18,081

$

— 395,400 — —

$

532,454

$

395,400

$

—

$

2,162,181

$ 395,400

In addition, Mr. Parker would be entitled to the payments set forth above in the column ―Termination Without Cause or for Good Reason‖ if his employment were terminated by us upon expiration of his term of employment after giving notice that his term would not be extended. Incentive and Benefit Plans 2007 Stock Incentive and Award Plan Our board of directors adopted our 2007 Plan in April 2007, and our shareholders have approved it. Holders of stock options or other awards under the plan are not subject to the shareholder‘s agreement applicable to optionees under our 2005 Stock Option Plan. The plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Code and stock options which do not so qualify, stock appreciation rights, dividend equivalent rights, restricted stock and performance-based restricted stock, performance units and performance shares, cash incentive awards, phantom stock awards and share awards. Directors, officers, employees, including future employees who have received written offers of employment, and consultants and advisors of us and our subsidiaries (each an eligible individual) may receive grants under the plan. The plan is designed to comply with the requirements for ―performance-based compensation‖ under Section 162(m) of the Code as currently in effect, and the conditions for exemptions from short-swing profit recovery rules under Rule 16b-3 under the Exchange Act. The plan requires that a committee of at least two board members administer the plan. The committee may consist of the entire board, but from and after the effective date of this registration statement: • if the committee consists of less than the entire board, then with respect to any option or award granted to an eligible individual who is subject to Section 16 of the Exchange Act, the committee must consist of at least two directors, each of whom must be ―non-employee directors‖ for purposes of Section 16 of the Exchange Act; and if needed for any option or award to qualify as performance-based compensation following the period beginning with the effective date of this registration statement and ending on the earlier of the date of our annual meeting in 2011 and the expiration of the ―reliance period‖ under Treasury Regulation Section 1.162-27(f)(2) (the ―transition period‖), the committee must consist of at least two directors, each of whom must be an outside director for purposes of Section 162(m) of the Code.

•

The compensation committee currently administers the plan and has appointed a subcommittee to satisfy the requirements of Section 16 of the Exchange Act and Section 162(m) of the Code described above. Generally, the committee (and if appropriate, the subcommittee) has the right to grant options and other awards to eligible individuals and to determine the terms and conditions of options and awards, including the vesting schedule and exercise price of options and awards. 87

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The plan authorizes the initial issuance of 1,840,000 shares of our common stock. Until the termination of the plan, the number of shares available for issuance will be increased annually on January 1st of each year, commencing on January 1, 2008, in an amount equal to 3% of the total number of our shares of common stock issued and outstanding as of December 31st of the immediately preceding calendar year. Our board of directors has the discretion to reduce the amount of the annual increase in any particular year. Both the initial share reserve and/or the increased number of shares available for issuance under the plan are subject to adjustment in the event of any change in capitalization affecting our outstanding common stock. No more than 1,840,000 shares may be made the subject of incentive stock options under the plan. Following a transition period permitted under Section 162(m) of the Code, the number of shares that may be subject to options and stock appreciation rights granted to an eligible individual in any calendar year may not exceed 1,500,000 shares, and the number of shares that may be subject to performance shares or performance-based restricted stock granted to an eligible individual in any calendar year may not exceed 1,500,000 shares (with such limit to be applied separately to each type of award). The dollar amount of cash that may be the subject of performance units or cash incentive awards granted to an eligible individual in any calendar year may not exceed $1,500,000 and $2,000,000, respectively. In the event of certain transactions involving our common stock, including a merger or consolidation, the plan and the options and awards issued under the plan will continue in effect in accordance with their respective terms, except that following these transactions either: • • each outstanding option or award will be treated as provided for in the agreement entered into in connection with the transaction; or if not so provided in the agreement, each optionee or grantee will be entitled to receive in respect of each share of common stock subject to any outstanding option or award, upon exercise of an option or payment or transfer in respect of any award, the same consideration that each holder of a share of common stock was entitled to receive in the transaction, provided, however, that unless otherwise determined by the committee, the consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the options and awards prior to the transaction. In addition, in the event of a change in ownership or effective control of us, the committee may provide, in an agreement evidencing the grant of an option or award or at any time thereafter, that options or awards may become vested and/or exercisable and may become free of restrictions, to the extent of all or any portion of the option or award.

The plan will automatically terminate on the day preceding the tenth anniversary of its approval by our board of directors, unless terminated sooner by our board. Generally, our board of directors may terminate, amend, modify or suspend the plan at any time, except that no such action may impair and adversely affect the rights under any award previously granted to a participant without the participant‘s consent, and no material modification to performance goals and targets under the plan may be made without shareholder approval. Employee Stock Purchase Plan In connection with this offering, we have established our ESPP, which is designed to enable eligible employees to periodically purchase shares of our common stock at a discount from the fair market value of our common stock on the date of purchase. The ESPP is intended to qualify as an ―employee stock purchase plan‖ within the meaning of Section 423 of the Code. Our board of directors adopted our ESPP in April 2007, and our shareholders have approved the plan. Participants in our ESPP are not subject to any shareholder‘s agreement with respect to shares issued pursuant to the ESPP. The maximum number of shares of our common stock that may be issued under our ESPP, subject to certain adjustments reflecting changes in our capitalization, is 750,000 shares. The ESPP is administered by our compensation committee. If our board of directors determines otherwise, however, the ESPP may be administered by the board itself or by those directors that are appointed to a committee by the board to administer the ESPP. All of our employees, other than officers, generally are eligible to participate in the ESPP if they are 88

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employed by us or by any participating subsidiary for more than twenty hours per week and for more than five months in any calendar year. Any employee who is a 5% shareholder or who would become a 5% shareholder as a result of his or her participation in the ESPP, however, will not be eligible to participate. In addition, no employee will have the right to purchase shares of our common stock under the ESPP if the employee‘s rights to purchase stock under all of our employee stock purchase plans would accrue at a rate that exceeds $25,000 of the fair market value of our common stock for each calendar year as determined under Section 423 of the Code. Other than the first offering period, our ESPP provides for consecutive six-month offering periods that commence on March 1st and September 1st of each year and end on August 31st and February 28th (or February 29th, in the case of a leap year) of each year, respectively. The first offering period will begin on the effective date of this offering and will end on February 29, 2008. Our ESPP permits participants to purchase shares of our common stock through payroll deductions and personal contributions. Participants may elect to deduct either a percentage or a fixed dollar amount of their compensation (including fringe benefits, overtime and bonuses) for each pay period that ends during an offering period. The total amount that participants may deduct from their compensation or contribute from personal funds in any calendar year, however, cannot exceed their compensation for that year. The committee (or our board of directors) has the discretion to decrease the amount of any participant‘s payroll deductions or personal contributions to the extent necessary to comply with the requirements of Section 423 of the Code. Amounts deducted or contributed by participants are used to purchase shares of our common stock at the end of each offering period. The purchase price has been set at 90% of the fair market value of a share of common stock on the first day of an offering period or the date of purchase ( i.e. , the last day of the offering period), whichever is lower. Participants may generally end their participation in the ESPP at any time prior to the last five days of an offering period, and any accumulated payroll deductions and/or personal contributions will be refunded to withdrawing participants. Participation in our ESPP ends automatically upon a termination of employment for any reason. In the event of a change in control transaction or a dissolution or liquidation of the company, the committee has the discretion, with respect to the offering period then in progress, to accelerate the purchase date to the last payroll date immediately preceding the change in control, dissolution or liquidation or to terminate the offering period immediately prior to the consummation of the change in control, dissolution or liquidation. In each case, any remaining balance in a participant‘s account will be refunded to the participant. Our ESPP may be terminated by our board of directors at any time. Limitations of Liability and Indemnification Matters Our certificate of incorporation provides that our directors will not be personally liable for monetary damages to us or our shareholders for breach of fiduciary duty as a director, except for liabilities arising: • • • • from any breach of the director‘s duty of loyalty to us or our shareholders; from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of any law; from authorizing illegal dividends or redemptions; and from any transaction from which the director derived an improper personal benefit.

In addition, our bylaws provide that we will fully indemnify any person who was or is a party, or is threatened to be made a party, or is involved in any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that the person is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney‘s fees), judgments, fines and amounts 89

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paid in settlement actually and reasonably incurred or suffered by the person in connection with the action, suit or proceeding. Delaware law also provides that indemnification permitted under law is not to be deemed exclusive of any other rights to which the directors and officers may be entitled under a corporation‘s bylaws, any agreement, a vote of shareholders or otherwise. We are authorized to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his actions, regardless of whether Delaware law would permit indemnification. We have obtained liability insurance for our officers and directors. At present, we are not the subject of any pending litigation or proceeding involving any director, officer, employee or agent as to which indemnification or advancement of expenses will be required or permitted under our bylaws. 90

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Relationship with New Mountain Capital and the deLaski Shareholders The New Mountain Funds The New Mountain Funds became our principal shareholders in connection with our recapitalization. In the recapitalization, they invested an aggregate amount of $180 million in us through the purchase of: • • • $75 million in aggregate principal amount of our 8% subordinated debentures due 2015; 29,079,580 shares of our common stock representing approximately 75% of the equity and voting power of the company; and our Series A preferred stock (which became our Class A common stock in our 2007 reincorporation).

Under our certificate of incorporation, holders of our Class A common stock are entitled to elect a majority of the members of the board of directors until the New Mountain Funds beneficially own less than one-third of the outstanding shares of our common stock. The director voting right of the holders of our Class A common stock is subject to reduction and elimination as the common stock ownership percentages of the New Mountain Funds declines, as described in more detail below. As described in more detail below, three of our directors were nominated by New Mountain Partners and Allegheny New Mountain and are Managing Directors of New Mountain Capital. deLaski Shareholders We were founded in November 1983 by Kenneth E. deLaski and Donald deLaski to develop accounting solutions for government contractors. Prior to the recapitalization, Messrs. deLaski and certain of their family members (collectively, the deLaski shareholders) were our principal shareholders. In connection with the recapitalization, we repurchased a portion of the shares of common stock owned by the deLaski shareholders for cash. In addition, we also sold $25 million in aggregate principal amount of our 8% subordinated debentures due 2015 to Kenneth E. deLaski. As of May 1, 2007, the deLaski shareholders owned an aggregate of 8,291,375 shares of our common stock (approximately 21% of the issued and outstanding common stock). As described in more detail below, one of our directors was nominated by the deLaski shareholders. Recapitalization Recapitalization Agreement We entered into the recapitalization agreement with the New Mountain Funds, the deLaski shareholders and certain management shareholders on December 23, 2004. The recapitalization closed on April 22, 2005. We used proceeds from the recapitalization and from borrowings under our credit agreements to repurchase from the deLaski shareholders and certain members of our management (and other employees) an amount of common stock resulting in these persons collectively owning an aggregate of approximately 25% of our equity and voting power (other than for the election of directors). In connection with the recapitalization, we reimbursed New Mountain Capital for certain expenses associated with the recapitalization. The total amount of these reimbursements was $77,125. In addition, we paid to the New Mountain Funds‘ legal counsel fees incurred by them in connection with the recapitalization. The total amount of these fees was $1,075,000. Pursuant to the recapitalization agreement, 70,533,180 shares of our common stock held by the deLaski shareholders were repurchased, including 47,728,920 shares held by Kenneth E. deLaski and 22,104,020 shares held by Donald deLaski directly or indirectly through trusts for the benefit of certain family members of Kenneth E. deLaski and Donald deLaski. We made payments in the amount of $172,338,542 and $79,812,713, respectively, for the repurchase of the shares held by Kenneth E. deLaski and his family members and by Donald 91

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deLaski and his family members. In addition, we paid $2,528,411 to a trust for the benefit of Kathleen and Edward Grubb, sister and brother-in-law of Kenneth E. deLaski, and daughter and son-in-law of Donald deLaski, for the repurchase of shares held by them. The proceeds were also used to make payments to holders under our SAR Plan for SARs that were vested as follows to executive officers at that time: • • • • • $415,687 to Lori L. Becker; $1,622,217 to Eric J. Brehm; $320,482 to Mary R. Burden; $1,009,163 to Richard P. Lowrey; and $538,876 to Susan H. O‘Dea.

In addition, we accelerated the vesting of the remaining SARs and have made or are committed to make additional payments as follows: • $373,827 to Lori L. Becker; • • • • $60,457 to Eric J. Brehm; $129,712 to Mary R. Burden; $753,907 to Richard P. Lowrey; and $74,949 to Susan H. O‘Dea.

Under the recapitalization agreement, the shareholders party to the agreement were also entitled to receive from us the amount of income taxes that we would otherwise have been required to pay if we did not take the deductions that resulted from our payments to the holders of our stock appreciation rights (the contingent payments). In October 2006 and March 2007, we paid Kenneth E. deLaski an aggregate amount of $11.8 million as contingent payments on behalf of all deLaski shareholders. The shareholders party to the recapitalization agreement agreed to indemnify the New Mountain Funds and their affiliates against all losses arising out of, among other things, breaches of representations and warranties and breaches of covenants and agreements by the shareholders or us. In connection with the recapitalization, the parties to the recapitalization agreement entered into an escrow agreement, dated April 22, 2005, under which $40 million was placed into escrow as partial security for any indemnification claims arising under the recapitalization agreement. No claims were made against the escrow account, and in 2006 all amounts in escrow were released to be paid to the shareholders. Shareholder’s Agreement and Director Shareholder’s Agreement Each of our current shareholders (including shareholders that are employees, executive officers or directors of the company) are party to a shareholder‘s agreement or individual director shareholder‘s agreements (collectively, the shareholder‘s agreement) that generally prohibit the sale, transfer, assignment or other disposition of the stock held by the shareholder, except certain permitted transfers to family members and entities related to the shareholder or family member. On April 22, 2005, we entered into a shareholder‘s agreement with those employees who continued as shareholders after the recapitalization, the deLaski shareholders, The Onae Trust and the New Mountain Funds. Our directors, executive officers and other employees who have purchased our shares after the recapitalization also became parties to the shareholder‘s agreement through the execution of joinder agreements to the shareholder‘s agreement or the execution of individual director shareholder agreements. The joinder agreement entered into by Kevin T. Parker in connection with his purchase of shares of our common stock, however, provides for certain rights and obligations not shared by other shareholders that are 92

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party to the shareholder‘s agreement, as described in more detail below. In addition, each holder of options under our 2005 Stock Option Plan is also required to execute the shareholder‘s agreement (or any other shareholder‘s agreement in use by us from time to time), among other conditions, prior to being deemed the holder of, or having any rights with respect to, any shares of our common stock. Holders of options or other awards received pursuant to our 2007 Plan and holders of our common stock issued pursuant to our ESPP are not subject to the shareholder‘s agreement. Under the shareholder‘s agreement, each shareholder party to the agreement may participate proportionately in any private sale or public offering of common stock by the New Mountain Funds of their shares of our common stock. Each shareholder may sell in the private sale or public offering the same percentage of the shareholder‘s shares of our common stock as the New Mountain Funds sell in the private sale or public offering, determined based on the aggregate number of shares of common stock owned and the aggregate number of shares of common stock being sold by the New Mountain Funds (assuming conversion, exchange or exercise of all convertible securities held by the New Mountain Funds and the shareholders, including vested and unvested options). If the number of shares of which a shareholder is entitled to sell exceeds the number of shares of common stock held by the shareholder, any options held by the shareholder (including unvested options) may be exercised to the extent of the excess. A shareholder may choose any combination of shares and options (if vested) in determining the securities the shareholder will sell in the public or private offering. Any unvested options may only be exercised to the extent there is an amount of securities that such shareholder may sell that has not been covered by shares or vested options. In lieu of permitting the shareholder to exercise any vested or unvested options to enable a shareholder to participate in the public offering of shares owned by the New Mountain Funds, we may, at our option, cause the options and the shares underlying the options to be registered, thereby permitting the shareholder to sell these shares at a later date. The option agreement does not limit the ability of a shareholder to participate in a public offering of shares by the New Mountain Funds to the extent that the shareholder holds shares of our common stock. The shareholder‘s agreement also provides that if the New Mountain Funds propose to sell all or any portion of their shares of common stock in a bona fide arm‘s-length transaction (by merger or otherwise) or if we propose to sell or otherwise transfer for value all or substantially all of our stock, assets or business: • the New Mountain Funds, at their option, may require in the case of a sale of stock by them, that each shareholder party to the agreement sell their shares proportionate to the New Mountain Funds and waive any appraisal rights in connection with the sale transaction; and if shareholder approval of the transaction is required and our shareholders are entitled to vote on the transaction, each shareholder party to the agreement is required to vote all of its shares in favor of the transaction.

•

The sale of shares of our common stock by the shareholders party to the shareholder‘s agreement upon exercise by the New Mountain Funds of these rights will be for the same per share consideration and on substantially the same terms and conditions as the sale of shares owned by the New Mountain Funds. The consideration may be adjusted, as needed, if the shareholders and the New Mountain Funds are selling different types of capital stock, except that there will be no adjustment in the consideration per share if the New Mountain Funds are also selling their shares of Class A common stock. If the consideration consists of securities and the sale would require either a registration statement under the Securities Act or the preparation of a disclosure statement pursuant to Regulation D under the Securities Act (or similar provision under state securities laws) and the registration statement or disclosure statement is not otherwise being prepared, then, at the option of the New Mountain Funds, the shareholder may receive, in lieu of securities, the fair market value of the securities in cash. The shareholder‘s agreement (other than those agreements entered into by our directors) provides that, upon termination of an employee shareholder‘s employment (other than Mr. Parker‘s employment, whose rights under his joinder agreement are described below), we have the right to purchase for a period of six months all or any portion of the shares of common stock of the company held by the employee or acquired by the employee after the date of termination upon the exercise of any stock options held by the employee. If the employee is terminated by us for cause, the purchase price per share of the employee‘s common stock will be equal to the 93

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lesser of 90% of the shareholder‘s cost of their shares of common stock and the fair market value of the shareholder‘s common stock. If an employee is terminated by us for any reason other than cause or if the employee‘s employment with us terminates by reason of death, permanent disability or adjudicated incompetency, the purchase price per share of the employee‘s common stock will be equal to the fair market value of the shareholder‘s common stock. The fair market value of any shares repurchased by us will equal the average of the daily closing prices of our common stock on the 20 consecutive trading days immediately prior to the employee‘s termination or, if the shares are not publicly listed or traded, will be determined by our board of directors in good faith. The shareholder‘s agreement, moreover, prohibits shareholders party to the agreement (other than those agreements entered into by our directors) from engaging in certain prohibited activities. Under the agreement, these shareholders may not: • disclose or furnish to any other person confidential or proprietary information, defined as any non-public information acquired in the course of the shareholder‘s employment with us, if applicable, that is reasonably likely to have competitive value to us, any of our affiliates or any competitor, excluding information that has become public other than as a result of breach by the shareholder of the shareholder‘s agreement; directly or indirectly solicit for employment any of our employees or employees of any of our affiliates (in the case of employee shareholders only); or make a prohibited transfer of the shareholder‘s shares of our common stock.

• •

We have the right to purchase all or any portion of the shares of our common stock then held by a shareholder who is party to the shareholder‘s agreement if: • • a shareholder engages in any of the prohibited activities described above; an employee shareholder at any time prior to the second anniversary of the employee‘s termination, owns, manages or is employed by any of our competitors or is a competitor of the company in an individual capacity or engages in any other competitive activity (including breaching any non-competition obligations under any non-competition agreement or employee agreement to which the shareholder is a party); or a shareholder is convicted of a felony against us or any of our affiliates.

•

If we exercise this right, the purchase price per share of the shareholder‘s common stock will be equal to the lesser of 90% of the shareholder‘s cost of their shares of common stock and the fair market value of the shareholder‘s common stock. Under the shareholder‘s agreement, from and after the date the New Mountain Funds and any assignee of the New Mountain Funds ceases to beneficially own shares of our common stock representing at least 15% of the total number of votes that may be cast in the general election of directors of the company: • all other provisions of the agreement regarding the rights and restrictions on our common stock terminate, including the repurchase provisions upon termination of employment or in the event of certain prohibited activities (applicable to all shareholders party to the agreement other than director shareholders); any shares of common stock owned by the shareholders party to the agreement may be sold, transferred or assigned free of the restrictions contained in the agreement; and the shareholders party to the agreement will not be entitled to any of the rights contained in the shareholder‘s agreement, except for those rights relating to their participation in private sales and public offerings by the New Mountain Funds. 94

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Kevin T. Parker Joinder Agreement to Shareholder’s Agreement Each executive officer who has purchased shares of our common stock entered into joinder agreements to the shareholder‘s agreement dated as of the date of purchase of the shares. With the exception of Mr. Parker, each executive officer has the same rights and obligations as all other employees under the shareholder‘s agreement. Under Mr. Parker‘s joinder agreement, if Mr. Parker‘s employment is terminated, the period in which we are able to purchase shares of common stock owned by him is limited to two months after his termination (as opposed to six months for all other employees). In addition, in determining the purchase price for the shares of common stock owned by Mr. Parker, the fair market value of the shares of common stock owned by him will equal the average of the daily closing prices of our common stock on the 20 consecutive trading days immediately prior to his termination or, if the shares are not publicly listed or traded, will be determined by the mutual agreement of us and Mr. Parker or, in the absence of mutual agreement, by an investment banker or other third party valuation firm (or, in the absence of mutual agreement, by the American Arbitration Association). Under Mr. Parker‘s employment agreement, when our common stock becomes publicly traded, we are required to maintain an effective registration statement covering the resale of shares purchased by Mr. Parker or ensure that we satisfy the requirements of Rule 144 of the Securities Act so that Rule 144 is available for Mr. Parker to sell his shares. Mr. Parker, however, will remain subject to the contractual and legal restrictions on resale applicable to him under the shareholder‘s agreement. As in the shareholder‘s agreement applicable to other shareholders which are parties to the shareholder‘s agreement, Mr. Parker is prohibited from engaging in certain activities. His joinder agreement, however, alters the prohibition against disclosing or furnishing to any other person confidential or proprietary information otherwise applicable under the shareholder‘s agreement by extending the prohibition only to non-public information acquired during Mr. Parker‘s employment with us that has or is reasonably likely to have a material competitive value on us, any of our affiliates or any competitor, excluding information that has become public other than as a result of breach by Mr. Parker of his employment agreement. In addition, under Mr. Parker‘s employment agreement, the prohibition contained in his employment agreement against engaging in any competitive activity also applies to his joinder agreement and, thus, limits the types of competitive activities that would trigger our right to purchase all or any portion of the shares of common stock held by Mr. Parker under the shareholder‘s agreement. Specifically, for purposes of determining whether Mr. Parker is engaging in a competitive activity that would trigger our right to repurchase his shares, the joinder agreement: • limits our market area to the United States and any country or territory other than the United States which accounted for at least 2.5% of our software license revenue during the 12 months immediately prior to Mr. Parker‘s termination (rather than each country or territory in which we market or have plans to market any of our services and products which is otherwise applicable to all other shareholders); limits the definition of a company product to only those project-focused business management and/or sales management software and/or other products that we are developing, implementing, marketing and/or selling (instead of also including any products that we have plans to develop, implement, market and/or sell as is the case for all other shareholders); limits the definition of a competing product to those products that directly compete with any of our products and limits the definition of competitor to any person that is directly engaging in a competing business in our market area (rather than including products or competitors that indirectly compete with us); provides that ownership of 5% or less (instead of 2% or less for all other shareholders) of the outstanding securities of any issuer will not be considered a competing activity so long as Mr. Parker does not have or exercise any rights to manage the business of the issuer; and provides that being employed by a licensee of any of our products and providing competing services to the licensee, standing alone, will not be considered a competing product. 95

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Management Rights Letters On April 22, 2005, we entered into management rights letters with New Mountain Partners and Allegheny New Mountain pursuant to which they are entitled to routinely consult with, and advise, management regarding our operations and have the right to inspect our books and records. We are also required to deliver financial statements to New Mountain Partners and Allegheny New Mountain within 45 days after the end of each of the first three quarters of each year and 120 days after the end of each year. Each management rights letter terminates on the date New Mountain Partners or Allegheny New Mountain, as applicable, no longer holds any of our securities. Certain rights granted in the management rights letters are also granted under the investor rights agreement (described below), such as the right of New Mountain Partners and Allegheny New Mountain to elect members of our board of directors. These rights terminate in accordance with the terms of the investor rights agreement, instead of on the date New Mountain Partners or Allegheny New Mountain no longer holds any of our securities. Investor Rights Agreement On April 22, 2005, we entered into an investor rights agreement with the New Mountain Funds and certain other persons, including the deLaski shareholders. The investor rights agreement contains a voting agreement that provides, among other things, that New Mountain Partners, Allegheny New Mountain and the deLaski shareholders will be entitled to designate a certain number of members of the board of directors and that we are required to take all necessary and desirable action to ensure that the designated individuals are elected as members of our board of directors. Further, at each shareholder meeting at which directors are to be elected, the New Mountain Funds, and any assignee of the New Mountain Funds, and the deLaski shareholders are required to take all necessary and desirable action to effect the terms of the voting agreement, including with respect to the election of directors. Three of our current directors, Messrs. Ajouz, Klinsky and Singh, were appointed by New Mountain Partners and Allegheny New Mountain and one of our current directors, Ms. deLaski, was appointed by the deLaski shareholders pursuant to the investor rights agreement. The rights granted in the investor rights agreement to New Mountain Partners, Allegheny New Mountain and the deLaski shareholders to appoint directors is subject to reduction and elimination as the stock ownership percentages of the New Mountain Funds or the deLaski shareholders, as applicable, decline. So long as New Mountain Partners owns a majority of the outstanding shares of our Class A common stock and beneficially owns one-third or more of the outstanding shares of our common stock, it has the right to designate at a least a majority of our board of directors; provided that: • if the New Mountain Funds (including any transferee of the New Mountain Funds) beneficially own less than one-third, but at least 15% of the outstanding shares of our common stock, New Mountain Partners will be entitled to elect three of the members of our board of directors; if the New Mountain Funds (including any transferee of the New Mountain Funds) beneficially own less than 15% but at least 5% of the outstanding shares of our common stock, New Mountain Partners will be entitled to elect two of the members of our board of directors; and if the New Mountain Funds (including any transferee of the New Mountain Funds) beneficially own less than 5% of the outstanding shares of our common stock, then so long as the New Mountain Funds beneficially own any shares of our common stock, New Mountain Partners will be entitled to elect at least one member of our board of directors.

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•

Notwithstanding the foregoing, as long as New Mountain Partners has the right to designate more than one director, and Allegheny New Mountain owns any shares of our Class A common stock, Allegheny New Mountain has the right to designate one director to our board of directors in lieu of the director being designated by New Mountain Partners. In addition, so long as the deLaski shareholders beneficially own at least 15% of our outstanding common stock, they have the right to designate two members of our board of directors. If the deLaski Shareholders 96

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beneficially own less than 15% but at least 5% of our outstanding common stock, they have the right to designate one member to our board of directors. Any members designated by the deLaski Shareholders must be reasonably acceptable to the New Mountain Funds. If any member of our board of directors designated by New Mountain Partners, Allegheny New Mountain or the deLaski shareholders ceases to serve as a director for any reason, the resulting vacancy will be filled by the person or entity entitled to designate the director (provided that the person or entity still has the right to designate a director as described above). In addition, the New Mountain Funds and the deLaski shareholders will not vote in favor of the removal of any designated director unless the person or entity having the right to designate the director to our board of directors recommends his or her removal. In such case, the New Mountain Funds and the deLaski shareholders are required to vote in favor of the director‘s removal. The voting agreement with respect to the election of directors and vacancies and removals of directors requires that our articles of incorporation and bylaws provide for indemnification of, advancement of expenses to and limitation of personal liability to the directors of our board of directors. Under this agreement, we are not permitted to amend, repeal or modify in a manner adverse to our directors any provision of our articles of incorporation until at least six years following the date that New Mountain Partners, Allegheny New Mountain and the deLaski shareholders are no longer entitled to designate directors to our board of directors. Under the investor rights agreement, the prior written consent of the New Mountain Funds is required upon the occurrence of certain events. We cannot, without the prior written consent of the New Mountain Funds, take certain actions including, among other things, actions to: • • consolidate or merge with any other person, sell or transfer all or substantially all of our assets to another person or enter into any other similar business combination transaction; enter into any transaction with any shareholder holding more than 1% of our outstanding common stock, director, officer or employee unless the transaction is determined by a majority of our board of directors to be fair and reasonable and is approved by a majority of disinterested directors; change significantly the scope or nature of our business; incur indebtedness of more than $10 million (other than indebtedness incurred under our current credit agreement as in effect on April 22, 2005 or under any amendment to, or refinancing of, our credit agreement provided that the prior consent of the New Mountain Funds to any amendment or refinancing is obtained); sell, lease, transfer or otherwise dispose of any asset or group of assets with a book value or fair market value of $10 million or more; purchase, acquire or obtain any capital shares or other proprietary interest in any entity or related entity; purchase, acquire or obtain any business or assets of another person having a value in excess of $5 million; pay or declare a dividend or distribution on any shares of our capital stock (other than dividends on our common stock payable in additional shares of common stock); issue, sell, offer for sale or solicit offers to buy any shares of our common stock or any convertible or non-convertible securities other than granting of options under our stock option plan, which grants have been approved by our board of directors (or a board committee) inclusive of at least one director appointed by the New Mountain Funds or pursuant to a stock dividend or upon any stock split or other subdivision or combination of shares of our capital stock; increase the number of directors of our board of directors to more than eight directors; amend, repeal or change any provision of our articles of incorporation or bylaws in any manner adverse to the New Mountain Funds or any assignee of the New Mountain Funds; 97

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become a party to any agreement which restricts our ability to perform the investor rights agreement or the shareholder‘s agreement; change our independent auditors (other than to a ―Big 4‖ accounting firm); grant any severance or termination pay to any of our executive officers except payments made pursuant to pre-existing written agreements, in the ordinary course of business consistent with past practice or as determined by counsel to be required by law; enter into, amend or modify any contract that would purport to apply to the New Mountain Funds; remove, replace or establish the level of compensation payable to any of our executive officers, except in the ordinary course of business consistent with past practice; and agree or otherwise commit to do any of the foregoing (unless the commitment is conditioned on obtaining the approval of the New Mountain Funds).

The prior written consent of the deLaski shareholders is required to amend, repeal or change any provision of the advisory agreement, described below, and to enter into any transaction with any shareholder holding more than 1% of our common stock, any director, officer or employee of the company, or any affiliate of the foregoing unless the transaction is determined to be fair and reasonable and is either approved by a majority of the disinterested members of the Board or is on terms at least as favorable to us as the terms that would be available from an independent third party on an arm‘s length basis. The approval rights of the New Mountain Funds under the investor rights agreement terminate when the New Mountain Funds and any assignee of the New Mountain Funds beneficially owns less than 15% of the shares of our outstanding common stock, or approximately shares of our common stock after giving effect to this offering, and the deLaski approval rights terminate at the time the number of shares beneficially owned by the deLaski shareholders constitutes less than 52.8% of the number of shares of common stock owned by them on April 22, 2005 or approximately 4,348,513 shares of our common stock. The investor rights agreement provides certain registration rights which, among other things: • • • allow the New Mountain Funds and any assignee of the New Mountain Funds to require that we effect the registration under the Securities Act of all or a part of the shares of our common stock held by them up to four times; allow the New Mountain Funds and any assignee of the New Mountain Funds the right to include certain shares of our common stock held by them in any registration statement filed by us with respect to any offering of our equity securities; and restrict our ability to grant a holder or prospective holder of our securities demand or incidental registration rights, unless the rights are subordinate to the rights granted to the New Mountain Funds and any assignee of the New Mountain Funds.

The investor rights agreement contains indemnification provisions in favor of the shareholders that are party to the agreement and each control person of the shareholders against any losses arising out of the registration of our securities. We will reimburse these persons for any reasonable legal or other fees or expenses incurred in connection with investigating or defending any loss. We will not be liable to any of these persons if the loss arises out of or is based upon an untrue statement or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to us by or on behalf of the person. Advisory Agreement On April 22, 2005, we entered into an advisory agreement with New Mountain Capital, pursuant to which New Mountain Capital was engaged to provide management, financial and investment banking services to us on a non-exclusive basis. New Mountain Capital receives $500,000 annually as an advisory fee for these ongoing 98

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services (payable quarterly in advance) and, separately, is entitled to receive a transaction fee, on a transaction by transaction basis, equal to 2% of the transaction value of each significant transaction directly or indirectly involving us or any of our controlled affiliates, including acquisitions, dispositions, mergers or other similar transactions, debt, equity or other financing transactions, public or private offerings of our securities and joint ventures, partnerships and minority investments. Transaction fees are payable upon the consummation of a significant transaction. No fee is payable for a transaction with a value of less than $25 million. In 2005, we paid $458,333 in advisory fees to New Mountain Capital (including $333,000 related to fees incurred in 2005) and $3.6 million in transaction fees to New Mountain Capital in connection with our recapitalization. In 2006, we paid $375,000 in advisory fees and $2,000,000 in transaction fees to New Mountain Capital in connection with our debt refinancing. In January 2007, we also paid $125,000 in advisory fees for services rendered in 2006. Assuming an initial public offering price of $ per share (the midpoint of the range set forth on the cover of this prospectus), we will also pay $ in transaction fees to New Mountain Capital in connection with this offering. This amount represents 2% of the gross proceeds to us in this offering, without taking into account underwriters‘ fees and expenses and our expenses. New Mountain Capital has agreed to waive its advisory fee for the third quarter of 2007 and for subsequent quarters upon completion of this offering. Under the advisory agreement, we are required to pay directly or reimburse New Mountain Capital for its out-of-pocket expenses incurred in connection with the services provided under the agreement. We paid approximately $77,125 in 2005 and $3,840 in 2006 in total expense reimbursements arising under the advisory agreement to New Mountain Capital and estimate reimbursing New Mountain Capital approximately $ for expenses in connection with this offering. In addition, we have agreed to indemnify New Mountain Capital, its affiliates and its respective partners, officers, directors, employees, agents and representatives from and against all losses arising out of, or in connection with, the services contemplated by the advisory agreement. The advisory agreement terminates when, among other things, the New Mountain Funds cease to beneficially own at least 15% of our outstanding common stock or a change of control occurs, which will generally occur: • • • upon the consolidation, merger or other business combination of us into another person; upon the sale, lease, transfer or other disposition of all or substantially all of our assets; upon any transaction or series of related transactions in which the holders of our voting capital immediately prior to the transaction do not continue to hold more than 40% of the combined voting power of the voting securities of the surviving entity having the power to vote with respect to the election of directors; or when the directors who were members of our board of directors at the close of business on April 22, 2005 (or any new director who has been approved by a vote of at least a majority of those directors) cease to constitute a majority of the members of our board of directors.

•

Non-Competition Agreements In connection with the recapitalization, Kenneth E. deLaski and Donald deLaski entered into separate non-competition agreements on April 22, 2005. Until April 22, 2010, Messrs. deLaski cannot engage in any competitive activity, solicit any of our employees who were employed by us within 12 months prior to the solicitation or solicit any of our customers who were customers within 12 months prior to the solicitation. Shareholder Releases On April 22, 2005, in connection with the recapitalization, shareholders who were parties to the recapitalization agreement released us, our subsidiaries and affiliates, our former and present officers, directors, employees, agents and any of their representatives from any claims which the shareholders had in their capacity as a shareholder, optionee or holder of stock appreciation rights, except for any future claims in connection with the recapitalization and certain related transactions, claims related to occurrences after the date of the recapitalization agreement and certain other specified claims. 99

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Management Sale Concurrent with the recapitalization, Eric J. Brehm entered into a stock purchase agreement, dated April 22, 2005 pursuant to which he purchased 65,920 shares of our common stock for a per share purchase price of $3.61, the per share purchase price which the New Mountain Funds paid for its shares of our common stock. Mr. Brehm is a party to the shareholder‘s agreement. Other Related Party Transactions Stock Purchases by Executive Officers and Directors In connection with the commencement of their employment or service with us, certain of our executive officers and non-employee directors not affiliated with New Mountain Capital purchased shares of our common stock. The information contained in the chart below reflects our share price adjustment for shares purchased by Mr. Schwiesow on June 16, 2006 and by Ms. deLaski, Mr. Kampf and Ms. Perna on June 2, 2006. In June 2006, Ms. deLaski, Ms. Perna and Messrs. Schwiesow and Kampf purchased shares of our common stock at a purchase price of $7.22 per share. At the time of each individual‘s respective purchase, our board of directors concluded that the fair value of a share of our common stock was $7.22. In September 2006, we subsequently obtained an independent valuation of our common stock which concluded that the fair value of a share of our common stock at the time of these purchases was $9.00 per share. As a result of this valuation difference, Ms. deLaski, Ms. Perna and Messrs. Schwiesow and Kampf acquired shares of our common stock in excess of the shares each individual would have acquired had a price of $9.00 per share been used. Accordingly, on December 27, 2006, we entered into agreements with each individual pursuant to which the excess shares acquired by them as a result of the valuation difference were returned to us for no consideration.
Name Date No. of Shares & Purchase Price $9.00 (as adjusted)

$3.61

$12.24

Executive Officers William D. Clark Kevin T. Parker James C. Reagan David R. Schwiesow Holly C. Kortright Non-Employee Directors Nanci E. Caldwell Kathleen deLaski Joseph M. Kampf Albert A. Notini Janet R. Perna

12/15/05 12/29/05 12/15/05 6/16/06 1/15/07 12/1/05 6/2/06 6/2/06 12/1/05 6/2/06 100

27,700 138,500 84,000 — — 41,550 — — 34,620 —

— — — 11,110 — — 55,555 27,778 — 11,110

3,000

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Option Grants to Executive Officers and Directors At various times during 2006, in connection with the commencement of their employment or service with us, we granted options to purchase shares of our common stock to certain of our executive officers and directors not affiliated with New Mountain Capital. These options were granted with a per share exercise price of $7.22 or $10.19, which our board of directors believed to be the fair values of a share of our common stock at the time of these grants. Subsequent to these grants, independent valuations of our common stock showed that these options had been granted at below fair value on the dates of grant. Effective as of December 4, 2006, and with the consent of the affected optionees, we adjusted the per share exercise price of the options to $7.91, $9.00 or $11.48, depending on the date on which the options had been granted. To compensate the affected optionees for the loss in value, we granted each of these individuals additional options having a per share exercise price equal to the fair value of a share of common stock on December 4, 2006, or $11.48. The following chart sets forth the initial option grants, the initial and adjusted exercise price and additional option grants:
No. of Shares Underlying Additional Option Grants ($11.48/share)

Name

Grant Date

No. of Shares Underlying Initial Option

Initial Exercise Price

Adjusted Exercise Price

Executive Officers Richard M. Lowenstein Carolyn J. Parent David R. Schwiesow Non-Employee Directors Kathleen deLaski Joseph M. Kampf Janet R. Perna

10/23/06 3/9/06 4/26/06 6/2/06 6/2/06 6/2/06

135,000 135,000 125,000 37,700 37,700 37,700

$ 10.19 $ 7.22 $ 7.22 $ $ $ 7.22 7.22 7.22

$ 11.48 $ 7.91 $ 9.00 $ $ $ 9.00 9.00 9.00

27,339 14,623 34,929 10,535 10,535 10,535

Effective February 21, 2007, Nanci Caldwell and Albert Notini each received a stock option grant to purchase 20,000 shares of our common stock at a per share exercise price of $13.10 to align their equity interests with those of the other non-employee directors. In addition, under our new director compensation program, each of the non-employee directors not affiliated with New Mountain Capital was granted options to purchase 7,500 shares of our common stock at a per share exercise price of $13.10. Further, on March 15, 2007, we granted options to purchase shares of our common stock to our named executive officers. These options were granted with a per share exercise price of $13.10. Director Loan to Joseph M. Kampf On June 2, 2006, Joseph Kampf purchased 34,626 shares of our common stock for an aggregate purchase price of $249,999. We accepted a promissory note from Mr. Kampf in this amount with a stated maturity of June 30, 2006, pursuant to which he promised to pay the principal amount plus simple interest at a rate of 4.93% per year. On June 27, 2006, Mr. Kampf paid us $250,868, representing all amounts owed under the note (including $868 in accrued interest). The shares purchased by Mr. Kampf in June 2006 were determined, in light of an independent valuation, to have been made at a per share price below the fair value of a share of our common stock at the time of purchase. In December 2006, Mr. Kampf returned 6,849 shares to us in light of the valuation difference. Subordinated Debentures The proceeds from the issuance of the 8% subordinated debentures were used to repurchase common stock from other shareholders in the recapitalization, to make payments to holders of stock appreciation rights under the company‘s SAR Plan and to pay for the costs of the recapitalization. The costs associated with issuing the 8% subordinated debentures were $2.4 million. In April 2006, using proceeds received from a $100 million 101

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borrowing under our credit facility, we repaid the outstanding principal amount of the debentures held by Kenneth E. deLaski ($25 million) and the New Mountain Funds ($75 million) in full, plus all accrued and unpaid interest in the amount of $8.1 million on the debentures. Consulting Services In 2005, we paid $20,000 to Nanci Caldwell, a non-employee member of the company‘s board of directors, for consulting services. Policies and Procedures for Review and Approval of Related Party Transactions Prior to completion of this offering, our board of directors will adopt policies and procedures for review, approval or ratification of related party transactions. These will be in accordance with applicable rules and regulations of the Securities and Exchange Commission and The Nasdaq Global Market and will provide that related party transactions must be approved by our audit committee or a committee comprised solely of independent directors. 102

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PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth information regarding the beneficial ownership of our common stock as of May 1, 2007 by: • • • • • each person who beneficially owns more than 5% of the outstanding shares of our common stock; each of our named executive officers named in the Summary Compensation Table; each of our shareholders selling shares in this offering; each of our directors; and all directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the shares. Common stock subject to options that are currently exercisable or exercisable within 60 days of May 1, 2007 are deemed to be outstanding and beneficially owned by the person holding the options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of beneficial ownership is based on 39,447,102 shares of common stock outstanding as of May 1 and shares of common stock to be outstanding after this offering, after giving effect to the issuance of shares of our common stock upon the exercise of options prior to the closing of this offering, including the shares that are being offered for sale by us in this offering. Unless otherwise indicated to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated, the address for each listed shareholder is c/o Deltek, Inc., 13880 Dulles Corner Lane, Herndon, Virginia 20171. Each of the shareholders listed below is party to a shareholder‘s agreement between the shareholder and the company. Pursuant to shareholder‘s agreements, if, among other things, the New Mountain Funds propose to sell all or any portion of their shares of our common stock and shareholder approval is required, each shareholder party to these agreements is required to vote its shares of our common stock in favor of the transaction. Accordingly, all of the parties to the shareholder‘s agreements may be deemed to be members of a group, and the New Mountain Funds would be deemed to beneficially own all of the shares of common stock held by parties to the shareholder‘s agreement for purposes of Section 13 of the Exchange Act, or shares of common stock or % of the common stock outstanding prior to this offering. The table below represents the number of shares owned by each shareholder without giving effect to the shareholder‘s agreements to provide investors information concerning the economic ownership of each shareholder. See ―Certain Relationships and Related Party Transactions‖ for a description of the shareholder‘s agreements and other related party transactions existing between the selling shareholders and us. 103

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Percentage of Shares Owned Assuming Full Exercise of an Option Granted to the Underwriters

Shares Beneficially Owned Prior to this Offering Beneficial Owner Number Percentage

Number of Shares Being Offered

Shares Beneficially Owned After this Offering without Exercise of Option Granted to the Underwriters Numbe r Percentage

Number of Shares Being Offered Pursuant to an Option Granted to the Underwriters

New Mountain Partners II, L.P.(1)(2) New Mountain Affiliated Investors II, L.P.(1)(2) Allegheny New Mountain Partners, L.P.(1)(2) Kenneth E. deLaski(3) Donald deLaski(4) Michael B. Ajouz(1) Nanci E. Caldwell(5) Kathleen deLaski(6) Joseph M. Kampf(7) Steven B. Klinsky(1) Albert A. Notini(8) Kevin T. Parker(9) Janet R. Perna(10) James C. Reagan(11) Alok Singh(1) Richard P. Lowrey(12) Eric J. Brehm(13) Carolyn J. Parent(14) All directors and executive officers as a group (17 persons)(15) Other selling shareholders:

26,569,513 461,570 2,048,497 5,573,080 2,416,720 — 48,475 149,374 42,058 — 41,545 588,635 23,169 161,500 — 155,000 169,190 37,406

67.4 % 1.2 % 5.2 % 14.1 % 6.1 % * * * * * * * * * * * * *

* * * * * * * * * * * * *

1,604,314

1.5 %

* (1)

(2)

Represents ownership of less than 1%. The general partner of each of New Mountain Partners, New Mountain Affiliated Investors and Allegheny New Mountain is New Mountain Investments II, L.L.C., a Delaware limited liability company. Steven B. Klinsky is the managing member of New Mountain Investments II, L.L.C. and Michael B. Ajouz and Alok Singh are members of New Mountain Investments II, L.L.C. New Mountain Investments II, L.L.C. has decision-making power over the disposition and voting of shares of portfolio investments of New Mountain Partners, New Mountain Affiliated Investors and Allegheny New Mountain. Steven B. Klinsky, as the managing member of New Mountain Investments II, L.L.C., has voting and investment power over the shares held by New Mountain Investments II, L.L.C. Because New Mountain Investments II, L.L.C. has decision-making power over New Mountain Partners, New Mountain Affiliated Investors and Allegheny New Mountain, Steven B. Klinsky may, therefore, be deemed to beneficially own the shares that New Mountain Partners II, New Mountain Affiliated Investors and Allegheny New Mountain hold of record or may be deemed to beneficially own. Steven B. Klinsky, Michael B. Ajouz, Alok Singh and New Mountain Partners II, L.L.C. expressly disclaim beneficial ownership of these shares. The address of each of the foregoing is c/o New Mountain Capital, L.L.C., 787 Seventh Avenue, 49 Floor, New York, New York 10019. New Mountain Partners, New Mountain Affiliated and Allegheny New Mountain collectively own all of the issued and outstanding shares of our Class A common stock.
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(3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

Shares beneficially owned by Mr. deLaski include shares held by the estate of Tena R. deLaski and trusts for the benefit of certain family members. Kenneth E. deLaski is our former chief executive officer and a former director of the company. Donald deLaski is our co-founder and the father of Kenneth E. deLaski. Includes options to acquire 6,925 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 12,059 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 12,059 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 6,925 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 450,135 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 12,059 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 77,500 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 155,000 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 100,000 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 37,406 shares of our common stock which are exercisable within 60 days of May 1, 2007. Includes options to acquire 1,016,220 shares of our common stock which are exercisable within 60 days of May 1, 2007. Excludes shares that may be deemed beneficially owned by Messrs. Ajouz, Klinsky and Singh. See footnote 1 above. 105

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DESCRIPTION OF CAPITAL STOCK General Our authorized capital stock consists of 200,000,000 shares of our common stock, $0.001 par value, 100 shares of Class A common stock, $0.001 par value, and 5,000,000 shares of our preferred stock, $0.001 par value. As of May 1, 2007, there were 39,447,102 shares of common stock outstanding, held of record by approximately 55 shareholders, and 100 shares of Class A common stock, held of record by the New Mountain Funds. Immediately following the completion of this offering there will be shares of common stock outstanding and 100 shares of Class A common stock outstanding. The following description does not purport to be complete and is subject to the provisions of our certificate of incorporation and bylaws, forms of which are filed as exhibits to this registration statement. The descriptions are qualified in their entirety by reference to our certificate of incorporation and bylaws and to applicable law. In addition, the discussion below is affected by agreements with our principal shareholders and is qualified in their entirety by reference to those agreements. See ―Certain Relationships and Related Party Transactions.‖ Common Stock The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders. Our shareholders do not have cumulative voting rights in the election of directors. Subject to preferences that may be granted to any then-outstanding preferred stock, holders of our common stock are entitled to receive ratably only those dividends that the board of directors may from time to time declare, and we may pay, on our outstanding shares in the manner and upon the terms and conditions provided by law. See ―Dividend Policy.‖ In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in all of our assets remaining after we pay our liabilities and distribute the liquidation preference of any then-outstanding preferred stock. Holders of our common stock will have no preemptive or other subscription or conversion rights. There will be no redemption or sinking fund provisions applicable to our common stock. Holders of our Class A common stock are entitled to elect a certain number of the members of the board of directors independently of the holders of shares of our common stock. All of the issued and outstanding shares of our Class A common stock is held by the New Mountain Funds. Under the terms of the Class A common stock, and assuming the holders beneficially own one-third or more of the outstanding shares of our common stock, the holders are entitled to elect a majority of the members of our board of directors. If the holders own less than one-third but at least 15% of the outstanding shares of our common stock, they are entitled to elect three of the members of our board of directors. If the holders own less than 15% of the outstanding shares of our common stock, but at least 5% of the outstanding shares of our common stock, they are entitled to elect two members and if the holders own less than 5% of the outstanding shares of our common stock, then so long as they own any shares of our common stock, they are entitled to elect one member of our board of directors. The holders are entitled to remove, without cause, any member of our board elected by them or to fill any vacancy created by the resignation, death or removal of a member of our board elected by them. Preferred Stock Our board of directors has the authority, without further action by the shareholders, to issue our preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of each series. These rights, preferences and privileges may include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of this series, any or all of which may be greater than the rights of our common stock. The issuance of our preferred stock could adversely affect the voting power of our holders of common stock and the likelihood that these holders will receive dividend payments and payments upon liquidation. We have no present plan to issue any shares of our preferred stock. 106

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Amendment to Certificate of Incorporation or Bylaws Our certificate of incorporation may be amended in any manner provided by the Delaware General Corporation Law, except for provisions relating to exculpation, amendments to the certificate of incorporation or corporate opportunities, which can only be amended by 80% of the voting power of shares of our capital stock. A majority of the voting power of shares of our capital stock or the board of directors may adopt a bylaw or repeal or amend a bylaw. Board of Directors Our board of directors is currently composed of nine members. Under our certificate of incorporation, we may not have less than three nor more than fifteen board members. Our certificate of incorporation authorizes our board to fix the number of its members. A vacancy or a newly created board position is filled by our board of directors (subject to the rights of the holders of the Class A common stock). Directors are annually elected by a majority of the votes cast in an uncontested election and by a plurality of votes cast in a contested election. Action by Written Consent Under our certificate of incorporation and bylaws, shareholder action can be taken at an annual meeting or a special meeting and can not be taken by written consent of the shareholders if the New Mountain Funds and their affiliates do not beneficially own at least one-third of the outstanding shares of our common stock. Ability to Call Special Meetings Our bylaws provide that special meetings of our shareholders can only be called by our board of directors or by the chairman of our board of directors. Special meetings may also be called by the holders of at least 40% of the outstanding shares of our common stock. Corporate Opportunities Under our certificate of incorporation, we renounce business opportunities presented to the New Mountain Funds and their affiliates even if the opportunity is one that we might reasonably have pursued. The New Mountain Funds and their affiliates will not be liable to us or our shareholders for breach of any duty by reason of using, selling, assigning or transferring a business opportunity, except in the case of a business opportunity expressly offered to an affiliate of the New Mountain Funds who is a director or officer of the company solely in his capacity as an officer or director of our company. In addition, the New Mountain Funds and their affiliates will not be deemed to breach their fiduciary duty to us, or have any liability to us, for: • • • engaging in similar lines of business as us; doing business with our customers or vendors; or entering into or performing agreements with us.

Shareholders are deemed to have notice of, and consented to, this provision of our certificate of incorporation. Anti-takeover Effects of Provisions of Our Certificate of Incorporation and Bylaws, Delaware Law and Shareholder’s Agreement Certain provisions of our certificate of incorporation and bylaws, as summarized below, and applicable provisions of the Delaware General Corporation Law and our shareholder‘s agreements may make it more difficult for or prevent an unsolicited third party from acquiring control of us or changing our board of directors and management. These provisions may have the effect of deterring hostile takeovers or delaying changes in our 107

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control or in our management. These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and in the policies furnished by them and to discourage certain types of transactions that may involve an actual or threatened change in our control. The provisions also are intended to discourage certain tactics that may be used in proxy fights. These provisions, however, could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. No Cumulative Voting Our certificate of incorporation and bylaws do not provide for cumulative voting in the election of directors. The combination of our significant shareholders ownership of a significant portion of our issued and outstanding common stock, the New Mountain Funds‘ ownership of the Class A common stock and lack of cumulative voting will make it difficult for our other shareholders to replace our board of directors or for another party to obtain control of us by replacing our board of directors. Size of Board and Vacancies Our certificate of incorporation provides that the number of directors on our board of directors is fixed by our board of directors. Newly created directorships resulting from any increase in our authorized number of directors are filled solely by the vote of our remaining directors in office (subject to the rights of the holders of the Class A common stock). Any vacancies in our board of directors resulting from death, resignation or removal from office are filled solely by the vote of our remaining directors in office (subject to the rights of the holders of the Class A common stock). Shareholder Action by Written Consent Our certificate of incorporation provides that our shareholders may not act by written consent without a meeting if the New Mountain Funds and their affiliates do not beneficially own at least one-third of the outstanding shares of our common stock. Shareholder Meetings Our bylaws provide that a special meeting of our shareholders may be called only by: • • • our board of directors; our chairman; and holders of at least 40% of the outstanding shares of our common stock.

Bylaw Amendments Our bylaws may only be amended by our board of directors or upon the vote (or, if available, written consent) of holders of a majority or more of the voting power of shares of our capital stock. Requirements for Advance Notification of Shareholder Nominations and Proposals Our bylaws establish advance notice procedures with respect to shareholder proposals and nomination of candidates for election as directors other than nominations made by or at the direction of our board of directors or a committee of our board of directors. Shareholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors or by a shareholder who was a shareholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our secretary timely written notice, in proper form, of the shareholder‘s intention to bring that business before the meeting. 108

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Undesignated Preferred Stock The authorization of our undesignated preferred stock makes it possible for our board of directors to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. Required Participation is Sales of Securities Under our shareholder‘s agreements, if the New Mountain Funds propose to sell all or any portion of their shares of our common stock or if we propose to sell or otherwise transfer for value all or substantially all of the stock, assets or business of the company and shareholder approval is required, each shareholder party to the shareholder‘s agreement is required to vote its shares of our common stock in favor of the transaction. This voting agreement could impede the success of any hostile attempt to change control of us. Section 203 of the Delaware General Corporation Law We will be governed by Section 203 of the Delaware General Corporation Law once we are a public company and listed on The Nasdaq Global Market. This provision would generally prohibit a Delaware corporation from engaging in any business combination with any interested shareholders for a period of three years following the date that such shareholder became an interested shareholder subject to certain exceptions, including if, prior to such time, the board of directors approved the business combination or the transaction which resulted in the stockholder becoming an interested stockholder. ―Business combinations‖ include mergers, asset sales and other transactions resulting in a financial benefit to the ―interested stockholder.‖ Subject to various exceptions, an ―interested stockholder‖ is a person who, together with his or her affiliates and associates, owns, or within three years did own, 15% or more of the corporation‘s outstanding voting stock. The Nasdaq Global Market We have applied to have and expect our common stock to be listed on The Nasdaq Global Market under the symbol ―PROJ.‖ Transfer Agent and Registrar We have appointed as the transfer agent and registrar for our common stock. 109

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SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE Immediately prior to this offering, there was no public market for our common stock. Sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices of our common stock. Furthermore, since some shares of our common stock will not be available for sale for a certain period of time after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future. Upon completion of this offering, and as described in ―Prospectus Summary—The Offering,‖ we will have shares of our common stock outstanding, which includes the issuance of shares of our common stock upon the exercise of options immediately prior to the closing of this offering. Of these shares, the shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, unless those shares are purchased by ―affiliates‖ as that term is defined in Rule 144 under the Securities Act. The remaining shares of our common stock held by existing shareholders are ―restricted securities‖ as that term is defined in Rule 144 under the Securities Act and are subject to the contractual restrictions described below. Of these remaining securities: • • • shares which are not subject to the 180-day lock-up period described below may be sold beginning 90 days after the date of this prospectus; additional shares may be sold upon expiration of the 180-day lock-up period described below; and additional shares may be sold in the public market on subsequent dates.

Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act. Shareholder’s Agreement We and our shareholders (including certain of our employees) are party to an April 22, 2005 shareholder‘s agreement with the New Mountain Funds. In addition, each of our directors who purchased shares of our common stock entered into a shareholder‘s agreement dated as of the date of purchase of their shares. These agreements generally prohibit the sale, transfer, assignment or other disposition of any stock held by any shareholder, except for certain permitted transfers, until the date on which the New Mountain Funds and any assignee of the New Mountain Funds cease to beneficially own shares of our common stock representing at least 15% of the total number of votes that may be cast in the general election of directors of the company. In addition, the agreements provide that shareholders are entitled to participate proportionally in any private sale or public offering by the New Mountain Funds of their shares of common stock including under Rule 144 if the New Mountain Funds sell all or any portion of their shares of our common stock in Rule 144 transactions. See ―Certain Relationships and Related Party Transactions—Recapitalization—Shareholder‘s Agreement and Director Shareholder‘s Agreement.‖ Registration Rights Upon completion of this offering, the holders of shares of our common stock and holders of options, directly or indirectly, will have rights to require, or participate, in the registration under the Securities Act of the shares held by them or acquirable upon exercise of their options. See ―Certain Relationships and Related Party Transactions—Recapitalization—Shareholder‘s Agreement and Director Shareholder‘s Agreement.‖ 110

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Lock-up Agreements Our officers and directors and each other person who, directly or indirectly, owns or has the right to acquire an aggregate of 20,000 shares of common stock or more (together with vested options to acquire shares of common stock) at the date of this offering have signed lock-up agreements under which they agreed not to offer, sell, contract to sell, pledge, or otherwise dispose of, or to enter into any hedging transaction with respect to, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock for a period ending 180 days after the date of this prospectus, subject to extension for an additional 18 days upon the occurrence of certain events. These shareholders and optionees will together beneficially own an aggregate of shares of our common stock upon completion of this offering. The foregoing does not prohibit open market purchases and sales of our common stock by such holders after the completion of this offering or of common stock acquired in this offering or the sale of shares of our common stock pursuant to this offering and transfers or dispositions by our officers, directors and shareholders may be made: • • • with the written consent of Credit Suisse Securities (USA) LLC; as a distribution to partners, members or shareholders of a holder of our common stock that is a business entity; as a sale or other bona fide transfer in a single transaction of all or substantially all of the equity interests of a holder that is a business entity or all or substantially all of that holder‘s assets, so long as such transfer was not undertaken for the purpose of avoiding the restrictions imposed by the lock-up agreement; as a transfer by a business entity to another business entity so long as the transferee is an affiliate of the holder; as a bona fide gift; or to any trust for the direct or indirect benefit of the holder or his or her immediate family.

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Unless a transfer or disposition is made with the written consent of Credit Suisse Securities (USA) LLC, the permitted transfers and dispositions described above may not be made unless the transfer or disposition does not involve a disposition of value, the transfer or disposition does not result in a filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock being required or voluntarily made during the lock-up period (other than a Form 5 under certain circumstances) and the transferee of each such shares agrees to be bound by the lock-up agreement. For more information regarding the lock-up agreements of our executive officers, directors and most other shareholders and optionees, see ―Underwriting.‖ Rule 144 In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of: • • 1% of the number of shares of our common stock then outstanding, which will equal approximately after this offering; or shares immediately

the average weekly trading volume of our common stock on The Nasdaq Global Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and the availability of current public information about us. 111

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Rule 144(k) Common stock eligible for sale under Rule 144(k) may be sold immediately upon the completion of this offering. In general, under Rule 144(k), a person may sell shares of common stock acquired from us immediately upon completion of this offering, without regard to manner of sale, the availability of public information or volume, if: • • the person is not an affiliate of Deltek and has not been an affiliate of Deltek at any time during the three months preceding such a sale; and the person has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate.

Rule 701 Shares of our common stock issued in reliance on Rule 701, such as those shares acquired upon exercise of options granted under our 2005 Stock Option Plan, are restricted and, subject to the contractual and legal provisions on resale described above, beginning 90 days after the effective date of this prospectus, may be sold by shareholders other than our affiliates, subject only to the manner of sale provisions of Rule 144, and by affiliates under Rule 144 without compliance with its one-year holding requirement. Stock Options and Incentive and Benefit Plan Awards Immediately after this offering, we intend to file a registration statement under the Securities Act covering all of the shares subject to options outstanding under our 2005 Stock Option Plan, but not exercised, as of the closing of this offering and 2,590,000 shares reserved for issuance under our 2007 Plan and our ESPP. That registration is expected to become effective upon filing with the Securities and Exchange Commission. Accordingly, common stock registered under that registration statement will, subject to the contractual and legal provisions on resale described above, vesting provisions and limitations as to the volume of shares that may be sold by our affiliates under Rule 144 described above, be available for sale in the open market immediately after the registration statement is filed. Upon completion of this offering, options to purchase average exercise price of $ per shares. Of these, shares of common stock will be issued and outstanding at a weighted shares would be subject to the lock-up period described above if exercised. 112

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS The following summary describes the material U.S. federal income tax consequences and, in the case of a non-U.S. holder (as defined below), the material U.S. federal estate tax consequences, of the acquisition, ownership and disposition of shares of our common stock. This summary does not discuss all of the aspects of U.S. federal income and estate taxation that may be relevant to you in light of your particular investment or other circumstances. In particular, this summary only addresses a holder that holds our common stock as a capital asset (generally, investment property) and does not address: • • • • special U.S. federal income tax rules that may apply to particular holders, such as financial institutions, insurance companies, tax-exempt organizations, and dealers and traders in stocks, securities or currencies; holders holding our common stock as part of a conversion, constructive sale, wash sale or other integrated transaction or a hedge, straddle or synthetic security; any U.S. state and local or non-U.S. or other tax consequences; or the U.S. federal income or estate tax consequences for the beneficial owners of a non-U.S. holder.

If a partnership or other pass-through entity (including an entity or arrangement treated as a partnership or other type of pass-through entity for U.S federal income tax purposes) owns our common stock, the tax treatment of a partner or beneficial owner of the partnership or other pass-through entity may depend upon the status of the partner or beneficial owner and the activities of the partnership or entity and certain determinations made at the partner or beneficial owner level. This summary does not discuss the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common stock by partnerships or other pass-through entities. Partners and beneficial owners in partnerships or other pass-through entities that own our common stock should consult their own tax advisors as to the particular U.S. federal income and estate tax consequences applicable to them. This summary is based on provisions of the U.S. Internal Revenue Code of 1986, as amended, applicable U.S. Treasury regulations and administrative and judicial interpretations, all as in effect or in existence on the date of this prospectus. Subsequent developments in U.S. federal income or estate tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income and estate tax consequences of purchasing, owning and disposing of our common stock as set forth in this summary. Each holder should consult a tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax consequences of acquiring, holding and disposing of our common stock. U.S. Holders The following summary applies to you only if you are a U.S. holder, as defined below. Definition of a U.S. Holder As used in this summary, the term ―U.S. holder‖ means a beneficial owner of our common stock that is for U.S. federal income tax purposes: • • • an individual citizen or resident of the United States; a corporation (or other entity classified as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of any political subdivision of the United States; an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or 113

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a trust, if (1) a U.S. court is able to exercise primary supervision over the trust‘s administration and one or more ―United States persons‖ (within the meaning of the U.S. Internal Revenue Code of 1986, as amended) has the authority to control all of the trust‘s substantial decisions or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a ―United States person.‖

Dividends We have never declared nor paid any cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. See ―Dividend Policy‖. In the event, however, that we pay dividends on our common stock, the gross amount of dividends paid to U.S. holders will be treated as dividend income to such holders, to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such income will be includible in the gross income of a U.S. holder on the day it is actually or constructively received by the U.S. holder. Under current legislation, which is scheduled to expire at the end of 2010, dividend income will generally be taxed to individual U.S. holders at rates applicable to long-term capital gains, provided that a minimum holding period and other limitations and requirements are satisfied. Dividends received after 2010 will be taxable at rates applicable to ordinary income. Corporate U.S. holders may be entitled to a dividends received deduction with respect to distributions treated as dividend income for U.S. federal income tax purposes, subject to numerous limitations and requirements. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted tax basis of the shares of our common stock to the extent thereof (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the holder on a subsequent disposition of our common stock), and the balance in excess of the adjusted basis will be taxed as capital gain (short-term or long-term, as applicable) recognized on a sale or exchange. Gain on Disposition of our Common Stock A U.S. holder will recognize taxable gain or loss on any sale or exchange of our common stock in an amount equal to the difference between the amount realized and the U.S. holder‘s adjusted tax basis in such common stock. Such gain or loss will be capital gain or loss. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitation. Information Reporting and Backup Withholding In general, information reporting requirements will apply to dividends paid on our common stock and to the proceeds received on the sale, exchange or other disposition (including a redemption) of our common stock by a U.S. holder other than certain exempt recipients (such as corporations). Backup withholding at a rate of 28% will apply to such payments if the U.S. holder fails to provide an accurate taxpayer identification number and to comply with certain certification procedures or otherwise establish an exemption from backup withholding. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or credit against the U.S. holder‘s U.S. federal income tax liability provided that the required information is timely furnished to the Internal Revenue Service. Non-U.S. Holders The following summary applies to you if you are a beneficial owner of our common stock that is not a U.S. holder (as defined above) and also is not a partnership (or an entity or arrangement classified as a partnership for U.S. federal tax purposes) (a ―non-U.S. holder‖). An individual may be treated as a resident of the U.S. in any calendar year for U.S. federal income tax purposes, instead of a nonresident, by, among other ways, being present in the U.S. on at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this 114

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calculation, an individual would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Individuals treated as residents of the U.S. are taxed for U.S. federal income purposes as if they were U.S. citizens. Dividends We have never declared nor paid any cash dividends on our capital stock and we do not anticipate paying any cash dividends in the foreseeable future. See ―Dividend Policy.‖ In the event, however, that we pay dividends on our common stock that are not effectively connected with a non-U.S. holder‘s conduct of a trade or business in the U.S., a U.S. federal withholding tax at a rate of 30%, or a lower rate under an applicable income tax treaty, will be withheld from the gross amount of the dividends paid to such non-U.S. holder. Non-U.S. holders should consult their own tax advisors regarding their entitlement to benefits under a relevant income tax treaty. In order to claim the benefit of an applicable income tax treaty, a non-U.S. holder will be required to provide a properly executed U.S. Internal Revenue Service Form W-8BEN (or other applicable form) in accordance with the applicable certification and disclosure requirements. Special rules apply to partnerships and other pass-through entities and these certification and disclosure requirements also may apply to beneficial owners of partnerships and other pass-through entities that hold our common stock. A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the U.S. Internal Revenue Service. Non-U.S. holders should consult their own tax advisors regarding their entitlement to benefits under a relevant income tax treaty and the manner of claiming the benefits. Dividends that are effectively connected with a non-U.S. holder‘s conduct of a trade or business in the U.S. and, if required by an applicable income tax treaty, are attributable to a permanent establishment maintained by the non-U.S. holder in the U.S., will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, the U.S. federal withholding tax discussed above will not apply if the non-U.S. holder provides a properly executed U.S. Internal Revenue Service Form W-8ECI (or other applicable form) in accordance with the applicable certification and disclosure requirements. In addition, a ―branch profits tax‖ may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the U.S. Gain on Disposition of our Common Stock A non-U.S. holder generally will not be taxed on any gain recognized on a disposition of our common stock unless: • the gain is effectively connected with the non-U.S. holder‘s conduct of a trade or business in the U.S. and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons (unless an applicable income tax treaty provides otherwise) and, if the non-U.S. holder is a foreign corporation, the ―branch profits tax‖ described above may also apply; the non-U.S. holder is an individual who holds our common stock as a capital asset, is present in the U.S. for more than 182 days in the taxable year of the disposition and meets other requirements (in which case, except as otherwise provided by an applicable income tax treaty, the gain, which may be offset by U.S. source capital losses, generally will be subject to a flat 30% U.S. federal income tax, even though the non-U.S. holder is not considered a resident alien under the U.S. Internal Revenue Code of 1986, as amended); or we are or have been a ―U.S. real property holding corporation‖ for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock (in which case a non-U.S. holder will be taxed as described in the first bullet point above). 115

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Generally, a corporation is a ―U.S. real property holding corporation‖ if the fair market value of its ―U.S. real property interests‖ equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The tax relating to stock in a U.S. real property holding corporation generally will not apply to a non-U.S. holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5% or less of our common stock, provided that our common stock were regularly traded on an established securities market. We believe that we are not currently, and we do not anticipate becoming in the future, a U.S. real property holding corporation. Federal Estate Tax Shares of our common stock that are owned or treated as owned by an individual who is not a U.S. citizen or resident of the U.S. (as specially defined for U.S. federal estate tax purposes) at the time of death will be included in the individual‘s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise and, therefore, may be subject to U.S. federal estate tax. Information Reporting and Backup Withholding Dividends paid to a non-U.S. holder may be subject to U.S. information reporting and backup withholding. A non-U.S. holder will be exempt from backup withholding if the non-U.S. holder provides a properly executed U.S. Internal Revenue Service Form W-8BEN or otherwise meets documentary evidence requirements for establishing its status as a non-U.S. holder or otherwise establishes an exemption. The gross proceeds from the disposition of our common stock may be subject to U.S. information reporting and backup withholding. If a non-U.S. holder sells our common stock outside the U.S. through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to the non-U.S. holder outside the U.S., then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. U.S. information reporting, however, but not U.S. backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the U.S., if a non-U.S. holder sells our common stock through a non-U.S. office of a broker that: • • • • is a U.S. person; derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the U.S.; is a ―controlled foreign corporation‖ for U.S. federal income tax purposes; or is a foreign partnership, if at any time during its tax year: (i) (ii) one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or the foreign partnership is engaged in a U.S. trade or business,

unless the broker has documentary evidence in its files that the non-U.S. holder is not a U.S. person and certain other conditions are met or the non-U.S. holder otherwise establishes an exemption. If a non-U.S. holder receives payments of the proceeds of a sale of our common stock to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless the non-U.S. holder provides a properly executed U.S. Internal Revenue Service Form W-8BEN certifying that the non-U.S. Holder is not a ―United States person‖ or the non-U.S. holder otherwise establishes an exemption. Backup withholding is not an additional tax. A non-U.S. holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed the non-U.S. holder‘s U.S. federal income tax liability by filing a refund claim with the U.S. Internal Revenue Service. 116

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UNDERWRITING Under the terms and subject to the conditions contained in an underwriting agreement dated , 2007, we and the selling shareholders have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc., Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated acting as representatives and the underwriters have severally agreed to purchase from us and the selling shareholders, the following respective numbers of shares of common stock:
Underwriter Number of Shares

Credit Suisse Securities (USA) LLC J.P. Morgan Securities Inc. Lehman Brothers Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated Wachovia Capital Markets, LLC William Blair & Company, LLC Montgomery & Co., LLC Total

The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in this offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults the purchase commitments of non-defaulting underwriters may be increased or this offering may be terminated. The selling shareholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to an aggregate of additional shares from the selling shareholders at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock. The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $ per share. The underwriters and selling group members may allow a discount of $ per share on sales to other broker/dealers. After the initial public offering, the representatives may change the public offering price and concession and discount to broker/dealers. The following table summarizes the compensation and estimated expenses we and the selling shareholders will pay:
Per Share Without Overallotment With Overallotment Without Overallotment Total With Overallotment

Underwriting Discounts and Commissions paid by us Expenses payable by us Underwriting Discounts and Commissions paid by selling shareholders Expenses payable by the selling shareholders

$ $ $ $

$ $ $ $

$ $ $ $

$ $ $ $

The underwriters have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the share of common stock being offered. We have agreed that we will not offer, sell, issue, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act 117

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relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, issue, contract to sell, pledge, disposition or filing, without the prior written consent of Credit Suisse Securities (USA) LLC for a period of 180 days after the date of this prospectus, except, however, for: • • • • • issuances of common stock pursuant to the exercise of options outstanding on the date hereof; grants, offers, sales or issuances of common stock (including grants of restricted securities) or options to acquire common stock pursuant to the 2005 Plan, the 2007 Plan or the ESPP; issuances of common stock pursuant to the exercise of such options; the filing of any registration statement on Form S-8 (including a reoffer prospectus prepared in accordance with Part I of Form S-3) relating to the issuances of the securities described in the bullets above; and offer, sale and issuance of up to 10% of the common stock outstanding at the time of the issuance as consideration or partial consideration for acquisitions of assets or securities of businesses.

In the event, however, that either during the last 17 days of the initial ―lock-up‖ period, we release earnings results or material news or a material event relating to us occurs or prior to the expiration of the initial ―lock-up‖ period, we announce that we will release earnings results during the 16-day period beginning on the last day of the initial ―lock-up‖ period, then in either case the expiration of the ―lock-up‖ will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Credit Suisse Securities (USA) LLC waives, in writing, such an extension. Our officers and directors and each other person who, directly or indirectly, owns or has the right to acquire an aggregate of 20,000 shares of common stock or more (together with vested options to acquire shares of common stock) at the date of this offering (collectively, the restricted shareholders) have agreed or will have agreed that, for value, they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC for a period of 180 days after the date of this prospectus, except, however: • if the restricted shareholder is a corporation, partnership, limited liability company or other business entity, any transfers to any stockholder, partner or member of, or owner of a similar equity interest in, the restricted shareholder, as the case may be, if, in any such case, such transfer is not for value; if the restricted shareholder is a corporation, partnership, limited liability company or other business entity, any transfer made by the restricted shareholder: • in connection with the sale or other bona fide transfer in a single transaction of all or substantially all of the restricted shareholder‘s capital stock, partnership interests, membership interests or other similarity equity interests, as the case may be, or all or substantially all of the restricted shareholder‘s assets, in any case not undertaken for the purpose of avoiding the above resale restrictions; or to another corporation, partnership, limited liability company or other business entity so long as the transferee is an affiliate (as defined below) of the restricted shareholder and such transfer is not for value;

•

• • •

for any transfer as a bona fide gift, provided that each donee thereof agrees to be bound in writing by the terms of the above resale restrictions prior to such transfer; or any transfer to any trust for the direct or indirect benefit of the restricted shareholder or the immediate family of the restricted shareholder; provided, however, that the trustee of the trust agrees to be bound 118

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in writing by the terms of the above resale restrictions prior to such transfer, and provided, further, that any such transfer does not involve a disposition for value. In the case of any transfer described above, it is a condition to the transfer that: such transfer or distribution shall result in no disposition of value, no filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock (other than a Form 5 made no more than 10 days prior to its filing deadline) shall be required or shall be voluntarily made during the ―lock-up‖ period and the transferee shall execute an agreement stating that the transferee agrees to take and hold such common stock subject to the terms of this agreement and there shall be no further transfer of such common stock except in accordance with this agreement. In addition, our restricted shareholders have agreed that, without the prior written consent of Credit Suisse Securities (USA) LLC, they will not, during the ―lock-up‖ period, make any demand for or exercise any right with respect to, the registration of any common stock or any security convertible into or exercisable or exchangeable for the common stock. In the event, however, that either during the last 17 days of the initial ―lock-up‖ period, we release earnings results or material news or a material event relating to us occurs or prior to the expiration of the initial ―lock-up‖ period, we announce that we will release earnings results during the 16-day period beginning on the last day of the initial ―lock-up‖ period, then in each case the expiration of the ―lock-up‖ will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Credit Suisse Securities (USA) LLC waives, in writing, such an extension. The foregoing ―lock-up‖ provisions applicable to our officers, directors and stockholders do not prohibit the exercise of options held by them or the sale of shares of common stock pursuant to this offering. We and the selling shareholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect. We will apply to list the shares of common stock on The Nasdaq Global Market. Certain of the underwriters and their respective affiliates have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for us and for our affiliates in the ordinary course of business for which they have received and would receive customary compensation. Affiliates of Credit Suisse Securities (USA) LLC, J.P. Morgan Securities Inc. and Wachovia Capital Markets, LLC, underwriters for this offering, are lenders, and will receive a portion of the net proceeds used to repay debt, under our credit agreement. An affiliate of Credit Suisse Securities (USA) LLC is also the administrative agent under our credit agreement. Immediately prior to this offering, there has been no market for our common stock. The initial public offering price will be determined by negotiation between us and the underwriters and will not necessarily reflect the market price of the common stock following this offering. The principal factors that will be considered in determining the public offering price will include: • • • • • • • the information presented in this prospectus and otherwise available to the underwriters; the history of and the prospects for the industry in which we will compete; the ability of our management; the prospects for our future earnings; the present state of our development and our current financial condition; the recent market prices of, and the demand for, publicly traded common stock of generally comparable companies; and the general condition of the securities markets at the time of this offering.

We offer no assurances that the initial public offering price will correspond to the price at which the common stock will trade in the public market subsequent to this offering or that an active trading market for the common stock will develop and continue after this offering. 119

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In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934 (the ―Exchange Act‖). • • Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market. Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering. Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

•

•

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on The Nasdaq Global Market or otherwise and, if commenced, may be discontinued at any time. A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations. European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares of common stock to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares of common stock to the public in that Relevant Member State at any time, • to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; 120

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•

to any legal entity which has two or more of an average of at least 250 employees during the last financial year; a total balance sheet of more than €43,000,000 and an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

• •

For the purposes of this provision, the expression an ―offer of Shares to the public‖ in relation to any shares of common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares of common stock to be offered so as to enable an investor to decide to purchase or subscribe the shares of common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/ EC and includes any relevant implementing measure in each Relevant Member State. Notice to Investors in the United Kingdom Each of the underwriters severally represents, warrants and agrees as follows: • it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (FSMA) to persons who have professional experience in matters relating to investments falling with Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the common stock in, from or otherwise involving the United Kingdom.

•

Notice to Investors in Italy Each of the underwriters severally represents, warrants and agrees that neither the shares of common stock, this prospectus nor any other material relating to the shares of common stock will be offered, sold, delivered, distributed or made available in the Republic of Italy other than to professional investors (―investiton professionali‖) as defined in Article 30, Paragraph 2, of Legislative Decree No. 58, of 24 February 1998 (the ―Financial Laws Consolidation Act‖), as subsequently amended and supplemented, which refers to the definition or ―operatori qualificati‖ as defined in Article 31, Paragraph 2, of CONSOB Regulation No. 11,522, of 1 July 1998, as subsequently amended and supplemented, or pursuant to Article 100 of the Financial Laws Consolidation and Article 33, Paragraph 1, of CONSOB Regulation n. 11,971, of 14 May 1999, as subsequently amended and supplemented and in accordance with applicable Italian laws and regulations. Any offer of the shares of common stock to professional investors in the Republic of Italy shall be made only by banks, investment firms or financial companies enrolled in the special register provided for in Article 107 of the Consolidated Banking Act, to the extent that they are duly authorized to engage in the placement and/or underwriting of financial instruments in the Republic of Italy in accordance with the relevant provisions of the Financial Laws Consolidations Act and/or any other applicable laws and regulations and in compliance with Article 129 of the Consolidated Banking Act. Insofar as the requirements above are based on laws that are superseded at any time pursuant to the implementation of the Prospectus Directive, such requirements shall be replaced by the applicable requirements under the Prospectus Directive. 121

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Notice to Investors in France The shares of common stock being offered by this prospectus are being issued and sold outside the Republic of France and each underwriter severally represents, warrants and agrees as follows: • in connection with their initial distribution, it has not offered or sold and will not offer or sell, directly or indirectly, any shares of common stock to the public in the Republic of France, and that it has not distributed and will not distribute or cause to be distributed to the public in the Republic of France this prospectus or any other offering material relating to this offering, and that such offers, sales and distributions have been made and will be made in the Republic of France only to qualified investors ( investisseurs qualifiés ) investing for their own account, as defined in and in accordance with Articles L.411-2, D.411-1 to D.411-4, D.734-1, D.744-1, D.754-1 and D.764-1 of the Monetary and Financial Code ( Code monétaire et financier ); pursuant to Article 211-4 of the General Regulations ( Règlement Général ) of the French Financial Markets Authority ( Autorité des marchés financiers ), it has duly informed such qualified investors ( investisseurs qualifiés ) of the fact that (i) the initial distribution is not covered by a prospectus subject to the clearance procedure ( visa ) of the French Financial Markets Authority ( Autorité des marchés financiers ); (ii) they can only invest in the common stock for their own account in compliance with the conditions set forth under Articles D.411-1, D. 411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the Monetary and Financial Code ( Code monétaire et financier ); and (iii) such shares may be resold or otherwise retransferred ( diffusées ), directly or indirectly, to the public in the Republic of France only in compliance with Articles L.411-1, L.411-2, L.412-1, L.621-8 through L.621-8-3 of the Monetary and Financial Code ( Code monétaire et financier ); and has complied with, and will comply with, all applicable provisions of the Monetary and Financial Code ( Code monétaire et financier ) and the General Regulations ( Règlement Général ) of the French Financial Markets Authority ( Autorité des marchés financiers ) with respect to anything done by it in relation to the common stock in, from or otherwise involving the Republic of France.

•

•

Notice to Investors in Germany Each person who is in possession of this prospectus is aware of the fact that no German sales prospectus (Wertpapierprospekt) within the meaning of the German Securities Prospectus Act (Wertpapierprospektgesetz, the ―Act‖) of the Federal Republic of Germany has been or will be published with respect to this offering. In particular, each underwriter severally represents, warrants and agrees that it has not engaged and has agreed that it will not engage in a public offering (öffentliches Angebot) within the meaning of the Act with respect to any of our common stock otherwise than in accordance with this offering. 122

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NOTICE TO CANADIAN RESIDENTS The distribution of the shares in Canada is being made only on a private placement basis exempt from the requirement that we and the selling shareholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of the shares are made. Any resale of the shares in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the shares. Representations of Purchasers By purchasing the shares in Canada and accepting a purchase confirmation, a purchaser is representing to us and the selling shareholders and the dealer from whom the purchase confirmation is received that: • • • • the purchaser is entitled under applicable provincial securities laws to purchase the shares without the benefit of a prospectus qualified under those securities laws; where required by law, that the purchaser is purchasing as principal and not as agent; the purchaser has reviewed the text above under Resale Restrictions; and the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the shares to the regulatory authority that by law is entitled to collect the information.

Further details concerning the legal authority for this information is available on request. Rights of Action—Ontario Purchasers Only Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the shares, for rescission against us and the selling shareholders in the event that this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the shares. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the shares. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling shareholders. In no case will the amount recoverable in any action exceed the price at which the shares were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling shareholders will have no liability. In the case of an action for damages, we and the selling shareholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the shares as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions. Enforcement of Legal Rights All of our directors and officers as well as the experts named herein and the selling shareholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada. 123

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Taxation and Eligibility for Investment Canadian purchasers of the shares should consult their own legal and tax advisors with respect to the tax consequences of an investment in the shares in their particular circumstances and about the eligibility of the shares for investment by the purchaser under relevant Canadian legislation. 124

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LEGAL MATTERS The validity of the shares of common stock we are offering will be passed upon for us by Fried, Frank, Harris, Shriver & Jacobson LLP, Washington, D.C. The underwriters have been represented by Cravath, Swaine & Moore LLP, New York, New York. EXPERTS The financial statements included in this prospectus and the related financial statement schedule included elsewhere in the registration statement have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports appearing herein and elsewhere in the registration statement (which reports express an unqualified opinion on the financial statements and financial statement schedule and include an explanatory paragraph referring to the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment), and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND ADDITIONAL INFORMATION We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act with respect to the common stock we propose to sell in this offering. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement. For further information about us and the common stock we propose to sell in this offering, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed as an exhibit to the registration statement. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You can read our Securities and Exchange Commission filings, including the registration statement, over the Internet at the Securities and Exchange Commission‘s website at www.sec.gov . You may also read and copy any document we file with the Securities and Exchange Commission at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference facilities. 125

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page

Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2005 and 2006 Consolidated Statements of Operations for the Years Ended December 31, 2004, 2005 and 2006 Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2005 and 2006 Consolidated Statements of Changes in Shareholders‘ Deficit for the Years Ended December 31, 2004, 2005 and 2006 Notes to Consolidated Financial Statements F-1

F-2 F-3 F-4 F-5 F-7 F-8

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee and Shareholders of Deltek, Inc. Herndon, Virginia We have audited the accompanying consolidated balance sheets of Deltek, Inc. (formerly Deltek Systems, Inc.) and its subsidiaries (the ―Company‖) as of December 31, 2005 and 2006, and the related consolidated statements of operations, changes in shareholders‘ deficit, and cash flows for the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company‘s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company‘s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2005 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the consolidated financial statements, in 2006 the Company changed its method of accounting for share-based payments to conform to Financial Accounting Standards Board Statement No. 123 (revised 2004), Share-Based Payment . /s/ DELOITTE & TOUCHE LLP McLean, Virginia April 19, 2007 F-2

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DELTEK, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
December 31 2005 2006

ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable, net of allowance of $1,321 and $1,960 at December 31, 2005 and 2006, respectively Deferred income taxes Prepaid expenses and other current assets TOTAL CURRENT ASSETS PROPERTY AND EQUIPMENT, NET CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET INTANGIBLE ASSETS, NET GOODWILL OTHER ASSETS TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ DEFICIT CURRENT LIABILITIES: Current portion of long-term debt Accounts payable and accrued expenses Accrued liability for redemption of stock in recapitalization Deferred revenues Interest payable on shareholder notes Income taxes payable TOTAL CURRENT LIABILITIES LONG-TERM DEBT LONG-TERM DEFERRED INCOME TAXES OTHER LONG-TERM LIABILITIES TOTAL LIABILITIES COMMITMENTS AND CONTINGENCIES (NOTE 17) SHAREHOLDERS’ DEFICIT: Preferred stock, $0.001 par value—authorized, 2,000,000 shares; issued and outstanding, 100 shares at December 31, 2005 and 2006 Common stock, $0.001 par value—authorized, 90,000,000 shares; issued and outstanding, 39,161,440 and 39,405,993 shares at December 31, 2005 and 2006, respectively Additional paid-in capital Accumulated deficit Accumulated other comprehensive income TOTAL SHAREHOLDERS’ DEFICIT TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$

17,679 22,144 9,913 7,964 57,700 5,344 4,444 7,372 16,191 4,599

$

6,667 39,987 6,961 4,771 58,386 8,576 3,480 16,169 44,519 3,358

$

95,650

$

134,488

$

1,150 16,233 12,387 27,253 5,467 35 62,525 213,275 185 2,774 278,759

$

20,150 28,671 5,349 26,612 — 166 80,948 210,375 3,760 3,470 298,553

— 39 108,655 (291,241 ) (562 ) (183,109 ) $ 95,650 $

— 39 112,350 (275,943 ) (511 ) (164,065 ) 134,488

See accompanying notes to consolidated financial statements. F-3

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DELTEK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data)
2004 Year Ended December 31 2005 2006

REVENUES: Software license fees Consulting services Maintenance and support services Other revenues Total revenues COST OF REVENUES: Cost of software license fees Cost of consulting services Cost of maintenance and support services Cost of other revenues Total cost of revenues GROSS PROFIT OPERATING EXPENSES: Research and development Sales and marketing General and administrative Recapitalization expenses Operating expenses INCOME FROM OPERATIONS Interest income Interest expense Other (expense) income, net INCOME (LOSS) BEFORE INCOME TAXES Income tax (benefit) expense NET INCOME EARNINGS PER SHARE Basic Diluted COMMON SHARES AND EQUIVALENTS OUTSTANDING Basic weighted average shares Diluted weighted average shares UNAUDITED PRO FORMA DATA Income (loss) before income taxes Pro forma income tax expense Pro forma net income (loss) Pro forma earnings (loss) per share—basic Pro forma earnings (loss) per share—diluted

$

34,934 28,585 54,178 3,516 121,213 4,860 23,397 11,287 4,114 43,658 77,555 22,944 16,680 11,367 — 50,991 26,564 408 (74 ) (132 ) 26,766 (1,117 )

$

45,923 41,212 63,709 2,112 152,956 4,591 32,659 11,969 2,002 51,221 101,735 26,246 19,198 15,181 30,853 91,478 10,257 436 (11,297 ) 238 (366 ) (9,098 )

$

74,958 66,573 83,172 3,565 228,268 6,867 54,676 15,483 4,634 81,660 146,608 37,293 37,807 26,622 — 101,722 44,886 397 (20,098 ) 82 25,267 9,969

$

27,883

$

8,732

$

15,298

$ $

0.33 0.33

$ $

0.17 0.17

$ $

0.39 0.38

84,741,320 84,741,320

52,910,437 52,910,437

39,331,894 40,262,240

$ $ $ $

26,766 11,059 15,707 0.19 0.19

$ $ $ $

(366 ) 3,203 (3,569 ) (0.07 ) (0.07 )

$ $ $ $

25,267 9,969 15,298 0.39 0.38

See accompanying notes to consolidated financial statements. F-4

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DELTEK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
2004 Year Ended December 31 2005 2006

CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts Depreciation and amortization Amortization of debt issuance costs Stock-based compensation expense Stock issued in lieu of director‘s fees Loss on disposal of fixed assets Deferred income taxes Recapitalization expenses Realized loss (gain) on investments Change in assets and liabilities: Accounts receivable, net Prepaid expenses and other assets Accounts payable and accrued expenses Interest payable on shareholder notes Income taxes payable Other long-term liabilities Deferred revenues Net Cash Provided by Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: Sales of marketable securities Acquisitions, net of cash acquired Purchase of property and equipment Capitalized software development costs Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock Proceeds from exercise of stock options Tax benefit from stock option exercises Shareholder distributions Redemption of stock and shareholder payments in recapitalization Recapitalization expenses Proceeds from the issuance of debt Debt issuance costs Repayment of debt Net Cash (Used in) Provided by Financing Activities IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS—Beginning of year CASH AND CASH EQUIVALENTS––End of year

$

27,883 284 4,413 — — — 97 (202 ) — 42 (1,704 ) (117 ) (2,400 ) — (115 ) 6,738 5,706 40,625 1,129 — (1,218 ) (2,339 ) (2,428 ) — — — (34,141 ) — — — — (7,569 ) (41,710 ) 29 (3,484 ) 16,613

$

8,732 877 3,944 580 — — 4 (9,463 ) 8,245 (286 ) (6,461 ) (2,919 ) 5,223 5,467 (24 ) (6,802 ) 4,126 11,243 3,207 (13,982 ) (1,511 ) (1,249 ) (13,535 ) 108,693 — — (28,513 ) (273,271 ) (8,245 ) 215,000 (5,840 ) (575 ) 7,249 (407 ) 4,550 13,129

$

15,298 2,052 8,097 3,048 1,686 20 28 1,874 — — (17,708 ) 2,980 8,662 (5,467 ) 294 661 (3,083 ) 18,442 — (32,769 ) (4,671 ) (856 ) (38,296 ) 1,051 12 7 — (7,038 ) — 125,000 (1,312 ) (108,900 ) 8,820 22 (11,012 ) 17,679

$

13,129

$

17,679

$

6,667

See accompanying notes to consolidated financial statements. F-5

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DELTEK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
2004 Year Ended December 31 2005 2006

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Noncash activity: Stock issued for acquisitions Accrued liability for redemption of stock in recapitalization Accrued liability for acquisition of business Accrued liability for purchases of property and equipment Cash paid during the year for: Interest Income taxes

$— $— $— $—

$

—

$ $ $ $

919 — 750 868

$ 12,387 $ $ 167 —

$ 74 $ 611

$ $

5,249 321

$ 22,352 $ 7,717

See accompanying notes to consolidated financial statements. F-6

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DELTEK, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (in thousands, except share data)
Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Total Shareholders’ Equity (Deficit)

Preferred Stock Amoun Shares t

Common Stock Shares Amoun t

Paid-In Capital

Balance at January 1, 2004 Net income Foreign currency translation adjustments Unrealized gain on investments Comprehensive income Distributions to shareholders Balance at December 31, 2004 Net income Foreign currency translation adjustments Reversal of unrealized gain on investments Comprehensive income Distributions to shareholders Redemption of stock in recapitalization Sale of common stock Sale of preferred stock Effect of stock split on par value Balance at December 31, 2005 Net income Foreign currency translation adjustments Comprehensive income Sale of common stock Stock issued for acquisitions Stock options exercised Tax benefit on stock options exercised Stock compensation Stock issued in lieu of director‘s fees Balance at December 31, 2006

— — — —

$ — — — —

84,741,320 — — —

$ — — —

8

$

— — — —

$

20,449 27,883 — —

$

(454 ) $ — 27 272

20,003 27,883 27 272 28,182

— — — — —

— $ — — — —

— 84,741,320 — — — $

— 8 — — — $

— — — — — $

(34,141 ) 14,191 8,732 — — $

— (155 ) $ — (121 ) (286 )

(34,141 ) 14,044 8,732 (121 ) (286 ) 8,325

— — — 100 —

— — — — —

— (75,682,340 ) 30,102,460 — — 39,161,440 — — 133,252 105,616 3,463 — — 2,222 39,405,993 $ $

— (7 ) 3 — 35 39 — — — — — — — — 39

— — 108,690 — (35 ) $ 108,655 — — 1,051 919 12 7 1,686 20 $ 112,350 $ $

(28,513 ) (285,651 ) — — — (291,241 ) $ 15,298 — — — — — — — (275,943 ) $

— — — — — (562 ) $ — 51 — — — — — — (511 ) $

(28,513 ) (285,658 ) 108,693 — — (183,109 ) 15,298 51 15,349 1,051 919 12 7 1,686 20 (164,065 )

100 $ — — — — — — — — — — — — — — — — —

100 $ —

See accompanying notes to consolidated financial statements. F-7

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization Deltek, Inc. (―Deltek‖ or the ―Company‖) is a leading provider of enterprise applications software and related services designed specifically for project-focused organizations. Project-focused organizations generate revenue from defined, discrete, customer-specific engagements or activities, rather than mass-producing products in a manufacturing or distribution environment. These organizations typically require specialized software to help them automate complex business processes around the engagement, execution, and delivery of projects. Deltek‘s software enables them to greatly enhance the visibility they have over all aspects of their operations by providing them increased control over their critical business processes, accurate project-specific financial information, and real-time performance measurements. With Deltek‘s software applications, project-focused organizations can better measure business results, optimize performance, streamline operations, and win new business. In April 2005, the Company underwent a recapitalization and change of control transaction as further described in Note 2 to the consolidated financial statements. In April 2007, the Company converted to a Delaware corporation changing its name to ―Deltek, Inc.‖ from a Virginia corporation under the name of ―Deltek Systems, Inc.‖ Principles of Consolidation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Areas of the financial statements where estimates may have the most significant effect include the allowance for doubtful accounts receivable and sales allowances, lives of tangible and intangible assets, impairment of long-lived assets, realization of deferred tax assets, stock option compensation, revenue recognition, valuation of acquired deferred revenue and intangible assets, and provisions for income taxes. Actual results could differ from those estimates. Revenue Recognition The Company‘s revenues are generated primarily from three sources: licensing of its software products, providing maintenance and support for those products, and providing consulting services for those products. Deltek‘s consulting services consist primarily of implementation services, training and assessment, and design services. A typical sales arrangement includes both software licenses and maintenance and may also include consulting services. Consulting services are also regularly sold separately from other elements generally on a time-and-materials basis. The Company recognizes revenue in accordance with Statement of Position (―SOP‖) 97-2, Software Revenue Recognition , as amended by SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions , as well as Technical Practice Aids issued by the American Institute of Certified Public Accountants, and in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (―SAB‖) No. 104, Revenue Recognition . F-8

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) For sales arrangements involving multiple elements, where software licenses are sold together with maintenance and support, consulting, training, or other services, the Company recognizes revenue using the residual method as described in SOP 98-9. Under the residual method, to determine the amount to allocate to and recognize revenue on delivered elements, normally the license element of the arrangement, the Company first allocates and defers revenue for any undelivered elements based upon objective evidence of fair value of those elements. The objective evidence of fair value used is required to be specific to the Company and commonly referred to as vendor-specific objective evidence, or VSOE. The Company recognizes the difference between the total arrangement fee and the amount deferred for the undelivered elements as revenue for the delivered elements. For maintenance and support agreements, VSOE is based upon historical renewal rates and, in some cases, renewal rates stated in the Company‘s agreements. For consulting services and training sold as part of a multiple element sales arrangement, VSOE is based upon the prices charged for those services when sold separately. For sales arrangements that require the Company to deliver future specified products or services in which VSOE of fair value is not available, the entire arrangement is deferred. Under its standard perpetual software license agreements, the Company recognizes revenue from the license of software upon execution of a signed agreement and delivery of the software, provided that the software license fees are fixed and determinable, collection of the resulting receivable is probable, and VSOE exists to allow the allocation of a portion of the total fee to undelivered elements of the arrangement. If a right of return exists, revenue is recognized upon the expiration of that right. The Company‘s standard software license agreement does not include customer acceptance provisions; if acceptance provisions are provided, delivery is deemed to occur upon acceptance. License revenues from resellers are recognized using a sell-through model whereby the Company recognizes revenue when the basic revenue recognition criteria are met as described above and these channels complete the sale of the Company‘s software products to the ultimate end user. The Company‘s standard payment terms for its software license agreements are within six months. The Company considers the software license fee to be fixed or determinable unless the fee is subject to refund or adjustment or is not payable within six months. Revenue from arrangements with payment terms extending beyond six months is recognized as payments become due and payable. Implementation, installation, and other consulting services are generally billed based upon hourly rates, plus reimbursable out-of-pocket expenses. Revenue on these arrangements is recognized based on hours actually incurred at the contract billing rates, plus out-of-pocket expenses. Implementation, installation, and other consulting services revenue under fixed-fee arrangements is generally recognized as the services are performed. The Company generally sells training services at a fixed rate for each specific training session, at a per-attendee price and revenue is recognized upon the customer attending and completing the training. The Company also sells training on a time-and-materials basis. In situations where customers pay for services in advance of the services being rendered, the related prepayment is recorded as deferred revenue and recognized as revenue when the services are performed. Maintenance and support services include unspecified periodic software updates, bug fixes, and phone support. Annual maintenance and support initially represent between 15% and 25% of the related software F-9

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) license list price, depending upon the related product, and fees are generally payable quarterly. Customers generally prepay for maintenance, and these prepayments are recorded as deferred revenue and revenue is recognized ratably over the term of the agreement. Other revenue is derived from the resale and sublicensing of third-party hardware and software products in connection with the software license and installation of the Company‘s products, and is generally recognized upon delivery. Other revenue also includes revenue associated with the Company‘s annual user conference. Cash and Cash Equivalents The Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company‘s cash equivalents primarily include funds held in money-market accounts on a short-term basis. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists of amounts due to the Company arising from normal business activities. The Company maintains an allowance for estimated losses resulting from the expected failure of some of its customers to make required payments (or ―credit losses‖) and a sales allowance for customer maintenance cancellations and consulting services adjustments. The provision for sales allowances are charged against the related revenue items and provision for doubtful accounts (credit losses) are recorded in ―General and Administrative‖ expense. The Company estimates uncollectible amounts for both sales allowances and credit losses based upon historical trends, age of customer receivable balances, and evaluation of specific customer receivable activity. Prepaid and Other Current Assets Prepaid and other current assets primarily consist of prepaid fees for third-party software, prepaid maintenance for internal use software, prepaid costs associated with the Company‘s annual user conference, and other assets. Concentrations of Credit Risk Financial instruments that could subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with high-credit quality financial institutions. The credit risk with respect to accounts receivable is diversified due to the large number of entities comprising the Company‘s customer base. Fair Value of Financial Instruments Financial instruments are defined as cash, evidence of an ownership interest in an entity or contracts that impose an obligation to deliver cash, or other financial instruments to a third party. Cash and cash equivalents are carried at fair market value and the carrying amounts of accounts receivable and accounts payable in the accompanying financial statements approximate fair value because of the short maturity of these instruments. The estimated fair value of the Company‘s debt at December 31, 2005 and 2006 was $225.4 million and $230.5 million, respectively, assuming interest rates of 6.5% and 7.6%, respectively. As of December 31, 2004, 2005, and 2006, the Company had no material derivative financial instruments. The Company‘s policy is to record derivative instruments at fair value with changes in value recognized in earnings during the period of change. F-10

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives, generally five to seven years for furniture and equipment, three to five years for computer equipment, and three to five years for software. Leasehold improvements are amortized over the shorter of the useful life of the asset or the lease term, generally five to ten years. Foreign Currency Translation and Transactions The Company‘s consolidated financial statements are translated into U.S. dollars in accordance with Statement of Financial Accounting Standards (―SFAS‖) No. 52, Foreign Currency Translation (―SFAS 52‖). For all operations outside the United States, net assets are translated at the current rates of exchange. Income and expense items are translated at the average exchange rate for the year, and balance sheet accounts are translated at the period ending rate. The resulting translation adjustments are recorded in ―Accumulated Other Comprehensive Income.‖ Foreign currency transactions are denominated in a currency other than a subsidiary‘s functional currency. A change in the exchange rates between a subsidiary‘s functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency cash flows is reported by the Company as a foreign currency transaction gain (loss). Software Development Costs Software development costs incurred subsequent to establishing technological feasibility and until general release of the software products are capitalized in accordance with SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed (―SFAS 86‖). Certain development efforts include the preparation of a detailed program design, which is the basis for establishing technological feasibility. Other efforts do not involve creation of a detailed program design, and therefore technological feasibility is not established until a working model of the software is developed, which generally occurs just prior to general release of the software. When the timeframe and, therefore, costs incurred between establishing technological feasibility and general release are significant, costs are capitalized. Amortization of capitalized development costs begins once the products are available for general release. Amortization is determined on a product-by-product basis using the greater of a ratio of current product revenue to projected current and future product revenue, or an amount calculated using the straight-line method over the estimated economic life of the product, which is generally four years. Software development costs of $2.3 million, $1.2 million, and $856,000 were capitalized for the fiscal years 2004, 2005, and 2006, respectively. Amortization of capitalized software was $1.6 million, $1.8 million, and $1.8 million for the same respective periods. Pro Forma Adjustments Prior to the Company‘s recapitalization in April 2005, the Company elected to be treated as an S corporation for federal income tax purposes and in certain states. As an S corporation, the shareholders reported the taxable income or loss of the Company and paid the taxes associated with that income on their individual tax returns. The Company paid state income taxes in certain states that did not recognize S corporation status. At the time of the recapitalization, the Company no longer qualified to be taxed as an S corporation, and became subject to federal and state income taxes as a C corporation. The income statement reflects pro forma financial information to show what the significant effects on the historical financial information might have been had the Company not been treated as an S corporation during 2004 and the portion of 2005 prior to April when the recapitalization occurred. F-11

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Income Taxes Income taxes are accounted for in accordance with SFAS No. 109, Accounting for Income Taxes (―SFAS 109‖). Under SFAS 109, deferred tax assets and liabilities are computed based on the difference between the financial statement and tax basis of assets and liabilities and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. In addition, in accordance with SFAS 109, a valuation allowance is required to be recognized if it is believed ―more likely than not‖ that a deferred tax asset will not be fully realized. Goodwill and Other Intangible Assets The Company allocates the purchase price paid in a purchase business combination to the assets acquired, including intangible assets, and liabilities assumed at estimated fair values considering a number of factors, including the use of an independent appraisal. In estimating the fair value of acquired deferred revenue, the Company considers the direct cost of fulfilling the legal performance obligations associated with the liability, plus a normal profit margin. The Company amortizes its intangible assets using accelerated or straight-line methods which best approximate the proportion of future cash flows estimated to be generated in each period over the estimated useful life of the applicable asset. Acquired intangible assets are being amortized over the following periods: Customer relationships 7–9 years Acquired technology 2–4 years Trade names One year–indefinite life Non-compete agreements Term of agreement The value associated with in-process technology is written off at the date of acquisition in accordance with FASB Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method (―FIN 4‖), when there is no alternative future use. The associated expense is included in ―Research and Development‖ expense. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (―SFAS 142‖), goodwill is not amortized, but instead tested for impairment at least annually. Accordingly the Company performs a goodwill impairment test as of December 31 of each year. No impairment of goodwill was recorded based upon these tests as of December 31, 2004, 2005, or 2006, as the Company assessed its fair value and determined the fair value exceeded the carrying value. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (―SFAS 144‖), the Company reviews its long-lived assets, including property and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There have been no impairment charges for the years ended December 31, 2004, 2005, and 2006. Debt Issuance Costs Costs incurred in connection with securing the Company‘s credit facility and debentures are capitalized and recorded as ―Prepaid Expenses and Other Current Assets‖ and ―Other Assets‖ on the consolidated balance sheets. The debt issuance costs are amortized and reflected in ―Interest Expense‖ over the respective lives of the loans using the effective interest method. F-12

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Advertising Expense Advertising costs are expensed as incurred. Advertising expenses which are included within ―Sales and Marketing‖ were approximately $461,000, $622,000 and $292,000 for the years ended December 31, 2004, 2005, and 2006, respectively. Stock-Based Compensation Prior to January 1, 2006, the Company accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (―APB‖) Opinion No. 25, Accounting for Stock Issued to Employees (―APB Opinion No. 25‖), and related interpretations. Accordingly, compensation cost for stock options generally was measured as the excess, if any, of the estimated fair value of the Company‘s common stock over the amount an employee must pay to acquire the common stock on the date that both the exercise price and the number of shares to be acquired pursuant to the option are fixed. While the Company accounted for stock-based compensation using the intrinsic value method described above, the Company provided pro forma disclosures in the notes to the consolidated financial statements in accordance with the requirements of SFAS No. 123, Accounting for Stock-Based Compensation (―SFAS 123‖), as amended by SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (―SFAS 148‖), as if the measurement provisions of SFAS 123 had been adopted, using the fair value method. In December 2004, the Financial Accounting Standards Board (―FASB‖) issued SFAS No. 123R, Share-Based Payment (―SFAS 123R‖), which is a revision of SFAS 123, supersedes APB Opinion No. 25, and amends SFAS No. 95, Statement of Cash Flows (―SFAS 95‖). SFAS 123R became effective for the Company for the fiscal year beginning January 1, 2006. Generally, the approach in SFAS 123R is similar to the approach described in SFAS 123. However, SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS 123R using the ―modified prospective‖ method, which does not require restatement of prior periods to recognize compensation cost in the amounts previously reported in the pro forma footnote disclosures. Under this transition method, stock-based compensation costs recorded in the income statement include the portion related to stock options vesting in the period for (1) all options granted prior to, but not vested as of January 1, 2006, based upon the grant date fair value previously estimated in accordance with SFAS 123, and (2) all options granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with SFAS 123R. As a result of adopting SFAS 123R, the Company‘s income before income taxes for the year ended December 31, 2006 is $1.7 million lower than if the Company had continued to account for stock-based compensation under APB Opinion No. 25. Basic and diluted net income per share is $0.04 and $0.04 lower, respectively, for the year ended December 31, 2006, than if the Company had continued to account for stock-based compensation under APB Opinion No. 25. As of December 31, 2006, there was approximately $10.4 million of unrecognized stock-based compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted average period of 3.21 years. No option-based employee compensation cost was reflected in net income for 2004 and 2005, as all options granted had an exercise price equal to or greater than the market value of the underlying common stock on the date of the grant. The Company did, however, have a Stock Appreciation Rights (―SAR‖) plan under which the Company issued SARs to employees and recorded related compensation expense of $6.4 million and $2.7 million for those years, respectively. See Note 2 for further details of the SAR plan. F-13

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table illustrates the effect on net income and earnings per share if the Company had applied the provisions of SFAS 123 to options granted under the Company‘s stock option plan for all periods presented prior to the adoption of SFAS 123R (in thousands, except per share data):
December 31 2004 2005

Net income as reported Total stock-based employee compensation expense determined under fair value-based method for all awards—net of related tax effect Pro forma net income Net income attributable to common stockholders per share, as reported: Basic Diluted Pro forma net income attributable to common stockholders per share: Basic Diluted

$ 27,883 (52 ) $ 27,831

$ 8,732 (366 ) $ 8,366

$ $

0.33 0.33

$ $

0.17 0.17

$ $

0.33 0.33

$ $

0.16 0.16

For purposes of determining these pro forma net income amounts, the fair value of each option has been estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for the respective periods:
December 31 2004 2005

Dividend yield Expected volatility Risk-free interest rate Expected life (in years)

0.0% 60.0% 4.0% 6

0.0% 37.0% 4.0% 5

Upon adoption of SFAS 123R, the Company selected the Black-Scholes option-pricing model as the most appropriate model for determining the estimated fair value for stock-based awards. The fair value of stock option awards subsequent to January 1, 2006 is amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The fair value of the Company stock on the date of grant was determined by the Company‘s Board of Directors with the assistance of an independent third-party valuation firm. Expected volatility was calculated as of each grant date based on reported data for a peer group of publicly traded companies for which historical information was available. The Company will continue to use peer group volatility information until historical volatility of the Company is relevant to measure expected volatility for future option grants. The average expected life was determined according to the ―SEC simplified method‖ as described in SAB No. 107, Share Based Payments (―SAB 107‖), which is the mid-point between the vesting date and the end of the contractual term. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve rates with the remaining term equal to the expected life assumed at the date of grant. Forfeitures are estimated based on the Company‘s historical analysis of actual stock option forfeitures. F-14

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:
Year Ended December 31, 2006

Dividend yield Expected volatility Risk-free interest rate Expected life (in years)

0.0% 50.0% 4.5%–5.0% 6

The following table presents the stock-based compensation expense, including that associated with SARs incurred prior to the Company‘s recapitalization in 2005, included in the related financial statement line items (in thousands):
2004 Year Ended December 31 2005 2006

Cost of license fees Cost of consulting services Cost of maintenance and support services Research and development Sales and marketing General and administrative Recapitalization expense Stock-based compensation expense

$

311 1,602 773 1,571 1,296 890 —

$

7 802 358 848 379 327 22,608

$

— 138 22 462 366 698 —

$ 6,443

$ 25,329

$ 1,686

All of the expense recorded for 2004 and 2005 related to SARs, which represented stock-based compensation expense for awards classified and accounted for as liabilities which were settled in cash. In 2006, the Company also recorded $20,000 related to vested stock issued in lieu of directors‘ fees. The stock-based compensation expense recorded in 2006 related to stock options accounted for as equity awards. The Company recognized $0, $12.4 million, and $9,000 in tax benefits related to the stock-based compensation expense recognized in the years ended December 31, 2004, 2005, and 2006, respectively. Income Per Share Net income per share is computed under the provisions of SFAS No. 128, Earnings Per Share (―SFAS 128‖). Basic earnings per share is computed using net income and the weighted average number of common shares outstanding. Diluted earnings per share reflect the weighted average number of common shares outstanding plus any potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of shares issuable upon the exercise of stock options. F-15

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table sets forth the computation of basic and diluted net income per share (in thousands, except share and per share data):
2004 Year Ended December 31 2005 2006

Basic earnings per share computation: Net income (numerator) Weighted average common shares–basic (denominator) Basic net income per share Diluted earnings per share computation: Net income (numerator) Shares computation: Weighted average common shares–basic Effect of dilutive stock options Weighted average common shares–diluted (denominator) Diluted net income per share

$

27,883 84,741,320

$

8,732 52,910,437

$

15,298 39,331,894

$

0.33

$

0.17

$

0.39

$

27,883 84,741,320 — 84,741,320

$

8,732 52,910,437 — 52,910,437

$

15,298 39,331,894 930,346 40,262,240

$

0.33

$

0.17

$

0.38

New Accounting Pronouncements In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 (―FIN 48‖). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in consolidated financial statements in accordance with SFAS 109. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective beginning January 1, 2007. The impact of the Company‘s reassessment of its tax positions in accordance with the requirements of FIN 48 is expected to be immaterial. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (―SFAS 157‖). SFAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of SFAS 157 on its consolidated results of operations and financial condition. 2. RECAPITALIZATION

In April 2005, the Company underwent a leveraged recapitalization and change of control transaction with an investor group which consists of New Mountain Partners II, L.P., Allegheny New Mountain Partners, L.P., and New Mountain Affiliated Investors II, L.P. (collectively ―New Mountain Capital‖) as follows: • • • Issued 29,079,580 shares of common stock (adjusted for the 2006, 10 for 1 stock split—see Note 14) to New Mountain Capital for $105.0 million, Sold $100.0 million of Subordinated Debentures ($75.0 million to New Mountain Capital and $25.0 million to one of the selling shareholders; collectively, the ―Subordinated Debentures‖ or the ―Debentures‖), and Secured a $115.0 million term loan facility. See Note 10 for further discussion of debt. F-16

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The $320.0 million total proceeds described above were used as follows: • • • • • $273.3 million to purchase 75,682,340 shares of common stock (adjusted for the 2006, 10 for 1 stock split—see Note 14) from the selling shareholders which was the amount needed to reduce their aggregate holdings to 25% of the outstanding shares, $31.0 million to holders of SARs, $8.2 million to pay for the costs of the recapitalization transaction, $5.8 million to pay for debt issuance costs, and $953,000 to pay employee retention bonuses.

Also in connection with the transaction, the Company issued 100 shares of Series A preferred stock, par value $0.001 per share, to New Mountain Capital. Holders of the Series A preferred stock have no voting rights, but are entitled to elect a majority of the members of the Board of Directors until such time that the common stock owned by New Mountain Capital constitutes less than one-third of the outstanding common stock. New Mountain Capital‘s rights to elect members to the Board of Directors are diluted as their percentage ownership of the common stock is diluted below one-third. In September 2002, the Company granted certain employees SARs in exchange for the surrender and cancellation of the individual employees‘ outstanding stock options. Vesting rights continued under the SAR plan as they were stated with each original option grant. The SAR price was set equal to the option exercise price in all cases except where the original option exercise price was in excess of $10.00, in which case those SARs were repriced to $10.00. Prior to the recapitalization in April 2005, a SAR valuation was calculated quarterly based upon a model that utilized an eight-quarter rolling financial history. SAR compensation expense was accrued for all exercisable and vested SARs. As of December 31, 2004, there were 1,447,535 SARs outstanding and a related deferred compensation liability of $7.5 million. Compensation expense related to the SARs was $6.4 million for the year ended December 31, 2004. No SARs were granted in 2005. During 2005, as part of the recapitalization, all vested SARs as of April 30, 2005 were paid out at the established market value of $36.10 for a total of $31.0 million. Amounts related to SARs have not been adjusted to reflect the 2006 stock split (see Note 14). Of the $31.0 million SAR payments made as part of the recapitalization, $23.5 million was expensed in 2005, $20.8 million of which was included as part of ―Recapitalization Expenses‖ in the income statement and the remaining $2.7 million was included in the appropriate income statement line based upon the employees‘ compensation expense. In addition, another $1.8 million was expensed at the time of the recapitalization for SAR payments to be made to executives (the ―Executive SAR Payments‖) over a period of time. These payments represent agreed-upon payments associated with converted and monetized unvested SARs, and do not have any vesting requirement and, therefore, became payable as a result of the recapitalization. The related expense was included in ―Recapitalization Expenses.‖ F-17

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following summarizes SAR-based compensation (in thousands): SAR accrued liability at December 31, 2003 SAR-based expenses accrued in 2004 SAR accrued liability at December 31, 2004 SAR-based expenses accrued in 2005: SARs vested prior to recapitalization Converted and monetized: executive SARs $ 1,026 6,443 7,469 23,522 1,807 25,329 Cash payments made in 2005: SAR-based compensation payments Executive SAR payments Executive SAR payment liability at December 31, 2005 Cash payments made in 2006: Executive SAR payments Executive SAR payment liability at December 31, 2006 $ (30,990 ) (953 ) 855 (360 ) 495

In addition to the SAR payments above, the Company agreed to convert employee unvested SARs outstanding into employee retention bonuses, which vest and are being expensed over the four-year period beginning May 2005. The total remaining value of these bonuses, after amounts forfeited, at December 31, 2006, was $2.6 million. Of this amount, $669,000 and $843,000 was expensed for 2005 and 2006, respectively, for these retention bonuses and classified in the income statement consistent with related employee labor. Of the amounts expensed, $669,000 and $546,000 for employee retention payments remained outstanding as of December 31, 2005 and 2006, respectively, and included in ―Accounts Payable and Accrued Expenses.‖ Pursuant to the terms of the recapitalization, the Company is obligated to make a payment to the selling shareholders equal to the amount of income taxes that the Company would be required to pay, but for the availability of deductions related to the SAR payments made in connection with the transaction. The amount and timing of the additional payments to the selling shareholders, which was estimated as of December 31, 2005 to be $12.4 million, are contingent on the use and timing of the SAR deductions to offset cash payments that would otherwise be made for income taxes. During 2006, $7.0 million of this amount was paid to the selling shareholders and the remaining obligation of $5.3 million, included in ―Accrued Liability for Redemption of Stock in Recapitalization‖ as of December 31, 2006 is expected to be paid during 2007. 3. BUSINESS ACQUISITIONS

WST Corporation On March 17, 2006, the Company acquired 100% of the outstanding common stock of WST Corporation (―Welcom‖), a provider of project portfolio management (―PPM‖) solutions, focused on earned value management (―EVM‖), planning and scheduling, portfolio analysis, risk management, and project collaboration products. The results of operations of Welcom have been included in the consolidated financial statements since the acquisition date. The aggregate purchase price, net of $685,000 in cash acquired, was $17.7 million and included cash payments through December 31, 2006 of $16.5 million, common stock valued at $548,000, and direct acquisition costs of $563,000. The value of the 69,254 common shares issued was determined by the Company‘s Board of Directors with the assistance of an independent third-party valuation firm. F-18

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) As a part of the purchase agreement, the Company is required to pay additional cash consideration of up to $2.0 million if certain operational and software license revenue goals are met during 2006. During 2006, the Company recorded $1.3 million of consideration associated with the resolution of these goals. Of that amount, $750,000 remains to be paid at December 31, 2006. The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Accounts receivable Current deferred tax asset Prepaid and other assets Fixed assets Intangible assets Goodwill Long-term deferred tax liability Accounts payable and accrued expenses Deferred revenue Total purchase price, net of cash $ 1,483 687 224 204 8,210 14,061 (3,722 ) (2,010 ) (1,458 )

$ 17,679

The components and the initial estimated useful lives of the intangible assets listed in the above table as of the acquisition date are as follows (in thousands):
Amount Life

Tradenames Developed software Customer relationships In-process technology

$ 4,200 2,150 1,560 300 $ 8,210

Indefinite 3 years 9 years —

The acquired tradenames were deemed to have an indefinite life and accordingly, are not being amortized until such time that the useful life is determined to no longer be indefinite in accordance with SFAS 142. The tradenames are tested for impairment in accordance with the provisions of SFAS 142. The developed software is being amortized on a straight-line basis over a three-year period and the expense is included in ―Cost of Software License Fees.‖ The customer relationships are being amortized using an accelerated amortization method over nine years and the expense is included in ―Sales and Marketing‖ expense. The $300,000 of in-process technology was written off as it had no alternative future use. The goodwill recorded in this transaction is not deductible for tax purposes. C/S Solutions On July 24, 2006, the Company acquired 100% of the outstanding common stock of C/S Solutions, Inc. (―C/S Solutions‖), a provider of business intelligence software for the EVM marketplace. The results of operations of C/S Solutions have been included with the consolidated financial statements since the acquisition date. The aggregate purchase price, net of $75,000 in cash acquired, was $16.4 million and included cash payments through December 31, 2006 of $15.6 million, common stock valued at $371,000, and direct acquisition costs of $468,000. The value of the 36,362 common shares issued was determined by the Company‘s Board of Directors with the assistance of an independent third-party valuation firm. F-19

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Accounts receivable Prepaid and other assets Intangible assets Goodwill Deferred tax liability Accounts payable and accrued expenses Deferred revenue Total purchase price, net of cash $ 704 59 4,380 14,129 (1,544 ) (340 ) (985 )

$ 16,403

The components and the initial estimated useful lives of the intangible assets listed in the above table as of the acquisition date are as follows (in thousands):
Amount Life

Developed software Customer relationships Non-compete Agreements

$ 1,960 2,200 220 $ 4,380

3 years 7 years 3 years

The developed software is being amortized on a straight-line basis over a three-year period and the expense is included in ―Cost of Software License Fees.‖ The customer relationships are being amortized using an accelerated amortization method over seven years and the expense is included in ―Sales and Marketing‖ expense. The non-compete agreements are being amortized on a straight-line basis over a three-year period and are included in ―General and Administrative‖ expense. The goodwill recorded in this transaction is not deductible for tax purposes. Wind2 On October 3, 2005, the Company acquired 100% of the outstanding common stock of Wind2, a software firm serving project-driven professional services firms. The results of operations of Wind2 have been included in the consolidated financial statements since the acquisition date. The aggregate purchase price, net of $338,000 in cash acquired, was $14.3 million and included cash payments through December 31, 2005 of $13.5 million, direct acquisition costs of $462,000, and an accrued liability for $167,000. During 2006, the Company paid $167,000 plus an additional $189,000 associated with this liability. Goodwill from the Wind2 acquisition changed during 2006 as the purchase price allocation was finalized. As part of the purchase agreement, the Company entered into retention agreements totaling $250,000 with certain key employees of Wind2. These retention bonuses are earned over a two-year period from the acquisition date, and accordingly are being expensed ratably over that period. F-20

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands): Accounts receivable Prepaid and other assets Fixed assets Intangible assets Goodwill Accounts payable and accrued Deferred revenue Total purchase price, net of cash $ 784 96 302 7,576 6,879 (713 ) (586 )

$ 14,338

The components and the initial estimated useful lives of the intangible assets listed in the above table as of the acquisition date are as follows (in thousands):
Amount Life

Developed software Customer relationships Tradename

$

537 6,937 102

4 years 7 years 1 year

$ 7,576 The developed software is being amortized on a straight-line basis over a four-year period and the expense is included in ―Cost of Software License Fees.‖ The customer relationships are being amortized using an accelerated amortization method over seven years and the expense is included in ―Sales and Marketing‖ expense. The tradename was amortized over a one year period and is included in ―General and Administrative‖ expense. The goodwill recorded in this transaction is deductible for tax purposes. 4. MARKETABLE SECURITIES

The Company‘s marketable securities were classified as available-for-sale. These securities were carried at estimated fair value, and unrealized gains and losses are reported as a separate component of shareholders‘ deficit. All the securities were converted to cash during 2005 and accordingly none were outstanding as of December 31, 2005 or 2006. The carrying amount of available-for-sale securities and their approximate fair market value at December 31, 2004, was as follows (in thousands):
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Approximate Market Value

Marketable equity securities

$

2,641

$

272

$

—

$

2,913

F-21

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 5. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following (in thousands):
December 31 2005 2006

Accounts receivable—billed Accounts receivable—unbilled Allowance for doubtful accounts and sales allowances Total

$ 20,169 3,296 (1,321 ) $ 22,144

$ 36,874 5,073 (1,960 ) $ 39,987

The ―Provision for Doubtful Accounts‖ associated with sales allowances was $185,000, $570,000 and $1.3 million for the years ended December 31, 2004, 2005 and 2006, respectively. The ―Provision for Doubtful Accounts‖ associated with expected credit losses was $99,000, $307,000 and $718,000 for the same periods. 6. PROPERTY AND EQUIPMENT The components of ―Property and Equipment, Net‖ consisted of the following (in thousands):
December 31 2005 2006

Furniture and equipment Computer equipment Software Leasehold improvements Total Less—accumulated depreciation and amortization Furniture, equipment, and leasehold improvements, net

$

3,234 8,082 2,224 2,836 16,376 (11,032 )

$

3,151 9,137 3,654 3,474 19,416 (10,840 )

$

5,344

$

8,576

Depreciation and amortization expense for the years ended December 31, 2004, 2005, and 2006 was $2.4 million, $1.8 million, and $2.5 million, respectively. 7. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill The value of goodwill is primarily derived from the acquisitions of C/S Solutions in July 2006, Welcom in March 2006, Wind2 in October 2005 and Semaphore Inc. in 2000. It also includes the acquisition of certain assets of A/E Management in 2000. Goodwill from the Wind2 acquisition changed during 2006 as the purchase price allocation was finalized. The Company amortized goodwill until January 1, 2002. In accordance with SFAS 142, the Company discontinued amortization of its goodwill beginning January 1, 2002. Per the guidelines of SFAS 142, the Company performed tests for goodwill impairment as of December 31, 2004, 2005 and 2006 and determined that there was no impairment of goodwill as the Company assessed its fair value and determined the fair value exceeded the carrying value. F-22

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table represents the balance and changes in goodwill for the year ended December 31, 2006 (in thousands): Balance as of December 31, 2005 Wind2 acquisition Welcom acquisition C/S Solutions acquisition Balance as of December 31, 2006 $ 16,191 138 14,061 14,129 $ 44,519

Other Intangible Assets The following tables set forth information for intangible assets subject to amortization and for intangible assets not subject to amortization (in thousands):
As of December 31, 2005 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount As of December 31, 2006 Accumulated Amortization Net Carrying Amount

Amortized Intangible Assets Customer relationships Developed software Tradename and non-compete Total Unamortized Intangible Assets Tradename Total

$

7,716 2,532 102

$

(923 ) (2,028 ) (27 ) (2,978 ) — (2,978 )

$ 6,793 504 75 $ 7,372 $ —

$ 11,476 6,942 322 $ 18,740 $ 4,200

$

(3,165 ) (3,472 ) (134 ) (6,771 ) — (6,771 )

$

8,311 3,470 188

$ 10,350 $ —

$ $ $

$ $ $

$ 11,969 $ 4,200

$ 10,350

$ 7,372

$ 22,940

$ 16,169

The total amortization expense for the years ended December 31, 2004, 2005, and 2006 was $445,000, $363,000, and $3.8 million, respectively. The estimated future amortization expense is as follows (in thousands): Years Ending December 31 2007 2008 2009 2010 2011 Thereafter Total

$

4,071 3,224 2,125 1,175 802 572

$ 11,969

In accordance with SFAS 144, the Company reviews its long-lived assets, including property and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There have been no impairment charges for the years ended December 31, 2004, 2005, and 2006. F-23

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 8. DEFERRED REVENUES

The Company has deferred revenues related to software licenses, services and maintenance. Deferred services and deferred maintenance generally result when the Company has received payment for services and maintenance and support that have not yet been performed. The related revenues are deferred until the services have been performed. Deferred software license revenues generally result when one or more software products included in a multiple-element arrangement have not been delivered. During 2005, deferred revenues most commonly resulted from a multiple-element arrangement when one of the software products was undelivered and the Company lacked VSOE. In such cases, all revenue associated with the elements of the arrangement (including the services and maintenance revenues) must be deferred until all products have been delivered. The related direct costs associated with these arrangements of $2.3 million at December 31, 2005, are also deferred and presented as ―Prepaid Expenses and Other Current Assets‖ in the consolidated balance sheets. There were no such deferred costs at December 31, 2006. Deferred revenues consisted of the following (in thousands):
December 31 2005 2006

Deferred software license revenues Deferred consulting services revenues related to: Prepaid and billed services revenues Undelivered elements in software revenue arrangements Deferred maintenance revenues related to: Prepaid and billed maintenance revenues Undelivered elements in software revenue arrangements Total

$

5,118 6,914 5,097 9,562 562

$

2,360 12,009 — 12,243 —

$ 27,253

$ 26,612

9.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following (in thousands):
December 31 2005 2006

Accrued wages and other employee benefits Accounts payable Deferred rent, current Other accrued expenses Total

$

6,330 1,344 143 8,416

$

7,752 5,739 578 14,602

$ 16,233

$ 28,671

10.

DEBT

In connection with the Company‘s recapitalization in April 2005, the Company entered into a credit agreement with a syndicate of lenders led by Credit Suisse (the ―Credit Agreement‖). The Credit Agreement provided for a $115.0 million term loan and a $30.0 million revolving credit facility that matures on April 22, 2010. The loans accrue interest at 2.50% above the British Banker‘s Association Interest Settlement Rates for dollar deposits (the ―LIBO Rate‖) for the term loan, and 2.50% or 1.50% above the LIBO Rate for the revolving F-24

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) credit facility, depending on the type of borrowing. The spread above the LIBO Rate decreases as the Company‘s leverage ratio, as defined in the Credit Agreement, decreases. The Company entered into an agreement which caps the LIBO rate at 6.25% for the first $60.0 million of the term loan. This agreement expires December 31, 2007. In addition, the Credit Agreement provides for mandatory prepayments of principal based on annual cash flow and leverage levels, as well as scheduled principal repayments of 0.25% of the original term loan balance (adjusted for prepayments) each quarter through June 30, 2010. At the end of each of the three quarters ending March 31, 2011, and on April 22, 2011, a principal payment of 23.75% is due. The loans are collateralized by substantially all of the Company‘s assets and require the maintenance of certain financial covenants, including a maximum leverage ratio, minimum interest coverage, and minimum fixed charges coverage. In addition, the loans require the maintenance of certain non-financial covenants, including the delivery of financial statements within specified time periods after each quarter end. The Company was in compliance with all debt covenants as of December 31, 2006. In April 2007, the Company fell out of compliance due to its failure to deliver audited financial statements for the year ended December 31, 2006 by March 31, 2007. The Company‘s Credit Agreement provides for a 30-day grace period before incurring an ―Event of Default,‖ however, the Company is not allowed to draw on its credit facility during this period. The Company expects to deliver its financial statements within the grace period. The loans are senior to the subordinated debentures also issued as part of the recapitalization (as discussed in Note 2). In addition to the Credit Agreement and revolving credit facility, in connection with the recapitalization the Company sold $100.0 million of Subordinated Debentures, as further discussed in Note 2. The debentures accrued interest, payable annually at 8.00% on April 15. The debentures were subject to mandatory redemption on April 22, 2015 or upon a defined change of control event. The debentures may be redeemed in whole or in part at the option of the Company for the face value being redeemed, plus interest accrued and unpaid at the redemption date. The Company, on not more than two interest payment dates, may elect to capitalize and add all or a portion of the interest payment due to the outstanding principal balance of the debentures. In April 2006, the Company amended the Credit Agreement to obtain an additional $100.0 million under the term loan, and used these funds to repay the debentures. The amended Credit Agreement accrues interest at a modified rate of 2.25% above the LIBO Rate for the term loan, and 2.25% or 1.25% for the revolving credit facility, depending on the type of borrowing. The spread above the LIBO Rate decreases as the Company‘s leverage ratio, as defined in the Credit Agreement, decreases. The amended Credit Agreement also continues to provide for mandatory prepayments of principal based on annual cash flow and leverage levels, as well as scheduled principal repayments of $538,000 each quarter through June 30, 2010. At the end of each of the three quarters ending September 30, 2010, December 31, 2010, March 31, 2011, and on April 22, 2011, a principal payment of $51.3 million is due. At December 31, 2006, the Company had $18.0 million outstanding and $12.0 million available under its revolving credit facility. At December 31, 2006, the Company was contingently liable under open standby letters of credit issued by the Company‘s banks in favor of third parties. These letters of credit primarily relate to real estate lease obligations and total $1.6 million. No amounts were outstanding under these instruments at December 31, 2006. Costs incurred in connection with securing the original Credit Agreement and the debentures were $5.8 million in 2005, and costs incurred in connection with securing the 2006 addition to the term loan were $1.3 million in 2006. The debt issuance costs are being amortized and reflected in ―Interest Expense‖ over the respective lives of the loans. At December 31, 2005 and 2006, the current portion of the unamortized debt issuance costs is reflected as ―Prepaid and Other Current Assets‖ in the consolidated balance sheets and was $847,000 and $876,000, F-25

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) respectively. The noncurrent portion of the unamortized debt issuance costs for those same periods was $4.4 million and $2.6 million, respectively, and is reflected as ―Other Assets‖ in the consolidated balance sheets. Accordingly, $580,000 and $3.1 million of costs were amortized during 2005 and 2006, respectively, and recorded in ―Interest Expense.‖ Included in the $3.1 million of costs amortized in 2006 were costs of $2.3 million associated with shareholder debt issuance costs that were accelerated upon repayment of the debentures in April 2006. Long-term debt consisted of the following (in thousands):
December 31 2005 2006

Secured credit agreement Term loan Revolver 8% subordinated debentures Total Current portion of long-term debt Total

$ 114,425 — 100,000 214,425 (1,150 ) $ 213,275

$ 212,525 18,000 — 230,525 (20,150 ) $ 210,375

The following table summarizes planned and required future payments for long-term debt (in thousands): Years Ending December 31 2007 2008 2009 2010 2011 Total

$

20,150 2,150 2,150 103,575 102,500

$ 230,525

11.

EMPLOYEE BENEFITS

401(k) Plan —The Company has a 401(k) plan covering all eligible employees. Employees are eligible to participate on their first day of employment, but are not eligible for the Company contribution until the first month following three full months of employment. Company contributions vest ratably over five years. The Board of Directors approved a discretionary contribution of 4% of eligible compensation for 2004, 2005, and 2006. The Company‘s contribution for 2004, 2005, and 2006 was approximately $1.5 million, $1.8 million and $2.5 million, respectively. F-26

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 12. INCOME TAXES The (benefit) provision for income taxes consisted of the following (in thousands):
2004 Year Ended December 31 2005 2006

Current: Federal State Foreign Total current Deferred: Federal State Total deferred (Benefit) provision for income taxes

$ (1,298 ) 292 79 $ (927 )

$

— 299 66 365

$ 6,933 940 222 $ 8,095

$

$

— (190 ) (190 )

$ (8,642 ) (821 ) (9,463 ) $ (9,098 )

$ 1,690 184 1,874 $ 9,969

$ (1,117 )

During 2004, the Company reached a favorable settlement with respect to the audit of its 2001 federal income tax return. In addition, during 2004 the U.S. Treasury Department issued additional guidance on accounting for deferred revenue. As a result of these two developments, the Company determined that a $1.3 million accrual for C corporation income taxes was no longer required and therefore relieved the liability. Prior to 2005, the Company had elected to be treated as an S corporation. As of April 2005, the Company no longer qualified to be taxed as an S corporation and, therefore, is being taxed as a C corporation subsequent to that date. The Company recorded an income tax benefit of $8.9 million in 2005 related to deferred tax assets established from the S corporation period. The reported benefit or expense for income taxes differs from the amount computed by applying the statutory U.S. federal income tax rate of 35% to the income before income taxes as follows (in thousands):
Year Ended December 31 2005 2006

(Benefit) expense at statutory rate Change resulting from: S corporation income Recapitalization expenses State taxes, net of federal benefit Deferred tax asset—tax status change Research and development tax credit Foreign income taxes

$

(127 ) (3,227 ) 2,805 (524 ) (8,167 ) — 66

35.0 % 892.0 % ) (775.2 % 144.8 % 2,257.2 % 0.0 % ) (18.1 % ) (20.5 % 2,515.2 %

$ 8,844 — — 1,171 — (483 ) 144 293 $ 9,969

35.0 % 0.0 % 0.0 % 4.6 % 0.0 % ) (1.9 % 0.6 % 1.2 % 39.5 %

Other 76 Total $ (9,098 )

F-27

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table summarizes the significant components of the Company‘s deferred tax assets and liabilities for 2005 and 2006 (in thousands):
December 31 2005 2006

Deferred tax assets: Employee compensation and benefits Allowances and other accrued liabilities Deductible goodwill and purchased intangible assets Deferred revenue Domestic net operating loss carryforwards Foreign net operating loss carryforwards Research and development credit Interest expense Deferred rent Other Total deferred tax assets Deferred tax liabilities: Depreciation Software development costs Acquired intangibles Other Total deferred tax liabilities Net deferred tax asset before allowance Valuation allowance Net deferred tax asset

$

1,897 640 1,224 3,298 3,422 — — 1,034 632 24

$

2,604 895 1,512 2,511 — 599 355 — 1,407 1 9,884

$ 12,171

$

$

(522 ) (1,751 ) — (170 ) (2,443 ) 9,728 —

$

(127 ) (1,559 ) (4,239 ) (159 ) (6,084 ) 3,800 (599 )

$

9,728

$

3,201

At December 31, 2005, the Company had net operating loss carryforwards for income tax purposes of $8.7 million primarily associated with the SAR payments made in 2005 as well as prior loss carryforwards from its acquisition of Semaphore, Inc. These loss carryforwards expire beginning in 2017 through 2025. As of December 31, 2006, the Company will use all net operating losses from prior years with the exception of $2.0 million of foreign net operating losses from the Welcom acquisition which can be carried forward indefinitely under current local tax laws. Deferred tax assets are reduced by a valuation allowance if the Company believes it is more likely than not that some portion or all of the deferred tax asset will not be realized. Therefore, a valuation allowance of $599,000 has been recorded in 2006 with respect to the foreign net operating losses due to the history of losses and uncertainty of future income. Net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of changes in ownership pursuant to Section 382 of the Internal Revenue Code. F-28

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 13. OTHER (EXPENSE) INCOME Other (expense) income was comprised of the following (in thousands):
2004 Year Ended December 31 2005 2006

(Loss) gain on foreign currency (Loss) gain on investments Miscellaneous income Total other (expense) income

$

(42 ) (90 ) — (132 )

$

(18 ) 256 — 238

$

56 — 26 82

$

$

$

14.

SHAREHOLDERS’ DEFICIT

Preferred Stock —The Company‘s Board of Directors has the authority, without further action by the shareholders, to issue preferred stock in one or more series and to fix the terms and rights of the preferred stock. Such actions by the Board of Directors could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could thus be issued quickly with terms that could delay or prevent a change in control of the Company or make removal of management more difficult. There are 2,000,000 shares authorized with a par value of $0.001 per share. As discussed in Note 2, there were 100 shares issued and outstanding as part of the 2005 recapitalization transaction. Common Stock —During 2004 and 2005, prior to the Company‘s recapitalization, the Board of Directors approved cash distributions to shareholders of $34.1 million and $28.5 million, respectively. As discussed in Note 2, the Company entered into a recapitalization transaction during 2005 in which 75,682,340 shares were redeemed and 29,079,580 were issued to new investors. Subsequent to the recapitalization, the Board of Directors approved the purchase of an additional 1,022,880 shares by certain key executives of the Company for a price equal to the $3.61 value established during the recapitalization. Stock Split —In January 2006, the Company distributed 10 for 1 stock splits effected in the form of a 9 for 1 stock dividend, distributable on January 26, 2006 to shareholders of record on that day. Previously authorized but unissued shares were used to effect these dividends. All share and per share amounts for all periods presented have been adjusted to reflect the stock split. Amounts related to SARs outstanding in prior years have not been adjusted to reflect the stock split. 15. STOCK PLANS

The Company maintains a stock option plan (the ―2005 Plan‖) pursuant to which the Company may grant options to purchase 6,310,000 shares of common stock to directors and employees. F-29

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table summarizes the activity of all the Company‘s stock option plans from January 1, 2004 to December 31, 2006:
Weighted Average Exercise Price

Number of Options

Options outstanding at January 1, 2004 Options granted Options canceled Options exercised Options outstanding at December 31, 2004 Options granted Options canceled Options exercised Options outstanding at December 31, 2005 Options granted Options forfeited Options exercised Options outstanding at December 31, 2006

58,030 — (27,750 ) — 30,280 3,017,560 (44,130 ) — 3,003,710 1,639,696 (38,105 ) (3,463 ) 4,601,838

$

1.37 — 1.00 — 1.19 3.93 3.61 1.19 3.94 10.28 3.61 3.61

$

6.20

The weighted average grant date fair value of all options granted was $1.35 and $5.58 for the years ended December 31, 2005 and 2006, respectively. No options were granted during 2004. The total intrinsic value of options exercised during 2006 was approximately $23,000. In addition, the total cash received for options exercised was $13,000 during 2006. No options were exercised during 2004 and 2005. The stock options exercised during 2006 were issued from previously authorized common stock. The following table summarizes stock option vesting activity for the year ended December 31, 2006:
Weighted Average Grant Date Fair Value

Number of Options

Nonvested shares as of January 1, 2006 Options granted Options forfeited Options vested Nonvested shares as of December 31, 2006

3,003,710 1,639,696 (38,105 ) (749,195 ) 3,856,106

$

1.35 5.58 1.40 1.35 3.15

$

Stock options are granted at the discretion of the Board of Directors and expire 10 years from the date of the grant. Options generally vest over a four-year period based upon required service conditions. No options have performance or market conditions. The Company calculates the pool of additional paid-in capital associated with excess tax benefits using the ―simplified method‖ in accordance with FASB Staff Position No. 123(R)-3, as Amended (―FSP 123(R)-3‖). At December 31, 2006 there were 1,704,699 options available for future grant under the 2005 Plan. Under the 2005 Plan, each option holder is required to execute a shareholder‘s agreement, among other conditions, prior to being deemed the holder of, or having rights with respect to, any shares of the Company‘s F-30

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) common stock. In accordance with the shareholder‘s agreement, shareholders which are party to the agreement are entitled to participate proportionately in an offering of common stock by New Mountain Capital. Shareholders can only sell in conjunction with such an offering by New Mountain Capital and not at any other time. If the number of shares of common stock which the option holder is entitled to sell in the offering exceeds the number of shares of common stock held by the option holder, any options held by the option holder (including unvested options) may be exercised to the extent of the excess. A shareholder may choose any combination of shares and options (if vested) in determining the securities the shareholder will sell in the public or private offering. Any unvested options may only be exercised to the extent there is an amount of securities that such shareholder may sell that has not been covered by shares or vested options. Options not sold in the offering continue to be subject to normal vesting requirements. The following table summarizes information regarding stock options exercisable and stock options vested and expected to vest as of December 31, 2006 (in thousands, except share data):
Stock Options Exerciseable Stock Options Vested and Expected to Vest

Stock options outstanding Weighted average exercise price Aggregate intrinsic value Weighted average remaining contractual life (in years)

$ $

745,732 3.94 6,191 8.75

$ $

4,447,594 6.20 26,927 9.08

In determining the Company‘s fair value of its common stock for stock options granted during 2006, the Company obtained independent valuations to assist the Board of Directors in their analysis which, in certain circumstances, were completed subsequent to the granting of options by the Board of Directors during 2006. As a result of the independent valuations received, awards granted to 24 employees with exercise prices below fair value on the date of grant were modified to increase the exercise price to be equal to the fair value on the date of grant as determined by the independent valuation. No incremental compensation cost resulted from the modifications. 16. RELATED-PARTY TRANSACTIONS

Pursuant to the recapitalization agreement discussed in Note 2, New Mountain Capital receives $500,000 annually as an advisory fee for providing ongoing management, financial and investment banking services to the Company. New Mountain Capital is also entitled to receive transaction fees equal to 2% of the transaction value of each significant transaction directly or indirectly involving the Company or any of our controlled affiliates, including, but not limited to, acquisitions, dispositions, mergers, or other similar transactions, debt, equity or other financing transactions, public or private offerings of the Company‘s securities and joint ventures, partnerships and minority investments. Transaction fees are payable upon the consummation of a significant transaction. No fee is payable for a transaction with a value of less than $25.0 million. In 2005, the Company incurred $333,000 in advisory fees and a transaction fee of $3.6 million to New Mountain Capital related to the recapitalization of the Company. In 2006, the Company incurred $500,000 in advisory fees and a $2.0 million transaction fee to New Mountain Capital. The $2.0 million transaction fee to New Mountain Capital was in connection with the Company‘s debt refinancing. In 2005, the Company paid $20,000 to a non-employee member of the Company‘s Board of Directors for consulting services. F-31

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 17. COMMITMENTS AND CONTINGENCIES

Office Space Leases —The Company leases office space under noncancelable operating leases. Minimum rental expense is recognized on a straight-line basis over the term of the lease, regardless of when payments are due. Rent expense was approximately $4.4 million, $4.7 million, and $5.7 million for the years ended December 31, 2004, 2005, and 2006, respectively. The Company does not sublease any of its leased space. As of December 31, 2006, the future minimum operating lease payments are as follows (in thousands): Years Ending December 31 2007 2008 2009 2010 2011 Thereafter Total

$

6,266 5,919 5,668 5,393 3,849 899

$ 27,994

Other Matters —The Company is involved in a claim and legal proceeding arising from its normal operations. The Company is contesting the matter, and in the opinion of management, the ultimate resolution of the legal proceeding will not have a material adverse effect on the financial position or the future operating results and cash flows of the Company. At December 31, 2006, the Company was contingently liable under open standby letters of credit issued by the Company‘s banks in favor of third parties. These letters of credit primarily relate to real estate lease obligations and total $1.6 million. No amounts were outstanding under these instruments at December 31, 2006. Guarantees —The Company provides indemnifications to customers against intellectual property infringement claims made by third parties arising from the use of the Company‘s software products. Due to the nature of the indemnifications provided, the Company cannot estimate the fair value nor determine the total nominal amount of the indemnifications, if any. Estimated losses for such indemnifications are evaluated under SFAS No. 5, Accounting for Contingencies (―SFAS 5‖), as interpreted by FASB Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others (―FIN 45‖). The Company has secured copyright registrations for its own software products with the U.S. Patent and Trademark Office, and is provided intellectual property infringement indemnifications from its third-party partners whose technology may be embedded or otherwise bundled with the Company‘s software products. Therefore, the Company considers the probability of an unfavorable outcome in an intellectual property infringement case relatively low. The Company has not encountered material costs as a result of such obligations and has not accrued any liabilities related to such indemnifications. Product Warranty —The Company‘s standard software license agreement includes a warranty provision for software products. The Company generally warrants for the first ninety days after delivery that the software shall operate substantially as stated in the then current documentation provided that the software is used in a supported computer system. The Company provides for the estimated cost of product warranties based on specific warranty claims, provided that it is probable that a liability exists and provided the amount can be reasonably estimated. To date, the Company has not had any material costs associated with these warranties. F-32

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 18. SEGMENT INFORMATION

The Company operates as one reportable segment as the Company‘s principal business activity relates to selling project-based software solutions and implementation services. The Company‘s chief operating decision maker, the Chief Executive Officer, evaluates the performance of the Company based upon software license revenues, consulting services and maintenance revenues. The Company‘s products and services are sold primarily in the United States, but also include sales through direct and indirect sales channels in other countries, primarily in Canada and Europe. Less than 5% of the Company‘s revenues are generated from sales outside of the United States. As of December 31, 2006, the Company had $560,000 of long-lived assets held outside of the United States. No single customer accounted for more than 10% of the Company‘s revenue for the years ended December 31, 2004, 2005, and 2006. 19. SUBSEQUENT EVENTS

Changes in Capital Stock In April 2007, in conjunction with the Company‘s conversion from a Virginia to a Delaware corporation, the Company registered additional shares of capital stock to include a total of 200,000,000 shares, par value $0.001 per share of common stock, 100 shares, par value $0.001 per share Class A Common Stock and 5,000,000 shares, par value $0.001 per share of preferred stock. At the effective date of the conversion, each of the 100 shares of Series A Preferred Stock outstanding just prior to the conversion, were converted into 100 shares of Class A Common Stock. 2007 Stock Incentive and Award Plan In April 2007, the Company‘s Board of Directors approved a new Stock Incentive and Award Plan (the ―2007 Plan‖) that provides for the ability of the Board to grant up to 1,840,000 new stock incentive awards or options including Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Dividend Equivalent Rights, Performance Units, Performance Shares, Performance-based Restricted Stock, Share Awards, Phantom Stock and Cash Incentive Awards. The aggregate number of shares reserved and available for grant and issuance pursuant to the Plan shall be increased automatically on January 1 of each year commencing on January 1, 2008, in an amount equal to 3% of the total number of shares of the Company issued and outstanding on December 31 of the immediately preceding calendar year unless otherwise reduced by the Board of Directors. Options and awards issued under the 2007 Plan are not subject to the same shareholder‘s agreement as the 2005 Plan which restricts how and when shares may be sold. Concurrent with the approval of the 2007 Plan, the 2005 Plan was terminated for purposes of future grants. Employee Stock Purchase Program In April 2007, the Company‘s Board of Directors adopted an Employee Stock Purchase Program (the ―ESPP‖) to provide eligible employees an opportunity to purchase up to 750,000 shares of the Company‘s common stock through accumulated payroll deductions. The ESPP will be effective at such time that the Company consummates an initial public offering of its common stock. The per share price of common stock purchased pursuant to the ESPP shall be 90% of the fair market value of a share of common stock on (i) the first day of an offering period, or (ii) the date of purchase, whichever is lower. F-33

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DELTEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) AIM Acquisition On April 17, 2007, the Company entered into an agreement to purchase certain assets and related liabilities of Applied Integrated Management (―AIM‖) for a purchase price of $4.8 million, with $500,000 payable in shares of common stock and the remainder in cash. The agreement also provides for an additional revenue ―earn-out‖ payment not to exceed $1.0 million, due to the selling parties on June 30, 2008, which will be dependent upon revenue earned from the acquired assets for the twelve months ending April 30, 2008. The Company is also obligated to pay to the selling parties $500,000, deemed the ―Workforce in Place Payment‖ on April 17, 2008, provided that certain employees transferred to the Company as part of the asset purchase are still employed by the Company at that time. The assets purchased from AIM primarily relate to client contracts, tangible personal property and intangible rights and property. The Company also agreed to acquire certain limited obligations associated with the assets acquired. F-34

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PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. The following table sets forth the costs and expenses, other than the underwriting discount, payable by the Registrant in connection with the sale of common stock being registered. All amounts are estimates except the Securities and Exchange Commission registration fee, the NASD filing fee and The Nasdaq Global Market fee.
Item Amount

Securities and Exchange Commission registration fee NASD filing fee The Nasdaq Global Market fee Blue Sky filing fees and expenses Accounting fees and expenses Legal fees and expenses Transfer agent fees and expenses Printing and engraving expenses Miscellaneous expenses Total

$

6,140 20,500 * * * * * * * *

$

*

To be provided by amendment. The Registrant will bear all expenses shown above.

Item 14. Indemnification of Directors and Officers . Section 145 of the Delaware General Corporation Law permits a Delaware corporation to indemnify its officers, directors and other corporate agents to the extent and under the circumstances set forth therein. Our certificate of incorporation and bylaws provide that we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, in accordance with provisions corresponding to Section 145 of the Delaware General Corporation Law. These indemnification provisions may be sufficiently broad to permit indemnification of the registrant‘s executive officers and directors for liabilities, including reimbursement of expenses incurred, arising under the Securities Act. Pursuant to Section 102(b)(7) of the Delaware General Corporation Law, Article VI of our certificate of incorporation eliminates the personal liability of a director to us or our shareholders for monetary damages for a breach of fiduciary duty as a director, except for liabilities arising: • • • • from any breach of the director‘s duty of loyalty to us or our shareholders; from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; under Section 174 of the Delaware General Corporation Law; and from any transaction from which the director derived an improper personal benefit.

The above discussion of Section 145 of the Delaware General Corporation Law and of our amended certificate of incorporation and bylaws is not intended to be exhaustive and is respectively qualified in its entirety by Section 145 of the Delaware General Corporation Law, our certificate of incorporation and our bylaws. II-1

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As permitted by Section 145 of the Delaware General Corporation Law, we carry primary and excess insurance policies insuring our directors and officers against certain liabilities they may incur in their capacity as directors and officers. Under the policies, the insurer, on our behalf, may also pay amounts for which we granted indemnification to our directors and officers. In addition, the underwriting agreement to be filed as Exhibit 1.1 to this Registration Statement provides that the underwriters will indemnify us and our executive officers and directors for certain liabilities, including liabilities arising under the Securities Act, or otherwise. Item 15. Recent Sales of Unregistered Securities . During the three year period preceding the date of the filing of this registration statement, we have issued securities in the transactions described below without registration under the Securities Act. These securities were offered and sold by us in reliance upon exemptions from the registration requirements provided by Section 4(2) of the Securities Act, Regulation D under the Securities Act or Rule 701 under the Securities Act relating to sales not involving any public offering. The following information reflects our 9:1 stock dividend on January 26, 2006 and our share price adjustment from $7.22 per share to $9.00 per share with respect to certain stock purchases made. No underwriters were involved in the sales and the certificates representing the securities sold and issued contain legends restricting the transfer of the securities without registration under the Securities Act or an applicable exemption from registration. • On April 22, 2005, in connection with the recapitalization, we issued 91.40 shares of our Class A common stock to New Mountain Partners II, L.P. for an aggregate purchase price of $91.40, 7.03 shares of our Class A common stock to Allegheny New Mountain Partners, L.P. for an aggregate purchase price of $7.03 and 1.57 shares of our Class A common stock to New Mountain Affiliated Investors II, L.P. for an aggregate purchase price of $1.57. On April 22, 2005, in connection with the recapitalization, we issued 26,579,510 shares of our common stock to New Mountain Partners II, L.P. for an aggregate purchase price of $95,972,701.60, 2,043,150 shares of our common stock to Allegheny New Mountain Partners, L.P. for an aggregate purchase price of $7,377,355.97 and 456,920 shares of our common stock to New Mountain Affiliated Investors II, L.P. for an aggregate purchase price of $1,649,842.43. On April 22, 2005, in connection with the recapitalization, we issued $68,551,995 in aggregate principal amount of our 8% subordinated debentures due 2015 to New Mountain Partners II, L.P., $5,269,545 in aggregate principal amount of our 8% subordinated debentures due 2015 to Allegheny New Mountain Partners, L.P. and $1,178,460.00 in aggregate principal amount of our 8% subordinated debentures due 2015 to New Mountain Affiliated Investors II, L.P. On April 22, 2005, in connection with the recapitalization, we issued $25,000,000 in aggregate principal amount of our 8% subordinated debentures due 2015 to Kenneth E. deLaski. On April 22, 2005 and in connection with the recapitalization transaction, we issued an aggregate of 869,030 shares of our common stock for an aggregate purchase price of $3,137,198.30 to the following members of our management or affiliated trusts: Babette J. Aller, Timothy J. Bailey, Eric J. Brehm, Eric Brown, Brian E. Daniell, Scott A. DeFusco, Margaret F. Flaherty, Timothy K. Hannon, Catherine R. Henry, Sean M. Hickey, Cynthia S. Kalkwarf, Patricia A. Kelly, Douglas P. Kern, Michael D. Klaus, Richard A. Miller, III, Edward G. Muldrow, David P. Sample, Michael A. Scopa, Stephen F. Seaman Jr., Robert P. Stalilonis, Elizabeth C. Waksmunski, Cherryl A. Watson, Debra K. White, Richard S. Wilkinson and Jeffrey K. Woerner. On April 22, 2005 and in connection with the recapitalization transaction, we issued an aggregate of 8,824,160 shares of our common stock for an aggregate purchase price of $31,855,217.60 to Kenneth E. deLaski, David deLaski, Donald deLaski, Kathleen Grubb & Edward Grubb JTWROS, Kenneth E. deLaski & Tena R. deLaski JT TEN, the deLaski Irrevocable Trusts, Tena Renken deLaski Revocable Trust and The Onae Trust. II-2

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• • • • • • • • • •

On July 20, 2005, we granted options to purchase 900,270 shares of our common stock at exercise prices of $3.61 and $7.22 per share to Kevin T. Parker under our 2005 Stock Option Plan. On August 2, 2005, we granted options to purchase 55,400 shares of our common stock at an exercise price of $3.61 per share to Nanci E. Caldwell and Albert A. Notini under our 2005 Stock Option Plan. On October 3, 2005, we issued 69,230 shares of our common stock to David W. Marvin for an aggregate purchase price of $249,920.30 in connection with our acquisition of Wind2 Software, Inc. On October 10, 2005, we issued 20,770 shares of our common stock to Scott K. Schneider at an aggregate purchase price of $74,979.70 in connection with our acquisition of Wind2 Software, Inc. On November 3, 2005, we granted options to purchase 2,061,890 shares of our common stock at exercise prices of $3.61 and $7.22 per share to certain employees under our 2005 Stock Option Plan. On December 1, 2005, we issued 41,550 shares of our common stock to Nanci E. Caldwell for an aggregate purchase price of $149,995.50 and 34,620 shares of our common stock to Albert A. Notini for an aggregate purchase price of $124,978.20. On December 15, 2005, we issued 84,000 shares of our common stock to James C. Reagan for an aggregate purchase price of $303,240.00. On December 29, 2005, we issued 138,500 shares of our common stock to Kevin T. Parker for an aggregate purchase price of $499,985.00. On January 17, 2006, we issued 27,700 shares of our common stock to William D. Clark for an aggregate purchase price of $99,997.00. On January 26, 2006, we granted options to purchase 62,330 shares of our common stock at an exercise price of $7.22 per share to Michael L. Angles, Sean M. Hickey, Michael A. Scopa, Eric Brown and Richard S. Wilkinson under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $7.91 per share. On March 9, 2006, we granted options to purchase 302,500 shares of our common stock at an exercise price of $7.22 per share to Carolyn J. Parent, Jennifer Felix, Laurie Powers, Caroline Proctor, Charlie Ungashick and Bill Doyle under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $7.91 per share. On March 17, 2006, we issued 34,627 shares of our common stock to Anthony P.G. Welsh for an aggregate purchase price of $250,006.94 and 34,627 shares of our common stock to Stephen C. Cook for an aggregate purchase price of $250,006.94 in connection with our acquisition of WST Corporation d/b/a Welcom. On April 26, 2006, we granted options to purchase 22,000 shares of our common stock at an exercise price of $7.22 per share to John Pitsenberger and Jordan Stewart under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $8.41 per share. On May 30, 2006, we granted options to purchase 125,000 shares of our common stock at an exercise price of $7.22 per share to David R. Schwiesow under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $9.00 per share. On June 2, 2006, we issued 55,555 shares of our common stock to Kathleen deLaski Grubb for an aggregate purchase price of $499,995.00. On June 2, 2006, we granted options to purchase 113,100 shares of our common stock at an exercise price of $7.22 per share to Kathleen deLaski, Joseph M. Kampf and Janet R. Perna under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $9.00 per share. On June 5, 2006, we issued 11,110 shares of our common stock to Janet R. Perna for an aggregate purchase price of $99,999.00. II-3

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On June 16, 2006, we issued 11,110 shares of our common stock to David R. Schwiesow for an aggregate purchase price of $99,990.00. On June 28, 2006, we issued 27,777 shares of our common stock to Joseph M. Kampf for an aggregate purchase price of $249,993.00. On July 24, 2006, we issued 18,181 shares of our common stock to Gary W. Troop and 18,181 shares of our common stock to James H. Price, each for an aggregate purchase price of $199,991.00, in connection with our acquisition of C/S Solutions, Inc. On October 16, 2006, we issued 2,222 shares of our common stock to Joseph M. Kampf as a result of his election in June 2006 to receive his annual retainer of $20,000 in shares of our common stock at a price of $9.00 per share. The number of shares issued reflects our share price adjustment from $7.22 per share to $9.00 per share with respect to this issuance. On October 23, 2006, we granted options to purchase 200,000 shares of our common stock at an exercise price of $10.19 per share to Ashley Dunn, Lee Evans, Rachel Hammes, Rajeev Kumar, Richard M. Lowenstein, Greg Mancusi-Ungano and Susan Warner under our 2005 Stock Option Plan. In December 2006, the exercise price of these options was adjusted to $11.48 per share. On November 3, 2006, we issued 3,463 shares of our common stock to Alicia Townes upon the exercise of stock options held by Ms. Townes at an exercise price of $3.61 per share. On November 20, 2006, we granted options to purchase 494,100 shares of our common stock at an exercise price of $11.48 per share to certain employees under our 2005 Stock Option Plan. On November 21, 2006, we granted options to purchase 170,000 shares of our common stock at an exercise price of $11.48 per share to certain employees under our 2005 Stock Option Plan. On December 4, 2006, we granted options to purchase 150,666 shares of our common stock at an exercise price of $11.48 per share to certain employees and directors under our 2005 Stock Option Plan. On January 9, 2007, we granted options to purchase 40,000 shares of our common stock at an exercise price of $12.24 to David Kirby and David Spille under our 2005 Stock Option Plan. On January 15, 2007, we issued 3,000 shares of our common stock to Holly C. Kortright for an aggregate purchase price of $36,720. On January 19, 2007, we granted options to purchase 27,500 shares of our common stock at an exercise price of $12.24 to certain employees and directors under our 2005 Stock Option Plan. On February 5, 2007, we granted options to purchase 17,000 shares of our common stock at an exercise price of $13.05 per share to Ron Ritsick and Tom Vandervort under our 2005 Stock Option Plan. On February 21, 2007, we granted options to purchase 77,500 shares of our common stock at an exercise price of $13.10 to Nanci E. Caldwell, Kathleen deLaski, Joseph M. Kampf, Albert A. Notini and Janet R. Perna under our 2005 Stock Option Plan. On March 9, 2007, we granted options to purchase 24,000 shares of our common stock at an exercise price of $13.10 to Salman Ahmad, Tim Clamp and Paveen Varma under our 2005 Stock Option Plan. On March 15, 2007, we granted options to purchase 700,000 shares of our common stock at an exercise price of $13.10 to certain employees under our 2005 Stock Option Plan. On April 17, 2007, we issued 38,109 shares of our common stock to SCOTT-PATLAN, Inc. for an aggregate purchase price of $499,990.08, in connection with our acquisition of certain assets of Applied Integration Management Corporation. II-4

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Item 16. Exhibits and Financial Statement Schedules . (a) Exhibits. INDEX TO EXHIBITS
Exhibit Number Description of Documents

1.1 2.1

Form of Underwriting Agreement* Recapitalization Agreement, effective as of December 23, 2004, by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Amendment No. 1, dated as of March 14, 2005, to the Recapitalization Agreement by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Amendment No. 2, dated as of April 21, 2005, to the Recapitalization Agreement by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Advisory Agreement, dated as of April 22, 2005, between Deltek Systems, Inc. and New Mountain Capital, L.L.C. Certificate of Incorporation of Deltek, Inc. Bylaws of Deltek, Inc. Specimen Common Stock Certificate Specimen Class A Common Stock Certificate Investor Rights Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc., New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P. and the persons listed on the signature pages thereto Management Rights Letter, dated April 22, 2005, between New Mountain Partners II, L.P. and Deltek Systems, Inc. Management Rights Letter, dated April 22, 2005, between Allegheny New Mountain Partners, L.P. and Deltek Systems, Inc. Opinion of Fried, Frank, Harris, Shriver & Jacobson, LLP* Shareholders‘ Agreement, dated as of April 22, 2005, among Deltek Systems, Inc., the deLaski Shareholders and the persons listed on the signature pages thereto (and for purposes of Sections 3.3 and 3.4, New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P. and Allegheny New Mountain Partners, L.P.) Form of Joinder Agreement to the Shareholders‘ Agreement Form of Director Shareholder‘s Agreement Form of Optionee Shareholder‘s Agreement Joinder Agreement to the Shareholder‘s Agreement between Kevin T. Parker and Deltek Systems, Inc., dated June 16, 2005 II-5

2.2

2.3

2.4 3.1 3.2 4.1 4.2 4.3

4.4 4.5 5.1 9.1

9.2 9.3 9.4 9.5

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Exhibit Number

Description of Documents

9.6 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22

Amendment No. 1 to Shareholder‘s Agreement between Deltek Systems, Inc. and Joseph M. Kampf, dated September 14, 2006 2006 Employee Incentive Compensation Program* 2007 Stock Incentive and Award Plan* Amended and Restated 2005 Stock Option Plan Deltek, Inc. Employee Stock Purchase Plan* Executive Employment Agreement between Deltek Systems, Inc. and Kenneth E. deLaski dated April 22, 2005 Employment Agreement between Kevin T. Parker and Deltek Systems, Inc., dated December 29, 2006 First Stock Option Agreement between Kevin T. Parker and Deltek Systems, Inc., dated September 28, 2006 Second Stock Option Agreement between Kevin T. Parker and Deltek Systems, Inc., dated September 28, 2006 Employment Offer Letter between James C. Reagan and Deltek Systems, Inc., dated October 6, 2005 First Stock Option Agreement between James C. Reagan and Deltek Systems, Inc., dated November 3, 2005 Second Stock Option Agreement between James C. Reagan and Deltek Systems, Inc., dated November 3, 2005 Employment Offer Letter between David R. Schwiesow and Deltek Systems, Inc., dated May 8, 2006 First Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Amendment to Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Third Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated January 24, 2007 Employment Offer Letter between William D. Clark and Deltek Systems, Inc., dated October 6, 2005 First Stock Option Agreement between William D. Clark and Deltek Systems, Inc., dated November 3, 2005 Second Stock Option Agreement between William D. Clark and Deltek Systems, Inc., dated November 3, 2005 Employment Offer Letter between Richard M. Lowenstein and Deltek Systems, Inc, dated May 26, 2006 Employment Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated June 26, 2006 First Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 II-6

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Exhibit Number

Description of Documents

10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 10.40 10.41 10.42 10.43

Amendment to Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 Employment Offer Letter between Carolyn J. Parent and Deltek Systems, Inc., dated February 8, 2006 First Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Amendment to Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Employment Offer Letter between Holly C. Kortright and Deltek Systems, Inc., dated September 25, 2006 Stock Option Agreement between Holly C. Kortright and Deltek Systems, Inc., dated December 20, 2006 Intentionally Omitted Form of Stock Option Agreement between Eric J. Brehm and Deltek Systems, Inc. Notice of First Stock Option Grant between Eric J. Brehm and Deltek Systems, Inc., dated November 3, 2005 Notice of Second Stock Option Grant between Eric J. Brehm and Deltek Systems, Inc., dated November 3, 2005 Form of Stock Option Agreement between Richard P. Lowrey and Deltek Systems, Inc. Notice of First Stock Option Grant between Richard P. Lowrey and Deltek Systems, Inc., dated November 3, 2005 Notice of Second Stock Option Grant between Richard P. Lowrey and Deltek Systems, Inc., dated November 3, 2005 Intentionally Omitted Stock Appreciation Rights Agreement between Richard P. Lowrey and Deltek Systems, Inc., dated January 31, 2004 Amendment to Stock Appreciation Rights Agreement between Richard P. Lowrey and Deltek Systems, Inc., dated May 24, 2004 Form of Director Stock Option Agreement issued under the Amended and Restated 2005 Stock Option Plan Form of Amendment to Director Stock Option Agreement Form of Director Stock Option Agreement issued under the Amended and Restated 2005 Stock Option Plan (one-year vesting) II-7

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Exhibit Number

Description of Documents

10.44 10.45 10.46 10.47 10.48 10.49 10.50 10.51 10.52 10.53 10.54 10.55 10.56 10.57 10.58 10.59 10.60 10.61 10.62 10.63 10.64

Non-Competition Agreement, dated as of February 8, 2006, between Carolyn J. Parent and Deltek Systems, Inc. Non-Competition Agreement, dated as of April 22, 2005, between Kenneth E. deLaski and Deltek Systems, Inc. Non-Competition Agreement, dated as of April 22, 2005, between Donald deLaski and Deltek Systems, Inc. Recourse Promissory Note between Joseph M. Kampf and Deltek Systems, Inc., dated June 2, 2006 Release Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc. and the shareholders listed on the signature pages thereto Form of Officer Stock Purchase Agreement Form of Director Stock Purchase Agreement Form of Share Price Adjustment Agreement Director Invitation Letter between Nanci E. Caldwell and Deltek Systems, Inc., dated August 2, 2005 Director Invitation Letter between Kathleen deLaski and Deltek Systems, Inc., dated April 3, 2006 Director Invitation Letter between Joseph M. Kampf and Deltek Systems, Inc., dated April 3, 2006 Director Invitation Letter between Albert A. Notini and Deltek Systems, Inc., dated August 2, 2005 Credit Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc., as borrower, the other lenders signatory thereto, and Credit Suisse First Boston, as lender, lead arranger, administrative and collateral agent Amendment No. 1 to Credit Agreement, dated as of August 12, 2005, by and among Deltek Systems, Inc., as borrower, the lenders signatory thereto and Credit Suisse, as lender, administrative agent and collateral agent Incremental Term Loan Assumption Amendment No. 2 to Credit Agreement, dated as of April 28, 2006 by and among Deltek Systems, Inc., as borrower, the lenders signatory thereto and Credit Suisse, as lender, administrative agent and collateral agent Guarantee and Collateral Agreement, dated as of April 22, 2005, among Deltek Systems, Inc., the subsidiaries of Deltek Systems, Inc. signatories thereto and Credit Suisse First Boston, as collateral agent Supplement No. 1 to Guarantee and Collateral Agreement, dated as of October 3, 2005, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse, as collateral agent Supplement No. 2 to Guarantee and Collateral Agreement, dated as of March 17, 2006, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse First Boston as collateral agent Supplement No. 3 to Guarantee and Collateral Agreement, dated as of July 24, 2006, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse, as collateral agent Consent and Waiver to Credit Agreement, dated as of April 13, 2006 among Deltek Systems, Inc., the lenders signatory thereto and Credit Suisse, as administrative agent for the lenders Subsidiary Trademark Security Agreement, dated as of July 21, 2006 between C/S Solutions, Inc. as subsidiary guarantor and Credit Suisse, as collateral agent II-8

Table of Contents
Exhibit Number

Description of Documents

10.65 10.66 10.67 21.1 23.1 23.2 24.1 24.2

Subsidiary Trademark Security Agreement, dated as of May 1, 2006 between WST Corporation as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiary Trademark Security Agreement, dated as of October 14, 2005 between Wind2 Software, Inc., as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiary Copyright Security Agreement, dated as of October 14, 2005 between Wind2 Software, Inc., as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiaries of Deltek, Inc. Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included in the opinion filed as Exhibit 5.1)* Power of Attorney (included in signature page) Power of Attorney of James C. Reagan

* To be filed by amendment. (b) Financial Statement Schedules. Schedule II–Valuation and Qualifying Accounts REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee and Shareholders of Deltek, Inc. Herndon, Virginia We have audited the consolidated financial statements of Deltek, Inc. (formerly Deltek Systems, Inc.) and its subsidiaries as of December 31, 2005 and 2006, and for each of the three years in the period ended December 31, 2006, and have issued our report thereon dated April 19, 2007, which expresses an unqualified opinion and contains an explanatory paragraph concerning the change in method of accounting for share-based payments to conform to accounting principles generally accepted in the United States of America (included elsewhere in this Registration Statement). Our audits also included the consolidated financial statement schedule listed in Item 16(b) of this Registration Statement. This consolidated financial statement schedule is the responsibility of the Company‘s management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ DELOITTE & TOUCHE LLP McLean, Virginia April 19, 2007 II-9

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DELTEK, INC. VALUATION AND QUALIFYING ACCOUNTS (in thousands) SCHEDULE II
As of December 31, 2004 2005 2006

Allowance for Doubtful Accounts Beginning Balance Provision for Doubtful Accounts—Sales Allowances Provision for Doubtful Accounts—Credit Losses Additions to Allowance from Acquisitions Charges Against Allowance Ending Balance

$ 1,558 185 99 — (845 ) $ 997

$

997 570 307 — (553 )

$

1,321 1,334 718 66 (1,479 ) 1,960

$ 1,321

$

Deferred Tax Asset Valuation Allowance Beginning Balance Allowance Accruals Charges Against Allowance Ending Balance

$

— — — —

$

— — — —

$

— 599 — 599

$

$

$

Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes: (i) To provide to the underwriter, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (ii) That for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (iii) That for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-10

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SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, hereunto duly authorized, in the County of Fairfax, Commonwealth of Virginia, on May 8, 2007. DELTEK, INC. By: /s/ K EVIN T. P ARKER
Kevin T. Parker Chairman, President and Chief Executive Officer

POWER OF ATTORNEY KNOW ALL PEOPLE BY THESE PRESENTS, that each director of DELTEK, INC. whose signature appears below hereby appoints Kevin T. Parker, James C. Reagan, and David R. Schwiesow and each of them severally, acting alone and without the other, his/her true and lawful attorney-in-fact with full power of substitution or re-substitution, for such person and in such person‘s name, place and stead, in any and all capacities, to sign on such person‘s behalf, individually and in each capacity stated below, any and all amendments, including post-effective amendments to this Registration Statement, and to sign any and all additional registration statements relating to the same offering of securities of the Registration Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated:
Name and Signatures Title Date

/s/

K EVIN T. P ARKER
Kevin T. Parker

Chairman, President and Chief Executive Officer ( Principal Executive Officer ) Executive Vice President and Chief Financial Officer ( Principal Financial Officer and Principal Accounting Officer ) Michael B. Ajouz (Director) Nanci E. Caldwell (Director) Kathleen deLaski (Director) II-11

May 8, 2007

/s/

J AMES C. R EAGAN
James C. Reagan

May 8, 2007

/s/

M ICHAEL B. A JOUZ
Michael B. Ajouz

May 8, 2007

/s/

N ANCI E. C ALDWELL
Nanci E. Caldwell

May 8, 2007

/s/

K ATHLEEN D E L ASKI
Kathleen deLaski

May 8, 2007

Table of Contents
Name and Signatures Title Date

/s/

Joseph M. Kampf
Joseph M. Kampf

Joseph M. Kampf (Director) Steven B. Klinsky (Director) Albert A. Notini (Director) Janet R. Perna (Director) Alok Singh (Director) II-12

May 8, 2007

/s/

S TEVEN B. K LINSKY
Steven B. Klinsky

May 8, 2007

/s/

A LBERT A. N OTINI
Albert A. Notini

May 8, 2007

/s/

J ANET R. P ERNA
Janet R. Perna

May 8, 2007

/s/

A LOK S INGH
Alok Singh

May 8, 2007

Table of Contents

INDEX TO EXHIBITS
Exhibit Number Description of Documents

1.1 2.1

Form of Underwriting Agreement* Recapitalization Agreement, effective as of December 23, 2004, by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Amendment No. 1, dated as of March 14, 2005, to the Recapitalization Agreement by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Amendment No. 2, dated as of April 21, 2005, to the Recapitalization Agreement by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc., the shareholders of Deltek Systems, Inc. and Kenneth E. deLaski, as shareholders‘ representative Advisory Agreement, dated as of April 22, 2005, between Deltek Systems, Inc. and New Mountain Capital, L.L.C. Certificate of Incorporation of Deltek, Inc. Bylaws of Deltek, Inc. Specimen Common Stock Certificate Specimen Class A Common Stock Certificate Investor Rights Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc., New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P. and the persons listed on the signature pages thereto Management Rights Letter, dated April 22, 2005, between New Mountain Partners II, L.P. and Deltek Systems, Inc. Management Rights Letter, dated April 22, 2005, between Allegheny New Mountain Partners, L.P. and Deltek Systems, Inc. Opinion of Fried, Frank, Harris, Shriver & Jacobson, LLP* Shareholders‘ Agreement, dated as of April 22, 2005, among Deltek Systems, Inc., the deLaski Shareholders and the persons listed on the signature pages thereto (and for purposes of Sections 3.3 and 3.4, New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P. and Allegheny New Mountain Partners, L.P.) Form of Joinder Agreement to the Shareholders‘ Agreement Form of Director Shareholder‘s Agreement Form of Optionee Shareholder‘s Agreement Joinder Agreement to the Shareholder‘s Agreement between Kevin T. Parker and Deltek Systems, Inc., dated June 16, 2005 Amendment No. 1 to Shareholder‘s Agreement between Deltek Systems, Inc. and Joseph M. Kampf, dated September 14, 2006 2006 Employee Incentive Compensation Program* 2007 Stock Incentive and Award Plan*

2.2

2.3

2.4 3.1 3.2 4.1 4.2 4.3

4.4 4.5 5.1 9.1

9.2 9.3 9.4 9.5 9.6 10.1 10.2

Table of Contents
Exhibit Number

Description of Documents

10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25

Amended and Restated 2005 Stock Option Plan Deltek, Inc. Employee Stock Purchase Plan* Executive Employment Agreement between Deltek Systems, Inc. and Kenneth E. deLaski dated April 22, 2005 Employment Agreement between Kevin T. Parker and Deltek Systems, Inc., dated December 29, 2006 First Stock Option Agreement between Kevin T. Parker and Deltek Systems, Inc., dated September 28, 2006 Second Stock Option Agreement between Kevin T. Parker and Deltek Systems, Inc., dated September 28, 2006 Employment Offer Letter between James C. Reagan and Deltek Systems, Inc., dated October 6, 2005 First Stock Option Agreement between James C. Reagan and Deltek Systems, Inc., dated November 3, 2005 Second Stock Option Agreement between James C. Reagan and Deltek Systems, Inc., dated November 3, 2005 Employment Offer Letter between David R. Schwiesow and Deltek Systems, Inc., dated May 8, 2006 First Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Amendment to Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated December 20, 2006 Third Stock Option Agreement between David R. Schwiesow and Deltek Systems, Inc., dated January 24, 2007 Employment Offer Letter between William D. Clark and Deltek Systems, Inc., dated October 6, 2005 First Stock Option Agreement between William D. Clark and Deltek Systems, Inc., dated November 3, 2005 Second Stock Option Agreement between William D. Clark and Deltek Systems, Inc., dated November 3, 2005 Employment Offer Letter between Richard M. Lowenstein and Deltek Systems, Inc, dated May 26, 2006 Employment Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated June 26, 2006 First Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 Amendment to Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between Richard M. Lowenstein and Deltek Systems, Inc., dated December 20, 2006 Employment Offer Letter between Carolyn J. Parent and Deltek Systems, Inc., dated February 8, 2006

Table of Contents
Exhibit Number

Description of Documents

10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 10.40 10.41 10.42 10.43 10.44 10.45 10.46 10.47

First Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Amendment to Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Second Stock Option Agreement between Carolyn J. Parent and Deltek Systems, Inc., dated December 20, 2006 Employment Offer Letter between Holly C. Kortright and Deltek Systems, Inc., dated September 25, 2006 Stock Option Agreement between Holly C. Kortright and Deltek Systems, Inc., dated December 20, 2006 Intentionally Omitted Form of Stock Option Agreement between Eric J. Brehm and Deltek Systems, Inc. Notice of First Stock Option Grant between Eric J. Brehm and Deltek Systems, Inc., dated November 3, 2005 Notice of Second Stock Option Grant between Eric J. Brehm and Deltek Systems, Inc., dated November 3, 2005 Form of Stock Option Agreement between Richard P. Lowrey and Deltek Systems, Inc. Notice of First Stock Option Grant between Richard P. Lowrey and Deltek Systems, Inc., dated November 3, 2005 Notice of Second Stock Option Grant between Richard P. Lowrey and Deltek Systems, Inc., dated November 3, 2005 Intentionally Omitted Stock Appreciation Rights Agreement between Richard P. Lowrey and Deltek Systems, Inc., dated January 31, 2004 Amendment to Stock Appreciation Rights Agreement between Richard P. Lowrey and Deltek Systems, Inc., dated May 24, 2004 Form of Director Stock Option Agreement issued under the Amended and Restated 2005 Stock Option Plan Form of Amendment to Director Stock Option Agreement Form of Director Stock Option Agreement issued under the Amended and Restated 2005 Stock Option Plan (one-year vesting) Non-Competition Agreement, dated as of February 8, 2006, between Carolyn J. Parent and Deltek Systems, Inc. Non-Competition Agreement, dated as of April 22, 2005, between Kenneth E. deLaski and Deltek Systems, Inc. Non-Competition Agreement, dated as of April 22, 2005, between Donald deLaski and Deltek Systems, Inc. Recourse Promissory Note between Joseph Kampf and Deltek Systems, Inc., dated June 2, 2006

Table of Contents
Exhibit Number

Description of Documents

10.48 10.49 10.50 10.51 10.52 10.53 10.54 10.55 10.56 10.57 10.58 10.59 10.60 10.61 10.62 10.63 10.64 10.65 10.66 10.67 21.1 23.1 23.2 24.1 24.2

Release Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc. and the shareholders listed on the signature pages thereto Form of Officer Stock Purchase Agreement Form of Director Stock Purchase Agreement Form of Share Price Adjustment Agreement Director Invitation Letter between Nanci E. Caldwell and Deltek Systems, Inc., dated August 2, 2005 Director Invitation Letter between Kathleen deLaski and Deltek Systems, Inc., dated April 3, 2006 Director Invitation Letter between Joseph M. Kampf and Deltek Systems, Inc., dated April 3, 2006 Director Invitation Letter between Albert A. Notini and Deltek Systems, Inc., dated August 2, 2005 Credit Agreement, dated as of April 22, 2005, by and among Deltek Systems, Inc., as borrower, the other lenders signatory thereto, and Credit Suisse First Boston, as lender, lead arranger, administrative and collateral agent Amendment No. 1 to Credit Agreement, dated as of August 12, 2005, by and among Deltek Systems, Inc., as borrower, the lenders signatory thereto and Credit Suisse, as lender, administrative agent and collateral agent Incremental Term Loan Assumption Amendment No. 2 to Credit Agreement, dated as of April 28, 2006 by and among Deltek Systems, Inc., as borrower, the lenders signatory thereto and Credit Suisse, as lender, administrative agent and collateral agent Guarantee and Collateral Agreement, dated as of April 22, 2005, among Deltek Systems, Inc., the subsidiaries of Deltek Systems, Inc. signatories thereto and Credit Suisse First Boston, as collateral agent Supplement No. 1 to Guarantee and Collateral Agreement, dated as of October 3, 2005, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse, as collateral agent Supplement No. 2 to Guarantee and Collateral Agreement, dated as of March 17, 2006, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse First Boston as collateral agent Supplement No. 3 to Guarantee and Collateral Agreement, dated as of July 24, 2006, among Deltek Systems, Inc., the subsidiary guarantors signatory thereto and Credit Suisse, as collateral agent Consent and Waiver to Credit Agreement, dated as of April 13, 2006 among Deltek Systems, Inc., the lenders signatory thereto and Credit Suisse, as administrative agent for the lenders Subsidiary Trademark Security Agreement, dated as of July 21, 2006 between C/S Solutions, Inc. as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiary Trademark Security Agreement, dated as of May 1, 2006 between WST Corporation as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiary Trademark Security Agreement, dated as of October 14, 2005 between Wind2 Software, Inc., as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiary Copyright Security Agreement, dated as of October 14, 2005 between Wind2 Software, Inc., as subsidiary guarantor and Credit Suisse, as collateral agent Subsidiaries of Deltek, Inc. Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included in the opinion filed as Exhibit 5.1)* Power of Attorney (included in signature page) Power of Attorney of James C. Reagan

* To be filed by amendment.

Exhibit 2.1 EXECUTION COPY RECAPITALIZATION AGREEMENT by and among NEW MOUNTAIN PARTNERS II, L.P. NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. DELTEK SYSTEMS, INC. and SHAREHOLDERS OF DELTEK SYSTEMS, INC. Effective December 23, 2004

TABLE OF CONTENTS This Table of Contents is for convenience of reference only and is not intended to define, limit or describe the scope, intent or meaning of any provision of this Agreement. ARTICLE I. Definitions and Rules of Construction 1. 1. Definitions 1. 2. Rules of Construction ARTICLE II. Closing; Purchase Price; Adjustments and Related Matters 2. 1. Closing 2. 2. Recapitalization 2. 3. Payments and Deliveries at the Closing 2. 4. Contingent Payments 2. 5. Escrowed Portion of the Purchase Price 2. 6. Additional Issuances 2. 7. Allocation of the Investment Amount 2. 8. Shareholders‘ Representative ARTICLE III. Representations and Warranties of the Shareholders 3. 1. Organization and Power 3. 2. Authorization and Enforceability 3. 3. Capitalization of Deltek and the Subsidiaries 3. 4. Ownership at Closing 3. 5. Charter, Bylaws and Corporate Records 3. 6. No Violation 3. 7. Governmental Authorizations and Consents 3. 8. Financial Statements 3. 9. Absence of Certain Changes or Events 3. 10. Relationships with Affiliates 3. 11. Indebtedness to and from Officers and Directors of Deltek 3. 12. Assets – In General 3. 13. Real Property Interests 3. 14. Assets other than Real Property Interests 3. 15. Intellectual Property Rights 3. 16. Contracts 2 2 12 13 13 13 14 15 16 16 17 17 19 19 20 20 21 21 22 22 23 23 25 25 26 26 26 26 28

3. 17. 3. 18. 3. 19. 3. 20. 3. 21. 3. 22. 3. 23. 3. 24. 3. 25. Insurance 38 Tax Matters 34 Employee Benefit Matters 32 Labor Matters 32 Personnel Matters 31 Litigation 31 Licenses and Permits 30 Environmental Matters 30 Compliance with Laws 30

3. 26. 3. 27. 3. 28. 3. 29. 3. 30. Offering Exemption 39 39 39 39 39 40 40 40 40 40 41 41 41 41 42 43 43 43 44 44 45 45 46 48 49 49 50 ARTICLE IV. Representations and Warranties of Buyers 4. 1. Organization and Power 4. 2. Authorization 4. 3. Enforceability 4. 4. No Violation 4. 5. Government Authorizations and Consents 4. 6. Litigation 4. 7. Financial Capacity 4. 8. Brokers 4. 9. Investment; Securities Laws 4. 10. Accredited Investor ARTICLE V. Covenants 5. 1. Conduct of Deltek 5. 2. Access to Information Prior to the Closing 5. 3. Confidentiality 5. 4. Best Efforts 5. 5. HSR Act Filing; Other Filings 5. 6. Consents 5. 7. Access to Books and Records Following the Closing 5. 8. Shareholders‘ Post-Closing Confidentiality Obligation 5. 9. Expenses 5. 10. Certain Tax Matters 5. 11. Public Announcements 5. 12. Communications with Customers and Suppliers 5. 13. Directors and Officers Indemnification 5. Stock Appreciation Rights Suppliers and Customers 38 No Broker 38 Powers of Attorney 38 Bank Accounts 38

14. 5. 15. 5. 16. 5. 17. 5. 18. 5. 19. 5. 20. 5. 21. 5. 22. 5. 23. 5. 24. S Corporation Escrow 54 55 55 - ii ARTICLE VI. Conditions To Closing 6. 1. Conditions to All Parties‘ Obligations Management Sale 54 Restated December 2003 Financial Statements 54 Stock Option Plan 54 New Certificates 53 Legends 52 Restrictions on Transfer 52 Non-Solicitation 52 Interim Report of Gross Software Bookings 51 Indebtedness for Borrowed Money 51

6.2 . 6.3 . Conditions to Buyers‘ Obligations 56 58 58 59 59 59 59 59 59 59 59 60 60 60 60 60 60 61 67 67 67 67 67 68 68 68 68 69 69 70 70 ARTICLE VII. Deliveries by the Shareholders and Deltek at Closing 7.1 . Officer‘s Certificate 7.2 . Consents 7.3 . Resignations of Directors and Officers 7.4 . William Blair 7.5 . Outstanding Indebtedness 7.6 . Severance Arrangements 7.7 . Share Certificates 7.8 . Certificates of Redeemed Shares 7.9 . Further Instruments ARTICLE VIII. Deliveries by Buyers at Closing 8.1 . Officer‘s Certificate 8.2 . Payments 8.3 . Further Instruments ARTICLE IX. Certain Remedies and Limitations 9.1 . Expiration of Representations, Warranties and Covenants 9.2 . Indemnification 9.3 . No Set-Off 9.4 . Retention of Records 9.5 . No Investigation of Deltek ARTICLE X. Termination 10. 1. Termination 10. 2. Procedure and Effect of Termination ARTICLE XI. Miscellaneous 11. 1. Material Adverse Effect 11. 2. Disclaimer of Projections, Etc . 11. 3. Further Assurances 11. 4. Notices 11. 5. Governing Law 11. Entire Agreement Conditions to Deltek‘s and the Shareholders‘ Obligations 56

6. 11. 7. 11. 8. 11. 9. 11. 10. 11. 11. 11. 12. 11. 13. 11. 14. 11. 15. 11. 16. Counterparts - iii 73 Remedies 72 Reliance on Counsel and Other Advisors 72 No Other Duties 72 Jurisdiction; Court Proceedings; Waiver of Jury Trial 72 Assignability; Management Rights 71 Parties in Interest; Limitation on Rights of Others 71 Effect of Waiver or Consent 71 Amendment 70 Severability 70

EXHIBITS A B C D E F G H I J K L M N O P Q R Shareholders, Addresses and Shareholdings Buyers‘ Investment Financial Statements Form of Investor Rights Agreement Form of Articles of Amendment to the Articles of Incorporation Form of Shareholders‘ Agreement Form of Escrow Agreement Outstanding Stock Appreciation Rights Calculation of Per Share Purchase Price Management Accelerated Stock Appreciation Rights Form of Stock Option Plan Required Consents and Approvals Form of deLaski Employment Agreement Form of Advisory Agreement Form of Noncompetition Agreement Form of Release Form of Management Rights Letter Form of Debenture - iv -

RECAPITALIZATION AGREEMENT RECAPITALIZATION AGREEMENT (― Agreement ‖), effective as of December 23, 2004 (the ― Effective Date ‖), by and among New Mountain Partners II, L.P. (― NMP ‖), New Mountain Affiliated Investors II, L.P. (― NMAI ‖), Allegheny New Mountain Partners, L.P., a Delaware limited partnership (together with NMAI and NMP, ― Buyers ‖), Deltek Systems, Inc., a Virginia corporation (― Deltek ‖), the holders of all outstanding shares of stock of Deltek listed on Exhibit A (each, a ― Shareholder ‖ and, collectively, the ― Shareholders ‖) and Kenneth E. deLaski, in his capacity as Shareholders‘ Representative as defined in Section 2.8(a). RECITALS WHEREAS, the Shareholders are the holders and owners of all of the issued and outstanding shares of Capital Stock of Deltek as set forth on Exhibit A ; and WHEREAS, at the Closing, Buyers will invest an aggregate of $180,000,000 in Deltek through the purchase of $75,000,000 in aggregate principal amount of 8% subordinated debentures due 2015 (the ―Debentures‖), an amount of Common Stock that will result in Buyers owning an aggregate of 75% of the equity and voting power of all outstanding shares of Capital Stock of Deltek (exclusive of the Series A Preferred Stock) immediately following the Closing (the ― Common Shares ‖) and 100 shares of Series A Preferred Stock of Deltek, par value $0.001 per share (the ― Series A Preferred Stock ‖), all as set forth on Exhibit B ; and WHEREAS, at the Closing, Deltek will enter into a senior secured credit facility (the ― Credit Agreement ‖) with affiliates of Credit Suisse First Boston and/or other lenders, providing for a senior secured term loan in an aggregate principal amount of $115 million and a senior secured revolving credit facility in an aggregate principal amount of up to $30 million; and WHEREAS, at the Closing, Deltek will use the funds received from Buyers and from its borrowings under the Credit Agreement, and will also issue $25,000,000 in aggregate principal amount of Debentures to Kenneth E. deLaski, to (i) repurchase from the Shareholders an amount of Common Stock that will result in the Shareholders and Management Members (following the Management Sale) collectively owning an aggregate of 25% of the equity and voting power of all outstanding shares of Capital Stock of Deltek (exclusive of the Series A Preferred Stock) immediately following the Closing and (ii) make certain payments to holders in respect of the outstanding stock appreciation rights under Deltek‘s stock appreciation plan; WHEREAS, concurrently with the Closing, certain Shareholders will sell, and the Management Members will purchase, the Management Shares at a price per share equal to the per share price to be received by the Shareholders pursuant to Section 2.3 for the Redeemed Shares, as determined in accordance with Exhibit I (the ―Management Sale‖); WHEREAS, as a condition to the Management Sale and the consummation of the other Contemplated Transactions, each Management Member will become a party to the Shareholders‘ Agreement; and WHEREAS, the parties intend that, immediately following the Closing, Buyers will collectively own 75%, and the Shareholders and Management Members will collectively own

25%, of the equity and voting power of all outstanding shares of Capital Stock of Deltek (exclusive of the Series A Preferred Stock). NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I. Definitions and Rules of Construction 1.1. Definitions . As used in this Agreement, the following terms shall have the meanings set forth below: ― Accelerated SAR Payment ‖ has the meaning set forth in Section 5.14(b)(ii). ― Accelerated SARs ‖ has the meaning set forth in Section 5.14(b)(ii). ― Additional Shares ‖ has the meaning set forth in Section 2.6(a). ― Additional Vested SAR Amount ‖ means, (x) if the Closing occurs on or after February 28, 2005, an amount equal to (i) the aggregate number of Deltek stock appreciation rights that vest on or after February 28, 2005 and are unexercised on the Closing Date multiplied by (ii) the excess of (A) the per share price to be received by the Shareholders pursuant to Section 2.3 for the Redeemed Shares, as determined in accordance with Exhibit I , over (B) the per share exercise price of such vested stock appreciation rights, and (y) if the Closing occurs prior to February 28, 2005, zero. ― Advisory Agreement ‖ has the meaning set forth in Section 6.3(j). ― Affiliate ‖ means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, ―control‖ of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. Deltek and the Subsidiaries shall be Affiliates of the Shareholders prior to the Closing and of Buyers from and after the Closing. ― Agreement ‖ means this recapitalization agreement as amended from time to time in accordance with Section 11.8. ― Articles of Amendment ‖ means Deltek‘s Articles of Amendment to the Amended and Restated Articles of Incorporation, which shall include the terms of the Series A Preferred Stock, in the form attached hereto as Exhibit E . ― Business Day ‖ shall mean any day other than a Saturday, Sunday, or any federal or Commonwealth of Virginia holiday or day on which banks are required or authorized to close

in New York, New York. If any period expires on a day which is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, such period shall expire or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day. ― Buyers ‖ has the meaning set forth in the Preamble. ― Buyer Indemnitees ‖ has the meaning set forth in Section 9.2(b)(i). ― Capital Stock ‖ of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and limited liability company, partnership and joint venture interests) of such Person. ― Closing ‖ has the meaning set forth in Section 2.1. ― Closing Date ‖ has the meaning set forth in Section 2.1. ― Closing Portion of the Redemption Consideration ‖ has the meaning set forth in Section 2.2(b)(ii). ― Closing SAR Payment ‖ has the meaning set forth in Section 5.14(a). ― Code ‖ means the Internal Revenue Code of 1986, as amended from time to time, or corresponding provisions of subsequent superseding federal revenue Laws. ― Commercial Software ‖ means commercially-available Software licensed pursuant to a standard license agreement and used internally (and not licensed or sublicensed to third parties) by Deltek or the Subsidiaries in connection with the business of Deltek and the Subsidiaries as currently conducted. ― Common Shares ‖ has the meaning set forth in the Recitals. ― Common Stock ‖ means Deltek‘s common stock, par value $0.001 per share. ― Composite Tax Return ‖ has the meaning set forth in Section 3.24(a)(i). ― Composite Taxes ‖ has the meaning set forth in Section 3.24(a)(ii). ― Consultant ‖ means all persons who are or have been engaged as consultants by Deltek or who otherwise provide services to Deltek under a contractual arrangement. ― Contemplated Transactions ‖ means the transactions contemplated by this Agreement and the other Transaction Documents. ― Contingent Payments ‖ has the meaning set forth in Section 2.4.

― Conversion SAR Amendments ‖ means the separate Amendments to Option Conversion Stock Appreciation Right Agreement, dated as of May 24, 2004, executed by Deltek and Michael L. Angles, Lori Becker, Cyndia Biver, Eric Brehm, Mary R. Burden, Matthew H. Fogo, Richard P. Lowrey, Susan H. O‘Dea and Stephen P. Sisak, and the Amendment to Option Conversion Stock Appreciation Right Agreement, dated as of December 10, 2004, executed by Deltek and Sean Hickey. ― Copyrights ‖ means all registered and unregistered United States and foreign copyrights and applications therefor. ― Credit Agreement ‖ has the meaning set forth in the Recitals. ― Daily Cash Balance ‖ means, with respect to any Business Day, an amount equal to the sum of (i) Deltek‘s cash balance at the close of business on such Business Day as shown on its books and records, plus (ii) an amount equal to any expenses paid by Deltek on or prior to such Business Day that would otherwise have been the responsibility of Deltek pursuant to Section 5.9, plus (iii) an amount equal to the Proportionate Amount of Prepaid Fees paid by Deltek on or prior to such Business Day. ― Damages ‖ has the meaning set forth in Section 5.13(b). ― Debentures ‖ has the meaning set forth in the Recitals. ― December 2003 Balance Sheet ‖ means the audited consolidated balance sheet of Deltek and its Subsidiaries as of December 31, 2003 included in the December 2003 Financial Statements. ― December 2003 Financial Statements ‖ means the audited consolidated balance sheet of Deltek and its Subsidiaries as of December 31, 2003, and the related statements of income, changes in equity and cash flows for the year then ended, a copy of which is attached as Exhibit C . ― Deltek ‖ means Deltek Systems, Inc., a Virginia corporation. ― Deltek Disclosure Schedule ‖ means the disclosure schedule of even date herewith delivered by the Shareholders in connection with the execution and delivery of this Agreement. ― Deltek Intellectual Property ‖ means all Intellectual Property used or held for use by Deltek or any of its Subsidiaries in connection with their businesses whether owned or licensed from third parties. ― Deltek Intellectual Property Rights ‖ means all Intellectual Property Rights used or held for use by Deltek or any of its Subsidiaries in connection with their businesses whether owned or licensed from third parties. ― Effective Date ‖ has the meaning referred to in the Preamble.

― Entity ‖ means any general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust or foreign business organization. ― Environmental Laws ‖ means any and all federal, state, local and foreign statutes, Laws (including case or common law), regulations, ordinances, rules, judgments, orders, decrees, codes, injunctions, permits, concessions, grants, franchises, licenses, or agreements relating to human health and safety, the environment or emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, facilities, structures, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the investigation, clean-up or other remediation thereof. Without limiting the generality of the foregoing, ―Environmental Laws‖ include: (i) the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. , as amended; (ii) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 26 U.S.C. § 4611 and 42 U.S.C. § 9601 et seq ., as amended; (iii) the Superfund Amendment and Reauthorization Act of 1984, as amended; (iv) the Clean Air Act, 42 U.S.C. § 7401 et seq ., as amended; (v) the Clean Water Act, 33 U.S.C. § 1251 et seq ; (vi) the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. ; and (vii) the Occupational Safety and Health Act of 1976, 29 U.S.C. § 651, as amended, and all rules and regulations promulgated thereunder. ― ERISA ‖ means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, as well as any rules and regulations promulgated thereunder by any Governmental Authority, as from time to time in effect. ― ERISA Affiliate ‖ means a corporation which is a member of a controlled group of corporations with Deltek within the meaning of Code Section 414(b), a trade or business which is under common control with Deltek within the meaning of Code Section 414(c), or a member of an affiliated service group with Deltek within the meaning of Code Sections 414(m) or (o), including any such Entity which was an ERISA Affiliate at any time within the six (6) year period preceding the Closing Date. ― Escrow ‖ has the meaning set forth in Section 2.5. ― Escrow Agent ‖ means JPMorgan Chase Bank. ― Escrow Agreement ‖ has the meaning set forth in Section 2.5. ― Escrow Payment ‖ has the meaning set forth in Section 2.5. ― Excess Claims ‖ has the meaning set forth in Section 2.4(c). ― Executive Severance Agreements ‖ means the separate Executive Severance Agreements, dated as of May 24, 2004, executed by Deltek and Lori Becker, Eric Brehm, Richard P. Lowrey and Susan H. O‘Dea. ― Financial Model ‖ means Deltek‘s management‘s financial model, dated November 10, 2004, which was previously delivered to Buyers.

― Financial Statements ‖ has the meaning set forth in Section 3.8(a). ― GAAP ‖ means generally accepted accounting principles as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession in the United States. ― Governmental Authority ‖ means any nation or government, any foreign or domestic federal, state, county, municipal or other political instrumentality or subdivision thereof and any foreign or domestic entity or body exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government. ― Governmental Consents ‖ has the meaning set forth in Section 3.7. ― Gross Software Bookings ‖ means gross software bookings (before any adjustments or reserves) calculated using the identical methodologies used in calculating ―gross software bookings‖ in the Financial Model. ― Hazardous Substances ‖ means any substance that is toxic, ignitable, reactive, corrosive, radioactive, caustic, or regulated as a hazardous substance, contaminant, toxic substance, toxic pollutant, hazardous waste, special waste, or pollutant, including, without limitation, petroleum, its derivatives, by-products and other hydrocarbons, poly-chlorinated bi-phenyls and asbestos regulated under, or which is the subject of, applicable Environmental Laws. ― HSR Act ‖ means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. ― Income Taxes ‖ means all federal, state, local and foreign (i) Taxes that are based on or measured by income (or that include as one of their alternative bases a Tax based on or measured by income), and (ii) franchise Taxes; provided that Income Taxes shall not include Composite Taxes. ― Income Tax Return ‖ means a Tax Return in connection with Income Taxes. ― Indemnified Parties ‖ has the meaning set forth in Section 5.13(b). ― Indemnitee ‖ has the meaning set forth in Section 9.2(d)(i)(1). ― Indemnitor ‖ has the meaning set forth in Section 9.2(d)(i)(1). ― Intellectual Property ‖ means Software and Technology. ― Intellectual Property Rights ‖ means rights that exist under Laws respecting Copyrights, Patents, Trademarks and Trade Secrets. ― Inventors ‖ has the meaning set forth in Section 3.15(h).

― Investment Amount ‖ has the meaning set forth in Section 2.2(a). ― Investor Rights Agreement ‖ means that certain Investor Rights Agreement among Deltek, Buyers and certain other security holders of Deltek to be executed at Closing, substantially in the form attached hereto as Exhibit D . ― IRS ‖ means the Internal Revenue Service. ― Knowledge of Deltek ‖ means the actual knowledge of the following personnel of Deltek: Michael L. Angles, Lori L. Becker, Eric J. Brehm, Kenneth E. deLaski, Matthew H. Fogo, Richard P. Lowrey and Susan H. O‘Dea. ― Laws ‖ means (a) all constitutions, treaties, laws, statutes, codes, regulations, ordinances, orders, decrees, rules, or other requirements with similar effect of any Governmental Authority, (b) all judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any Governmental Authority (― Orders ‖), and (c) all provisions of the foregoing, in each case binding on or affecting the Person referred to in the context in which such word is used; ―Law‖ means any one of them and the words ―Laws‖ and ―Law‖ include Environmental Laws. ― Liability ‖ means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of such Person or is disclosed on a disclosure schedule. ― Lien ‖ means any lien, statutory or otherwise, security interest, mortgage, deed of trust, priority, pledge, charge, conditional sale, title retention agreement, financing lease, right of first refusal or other encumbrance or similar right of others, or any agreement to give any of the foregoing. ― Litigation ‖ has the meaning set forth in Section 3.20. ― Loss ‖ or ― Losses ‖ has the meaning set forth in Section 9.2(a). ― Management Members ‖ means those members of Deltek‘s management who participate in the Management Sale, as set forth in the Shareholder Certificate. ― Management Sale ‖ has the meaning set forth in the Recitals. ― Management Shares ‖ means the shares of Common Stock owned by certain Shareholders prior to the Closing (other than the Redeemed Shares) to be sold to the Management Members in connection with the Management Sale, as set forth on the Shareholder Certificate. ― Material Adverse Effect on Buyer ‖ has the meaning set forth in Section 4.4, as limited by Section 11.1.

― Material Adverse Effect on Deltek ‖ has the meaning set forth in Section 3.1(b), as limited by Section 11.1. ― Material Contract ‖ has the meaning set forth in Section 3.16(a). ― Most Recent Unaudited Financial Statements ‖ has the meaning set forth in Section 3.8(a). ― Net Closing SAR Payment ‖ means the Closing SAR Payment less the Additional Vested SAR Amount. ― NMAI ‖ has the meaning set forth in the Preamble. ― NMP ‖ has the meaning set forth in the Preamble. ― Non-Qualified S Corporation Shareholder ‖ has the meaning set forth in Section 3.24(b)(i). ― Options ‖ means the options to purchase Deltek Common Stock. ― Orders ‖ has the meaning set forth in the definition of ― Laws .‖ ― Other Taxes ‖ means all Taxes other than Income Taxes and Composite Taxes. ― Outstanding Indebtedness ‖ shall mean all obligations and indebtedness of Deltek and the Subsidiaries (i) for borrowed money (other than trade debt and other accrued current liabilities or obligations incurred in the ordinary course of business); (ii) evidenced by a note, bond, debenture or similar instrument; (iii) created or arising under any capital lease, conditional sale, earn out or other arrangement for the deferral of purchase price of any property; (iv) under letters of credit, banker‘s acceptances or similar credit transactions; (v) for any other Person‘s obligation or indebtedness of the same type as any of the foregoing, whether as obligor, guarantor or otherwise; (vi) for interest on any of the foregoing and (vii) for any premiums, prepayment or termination fees, expenses or breakage costs due upon prepayment of any of the foregoing. ― Patent Infringement Claim ‖ has the meaning set forth in the definition of ― Patent Infringement Losses .‖ ― Patent Infringement Losses ‖ means all Losses arising out of or relating to any third party claim of infringement or violation by Deltek or its Subsidiaries of third party Patent rights (a ― Patent Infringement Claim ‖), which Losses are claimed by Buyer Indemnitees in respect of a breach of any representation or warranty contained in Section 3.15(d). ― Patents ‖ means issued patents, including United States and foreign patents and applications therefor; divisions, reissues, continuations, continuations-in-part, reexaminations, renewals and extensions of any of the foregoing; and utility models and utility model applications.

― Permits ‖ has the meaning set forth in Section 3.19. ― Permitted Cash Distribution Amount ‖ means an amount equal to the excess, if any, of (x) the average Daily Cash Balance over the 11 Business Days immediately preceding the Closing Date, over (y) the sum of the amount of (i) all checks drawn on any Deltek account that are outstanding as of the close of business on the Business Day immediately preceding the Closing Date, (ii) all payroll ACH transactions and wires pending as of the close of business on the Business Day immediately preceding the Closing Date, (iii) any accrued and unpaid bonuses and commissions for fiscal year 2004 as of the close of business on the Business Day immediately preceding the Closing Date, including the employer‘s portion of any Taxes attributable to the payment of such amounts, and (iv) the employer‘s portion of the Hospital Insurance (Medicare) Tax under the Federal Insurance Contributions Act attributable to the Closing SAR Payment. ― Person ‖ means any individual, person, Entity, or Governmental Authority, and the heirs, executors, administrators, legal representatives, successors and assigns of the ―Person‖ when the context so permits. ― Personnel ‖ has the meaning set forth in Section 3.21(a). ― Plan ‖ has the meaning set forth in Section 3.23(a). ― Products ‖ has the meaning set forth in Section 3.15(a) ― Proportionate Amount of Prepaid Fees ‖ means the balance of any lump sum up front payment of royalties or license fees (exclusive of maintenance fees and development fees) for license rights to Cognos Corporation, Actuate Corporation or BEA Systems, Inc. (collectively, ― Vendors ‖) Software products paid by Deltek to such Vendors after the Effective Date but prior to the Closing Date, pursuant to a license agreement or amendment (e.g., add-on quote) to an existing license agreement with any such Vendor entered into after the Effective Date, that remain available for use on and after the Closing Date, calculated, with respect to each Software product, as the total amount of any such lump sum payment of royalties or license fees paid less the amount of such royalties or license fees that would have been utilized (i.e., due to such Vendor, but for the lump sum payment) for Software products sold by Deltek after the Effective Date through the Business Day immediately prior to the Closing Date. ― Real Property Interests ‖ has the meaning set forth in Section 3.13. ― Redeemed Shares ‖ means the shares of Common Stock of the Shareholders to be purchased by Deltek pursuant to the terms and conditions of this Agreement, as set forth in the Shareholder Certificate. ― Redemption Consideration ‖ means $301,500,000 plus (i) the amount of any Contingent Payments required by Section 2.4, less (ii) the Net Closing SAR Payment. ― Representation Records ‖ has the meaning set forth in Section 9.4.

― Restated December 2003 Financial Statements ‖ has the meaning set forth in Section 5.22. ― Retention Bonus ‖ has the meaning set forth in Section 5.14(b)(i). ― Ruling Relief ‖ means receipt by Deltek of a favorable private letter ruling from the IRS confirming and recognizing Deltek‘s status as an S corporation for federal Tax purposes within the meaning of Section 1361 of the Code (an ― S Corporation ‖) at all times from and after January 1, 2003 through the Closing Date. ― Ruling Request ‖ has the meaning set forth in Section 5.24(a). ― S Corporation ‖ has the meaning set forth in the definition of Ruling Relief. ― S Corporation Escrow Amount ‖ at any time means $20,000,000 of the Escrow Payment being deposited into the Escrow, plus any income earned thereon, less any amounts paid prior to that time from the Escrow, in accordance with the Escrow Agreement, (x) to Deltek in connection with a claim by Deltek in respect of any S Corporation Liability and (y) to the Shareholders‘ Representative as a quarterly distribution in respect of any income earned on such $20,000,000. ― S Corporation Liability ‖ means all Tax Liabilities incurred by Deltek as a result of its failure to make a valid S Election (and any comparable election under state and local Law) and be recognized by the IRS (or any comparable state or local Taxing Authority) as an S Corporation for Tax purposes at all times from and after January 1, 2003 through the Closing Date. ― S Election ‖ has the meaning set forth in Section 3.24(b)(i). ― SAR Amendments ‖ means the separate Amendments to Stock Appreciation Right Agreement, dated as of May 24, 2004, executed by Deltek and Lori Becker, Cyndia Biver (with whom there are two separate SAR Amendments), Mary R. Burden, Matthew H. Fogo, Richard P. Lowrey and Susan H. O‘Dea, and the Amendment to Stock Appreciation Right Agreement, dated as of December 10, 2004, executed by Deltek and Sean Hickey. ― Securities Act ‖ has the meaning set forth in Section 3.30. ― Series A Preferred Stock ‖ has the meaning set forth in the Recitals. ― Severance Agreements ‖ means the separate Severance Agreements, dated as of May 24, 2004, executed by Deltek and Michael L. Angles, Cyndia Biver, Mary R. Burden, Matthew H. Fogo and Stephen P. Sisak, and the Severance Agreement, dated as of December 10, 2004, executed by Deltek and Sean Hickey. ― Shareholder Affiliates ‖ has the meaning set forth in Section 5.8. ― Shareholder Certificate ‖ has the meaning set forth in Section 5.23.

― Shareholder Indemnitee ‖ has the meaning set forth in Section 9.2(a). ― Shareholder(s) ‖ means individually and collectively the Persons identified on Exhibit A as holding shares of Deltek Capital Stock. ― Shareholders‘ Agreement ‖ means that certain Shareholders‘ Agreement by and among Deltek and the security holders of Deltek providing for certain restrictions on transfer, drag along rights, tag along rights and other rights and restrictions, a copy of which is attached hereto as Exhibit F . ― Shareholders‘ Proportionate Interest ‖ means with respect to each Shareholder, that portion (in percentage terms) of the aggregate of all Redeemed Shares that is comprised of such Shareholder‘s Redeemed Shares. ― Shareholders‘ Representative ‖ has the meaning set forth in Section 2.8(a). ― Shareholders‘ Tax Period ‖ means any taxable periods ending on or prior to the Closing Date and the portion of any Straddle Period ending on the Closing Date. ― Shareholders‘ Taxes ‖ has the meaning set forth in Section 9.2(b)(ii). ― Software ‖ means the manifestation, in tangible or physical (including digital) form, including, but not limited to, in magnetic media, firmware, and documentation, of computer programs and databases, including data therein, such computer programs and databases to include, but not limited to, management information systems, and personal computer programs, websites and content therein. The tangible manifestation of such programs may be in the form of, among other things, source code, flow diagrams, listings, object code, and microcode. Software does not include any Technology. ― Straddle Period ‖ means any taxable period beginning before, and ending on or after, the Closing Date. ― Subsidiaries ‖ means Deltek Systems (Philippines) Ltd., a Virginia corporation, and Deltek Systems (UK) Ltd., a company incorporated under the laws of England and Wales. ― Surviving Representations ‖ has the meaning set forth in Section 9.1. ― Tax Benefit ‖ has the meaning set forth in Section 9.2(d)(ii)(4). ― Tax Contest ‖ has the meaning set forth in Section 9.2(d)(ii)(1). ― Tax Indemnification Liability ‖ has the meaning set forth in Section 9.2(d)(ii)(1). ― Tax Indemnitee ‖ has the meaning set forth in Section 9.2(d)(ii)(1). ― Tax Indemnitor ‖ has the meaning set forth in Section 9.2(d)(ii)(1). ― Tax Return ‖ has the meaning set forth in Section 3.24(a)(iv).

― Taxes ‖ has the meaning set forth in Section 3.24(a)(iii). ― Taxing Authority ‖ shall mean any government or any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or other imposition of Taxes. ― Technology ‖ shall mean all types of technical information and data, whether or not reduced to tangible or physical form, including, but not limited to: know-how; product definitions and designs; inventions; research and development; engineering, development, manufacturing, process, test, quality control, procurement, and service specifications, procedures, processes, standards, and reports; blueprints; drawings; materials specifications, procedures, standards, and lists; catalogs; technical information and data relating to marketing and sales activity; and formulae. Technology does not include any Software. ― Trademarks ‖ means all United States and foreign trademark and service mark registrations and applications therefor and unregistered trademarks and service marks. ― Trade Secrets ‖ means information in any form relating to Technology or Software that is considered to be proprietary information by the owner, is maintained on a confidential or secret basis by the owner, and is not generally known to other parties. ― Transaction Documents ‖ has the meaning set forth in Section 3.2. ― Vested SAR Holder ‖ has the meaning set forth in Section 5.14. ― William Blair ‖ has the meaning set forth in Section 3.28. ― William Blair Agreement ‖ has the meaning set forth in Section 3.28. 1.2. Rules of Construction . Unless the context otherwise requires: (a) A capitalized term has the meaning assigned to it; (b) An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) References in the singular or to ―him,‖ ―her,‖ ―it,‖ ―itself,‖ or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be; (d) References to Articles, Sections and Exhibits shall refer to articles, sections and exhibits of this Agreement, unless otherwise specified;

(e) The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent, or intent of this Agreement or any provision thereof; (f) This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted; (g) References to ―best efforts‖ in this Agreement shall require commercially reasonable best efforts, and not commercially unreasonable expenditures of money, time or other resources; (h) A monetary figure given in United States dollars shall be deemed to refer to the equivalent amount of foreign currency when used in a context which refers to or includes operations conducted principally outside of the United States; (i) References to ―including‖ in this Agreement shall mean ―including, without limitation‖, whether or not so specified; and (j) References to ―ordinary course‖ in this Agreement shall mean ―ordinary course in a manner consistent with past practice‖, whether or not so specified. ARTICLE II. Closing; Purchase Price; Adjustments and Related Matters 2.1. Closing .

The closing of the Contemplated Transactions (the ― Closing ‖) will take place at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, NY 10004, at 10:00 A . M . local time on the third Business Day immediately following the day on which the last of the conditions set forth in ARTICLE VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived in accordance with this Agreement, or on such other date as Buyers and Shareholders‘ Representative may otherwise agree. The day on which the Closing actually occurs is sometimes referred to herein as the ― Closing Date .‖ 2.2. Recapitalization .

(a) Investment . Subject to the terms and conditions set forth in this Agreement, at the Closing, Buyers shall purchase from Deltek for an aggregate purchase price of $180,000,000 (the ― Investment Amount ‖) in cash, and Deltek shall issue to each Buyer (i) an amount of Common Stock which shall equal in the aggregate 75% of the equity and voting power of all outstanding shares of Capital Stock of Deltek (exclusive of the Series A Preferred Stock) immediately following the Closing, which shares shall be allocated among Buyers based on the percentages set forth opposite the name of each Buyer under the heading ―Percentage of Common Shares‖ on Exhibit B , and Deltek shall execute and deliver to Buyer the Investor Rights Agreement, (ii) Debentures in the aggregate principal amount set forth opposite the name of such Buyer under the heading ―Debenture Amount‖ on Exhibit B , and (iii) the number of

shares of Series A Preferred Stock set forth opposite the name of such Buyer under the heading ―Number of Shares of Series A Preferred Stock‖ on Exhibit B , each at a purchase price set forth opposite such Buyer‘s name under the heading ―Aggregate Investment Amount‖ on Exhibit B . The Debentures, the Common Shares and the shares of Series A Preferred Stock to be purchased pursuant to this Section 2.2 may be reallocated by Buyers among themselves by delivering written notice of such reallocation to Deltek at any time prior to Closing, so long as such reallocation does not change the aggregate principal amount of the Debentures, or the total number of Common Shares or shares of Series A Preferred Stock, being purchased pursuant to this Section 2.2. (b) Restructuring; Use of Proceeds from the Investment . (i) Simultaneously with the investment described in Section 2.2(a), Deltek shall enter into the Credit Agreement and shall borrow $115 million under the term facility provided by the Credit Agreement and such other amounts under the revolving facility thereunder as may be necessary to pay any expenses in connection with the Contemplated Transactions. (ii) Immediately upon the receipt of the Investment Amount and the amounts borrowed by Deltek under the Credit Agreement, Deltek shall redeem, and the Shareholders shall sell, assign, convey and transfer to Deltek, free and clear of all Liens, the Redeemed Shares in exchange for the Redemption Consideration, of which $301,500,000, less the Net Closing SAR Payment (the ― Closing Portion of the Redemption Consideration ‖), shall be payable at the Closing, and the Contingent Payments shall be payable in accordance with Section 2.4. 2.3. Payments and Deliveries at the Closing .

At the Closing: (a) Buyers shall pay the Investment Amount to Deltek by wire transfer of immediately available funds to an account or accounts designated by Deltek. (b) Deltek shall pay the Closing Portion of the Redemption Consideration as follows: (i) The amount of the Escrow Payment shall be paid to the Escrow Agent by wire transfer of immediately available funds to an account designated by the Escrow Agent, all in accordance with Section 2.5; (ii) A Debenture in the principal amount of $25,000,000 payable to the order of Kenneth E. deLaski shall be issued and delivered to Mr. deLaski by Deltek in payment of a like amount of the Closing Portion of the Redemption Consideration owing to Mr. deLaski for his shares of Common Stock that are being redeemed by Deltek; (iii) The amount of $276,500,000, less the Escrow Payment and less the Net Closing SAR Payment, shall be paid to the Shareholders‘ Representative by wire transfer of immediately available funds to an account or accounts designated by the Shareholders‘

Representative, which amount shall be distributed by the Shareholders‘ Representative to the Shareholders pro rata in proportion to the Shareholders‘ Proportionate Interests (after taking into account the receipt by Kenneth E. deLaski of the $25,000,000 Debenture in partial payment of the Closing Portion of the Redemption Consideration owed to Mr. deLaski). (c) Deltek shall pay to each Vested SAR Holder, by check, such Person‘s portion of the Closing SAR Payment in accordance with Sections 5.14(a), 5.14(c) and 5.14(d). (d) The Shareholders shall deliver the stock certificates evidencing the Redeemed Shares to Deltek, duly endorsed in blank for transfer or accompanied by duly executed stock transfer powers in blank for transfer. (e) The parties will make the other deliveries set forth in ARTICLES VII and VIII. The designation of bank accounts to which funds shall be delivered pursuant hereto shall be made by the designating party no later than two Business Days prior to the Closing Date. 2.4. Contingent Payments .

After the Closing, the Shareholders shall be entitled to receive from Deltek the amount of Income Taxes that Deltek otherwise would be required to pay but for the deduction (including any deduction relating to the payment by Deltek of its portion of the Hospital Insurance (Medicare) Tax under the Federal Insurance Contributions Act attributable to the Closing SAR Payment) that Deltek is entitled to take as a result of its paying the Net Closing SAR Payment pursuant to Section 5.14(a) (the ― Contingent Payments ‖) as follows: (a) The Contingent Payments, if any, required by this Section 2.4 shall be made by wire transfer of immediately available funds to an account or accounts designated by the Shareholders‘ Representative for distribution to the Shareholders pro rata in proportion to the Shareholders‘ Proportionate Interests as follows: (i) Within five (5) Business Days after Deltek has filed each federal Income Tax Return extension request (IRS Form 7004) (or comparable state Income Tax Return extension request) for a taxable period in which Deltek claims a deduction for some or all of the Net Closing SAR Payment, Deltek shall pay ninety percent (90%) of the excess (if any) of (A) the Income Taxes that would have been required to be paid by Deltek and its Subsidiaries for such taxable period if the Net SAR Closing Payment had not been made over (B) the Income Taxes actually required to be paid by Deltek and its Subsidiaries for such taxable period; and (ii) Within five (5) Business Days after Deltek has filed each federal or state Income Tax Return for a taxable period in which Deltek claims a deduction for some or all of the Net Closing SAR Payment, Deltek shall pay the excess (if any) of (A) the Income Taxes that would have been required to be paid by Deltek and its Subsidiaries for such taxable period if the Net SAR Closing Payment had not been made over (B) the Income Taxes actually required to be paid by Deltek and its Subsidiaries for such taxable period, reduced by any Contingent Payments previously paid to the Shareholders‘ Representative pursuant to Section 2.4(a)(i) for the same taxable period covered by such Tax Return.

(b) The Shareholders shall promptly refund to Deltek the amount of any Contingent Payments received in the event that some or all of any deductions claimed in connection with the Net Closing SAR Payment on any Income Tax Return are subsequently disallowed by any Taxing Authority. The amount of any such refund shall be equal to the amount of additional Income Tax required to be paid by Deltek as a result of any such disallowance. In addition, if the amount calculated and paid to the Shareholders pursuant to Section 2.4(a)(i) exceeds the amount calculated pursuant to Section 2.4(a)(ii), the Shareholders shall promptly refund to Deltek the amount of such excess. (c) Notwithstanding the provisions of Section 2.4(a), Deltek shall not be obligated to make any payment of Contingent Payments to the Shareholders before the date that is 18 months after the Closing Date. Furthermore, if, as of such date, the aggregate amount of outstanding claims made by the Buyer Indemnitees pursuant to Section 9.2(b) exceed the amount remaining in the Escrow (the ― Excess Claims‖ ), Deltek shall pay into the Escrow an amount of the Contingent Payments equal to the Excess Claims and shall pay the remaining amount of Contingent Payments, if any, in the manner specified in Section 2.4(a), provided that Deltek shall have the option, in lieu of making such payment into the Escrow, to set off the amount of any such Contingent Payment against any amount established in a Final Determination (as defined in the Escrow Agreement) to be owed to any Buyer Indemnitee by the Shareholders pursuant to Section 9.2(b) and if the Buyer Indemnitee is a Person other than Deltek, to pay over such amount to such Buyer Indemnitee. 2.5. Escrowed Portion of the Purchase Price .

For the purpose of securing the Shareholders‘ obligations pursuant to Section 9.2(b), the amount of $40,000,000 in cash (the ― Escrow Payment ‖) shall be delivered by Deltek at the Closing to the Escrow Agent by wire transfer of immediately available funds to an account (the ― Escrow ‖) to be designated and administered by the Escrow Agent pursuant to an escrow agreement substantially in the form of Exhibit G (the ― Escrow Agreement ‖). 2.6. Additional Issuances .

(a) In addition to and without limitation of all other indemnities in this Agreement, in the event that at any time after the Closing the representation and warranty set forth in clause (iv) of Section 3.4 is determined not to have been true as of the Closing, and, as a consequence, the Common Shares represented, immediately following the Closing, less than 75% of the equity and voting power referred to in clause (iv) of Section 3.4, then Deltek shall issue to each Buyer, at no cost to such Buyer, additional shares of Common Stock (the ― Additional Shares ‖). Immediately after the issuance of the Additional Shares, all references in this Agreement to the ― Common Shares ‖ shall be deemed to include the Additional Shares. The Additional Shares shall be deemed to have been issued at the Closing and shall be equal in number to the number of shares of Common Stock that would have been required to have been issued to Buyers at the Closing in order for the representation and warranty set forth in clause (iv) of Section 3.4 to have been correct at the Closing less the number of shares of Common Stock actually issued to Buyers at the Closing.

(b) If, prior to any additional issuance required under Section 2.6(a), any dividend or other distribution was made on the outstanding shares of Common Stock, then Deltek shall pay such additional amounts to Buyers such that the aggregate amount of any prior dividends or distributions received by Buyers, when added to such additional amounts, are equal to the amounts that would have been received by Buyers had the Additional Shares been issued to Buyers at the Closing. (c) In connection with any issuances of Additional Shares pursuant to this Section 2.6, Deltek shall take all action necessary to cause its articles of incorporation to be amended to increase the authorized capital of Deltek to permit such issuances. Any Additional Shares issued to Buyers pursuant to this Section 2.6 shall be, when issued, validly issued and fully paid and nonassessable and free and clear of all Liens. 2.7. Allocation of the Investment Amount .

The parties to this Agreement agree to allocate $75,000,000 of the Investment Amount to the Debentures, $104,999,900 of the Investment Amount to the Common Shares and the Investor Rights Agreement and $100 of the Investment Amount to the Series A Preferred Stock. The parties hereto agree to report the sale and purchase of the Debentures, Common Shares and Series A Preferred Stock, and the execution and delivery of the Investor Rights Agreement, for all purposes in a manner consistent with this allocation and shall not take any position, including with respect to Tax, inconsistent with such allocation. 2.8. Shareholders‘ Representative .

(a) Appointment of Shareholders‘ Representative . Each of the Shareholders hereby constitutes and irrevocably appoints, effective from and after the Effective Date, Kenneth E. deLaski as such Shareholder‘s agent and attorney-in-fact (the ― Shareholders‘ Representative ‖) to act as Shareholders‘ Representative under this Agreement and the other Transaction Documents in accordance with the terms of this Section 2.8 and the other Transaction Documents. In the event of the resignation, death or incapacity of the Shareholders‘ Representative, a successor Shareholders‘ Representative reasonably satisfactory to Buyers shall thereafter be appointed by an instrument in writing signed by such successor Shareholders‘ Representative and by those Shareholders who, immediately prior to the Effective Date, held a majority of the outstanding shares of Deltek Capital Stock held by all Shareholders, and such appointment shall become effective as to any such successor Shareholders‘ Representative when a copy of such instrument shall have been delivered to Buyers. (b) Authority . The Shareholders‘ Representative is hereby authorized and empowered to act for, and on behalf of, any or all of the Shareholders (with full power of substitution in the premises) in connection with (i) the indemnity provisions of ARTICLE IX as they relate to the Shareholders generally and (ii) such other matters as are reasonably necessary for the consummation of the Contemplated Transactions including, without limitation, (A) to receive all payments, including the Closing Portion of the Redemption Consideration and the Contingent Payments, owing to the Shareholders under this Agreement, (B) to terminate, amend, waive any provision of, or abandon, this Agreement or any of the other Transaction Documents, (C) to act as the representative of the Shareholders to review and authorize all claims and

disputes or question the accuracy thereof, (D) to negotiate and compromise on their behalf with Buyers any claims asserted thereunder and to authorize payments to be made with respect thereto, (E) to take such further actions as are authorized in this Agreement or the other Transaction Documents, and (F) in general, do all things and perform all acts, including, without limitation, executing and delivering all agreements (including the Escrow Agreement and the other Transaction Documents), certificates, receipts, consents, elections, instructions and other documents contemplated by or deemed by the Shareholders‘ Representative to be necessary or desirable in connection with this Agreement, the other Transaction Documents and the Contemplated Transactions. Buyers shall be entitled to rely on such appointment and to treat the Shareholders‘ Representative as the duly appointed attorney-in-fact of each Shareholder. The Shareholders shall cooperate with the Shareholders‘ Representative and any accountants, attorneys or other agents whom it may retain to assist in carrying out its duties hereunder. Each Shareholder by execution of this Agreement, and without any further action, confirms such appointment and authority. Notices given to the Shareholders‘ Representative in accordance with Section 11.4 shall constitute notice to the Shareholders for all purposes under this Agreement. (c) Extent and Survival of Authority . The appointment of the Shareholders‘ Representative is an agency coupled with an interest and is irrevocable and any action taken by the Shareholders‘ Representative pursuant to the authority granted in this Section 2.8 shall be effective and absolutely binding on each Shareholder notwithstanding any contrary action of or direction from such Shareholder, except for actions or omissions of the Shareholders‘ Representative constituting willful misconduct or gross negligence. The death or incapacity, or dissolution or other termination of existence, of any Shareholder shall not terminate the authority and agency of the Shareholders‘ Representative. Buyers and any other party to a Transaction Document in dealing with the Shareholders‘ Representative may conclusively and absolutely rely, without inquiry, upon any act of the Shareholders‘ Representative as the act of the Shareholder. (d) Release from Liability; Indemnification . Each Shareholder hereby releases the Shareholders‘ Representative from, and each Shareholder agrees to indemnify the Shareholders‘ Representative against, liability for any action taken or not taken by the Shareholders‘ Representative in his capacity as such (including the expenses referred to in Sections 2.8(b) and 2.8(e) hereof), except for the liability of the Shareholders‘ Representative to a Shareholder for loss which such Shareholder may suffer from the willful misconduct or gross negligence of the Shareholders‘ Representative in carrying out his duties hereunder or under the other Transaction Documents. The Shareholders‘ Representative shall not be liable to any Shareholder, Buyer or their Affiliates, or to any other Person, with respect to any action taken or omitted to be taken by the Shareholders‘ Representative in his role as Shareholders‘ Representative under or in connection with this Agreement, unless such action or omission results from or arises out of fraud, gross negligence, willful misconduct or bad faith on the part of the Shareholders‘ Representative, and the Shareholders‘ Representative shall not be liable to any Shareholder in the event that, in the exercise of his reasonable judgment, the Shareholders‘ Representative believes there will not be adequate resources available to cover potential costs and expenses to contest a claim made by Buyers against the Shareholders.

(e) Reimbursement of Expenses . The Shareholders‘ Representative shall receive no compensation for service as such but shall receive reimbursement from, and be indemnified by, the Shareholders, pro rata in accordance with the Shareholders‘ Proportionate Interests, for any and all expenses, charges and liabilities, including, but not limited to, reasonable attorneys‘ fees, incurred by the Shareholders‘ Representative in the performance or discharge of his duties pursuant to this Section 2.8. ARTICLE III. Representations and Warranties of the Shareholders Except as set forth in the Deltek Disclosure Schedule (it being agreed that any matter disclosed in the Deltek Disclosure Schedule with respect to any section of this Agreement shall be deemed to have been disclosed with respect to all sections of this Agreement to the extent it is reasonably apparent from a reading of the matter disclosed that such matter is applicable to such other sections of this Agreement) and subject to the limitations set forth in ARTICLE IX, the Shareholders severally, in proportion to the Shareholders‘ Proportionate Interests, represent and warrant that the statements contained in this ARTICLE III are correct and complete on the date hereof and will be correct and complete at the Closing (except for representations and warranties that speak as of a specific date other than the date hereof, which representations and warranties shall on the date hereof be, and shall continue at the Closing to be, correct and complete as of such specified date) as follows: 3.1. Organization and Power .

(a) Shareholders . Each of the Shareholders has full power and authority or legal capacity, as applicable, to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to consummate the Contemplated Transactions. Exhibit A accurately lists the names of the Shareholders, their principal addresses, and the number of shares of Deltek Capital Stock owned by each. (b) Deltek . Deltek (i) is a corporation duly incorporated, validly existing and in good standing under the Laws of the Commonwealth of Virginia, (ii) has full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party, (iii) has all requisite corporate power and authority to own or lease and to operate its properties and carry out the businesses in which it is engaged, and (iv) is qualified or licensed to do business as a foreign corporation in good standing in each jurisdiction where its ownership of property, or the conduct of its business, requires such qualification and where the failure to so qualify would, individually or in the aggregate, have a Material Adverse Effect on Deltek. For the purposes hereof, a ― Material Adverse Effect on Deltek ‖ means any material adverse change in, or material adverse effect on, the assets, liabilities, business, operations or condition, financial or otherwise, of Deltek taken as a whole. (c) Affiliates . Except for the Shareholders and the Subsidiaries, Deltek has no Affiliates. (d) Subsidiaries . Each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the Laws of the jurisdiction where it is organized and has all

requisite corporate power and authority to own or lease and to operate its properties and carry on the businesses in which it is engaged. Each Subsidiary is qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction where its ownership of property, or the conduct of its business, requires such qualification and where the failure to so qualify would, individually or in the aggregate, have a Material Adverse Effect on Deltek. 3.2. Authorization and Enforceability .

(a) This Agreement has been, and each of the other documents, agreements and instruments to be executed and delivered at Closing (together with this Agreement, the ― Transaction Documents ‖) by the Shareholders or Deltek will be, at Closing, duly authorized, executed and delivered by Deltek and/or each of the Shareholders, as the case may be, and constitutes, or as of the Closing Date will constitute, a valid and legally binding agreement of Deltek or the Shareholders, as the case may be, enforceable against Deltek or the Shareholders, as the case may be, in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors‘ rights and to general equity principles. The execution and delivery of this Agreement and the other Transaction Documents to which Deltek is a party and the performance by Deltek of the Contemplated Transactions that are required to be performed by Deltek have been duly authorized by the Board of Directors of Deltek in accordance with applicable Law and the Amended and Restated Articles of Incorporation, as amended, and the Bylaws of Deltek, and no other corporate proceedings on the part of Deltek (including, without limitation, any shareholder vote or approval) are necessary to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which Deltek is a party or the consummation of the Contemplated Transactions. (b) The Debentures have been duly authorized by Deltek and when issued in compliance with the provisions of this Agreement and the other Transaction Documents will be duly and validly issued and outstanding and will constitute valid and binding agreements of Deltek enforceable against it in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors‘ rights and to general equity principles. The Common Shares and the shares of Series A Preferred Stock have been duly authorized by Deltek and when issued in compliance with the provisions of this Agreement and the other Transaction Documents will be validly issued and outstanding, fully paid and nonassessable. The terms, designations, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the Series A Preferred Stock will be as stated in the Articles of Amendment. 3.3. Capitalization of Deltek and the Subsidiaries .

(a) Deltek . The capitalization and record owners of all of the Capital Stock of Deltek is as set forth on Exhibit A . All outstanding Capital Stock of Deltek is duly authorized, has been validly issued and is fully paid and non-assessable, is owned beneficially and of record by the Shareholders, free and clear of any Lien, and was issued in compliance with applicable securities Laws or exemptions therefrom. No Person has preemptive rights with respect to any securities of Deltek. Deltek does not have, and immediately following the Closing, Deltek will not have, any outstanding securities convertible into or exchangeable or exercisable for any

shares of its Capital Stock or any rights to subscribe for or to purchase, or any agreements providing for the issuance (contingent or otherwise) of, or any calls against, commitments by or claims against it of any character relating to, any shares of its Capital Stock or any securities convertible into or exchangeable or exercisable for any shares of its Capital Stock. Except as set forth in the Investor Rights Agreement and the Shareholders‘ Agreement, Deltek is not a party to and there is not, and immediately after the Closing there will not be, any contract, right of first refusal, right of first offer, proxy, voting agreement, voting trust, registration rights agreement, or shareholders agreement, whether or not Deltek is a party thereto, with respect to the purchase, sale or voting of any shares of Capital Stock of Deltek or any securities convertible into or exchangeable or exercisable for any shares of Capital Stock of Deltek. (b) Subsidiaries . Section 3.3(b) of the Deltek Disclosure Schedule sets forth the authorized and outstanding Capital Stock of each of the Subsidiaries. All outstanding Capital Stock of the Subsidiaries is duly authorized, has been validly issued and is fully paid and non-assessable, is owned beneficially and of record by Deltek, free and clear of any Lien, and was issued in compliance with applicable securities Laws or exemptions therefrom. None of the Subsidiaries has any outstanding securities convertible into or exercisable for any shares of its Capital Stock, nor does it have any outstanding rights to subscribe for or to purchase, or any options for the purchase, or any arrangements providing for the issuance (contingent or otherwise) of, or any calls against, commitments by or claims against it of any character relating to, any shares of its Capital Stock or any securities convertible into or exchangeable or exercisable for any shares of its Capital Stock. 3.4. Ownership at Closing .

Upon completion of the Closing, (i) there shall be no Options outstanding, (ii) Deltek will own all of the issued and outstanding Capital Stock of the Subsidiaries, free and clear of any Liens, (iii) the record and beneficial owners of all of the Capital Stock of Deltek will be as set forth in the Officer‘s certificate delivered to Buyers by Deltek at Closing in accordance with Section 7.1, (iv) Buyers collectively will own 75% of the equity and voting power of all then outstanding shares of Capital Stock of Deltek, (v) Buyers will have valid title to the Debentures, the Common Shares and the shares of Series A Preferred Stock, free and clear of any Liens (other than any restrictions on transfer under state and/or federal securities laws and restrictions under the Shareholders‘ Agreement) and (vi) Deltek will have valid title to the Redeemed Shares, free and clear of any Liens (other than any restrictions on transfer under state and/or federal securities laws). 3.5. Charter, Bylaws and Corporate Records .

(a) Deltek . True and complete copies of the Amended and Restated Articles of Incorporation and Bylaws of Deltek, as currently in effect, and the minute books and stock record books thereof have been made available to Buyers. The minute books of Deltek contain accurate and complete records of all meetings held of, and corporate actions taken by, the shareholders, the Board of Directors, and committees, if any, of the Board of Directors of Deltek, and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. The

aforesaid charters, bylaws and minutes (including written consents or other actions) are true, correct and complete as of the Effective Date. (b) Subsidiaries . True and complete copies of the charter and bylaws of each of the Subsidiaries, as currently in effect, and the minute books and stock record books thereof have been made available to Buyers. The minute books of each Subsidiary contain accurate and complete records of all meetings held of, and corporate actions taken by, the shareholders, the Board of Directors, and committees, if any, of the Board of Directors of such Subsidiary, and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. The aforesaid charters, bylaws and minutes (including written consents or other actions) are true, correct and complete as of the Effective Date. 3.6. No Violation .

The execution and delivery by Deltek and the Shareholders of this Agreement and the other Transaction Documents to which Deltek or the Shareholders are a party, consummation of the Contemplated Transactions and compliance with the terms of the Transaction Documents to which Deltek or the Shareholders are a party will not (a) cause or result in any violation of or default, give rise to a right of termination, cause the forfeiture of any right, or require any consent, under any provision of (i) the Amended and Restated Articles of Incorporation or Bylaws of Deltek or the organizational documents of any Subsidiary, (ii) except as set forth on Section 3.6 of the Deltek Disclosure Schedule, any mortgage, indenture, trust, lease, partnership or other agreement or other instrument pertaining to the business of Deltek or any Subsidiary or any Law applicable to Deltek or any Subsidiary or by which any of them or any of their respective properties are bound or affected, the result of which, with respect to items identified in clause (ii), would (either individually or in the aggregate) have a Material Adverse Effect on Deltek, or (iii) any Law applicable to the Shareholders or by which their properties are bound or affected; or (b) result in the creation of, or require the creation of, any Lien upon any shares of Capital Stock or any property of Deltek or any Subsidiary. 3.7. Governmental Authorizations and Consents .

No consents, licenses, approvals or authorizations of, or registrations, declarations or filings with, any Governmental Authority (― Governmental Consents ‖) are required to be obtained or made by the Shareholders or Deltek in connection with the execution, delivery, performance, validity and enforceability of this Agreement or any other Transaction Documents to which Deltek or the Shareholders are a party or the consummation by the Shareholders or Deltek of the Contemplated Transactions, other than (a) a filing with the Federal Trade Commission and the Department of Justice under the HSR Act, (b) the material Governmental Consents set forth in Section 3.7 of the Deltek Disclosure Schedule and (c) such other Governmental Consents where the failure to obtain such Governmental Consents would not, individually or in the aggregate, have a Material Adverse Effect on Deltek.

3.8.

Financial Statements .

(a) In General . Included at Exhibit C are the following financial statements (the ― Financial Statements ‖): (i) the December 2003 Financial Statements and (ii) the unaudited consolidated balance sheet of Deltek and the Subsidiaries as of September 30, 2004, and the related unaudited statements of operations and cash flows, respectively, for the nine-month period ended on such date (the ― Most Recent Unaudited Financial Statements ‖). Except as set forth in Section 3.8(a) of the Deltek Disclosure Schedule, each of the Financial Statements has been prepared in accordance with GAAP applied on a basis consistent with prior periods and fairly presents in all material respects the consolidated financial position of Deltek and the Subsidiaries as of its respective date and the consolidated results of operations and shareholders‘ equity, or cash flows, as the case may be, of Deltek and the Subsidiaries for the period covered thereby; subject, with respect to the Most Recent Unaudited Financial Statements, to the absence of footnote disclosure and to normal, recurring end-of-period adjustments which shall, in the aggregate, not be material. (b) Financial Books and Records . The financial books and records of Deltek and the Subsidiaries have been maintained in accordance with sound business practices and fairly and accurately reflect, in all material respects, on a basis consistent with past periods and throughout the periods involved, (i) the consolidated financial position of Deltek and the Subsidiaries and (ii) all transactions of Deltek and the Subsidiaries. Deltek has not received any advice or notification from its independent certified public accountants that Deltek has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the books and records of Deltek or any Subsidiary any properties, assets, liabilities, revenues or expenses. (c) No Undisclosed Liabilities . Except as reflected in the Most Recent Unaudited Financial Statements or as set forth in Section 3.8(c) of the Deltek Disclosure Schedules, neither Deltek nor any Subsidiary (i) has any letters of credit outstanding as to which Deltek or any Subsidiary has any material actual or contingent reimbursement obligations, (ii) is a party to or bound, either absolutely or on a contingent basis, by any material agreement of guarantee, indemnification or any similar commitment with respect to the liabilities or obligations of any other Person (whether accrued, absolute or contingent) or (iii) has any other Liabilities (whether or not the subject of any other representation or warranty hereunder) except for Liabilities that may have arisen in the ordinary course since September 30, 2004 and which do not, individually or in the aggregate, have a Material Adverse Effect on Deltek. (d) Projections . The financial projections provided by Deltek to Buyers in connection with Buyers‘ review of Deltek were prepared in good faith by Deltek‘s management (it being understood and acknowledged by Buyers that projections are subject to uncertainties and contingencies and that actual results may differ in a material respect from such projections). 3.9. Absence of Certain Changes or Events .

Except as set forth in Section 3.9 of the Deltek Disclosure Schedule or as reflected on the Most Recent Unaudited Financial Statements, since December 31, 2003, each of Deltek and the Subsidiaries has conducted its business in the ordinary course and in a manner consistent

with past practice, and there has not been any change in the businesses, operations, properties or condition, financial or otherwise, of Deltek or any Subsidiary, nor has any event, condition or contingency occurred, in either case that is reasonably likely to have (either individually or in the aggregate) a Material Adverse Effect on Deltek. Without limiting the generality of the foregoing, except as set forth in Section 3.9 of the Deltek Disclosure Schedule or as reflected on the Most Recent Unaudited Financial Statements, since December 31, 2003, neither Deltek nor any Subsidiary has: (a) acquired (including by merger, consolidation or acquisition of stock), sold, leased, transferred, mortgaged or assigned any assets, tangible or intangible, other than in the ordinary course of business and in a manner consistent with past practices, for an amount that exceeds $100,000 in the aggregate; (b) incurred, assumed, guaranteed or discharged any Liability, including any indebtedness for borrowed money, except Liabilities disclosed on the December 2003 Balance Sheet or incurred in the ordinary course of business and in a manner consistent with past practices; (c) canceled, compromised, knowingly waived or released any right or claim (or series of related rights and claims) under Material Contracts, Intellectual Property Rights or Intellectual Property, except for cancellations, compromises, waivers or releases that do not, individually or in the aggregate, have a Material Adverse Effect on Deltek; (d) canceled, compromised, knowingly waived or released any account receivable, except in the ordinary course of business consistent with past practices; (e) committed to make any capital expenditure (or series of related capital expenditures) for an amount that exceeds $100,000, other than routine expenditures for information technology infrastructure hardware and software made pursuant to the Financial Model; (f) suffered any damages to or destruction of any tangible assets (whether or not covered by insurance), in any case or in the aggregate in excess of $100,000; (g) modified its charter or bylaws; (h) issued, sold or otherwise permitted to become outstanding any Capital Stock, or split, combined, reclassified, repurchased or redeemed any shares of its Capital Stock other than in connection with the Contemplated Transactions; (i) made any capital investment in, any loan to, or any acquisition of the securities or assets of any other Person other than acquisitions of supplies in the ordinary course of business; (j) entered into any transaction, contract, agreement, indenture, instrument or commitment involving amounts in excess of $100,000 in the aggregate other than in the ordinary course of business and in a manner consistent with past practices and the Advisory Agreement to be entered into at Closing;

(k) failed to maintain in full force and effect insurance policies on all of its properties providing coverage and amounts of coverage comparable to the coverage and amounts of coverage provided under its policies of insurance in effect on December 31, 2003; (l) made any change in the rate of compensation, commission, bonus or other direct or indirect remuneration payable, or agreed to pay, conditionally or otherwise, any bonus, incentive, retention or other compensation, retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of any employee, other than increases and payments in the ordinary course of business and in a manner consistent with past practice in the compensation payable to employees and as provided in the Conversion SAR Amendments, the Executive Severance Agreements, the SAR Amendments and the Severance Agreements; (m) encountered any labor union organizing activity or had any actual or overtly threatened employee strikes, work stoppages, slowdowns or lockouts; (n) materially modified or changed its business organization or materially and adversely modified or changed its relationship with its suppliers, customers and others having business relations with it; (o) except as otherwise required by Law, entered into, amended, modified, varied, altered, or otherwise changed any of the Plans; or (p) authorized, agreed or otherwise committed to any of the foregoing. 3.10. Relationships with Affiliates .

No Shareholder or any Affiliate of any Shareholder (i) has any interest in any property (real, personal, or mixed and whether tangible or intangible), used in or pertaining to the business of Deltek or any Subsidiary as currently conducted or contemplated to be conducted, (ii) owns of record or as a beneficial owner, an equity interest or any other financial or a profit interest in, a Person that has had business dealings or a material financial interest in any transaction with Deltek or a Subsidiary or (iii) is a party to any contract or agreement (except for the Conversion SAR Amendments, Executive Severance Agreements, SAR Amendments and Severance Agreements, and except for employment agreements and other employment related agreements set forth in Section 3.21 or 3.23 of the Deltek Disclosure Schedule) with, or has any claim or right against, Deltek or any Subsidiary. 3.11. Indebtedness to and from Officers and Directors of Deltek .

Neither Deltek nor any Subsidiary is indebted, directly or indirectly, to any Person who immediately prior to the Closing was a Shareholder, officer or director of Deltek or any Subsidiary in any amount whatsoever, other than for salaries for services rendered or reimbursable business expenses, nor is any such Shareholder, officer or director indebted to Deltek or any Subsidiary, except as set forth in Section 3.11 of the Deltek Disclosure Schedule and for advances made to employees of Deltek or any Subsidiary in the ordinary course of business to meet reimbursable business expenses anticipated to be incurred by such obligor.

3.12.

Assets – In General .

The assets and rights of Deltek and the Subsidiaries include all of the assets and rights of Deltek and the Subsidiaries which were used in the conduct of their businesses as conducted as of December 31, 2003, subject to such changes as have occurred in the ordinary course of business since December 31, 2003. All of such assets necessary for the conduct of the businesses of Deltek and the Subsidiaries as of December 31, 2003 are (i) in normal operating condition and repair, ordinary wear and tear excepted, (ii) not in need of maintenance or repair, except for ordinary routine maintenance or repairs that are not material in nature or cost, and (iii) adequate and sufficient for the continuing conduct of the businesses of Deltek and the Subsidiaries as presently conducted. 3.13. Real Property Interests .

Neither Deltek nor any Subsidiary owns any real property. Section 3.13 of the Deltek Disclosure Schedule includes a true and complete list of all leases, subleases, or other occupancies used by Deltek and the Subsidiaries or to which any of them is a party (the ― Real Property Interests ‖). Each of the Real Property Interests listed and described on Section 3.13 of the Deltek Disclosure Schedule is in full force and effect, free and clear of any material Liens created or caused by Deltek or any Subsidiary, and there is no default by Deltek or any Subsidiary in respect of any such Real Property Interests. 3.14. Assets other than Real Property Interests .

(a) Title . Either Deltek or a Subsidiary has good and marketable title to all of the tangible assets, other than Real Property Interests, shown on its books and records and on the December 31, 2003 Balance Sheet or acquired thereafter, in each case free and clear of any material Lien, except for (i) assets disposed of since December 31, 2003 in the ordinary course of business, (ii) liabilities, obligations and Liens reflected in the Financial Statements and (iii) assets subject to valid leases. (b) Personal Property . Set forth on Section 3.14(b) of the Deltek Disclosure Schedule includes a true and complete list of all tangible personal property owned or leased by Deltek or any Subsidiary and having a depreciated book value per unit in excess of $25,000. 3.15. Intellectual Property Rights .

(a) Section 3.15(a) of the Deltek Disclosure Schedule includes a true and complete list of (i) all registered Copyrights, issued Patents and registered and unregistered Trademarks owned by Deltek or a Subsidiary, (ii) all pending applications for Copyrights, Patents and Trademarks filed by or on behalf of Deltek or a Subsidiary, (iii) all Deltek Software products currently being (or actively proposed to be) marketed or supported (the ― Products ‖) and an indication as to which, if any, of such Products have been registered for copyright protection under United States or foreign copyright Law and (iv) all Internet domain name registrations relating to Deltek or the Products. None of such rights has been opposed, cancelled, or held unenforceable, and no Litigation, claim, governmental audit or inquiry is pending, or to the Knowledge of Deltek, is threatened making such claims. Each of the aforesaid Deltek

Intellectual Property Rights is valid, subsisting and enforceable. Each of the aforesaid registered or applied for Intellectual Property Rights is duly registered or filed in the name of Deltek. (b) The business of Deltek and the Subsidiaries as currently conducted does not require or use any Intellectual Property Rights or Intellectual Property not owned by or licensed to Deltek. Section 3.15(b) of the Deltek Disclosure Schedule is a true and complete list of all licenses, sublicenses and other agreements as to which Deltek is a party and pursuant to which Deltek has acquired or is authorized to use any Intellectual Property Rights or Intellectual Property (other than those comprising or reflected in Commercial Software), and except as set forth in Section 3.15(b) of the Deltek Disclosure Schedule, Deltek is not contractually obligated to make any payment or grant any rights to any third party in respect of any Intellectual Property Rights or Intellectual Property used by Deltek and the Subsidiaries or in connection with the business of Deltek and the Subsidiaries as currently conducted (other than those comprising or reflected in Commercial Software). (c) Except as set forth on Section 3.15(c) of the Deltek Disclosure Schedule or pursuant to a license agreement entered into with Deltek in the ordinary course of business, no Person (other than Deltek or a subsidiary) has an interest in or any right to use any Deltek Intellectual Property or Intellectual Property Rights. Except as set forth on Section 3.15(c) of the Deltek Disclosure Schedule, to the Knowledge of Deltek, there has not been, and there is not now, any material unauthorized use, infringement or misappropriation by any third party, including without limitation any employee or former employee of Deltek and the Subsidiaries, of any Deltek Intellectual Property or Intellectual Property Rights. No shareholder, director, officer or employee of, or Consultant to, Deltek has any right to use, other than in connection with the business activities of Deltek as presently conducted, any of Deltek Intellectual Property or Intellectual Property Rights. (d) The operation of the business of Deltek and the Subsidiaries prior to the Effective Date does not misappropriate or infringe in any respect upon the Intellectual Property Rights or Intellectual Property of any Person. No proceeding alleging misappropriation or infringement of the Intellectual Property Rights or Intellectual Property of any Person is pending or, to the Knowledge of Deltek, threatened against Deltek or any Subsidiary, except as set forth on Section 3.15(d) of the Deltek Disclosure Schedule. (e) Deltek has taken (and caused the Subsidiaries to take) reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets. Such Trade Secrets are not part of the public knowledge or literature, and have not been used, divulged, or appropriated either for the benefit of any Person (other than Deltek) or to the detriment of Deltek. (f) Except as set forth in Section 3.15(f) of the Deltek Disclosure Schedule, neither Deltek nor any Subsidiary has granted any third party (i) any right to reproduce, distribute or market any of the Products or any adaptations, translations, or derivative works based on the Products or any portion thereof or (ii) any right to license any of the Products. Each contract listed in Sections 3.15(f)(1)-(6) of the Deltek Disclosure Schedule is identical in all material respects to the forms of such respective agreements provided prior to the date hereof to Buyers in Section 9.2 of the Merrill Corporation Data Site data room.

(g) Except as set forth in Section 3.15(g) of the Deltek Disclosure Schedule no Person has been licensed to use, modify or maintain, or has lawful access to, any source code developed in respect of the Products. (h) To the Knowledge of Deltek, Deltek has obtained (and caused the Subsidiaries to obtain) valid and effective work made for hire agreements and assignments from all current and former independent contractors (collectively, the ― Inventors ‖) of all such Inventors‘ rights in any Deltek Intellectual Property Rights or Intellectual Property developed by such Inventors. Except for such Inventors, all Deltek Intellectual Property and Intellectual Property Rights not licensed from third parties have been developed by employees of Deltek or its Subsidiaries in the scope of their employment and are owned solely by Deltek or its Subsidiaries. (i) Except as set forth in Section 3.15(i) of the Deltek Disclosure Schedule, none of the Deltek Intellectual Property owned or, to the Knowledge of Deltek, licensed by Deltek or its Subsidiaries, contains any Intellectual Property licensed to Deltek or its Subsidiaries pursuant to a GNU General Public License or similar open source license. 3.16. Contracts .

(a) Material Contracts . Section 3.16(a) of the Deltek Disclosure Schedule is a true and complete description of all Material Contracts (as defined below) as of the date hereof to which Deltek or a Subsidiary is a party, by which it is bound, or which otherwise pertain to the business of Deltek or a Subsidiary. For the purposes of this Section 3.16, the term ― Material Contracts ‖ shall mean the following written or oral contracts, agreements, indentures, instruments, commitments and amendments thereof with customers, vendors, lenders and other third parties under which Deltek or a Subsidiary has (or with respect to clause (xi) or (xii), had during the time period referred to) any Liability: (i) end user Product license agreements executed prior to the Effective Date, which require implementation of the licensed Product for a fixed price in excess of $100,000 or were otherwise granted outside the ordinary course, and for which implementation of the licensed Product has not been completed as of the Effective Date; (ii) agreements relating to Intellectual Property Rights or Intellectual Property listed in Sections 3.15(b), 3.15(c), 3.15(f) and 3.15(g) of the Deltek Disclosure Schedule; (iii) marketing, sales, advertising and distribution agreements relating to the Products or Deltek‘s or a Subsidiary‘s service offerings (not included in Section 3.16(a)(ii)); (iv) mortgages, indentures, notes and installment obligations and other instruments and contracts relating to any borrowing of, or issuance of letters of credit for, an amount in excess of $50,000 by one or more of Deltek and the Subsidiaries;

(v) guaranties of any obligation in excess of $50,000 by Deltek or a Subsidiary (excluding any non-recourse guaranties and any endorsement made in the ordinary course of business for collection); (vi) hedging and similar agreements; (vii) contracts, agreements, indentures, instruments or commitments by and between Deltek or a Subsidiary and any Affiliate of Deltek or a Subsidiary, other Persons with whom Deltek or a Subsidiary is not dealing at arm‘s length, employee of Deltek or a Subsidiary or entity controlled by any employees of Deltek or a Subsidiary; (viii) leases of real property under which Deltek or a Subsidiary is the lessor or lessee; (ix) leases of personal property under which Deltek or a Subsidiary is the lessee and is obligated to make payments more than $25,000 per annum; (x) management, employment or service contracts or agreements, and contracts and agreements with Consultants, independent contractors and subcontractors providing for cash compensation or other payments equal to or greater than $100,000 per annum; (xi) agreements relating to any Litigation that was pending against Deltek or a Subsidiary at any time during the last five years; (xii) agreements relating to the acquisition of any business, product line or Capital Stock of any other Person entered into at any time during the last five years; (xiii) agreements limiting the freedom of Deltek or a Subsidiary to engage in any line of business or compete with any Person or other entity or in any market or geographical area, or to solicit any individual or class of individuals for employment (other than nonsolicitation agreements routinely entered into with customers for whom Deltek has provided consulting services and with partners and resellers); and (xiv) any contract, agreement, indenture, instrument or commitment not otherwise listed above with a reasonably expected contract value in excess of $100,000 per annum or that (regardless of amount) otherwise are, individually or in the aggregate, material to Deltek or any Subsidiary. (b) Status of Material Contracts . Except as disclosed in Schedule 3.16(b) of the Deltek Disclosure Schedule, all Material Contracts are valid, binding and in full force and effect and enforceable by Deltek in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization and other Laws of general applicability relating to or affecting creditors‘ rights and to general equity principles. As to each Material Contract, there does not exist thereunder any material breach, violation or default on the part of Deltek or any Subsidiary, or, to the Knowledge of Deltek, any other party to such Material Contract, and there does not exist any event, occurrence or condition, including the consummation of the Contemplated Transactions, which (with or without notice, passage of time, or both) would constitute a breach, violation or default thereunder on the part of Deltek or any Subsidiary, which

breach, violation or default would, individually or in the aggregate, have a Material Adverse Effect on Deltek. No waiver has been granted by Deltek or any Subsidiary or any of the other parties thereto under any of the Material Contracts. A true and complete copy of each written Material Contract has been made available to Buyers. 3.17. Compliance with Laws .

Neither Deltek nor any Subsidiary is in violation of, and, to the Knowledge of Deltek, no event has occurred or circumstance exists that (with or without notice or lapse of time) would constitute or result in a violation by Deltek or any Subsidiary of, or failure on the part of Deltek or any Subsidiary to comply with, any Law that is or was applicable to it or the conduct or operation of its business or the ownership or use of any of its assets, except where any such violation of, or failure to be in compliance with, such Law would not, individually or in the aggregate, have a Material Adverse Effect on Deltek. This Section 3.17 does not extend to compliance with Environmental Laws. 3.18. Environmental Matters .

(i) Each of Deltek and the Subsidiaries has complied in all material respects with, and is in material compliance with, all applicable Environmental Laws, (ii) the premises leased or operated by Deltek or the Subsidiaries are free of any Hazardous Substances constituting a material violation of, or likely to give rise to material liability under, Environmental Laws, and (iii) neither Deltek nor any Subsidiary has released any Hazardous Substances into the environment from or on the premises of Deltek or any Subsidiary which is required by applicable Environmental Law to be abated or remediated by Deltek or any Subsidiary. 3.19. Licenses and Permits . Each of Deltek and the Subsidiaries has all licenses, permits and other authorizations from Governmental Authorities necessary for the conduct of its business as presently conducted (collectively ― Permits ‖), except for where the failure to obtain such Permits would not, individually or in the aggregate, have a Material Adverse Effect on Deltek, and (i) each of said Permits is in full force and effect, (ii) Deltek or the Subsidiary is in full compliance with the terms, provisions and conditions thereof, except where the failure to be so in compliance would not, individually or in the aggregate, have a Material Adverse Effect on Deltek (iii) there are no outstanding violations, notices of noncompliance, judgments, consent decrees, orders or judicial or administrative actions, investigations or proceedings adversely affecting any of said Permits, and (iv) to the Knowledge of Deltek, no condition (including, without limitation, this Agreement and the Contemplated Transactions) exists and no event has occurred which (whether with or without notice, lapse of time or the occurrence of any other event) would reasonably be expected to result in the suspension or revocation of any of said Permits other than by expiration of the term set forth therein, except in each case where such a suspension or revocation would not, individually or in the aggregate, have a Material Adverse Effect on Deltek. Section 3.19 of the Deltek Disclosure Schedule sets forth a list of all material Permits held by Deltek or a Subsidiary.

3.20.

Litigation .

(a) Except as set forth in Section 3.20(a) of the Deltek Disclosure Schedule, there are no actions, suits, proceedings, governmental investigations (collectively, ― Litigation ‖), claims, audits or inquiries pending against Deltek or any Subsidiary or, to the Knowledge of Deltek, threatened, involving Deltek or any Subsidiary or their respective properties or business, at law or in equity or before any Governmental Authority, or that have been settled, dismissed or resolved on or since December 31, 2001. Neither Deltek nor any Subsidiary is subject to any Order arising from any Litigation, claims, audits or inquiries that would, individually or in the aggregate, have a Material Adverse Effect on Deltek. There is no Litigation, claim, audit or inquiry pending, or to the Knowledge of Deltek, threatened (i) against or involving Deltek or any Subsidiary which questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the Contemplated Transactions, (ii) affecting any Shareholder which could reasonably be expected to adversely affect or restrict such Shareholder‘s ability to consummate the Contemplated Transactions, or (iii) against or involving any director, officer or employee in connection with such Person‘s relationship with, or actions taken by such Person on behalf of, Deltek or any Subsidiary. (b) Any Litigation brought in connection with the 2002 ―going private‖ transaction of Deltek has been dismissed with prejudice and no further claims may be brought by any Person against Deltek or any of its directors, officers, shareholders or other Affiliates arising out of such transaction. 3.21. Personnel Matters .

(a) True, accurate, and complete lists of all of the directors, officers, and employees of Deltek and the Subsidiaries (individually and collectively, ― Personnel ‖) as of November 1, 2004 and their positions are included in Section 3.21(a) of the Deltek Disclosure Schedule. True and complete information concerning the respective salaries, wages, bonuses and other compensation paid by Deltek and the Subsidiaries during 2004 and 2003 as well as dates of employment, and date and amount of last salary increase, of such Personnel has been made available to Buyers. (b) Section 3.21(b) of the Deltek Disclosure Schedule sets forth a true, accurate and complete list of all outstanding stock appreciation rights, phantom stock or similar rights that either Deltek or a Subsidiary has granted to any Person. (c) There are no disputes, grievances, or disciplinary actions pending, or, to the Knowledge of Deltek, threatened, by or between Deltek or any Subsidiary and any Personnel. (d) The most recent written personnel policies and manuals of Deltek and the Subsidiaries are listed in Section 3.21(d) of the Deltek Disclosure Schedule, and true, accurate, and complete copies of all such written personnel policies and manuals have been made available to Buyers. (e) Except as otherwise disclosed in Section 3.21(e) and Section 3.23(a) of the Deltek Disclosure Schedule and for the Conversion SAR Amendments, the Executive Severance

Agreements, the SAR Amendments and the Severance Agreements, neither Deltek nor any Subsidiary is a party to any: (i) management, employment, consulting, or other agreement with any Personnel or other Person providing for employment over a period of time or for termination or severance benefits, whether written or unwritten, and whether or not conditioned upon a change in control of Deltek; (ii) bonus pay, incentive compensation, deferred compensation, profit-sharing, stock purchase, stock option or similar plan, agreement, or arrangement, whether written or unwritten; or (iii) collective bargaining agreement or other agreement with any labor organization or union or other Personnel organization (and no such agreement is currently being requested by, or is under discussion by management with, any Personnel or others). 3.22. Labor Matters .

(a) Neither Deltek nor any Subsidiary is obligated by, or subject to, any order of the National Labor Relations Board or other labor board or administration, or any unfair labor practice decision. (b) Neither Deltek nor any Subsidiary is a party or subject to any pending or, to the Knowledge of Deltek, threatened labor or civil rights dispute, controversy or grievance or any unfair labor practice proceeding with respect to claims of, or obligations of, any employee or group of employees. Neither Deltek nor any Subsidiary has received any notice that any labor representation request is pending or is threatened with respect to any employees of Deltek or any Subsidiary. (c) Each of Deltek and the Subsidiaries is in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours. This Section 3.22 does not extend to ERISA. 3.23. Employee Benefit Matters .

(a) Sections 3.23(a) and 3.23(e) of the Deltek Disclosure Schedule list all employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase, profit sharing, savings, disability, incentive, deferred compensation, retirement, severance or other employee benefit plans or programs and all employment or compensation agreements (i) currently maintained for the benefit of, or relating to, current employees and former employees of Deltek, any ERISA Affiliate, or any Subsidiary or (ii) pursuant to which Deltek, any ERISA Affiliate or any Subsidiary has any Liability but excepting the Executive Severance Agreements, the Conversion SAR Amendments, the SAR Amendments and the Severance Agreements (individually, a ― Plan ‖, collectively, the ― Plans ‖). (b) With respect to each Plan, Deltek has made available to Buyers true and complete copies of: (i) all material Plan documents; (ii) if applicable, all funding and administrative arrangement documents, including, but not limited to, trust agreements, insurance

contracts, custodial agreements, investment manager agreements, and service agreements; (iii) if applicable, the latest favorable determination letter received from the IRS regarding the qualification of each Plan covered by Section 401(a) of the Code; (iv) if applicable, the most recently filed Form 5500 for each Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and for each Plan that is an employee welfare benefit plan (as defined in Section 3(1) of ERISA); (v) if applicable, each summary plan description and each summary material modification regarding the terms and provisions thereof; (vi) if applicable, the most recent actuarial report; and (vii) if applicable, any material communication with any Governmental Authority. Deltek has made available to Buyers true and complete copies of each Executive Severance Agreement, Conversion SAR Amendment, SAR Amendment and Severance Agreement and all amendments and other material agreements related to the foregoing. (c) Each Plan and each Executive Severance Agreement, Conversion SAR Amendment, SAR Amendment and Severance Agreement (i) is in compliance in all material respects with all applicable governmental orders, statutes, regulations, and rules issued by a Governmental Authority and (ii) has been operated in compliance in all material respects with its terms. (d) No employees of Deltek, an ERISA Affiliate, or a Subsidiary currently participate or ever have participated in any multiemployer plan, as defined in Section 3(37) of ERISA or a voluntary employees beneficiary association, as defined in Section 501(c)(9) of the Code. (e) Except as required by Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B, no Plan or an ERISA Affiliate provides retiree medical or retiree life insurance benefits. Any Plan designed to satisfy the requirements of Section 125, 401(k), and/or 4980B of the Code satisfies such section in all material respects. (f) Each Plan intended to qualify under Section 401(a) of the Code has been determined to be so qualified by the IRS; and none of such Plans or related trusts, or any administrator or trustee thereof, or party-in-interest or disqualified person thereto has engaged in a transaction that could cause any of them to be liable for a civil penalty under Section 409 or 502(i) or any other section of ERISA or result in a tax under Section 4975 or 4976 or any other section of Chapter 43 of Subtitle D of the Code. (g) Each Plan that is required to be registered or approved by a Governmental Authority has been registered with, or approved by, and has been maintained in accordance with such registration or approval requirements, with such Governmental Authority. (h) All contributions required to be made with respect to any Plan by applicable Law, any Order, or any Plan document or other contractual undertaking, and all premiums due or payable with respect to any insurance policy funding any Plan have been timely paid in full or, to the extent not required to be made or paid on or before the date hereof, have been accrued in accordance with normal accounting practices and are fully reflected on the financial statements of Deltek and the Subsidiaries.

(i) All amounts required to be reserved under each unfunded Plan have been so reserved in accordance with reasonable accounting practices prevailing in the country where such Plan is maintained. (j) To the Knowledge of Deltek, each insurance contract relating to any Plan is valid and enforceable and, to the Knowledge of Deltek, there is no ground on which the insurer might avoid liability thereunder. (k) No Liability under Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code has been or is reasonably expected to be incurred by Deltek or any of its current or former ERISA Affiliates. (l) The execution of this Agreement or any of the other Transaction Documents, and performance of the Contemplated Transactions, will not (either alone or upon the occurrence of any additional or subsequent events) (i) except to the extent provided in Section 5.14, constitute an event under any Plan or related agreement, trust or loan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any current or former Personnel or (ii) result in the triggering or imposition or any restrictions or limitations on the right of Deltek or any Subsidiary to amend or terminate any Plan (or result in any adverse consequence for so doing). (m) The execution of this Agreement or any of the other Transaction Documents, and performance of the Contemplated Transactions, will not (either alone or upon the occurrence of any additional or subsequent events) result in any payment or benefit that will or may be made by Deltek or any Subsidiary that will be characterized as ―excess parachute payment,‖ within the meaning of Section 280G(b)(1) of the Code. 3.24. Tax Matters . (a) Tax Definitions . As used in this Agreement: (i) ― Composite Tax Return ‖ means any Tax Return in connection with any Composite Taxes and any amendment thereto. (ii) ― Composite Taxes ‖ means all state and local withholding Taxes, income Taxes, and estimated Taxes required to be paid or actually paid by Deltek, in each case on behalf of its Shareholders in their capacity as such (and not with respect to wages) in respect of income of Deltek and its Subsidiaries for tax periods ending on or before Closing. (iii) ― Taxes ‖ means all (and ― Tax ‖ shall mean any specific) taxes, government levies or other like government assessments, charges or fees (including estimated taxes, charges and fees) (in each case whether disputed or not), including, without limitation, income, corporation, advance corporation, gross receipts, transfer, excise, property, sales, use, value-added, license, payroll, pay as you earn, withholding, social security and franchise or other governmental taxes or charges, imposed by the United States or any state, county, local or foreign government or subdivision or agency thereof; and such term shall include any interest, penalties or additions to tax attributable to such taxes and any Liability arising under any tax

sharing agreement or any Liability for Taxes of another Person by contract, as a transferee or successor, under Treas. Reg. § 1.1502-6 or analogous state, local, or foreign Law. (iv) ― Tax Return ‖ means any report, return, statement or other written information required to be supplied by Deltek or any Subsidiary to a Taxing Authority in connection with any Taxes and any amendment thereto. (b) Representations Regarding Tax Matters . (i) Except as set forth in Section 3.24(b)(i) of the Deltek Disclosure Schedule, Deltek has elected to be, and subject to Deltek‘s receipt of the Ruling Relief, Deltek has been, a validly electing S Corporation at all times from and after January 1, 2003 for federal Tax purposes. Except for a Shareholder that is not a permissible shareholder of an S Corporation under Section 1361 of the Code (the ― Non-Qualified S Corporation Shareholder ‖), all requirements for making the election to treat Deltek as an S Corporation (the ― S Election ‖) for federal Tax purposes were satisfied at the time the election was made and the election was timely filed and in effect for all taxable years of Deltek for which federal and state income tax returns were filed based upon the continued validity of such S Election. Except for the Non Qualified S Corporation Shareholder, each other Shareholder is a permitted shareholder of an S Corporation under Section 1361 of the Code and the Shareholders collectively (though with differing ownership interests from time to time during this period) are and have been at all times during which the S Election has been in effect, the sole shareholders of Deltek. Deltek has, and at all times from and after January 1, 2003, has had, only one class of common stock and does not have any outstanding options, contracts or other instruments which would constitute a second class of stock within the meaning of Section 1361(b)(1)(D) of the Code and the Treasury Regulations issued thereunder. (ii) Except for the Non-Qualified S Corporation Shareholder, Deltek and the Shareholders (and any former shareholder of Deltek) have made all elections and filings necessary for the Subchapter S election and Subchapter S treatment of Deltek to be recognized at all times from and after January 1, 2003, for state income tax purposes in each state where it files income Tax Returns as an S corporation. Subject to Deltek‘s receipt of the Ruling Relief, the status of Deltek for state tax purposes in each state where it files Tax Returns is set forth in Section 3.24(b)(ii) of the Deltek Disclosure Schedule. Section 3.24(b)(ii) of the Deltek Disclosure Schedule sets forth those states in which Deltek has filed Composite Tax Returns on behalf of its shareholders, and the shareholders included in each of such returns. Deltek has obtained from each shareholder who has been, or will be, included in a Composite Tax Return an authorization to file the Composite Tax Return and to pay Composite Taxes on behalf of such shareholder. (iii) The Shareholders, Deltek, and each Subsidiary has (A) filed with the appropriate Taxing Authorities all material Tax Returns required to have been filed, and such Tax Returns are true, correct and complete in all material respects and (B) paid or made adequate provision on the Financial Statements in accordance with GAAP for the payment of all Taxes of Deltek or any Subsidiary shown to be due on such filed Tax Returns.

(iv) Neither the Shareholders, Deltek, nor any Subsidiary has received any written notice of deficiency or assessment from any federal, state, local, foreign, or other Taxing Authority with respect to liabilities for Taxes of Deltek or any Subsidiary that have not been fully paid or finally settled or provided for in the Financial Statements. (v) Except as set forth in Section 3.24(b)(v) of the Deltek Disclosure Schedule, no claim has ever been made by a Taxing Authority with which Deltek or any Subsidiary does not file Tax Returns that such Taxpayer is or may be subject to taxation by that Taxing Authority. (vi) Except as set forth in Section 3.24(b)(vi) of the Deltek Disclosure Schedule, there is no pending or, to the Knowledge of Deltek, threatened Litigation, claim, audit or inquiry with respect to Deltek or any Subsidiary involving: (1) the assessment or collection of Taxes of Deltek or any Subsidiary, or (2) a claim for refund made by Deltek or any Subsidiary with respect to Taxes previously paid. (vii) Other than the affiliated group of which Deltek was the parent corporation, neither Deltek nor any of its Subsidiaries has ever been included in an affiliated group (as defined in Section 1504 of the Code). (viii) Except as set forth in Section 3.24(b)(viii) of the Deltek Disclosure Schedule, there are no outstanding waivers or extensions of any statute of limitations with respect to the assessment of any Tax payable by Deltek or any Subsidiary. (ix) Neither Deltek nor any Subsidiary is a party to any tax-sharing agreement, or similar agreement, the principal purpose of which agreement is to allocate tax liabilities for which the parties would otherwise be jointly liable, including any terminated agreement, as to which it could have any continuing liabilities after the Closing. (x) Neither Deltek nor any of its Subsidiaries has entered into any closing agreement with any Taxing Authority under Section 7121 of the Code (or any comparable provision of state, local, or foreign law) that would have any effect on any Tax liability of Deltek or its Subsidiaries not yet required to have been paid. (xi) Neither Deltek nor any of its Subsidiaries has made an election, nor are either of them required, to treat any asset as (A) owned by another person pursuant to the provisions of Section 168(f) or (g) of the Code, or the safe harbor leasing provisions of the Code, or (B) tax-exempt bond-financed property or tax-exempt use property within the meaning of Section 168 of the Code. (xii) The unpaid Taxes of Deltek and the Subsidiaries (A) did not, as of September 30, 2004, exceed the reserves for tax liabilities reflected in the Most Recent Unaudited Financial Statements, including any contingency reserves, and (B) will not exceed such reserves as adjusted for the passage of time and in the ordinary course of business through

the Closing Date in accordance with the past custom and practice of Deltek and each Subsidiary in filing its Tax Returns. (xiii) Other than as a result of the operations of the Subsidiaries, Deltek does not have a ―permanent establishment‖ in any foreign country as such term is defined in any applicable Tax treaty or convention between the United States and such foreign country, nor has Deltek or a Subsidiary otherwise taken steps or conducted business operations that will expose it to the taxing jurisdiction of a foreign country. Deltek and each Subsidiary have complied in all respects with all material applicable Tax Laws and regulations of each country (including political subdivisions thereof) in which Deltek or such Subsidiary has performed services. (xiv) Deltek and each Subsidiary has collected or withheld and paid all material Taxes required to have been collected or withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (xv) Section 3.24(b)(xv) of the Deltek Disclosure Schedule lists all federal, state, local, and foreign Tax Returns filed with respect to Deltek or any Subsidiary for taxable periods ended on or after December 31, 2001; and indicates those Tax Returns that currently are the subject of an audit by a Governmental Authority. The Shareholders have delivered or otherwise made available to Buyers correct and complete copies of all federal, state, local and foreign Income Tax Returns filed by Deltek or any Subsidiary and all Composite Tax Returns filed by Deltek or any Subsidiary, as well as any examination reports received by Deltek or any Subsidiary, and statements of deficiencies assessed against or agreed to by Deltek or any Subsidiary, in all cases since December 31, 2001. (xvi) Neither Deltek nor any of its Subsidiaries is or has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Code Section 897(c)(1)(A)(ii). (xvii) Neither Deltek nor any of its Subsidiaries has agreed, nor are either of them required, to make any adjustment to taxable income in any period after the Closing under Section 481(a) of the Code by reason of a change in accounting method or otherwise that will affect the Liability of Deltek or any Subsidiary for Taxes in any taxable period after the Closing Date, except as provided in Section 3.24(b)(xvii) of the Deltek Disclosure Schedule. (xviii) Except as provided in Section 3.24(b)(xviii) of the Deltek Disclosure Schedule, there are no joint ventures, partnerships, limited liability companies or other arrangements or contracts to which Deltek or any of its Subsidiaries is a party that is required to be treated as a partnership for federal income Tax purposes. (xix) The Contemplated Transactions, either by themselves or in conjunction with any other transaction that Deltek or any of its Subsidiaries may have entered into or agreed to, will not give rise to any federal income tax Liability under Section 355(e) of the Code for which Deltek or any of its Subsidiaries may in any way be held liable.

3.25.

Insurance .

Each of Deltek and the Subsidiaries maintains the general liability, professional liability, product liability, fire, casualty, motor vehicle, workers‘ compensation, and other types of insurance shown in Section 3.25 of the Deltek Disclosure Schedule, which insurance is in full force and effect and, to the Knowledge of Deltek, comprised of the types and in the amounts customarily carried by businesses of similar size in the same industry. Deltek and the Subsidiaries have not received any written notice of increase in premiums with respect to, or cancellation or non-renewal of, any of its insurance policies, except for general increases in rates to which similarly situated companies are subject. Deltek and the Subsidiaries have timely filed all claims for which they are seeking payment or other coverage under any of their insurance policies. Deltek and the Subsidiaries have not made any claim against an insurance policy as to which the insurer is denying coverage or defending the claim under a reservation of rights. Deltek and the Subsidiaries are not in default in any material respect under any insurance policy maintained by any of them. 3.26. Bank Accounts .

Section 3.26 of the Deltek Disclosure Schedule sets forth the name of each Person with whom Deltek or a Subsidiary maintains an account or safety deposit box and the names of all Persons authorized to draw thereon or to have access thereto. 3.27. Powers of Attorney .

None of the Shareholders, Deltek or the Subsidiaries has given any irrevocable power of attorney (other than such powers of attorney given in the ordinary course of business with respect to routine matters or as may be necessary or desirable in connection with the consummation of the Contemplated Transactions) to any Person for any purpose whatsoever with respect to Deltek or any Subsidiary. 3.28. No Broker .

Except for William Blair & Company, L.L.C. (― William Blair ‖), which was retained by Deltek pursuant to that certain letter engagement agreement dated February 19, 2004 (the ― William Blair Agreement ‖), none of the Shareholders, Deltek or any Subsidiary, or any of Deltek‘s directors, officers, employees or agents, has employed or incurred any Liability to any broker, finder or agent for any brokerage fees, finder‘s fees, commissions or other amounts with respect to this Agreement, the other Transaction Documents or the Contemplated Transactions. 3.29. Suppliers and Customers .

Deltek has no Knowledge of any termination, cancellation or threatened termination or cancellation of, or any modification in, or any dissatisfaction with, the business relationship between Deltek or any Subsidiary and any supplier, vendor, customer or client of Deltek or any Subsidiary, which would, individually or in the aggregate, have a Material Adverse Effect on Deltek.

3.30.

Offering Exemption .

Assuming the accuracy of the representations and warranties made by Buyers in ARTICLE IV, the offer, sale and issuance of the Debentures, the Common Shares and the shares of Series A Preferred Stock as contemplated hereby will be exempt from registration under the Securities Act of 1933, as amended (the ― Securities Act ‖), and otherwise effected in compliance with all applicable federal and state securities Laws. Deltek has not, directly or indirectly, offered, sold or solicited any offer to buy and will not, directly or indirectly, offer, sell or solicit any offer to buy, any security of a type or in a manner which would be integrated with the sale of the Debentures, the Common Shares or the shares of Series A Preferred Stock and require any of the Debentures, the Common Shares or the shares of Series A Preferred Stock to be registered under the Securities Act. None of Deltek, its Affiliates or any Person acting on its or any of their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offering of the Debentures, the Common Shares or the shares of Series A Preferred Stock. ARTICLE IV. Representations and Warranties of Buyers Subject to the limitations set forth in ARTICLE IX, Buyers, severally in proportion to their respective portions of the Investment Amount, represent and warrant to the Shareholders that the statements contained in this ARTICLE IV are correct and complete on the date hereof and will be correct and complete at the Closing (except for representations and warranties that speak as of a specific date other than the date hereof, which representations and warranties shall on the date hereof be, and shall continue at the Closing to be, correct and complete as of such specified date) as follows: 4.1. Organization and Power .

Each Buyer is a limited partnership duly formed, validly existing and in good standing under the Laws of the state of Delaware and has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Contemplated Transactions. Each Buyer has all requisite power and authority to own, lease or otherwise hold and operate its properties. 4.2. Authorization .

Each Buyer has duly authorized the execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the performance of its obligations hereunder and thereunder. 4.3. Enforceability .

This Agreement and each of the other Transaction Documents constitute, or when executed and delivered will constitute, the valid and legally binding obligation of each Buyer, enforceable in accordance with its terms, except as such enforceability may be limited by

equitable principles and by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or similar Laws relating to or affecting the rights of creditors generally. 4.4. No Violation .

The execution, delivery and performance of this Agreement and the other Transaction Documents executed or to be executed by each Buyer pursuant to this Agreement, and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default under any provision (a) of the formation documents of such Buyer, or (b) of any mortgage, indenture, trust, lease, partnership or other agreement or other instrument, permit, concession, grant, franchise, license, judgment, order, decree, statute, Law, ordinance, rule or regulation applicable to such Buyer or any of its properties or assets, the result of which, with respect to items identified in clause (b) would (either individually or in the aggregate) have a material adverse effect on the operations or financial condition of such Buyer or would materially impair such Buyer‘s ability to consummate the transactions contemplated hereby (a ― Material Adverse Effect on Buyer ‖). 4.5. Government Authorizations and Consents .

No Governmental Consents are required to be obtained or made by either Buyer in connection with the execution, delivery, performance, validity and enforceability of this Agreement or any other Transaction Documents to which it is a party, other than (a) a filing with the Federal Trade Commission and the Department of Justice under the HSR Act and (b) other consents, licenses, approvals, authorizations, registrations or declarations, where the failure to obtain each would not, individually or in the aggregate, have a Material Adverse Effect on each Buyer. Neither Buyer is currently engaged in, or contemplating, any business transaction that would be reasonably expected to hinder or delay the authorizations and consents referred to in this Section 4.5. 4.6. Litigation .

There is no Litigation, claim, audit or inquiry pending, or to the knowledge of Buyers, threatened against or involving either Buyer which questions the validity of this Agreement or any of the other Transaction Documents to which it is a party or seeks to prohibit, enjoin or otherwise challenge either Buyer‘s ability to consummate the Contemplated Transactions. 4.7. Financial Capacity .

Buyers have committed capital in an amount that is sufficient to pay the Investment Amount as required by and in accordance with this Agreement and have provided the Shareholders with evidence of such capability. 4.8. Brokers .

Except for New Mountain Capital LLC and Bain & Company, Inc., no agent, broker, Person or firm acting on behalf of either Buyer or its Affiliates is, or will be, entitled to

any commission or broker‘s or finder‘s fees from any of the parties hereto, or from any Affiliate of any of the parties hereto, in connection with any of the transactions contemplated herein. 4.9. Investment; Securities Laws .

Each Buyer is acquiring the Debentures, the Common Shares and the shares of Series A Preferred Stock to be purchased under this Agreement for its own account, not as a nominee or agent, for investment and not with a view to the distribution thereof (within the meaning of the Securities Act) except in compliance with all applicable federal and state securities Laws. Each Buyer understands that (i) the Debentures, the Common Shares and the shares of Series A Preferred Stock have not been registered under the Securities Act or any state securities Laws, and (ii) the Debentures, the Common Shares and the shares of Series A Preferred Stock may not be sold unless such disposition is registered under the Securities Act and applicable state securities Laws or is exempt from registration thereunder. Each Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the securities to be issued hereunder and of making an informed investment decision and can bear a complete loss of its investment. 4.10. Accredited Investor . Each Buyer is an ―Accredited Investor‖ (as defined in Rule 501(a) under the Securities Act). ARTICLE V. Covenants 5.1. Conduct of Deltek .

(a) Except as otherwise contemplated by this Agreement and the Transaction Documents, during the period from the Effective Date to the Closing Date, the Shareholders shall cause Deltek and its Subsidiaries to, and Deltek shall, and shall cause each of its Subsidiaries to, conduct its business and operations in the ordinary course and to the extent consistent therewith, (1) use reasonable efforts to maintain its assets and properties and to preserve its current relationships with customers, employees, suppliers and others having business dealings with it; (2) use reasonable efforts to perform and comply with its Material Contracts and Permits and comply with applicable Laws; (3) maintain its books and records in the usual, regular and ordinary manner, on a basis consistent with past practice; and (4) use reasonable efforts to preserve the goodwill and ongoing operations of its business. (b) From the Effective Date to the Closing Date, the Shareholders shall cause Deltek and its Subsidiaries not to, and Deltek shall not and shall cause its Subsidiaries not to: (i) fail to invoice its customers and collect its accounts receivable, pay its Taxes and other Liabilities when due and pay or perform its other material obligations when due, in each case in the ordinary course and in a manner consistent with past practice; (ii) increase the rate of compensation of, or pay or agree to pay any benefit to, its directors, officers or employees, except in connection with promotions or periodic

reviews of employees (but not directors or officers) in the ordinary course of business or as may be required by any existing plan, (including, without limitation, any Plan, agreement or arrangement) disclosed in Section 3.21(e) or Section 3.23(a) of the Deltek Disclosure Schedule; (iii) enter into, adopt or amend any Plan, or employment or severance agreement, except as required by Law, or as expressly contemplated by this Agreement; (iv) enter into any agreement providing for the acceleration of payment or performance or other consequence as a result of change in control of Deltek; (v) change its accounting policies or procedures unless required to conform with GAAP; (vi) file or cause to be filed any amended Tax Return with respect to Deltek or its Subsidiaries, make any tax election, or waive to extend the statute of limitations in respect of any Taxes; (vii) settle or compromise any pending or threatened Litigation, claims, audits or inquiries, if such settlement involves the payment of money after the Closing or any equitable relief; (viii) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of Deltek or its Subsidiaries; (ix) declare or pay any cash or non-cash dividend or make any cash or non-cash distribution in respect of, or repurchase or redeem, any shares of Capital Stock, other than pre-Closing distributions to Shareholders of cash not to exceed, in the aggregate, the lesser of (x) the Permitted Cash Distribution Amount and (y) Deltek‘s cash balance at the close of business on the day immediately preceding the Closing Date. (x) enter into any contract that purports to limit, curtail or restrict the kinds of businesses in which it or its existing or future Affiliates may conduct their respective businesses, or the Persons with whom it or its existing or future Affiliates can compete or to whom it or its existing or future Affiliates can sell products or deliver services; or (xi) take any action or omit to take any action which would cause any representation or warranty made by the Shareholders or Deltek in this Agreement or any Transaction Document to be or become untrue in any material respect (disregarding for these purposes any Material Adverse Effect, materiality or corollary qualifications contained therein). 5.2. Access to Information Prior to the Closing .

During the period from the Effective Date through the Closing Date, Deltek shall, and the Shareholders shall cause Deltek to, give Buyers and their authorized representatives reasonable access during regular business hours to all offices, facilities, books and records of Deltek and the Subsidiaries as Buyers may reasonably request; provided , however , that (i) Buyers and their representatives shall take such action as is deemed necessary in the reasonable

judgment of the Shareholders and Deltek to schedule such access and visits through a designated officer of Deltek and in such a way as to avoid disrupting the normal business of Deltek, (ii) Deltek shall not be required to take any action which would constitute a waiver of the attorney-client or other privilege and (iii) Deltek need not supply Buyers with any information which, in the reasonable judgment of the Shareholders or Deltek, Deltek is under a contractual or legal obligation not to supply, including, without limitation, as a result of any governmental or defense industrial security clearance requirement or program requirements of any Governmental Authority prohibiting certain persons from sharing information; provided , however , the Shareholders will use their reasonable efforts to enable Buyers to receive such information. 5.3. Confidentiality .

(a) Between the Effective Date and the Closing Date, Buyers on the one hand and Deltek and the Shareholders on the other hand will maintain in confidence, and will cause the directors, officers, employees, agents and advisors of Buyers and Deltek to maintain in confidence, and not use to the detriment of another party any written, oral, or other information obtained in confidence from another party (or such party‘s agents or advisors) in connection with this Agreement or the Contemplated Transactions, unless (i) such information was independently developed by such disclosing party, is already known to such disclosing party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such disclosing party, (ii) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, or (iii) the furnishing or use of such information is required by Law or legal proceedings. (b) If the Contemplated Transactions are not consummated, each party will return or destroy (provided that any such destruction shall be certified by a duly authorized officer of such party) as much of such written information as the other party may reasonably request in writing. Notwithstanding the foregoing, one copy of any such documents or information may be retained by such party‘s external legal counsel subject to the terms of this Section 5.3, for use only in disputes relating to this Agreement, any of the other Transaction Documents or any of the Contemplated Transactions. 5.4. Best Efforts .

Subject to the terms and conditions of this Agreement, each party will use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable Laws and the terms of this Agreement to consummate the Contemplated Transactions, including (i) the execution and delivery of any further instruments or documents which are reasonably requested by a party or its counsel to any party signatory hereto in order to evidence or facilitate the consummation of the Contemplated Transactions and (ii) assisting in obtaining the financing contemplated by the Credit Agreement. 5.5. HSR Act Filing; Other Filings .

(a) HSR Act . Not later than ten Business Days after the Effective Date and pursuant to the applicable requirements of the HSR Act and the rules and regulations thereunder,

Buyers and the Shareholders shall cause to be filed with the Federal Trade Commission and the Antitrust Division of the Department of Justice all requisite documents and notifications in connection with the Contemplated Transactions. Buyers and the Shareholders shall diligently and expeditiously comply with the HSR Act in connection with securing all necessary approvals or waivers thereunder. (b) Other Filings . Buyers and the Shareholders shall cooperate with one another (i) in determining whether any other action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any Material Contracts, in connection with the consummation of the Contemplated Transactions and (ii) in taking such actions or making any such filings, in furnishing such information as may be required in connection therewith, and in seeking timely to obtain any such actions, consents, approvals or waivers. 5.6. Consents .

Without limiting the generality of Sections 5.4 or 5.5 hereof, each of the parties hereto will use its best efforts (i) to obtain prior to the earlier of the date required (if so required) or the Closing Date, all authorizations, consents, Orders, Permits or approvals of, or give notices to, or make filings, registrations or qualifications with, all Governmental Authorities and any other Person that are required for the consummation of the Contemplated Transactions; (ii) to defend, consistent with applicable principles and requirements of Law, any lawsuit or other legal proceeding, whether judicial or administrative, whether brought derivatively or on behalf of third Persons (including Governmental Authorities) challenging this Agreement or the Contemplated Transactions; and (iii) to furnish to each other such information and assistance as may reasonably be requested in connection with the foregoing. 5.7. Access to Books and Records Following the Closing .

Following the Closing, Deltek shall permit the Shareholders and their authorized representatives, during normal business hours and upon reasonable notice, to have reasonable access to, and examine and make copies of, all books and records of Deltek which relate to transactions or events occurring prior to the Closing or transactions or events occurring subsequent to the Closing which are related to or arise out of transactions or events occurring prior to the Closing; provided , however , (a) that the Shareholders and their representatives shall take such action as is deemed necessary in the reasonable judgment of Deltek to schedule such access and visits through a designated officer of Deltek and in such a way as to avoid disrupting the normal business of Deltek, (b) Deltek shall not be required to take any action which would constitute a waiver of the attorney-client or other privilege and (c) Deltek need not supply the Shareholders with any information which, in the reasonable judgment Deltek, Deltek is under a contractual or legal obligation not to supply, including, without limitation, as a result of any governmental or defense industrial security clearance requirement or program requirements of any Governmental Authority prohibiting certain persons from sharing information. Deltek shall retain all books and records for a period of seven years following the Closing, or for such longer period following the Closing as may be required by applicable Law; provided that, during such period, Deltek may destroy or cause or permit to be destroyed any books or records so long as, at least thirty (30) days prior to such destruction, it provides to the Shareholders‘ Representative

notice of such intent and a reasonable opportunity for the Shareholders‘ Representative to copy such books or records. 5.8. Shareholders‘ Post-Closing Confidentiality Obligation .

Following the Closing, except as otherwise expressly provided in this Agreement or in other agreements delivered in connection herewith, the Shareholders shall, and shall cause their Affiliates and their officers, agents and representatives (collectively, ― Shareholder Affiliates ‖) to, (a) maintain the confidentiality of, (b) not use, and (c) not divulge to any Person, all confidential or proprietary information of Deltek and the Subsidiaries, except with the prior written consent of Buyers, or to the extent that such information is required to be divulged by legal process, or except as may reasonably be necessary in connection with the performance of any indemnification obligations under this Agreement, or except as may be required by Law; provided , however , that the Shareholders and the Shareholder Affiliates shall not be subject to such obligation of confidentiality for information that (i) otherwise becomes lawfully available to the Shareholders or the Shareholder Affiliates after the Closing Date on a nonconfidential basis from a third party who is not under an obligation of confidentiality to Buyers or Deltek or (ii) is or becomes generally available to the public without breach of this Agreement by any of the Shareholders or the Shareholder Affiliates. If any Shareholder or Shareholder Affiliate shall be required by legal process or by Law to divulge any such information, such Shareholder or Shareholder Affiliate shall provide Deltek with prompt written notice of each request so that Deltek may seek an appropriate protective order or other appropriate remedy, and such Shareholder or Shareholder Affiliate shall cooperate with Deltek to obtain a protective order or other remedy; and provided , further , that, in the event that a protective order or other remedy is not obtained, such Shareholder or Shareholder Affiliate shall furnish only that portion of such information which, in the opinion of its counsel, such Shareholder or Shareholder Affiliate is legally compelled to disclose and shall exercise its best efforts to obtain reliable assurance that confidential treatment will be accorded any such information so disclosed. Notwithstanding anything to the contrary in this Agreement (including Section 5.3 and this Section 5.8), the parties may disclose to any and all Persons the tax treatment and tax structure of the Contemplated Transactions. 5.9. Expenses .

Deltek shall be responsible for and pay at Closing (or thereafter to the extent not billed at Closing) (A) the fees, costs and expenses incurred (i) in connection with the bank financing, (ii) by Deltek and the Shareholders‘ Representative in connection with the Contemplated Transactions, including fees and disbursements of counsel, financial advisor (William Blair & Company), consultants and accountants, and (iii) by Buyers in connection with the Contemplated Transactions, including fees and disbursements of counsel, financial advisors, consultants and accountants incurred by Buyers, and including filing fees and expenses incurred by Buyers in connection with any filing by Buyers under the HSR Act and (B) a closing payment to New Mountain Capital, LLC in an amount equal to 2% of the Investment Amount pursuant to the Advisory Agreement. Without limiting the generality of the foregoing, Deltek shall be responsible for and pay all fees and disbursements of Squire, Sanders & Dempsey L.L.P. and Fried, Frank, Harris, Shriver & Jacobson LLP in connection with the Contemplated Transactions. Notwithstanding anything herein to the contrary, the Shareholders shall be responsible for any

fees, costs and expenses incurred by Deltek or the Shareholders, whether prior to or after the Closing, in connection with the preparation and prosecution of the Ruling Request. 5.10. Certain Tax Matters .

(a) S Corporation Status . Deltek and the Shareholders will not revoke Deltek‘s election to be taxed as an S corporation within the meaning of Code Sections 1361 and 1362. Deltek and the Shareholders will not take or allow any action, other than the purchase on the Closing Date of the Common Shares and Series A Preferred Stock by Buyers pursuant to this Agreement, that would result in the termination of Deltek‘s status as a validly electing S corporation within the meaning of Code Sections 1361 and 1362. (b) Tax Return Preparation . Deltek shall prepare, or cause to be prepared, and file, or cause to be filed, on a timely basis (in each case, at its sole cost and expense) all Tax Returns required to be prepared for taxable periods ending prior to the Closing Date and for Straddle Periods. To the extent permitted by Law (i) all such Tax Returns shall be prepared in a manner consistent with past practice of Deltek and the Subsidiaries and (ii) all such Tax Returns in respect of taxable periods beginning prior to the Closing Date shall be prepared and filed on the basis that the relevant taxable period ended as of the close of business on the day before the Closing Date. At least 30 days prior to the due date (including extensions) of any such Tax Returns that are Income Tax Returns or Composite Tax Returns and that are due at least 40 days after the Closing Date, Deltek shall deliver the applicable Tax Return(s) to Shareholders‘ Representative for its approval not to be unreasonably withheld (Deltek shall use its reasonable efforts to deliver any such Tax Returns that are due within the 40 days at least 10 days prior to the due date thereof). For this purpose, the Shareholders‘ Representative‘s withholding of approval of a Tax Return with respect to a period that ends on or before the Closing Date, based upon Deltek‘s failure to adopt in such Tax Return an alternative reporting position suggested by the Shareholders‘ Representative, shall be deemed reasonable if the reporting position proposed by the Shareholders‘ Representative on such Tax Return has a ―reasonable basis,‖ as defined in Section 6662 of the Code and is not inconsistent with past practice. In the event of a disagreement between Deltek and Shareholders‘ Representative, Deltek and Shareholders‘ Representative shall select a certified public accountant, which may include the certified public accountant currently used by Deltek, to resolve such dispute and the decision of such certified public accountant shall be binding on both Deltek and Shareholders‘ Representative. Deltek shall timely pay all Taxes shown due with respect to Tax Returns filed after the Closing Date and shall be entitled to receive reimbursement for such Taxes which are Shareholders‘ Taxes within two (2) days of the payment thereof (such payment to be by wire transfer to the account of Deltek); provided that reimbursement for any Composite Taxes shall be made immediately out of the Escrow to the extent provided in Section 9.2(b)(iii). (c) Cooperation on Tax Matters . (i) Deltek and the Shareholders shall cooperate fully, as and to the extent reasonably requested by any party, in connection with the filing of Tax Returns pursuant to this Section 5.10 and any audit or other Litigation with respect to Taxes. Such cooperation shall include the retention and (upon the other party‘s request) the provision of records and information which are reasonably relevant to any such audit or other Litigation and making

employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Deltek and the Shareholders agree (A) to retain all books and records with respect to Tax matters pertinent to Deltek relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Deltek or the Shareholders‘ Representative, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority, and (B) to give the other reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other so requests, Deltek or the Shareholders, as the case may be, shall allow the other to take possession of such books and records. (ii) Deltek and the Shareholders further agree, upon request, to use their best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the Contemplated Transactions). (iii) Deltek and the Shareholders further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Section 6043 of the Code and all Treasury Department Regulations promulgated thereunder. (d) Certain Taxes . All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with the Contemplated Transactions (including any transfer or similar tax imposed by any Governmental Authority), shall be paid by Deltek. The party required by Law to do so will file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable Law, the other party will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation. (e) Refunds, Carrybacks and Amended Returns . (i) Except for refunds or credits resulting from a carryback of an item from a post-Closing period (which shall be for the account of Deltek), any refunds or credits of Taxes of Deltek or any Subsidiary with respect to Shareholders‘ Taxes shall be for the account of the Shareholders. Deltek shall pay, or cause the applicable Subsidiary to pay, to Shareholders‘ Representative any such refund or credits within fifteen (15) days after the refund is received (or the receipt of the benefit of any credit through a reduction of a Tax payment). Deltek shall file or shall cause any Subsidiary, if Shareholders so request and at Shareholders‘ expense, to file for and obtain any refunds or credits with respect to Taxes to which Shareholders are entitled under this Section 5.10(e). Deltek shall permit the Shareholders‘ Representative to control the prosecution of any such refund claim and, where deemed appropriate by the Shareholders‘ Representative, shall or shall cause any Subsidiary to authorize by appropriate powers of attorney such Persons reasonably satisfactory to Deltek as Shareholders‘ Representative shall designate to represent Deltek or any Subsidiary with respect to such refund claim, provided that Deltek may participate in any such proceeding at its own expense. Notwithstanding the foregoing, the Shareholders‘ Representative may not settle or otherwise resolve any refund claim that could adversely affect the liability of Deltek or any Subsidiary for Taxes (other than

Shareholders‘ Taxes), in respect of any taxable period, without the consent of Deltek (such consent not to be unreasonably withheld). (ii) Deltek (or the applicable Subsidiary) shall be responsible for the preparation and filing of any amended Tax Returns for Shareholders‘ Tax Periods that are required as a result of examination adjustments made by the IRS or by the applicable state, local, or foreign taxing authorities for such taxable years as finally determined. Any required amended Tax Returns resulting from such Shareholders‘ Tax Period examination adjustments, as finally determined, shall be furnished to the Shareholders‘ Representative for approval (which approval shall not be unreasonably withheld), and, if necessary, signature and filing at least 30 days prior to the due date for filing such returns. Nothing in this Section 5.10(e)(ii) shall require Shareholders to amend any Tax Return other than as set forth above. (f) Covenants . (i) Deltek shall not and shall not cause or permit any Subsidiary to file an amended Tax Return or Tax election with respect to any taxable period ending prior to the Closing Date unless (i) Deltek is required to do so as a result of a Tax contest; (ii) the Shareholders‘ Representative consents in its sole discretion or (iii) Deltek obtains a legal opinion from counsel reasonably acceptable to the Shareholders‘ Representative that such amendment is legally required to be filed (provided, further, that such legal opinion may not assume any facts that are disputed in good faith by the Shareholders‘ Representative). (ii) On the Closing Date, Deltek shall not and shall not cause or permit any Subsidiary to effect any extraordinary transactions (including, but not limited to, the distribution of any dividend or the effectuation of any redemption) other than the Contemplated Transactions. On the Closing Date prior to the Closing, the Shareholders shall not cause or permit Deltek or any Subsidiary to effect any extraordinary transactions other than (i) the Contemplated Transactions and (ii) the planned distribution to the Shareholders contemplated by Section 5.1(b)(ix). (g) Buyers and Shareholders agree to cause Deltek and its Subsidiaries to elect not to apply the pro rata allocation rules to an S termination year pursuant to Section 1362(e)(3) of the Code. 5.11. Public Announcements .

None of Buyers, Deltek or the Shareholders will issue any press release or make any public statement with respect to this Agreement or the Contemplated Transactions or disclose the existence of this Agreement to any Person or entity, prior to the Closing and, after the Closing, will not issue any such press release or make any such public statement without the prior consent of the other party (which consent shall not be unreasonably withheld or delayed), subject, in each case, to any applicable disclosure obligations pursuant to applicable Law, provided that the party proposing to issue any press release or similar public announcement or communication in compliance with any such disclosure obligations shall use commercially reasonable efforts to consult in good faith with the other party before doing so. Notwithstanding the foregoing, (i) Deltek, the Shareholders (and the Shareholders‘ Representative) and William

Blair shall have the right following the Closing to disclose to the financial community that Deltek has been sold to Buyers; provided that no terms of the Contemplated Transactions shall be disclosed beyond the parties involved and their respective roles, the general nature of the Contemplated Transactions (i.e. a recapitalization) and the Closing Date, and (ii) Buyers shall have the right to disclose to their limited partners, other investors and potential investors the terms of the Contemplated Transactions in accordance with Buyers‘ customary practice, and shall have the right to disclose publicly that the Contemplated Transactions were consummated so long as the financial terms are not disclosed. 5.12. Communications with Customers and Suppliers .

Deltek and Buyers will mutually agree upon all communications with Deltek‘s suppliers and customers relating to this Agreement and the Contemplated Transactions prior to the Closing Date. 5.13. Directors and Officers Indemnification .

(a) Article 8 of Deltek‘s Amended and Restated Articles of Incorporation, as amended, shall not be amended, repealed or otherwise modified for a period of four (4) years from the Closing Date in any manner that would affect adversely the rights thereunder of individuals who at or at any time prior to the Closing Date were directors, officers, employees, fiduciaries or agents of Deltek. (b) After the Closing, Deltek shall, to the extent set forth under Article 8 of Deltek‘s Amended and Restated Articles of Incorporation, as amended, but in no event to a greater extent than permitted by Law, indemnify and hold harmless each current and former director or officer of Deltek and each Subsidiary and each such person who served at the request of Deltek or any Subsidiary as a director, officer, trustee, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (collectively, for purposes of this Section 5.13 and Section 11.10 only, the ― Indemnified Parties ‖) against all costs and expenses (including reasonable attorneys‘ fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any Litigation (whether arising before or after the Closing Date), whether civil, administrative, criminal or investigative, arising out of or pertaining to any action or omission in their capacities as officers or directors, in each case occurring before the Closing Date (collectively, ― Damages ‖). Without limiting the foregoing, in the event of any such Litigation, (i) Deltek shall, upon receipt of an undertaking by or on behalf of such Indemnified Party to repay such amount if it is ultimately determined that such Indemnified Party was not entitled to be indemnified hereunder, pay the reasonable fees and expenses of one counsel selected by the Shareholders‘ Representative, which counsel shall be reasonably satisfactory to Deltek, promptly after statements therefor are received (unless Deltek shall elect to defend such action) and (ii) Deltek shall reasonably cooperate in the defense of any such matter; provided , however , that Deltek shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld or delayed). In the event that any claim or claims for indemnification are asserted or made within such four-year period, all rights to indemnification in respect of any such claim or claims shall continue until the disposition of any and all such claims.

(c) In the event Deltek or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each case, proper provision shall be made so that the successors and assigns of Deltek honor the indemnification obligations set forth in this Section 5.13. (d) Notwithstanding the foregoing, (i) nothing in Section 5.13 shall limit Buyers‘ remedies under Section 9.2 of this Agreement or otherwise and arising in connection with this Agreement, and (ii) the provisions of this Section 5.13 shall not apply with respect to any Damages or Litigation arising out of or relating to this Agreement, the other Transaction Documents or the Contemplated Transactions. Without limiting the generality of the foregoing, no Shareholder shall have any right under this Section 5.13 to reimbursement from Deltek for any indemnification payment made by such Shareholder pursuant to ARTICLE IX. 5.14. Stock Appreciation Rights .

(a) Vested SARs . At the Closing, to the extent any stock appreciation rights set forth on Exhibit H are vested and have not been previously exercised, such stock appreciation rights shall, pursuant to the terms of the applicable stock appreciation rights plan and agreement be deemed exercised, and the holders thereof (the ― Vested SAR Holders ‖) shall be entitled to receive a payment from Deltek at the Closing in an aggregate amount (the ― Closing SAR Payment ‖) equal to (i) the number of such stock appreciation rights that are deemed exercised multiplied by (ii) the excess of (A) the per share price to be received by the Shareholders pursuant to Section 2.3 for their shares of Common Stock that are redeemed by Deltek pursuant to this Agreement, as determined in accordance with Exhibit I , over (B) the per share exercise price of such vested stock appreciation rights. Deltek shall calculate and communicate to Buyers the amount of the Closing SAR Payment at least two (2) Business Days prior to the Closing Date, and the portion of the Closing SAR Payment to be paid to each Vested SAR Holder shall be set forth opposite such Vested SAR Holder‘s name on a certificate which shall be provided to Buyers by Deltek on such date. (b) Unvested SARs . (i) All stock appreciation rights set forth on Exhibit H that are outstanding but unvested as of the Closing (other than those unvested stock appreciation rights held by the management employees listed on Exhibit J hereto) shall be cancelled without payment of consideration therefor in accordance with the applicable stock appreciation right agreement and plan. Buyers acknowledge that Deltek intends to adopt a retention bonus policy, which shall be reasonably satisfactory to Buyers, that shall be effective as of the Closing and that shall entitle each holder of a stock appreciation right set forth on Exhibit H , which was unvested as of the Closing and cancelled (other than the management employees listed on Exhibit J ), to earn a bonus (a ― Retention Bonus ‖) that shall be paid in four equal installments on the first, second, third and fourth anniversaries of the Closing so long as such holder (1) was employed by Deltek on the Closing Date, (2) is employed by Deltek or an Affiliate on the anniversary date when such payment is due and (3) has been continuously employed by Deltek or an Affiliate from the Closing Date until such anniversary date. Deltek shall calculate and communicate to Buyers for their review and approval (which will not be unreasonably withheld or delayed), the

amount of each such holder‘s Retention Bonus at least two (2) Business Days prior to the Closing Date, which amount shall be set forth opposite such holder‘s name on a certificate which shall be provided to Buyers by Deltek on such date. After the Closing, Deltek shall make all Retention Bonus payments contemplated by such retention bonus policy in accordance with such bonus policy. (ii) All stock appreciation rights listed on Exhibit H that are held by the management employees listed on Exhibit J and are outstanding but unvested as of the Closing shall not be cancelled as contemplated by the applicable stock appreciation right agreement and plan but shall accelerate and be deemed fully vested and exercisable and to have been exercised immediately prior to the Closing pursuant to the applicable Conversion SAR Amendment or SAR Amendment (the ― Accelerated SARs ‖). Deltek shall calculate and communicate to Buyers for their review and approval (which will not be unreasonably withheld or delayed), the amount due each such holder pursuant to the applicable Conversion SAR Amendment or SAR Amendment (the ― Accelerated SAR Payment ‖) at least two (2) Business Days prior to the Closing Date, which amount shall be set forth opposite such holder‘s name on a certificate which shall be provided to Buyers by Deltek on such date. After the Closing, Deltek shall pay such holder the Accelerated SAR Payment in accordance with the terms of the Conversion SAR Amendment or SAR Amendment applicable to such holder. (iii) The aggregate amount of Retention Bonuses and Accelerated SAR Payments (before withholding) shall not exceed $6,450,000 less (x) 60% of the Additional Vested SAR Amount and (y) the aggregate amount, if any, forfeited by holders of such stock appreciation rights upon termination of employment for ―Cause‖ or without ―Good Reason.‖ (c) Withholding . Deltek shall have the right to deduct from any amount payable under this Section 5.14 or any agreement or plan referred to herein any Taxes or other amounts required by applicable Law to be withheld. (d) Offset . Notwithstanding anything contained in this Agreement to the contrary, Deltek shall take all steps necessary so that any amounts owed to Deltek or any of the Subsidiaries by any of their officers or employees under any outstanding loan or payroll advance, including those disclosed in Section 3.11 of the Deltek Disclosure Schedule, shall be offset, first, against the Closing SAR Payment, and, second, if necessary, against the Retention Bonus or Accelerated SAR Payment, as applicable, payable to such officer or employee. 5.15. Indebtedness for Borrowed Money .

Deltek shall, and the Shareholders shall cause Deltek and the Subsidiaries to, pay prior to the Closing any and all Outstanding Indebtedness (other than with respect to letters of credit that have not been drawn down) so that immediately after the Closing neither Deltek nor any Subsidiary shall have any obligation to repay any such Outstanding Indebtedness. 5.16. Interim Report of Gross Software Bookings .

Deltek shall, and the Shareholders shall cause Deltek to, prepare and deliver to Buyers on December 23, 2004, a report, certified as accurate by Deltek‘s Chief Financial Officer, showing Deltek‘s Gross Software Bookings for the fourth quarter of 2004 through December 17, 2004.

In addition, between the Effective Date and the Closing, Deltek shall, and the Shareholders shall cause Deltek to, prepare and deliver to Buyers as soon as practicable after the end of each month, unaudited consolidated financial statements of Deltek and the Subsidiaries prepared on the same basis as the Most Recent Unaudited Financial Statements for such month and a report of the Gross Software Bookings for such month. 5.17. Non-Solicitation .

Between the date hereof and the Closing Date, none of Deltek, its Subsidiaries or the Shareholders shall solicit or facilitate (including by way of providing information regarding Deltek, its Subsidiaries or their businesses to any Person or providing access to any Person) any inquiries, discussions or proposals regarding, continue or enter into negotiations looking toward, or enter into or consummate any agreement or understanding in connection with any proposal regarding, any purchase or other acquisition of all or any portion of Deltek or its Subsidiaries (other than the ordinary course of business sale of products or services) or any Capital Stock (whether newly issued or currently outstanding) of Deltek or any of the Subsidiaries, any merger, business combination or recapitalization involving Deltek or any of the Subsidiaries, the liquidation, dissolution or reorganization of Deltek or any of the Subsidiaries, or any similar transaction; and the Shareholders and Deltek shall cause Deltek‘s and the Subsidiaries‘ directors, officers, representatives and Affiliates to refrain from any of the foregoing. The Shareholders‘ Representative shall promptly notify Buyers if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with, Deltek, any of the Subsidiaries, any Shareholder or any of their respective representatives, including the nature and terms of any of the foregoing and the identity of the parties involved. 5.18. Restrictions on Transfer .

Prior to the Closing, no Shareholder shall sell, transfer, contribute, pledge, distribute or otherwise dispose of or incur any Lien on any shares of Common Stock owned by such Shareholder, or agree to do any of the foregoing. 5.19. Legends . Each certificate representing the Series A Preferred Stock shall bear a legend containing the following words: ―THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT OR LAWS.‖

Each certificate representing shares of Common Stock (including the Common Shares and any new certificates issued to the Shareholders at or after Closing) shall bear a legend containing the following words: ―THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT OR LAWS AND EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF A SHAREHOLDERS‘ AGREEMENT WITH THE COMPANY, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.‖ Each certificate representing the Debentures shall bear a legend as provided for in the form of such Debenture attached hereto. The requirement that the above legends (as they relate to registration under the Securities Act) be placed upon certificates evidencing any such securities shall cease and terminate upon the earliest of the following events: (i) when such securities are transferred in an underwritten public offering, (ii) when such securities are transferred pursuant to Rule 144 under the Securities Act or (iii) if the holder delivers to Deltek an opinion of its counsel or a ―no-action‖ letter from the Staff of the Securities and Exchange Commission, in either case to the effect that registration under the Securities Act is not required upon any sale or other disposition of such shares. The requirement that the above legends (as they relate to the Shareholders‘ Agreement) be placed upon certificates evidencing any such securities shall cease and terminate upon the termination of the Shareholders‘ Agreement. Upon the occurrence of any of the foregoing events, Deltek, upon the surrender of certificates containing such legend, shall, at its own expense, deliver to the holder of any such securities as to which the requirement for such legend shall have terminated, one or more new certificates evidencing such securities not bearing the legend which is no longer applicable. 5.20. New Certificates .

Subject to Section 5.19, upon surrender by any holder to Deltek of any certificate representing Debentures, the Common Shares or shares of Series A Preferred Stock, Deltek at its expense will, within three (3) Business Days, issue in exchange therefor, and deliver to such holder, a new certificate or certificates representing such Debentures, Common Shares or shares of Series A Preferred Stock, as applicable, in such denominations as may be requested by such holder. Upon receipt of evidence of the loss, theft, destruction or mutilation of any certificate representing any Debentures, Common Shares or shares of Series A Preferred Stock, and in case of any such loss, theft or destruction, upon delivery of an indemnity agreement, or in any case of any such mutilation, upon surrender and cancellation of such certificate, Deltek at its expense will, within three (3) Business Days, issue and deliver to the holder a new certificate for such

Debentures, Common Shares or shares of Series A Preferred Stock of like tenor, in lieu of such lost, stolen, destroyed or mutilated certificate. 5.21. Stock Option Plan .

After the Closing, Deltek shall adopt a stock option plan for managers and other employees of Deltek (other than Kenneth E. deLaski) in substantially the form attached hereto as Exhibit K . 5.22. Restated December 2003 Financial Statements .

At the request of Buyers, Deltek shall, as promptly as practicable after receipt of such request, prepare and deliver to Buyers a consolidated balance sheet of Deltek and the Subsidiaries as of December 31, 2003 and related statements of income, changes in equity and cash flows for the year then ended, restated to reflect changes that are associated with the proper recognition of revenue under Deltek‘s customer contracts, and shall request Grant Thornton LLP to audit such financial statements (the ― Restated December 2003 Financial Statements ‖). If requested to be prepared, the Restated December 2003 Financial Statements shall be prepared in accordance with GAAP applied on a basis consistent with prior periods and shall fairly present in all material respects the consolidated financial position of Deltek and the Subsidiaries as of December 31, 2003 and the consolidated results of operations and shareholders‘ equity, or cash flows, as the case may be, of Deltek and the Subsidiaries for the fiscal year ended December 31, 2003. 5.23. Management Sale .

No later than two (2) Business Days prior to the Closing Date, Deltek shall deliver to Buyers for their review and approval (which will not be unreasonably withheld or delayed), a certificate (such certificate, as approved by Buyers, the ―Shareholder Certificate‖) which shall set forth (i) the identities of the Shareholders and Management Members participating in the Management Sale, (ii) the amount of Management Shares to be sold by each such Shareholder set forth opposite such Shareholder‘s name, (iii) the amount of Management Shares to be purchased by each such Management Member set forth opposite such Management Member‘s name, and (iv) the amount of Redeemed Shares to be redeemed from each Shareholder set forth opposite such Shareholder‘s name. 5.24. S Corporation Escrow .

(a) Ruling Relief . Promptly following the date hereof, the Shareholders shall cause Deltek to prepare a ruling request seeking the Ruling Relief (the ― Ruling Request ‖). Prior to filing the Ruling Request, the Shareholders shall submit a draft of the Ruling Request to NMP for its review. NMP shall forward to the Shareholders any comments to the draft Ruling Request within five (5) Business Days after NMP‘s receipt thereof and the Shareholders shall incorporate therein all reasonable comments made by NMP. Thereafter, the Shareholders shall cause Deltek to promptly file the Ruling Request and shall pursue a favorable response to such request for Ruling Relief. The Shareholders shall keep NMP informed of all material developments in the resolution of the Ruling Relief issue, including providing NMP with all written communications

with the IRS promptly upon receipt thereof. Following the Closing, Deltek shall, and Buyers shall cause Deltek to, continue to provide reasonable cooperation to obtain the Ruling Relief. (b) Ruling Relief Granted . If the Ruling Relief is granted by the IRS, then, as promptly as practicable following the delivery by the Shareholders to NMP of evidence reasonably satisfactory to NMP that the Ruling Relief has been granted, the S Corporation Escrow Amount then remaining in the Escrow shall be released from the Escrow to the Shareholders‘ Representative to be distributed to the Shareholders in accordance with the terms of Schedule 1 of the Escrow Agreement. (c) Ruling Relief Denied . If the Ruling Relief is denied by the IRS, or the Shareholders elect not to continue to pursue the Ruling Request, then, as promptly as practicable thereafter, (x) Deltek shall amend all relevant Tax Returns that reflect Deltek as an S Corporation to reflect Deltek‘s status as a C corporation for the taxable periods covered by such Tax Returns, and (y) an amount equal to the aggregate amount payable upon the filing of such amended Tax Returns, plus the amount of any other S Corporation Liability, shall be promptly paid to Deltek out of the S Corporation Escrow Amount then remaining in the Escrow, and the balance of the S Corporation Escrow Amount, if any, shall promptly be released from the Escrow to the Shareholders‘ Representative to be distributed to the Shareholders in accordance with the terms of Schedule 1 of the Escrow Agreement. If the balance then in the Escrow is less than the sum of the amounts payable upon the filing of such amended Tax Returns plus the amount of any other S Corporation Liability plus the aggregate amount of all Claims Outstanding (as defined in the Escrow Agreement) at such time, then the Shareholders shall promptly (but no later than ten (10) Business Days after request by Deltek therefor) pay to Deltek the amount of such shortfall. (d) Instructions to Escrow Agent . NMP and the Shareholders‘ Representative shall promptly (but in any event not more than five (5) Business Days after the date of request by the other party therefor) execute and deliver to the Escrow Agent any joint written instructions necessary to effectuate the provisions of this Section 5.24. ARTICLE VI. Conditions To Closing 6.1. Conditions to All Parties‘ Obligations .

The obligations of the parties to consummate the Contemplated Transactions are subject to the fulfillment prior to or at the Closing of each of the following conditions (any or all of which may be waived by the parties): (a) No Injunction . On the Closing Date, there shall not be in effect any Law, or Order issued by a court of competent jurisdiction, restraining or prohibiting consummation of the transactions contemplated by this Agreement. (b) HSR Act . Any applicable waiting period under the HSR Act relating to the Contemplated Transactions shall have expired or been terminated.

6.2

Conditions to Deltek‘s and the Shareholders‘ Obligations .

The obligations of Deltek and the Shareholders to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by the Shareholders‘ Representative): (a) Representations and Warranties . The representations and warranties of Buyers in this Agreement or in any of the other Transaction Documents shall be true and correct (without regard to any qualifications as to materiality or Material Adverse Effect (or any correlative term) contained in such representations and warranties) as of the date when made and as of the Closing Date, except (a) for representations and warranties made as of a specified date, which shall be measured only as of such specified date, and (b) where the failure to be true and correct, individually or in the aggregate, has not had and would not be reasonably likely to have a Material Adverse Effect. (b) Performance . Buyers shall have performed and complied with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by Buyers at or prior to the Closing. (c) Deliveries . Deltek and the Shareholders shall have received the deliveries contemplated by ARTICLE VIII, as applicable. (d) Escrow Agreement . Buyers and the Escrow Agent shall have entered into the Escrow Agreement. (e) Other Agreements . Buyers shall have entered into each of the Transaction Documents to which they are parties, including, without limitation, the Investor Rights Agreement and the Shareholders‘ Agreement. 6.3 Conditions to Buyers‘ Obligations .

The obligations of Buyers to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole or in part by Buyers): (a) Representations and Warranties . The representations and warranties of the Shareholders in this Agreement or in any of the other Transaction Documents shall be true and correct (without regard to any qualifications as to materiality or Material Adverse Effect (or any correlative term) contained in such representations and warranties) as of the date when made and as of the Closing Date, except (a) for representations and warranties made as of a specified date, which shall be measured only as of such specified date, and (b) where the failure to be true and correct, individually or in the aggregate, has not had and would not be reasonably likely to have a Material Adverse Effect. (b) Performance . The Shareholders and Deltek shall have performed and complied with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by the Shareholders and Deltek at or prior to the Closing.

(c) Consents and Approvals . The Shareholders or Deltek, as the case may be, shall have obtained (i) the material consents and approvals, or waivers thereof, of third parties, including, without limitation, any Governmental Consents and (ii) the material Permits, in each case as set forth on Exhibit L . (d) Deliveries . Buyers shall have received the deliveries contemplated by ARTICLE VII. (e) No Material Adverse Effect . From the Effective Date until the Closing Date, there shall have been no change, or the occurrence of an event which has resulted or can reasonably be expected to result in a change, in the business, operations, properties, contracts, customer relations or condition, financial or otherwise, of Deltek or any Subsidiary that has had or would reasonably be likely to have (either individually or in the aggregate) a Material Adverse Effect on Deltek, other than changes expressly permitted under or contemplated by this Agreement; provided that this Section 6.3(e) shall not entitle Buyers to refuse to close the transactions contemplated by this Agreement unless the Material Adverse Effect gives rise, or could reasonably be expected to give rise, to Losses that in the aggregate are, or could be, in excess of $15,000,000. (f) Matters Referred to in Deltek Disclosure Schedule . All matters referred to in the Deltek Disclosure Schedule as being taken, in process, or intended to be taken shall have been completed to the reasonable satisfaction of Buyers. (g) deLaski Employment Agreement . Kenneth E. deLaski shall have entered into an employment agreement in substantially the form attached hereto as Exhibit M , pursuant to which Mr. deLaski will agree to continue to serve as chief executive officer of Deltek. (h) Gross Software Bookings . Buyers shall have received a report, certified as accurate by Deltek‘s Chief Financial Officer, showing that Deltek‘s Gross Software Bookings for the fourth quarter of 2004 were at least $10,500,000. (i) Credit Facilities . Deltek shall have entered into a credit facility with affiliates of Credit Suisse First Boston or other lenders providing for a $115 million term loan and a revolving credit line of up to $30 million on terms and conditions reasonably acceptable to Buyers and funds thereunder shall be available to Deltek that are sufficient, when added to the Investment Amount, to consummate the Contemplated Transactions. (j) Advisory Agreement . Deltek shall have executed and delivered to New Mountain Capital, LLC an advisory agreement substantially in the form attached hereto as Exhibit N (the ― Advisory Agreement ‖). (k) Audited Financial Statements . Deltek shall have delivered to Buyers either (x) the Restated December 2003 Financial Statements or (y) a certificate of the Chief Financial Officer of Deltek stating that Grant Thornton LLP had advised Deltek that the December 2003 Financial Statements were not required to be restated in order to conform Deltek‘s revenue recognition policy with GAAP.

(l) Noncompetition Agreements . Kenneth E. deLaski and Donald deLaski shall have entered into non-competition agreements in substantially the form attached hereto as Exhibit O . (m) Release . Shareholders shall have entered into a release, releasing all claims against Deltek, in substantially the form attached hereto as Exhibit P . (n) Management Rights Letter . Deltek shall have executed and delivered to NMP a management rights letter, in substantially the form attached hereto as Exhibit Q . (o) Articles of Amendment . The Articles of Amendment embodying the Series A Preferred Stock shall have been duly filed with the State Corporation Commission of Virginia and shall have become effective and shall be in full force and effect. (p) Debentures . Deltek shall have executed and delivered to each of the Buyers and Kenneth E. deLaski the Debentures, in substantially the form attached hereto as Exhibit R . (q) Escrow Agreement . The Shareholders and the Escrow Agent shall have entered into the Escrow Agreement. (r) Management Sale . The Management Sale shall have been completed immediately prior to or concurrently with the Closing in accordance with the terms hereof and the terms of the Shareholder Certificate and the Management Members shall have entered into the Shareholders‘ Agreement. (s) Other Agreements . The other parties thereto shall have entered into the Transaction Documents, including, without limitation, the Investor Rights Agreement and the Shareholders‘ Agreement. ARTICLE VII. Deliveries by the Shareholders and Deltek at Closing On the Closing Date, the Shareholders and/or Deltek shall deliver or cause to be delivered to Buyers (or in the case of Section 7.8, the Shareholders shall deliver to Deltek): 7.1 Officer‘s Certificate .

An Officer‘s Certificate signed by a senior officer of Deltek and the Shareholders‘ Representative certifying (i) to the effect set forth in Sections 6.3(a), 6.3(b), 6.3(e), 6.3(f) and 6.3(r), (ii) that no Litigation is pending or, to such officer‘s knowledge, threatened that seeks to restrain, prohibit or obtain damages or other relief in connection with this Agreement or consummation of the Contemplated Transactions or which questions the validity or legality of any of the Contemplated Transactions and (iii) to the identity of the record and beneficial owners (including type and amount of Capital Stock so owned) of all of the outstanding Capital Stock of Deltek immediately following the Closing.

7.2

Consents . Copies or other evidence reasonably satisfactory to Buyers of the consents and approvals referred to on Exhibit L .

7.3

Resignations of Directors and Officers .

Written resignations, dated as of the Closing Date, of any directors and officers of Deltek and the Subsidiaries requested by Buyers at or prior to Closing. 7.4 William Blair .

Documents reasonably satisfactory to Buyers by which William Blair shall release Deltek from, and the Shareholders shall assume, any and all Liability arising under or related to the indemnification provisions of the William Blair Agreement. 7.5 Outstanding Indebtedness . Documents reasonably satisfactory to Buyers evidencing the repayment in full of all Outstanding Indebtedness. 7.6 Severance Arrangements .

Documents reasonably satisfactory to Buyers from each Person who is a party to a severance agreement with Deltek or the Subsidiaries, including the Severance Agreements, stating that such Person is not entitled to severance or other payment or benefit by reason of any of the Contemplated Transactions, except as set forth in Section 5.14(b)(ii). 7.7 Share Certificates . Stock certificates representing the Common Shares and Series A Preferred Stock. 7.8 Certificates of Redeemed Shares . Stock certificates evidencing the Redeemed Shares, accompanied by stock transfer powers duly executed in blank. 7.9 Further Instruments .

Such further instruments of assignments, conveyance or transfer or other documents of further assurance as Buyers may reasonably request.

ARTICLE VIII. Deliveries by Buyers at Closing On the Closing Date, Buyers shall deliver or cause to be delivered to Deltek and the Shareholders: 8.1 Officer‘s Certificate .

A certificate signed by an authorized signatory of each Buyer certifying (i) to the effect set forth in Sections 6.2(a) and 6.2(b) and (ii) that no Litigation is pending or, to such signatory‘s knowledge, threatened that seeks to restrain, prohibit or obtain damages or other relief in connection with this Agreement or consummation of the Contemplated Transactions or which questions the validity or legality of any of the Contemplated Transactions. 8.2 Payments . The payments set forth in Section 2.3(a). 8.3 Further Instruments . Such documents of further assurance as the Shareholders may reasonably request. ARTICLE IX. Certain Remedies and Limitations 9.1 Expiration of Representations, Warranties and Covenants .

All of the representations and warranties of the parties set forth in this Agreement and the other Transaction Documents shall terminate and expire, and shall cease to be of any force or effect, at 5:00 P.M. (New York time) on the date that is the eighteen (18) month anniversary of the Closing Date, and all liability with respect to such representations and warranties shall thereupon be extinguished (except to the extent a claim for indemnification has been made prior to such time for any breach thereof); provided that the representations and warranties of the Shareholders set forth in (a) Section 3.24 (Tax Matters) shall continue in full force and effect until 30 days after all applicable statutes of limitations, including waivers and extensions, have expired with respect to the matters addressed therein; (b) Sections 3.1(a) and (b)(ii) (Organization and Power), Section 3.2 (Authorization and Enforceability), Section 3.3(a) (Capitalization of Deltek), Section 3.4 (Ownership at Closing), Section 3.10 (Relationship with Affiliates), Section 3.11 (Indebtedness to and from Officers and Directors of Deltek), Section 3.20(b) (Certain Litigation), Section 3.28 (No Broker), the first sentence of Section 4.1 (Organization and Power), Section 4.2 (Authorization), Section 4.3 (Enforceability), Section 4.8 (Brokers), Section 4.9 (Investment; Securities Laws) and Section 4.10 (Accredited Investor) shall survive indefinitely; and (c) Section 3.18 (Environmental Matters) shall survive until the third anniversary of the Closing Date (except to the extent a claim for indemnification has been made prior to such time for any breach thereof) (the representations and warranties of the Shareholders referred to in clauses (a), (b) and (c) are collectively referred to as the ― Surviving Representations ‖). All covenants and agreements contained herein shall survive the Closing indefinitely.

9.2

Indemnification .

(a) By Buyers . Subject to the provisions of Section 9.1 hereof relating to the survival of representations and warranties and the other limitations contained herein, from and after the Closing, Buyers, severally in proportion to their respective portions of the Investment Amount, agree to indemnify, defend and hold harmless the Shareholders, their Affiliates, and their officers, directors, partners, employees, agents, representatives, successors and any assigns of any of the foregoing (― Shareholder Indemnitees ‖) against all claims, losses, liabilities, damages, deficiencies, interest and penalties, costs and expenses, including, without limitation, losses resulting from the defense, settlement and/or compromise of a claim and/or demand and/or assessment, reasonable attorneys‘, accountants‘ and expert witnesses‘ fees, costs and expenses of investigation, and the costs and expenses of enforcing the indemnification provided hereunder (hereafter individually a ― Loss ‖ and collectively ― Losses ‖) incurred by any of the Shareholder Indemnitees (after deduction of the amount of any insurance proceeds recovered by the Shareholder Indemnitees) arising out of or relating to: (A) any breach of any representation or warranty made by Buyers in this Agreement or any other Transaction Document or (B) any breach of any covenant, agreement or obligation of Buyers contained in this Agreement or any other Transaction Document. Notwithstanding the foregoing, with respect to direct claims made by a Shareholder Indemnitee against Buyers, damages shall constitute Losses for the purpose of this Section 9.2(a) only to the extent of the direct damages incurred by the Shareholder Indemnitee (excluding consequential damages, whether or not foreseeable), but Buyers shall be liable for all damages (including consequential damages) that form part of a third party claim against a Shareholder Indemnitee. (b) By the Shareholders . (i) Subject to the provisions of Section 9.1 relating to the survival of representations and warranties and the other limitations contained herein, from and after the Closing, the Shareholders severally, in proportion to the Shareholders‘ Proportionate Interests, agree to indemnify, defend and hold harmless Buyers, their Affiliates, and the officers, directors, partners, employees, agents, representatives, successors and assigns of any of the foregoing (collectively, ― Buyer Indemnitees ‖) against all Losses incurred by any of Buyer Indemnitees (after deduction of the amount of any insurance proceeds recovered by the Buyer Indemnitees) and arising out of or relating to: (A) any breach of any representation or warranty made by the Shareholders in this Agreement or any other Transaction Document, (B) any breach of any covenant, agreement or obligation of the Shareholders contained in this Agreement or any other Transaction Document, (C) any breach by Deltek of any covenant, agreement or obligation contained in this Agreement or any other Transaction Document and required to be performed or complied with by Deltek prior to the Closing, (D) Shareholders‘ Taxes, (E) any employee severance obligations incurred by Deltek or any Subsidiary arising out of the consummation of the Contemplated Transactions (including under the Executive Severance Agreements and Severance Agreements) other than those obligations incurred under Section 5.14(b)(ii), and (F) any Losses arising out of or relating to claims made by holders of Deltek‘s stock appreciation rights that in any way relate to the consideration paid to such holders with respect to the exercise or termination of their stock appreciation rights in connection with the Contemplated Transactions. Notwithstanding the foregoing, with respect to direct claims made by a Buyer

Indemnitee against the Shareholders, damages shall constitute Losses for the purpose of this Section 9.2(b) only to the extent of the direct damages incurred by the Buyer Indemnitee (excluding consequential damages, whether or not foreseeable), but the Shareholders shall be liable for all damages (including consequential damages) that form part of a third party claim against a Buyer Indemnitee. In addition, notwithstanding the foregoing, Losses shall not include, and the Buyer Indemnitees shall not be entitled to indemnification from the Shareholders under this Section 9.2(b) with respect to (i) any restatement of Deltek‘s financial statements after the Closing to conform Deltek‘s revenue recognition policy or Deltek‘s manner of amortizing Software development costs with GAAP, (ii) any other adjustment after the Closing to Deltek‘s financial statements that has a non-cash impact on Deltek and solely relates to shifting amounts from one year to the immediately succeeding year or the immediately preceding year, (iii) any Patent Infringement Losses attributable to periods from and after the eighteen-month anniversary of the Closing Date, (iv) any Patent Infringement Losses in excess of $10 million in the aggregate that are attributable to periods prior to the Closing or to periods from and after the Closing but prior to the eighteen-month anniversary of the Closing Date, or (v) up to $50,000 of legal fees and expenses incurred by Deltek in defending or settling any Patent Infringement Claim. (ii) The Shareholders shall be responsible for (i) all Income Taxes of Deltek and the Subsidiaries with respect to taxable periods ending on or before the Closing Date, (ii) all Income Taxes of Deltek and the Subsidiaries with respect to the portion of any Straddle Period ending on the day before the Closing Date (such liability to be determined on a closing-of-the-books method), (iii) Income Taxes in respect of any taxable period that ends on, before or includes the Closing Date for which Deltek or any Subsidiary is liable pursuant to Treasury Regulation § 1.1502-6 (or any analogous or similar state, local, or foreign Law), (iv) all Composite Taxes of Deltek and the Subsidiaries with respect to taxable periods ending on or before the Closing Date and with respect to all Straddle Periods and (v) all Other Taxes of Deltek and the Subsidiaries that were required to have been paid at any time on or before the Closing Date (all such Taxes, ― Shareholders‘ Taxes ‖). Such obligations shall be without regard to whether there was any breach of any representation or warranty under ARTICLE III with respect to such Tax or any disclosures that may have been made with respect to ARTICLE III or otherwise. (iii) Any liability of the Shareholders pursuant to Section 9.2(b)(ii) in respect of Composite Taxes shall be paid out of the balance in the Escrow not otherwise reserved for indemnification claims made against the Escrow under this Section 9.2; provided that if the balance in the Escrow is insufficient or if the Escrow has terminated, such liability shall be paid (without duplication) directly by the Shareholders. (c) Limitations on Rights of Buyer Indemnitees . Except as set forth below, the Shareholders shall not be required to indemnify Buyer Indemnitees with respect to any claim for indemnification resulting from or arising out of matters described in Section 9.2(b)(i)(A) unless and until the aggregate amount of all such claims against Buyer Indemnitees for such matters exceeds $3,000,000, in which event Buyer Indemnitees will be entitled to recover all Losses resulting from or arising out of such matters to the extent the aggregate amount of such Losses exceeds $3,000,000; provided , however , that the foregoing limitation shall not apply to a claim for indemnification to the extent such claim is based upon a breach of any of the Surviving

Representations or fraud; and provided further , that the Shareholders‘ maximum liability to Buyer Indemnitees under Section 9.2(b)(i)(A) shall not exceed $75,000,000 in the aggregate, except for claims based upon a breach of any of the Surviving Representations (other than representations and warranties of the Shareholders set forth in Section 3.18 (Environmental Matters)) or fraud. In no event shall the Shareholders‘ maximum liability to Buyer Indemnitees under Section 9.2(b)(i)(A) exceed in the aggregate the amount of the Redemption Consideration plus the Closing SAR Payment. The maximum liability of each Shareholder to Buyer Indemnitees under Section 9.2(b)(i)(A) will not exceed such Shareholder‘s Proportionate Interest of the maximum aggregate liability of all Shareholders to Buyer Indemnitees under Section 9.2(b)(i)(A). (d) Procedure . (i) Third-Party Actions (Other than Tax Contests) . (1) If either a Buyer Indemnitee, on the one hand, or a Shareholder Indemnitee, on the other hand (the ― Indemnitee ‖), receives notice or otherwise obtains knowledge of any matter or any threatened matter that may give rise to an indemnification claim against the other party (the ― Indemnitor ‖), then the Indemnitee shall promptly deliver to the Indemnitor a written notice describing such matter in reasonable detail. The failure to make timely delivery of such written notice by the Indemnitee to the Indemnitor shall not relieve the Indemnitor from any liability under this Section 9.2 with respect to such matter, except to the extent the Indemnitor is actually materially prejudiced by failure to give such notice. The Indemnitor shall have the right, at its option, to assume the defense of any such matter with its own counsel, but only if the Indemnitor simultaneously agrees to indemnify the Indemnitee for such matter. If the Indemnitor elects to assume the defense of and indemnification for any such matter, then: (A) Notwithstanding anything to the contrary contained in this Agreement, the Indemnitor shall not be required to pay or otherwise indemnify the Indemnitee against any attorneys‘ fees or other expenses incurred on behalf of the Indemnitee in connection with such matter following the Indemnitor‘s election to assume the defense of such matter, unless (i) the Indemnitor fails to defend diligently the action or proceeding within ten (10) days after receiving notice of such failure from the Indemnitee; (ii) the Indemnitee reasonably shall have concluded (upon advice of its counsel) that there may be one or more legal defenses available to such Indemnitee or other Indemnitees that are not available to the Indemnitor; or (iii) the Indemnitee reasonably shall have concluded (upon advice of its counsel) that, with respect to such claims, the Indemnitee and the Indemnitor may have different, conflicting, or adverse legal positions or interests; (B) the Indemnitee shall make available to the Indemnitor all books, records and other documents and materials that are under the direct or indirect control of the Indemnitee or any of the Indemnitee‘s agents and that the Indemnitor considers necessary or desirable for the defense of such matter; (C) the Indemnitee shall use commercially reasonable efforts to take, or cause to be taken all actions and to do, or cause to be done, all things necessary

or, in the reasonable opinion of the Indemnitor, desirable to the defense of, or any settlement, compromise or adjustment relating to, such matter consistent with the other provisions hereof, including (x) supplying such factual and technical information as the Indemnitee shall possess as the Indemnitor shall reasonably request, (y) making available to the Indemnitor persons employed by the Indemnitee, and (z) maintaining in existence and making available to the Indemnitor books, records and files of the Indemnitee relating to any potential claim. Indemnitor shall reimburse Indemnitee for the reasonable out-of-pocket expenses and other costs incurred by Indemnitee in the performance of its obligations under this Section 9.2(d)(i)(1)(C); (D) the Indemnitee shall otherwise fully cooperate as reasonably requested by the Indemnitor in the defense of such matter; (E) the Indemnitee shall not admit any liability with respect to such matter; and (F) the Indemnitor shall not, without the written consent of the Indemnitee, which shall not be unreasonably withheld or delayed, settle or compromise any pending or threatened Litigation in respect of which indemnification may be sought hereunder (whether or not the Indemnitee is an actual or potential party to such Litigation) or consent to the entry of any judgment (i) which does not, to the extent that the Indemnitee or any of its Affiliates may have any liability with respect to such Litigation, include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release of the Indemnitee and its Affiliates from all liability in respect of such Litigation, (ii) which includes any statement as to or an admission of fact, culpability or a failure to act, by or on behalf of the Indemnitee or any of its Affiliates, or (iii) in any manner that involves any injunctive relief against the Indemnitee or may materially and adversely affect the Indemnitee or any of its Affiliates. If the Indemnitor elects not to assume the defense of and indemnification for such matter, then the Indemnitee shall proceed diligently to defend such matter with the assistance of counsel reasonably satisfactory to the Indemnitor, provided , however , that the Indemnitee shall not settle, adjust or compromise such matter, or admit any liability with respect to such matter, without the prior written consent of the Indemnitor, such consent not to be unreasonably withheld or delayed. (2) The procedures in Section 9.2(d)(i) shall not apply to (A) matters subject to Section 9.2(d)(ii) (Tax Contests) and (B) direct claims of Shareholder Indemnitees and Buyer Indemnitees against Buyers and the Shareholders, respectively, under Section 9.2 that are not based upon claims asserted by third parties. (ii) Tax Contests . (1) The party obliged to provide indemnification for Taxes under Section 9.2(a) or 9.2(b) (the ― Tax Indemnitor ‖) shall assume and direct the defense or settlement of any hearing, arbitration, suit, audit or other proceeding (each a ― Tax Contest ‖) commenced, filed or otherwise initiated or convened to investigate or resolve the existence and extent of a liability with respect to which the Tax Indemnitor would have an indemnification obligation under Section 9.2(a) or 9.2(b) (― Tax Indemnification Liability ‖). The party entitled to

be indemnified under this Section 9.2(d)(ii) (the ― Tax Indemnitee ‖) shall have the right to participate, at its own cost and expense, in the defense of such Tax Contest, it being understood that the Tax Indemnitor shall control such Tax Contest. (2) The Tax Indemnitor shall pay all out-of-pocket expenses and other costs related to the Tax Indemnification Liability, including but not limited to reasonable fees for attorneys, accountants, expert witnesses or other consultants retained by the Tax Indemnitor and/or Tax Indemnitee, and incurred at any time during which the Tax Indemnitor is controlling and directing the Tax Contest in respect of which such fees are incurred. To the extent that any such expenses and other costs have been or are paid by a Tax Indemnitee, the Tax Indemnitor shall promptly reimburse the Tax Indemnitee therefor. Notwithstanding the foregoing two sentences, the Tax Indemnitor shall not be required to pay, reimburse or otherwise indemnify the Tax Indemnitee against any out-of-pocket expenses (including fees for attorneys, accountants, expert witnesses or other consultants) and other costs incurred on behalf of the Tax Indemnitee in connection with a Tax Contest following the Tax Indemnitor‘s assumption of the control and defense of the Tax Context, unless (i) the Tax Indemnitor fails to defend diligently the Tax Contest within ten (10) days after receiving notice of such failure from the Tax Indemnitee; (ii) the Tax Indemnitee reasonably shall have concluded (upon advice of its counsel) that there may be one or more legal defenses available to such Tax Indemnitee or other Tax Indemnitees that are not available to the Tax Indemnitor; or (iii) the Tax Indemnitee reasonably shall have concluded (upon advice of its counsel or accountants) that, with respect to such claims, the Tax Indemnitee and the Tax Indemnitor may have different, conflicting, or adverse legal positions or interests (including without limitation, differing, conflicting or adverse interests that may arise because the same or similar issues, which are the subject of the claim, will, or will likely, be present in respect of periods ending after the Closing Date and the conduct of the Tax Contest or resolution of the claim may adversely affect the outcome of future potential Tax Contests with respect to such same or similar issues for which the Tax Indemnitee is not fully indemnified by the Tax Indemnitor pursuant to Sections 9.2(a) or 9.2(b)). (3) Any Tax Indemnitee shall give written notice to the Tax Indemnitor of any settlement proposed by the Taxing Authority. The Tax Indemnitor shall have the right, in its sole discretion, to settle any claim for which indemnification has been sought under this Section 9.2(d)(ii); provided , however, that the Tax Indemnitor shall not enter into any settlement, closing agreement or other agreement with respect to any Tax liability without the prior written consent of the Tax Indemnitee (such consent not to be unreasonably withheld or delayed) if such settlement, closing agreement or other agreement will adversely affect Taxes payable by the Tax Indemnitee or its Affiliates for taxable periods or portions thereof beginning after the Closing Date. (4) Any indemnity payment that would otherwise be required to be made by a Tax Indemnitor shall be reduced to the extent that, as a result of the Tax Contest relating to such payment, the Tax Indemnitee shall be entitled to a deduction, loss, credit, refund, or other tax benefit (each a ― Tax Benefit ‖), in the case where Deltek is the Tax Indemnitee, in respect of a taxable period which is not a Shareholder Tax Period. The amount of such reduction shall be the present value of such Tax Benefit to the Tax Indemnitee using a discount rate of 8%

and taking into account the Tax Indemnitee‘s reasonable projections of its ability to utilize such deduction, loss or credit to actually reduce its projected Tax liability. (e) Costs Related to Direct Claims . Notwithstanding anything in this Section 9.2 to the contrary, except (i) as otherwise may be ordered by a court of competent jurisdiction, (ii) in connection with the enforcement of a judgment by a court of competent jurisdiction that such party is entitled to indemnification hereunder and (iii) in connection with a claim for fraud, Buyer Indemnitees and Shareholder Indemnitees shall bear their own costs, including counsel fees and expenses, incurred in connection with direct claims against the Shareholders and Buyers, respectively, hereunder that are not based upon claims asserted by third parties. (f) Exclusivity . Should the Closing occur, the right of each party hereto to assert indemnification claims and receive indemnification payments pursuant to this Section 9.2 shall be the sole and exclusive right and remedy exercisable by such party with respect to any breach by the other party hereto of any representation or warranty in this Agreement or any other Transaction Document except in the case of fraud. (g) Subrogation. To the extent that the Indemnitor makes or is required to make any indemnification payment to the Indemnitee, the Indemnitor shall be entitled to exercise, and shall be subrogated to, any rights and remedies (including rights of indemnity, rights of contribution and other rights of recovery) that the Indemnitee or any of the Indemnitee‘s Affiliates may have against any other Person with respect to any Losses to which such indemnification payment is directly related, so long as the Indemnitee is not adversely affected thereby. The Indemnitee shall permit the Indemnitor to use the name of the Indemnitee and the names of the Indemnitee‘s Affiliates in any transaction or in any proceeding or other matter involving any of such rights or remedies; and the Indemnitee shall take such actions as the Indemnitor may reasonably request for the purpose of enabling the Indemnitee to perfect or exercise the Indemnitor‘s right of subrogation hereunder. (h) Indemnification Payments as Investment Amount Adjustment . Any payments made by Buyers or Deltek under this Section 9.2 shall be considered an increase to the Redemption Consideration. Any payments made by the Shareholders to Buyers under this Section 9.2 shall be considered a reduction of the portion of the Investment Amount allocable to the Common Shares purchased by Buyers, and any payments made by the Shareholders to Deltek under this Section 9.2 shall be considered a reduction of the Redemption Consideration. (i) No Materiality . For purposes of indemnification under this Section 9.2, each of the representations and warranties that contain any qualifications as to materiality or Material Adverse Effect (or any correlative terms) shall be deemed to have been given as though there were no such qualifications in determining whether there has been any breach of any representations or warranties hereunder. (j) Allocation of Payments among Buyer Indemnitees . For the avoidance of doubt, in the event of any Loss suffered by Buyers, any indemnity payment required under this Section 9.2 shall be paid to the appropriate Buyer. In the event of any Loss suffered by Deltek, any indemnity payment required under this Section 9.2 shall be paid to Deltek.

9.3

No Set-Off .

Except as provided in Section 2.4(c), neither Buyers nor the Shareholders shall have any right to set-off any indemnification obligations that either may have under Section 9.2 against any other obligations or amounts due to Buyers or the Shareholders, as applicable, including, without limitation, under any other provisions of this Agreement or under any other Transaction Document, including the Debentures. 9.4 Retention of Records .

From and after the Effective Date, Buyers and the Shareholders shall preserve all books, records and other documents, materials and information (― Representation Records ‖) relevant to the representations, warranties and covenants set forth in this Agreement for a period of three years following the Effective Date or for such longer period as the rights of the parties hereunder may exist. After Buyers and the Shareholders are no longer obligated to retain the Representation Records pursuant to this Section 9.4, Buyers or the Shareholders, as applicable, shall give the other Party not less than thirty (30) days prior written notice before destroying any Representation Records and, if the other Party so requests, shall deliver at the other Party‘s expense, such Representation Records to the other Party instead of destroying such Representation Records. 9.5 No Investigation of Deltek .

Notwithstanding anything to the contrary in this Agreement, (i) no investigation of Deltek and the Subsidiaries by Buyers or their representatives or advisors (or any knowledge of Buyers or their representatives or advisors) prior to or after the Effective Date shall, and (ii) the delivery by Buyers of any document, waiver or other instrument or written communication hereunder (other than the Deltek Disclosure Schedule delivered to Buyers on the Effective Date) shall not, diminish, obviate or cure any breach of any of the representations, warranties, covenants or agreements of Deltek or the Shareholders contained in this Agreement or any other Transaction Documents. Article X. Termination 10.1 Termination . This Agreement may be terminated and the transactions contemplated hereby may be abandoned: (a) at any time, by mutual written agreement of the Shareholders‘ Representative and Buyers; (b) by written notice by either the Shareholders‘ Representative or Buyers to the other party, at any time after March 31, 2005 if the Closing shall not have occurred on or prior to such date; provided , however , that the right to terminate this Agreement under this Section 10.1(b) shall not be available to such party if the action or inaction of such party (or in the case of the Shareholders‘ Representative, Deltek or the Shareholders) or any of its Affiliates

has been a principal cause of or resulted in the failure of the Closing to occur on or before such date and such action or failure to act constitutes a breach of this Agreement. 10.2 Procedure and Effect of Termination .

In the event of the termination of this Agreement and the abandonment of the Contemplated Transactions contemplated hereby, written notice thereof shall be given by a terminating party to the other parties, and this Agreement shall terminate and the Contemplated Transactions shall be abandoned without further action by Deltek, the Shareholders or Buyers. If this Agreement is terminated pursuant to Section 10.1: (a) Buyers shall promptly cause to be returned to Deltek or destroy all documents and information obtained in connection with this Agreement and the Contemplated Transactions and all documents and information obtained in connection with Buyers‘ investigation of Deltek from Deltek or its representatives, including any copies made by or supplied to Buyers or any of Buyers‘ agents of any such documents or information. Notwithstanding the foregoing, one copy of such documents or information may be retained by Buyers‘ external legal counsel for evidentiary purposes in the case of any Litigation or threatened Litigation relating to this Agreement or any of the Contemplated Transactions. (b) No party hereto shall have any obligation or liability to the other parties hereto, except that the parties hereto shall remain bound by the provisions of this Section 10.2 and Sections 5.3, 5.9 and 5.11 and ARTICLE XI and by the provisions of the Confidentiality Agreement between New Mountain Capital, LLC and Deltek dated October 7, 2004; provided , however , that nothing herein shall relieve the defaulting or breaching party from any liability to the other parties hereto. ARTICLE XI. Miscellaneous 11.1 Material Adverse Effect .

None of the following shall be taken into account, either singly or in the aggregate, in determining whether there has been or would be a Material Adverse Effect on Deltek or Buyers: (1) any adverse change, event or effect that is proximately caused by conditions affecting the United States or international economy generally (unless such conditions adversely affect the party in question in a materially disproportionate manner), (2) any adverse change, event or effect that is proximately caused by any industry in which such party competes (unless such conditions adversely affect the party in question in a materially disproportionate manner), and (3) any adverse change, event or effect that is proximately caused by any breach by the party in question of any covenant or obligation set forth in this Agreement. 11.2 Disclaimer of Projections, Etc .

The Shareholders make no representation or warranty to Buyers except as specifically made in this Agreement and the other Transaction Documents. In particular, except as set forth in Section 3.8(d), the Shareholders make no representation or warranty to Buyers with respect to the contents of any management presentations to Buyers or the data room made

available to Buyers, including the certainty or accuracy of any financial projection or forecast delivered by or on behalf of the Shareholders to Buyers. Buyers acknowledge that (a) there are uncertainties inherent in attempting to make such projections and forecasts, (b) they are familiar with such uncertainties, (c) they have had an opportunity to review and ask questions regarding any assumptions used by Deltek management in the preparation of such projections and forecasts, and (d) except as set forth in Section 3.8(d), they are taking full responsibility for making their own evaluation of the adequacy and accuracy of all such projections and forecasts so furnished to them, and they shall have no claim against the Shareholders with respect thereto. 11.3 Further Assurances .

At any time and from time to time after the Closing Date, the Shareholders will, upon the request of Buyers, and Buyers will, upon the request of the Shareholders, perform, execute, acknowledge and deliver all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably required by Buyers or the Shareholders, as the case may be, to effect or evidence the Contemplated Transactions. 11.4 follows: If to the Shareholders: c/o Kenneth E. deLaski Shareholders‘ Representative 100 Interpromontory Road Great Falls, Virginia 22066 Fax: (703) 757-8113 Squire, Sanders & Dempsey L.L.P. 8000 Towers Crescent Drive, Suite 1400 Tysons Corner, VA 22182-2700 Attn: James J. Maiwurm Fax: (703) 720-7801 c/o New Mountain Capital, LLC 712 Fifth Avenue, 23rd Floor New York, NY 10019 Attn: Alok Singh Fax: (212) 582-2277 Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, NY 10004 Attn: Aviva F. Diamant Fax: (212) 859-4000 Notices . All necessary notices, demands and requests required or permitted to be given hereunder shall be in writing and addressed as

With a copy to:

If to Buyers:

With copies to:

Notices shall be delivered by a recognized courier service or by facsimile transmission and shall be effective upon receipt, provided that notices shall be presumed to have been received:

(a) if given by courier service, on the second Business Day following delivery of the notice to a recognized courier service before the deadline for delivery on or before the second Business Day following delivery to such service, delivery costs prepaid, addressed as aforesaid; and (b) if given by facsimile transmission, on the next Business Day, provided that the facsimile transmission is confirmed by answer back, written evidence of electronic confirmation of delivery, or oral or written acknowledgment of receipt thereof by the addressee. From time to time either party may designate a new address or facsimile number for the purpose of notice hereunder by notice to the other party in accordance with the provisions of this Section 11.4. 11.5 Governing Law .

This Agreement shall in all respects be governed by, and construed in accordance with, the Laws (excluding conflict of laws rules and principles) of the State of New York applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance. 11.6 Entire Agreement .

This Agreement, together with the Exhibits and Schedules hereto and the other Transaction Documents, constitutes the entire agreement of the parties relating to the subject matter hereof and supersedes all prior contracts or agreements, whether oral or written. There are no representations, agreements, arrangements or understandings, oral or written, between or among the parties relating to the subject matter of this Agreement which are not fully expressed in this Agreement or in another Transaction Document. 11.7 Severability .

Should any provision of this Agreement or the application thereof to any person or circumstance be held invalid or unenforceable to any extent: (a) such provision shall be ineffective to the extent, and only to the extent, of such unenforceability or prohibition and shall be enforced to the greatest extent permitted by Law; (b) such unenforceability or prohibition in any jurisdiction shall not invalidate or render unenforceable such provision as applied (i) to other Persons or circumstances or (ii) in any other jurisdiction; and (c) such unenforceability or prohibition shall not affect or invalidate any other provision of this Agreement. 11.8 Amendment .

Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented or modified orally, but only by an instrument in writing signed by Buyers and the Shareholders‘ Representative; provided , that, the observance of any provision of this Agreement may be waived in writing by the party that will lose the benefit of such provision as a result of such waiver.

11.9

Effect of Waiver or Consent .

No waiver or consent, express or implied, by any party to or of any breach or default by any party in the performance by such party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligations of such party hereunder. No single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce any right or power, shall preclude any other or further exercise thereof or the exercise of any other right or power. Failure on the part of a party to complain of any act of any party or to declare any party in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitation period has run. 11.10 Parties in Interest; Limitation on Rights of Others .

The terms of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective legal representatives, successors and assigns. Nothing in this Agreement, whether express or implied, shall be construed to give any Person (other than the parties hereto and their respective legal representatives, successors and assigns and as expressly provided herein) any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions contained herein, as a third party beneficiary or otherwise; provided , that Indemnified Parties, Buyer Indemnitees or Shareholder Indemnitees who are not otherwise a party to this Agreement shall be third party beneficiaries of this Agreement. 11.11 Assignability; Management Rights .

(a) This Agreement shall not be assigned by Deltek or any Shareholder without the prior written consent of Buyers. Prior to Closing, this Agreement shall not be assigned by Buyers without the prior written consent of Sellers‘ Representative, provided , however , that either Buyer may assign its rights and obligations under this Agreement to an Affiliate of such Buyer, which assignment shall not relieve such Buyer of its obligations hereunder. Following the Closing, either Buyer may assign any and all of its rights under this Agreement to any purchaser or other transferee of any of its Debentures, Common Shares, and/or shares of Series A Preferred Stock, but no such assignment shall relieve such Buyer of its obligations hereunder. (b) Deltek agrees that, at any time after the Closing, upon the request of a Buyer and in connection with any sale or other transfer by such Buyer of any Debentures, Common Shares or shares of Series A Preferred Stock, Deltek shall: (i) provide each transferee with management rights substantially similar to those provided to NMP in the Management Rights Letter, if such rights would facilitate the transferee‘s ability to meet or comply with any regulatory or legal requirement or standard, including such rights as are necessary to cause the investment by the transferee to constitute a ―venture capital investment‖ for purposes of the Department of Labor‘s ―plan assets regulation‖, (ii) provide such transferee with such other rights as may be reasonably necessary for such transferee to comply with any other regulatory

scheme to which such transferee may be subject and (iii) take any actions reasonably necessary to effectuate or facilitate such sale or transfer to such transferee. 11.12 Jurisdiction; Court Proceedings; Waiver of Jury Trial .

Any Litigation against any party to this Agreement arising out of or relating to this Agreement shall be brought in any federal or state court located in the State of New York in New York County and each of the parties hereby submits to the exclusive jurisdiction of such courts for the purpose of any such Litigation. A final judgment in any such Litigation shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. To the extent that service of process by mail is permitted by applicable Law, each party irrevocably consents to the service of process in any such Litigation in such courts by the mailing of such process by registered or certified mail, postage prepaid, at its address for notices provided for herein. Each party irrevocably agrees not to assert (a) any objection which it may ever have to the laying of venue of any such Litigation in any federal or state court located in the State of New York in New York County and (b) any claim that any such Litigation brought in any such court has been brought in an inconvenient forum. Each party waives any right to a trial by jury, to the extent lawful, and agrees that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained-for agreement among the parties irrevocably to waive its right to trial by jury in any Litigation whatsoever between them relating to this Agreement or the transactions contemplated hereby. 11.13 No Other Duties .

The only duties and obligations of the parties under this Agreement are as specifically set forth in this Agreement, and no other duties or obligations shall be implied in fact, Law or equity, or under any principle of fiduciary obligation. 11.14 Reliance on Counsel and Other Advisors .

Each party has consulted such legal, financial, technical or other expert as it deems necessary or desirable before entering into this Agreement. Each party represents and warrants that it has read, knows, understands and agrees with the terms and conditions of this Agreement. 11.15 Remedies .

Subject to the provisions of Section 9.2(f), all remedies, either under this Agreement or by Law or otherwise afforded to the parties hereunder, shall be cumulative and not alternative, and any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of this Agreement and to exercise all other rights granted by Law, equity or otherwise.

11.16

Counterparts .

This Agreement may be executed by facsimile signatures and in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. NEW MOUNTAIN PARTNERS II, L.P. By: New Mountain Investments, L.L.C. its general partner By: Name: Title: /s/ Stephen B. Klinsky Stephen B. Klinsky Managing Member

NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Stephen B. Klinsky Stephen B. Klinsky Managing Member

ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Stephen B. Klinsky Stephen B. Klinsky Managing Member

[SIGNATURE PAGES OF DELTEK, SHAREHOLDERS REPRESENTATIVE AND SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. DELTEK SYSTEMS, INC. By: Name: Title: /s/ Kenneth E. deLaski Kenneth E. deLaski CEO & President

[SIGNATURE PAGES OF SHAREHOLDERS’ REPRESENTATIVE AND SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS‘ REPRESENTATIVE By: Name: Title: /s/ Kenneth E. deLaski Kenneth E. deLaski Shareholders‘ Representative

[SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Kenneth E. deLaski Kenneth E. deLaski [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Donald deLaski Donald deLaski [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Tena R. deLaski Tena R. deLaski [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. Kenneth E. deLaski and Tena R. deLaski, JT TEN /s/ Kenneth E. deLaski By: Name: Kenneth E. deLaski /s/ Tena R. deLaski By: Name: Tena R. deLaski [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. deLaski Irrevocable Trust By: /s/ Kenneth E. deLaski Name: Kenneth E. deLaski Its: Trustee By: /s/ Tena R. deLaski Name: Tena R. deLaski Its: Trustee [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. deLaski S Trust By: /s/ Kenneth E. deLaski Name: Kenneth E. deLaski Its: Trustee By: /s/ Tena R. deLaski Name: Tena R. deLaski Its: Trustee [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. deLaski Irrevocable Trust By: /s/ Kenneth E. deLaski Name: Kenneth E. deLaski Its: Trustee By: /s/ Tena R. deLaski Name: Tena R. deLaski Its: Trustee [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. deLaski S Trust By: /s/ Kenneth E. deLaski Name: Kenneth E. deLaski Its: Trustee By: /s/ Tena R. deLaski Name: Tena R. deLaski Its: Trustee [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ David deLaski David deLaski [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. Edward Grubb and Kathleen Grubb, JTWROS /s/ Edward Grubb By: Name: Edward Grubb /s/ Kathleen Grubb By: Name: Kathleen Grubb [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS DELTEK SYSTEMS, INC. /s/ Eric J. Brehm Eric J. Brehm [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS DELTEK SYSTEMS, INC. /s/ Margaret F. Flaherty Margaret F. Flaherty [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Robert P. Stalilonis Robert P. Stalilonis [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Patricia A. Kelly Patricia A. Kelly [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. Joseph H. Jezior and Diane M. Jezior, JT TEN /s/ Joseph H. Jezior By: Name: Joseph H. Jezior /s/ Diane M. Jezior By: Name: Diane M. Jezior [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. The Onae Trust /s/ John K. Bale, Power of Attorney for Robert A. Jacobs By: Name: Robert A. Jacobs Its: Trustee [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. Brian E. Daniell and Michelle R. Daniell, JTWROS /s/ Brian E. Daniell By: Name: Brian E. Daniell /s/ Michelle R. Daniell By: Name: Michelle R. Daniell [SIGNATURE PAGES OF SHAREHOLDERS CONTINUE ON FOLLOWING PAGES]

IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. SHAREHOLDERS OF DELTEK SYSTEMS, INC. /s/ Sean Hickey Sean Hickey [END OF SIGNATURE PAGES TO RECAPITALIZATION AGREEMENT]

Exhibit D—Form of Investor Rights Agreement [See Executed Document on file as Exhibit 4.3]

Exhibit F—Form of Shareholders’ Agreement [See Executed Document on file as Exhibit 9.1]

Exhibit M—Form of deLaski Employment Agreement [See Executed Document on file as Exhibit 10.5]

Exhibit N—Form of Advisory Agreement [See Executed Document on file as Exhibit 2.4]

Exhibit O—Form of Noncompetition Agreement [See Executed Document on file as Exhibits 10.44 – 10.46]

EXHIBIT R Exhibit P—Form of Release [See Executed Document on file as Exhibit 10.48]

Exhibit Q—Form of Management Rights Letter [See Executed Document on file as Exhibits 4.4 and 4.5]

Exhibit 2.2 AMENDMENT NO. 1 TO RECAPITALIZATION AGREEMENT AMENDMENT NO. 1, dated as of March 14, 2005 (this ― Amendment ‖), to the Recapitalization Agreement (the ― Agreement ‖), effective as of December 23, 2004, by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc. (― Deltek ‖), the holders of all outstanding shares of stock of Deltek and Kenneth E. deLaski, in his capacity as Shareholders‘ Representative. WHEREAS, the parties desire to amend the Agreement in certain respects; WHEREAS, Section 11.8 of the Agreement provides that the Agreement may be amended by an instrument in writing signed by Buyers and the Shareholders‘ representative; NOW THEREFORE, in consideration of the premises and the agreements contained in this Amendment, and intending to be legally bound hereby, the parties hereto agree as follows: SECTION 1. Amendments . 1.1. Section 10.1(b) of the Agreement is hereby amended by deleting the reference to ―March 31, 2005‖ and inserting in replacement thereof ―May 20, 2005‖. 1.2. Exhibit B of the Agreement is hereby amended and restated as set forth on Exhibit B hereto. 1.3. Exhibit I of the Agreement is hereby amended and restated as set forth on Exhibit I hereto. SECTION 2. Status as a Transaction Document . The parties hereto agree that this Amendment shall be a ―Transaction Document‖ for purposes of the Agreement. SECTION 3. Effect of Amendment . Except as and to the extent expressly modified by this Amendment, the Agreement shall remain in full force and effect in all respects. SECTION 4. Counterparts . This Amendment may be executed by facsimile signatures and in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. SECTION 5. Governing Law . This Amendment shall in all respects be governed by, and construed in accordance with, the laws (excluding conflict of laws rules and principles) of the State of New York applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance.

IN WITNESS WHEREOF, each of the undersigned have caused this Amendment to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. NEW MOUNTAIN PARTNERS II, L.P. By: New Mountain Investments, L.L.C. its general prtner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

/s/ Kenneth E. deLaski Kenneth E. deLaski, in his capacity as Shareholders‘ Representative

EXHIBIT B Buyers’ Investment List of Buyers
Buyer Debenture Amount

New Mountain Partners II, L.P. Allegheny New Mountain Partners, L.P. New Mountain Affiliated Investors II, L.P. Total

$ $ $ $

68,551,995.00 5,269,545.00 1,178,460.00 75,000,000.00

Buyer

Percentage of Common Shares

New Mountain Partners II, L.P. Allegheny New Mountain Partners, L.P. New Mountain Affiliated Investors II, L.P. Total

91.40266 % 7.02606 % 1.57128 % 100.00000 %

Buyer

Number of Shares of Series A Preferred Stock

New Mountain Partners II, L.P. Allegheny New Mountain Partners, L.P. New Mountain Affiliated Investors II, L.P. Total

91.40 7.03 1.57 100

In addition, each Buyer shall receive from Deltek a fully executed copy of the Investor Rights Agreement.
Buyer Aggregate Investment Amount

New Mountain Partners II, L.P. Allegheny New Mountain Partners, L.P. New Mountain Affiliated Investors II, L.P. Total

$ $ $ $

164,524,788.00 12,646,908.00 2,828,304.00 180,000,000.00

EXHIBIT I Calculation of Per Share Purchase Price The price per share to be received by the Shareholders for their Redeemed Shares in connection with the Reorganization Transaction is equal to: (A) $336,500,000 (the valuation of Deltek‘s business used to price the Recapitalization Transaction) plus the total exercise price of the unexercised SARs that vested prior to February 28, 2005 and are deemed exercised immediately prior to Closing pursuant to the Plans

divided by (B) the number of shares of Common Stock issued and outstanding immediately prior to Closing plus the number of unexercised SARs that vested prior to February 28, 2005 and that are deemed exercised immediately prior to Closing pursuant to the Plans.

Exhibit 2.3 AMENDMENT NO. 2 TO RECAPITALIZATION AGREEMENT AMENDMENT NO. 2, dated as of April 21, 2005 (this ― Amendment ‖), to the Recapitalization Agreement, effective as of December 23, 2004, by and among New Mountain Partners II, L.P., New Mountain Affiliated Investors II, L.P., Allegheny New Mountain Partners, L.P., Deltek Systems, Inc. (― Deltek ‖), the holders of all outstanding shares of stock of Deltek and Kenneth E. deLaski, in his capacity as Shareholders‘ Representative, as amended (the ― Agreement ‖). WHEREAS, the parties desire to amend the Agreement in certain respects; WHEREAS, Section 11.8 of the Agreement provides that the Agreement may be amended by an instrument in writing signed by Buyers and the Shareholders‘ Representative; NOW THEREFORE, in consideration of the premises and the agreements contained in this Amendment, and intending to be legally bound hereby, the parties hereto agree as follows: SECTION 1. Amendments . 1.1. The fourth ―Whereas‖ clauses included in the Recitals is hereby amended and restated as follows: WHEREAS, at the Closing, Deltek will use the funds received from Buyers, from the Management Sale and from its borrowings under the Credit Agreement, and will also issue $25,000,000 in aggregate principal amount of Debentures to Kenneth E. deLaski, to (i) repurchase from the Shareholders an amount of Common Stock that will result in the Shareholders and Management Members (following the Management Sale) collectively owning an aggregate of 25% of the equity and voting power of all outstanding shares of Capital Stock of Deltek (exclusive of the Series A Preferred Stock) immediately following the Closing and (ii) make certain payments to holders in respect of the outstanding stock appreciation rights under Deltek‘s stock appreciation plan; 1.2. The fifth ―Whereas‖ clauses included in the Recitals is hereby amended and restated as follows: WHEREAS, concurrently with the Closing, Deltek will sell, and the Management Members will purchase, the Management Shares at a price per share equal to the per share price to be received by the Shareholders pursuant to Section 2.3 for the Redeemed Shares, as determined in accordance with Exhibit I (the ―Management Sale‖); 1.3. Section 1.1 of the Agreement is hereby amended by adding thereto the following definition: ― Deferred Amount ‖ has the meaning set forth in Section 2.9. 1.4. Section 1.1 of the Agreement is hereby amended by adding thereto the following definition:

― Management Investment Amount ‖ means the amount of $2,290,000, representing the aggregate amount being paid by the Management Members for the Management Shares. 1.5. The definition of ―Management Shares‖ included in Section 1.1 of the Agreement is hereby amended and restated as follows: ― Management Shares ‖ means the shares of Common Stock to be sold to the Management Members by Deltek in connection with the Management Sale, as set forth in the Shareholder Certificate. 1.6. The definition of ―Permitted Cash Distribution Amount‖ included in Section 1.1 of the Agreement is hereby amended and restated as follows: ― Permitted Cash Distribution Amount ‖ means an amount equal to the excess, if any, of (x) the average Daily Cash Balance over the 11 Business Days immediately preceding the day before the Closing Date, over (y) the sum of the amount of (i) any accrued and unpaid bonuses and commissions for fiscal year 2004 as of the close of business on the Business Day immediately preceding the Closing Date, including the employer‘s portion of any Taxes attributable to the payment of such amounts, and (ii) the employer‘s portion of the Hospital Insurance (Medicare) Tax under the Federal Insurance Contributions Act attributable to the Closing SAR Payment. 1.7. The definition of ―Proportionate Amount of Prepaid Fees‖ included in Section 1.1 of the Agreement is hereby amended and restated as follows: ― Proportionate Amount of Prepaid Fees ‖ means the balance of any lump sum up front payment of royalties or license fees (exclusive of maintenance fees and development fees) for license rights to Cognos Corporation, Actuate Corporation or BEA Systems, Inc. (collectively, ― Vendors ‖) Software products paid by Deltek to such Vendors after the Effective Date but prior to March 31, 2005, pursuant to a license agreement or amendment (e.g., add-on quote) to an existing license agreement with any such Vendor entered into after the Effective Date, that remain available for use on and after March 31, 2005, calculated, with respect to each Software product, as the total amount of any such lump sum payment of royalties or license fees paid less the amount of such royalties or license fees that would have been utilized (i.e., due to such Vendor, but for the lump sum payment) for Software products sold by Deltek after the Effective Date through March 31, 2005. 1.8. The definition of ―Redemption Consideration‖ included in Section 1.1 of the Agreement is hereby amended and restated as follows: ― Redemption Consideration ‖ means $301,500,000 plus (i) the Management Investment Amount, plus (ii) the amount of any Contingent Payments required by Section 2.4, less (iii) the Net Closing SAR Payment. 1.9. Section 2.2(b)(ii) of the Agreement is hereby amended and restated as follows: (ii) Immediately upon the receipt of the Investment Amount and the amounts

borrowed by Deltek under the Credit Agreement, Deltek shall redeem, and the Shareholders shall sell, assign, convey and transfer to Deltek, free and clear of all Liens, the Redeemed Shares in exchange for the Redemption Consideration, of which $301,500,000, plus the Management Investment Amount, less the Net Closing SAR Payment and less the Deferred Amount (the ― Closing Portion of the Redemption Consideration ‖), shall be payable at the Closing, the Contingent Payments shall be payable in accordance with Section 2.4 and the Deferred Amount shall be payable in accordance with Section 2.9. 1.10. Section 2.3(b)(iii) of the Agreement is hereby amended and restated as follows: (iii) The amount of $276,500,000, plus the Management Investment Amount, less the Escrow Payment, less the Net Closing SAR Payment and less the Deferred Amount, shall be paid to the Shareholders‘ Representative by wire transfer of immediately available funds to an account or accounts designated by the Shareholders‘ Representative, which amount shall be distributed by the Shareholders‘ Representative to the Shareholders pro rata in proportion to the Shareholders‘ Proportionate Interests (after taking into account the receipt by Kenneth E. deLaski of the $25,000,000 Debenture in partial payment of the Closing Portion of the Redemption Consideration owed to Mr. deLaski and the future receipt by Kenneth E. deLaski of the Deferred Amount). 1.11. The following new Section 2.9 is hereby added to the Agreement: Section 2.9 Deferred Payment . On the earlier of (x) the date that is 60 days after the Closing Date and (y) such other date agreed to by Deltek and the NMP Entities, Deltek shall pay to Kenneth E. deLaski the amount of $2,000,000 (the ― Deferred Amount ‖) by wire transfer of immediately available funds to an account designated by Mr. deLaski. 1.12. The following new subsection (c) is hereby added to Section 5.1: (c) The Shareholders shall cause Deltek and its Subsidiaries not to, and Deltek shall not and shall cause its Subsidiaries not to, on the Business Day immediately prior to the Closing Date, make any cash payments other than payments of trade payables made in the ordinary course of business. 1.13. Section 5.23 is hereby amended and restated as follows: No later than two (2) Business Days prior to the Closing Date, Deltek shall deliver to Buyers for their review and approval (which will not be unreasonably withheld or delayed), a certificate (such certificate, as approved by Buyers, the ―Shareholder Certificate‖) which shall set forth (i) the identities of the Management Members participating in the Management Sale, (ii) the amount of Management Shares to be purchased by each such Management Member set forth opposite such Management Member‘s name, and (iii) the amount of Redeemed Shares to be redeemed from each Shareholder set forth opposite such Shareholder‘s name. 1.14. Section 7.6 is hereby deleted in its entirety.

1.15. The address for Buyers included in Section 11.4 is hereby amended and restated as follows: c/o New Mountain Capital, LLC 787 Seventh Avenue, 49 Floor New York, NY 10019 Attn: Alok Singh Fax: (212) 582-2277
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SECTION 2. Status as a Transaction Document . The parties hereto agree that this Amendment shall be a ―Transaction Document‖ for purposes of the Agreement. SECTION 3. Effect of Amendment . Except as and to the extent expressly modified by this Amendment, the Agreement shall remain in full force and effect in all respects. SECTION 4. Counterparts . This Amendment may be executed by facsimile signatures and in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. SECTION 5. Governing Law . This Amendment shall in all respects be governed by, and construed in accordance with, the laws (excluding conflict of laws rules and principles) of the State of New York applicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance.

IN WITNESS WHEREOF, each of the undersigned have caused this Amendment to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written. NEW MOUNTAIN PARTNERS II, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

NEW MOUNTAIN AFFILIATED INVESTORS II, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. By: New Mountain Investments II, L.L.C. its general partner By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member

/s/ Kenneth E. deLaski Kenneth E. deLaski, in his capacity as Shareholders‘ Representative

Exhibit 2.4 EXECUTION COPY ADVISORY AGREEMENT THIS ADVISORY AGREEMENT, dated as of April 22, 2005 (this ― Agreement ‖) is made and entered into among Deltek Systems, Inc., a Virginia corporation (together with its subsidiaries, the ― Company ‖), and New Mountain Capital, LLC, a Delaware limited liability company (the ― Advisor ‖). WITNESSETH: WHEREAS, New Mountain Partners II, L.P., a Delaware limited partnership, New Mountain Affiliated Investors, L.P. II, a Delaware limited partnership, and Allegheny New Mountain Partners, L.P., a Delaware limited partnership (the ― Investors ‖), affiliates of the Advisor, have made or will make an investment of $180,000,000 in the Company (the ― Investment ‖), through the purchase of common stock of the Company (― Common Stock ‖), Series A Preferred Stock of the Company, and $75,000,000 in aggregate principal amount of 8.00% subordinated debentures due 2015 (the ― Debentures ‖), which Investment will be used, among other things, to complete the transactions (collectively, the ― Recapitalization ‖) contemplated by the Recapitalization Agreement, dated as of December 23, 2004, by and among the Company, the Investors and the shareholders of the Company, as such agreement may be amended, restated, supplemented or modified from time to time (as amended, the ― Recapitalization Agreement ‖); WHEREAS, the Advisor, by and through itself, its affiliates and their respective officers, employees and representatives, has expertise in the areas of management, finance, strategy, investment and acquisitions relating to the business of the Company; and WHEREAS, the Company may desire to avail itself, during the term of this Agreement, of the expertise of the Advisor in the aforesaid areas and the Advisor may wish to provide the services to the Company as herein set forth. NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows: SECTION 1. Engagement . The Company hereby engages the Advisor, on a non-exclusive basis, to provide management, financial and investment banking advisory services to the Company on the terms and subject to the conditions set forth below. SECTION 2. Services . 2.1. Ongoing Services . The Advisor will assist, advise and consult with the Company‘s board of directors and management in such manner and on such business, management, financial and strategic matters, and provide such other financial and managerial advisory services (collectively, the ― Ongoing Services ‖), as may be reasonably requested from time to time by the board of directors of the Company for the benefit of the Company and agreed to by the Advisor, including, without limitation, assistance in:

(a) establishing and maintaining banking, legal and other business relationships; (b) developing and implementing corporate and business strategy and planning for the Company, including plans and programs for improving operating marketing and financial performance, budgeting of future corporate investments, acquisition and divestiture strategies, and reorganizational programs; (c) structuring and implementing equity participation plans, employee benefit plans and other incentive arrangements for key executives; and (d) providing professional employees, advisors and consultants to serve as directors and/or officers of the Company and its subsidiaries. 2.2. Transaction Services . The Advisor will provide financial advisory, investment banking and other similar services (― Transaction Services ‖) to the Company in connection with specific transactions directly or indirectly involving the Company or any controlled affiliate of the Company (each, a ― Significant Transaction ‖) including, without limitation, assistance with respect to: (a) proposals for acquisitions, dispositions, mergers, consolidations, tender offers, share exchanges, restructurings or recapitalizations by or of the Company; (b) debt, equity or other financing transactions; (c) public or private offerings of the Company‘s securities, whether in a primary offering (including, without limitation, the Company‘s initial public offering of common stock) or a secondary offering; and (d) joint ventures, partnerships and minority investments. 2.3. Advisors . The Company acknowledges that the Advisor may from time to time engage advisors, consultants and other agents to assist the Company in providing the Ongoing Services or Transaction Services to the Company. SECTION 3. Consideration . 3.1. Ongoing Services . In consideration for the Ongoing Services, the Company will pay to the Advisor an annual fee of Five Hundred Thousand dollars ($500,000) (the ― Advisory Fee ‖). The Advisory Fee shall be payable in advance in non-refundable quarterly installments commencing on the Closing Date. If any such date on which such Advisory Fee is payable is not a business day, such Advisory Fee shall be payable on the first business day thereafter. 3.2. Transaction Services . In addition to the fee payable pursuant to Section 3.1, in consideration for Transaction Services (including for Transaction Services performed by the Advisor in connection with Recapitalization), the Company will pay to 2

the Advisor a transaction fee in cash equal to two percent (2%) of the Transaction Value (as defined below) (the ― Transaction Fee ‖) of each Significant Transaction, which fee shall be payable upon the consummation of such Significant Transaction; provided, that, with respect to a Significant Transaction that is consummated after the termination of this Agreement, no Transaction Fee shall be paid by the Company unless on or prior to the termination of this Agreement, the Company shall have entered into an agreement (whether a confidentiality agreement, letter of intent, definitive transaction agreement, or otherwise) relating to such Significant Transaction; and further, provided that, in connection with the Recapitalization, the Advisor shall only be entitled to a Transaction Fee on the amount of the Investment. Notwithstanding anything contained herein to the contrary, if in connection with any single business transaction, two or more Significant Transactions are concurrently consummated and are related to one another (e.g., the acquisition of a business and the financing related to such acquisition), the Advisor shall only be paid one Transaction Fee, which fee shall be calculated with respect to the Significant Transaction that individually produces the largest Transaction Fee among all of the related Significant Transactions being concurrently consummated. 3.3. Definitions . For purposes of this Agreement ― Transaction Value ‖ means the total fair market value (at the time of closing) of all consideration (including cash, convertible and non-convertible securities property, amounts of cash, convertible and non-convertible securities or property held in escrow, consideration paid in installment payments, debt remaining on the financial statements of the company which is the subject of the Significant Transaction, debt for borrowed money assumed by the purchaser, amounts payable in connection with the Significant Transaction under consulting agreements, agreements not to compete or similar arrangements (including such payments to management) and other indebtedness and obligations assumed in connection with the Significant Transaction and any other form of consideration) paid or payable, directly or indirectly, in connection with the Significant Transaction. The Transaction Fee on amounts paid into escrow will not be payable until the escrowed amount is released, and if the escrowed amount is released in installments, then a portion of the Transaction Fee relating to each installment will be calculated and payable if and when such installment is released. If the consideration in connection with any Significant Transaction includes payments contingent on future events, the portion of the Transaction Fee relating to such contingent payments will be calculated and payable if and when such contingent payments are made. ― Significant Transaction ‖ will not include any transaction the Transaction Value of which is less than $25,000,000. SECTION 4. Expenses . In addition to the Advisory Fee and all Transaction Fees, the Company will pay directly or reimburse the Advisor for its Out-of-Pocket Expenses (as defined below). Promptly following the Company‘s request therefor, the Advisor will provide written substantiation in reasonable detail relating to any Out-of-Pocket Expenses to be paid or reimbursed by the Company pursuant to this Agreement. For the purposes of this Agreement, ― Out-of-Pocket Expense ‖ means the reasonable out-of-pocket costs and expenses that are actually incurred by the Advisor or its affiliates in connection with the services rendered hereunder, including the reasonable fees and disbursements of any independent professionals, including accountants and outside legal counsel, investment bankers, advisors, consultants and other agents. All reimbursements 3

for Out-of-Pocket Expenses will be made promptly upon or as soon as practicable after presentation by the Advisor to the Company of a written statement therefor. SECTION 5. Information; Confidentiality . 5.1. Information . The Company shall furnish the Advisor with such information as the Advisor believes appropriate to its engagement hereunder (all such information so furnished being referred to herein as the ― Information ‖). The Company recognizes and confirms that (a) the Advisor will use and rely primarily on Information provided by the Company and on information available from generally recognized public sources in performing the services to be performed hereunder and (b) the Advisor does not assume responsibility of the accuracy or completeness of any such Information. The Advisor does not represent or warrant any results of the services provided hereunder. 5.2. Confidentiality . All non-public information concerning the Company which is given to the Advisor or its directors, officers, employees, agents, advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) or other person associated with or acting on behalf of such person (its ― Representatives ‖) by the Company or its Representatives from time to time will be used solely in the course of the performance of the Advisor‘s services hereunder or, in the case of any of such persons who are also officers and/or directors of the Company, in their capacities as officers and/or directors of the Company. Except as contemplated by this Agreement or as otherwise required by applicable law or judicial or regulatory process, the Advisor will not disclose any non-public information to a third party without the prior written consent of the Company. 5.3. No Disclosure of Advice . Except as otherwise required by applicable law or judicial or regulatory process, neither the Advisor‘s role under this Agreement nor any advice rendered by the Advisor pursuant to this Agreement (collectively, ― Confidential Information ‖), whether formal or informal, may be disclosed, in whole or in part, or summarized, excerpted from or otherwise referred to without the Advisor‘s prior written consent. If the Company is required by applicable law or judicial or regulatory process to divulge any Confidential Information, the Company shall provide the Advisor with prompt written notice of each request so that the Advisor may seek an appropriate protective order or other appropriate remedy, and the Company shall cooperate with the Advisor to obtain a protective order or other remedy; provided, that, in the event that a protective order or other remedy is not obtained, the Company shall furnish only that portion of such information which, in the opinion of its counsel, it is legally compelled to disclose and shall exercise its best efforts to obtain reliable assurance that confidential treatment will be accorded any such information so disclosed. SECTION 6. Indemnification . 6.1. General . The Company will indemnify and hold harmless the Advisor, its affiliates, and their respective partners (both general and limited), members (both managing and otherwise), officers, directors, employees, agents and representatives (each such person being an ― Indemnified Party ‖) from and against any and all losses, 4

claims, liabilities, obligations, payments, actual and punitive damages, charges, judgments, fines, penalties, amounts paid in settlement, costs and expenses (including, without limitation, interest which may be imposed in connection therewith) whether joint or several (the ― Indemnifiable Losses ‖), related to, arising out of or in connection with the services contemplated by this Agreement or the engagement of the Advisor pursuant to, and the performance by the Advisor of the services contemplated by, this Agreement, whether or not pending or threatened, whether or not an Indemnified Party is a party and whether or not such action, claim, suit, charge, demand, complaint, inquiry, audit, investigation or proceeding (a ― Claim ‖), is initiated or brought by the Company directly, derivatively or otherwise, or brought by a third party, including without limitation any action, suit, proceeding or investigation arising out of any action or failure to take action by the Company, whether or not based on a theory of primary or secondary liability, and will reimburse any Indemnified Party for all reasonable costs and expenses (including costs and expenses of investigation and fees, expenses and disbursements of counsel, consultants and other experts) as they are incurred in connection with investigating, preparing, pursuing, defending or assisting in the defense of any Claim for which the Indemnified Party would be entitled to indemnification under the terms of this provision, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto; provided , that subject to Section 6.2, if the Company provides (a) an executed written undertaking reasonably satisfactory to the Advisor confirming the Company‘s indemnity obligations hereunder (without any reservation of rights) and expressly releasing all Indemnified Parties from any and all liability related to the matter in question and (b) evidence reasonably acceptable to the Indemnified Party that the Company will have the financial resources to defend the Claim and fulfill its indemnity obligations hereunder (such undertaking, an ― Indemnity Undertaking ‖), then the Company will be entitled to assume the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment. Notwithstanding the foregoing, the Company shall not have any obligation to indemnify or defend an Indemnified Party with respect to any Indemnifiable Losses or Claims that results primarily and directly from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification. 6.2. Right to Counsel . Any Indemnified Party may, at its own expense, retain separate counsel to participate in any defense of a Claim, and any Indemnified Party will have the right to employ separate counsel at the expense of the Company and to control its own defense of such Claim if, in the reasonable opinion of counsel to such Indemnified Party, (a) a conflict or potential conflict exists between the Company, on the one hand, and such Indemnified Party, on the other hand, (b) there may be one or more legal defenses available to such Indemnified Party which are different from or additional to those available to the Company, (c) the Company fails to provide an Indemnity Undertaking within ten (10) days after an Indemnified Party shall have given the Company notice of any Claim or (d) after providing an Indemnity Undertaking, the Company fails to act diligently in defense of any Indemnified Party within ten (10) days after receiving notice of such failure from such Indemnified Party. 6.3. Notice . The Indemnified Party shall give prompt notice to the Company of any actual or asserted event or occurrence that could reasonably be expected 5

to give rise to a Claim. The failure by an Indemnified Party to notify the Company of a Claim will not relieve the Company from any liability hereunder unless, and only to the extent that, the Company did not learn of such Claim and such failure shall materially prejudice the ability of the Company to defend such Claim or otherwise perfect rights to any insurance coverage relating thereto. 6.4. Settlement . The Company will not, without the prior written consent of the applicable Indemnified Party, settle, compromise or consent to the entry of any judgment in any Claim relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the applicable Indemnified Party from all liability arising or that may arise out of such Claim. Provided the Company is not in breach of its indemnification obligations hereunder and has furnished the Indemnified Party with an Indemnity Undertaking, such Indemnified Party may not settle or compromise any Claim subject to indemnification hereunder without the consent of the Company. 6.5. Contribution . If any indemnification sought by any Indemnified Party pursuant to this Section 6 is unavailable for any reason or is insufficient to hold the Indemnified Party harmless against any Indemnifiable Losses referred to herein, then the Company will contribute to the Indemnifiable Losses for which such indemnification is held unavailable or insufficient in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) by the Company, on the one hand, and the Advisor, on the other hand, in connection with the transactions which gave rise to such Indemnifiable Losses or, if such allocation is not permitted by applicable law, not only such relative benefits but also the relative faults of the Company, on the one hand, and the Advisor, on the other hand, as well as any other equitable considerations, subject to the limitation that in any event the aggregate contribution by the Indemnified Parties to all Indemnifiable Losses with respect to which contribution is available hereunder will not exceed the Fees paid through the date on which (or, if more than one date, the last date on which) the conduct occurred that gave rise to the Indemnifiable Loss. 6.6. Judicial Determination of Liability . Notwithstanding any other provision hereof, none of the Advisor nor any employee, officer, director or other related person or entity will have any liability or obligation by reason of this Agreement for performance or nonperformance of services contemplated hereby except and solely to the extent that it is judicially determined by a court of competent jurisdiction that such person intentionally breached or caused to be breached a material provision of this Agreement. The parties hereto hereby expressly disclaim any liability or obligation of the Advisor and its affiliates or any of their respective employees, officers, directors and other related persons or entities for actual or alleged negligence of any character in connection with the services contemplated by this Agreement. 6.7. Non-Exclusive Remedy . The provisions of this Section 6 will be in addition to and in no manner limit or otherwise affect any other right that the Advisor or any other Indemnified Party may have, whether by contract, or arising as a matter of law or the constituent documents of any other entity. 6

SECTION 7. Term; Termination . This Agreement shall be effective until otherwise terminated as provided for in the next sentence. This Agreement shall terminate on the earliest of (a) mutual consent of the parties, (b) at such time as the Investors cease to beneficially own, in the aggregate, at least fifteen percent (15%) of the outstanding Common Stock, and (c) the consummation of a Change of Control (as such term is defined in the Debentures). The termination of this Agreement will not affect the Advisor‘s obligations under Section 5.2, the Advisor‘s rights under Sections 4 or 6 hereof or the Advisor‘s rights to receive a Transaction Fee in connection with a Significant Transaction that causes the termination of this Agreement pursuant to this Section 7 (all of which obligations and rights shall survive the termination of this Agreement). SECTION 8. Independent Contractor Status . 8.1. The Advisor and the individuals acting on its behalf that are actually providing the services contemplated hereby will be independent contractors, rather than employees or agents of the Company, and will have only such authority as is incident to the discharge of the duties herein contemplated or specifically authorized from time to time by the board of directors of the Company, as the case may be. 8.2. The Company hereby acknowledges that the persons performing the foregoing services are full-time employees of the Advisor or other related entities and will not be expected to devote substantially all of their efforts to the Company but rather only so much of their efforts as, from time to time, the Advisor determines in its discretion to be appropriate in the circumstances. 8.3. The parties acknowledge that one or more affiliates of the Advisor may serve as an officer or director of the Company and that actions taken to satisfy the fiduciary obligation of such officer or director shall not constitute providing ―advice‖ by the Advisor. SECTION 9. Miscellaneous . 9.1. Amendments and Waivers . This Agreement and any of the provisions hereof may be amended, waived (either generally or in a particular instance and either retroactively or prospectively), modified or supplemented, in whole or in part, only by written agreement signed by each of the parties hereto; provided , that, the observance of any provision of this Agreement may be waived in writing by the party that will lose the benefit of such provision as a result of such waiver. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach, except as otherwise explicitly provided for in such waiver. Except as otherwise expressly provided herein, no failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. 7

9.2. Notices . Unless otherwise provided herein, all notices, requests, demands, claims and other communications provided for under the terms of this Agreement shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be sent by (a) personal delivery (including receipted courier service) or overnight delivery service, (b) facsimile during normal business hours, with confirmation of receipt, to the number indicated, (c) reputable commercial overnight delivery service courier or (d) registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below: If to the Advisor: New Mountain Capital, LLC 787 Seventh Avenue 49 Floor New York, NY 10019 Attention: Mr. Alok Singh Facsimile: (212) 582-1816
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with a copy to: Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, NY 10004-1980 Attention: Aviva F. Diamant, Esq. Facsimile: (212) 859-4000 If to the Company: Deltek Systems, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 Telephone: (703) 734-8606 Facsimile: (703) 734-1146 Attention: Chief Financial Officer Unless otherwise specified herein, such notices or other communications shall be deemed received (a) on the date delivered, if delivered personally or sent by facsimile, and (b) one business day after being sent by Federal Express or other overnight courier. 9.3. Governing Law; Venue; Service of Process; Waiver of Jury Trials . (a) Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties hereto shall be governed by, the laws of the State of New York, without giving effect to the conflicts of law principles thereof. 8

(b) Venue and Service of Process . By execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally (i) consents to submit to the exclusive jurisdiction of the federal and state courts located in the State of New York in New York County (collectively, the ― Selected Courts ‖) for any action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, and agrees not to commence any action or proceeding relating thereto except in the Selected Courts, provided , that, a party may commence any action or proceeding in a court other than a Selected Court solely for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (ii) consents to service of any process, summons, notice or document in any action or proceeding by registered first-class mail, postage prepaid, return receipt requested or by nationally recognized courier guaranteeing overnight delivery in accordance with Section 9.2 hereof and agrees that such service of process shall be effective service of process for any action or proceeding brought against it in any such court, provided , that, nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law; (iii) waives any objection to the laying of venue of any action or proceeding arising out of this Agreement or the transactions contemplated hereby in the Selected Courts; and (iv) waives and agrees not to plead or claim in any court that any such action or proceeding brought in any such Selected Court has been brought in an inconvenient forum. (c) Waiver of Jury Trial . With respect to any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, each of the parties hereby irrevocably, to the extent not prohibited by applicable law that cannot be waived, waives, and covenants that it will not assert (whether as plaintiff, defendant or otherwise), any right to trial by jury in any action arising in whole or in part under or in connection with this Agreement or the transactions contemplated hereby, whether now existing or hereafter arising, and whether sounding in contract, tort or otherwise, and agrees that any of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained-for agreement among the parties irrevocably to waive its right to trial by jury in any action or proceeding whatsoever between them relating to this Agreement or the transactions contemplated hereby. Such action or proceeding shall instead be tried in a Selected Court by a judge sitting without a jury. 9.4. Binding Effect; Assignment; Third-Party Beneficiaries . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and any of their respective successors, personal representatives and permitted assigns who agree in writing to be bound by the terms hereof. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise by either of the parties hereto without the prior written consent of the other party; provided , however , that the Advisor may assign its rights and obligations under this Agreement to an affiliate of the Advisor without the consent of the Company provided that no such assignment shall relieve the Advisor of its obligations under this Agreement. Any assignment in violation of the preceding sentence will be void. The provisions of Section 6 shall inure to the benefit of and be enforceable by each Indemnified Party. 9

9.5. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. 9.6. Severability . Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but the invalidity or unenforceability of any provision or portion of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision or portion of any provision, in any other jurisdiction. In addition, should a court or arbitrator determine that any provision or portion of any provision of this Agreement is not reasonable or valid, either in period of time, geographical area, or otherwise, the parties hereto agree that such provision should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable or valid. 9.7. Certain Definitions . For purposes of this Agreement, (a) ―affiliate‖ of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such first person, (b) ―person‖ means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity and (c) ―beneficially own‖ means beneficially owned as determined under Rule 13d-3 promulgated under the Exchange Act, provided, that, such determination shall be made without reference to the 60-day period provided for in Rule 13d-3(d)(1)(i). 9.8. General Interpretive Principles . When a reference is made in this Agreement to a Section, such reference is to a Section of this Agreement unless otherwise indicated. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The headings of the sections, paragraphs, subparagraphs, clauses and subclauses of this Agreement are for convenience of reference only and shall not in any way affect the meaning or interpretation of any of the provisions hereof. Unless otherwise specified, the terms ―hereof,‖ ―herein‖ and similar terms refer to this Agreement as a whole (including the exhibits, schedules and disclosure statements hereto), and references herein to Sections refer to Sections of this Agreement. Words of inclusion shall not be construed as terms of limitation herein, so that references to ―include,‖ ―includes‖ and ―including‖ shall not be limiting and shall be regarded as references to non-exclusive and non-characterizing illustrations. References to a person are also to its permitted successors and assigns. 9.9. Entire Agreement . This Agreement and the other agreements, certificates and documents referred to herein or delivered pursuant here which form a part hereof, (a) constitute the entire agreement, and supersede all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof and (b) except for the provisions of Section 6, are not intended to confer upon any person other than the parties any rights or remedies. 10

9.10. Specific Performance . The parties hereto acknowledge that there will be no adequate remedy at law for a violation of any of the provisions of this Agreement and that, in addition to any other remedies which may be available, all of the provisions of this Agreement shall be specifically enforceable in accordance with their respective terms. [Signature Page Follows] 11

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. DELTEK SYSTEMS, INC. By: Name: Title: /s/ Kenneth E. deLaski Kenneth E. deLaski Chief Executive Officer

NEW MOUNTAIN CAPITAL, LLC By: Name: Title: /s/ Steven B. Klinsky Steven B. Klinsky Managing Member and Chief Executive Officer

Exhibit 3.1 CERTIFICATE OF INCORPORATION OF DELTEK, INC. ARTICLE I NAME The name of the Corporation is Deltek, Inc. (the ―Corporation‖). ARTICLE II REGISTERED OFFICE AND AGENT The address of the Corporation‘s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company. ARTICLE III PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (the ―DGCL‖). ARTICLE IV CAPITAL STOCK The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Two Hundred Five Million, One Hundred (205,000,100) shares, of which: Two Hundred Million (200,000,000) shares, par value $0.001 per share, shall be shares of common stock (the ―Common Stock‖); One Hundred (100) shares, par value $0.001 per share, shall be shares of Class A Common Stock (the ―Class A Stock‖); and Five Million (5,000,000) shares, par value $0.001 per share, shall be shares of preferred stock (the ―Preferred Stock‖). A. COMMON STOCK. Except as (i) otherwise required by law or (ii) expressly provided in this Certificate of Incorporation, each share of Common Stock shall have the same powers, rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters. 1. DIVIDENDS. Subject to the rights of the holders of Preferred Stock, and to the other provisions of this Certificate of Incorporation, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends and other distributions in cash, securities or other property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.

2. VOTING RIGHTS. At every annual or special meeting of stockholders of the Corporation, each holder of Common Stock shall be entitled to cast one (1) vote for each share of Common Stock standing in such holder‘s name on the stock transfer records of the Corporation; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including, without limitation, to vote on any certificate of designation (or any amendment thereto) relating to any series of Preferred Stock) that relates solely to the terms of the Class A Stock or one or more outstanding series of Preferred Stock if the holders of such stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including, without limitation, any certificate of designation relating to any series of Preferred Stock). B. PREFERRED STOCK. The Board of Directors is authorized, subject to limitations prescribed by law, to provide by resolution or resolutions for the issuance of shares of Preferred Stock in one or more series, to establish the number of shares to be included in each such series, and to fix the voting powers (if any), designations, powers, preferences, and relative, participating, optional or other rights, if any, of the shares of each such series, and any qualifications, limitations or restrictions thereof. Irrespective of the provisions of Section 242(b)(2) of the DGCL, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding stock of the Corporation entitled to vote thereon, without the separate vote of the holders of the Preferred Stock as a class, or any series thereof, unless a vote of any such holders is required pursuant to the terms of any series of Preferred Stock. C. CLASS A STOCK. (i) The rights, preferences and restrictions of the Class A Stock shall be determined and fixed as set forth in this Paragraph C. (ii) Voting Rights . (a) General . The holders of Class A Stock shall not be entitled to any voting rights except as hereinafter provided in this Paragraph C(ii) or as required by law or by this Certificate of Incorporation. (b) Voting with Respect to Certain Matters . The Corporation shall not, without the prior consent or approval of the holders of Class A Stock, voting as a single class amend, alter, repeal, restate, or supplement this Certificate of Incorporation or the Corporation‘s bylaws (in each case, whether by reclassification, merger, consolidation, reorganization or otherwise) in a manner which alters or changes, in any manner adverse to the holders of the Class A Stock, the powers, preferences, privileges or rights of the Class A Stock or which otherwise would adversely affect the powers, preferences, privileges or rights of the Class A Stock. (c) Voting Rights for Directors . The holders of Class A Stock, voting separately as a class, shall be entitled to elect to the Board of Directors a total number of individuals equal to the product (rounded up to the nearest whole number) of (x) 51% and (y) the total number of members that comprise the Whole Board; provided, that 2

(1) at such time, if any, as the Common Stock then Beneficially Owned by the Holders constitutes less than 33 / 3 % but at least 15% of the outstanding Common Stock of the Corporation, the number of directors the holders of Class A Stock shall have the right to elect under this Paragraph C(ii) shall be three; and provided, further , that
1

(2) at such time, if any as the Common Stock then Beneficially Owned by the Holders constitutes less than 15% but at least 5% of the outstanding Common Stock of the Corporation, the number of directors the holders of Class A Stock shall have the right to elect under this Paragraph C(ii) shall be two; and provided, further , that (3) at such time, if any, as the Common Stock then Beneficially Owned by the Holders constitutes less than 5% of the outstanding Common Stock of the Corporation, so long as the Holders shall Beneficially Own any shares of Common Stock, the number of directors the holders of Class A Stock shall have the right to elect under this Paragraph C(ii) shall be one. (d) Election Procedures . (1) The right of the holders of Class A Stock to elect directors as described in this Paragraph C(ii) (including, without limitation, to fill any vacancy occurring in the office of any director elected pursuant to this Paragraph C(ii)) may be exercised either at a special meeting of the holders of Class A Stock, at any annual meeting of stockholders held for the purpose of electing directors, or by the written consent of holders of Class A Stock acting without a meeting pursuant to Section 228 of the DGCL. The term of office of any director elected by the holders of Class A Stock pursuant to this Paragraph C(ii) shall terminate upon the election of his successor or upon his earlier death, resignation or removal as provided in this Certificate of Incorporation. (2) Notwithstanding anything contained in this Certificate of Incorporation or the bylaws of the Corporation, any director so elected pursuant to this Paragraph C(ii) may be removed without cause only by the holders of Class A Stock. The right of the holders of Class A Stock to remove directors without cause may be exercised at any special meeting of the holders of Class A Stock or by a written consent of the holders of Class A Stock acting without a meeting pursuant to Section 228 of the DGCL. (3) In case of a vacancy occurring in the office of any director so elected pursuant to this Paragraph C(ii), for whatever reason, the holders of Class A Stock may elect a successor to hold office for the unexpired term of such director, or such vacancy may be filled by a majority of the other directors so elected pursuant to this Paragraph C(ii) then in office. (4) All actions taken by the holders of Class A Stock under this Paragraph C(ii) shall be taken by the affirmative vote, or by written consent, of the holders of more than 50% of the issued and outstanding shares of Class A Stock. (iii) Reacquired Shares . Any shares of Class A Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof, and, if necessary to provide for the lawful redemption or purchase of such shares, the capital represented by such shares shall be reduced in accordance with the DGCL. 3

(iv) Other Rights and Powers . Except as set forth herein, the shares of Class A Stock shall not have any relative, participating, optional or other special rights (including, without limitation, any rights to convert into Common Stock, liquidation preference or any rights to dividends) and powers and the consent of the holders thereof shall not be required for the taking of any corporate action. (v) Definitions . For the purposes of this Paragraph C, the following definitions shall apply: (a) ― Beneficially Owned ‖ shall mean beneficially owned as determined in accordance with Securities Exchange Act Rule 13d-3; (b) ― Holders ‖ shall mean the Initial Holders and any Person to whom shares of Common Stock issued by the Corporation to the Initial Holders are transferred, other than a transfer in a public offering or in a sale in accordance with Securities Act Rule 144; (c) ― Initial Holders ‖ shall mean New Mountain Partners, II, L.P., New Mountain Affiliated Investors II, L.P., and Allegheny New Mountain Partners, L.P; (d) ― Person ‖ shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind; and (e) ― Whole Board ‖ shall have the meaning set forth in Article V of this Certificate of Incorporation. ARTICLE V BOARD OF DIRECTORS A. MANAGEMENT. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or this Certificate of Incorporation directed or required to be exercised or done by the stockholders. B. NUMBER OF DIRECTORS. Subject to the rights of the holders of Class A Stock or any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board; provided, however , that the number of directors shall not be less than three (3) nor more than fifteen (15). The term ―Whole Board‖ at any time shall mean the total number of directors fixed at the time whether or not there exist any vacancies in previously-authorized directorships. C. NEWLY-CREATED DIRECTORSHIPS AND VACANCIES. Subject to the rights of the holders of Class A Stock or any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or any other cause shall, unless otherwise required by law or resolution of the Board of Directors, be filled only by the Board of Directors, provided that a quorum is then in office 4

and present, or by a majority of the directors then in office, if less than a quorum is then in office, or by the sole remaining director. Directors elected to fill a newly created directorship or other vacancies shall hold office until such director‘s successor has been duly elected or until his earlier death, resignation or removal as provided in this Certificate of Incorporation. D. REMOVAL OF DIRECTORS. Subject to the rights of the holders of Class A Stock or any series of Preferred Stock then outstanding, any director may be removed, with or without cause, from office at any time, at a meeting called for that purpose, and only by the affirmative vote of the holders of a majority of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a single class; provided, however , that any director elected by the holders of Class A Stock may only be removed without cause by the holders of more than 50% of the issued and outstanding shares of Class A Stock, voting as a separate class. E. WRITTEN BALLOT NOT REQUIRED. Elections of directors need not be by written ballot unless the bylaws of the Corporation shall otherwise provide. F. BYLAWS. The Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the Corporation. Any bylaws made by the directors under the powers conferred hereby may be amended or repealed by the directors or by the stockholders. The stockholders shall also have power to adopt, amend or repeal the bylaws of the Corporation; provided , however , that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law, by this Certificate of Incorporation or by the bylaws, the affirmative vote of the holders of more than 50% of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a single class, shall be required to adopt, amend or repeal any provision of the bylaws of the Corporation. 5

G. INITIAL BOARD OF DIRECTORS. Until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal, the initial Board of Directors shall be as follows: Michael Ajouz c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 ARTICLE VI LIMITATION OF LIABILITY A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however , that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director‘s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended. Any repeal or modification of this Article VI shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. 6

Nanci E. Caldwell

Kathleen DeLaski

Joseph M. Kampf

Steven B. Klinsky

Albert A. Notini

Kevin T. Parker

Janet M. Perna

Alok Singh

ARTICLE VII AMENDMENT The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. Notwithstanding any other provision of this Certificate of Incorporation or the bylaws of the Corporation, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Certificate of Incorporation, the bylaws of the Corporation or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law, this Certificate of Incorporation, the bylaws of the Corporation or otherwise, the affirmative vote of the holders of at least 80% of the voting power of the issued and outstanding shares of Common Stock and the issued and outstanding shares of Preferred Stock, if any, entitled to vote generally with the Common Stock on all matters on which the holders of Common Stock are entitled to vote, voting together as a class, shall be required to adopt any provision inconsistent with, or to amend or repeal any provision of, Articles VI, VII or VIII of this Certificate of Incorporation. ARTICLE VIII BUSINESS OPPORTUNITIES A. Except as otherwise agreed in writing, to the fullest extent permitted by law, (i) no Sponsor Stockholder (or any of the officers, directors, employees, advisory board members, agents, stockholders, members, partners, affiliates and subsidiaries of any Sponsor Stockholder or any of its affiliates (collectively the ―Sponsor Affiliates‖)) shall have the duty (fiduciary or otherwise) or obligation, if any, to refrain from (a) engaging in the same or similar activities or lines of business as the Corporation, (b) doing business with any client, customer or vendor of the Corporation or (c) entering into and performing one or more agreements (or modifications or supplements to pre-existing agreements) with the Corporation, including, without limitation, in the case of any of clause (a), (b) or (c), any such matters as may be corporate opportunities, and (ii) no Sponsor Stockholder nor any Sponsor Affiliate shall be deemed to have breached any duties (fiduciary or otherwise), if any, to the Corporation or its stockholders by reason of any Sponsor Stockholder or any Sponsor Affiliate engaging in any such activity or entering into such transactions, including, without limitation, any corporate opportunities. B. If any Sponsor Stockholder or Sponsor Affiliate acquires knowledge of a corporate opportunity or is utilizing any corporate opportunity, the Corporation shall have no interest in such corporate opportunity and no expectancy that such corporate opportunity be offered to it, any such interest or expectancy being hereby renounced, so that (i) such Sponsor Stockholder or Sponsor Affiliate shall, to the fullest extent permitted by law, have the right to hold and to utilize any such corporate opportunity for its own account (and for the account of its officers, directors, employees, advisory board members, agents, stockholders, members, partners, affiliates and subsidiaries (other than the Corporation)) or to direct, sell, assign or transfer such corporate opportunity to any person other than the Corporation and (ii) such Sponsor Stockholder or Sponsor Affiliate shall have no obligation to communicate or offer such corporate opportunity to the Corporation and shall not, to the fullest extent permitted by law, breach any duty (fiduciary or otherwise) to the Corporation or any of its stockholders or be liable to the Corporation or any of its stockholders for breach of any duty (fiduciary or otherwise) as a director, officer or stockholder of the Corporation by reason of the fact that any Sponsor 7

Stockholder or Sponsor Affiliate or acquires, utilizes, or seeks such corporate opportunity for itself, directs such corporate opportunity to another person, or otherwise does not communicate information regarding such corporate opportunity to the Corporation or any of its stockholders; provided, however , that the Corporation does not renounce any interest or expectancy it may have in any corporate opportunity that is offered to any director or officer of the Corporation (as defined in Securities Exchange Rule 16a-1(f)) who also is a Sponsor Affiliate if such opportunity is expressly offered to such person in his capacity as a director or officer of the Corporation (as defined in Securities Exchange Act Rule 16a-1(f)). C. For purposes of this Article VIII, (i) the term ―corporate opportunity‖ shall mean an investment, business opportunity or prospective economic or competitive advantage, including, without limitation, any matter (a) in which the Corporation could have an interest or expectancy, (b) which the Corporation is financially able to undertake, or with respect to which the Corporation would reasonably be able to obtain debt or equity financing, and (c) which is, from its nature, in the line or lines of the Corporation‘s business or reasonable expansion thereof, (ii) the term ―Corporation‖ shall mean the Corporation and all corporations, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) 50% or more of the outstanding voting stock, voting power, partnership interests or similar voting interests, (iii) the term ―person‖ shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof, or other entity of any kind, and (iv) the term ―Sponsor Stockholder‖ shall mean each of New Mountain Partners, II, L.P., New Mountain Affiliated Investors II, L.P., and Allegheny New Mountain Partners, L.P. and each of their respective affiliates (as defined in Securities Act Rule 405); provided, however , that for purposes of this definition of ―Sponsor Stockholder,‖ none of the Sponsor Stockholders, on one hand, or the Corporation, on the other hand, shall be deemed to be an affiliate of one another. D. Neither the alteration, amendment or repeal of this Article VIII nor the adoption of any provisions of this Certificate of Incorporation inconsistent with this Article VIII shall eliminate or reduce the effect of this Article VIII in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article VIII, would accrue or arise prior to such alteration, amendment, repeal or adoption. ARTICLE IX ACTION BY WRITTEN CONSENT If the Sponsor Stockholders beneficially own less than 33 1/3% of the outstanding shares of the Common Stock, and subject to the rights of the holders of Class A Stock or any series of Preferred Stock, then any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation shall be taken only upon the vote of the stockholders at an annual or special meeting duly called and shall not be effected by written consent of the stockholders. For purposes of this Article IX, the term ―Sponsor Stockholders‖ shall be defined as New Mountain Partners, II, L.P., New Mountain Affiliated Investors II, L.P., and Alleghany New Mountain Partners, L.P. (together with any of their affiliates (as defined in Securities Act Rule 405)) and the term ―beneficially own‖ shall mean ―beneficially own‖ as determined in accordance with Securities Exchange Act Rule 13d-3. 8

ARTICLE X INCORPORATOR The name and mailing address of the Incorporator is as follows: David R. Schwiesow c/o Deltek, Inc. 13880 Dulles Corner Lane Herndon, VA 20171 *** I, the undersigned, for the purpose of forming a corporation under the laws of the State of Delaware do make, file and record this Certificate of Incorporation, and, accordingly, have hereto set my hand this 3 day of April, 2007.
rd

/s/ David Schwiesow Name: David Schwiesow Incorporator 9

Exhibit 3.2 BYLAWS OF DELTEK, INC. ARTICLE I Offices SECTION 1. Registered Office . The registered office of the Corporation in the State of Delaware shall be located at 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of the Corporation‘s registered agent at such address shall be Corporation Service Company. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the Board of Directors. SECTION 2. Other Offices . The Corporation may have an office or offices other than said registered office at such place or places, either within or without the State of Delaware, as the Board of Directors shall from time to time determine or the business of the Corporation may require. ARTICLE II Meetings of Stockholders SECTION 1. Place of Meetings . All meetings of the stockholders for the election of directors or for any other purpose shall be held at any such place, either within or without the State of Delaware, or by means of remote communications, as shall be designated from time to time by the Board of Directors and stated in the notice of meeting. SECTION 2. Annual Meeting . An annual meeting of stockholders shall be held each year and stated in a notice of meeting. The date, time and place, if any, or means of remote communications, if any, of such meeting shall be determined by the Board of Directors of the Corporation by resolution. At such annual meeting, the stockholders shall elect, subject to Article II, Section 9(b) of these Bylaws, a Board of Directors and transact such other business as may properly be brought before the meeting. SECTION 3. Special Meetings . Special meetings of stockholders may be called for any purpose by the Board of Directors or its Chairman and may be held at such time and place, if any, within or without the State of Delaware, or by means of remote communications, if any, as shall be stated in a notice of meeting; provided, however , that special meetings of the stockholders also may be called by holders of at least 40% of the outstanding shares of the Corporation‘s Common Stock, par value $.001 per share. SECTION 4. Notice of Meetings . Except as otherwise expressly required by statute, notice of each annual and special meeting of stockholders stating the date, place, if any, and hour of the meeting, means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder‘s address as it appears on the records of the Corporation. Without

limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law the (the ―DGCL‖). SECTION 5. List of Stockholders . The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 6. Quorum; Adjournments . The holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders, except as otherwise provided by statute or by the Certificate of Incorporation of the Corporation, as amended from time to time (the ―Certificate of Incorporation‖). Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. If, however, such quorum shall not be present or represented by proxy at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented by proxy. At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or, if after adjournment a new record date is set, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. SECTION 7. Organization . At each meeting of stockholders, the Chairman of the Board of Directors, if one shall have been elected, or, in his absence or if one shall not have been elected, such person as the Board of Directors may have designated or, in his absence, the Chief Executive Officer, or in his absence, such person as may be chosen by the holders of a majority of the voting power of the outstanding shares of capital stock entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. The Secretary or, in his absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting shall act as secretary of the meeting and keep the minutes thereof. SECTION 8. Order of Business . The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting. SECTION 9. (a) Voting . Except as otherwise provided by the Certificate of Incorporation or the DGCL, each stockholder of the Corporation shall be entitled at each meeting of stockholders to one (1) vote for each share of capital stock of the Corporation standing in his name on the record of stockholders of the Corporation: (i) on the date fixed pursuant to the provisions of Section 14 of Article II of these Bylaws, as amended from time to time (the ―Bylaws‖) as the record date

for the determination of the stockholders who shall be entitled to notice of and to vote at such meeting; or (ii) if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice thereof shall be given, or, if notice is waived, at the close of business on the date next preceding the day on which the meeting is held. Each stockholder entitled to vote at any meeting of stockholders may authorize another person or persons to act for him by a proxy which is in writing or transmitted as permitted by law, including, without limitation, electronically, via telegram, internet, interactive voice response system, or other means of electronic transmission executed or authorized by such stockholder or his attorney-in-fact, but no proxy shall be voted after (3) three years from its date, unless the proxy provides for a longer period. Any such proxy shall be delivered to the secretary of the meeting at or prior to the time designated in the order of business for so delivering such proxies. Any proxy transmitted electronically shall set forth information from which it can be determined by the secretary of the meeting that such electronic transmission was authorized by the stockholder. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power of the issued and outstanding stock of the Corporation entitled to vote thereon, present and voting, in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation or of these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless required by statute, or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted and the number of votes to which each share is entitled. (b) A nominee for director shall be elected to the Board of Directors at a meeting if the votes cast for such nominee‘s election exceed the votes cast against such nominee‘s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Article II, Section 11 of the Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the day next preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. SECTION 10. Inspectors . The Board of Directors may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders.

SECTION 11. Advance Notice Provisions for Election of Directors . Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as provided under Section 3 of this Article II, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 11 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 11. In addition to any other applicable requirements, for a nomination to be made by a stockholder such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder‘s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than ninety (90) days prior to the date of the anniversary of the previous year‘s annual meeting; provided, however , that in the event the annual meeting is scheduled to be held on a date more than thirty (30) days prior to or delayed by more than sixty (60) days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of the close of business ninety (90) days prior to such annual meeting or the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) following the day on which public disclosure is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. To be in proper written form, a stockholder‘s notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person, (iv) such person‘s written consent to serve as a director if elected, (v) a statement whether such person, if elected, intends to tender, promptly following such person‘s election or re-election, an irrevocable resignation effective upon such person‘s failure to receive the required vote for re-election at the next meeting at which such person would face re-election and upon acceptance of such resignation by the Board of Directors in accordance with the Board of Directors‘ policy ( see Exhibits 1 and 2 hereto) and (vi) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the ―Exchange Act‖), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 11. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. SECTION 12. Advance Notice Provisions for Business to be Transacted at Annual Meeting . No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 12 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 12. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder‘s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days prior to the date of the anniversary of the previous year‘s annual meeting; provided, however , that in the event the annual meeting is scheduled to be held on a date more than thirty (30) days prior to or delayed by more than sixty (60) days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of the close of business ninety (90) days prior to such annual meeting or the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made. To be in proper written form, a stockholder‘s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meting to bring such business before the meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 12; provided, however , that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 12 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. SECTION 13. Action by Written Consent . Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, by any provision of statute or of the Certificate of Incorporation or of these Bylaws, the meeting and vote of

stockholders may be dispensed with, and the action may be taken without such meeting and vote solely to the extent the Certificate of Incorporation permits action by written consent. The consent shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, or the Corporation‘s principal place of business, or an officer or agent of the Corporation having custody of the book or books in which the proceedings of meetings of the stockholders are recorded. Delivery made to the Corporation‘s registered office shall be by hand or by certified or registered mail, return receipt requested. All consents properly delivered in accordance with this Section 13 shall be deemed to be received when so delivered. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the Corporation as required by this Section 13, written consents signed by the holders of a sufficient number of shares to take such corporate action are so received. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action taken pursuant to such written consent of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting thereof. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the DGCL. SECTION 14. Fixing the Record Date . In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however , that the Board of Directors may fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting (including, without limitation, by telegram, cablegram or other electronic transmission as permitted by law), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. Such notice shall specify the action proposed to be consented to by stockholders. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board of Directors pursuant to the first sentence of this paragraph). If no record date has been fixed by the Board of Directors within ten (10) days after the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of

Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. In the event of delivery to the Corporation of a written consent or written consents purporting to authorize or take corporate action, and/or related revocation or revocations, (each such written consent and related revocation, individually and collectively, a ―Consent‖), the Secretary of the Corporation shall provide for the safekeeping of the Consent and shall as soon as practicable thereafter conduct such reasonable investigation as the Secretary deems necessary or appropriate for the purpose of ascertaining the validity of the Consent and all matters incident thereto, including, without limitation, whether holders of shares having the requisite voting power to authorize or take the action specified in the Consent have given consent. If after such investigation the Secretary shall determine that the Consent is sufficient and valid, that fact shall be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of the stockholders, and the Consent shall be filed in such records, at which time the Consent shall become effective as stockholder action. ARTICLE III Board of Directors I. SECTION 1. General Powers . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. Number and Election . The number of directors shall be determined in the manner provided in the Certificate of Incorporation. Except as otherwise provided by the Bylaws, the directors shall be elected at the annual meeting of stockholders. SECTION 3. Place of Meetings . Meetings of the Board of Directors shall be held at such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be specified in the notice of any such meeting. SECTION 4. Annual Meetings . The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such other time or place (within or without the State of Delaware) as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article III. SECTION 5. Regular Meetings . Regular meetings of the Board of Directors shall be held at such time and place as the Board of Directors may fix. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. SECTION 6. Special Meetings . Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors, if one shall have been elected, or by two or more directors of the Corporation or by the Chief Executive Officer.

SECTION 7. Notice of Meetings . Notice of regular meetings of the Board of Directors need not be given except as otherwise required by law or these Bylaws. Notice of each special meeting of the Board of Directors, and of each regular and annual meeting of the Board of Directors for which notice shall be required, shall be given by the Secretary as hereinafter provided in this Section 7, in which notice shall be stated the time and place of the meeting. Except as otherwise required by these Bylaws, such notice need not state the purposes of such meeting. Notice of any special meeting, and of any regular or annual meeting for which notice is required, shall be given to each director at least (a) twenty-four (24) hours before the meeting if by telephone or by being personally delivered or sent by telex, telecopy, electronic transmission or similar means or (b) five (5) days before the meeting if delivered by mail to the director‘s residence or usual place of business. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission or similar means. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Any director may waive notice of any meeting by a writing signed by the director entitled to the notice, or by electronic transmission by the director, and filed with the minutes or corporate records. SECTION 8. Waiver of Notice and Presumption of Assent . Any member of the Board of Directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. SECTION 9. Quorum and Manner of Acting . A majority of the Whole Board shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and, except as otherwise expressly required by statute or the Certificate of Incorporation or these Bylaws, the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. For purposes of these Bylaws, the term ―Whole Board‖ shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. In the absence of a quorum at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to all of the directors unless such time and place were announced at the meeting at which the adjournment was taken, in which case such notice shall only be given to the directors who were not present thereat. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. The directors shall act only as a Board of Directors and the individual directors shall have no power as such. SECTION 10. Organization . At each meeting of the Board of Directors, the Chairman of the Board of Directors, if one shall have been elected, or, in the absence of the Chairman of the Board of Directors or if one shall not have been elected, the Chief Executive Officer (or, in his absence, another director chosen by a majority of the directors present) shall act as chairman of the meeting and preside thereat. The Secretary or, in his absence, any person appointed by the chairman, shall act as secretary of the meeting and keep the minutes thereof. SECTION 11. Resignations; Newly Created Directorships; Vacancies; and Removals . Any director of the Corporation may resign at any time by giving notice in writing or by electronic transmission of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Newly created directorships resulting from any increase in the number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement,

disqualification, removal or any other cause shall be filled as provided in the Certificate of Incorporation. Any director may be removed as provided in the Certificate of Incorporation. SECTION 12. Compensation . The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity. SECTION 13. Committees . The Board of Directors may, by resolution passed by a majority of the Board of Directors, designate one or more committees, including an executive committee, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except to the extent restricted by statute or the Certificate of Incorporation, each such committee, to the extent provided in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors (including, without limitation, the right to delegate authority to one or more subcommittees thereof) and may authorize the seal of the Corporation to be affixed to all papers which require it. Each such committee shall serve at the pleasure of the Board of Directors and have such name as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors. SECTION 14. Committee Rules . Each committee of the Board of Directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. In the event that a member and that member‘s alternate, if alternates are designated by the Board of Directors as provided in Section 13 of this Article III, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. SECTION 15. Action by Consent . Unless restricted by the Certificate of Incorporation, any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board of Directors or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. SECTION 16. Telephonic and Other Meetings . Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting. ARTICLE IV Officers SECTION 1. Number and Qualifications . The officers of the Corporation shall be elected by the Board of Directors and shall include the Chief Executive Officer, the President, the Chief Financial

Officer and the Secretary. The Corporation may also have, at the discretion of the Board of Directors, such other officers as are desired, including a Chairman of the Board of Directors, one or more Vice Presidents, one or more Assistant Treasurers, one or more Assistant Secretaries, and such other officers as may be necessary or desirable for the business of the Corporation. In the event there are two or more Vice Presidents, then one or more may be designated as Executive Vice President, Senior Vice President, or other similar or dissimilar title. At the time of the election of officers, the directors may by resolution determine the order of their rank. Any number of offices may be held by the same person, and no officer except the Chairman of the Board of Directors, if any, need be a director. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of Chief Executive Officer and Secretary shall be filled as expeditiously as possible. SECTION 2. Election and Term of Office . The officers of the Corporation shall be elected annually by the Board of Directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as conveniently may be. The Chairman of the Board of Directors, if any, and Chief Executive Officer shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders or as soon thereafter as is convenient. Vacancies may be filled or new offices created and filled at any meeting of the Board of Directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned or have been removed, as hereinafter provided in these Bylaws. SECTION 3. Resignations . Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon receipt. Unless otherwise specified therein, the acceptance of any such resignation shall not be necessary to make it effective. SECTION 4. Removal . Any officer of the Corporation may be removed, either with or without cause, at any time, by the Board of Directors at any meeting thereof. SECTION 5. Vacancies . Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term by the Board of Directors. SECTION 6. Compensation . The compensation of the officers of the Corporation for their services as such officers shall be fixed from time to time by the Board of Directors. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he is also a director of the Corporation. SECTION 7. Chairman of the Board of Directors . (a) The Chairman of the Board of Directors, if one be elected, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws. If there is no Chief Executive Officer, the Chairman of the Board of Directors shall in addition be the Chief Executive Officer of the Corporation and shall have the powers and duties prescribed in Section 8 of this Article IV. The Chairman shall not be an officer of the Board of Directors unless the Board determines otherwise by resolution. (b) In the event that the Chairman of the Board of Directors is also an officer of the Corporation, the Board of Directors may, in its sole discretion, appoint a member of the Board of Directors who is not an officer of the Corporation to serve as Lead Director. The Lead Director shall have such duties as are determined by (i) the Board of Directors at and from time to time after such appointment or (ii) the Bylaws.

SECTION 8. Chief Executive Officer . The Chief Executive Officer shall be the chief executive officer of the Corporation and shall have the powers and perform the duties incident to that position. If the Chief Executive Officer is a director, he shall, in the absence of the Chairman of the Board of Directors, or if a Chairman of the Board of Directors shall not have been elected, preside at each meeting of the Board of Directors or the stockholders. Subject to the powers of the Board of Directors, he shall be in the general and active charge of the entire business and affairs of the Corporation, including authority over its officers, agents and employees, and shall have such other duties as may from time to time be assigned to him by the Board of Directors. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect, and execute bonds, mortgages and other contracts requiring a seal under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. SECTION 9. President . The President shall be the chief operating officer of the Corporation. He shall perform all duties incident to the office of President, and be responsible for the general direction of the operations of the business, reporting to the Chief Executive Officer, and shall have such other duties as may from time to time be assigned to him by the Board of Directors or as may be provided in these Bylaws. At the written request of the Chief Executive Officer, or in his absence or in the event of his inability to act, the President shall perform the duties of the Chief Executive Officer, and, when so acting, shall have the powers of and be subject to the restrictions placed upon the Chief Executive Officer in respect of the performance of such duties. SECTION 10. Vice President . Each Vice President shall perform all such duties as from time to time may be assigned to him by the Board of Directors. At the written request of the President, or in the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions placed upon the President in respect of the performance of such duties. SECTION 11. Chief Financial Officer . The Chief Financial Officer shall (a) have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation; (c) deposit all moneys and other valuables to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to its direction; (d) receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; (e) disburse the funds of the Corporation and supervise the investments of its funds, taking proper vouchers therefor; (f) render to the Board of Directors, whenever the Board of Directors may require, an account of the financial condition of the Corporation; and

(g) in general, perform all duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned to him by the Board of Directors. The Chief Financial Officer may also be the Treasurer if so determined by the Board of Directors. SECTION 12. Secretary . The Secretary shall (a) keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; (b) see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; (c) be custodian of the records and the seal of the Corporation and affix and attest the seal to all certificates for shares of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and (e) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 13. The Assistant Treasurer . The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or, if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability to act or his failure to act (in violation of a duty to act or in contravention of direction to act by the Board of Directors), perform the duties and exercise the powers of the Treasurer and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 14. The Assistant Secretary . The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability to act or his failure to act (in violation of a duty to act or in contravention of direction to act by the Board of Directors), perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 15. Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors. SECTION 16. Officers‘ Bonds or Other Security . If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety as the Board of Directors may require.

SECTION 17. Absence or Disability of Officers . In the case of the absence or disability of any officer of the Corporation and of any person hereby authorized to act in such officer‘s place during such officer‘s absence or disability, the Board of Directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select. ARTICLE V Indemnification SECTION 1. Nature of Indemnity . Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a ―proceeding‖), by reason of the fact that he is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including, without limitation, service with respect to an employee benefit plan (hereinafter, an ―Indemnitee‖), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while so serving, shall be indemnified and held harmless by the Corporation to the full extent authorized by DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), or by other applicable law as then in effect, against all expense, liability and loss (including, without limitation, attorneys‘ fees, costs and charges, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (―ERISA‖), penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such Indemnitee in connection therewith; provided, however , that except as provided in Section 3 of this Article V with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors. Each person who is or was serving as a director or officer of a majority-owned subsidiary of the Corporation shall be deemed to be serving, or have served, at the request of the Corporation. SECTION 2. Advances for Expenses . Expenses (including, without limitation, attorneys‘ fees, costs and charges) incurred by an Indemnitee in defending a proceeding shall be paid by the Corporation in advance of the final disposition of such proceeding upon receipt of an undertaking by or on behalf an Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article V. The Board of Directors may, upon approval of such Indemnitee, authorize the Corporation‘s counsel to represent such person in any proceeding, whether or not the Corporation is a party to such proceeding. SECTION 3. Procedure for Indemnification and Advancement . Any indemnification or advance of expenses (including, without limitation, attorney‘s fees, costs and charges) under this Article V shall be made promptly, and in any event within 60 days, or, in the case of a claim for an advancement of expenses, within 20 days, upon the written request of an Indemnitee (and, in the case of advance of expenses, receipt of a written undertaking by or on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified therefor pursuant to the terms of this Article V). The right to indemnification or advances as granted by this Article V shall be enforceable by such Indemnitee in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days (or 20 days with respect to advancement of expenses). Such Indemnitee‘s costs and expenses incurred in connection with

successfully establishing his right to indemnification or advancement, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses (including, without limitation, attorney‘s fees, costs and charges) under this Article V where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in the DGCL, as the same exists or hereafter may be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL, as the same exists or hereafter may be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), nor the fact that there has been an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. SECTION 4. Other Rights; Continuation of Right to Indemnification . The indemnification and advancement of expenses provided by this Article V shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), bylaw, agreement, vote of stockholders or directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administers of such person. All rights to indemnification under this Article V shall be deemed to be a contract between the Corporation and each Indemnitee. Any repeal or modification of this Article V or any repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification of such Indemnitee or the obligations of the Corporation arising hereunder with respect to any proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification. SECTION 5. Insurance . The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, limited liability company, joint venture, trust or other enterprise (including, without limitation, with respect to an employee benefit plan), against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article V; provided, however , that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the Board of Directors. SECTION 6. Savings Clause . If this Article V or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person entitled to indemnification under the first paragraph of this Article V as to all expense, liability and loss (including, without limitation, attorneys‘ fees, costs and charges, fines, ERISA excise taxes and penalties, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification is available to such person pursuant to this Article

V to the full extent permitted by any applicable portion of this Article V that shall not have been invalidated and to the full extent permitted by applicable law. ARTICLE VI Stock Certificates and Their Transfer SECTION 1. Stock Certificates . The Board of Directors may issue stock certificates, or may provide by resolution or resolutions that some or all of any or all classes or series of stock of the Corporation shall be uncertificated shares of stock. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors or the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. A certificate representing shares issued by the Corporation shall, if the Corporation is authorized to issue more than one class or series of stock, set forth upon the face or back of the certificate, or shall state that the Corporation will furnish to any stockholder upon request and without charge, a full statement of the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The Corporation shall furnish to any holder of uncertificated shares, upon request and without charge, a full statement of the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. SECTION 2. Facsimile Signatures . Any or all of the signatures on a certificate may be a facsimile, engraved or printed. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 3. Lost Certificates . The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate SECTION 4. Transfers of Stock . Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its records; provided, however , that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificates are presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 5. Transfer Agents and Registrars . The Board of Directors may appoint, or authorize any officer or officers to appoint, one or more transfer agents and one or more registrars.

SECTION 6. Regulations . The Board of Directors may make such additional rules and regulations, not inconsistent with these Bylaws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 7. Registered Stockholders . The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments a person registered on its records as the owner of shares of stock, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the DGCL. ARTICLE VII General Provisions SECTION 1. Dividends . Subject to the provisions of statutes and the Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of stock of the Corporation, unless otherwise provided by statute or the Certificate of Incorporation. SECTION 2. Reserves . Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may, from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors may think conducive to the interests of the Corporation. The Board of Directors may modify or abolish any such reserves in the manner in which it was created. SECTION 3. Seal . The seal of the Corporation shall be in such form as shall be approved by the Board of Directors, which form may be changed by resolution of the Board of Directors. SECTION 4. Fiscal Year . The fiscal year of the Corporation shall end on December 31 of each fiscal year and may thereafter be changed by resolution of the Board of Directors. SECTION 5. Checks, Notes, Drafts, Etc . All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation. SECTION 6. Execution of Contracts, Deeds, Etc . The Board of Directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances. SECTION 7. Loans . Subject to applicable law, the Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiary, including any officer or employee who is a director of the Corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in this section contained shall be

deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute. SECTION 8. Voting of Stock in Other Corporations . Unless otherwise provided by resolution of the Board of Directors, the Chairman of the Board of Directors or the Chief Executive Officer, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of such other corporation. In the event one or more attorneys or agents are appointed, the Chairman of the Board of Directors or the Chief Executive Officer may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent. The Chairman of the Board of Directors, or the Chief Executive Officer may, or may instruct the attorneys or agents so appointed to, execute or cause to be executed in the name and on behalf of the Corporation and under its seal or otherwise, such written proxies, consents, waivers or other instruments as may be necessary or proper in the circumstances. SECTION 9. Inspection of Books and Records . Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation‘s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person‘s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right of inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in the State of Delaware or at its principal place of business. SECTION 10. Inconsistent Provisions . In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. SECTION 11. Waivers . A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice. ARTICLE VIII Amendments These Bylaws may be amended or repealed or new Bylaws adopted only in accordance with Article V of the Certificate of Incorporation.

Exhibit 4.1 DELTEK COMMON SHARES __________ NUMBER DELTEK, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON SHARES __________ SHARES

TRANSFERABLE IN THE CITIES OF [ ]

CUSIP SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT IS THE OWNER OF

FULLY PAID AND NONASSESSESSABLE COMMON SHARES. $.0001 PAR VALUE PER SHARE OF DELTEK, INC. Transferable on the books of the Company by the holder hereof in person or by a duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. DATED:

SECRETARY [OR TREASURER]

/s/ Kevin T. Parker CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER DELTEK, INC. CORPORATE SEAL , 2007 DELAWARE

COUNTERSIGNED: [ By: Transfer Agent and Registrar – Authorized Signature DELTEK, INC. The Company will furnish without charge to each stockholder who so requests from the Company‘s principal office a full statement of the powers, designations, preferences and relative participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. ]

TEN CO M TEN ENT JT TEN

-

as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT MIN ACT — (Cust) under Uniform Gifts to Minors

Custodian (Minor)

Act (State) UNIF TRF MIN ACT — (Cust) under Uniform Transfers (Minor) to Minors Act (state) Additional abbreviations may also be used though not in the above list. For Value Received, hereby sell(s), assign(s) and transfer(s) unto Custodian (until age )

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

Shares of the common shares represented by the within Certificate, and does hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within named Company with full power of substitution in the premises. Dated NOTICE:: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

Signature Guaranteed By THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONIS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15.

Exhibit 4.2 DELTEK CLASS A SHARES __________ NUMBER DELTEK, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CLASS A SHARES __________ SHARES

TRANSFERABLE IN THE CITIES OF [ ]

CUSIP SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT IS THE OWNER OF

FULLY PAID AND NONASSESSESSABLE CLASS A SHARES. $.0001 PAR VALUE PER SHARE OF DELTEK, INC. Transferable on the books of the Company by the holder hereof in person or by a duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. WITNESS the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. DATED:

SECRETARY [OR TREASURER]

/s/ Kevin T. Parker CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER DELTEK, INC. CORPORATE SEAL , 2007 DELAWARE

COUNTERSIGNED: [ By: Transfer Agent and Registrar – Authorized Signature DELTEK, INC. The Company will furnish without charge to each stockholder who so requests from the Company‘s principal office a full statement of the powers, designations, preferences and relative participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. ]

TEN CO M TEN ENT JT TEN

-

as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT MIN ACT — (Cust) under Uniform Gifts to Minors

Custodian (Minor)

Act (State) UNIF TRF MIN ACT — (Cust) under Uniform Transfers (Minor) to Minors Act (state) Additional abbreviations may also be used though not in the above list. For Value Received, hereby sell(s), assign(s) and transfer(s) unto Custodian (until age )

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

Shares of the Class A shares represented by the within Certificate, and does hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within named Company with full power of substitution in the premises. Dated NOTICE:: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

Signature Guaranteed By THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONIS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15.

Exhibit 4.3 EXECUTION COPY INVESTOR RIGHTS AGREEMENT by and among DELTEK SYSTEMS, INC., NEW MOUNTAIN PARTNERS II , L.P., NEW MOUNTAIN AFFILIATED INVESTORS II, L.P., ALLEGHENY NEW MOUNTAIN PARTNERS, L.P. and CERTAIN OTHER PERSONS WHO ARE SIGNATORIES HERETO dated as of April 22, 2005

INVESTOR RIGHTS AGREEMENT, dated as of April 22, 2005 by and among Deltek Systems, Inc., a Virginia corporation, and New Mountain Partners II, L.P., a Delaware limited partnership (― NMP ‖), New Mountain Affiliated Investors II, L.P., a Delaware limited partnership (― NMAI ‖), Allegheny New Mountain Partners, L.P., a Delaware limited partnership (― Allegheny ‖, and together with NMP and NMAI, the ― NMP Entities ‖), the persons listed on the signature pages hereto under the heading ―deLaski Shareholders‖ and such other persons who become signatories hereto from time to time as provided for herein. WHEREAS, pursuant to a Recapitalization Agreement, effective as of December 23, 2004 (as it may be amended, restated, supplemented or modified from time to time, the ― Recapitalization Agreement ‖), by and among the Company, the NMP Entities, the deLaski Shareholders and certain other parties thereto upon the terms and subject to the conditions contained therein, the NMP Entities have purchased, among other securities, 8.00% subordinated debentures and shares of Common Stock; and WHEREAS, to induce the NMP Entities to execute and deliver the Recapitalization Agreement and to consummate the transactions contemplated thereby, the Company and the deLaski Shareholders have agreed to provide the NMP Entities with the rights set forth in this Agreement. Accordingly, the parties hereto agree as follows: SECTION. 1. Definitions . As used herein, unless the context otherwise requires, the following terms have the following respective meanings: 1.1. ― Advisory Agreement ‖ means the advisory agreement, dated as of the date hereof, among the Company and New Mountain Capital, LLC. 1.2. ― Affiliate ‖ means (i) with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (ii) with respect to any individual, shall also mean the spouse or child of such individual. 1.3. ― Allegheny ‖ has the meaning set forth in the introduction. 1.4. ― Articles of Incorporation ‖ means the Articles of Incorporation of the Company, as it may be amended, restated, supplemented or modified from time to time. 1.5. ― Assignee ‖ has the meaning set forth in Section 8.2. 1.6. ― Beneficially Owned ‖ means beneficially owned as determined under Rule 13d-3 promulgated under the Exchange Act, provided, that, such determination shall be made without reference to the 60-day period provided for in Rule 13d-3(d)(1)(i). 1.7. ― Board ‖ means the board of directors of the Company as it may be composed from time to time. 2

1.8. ― Common Stock ‖ means any shares of common stock, par value $0.001 per share, of the Company, now or hereafter authorized to be issued, and any and all securities of any kind whatsoever of the Company or any successor thereof which may be issued on or after the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stock pursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalization of the Company or otherwise. 1.9. ― Company ‖ shall mean Deltek Systems, Inc., a Virginia corporation, and shall include any successor thereto by merger, consolidation, acquisition of substantially all the assets thereof, or otherwise. 1.10. ― Convertible Offered Securities ‖ has the meaning set forth in Section 5.1(a). 1.11. ― Convertible Securities ‖ shall mean (i) any options or warrants to purchase or other rights to acquire Common Stock, (ii) any securities by their terms convertible into or exchangeable for Common Stock, and (iii) any options or warrants to purchase or other rights to acquire any such convertible or exchangeable securities. 1.12. ― deLaski Directors ‖ has the meaning set forth in Section 7.1(b). 1.13. ― deLaski Shareholders ‖ means Kenneth E. deLaski, Donald deLaski, Tena R. deLaski, Kenneth E. deLaski & Tena R. deLaski JT TEN, David deLaski, Edward Grubb and Kathleen Grubb, JTWROS, Dana Nancy deLaski Irrevocable Trust and Daphne Jean deLaski Irrevocable Trust. 1.14. ― Demand Exercise Notice ‖ has the meaning set forth in Section 2.1(a). 1.15. ― Demand Registration ‖ has the meaning set forth in Section 2.1(h). 1.16. ― Designated Director ‖ has the meaning set forth in Section 7.1(c). 1.17. ― Election Notice ‖ has the meaning set forth in Section 5.3. 1.18. ― Exchange Act ‖ means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time. Reference to a particular section of the Exchange Act shall include a reference to the comparable section, if any, of any such similar federal statute. 1.19. ― Form S-3 ‖ means a Form S-3 registration statement under the Securities Act, and any successor or similar form thereto. 1.20. ― Holder ‖ means any of the NMP Entities and any Assignee. 1.21. ― Holder Demand ‖ has the meaning set forth in Section 2.1(a). 3

1.22. ― Indebtedness ‖ means all liabilities, obligations and indebtedness of a Person, of any kind or nature, whether now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, and whether primary, secondary, direct, contingent, fixed or otherwise, including, without in any way limiting the generality of the foregoing: (i) all obligations, liabilities and indebtedness secured by any lien on a Person‘s property, even though such Person shall not have assumed or become liable for the payment thereof; (ii) all obligations or liabilities created or arising under any capital lease, conditional sale or other title retention agreement; (iii) all accrued pension fund and other benefit plan obligations and liabilities; (iv) all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness, dividend or other obligation of any other Person or assure or in effect assure the holder of any such obligations against loss in respect thereof; and (v) any liabilities under, or associated with, interest rate protection agreements. 1.23. ― indemnified party ‖ means any Person seeking indemnification pursuant to Section 2.6. 1.24. ― indemnifying party ‖ means any Person from whom indemnification is sought pursuant to Section 2.6. 1.25. ― Indemnitees ‖ has the meaning set forth in Section 2.6(a). 1.26. ― Independent Director ‖ has the meaning set forth in Section 7.1(c). 1.27. ― Initiating Holder ‖ means the party or parties delivering a Holder Demand as provided for under Section 2.1(a). 1.28. ― Issuance Notice ‖ has the meaning set forth in Section 5.2. 1.29. ― Losses ‖ has the meaning set forth in Section 2.6(a). 1.30. ― Majority Participating Holders ‖ means, at any time, Participating Holders holding more than 50% of the Registrable Securities proposed to be included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2. 1.31. ― Majority Voting deLaski Shareholders ‖ means at any time, the holders of more than 50% of the aggregate number of shares of Common Stock held by the deLaski Shareholders. 1.32. ― NASD ‖ means National Association of Securities Dealers, Inc. 1.33. ― Nasdaq ‖ has the meaning set forth in Section 2.3(a)(x). 1.34. ― NMAI ‖ has the meaning set forth in the introduction. 1.35. ― NMP ‖ has the meaning set forth in the introduction. 4

1.36. ― NMP Directors ‖ shall mean any directors designated to the Board by NMP or Allegheny pursuant to Section 7.1(a). 1.37. ― NMP Entities ‖ has the meaning set forth in the introduction. 1.38. ― NMP Holder ‖ means any of the NMP Entities and any Person to whom Registrable Securities were transferred by an NMP Holder, other than in a public offering or in a sale pursuant to Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended. 1.39. ― Non-Convertible Offered Securities ‖ has the meaning set forth in Section 5.1(a). 1.40. ― Offered Percentage ‖ means, as to any Holder or deLaski Shareholder at any time of determination, the percentage obtained by dividing (a) the number of shares of Common Stock held by such Holder or deLaski Shareholder, as the case may be, by (b) the aggregate number of shares of Common Stock held by all Holders and deLaski Shareholders (in the case of both (a) and (b), assuming conversion, exercise or exchange of all outstanding Convertible Securities held by any Holder or deLaski Shareholder). 1.41. ― Offered Securities ‖ has the meaning set forth in Section 5.1(a). 1.42. ― Offeree ‖ has the meaning set forth in Section 5.1(a). 1.43. ― Participating Holders ‖ means any Holder participating in any offering of Registrable Securities pursuant to Section 2.1 or Section 2.2. 1.44. ― Partner Distribution ‖ has the meaning set forth in Section 2.1(a). 1.45. ― Permitted Issuances ‖ means (i) the granting of options to purchase shares of Common Stock (or the issuance of Common Stock upon the exercise thereof) pursuant to the Company‘s stock option plan, which grants were approved by the Board (or a committee thereof), including at least one NMP Director, (ii) the issuance of any shares of Common Stock pursuant to a stock dividend or upon any stock split or other subdivision or combination of shares of the Company‘s capital stock, (iii) the issuance of any shares of Common Stock or Convertible Securities as consideration for the acquisition by the Company or any subsidiary of the Company of another business entity or interest therein (including a joint venture or strategic alliance) by merger, purchase of substantially all the assets or other business combination or investment, in each case, which was approved by the Board, including at least one NMP Director, and (iv) the issuance of any shares of Common Stock or Convertible Securities to directors, officers, employees or consultants of the Company, in connection with their service as directors of the Company, their employment by the Company or their service as a consultant to or officer of the Company, which issuance was approved by the Board, including at least one NMP Director. 1.46. ― Permitted Transferees ‖ means any Person that would be a ―Permitted Transferee‖ under the Shareholders‘ Agreement. 5

1.47. ― Person ‖ means an individual, a corporation, a partnership, a limited liability company, a business, an association, a trust, an individual, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 1.48. ― Postponement Period ‖ has the meaning set forth in Section 2.1(j). 1.49. ― Purchasers ‖ has the meaning set forth in the recitals. 1.50. ― Recapitalization Agreement ‖ has the meaning set forth in the recitals. 1.51. ― Refused Securities ‖ means, with respect to any Holder or deLaski Shareholder, any Offered Securities which any other Holder or deLaski Shareholder shall have declined to purchase pursuant to such other Holder‘s or deLaski Shareholder‘s rights under Section 5.1(b). 1.52. ― Registrable Securities ‖ means any shares of Common Stock held by a Holder. For purposes of this Agreement, a Person will be deemed to be a Holder of Registrable Securities whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion, exercise or exchange of any Convertible Securities but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall not be required to convert, exercise or exchange such Convertible Security (or otherwise acquire such Registrable Security) to participate on any registered offering hereunder until the closing of such offering. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) such securities shall have been sold to the public pursuant to Rule 144 under the Securities Act or (c) such securities shall have ceased to be outstanding. 1.53. ― Registration Expenses ‖ means all fees and expenses incurred in connection with the Company‘s performance of or compliance with Section 2 hereof, including, without limitation, (i) all registration, filing and applicable SEC fees, NASD fees, national securities exchange or inter-dealer quotation system fees, and fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel to the underwriters and the Participating Holders in connection with ―blue sky‖ qualification of the Registrable Securities and determination of their eligibility for investment under the laws of the various jurisdictions), (ii) all printing (including printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and printing preliminary and final prospectuses), word processing, duplicating, telephone and facsimile expenses, and messenger and delivery expenses, (iii) all fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of ―cold comfort‖ letters or any special audits required by, or incident to, such registration, (iv) all fees and expenses of one law firm or other counsel selected by the Majority Participating Holders, (v) all fees and expenses of one firm of accountants selected by the Majority Participating Holders, (vi) all fees and expenses of any special experts or other Persons retained by the Company in 6

connection with any registration, (vii) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practices, (viii) all applicable rating agency fees with respect to the Registrable Securities, (ix) fees and expenses of a Qualified Independent Underwriter (as such term is defined in Schedule E to the By-Laws of the NASD) and its counsel, (x) all fees and disbursements of the underwriters (other than underwriting discounts and commissions), (xi) all transfer taxes and (xii) all expenses incurred in connection with promotional efforts or ―roadshows‖; provided , however , that Registration Expenses shall exclude, and the Participating Holders shall pay, underwriting discounts and commissions in respect of the Registrable Securities being registered for such Participating Holders. 1.54. ― SEC ‖ means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. 1.55. ― Section 2.2 Sale Amount ‖ has the meaning set forth in Section 2.2(c). 1.56. ― Section 4 Termination Date ‖ means (i) with respect to Section 4.1, at any time as the Common Stock then Beneficially Owned by the Holders constitutes less than 15% of the outstanding Common Stock of the Company, and (ii) with respect to Section 4.2, at any time as the number of shares of the Common Stock then Beneficially Owned by the deLaski Shareholders constitutes less than 52.8% of the number of shares of Common Stock Beneficially Owned by the deLaski Shareholders on the date hereof (after giving effect to the transactions contemplated by the Recapitalization Agreement), provided that for the purpose of calculating the number of shares of Common Stock Beneficially Owned by the deLaski Shareholders on either such date, any shares of Common Stock issuable upon exercise of any unexercised options or warrants held by the deLaski Shareholders shall be disregarded. 1.57. ― Securities Act ‖ means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time. References to a particular section of the Securities Act shall include a reference to the comparable section, if any, of any such similar federal statute. 1.58. ― Selected Courts ‖ has the meaning set forth in Section 8.4(b). 1.59. ― Series A Preferred Stock ‖ means any shares of series A preferred stock, par value $0.001 per share, of the Company. 1.60. ― Shareholders‘ Agreement ‖ means the shareholders‘ agreement, dated as of the date hereof, by and among the Company and certain of its shareholders, as such agreement may be amended from time to time (and to which the NMP Entities are a party with respect to certain sections therein). 1.61. ― Shareholders‘ Agreement Holders ‖ means any holder of Shareholders‘ Agreement Securities. 1.62. ― Shareholders‘ Agreement Securities ‖ means any shares of Common Stock subject to restrictions on transfer by Section 3.1 of the Shareholders‘ Agreement. 7

SECTION. 2. Registration Under Securities Act . 2.1. Registration on Demand . (a) Demand . At any time or from time to time, a Holder or Holders holding Registrable Securities may require the Company to effect the registration under the Securities Act of all or part of their respective Registrable Securities, by delivering a written request (a ― Holder Demand ‖) therefor to the Company specifying the number of shares of Registrable Securities to be registered and the intended method of distribution thereof. As promptly as practicable, but no later than five days after receipt of a Holder Demand, the Company shall give written notice (the ― Demand Exercise Notice ‖) of the Holder Demand to all Holders. Such Holders shall have the option, within 30 days after the receipt of the Demand Exercise Notice (or, 15 days if, at the request of the Initiating Holder, the Company states in such written notice or gives telephonic notice to each Holder, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date) to request, in writing, that the Company include in such registration any Registrable Securities held by such Holder (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder). The Company shall as expeditiously as reasonably possible (but in any event within 120 days of receipt of a Holder Demand), use its best efforts to effect the registration under the Securities Act of the Registrable Securities which the Company has been so requested to register by the Initiating Holder and any other Holders which have made such written request. The Company shall (i) use its best efforts to effect the registration of Registrable Securities for distribution in accordance with the intended method of distribution set forth in a written request delivered by the Majority Participating Holders, which may include, at the option of such Majority Participating Holders, a distribution of Registrable Securities to, and resale of such Registrable Securities by, the partners of such Holder or Holders (a ― Partner Distribution ‖), and (ii) if requested by the Majority Participating Holders, obtain acceleration of the effective date of the registration statement relating to such registration. (b) Partner Distributions . Notwithstanding anything contained herein to the contrary, the Company shall, at the request of any Participating Holder seeking to effect a Partner Distribution, file any prospectus supplement or post-effective amendments and shall otherwise take any action necessary to include such language, if such language was not included in the initial registration statement, or revise such language if deemed necessary by such Participating Holder, to effect such Partner Distribution. (c) Registration Statement Form . Registrations under this Section 2.1 shall be on such appropriate form of the SEC (i) as shall be selected by the Majority Participating Holders and as shall be reasonably acceptable to the Company and (ii) as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in such Participating Holders‘ requests for such registration, including, without limitation, a Partner Distribution or a continuous or delayed basis offering pursuant to Rule 415 under the Securities Act. The Company agrees to include in any such registration statement all information which, in the opinion of counsel to the Participating Holders and counsel to the Company, is necessary or desirable to be included therein. 8

(d) Expenses . The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registration requested pursuant to this Section 2.1. Notwithstanding the foregoing, the provisions of this Section 2.1(d) shall be deemed amended to the extent necessary to cause these expense provisions to comply with ―blue sky‖ laws of each state or the securities laws of any other jurisdiction in the United States and its territories in which the offering is made. (e) Effective Registration Statement . A registration requested pursuant to this Section 2.1 shall not be deemed a Demand Registration (including for purposes of Section 2.1(h)) unless a registration statement with respect thereto has become effective and has been kept continuously effective for a period of at least 180 days (or such shorter period which shall terminate when all the Registrable Securities covered by such registration statement have been sold pursuant thereto) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriter or underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer. Should a Demand Registration not become effective due to the failure of a Participating Holder to perform its obligations under this Agreement, or in the event the Majority Participating Holders withdraw or do not pursue the request for the Demand Registration as provided for in Section 2.1(g) (in each of the foregoing cases, provided that at such time the Company is in compliance in all material respects with its obligations under this Agreement), then, such Demand Registration shall be deemed to have been effected (including for purposes of Section 2.1(h)); provided , that , if (i) the Demand Registration does not become effective because a material adverse change has occurred, or is reasonably likely to occur, in the condition (financial or otherwise), prospects, business, assets or results of operations of the Company and its subsidiaries taken as a whole subsequent to the date of the delivery of the Demand Exercise Notice, (ii) after the Demand Registration has become effective, such registration is interfered with by any stop order, injunction, or other order or requirement of the SEC or other governmental agency or court, (iii) the Demand Registration is withdrawn at the request of the Majority Participating Holders due to the advice of the managing underwriter(s) that the Registrable Securities covered by the registration statement could not be sold in such offering within a price range acceptable to the Majority Participating Holders, (iv) the Demand Registration is withdrawn for any reason at any time during a Postponement Period or within ten days thereafter, or (v) the Participating Holders reimburse the Company for any and all Registration Expenses incurred by the Company in connection with such request for a Demand Registration that was withdrawn or not pursued, then the Demand Registration shall not be deemed to have been effected and will not count as a Demand Registration. (f) Selection of Underwriters . The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.1 shall be selected by the Majority Participating Holders, provided that such underwriters shall be reasonably acceptable to the Company. (g) Right to Withdraw . Any Participating Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.1 at any time prior to the effective date of such registration statement by giving written notice to the Company of its request to withdraw. Upon receipt of notices from 9

the Majority Participating Holders to such effect, the Company shall cease all efforts to obtain effectiveness of the applicable registration statement, and whether the Initiating Holder‘s request for registration pursuant to this Section 2.1 shall be counted as a Demand Registration for purposes of Section 2.1(h) shall be determined in accordance with Section 2.1(e). (h) Limitations on Registration on Demand . The Holders shall be entitled to require the Company to effect, and the Company shall be required to effect, four registrations in the aggregate pursuant to this Section 2.1 (each, a ― Demand Registration ‖); provided , however , that the Company shall not be required to effect a Demand Registration until at least 90 days after the effective date of any other registration statement filed by the Company pursuant to a previous Demand Registration. The aggregate offering value of the shares to be registered pursuant to any Demand Registration shall be at least $10 million (determined as of the date the demand is made), unless the registration is of the balance of the Registrable Securities held by the Holders. (i) Priority in Registrations on Demand . Whenever the Company effects a registration pursuant to this Section 2.1 in connection with an underwritten offering by Holders, no securities other than Registrable Securities and Shareholders‘ Agreement Securities shall be included among the securities covered by such registration unless the Majority Participating Holders consent in writing to the inclusion therein of such other securities, which consent may be subject to terms and conditions determined by the Majority Participating Holders in their sole discretion. If any registration pursuant to a Holder Demand involves an underwritten offering and the managing underwriter(s) of such offering shall inform the Company in writing of its belief that the number of Registrable Securities requested to be included in such registration pursuant to this Section 2.1, when added to the number of any other securities to be offered in such registration (including any Shareholders‘ Agreement Securities), would materially adversely affect such offering, then the Participating Holders and Shareholders‘ Agreement Holders shall be entitled to participate on a pro rata basis based on the number of shares of Registrable Securities and Shareholders‘ Agreement Securities requested to be included in the offering by each such Participating Holder and Shareholders‘ Agreement Holders. (j) Postponement . The Company shall be entitled once in any twelve-month period to postpone for a reasonable period of time (but not exceeding 90 days) (the ― Postponement Period ‖) the filing of any registration statement required to be prepared and filed by it pursuant to this Section 2.1 if (i) such postponement is required by applicable law arising from events outside of the control of the Company or (ii) the Company determines, in its reasonable judgment upon advice of counsel, as authorized by a resolution of its Board, that such registration and offering would require premature disclosure of any material financing, acquisition, corporate reorganization, business combination or other material transaction involving the Company or any of its subsidiaries, and promptly gives the Participating Holders written notice of such determination, containing a statement of the reasons for such postponement and an approximation of the anticipated delay. 10

2.2. Incidental Registration . (a) Right to Include Registrable Securities . If the Company at any time proposes to register any of its equity securities under the Securities Act by registration on Form S-1, S-2 or S-3, or any successor or similar form(s) (except registrations (i) pursuant to Section 2.1, (ii) solely for registration of equity securities in connection with an employee benefit plan or dividend reinvestment plan on Form S-8 or any successor form thereto or (iii) in connection with any acquisition or merger on Form S-4 or any successor form thereto), whether or not for sale for its own account, it will each such time give prompt written notice (but in no event less than 30 days prior to the initial filing of a registration statement with respect thereto) to each of the Holders of its intention to do so and such notice shall offer the Holders of such Registrable Securities the opportunity to register under such registration statement such number of Registrable Securities as each such Holder may request in writing. Upon the written request of any of the Holders (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder), made as promptly as practicable, and in any event, within 30 days after the receipt of any such notice (or 15 days if the Company states in such written notice or gives telephonic notice to each Holder, with written confirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3 and (ii) such shorter period of time is required because of a planned filing date), the Company shall include in such registration under the Securities Act all Registrable Securities which the Company has been so requested to register by each Holder; provided , however , that if, at any time after giving written notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company shall give written notice of such determination and its reasons therefor to the Holders and (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from any obligation of the Company to pay the Registration Expenses in connection therewith as provided for in Section 2.2(d)), without prejudice, however, to the rights of the Holders to request that such registration be effected as a registration under Section 2.1 and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering such other securities. No registration effected under this Section 2.2 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1. (b) Right to Withdraw; Option to Participate in Shelf Takedowns . Any Holder shall have the right to withdraw its request for inclusion of Registrable Securities in any registration statement pursuant to this Section 2.2 at any time prior to the effective date of such registration statement by giving written notice to the Company of its request to withdraw. In the event that the Holder has requested inclusion of Registrable Securities in a shelf registration, the Holder shall have the right, but not the obligation, to participate in any offering of the Company‘s equity securities under such shelf registration. (c) Priority in Incidental Registrations . If any registration pursuant to this Section 2.2 involves an underwritten offering and the managing underwriter(s) of such offering shall inform the Company in writing of its belief that the number of Registrable 11

Securities requested to be included in such registration or offering, when added to the number of other equity securities to be offered in such registration or offering (including any Shareholders‘ Agreement Securities), would materially adversely affect such offering, then the Company shall include in such registration or offering, to the extent of the number and type which the Company is so advised can be sold in (or during the time of) such registration or offering without so materially adversely affecting such registration or offering (the ― Section 2.2 Sale Amount ‖), (i) all of the securities proposed by the Company to be sold for its own account; (ii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the Registrable Securities and Shareholders‘ Agreement Securities requested by the Participating Holders and Shareholders‘ Agreement Holders (provided that if all of the Registrable Securities and Shareholders‘ Agreement Securities requested by the Participating Holders and Shareholders‘ Agreement Holders may not be included, the Participating Holders and Shareholders‘ Agreement Holders shall be entitled to participate on a pro rata basis based on the aggregate number of shares of Registrable Securities and Shareholders‘ Agreement Securities requested by the Participating Holders and Shareholders‘ Agreement Holders to be registered); and (iii) thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, any other securities of the Company requested to be included by Company shareholders holding other such registration rights. (d) Expenses . The Company shall pay, and shall be responsible for, all Registration Expenses in connection with any registration requested pursuant to this Section 2.2. Notwithstanding the foregoing, the provisions of this Section 2.2(d) shall be deemed amended to the extent necessary to cause these expense provisions to comply with ―blue sky‖ laws of each state or the securities laws of any other jurisdiction in the United States and its territories in which the offering is made. (e) Selection of Underwriters . The underwriters of each underwritten offering of the Registrable Securities pursuant to this Section 2.2 shall be selected by the Majority Participating Holders, provided that such underwriters shall be reasonably acceptable to the Company. (f) Plan of Distribution; Partner Distributions . Any participation by Holders in a registration by the Company shall be in accordance with the Company‘s plan of distribution, which shall include, upon the written request of such Holder or Holders, a Partner Distribution. Notwithstanding anything contained herein to the contrary, the Company shall, at the request of any Holder seeking to effect a Partner Distribution, file any prospectus supplement or post-effective amendments and otherwise take any action necessary to include such language, if such language was not included in the initial registration statement, or revise such language if deemed reasonably necessary by such Holder to effect such Partner Distribution. 2.3. Registration Procedures . (a) If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act pursuant to either Section 2.1 or Section 2.2 hereof, the Company shall as expeditiously as reasonably possible: 12

(i) prepare and file with the SEC as soon as practicable (and in the case of a demand pursuant to Section 2.1, within 45 days after receipt by the Company of a Demand Exercise Notice) a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities in accordance with the intended method of disposition thereof (including, without limitation, a Partner Distribution) which registration statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and thereafter use its best efforts to cause such registration statement to become and remain effective (A) with respect to an underwritten offering, for a period of at least 180 days or until all shares subject to such registration statement have been sold, and (B) with respect to a shelf registration, until the later of (1) the sale of all Registrable Securities thereunder and (2) the earlier of the tenth anniversary of the date of this Agreement and the third anniversary of the effective date of such shelf registration; (ii) prepare and file with the SEC any amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement in accordance with the intended methods of disposition by the Participating Holders set forth in such registration statement for such period as provided for in Section 2.3(a)(i) above; (iii) furnish, without charge, to each Participating Holder and each underwriter such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents, as the Majority Participating Holders and such underwriters may request (it being understood that the Company consents to the use of such prospectus or any amendment or supplement thereto by each Participating Holder and the underwriters in connection with the offering and sale of the Registrable Securities covered by such prospectus or any amendment or supplement thereto); (iv) use its best efforts (A) to register or qualify all Registrable Securities and other securities covered by such registration statement under such state securities or blue sky laws where an exemption is not available and as the Majority Participating Holders or any managing underwriter shall reasonably request, (B) to keep such registration or qualification in effect for so long as such registration statement remains in effect, and (C) to take any and all other actions which may be necessary or advisable to enable the Participating Holders or underwriters to consummate the disposition in such jurisdictions of the securities to be sold by the Participating Holders or underwriters, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not, but for the requirements of this Section 2.3(a)(iv), be obligated to be so qualified; 13

(v) use its best efforts to cause all Registrable Securities covered by such registration statement to be registered with