THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Blackbaud, Inc. (BLKB)

5/1/2006 Proxy Information

Our policy regarding transactions with affiliates is that they should be made on terms no less favorable to us than could have been obtained from unaffiliated third parties. All transactions between us and our officers, directors, principal stockholders and their affiliates will be approved by our Audit Committee or a majority of the disinterested directors, and will continue to be on terms no less favorable to us than could be obtained from unaffiliated third parties. We describe below agreements we have with one or more of our officers, directors, principal stockholders and their affiliates under which payments exceeding $60,000 were made in 2005.

Tax Arrangement for Option Exercise. Pursuant to an option agreement with our former President and Chief Executive Officer, Robert J. Sywolski, we agreed to pay to Mr. Sywolski an amount equal to 10% of any gain he received upon exercise and sale of options to purchase shares of our common stock. Pursuant to this arrangement, we paid $3,150,459 to Mr. Sywolski during 2005 in connection with his option exercise and sale of 1,389,257 shares of our common stock, plus the cancellation of options to purchase 2,030,402 shares as payment, under a net exercise, for the exercise price of the options and for payment of taxes related thereto.

Lease agreement. We entered into a lease agreement dated as of October 13, 1999 with Duck Pond Creek, LLC to lease the space for our headquarters in Charleston, South Carolina. Duck Pond Creek is a South Carolina limited liability company, 4% of which is owned by each of Louis J. Attanasi and Gerard J. Zink, two of our named executive officers. Under this lease, we made payments to Duck Pond Creek totaling approximately $4.5 million in 2005. The term of the lease is for 10 years with two five-year renewal options. The current annual base rent of the lease is approximately $4.5 million. The base rate escalates annually at a rate equal to the change in the consumer price index, as defined in the agreement. Based on publicly-available survey data on office space rental rates in our area at the time we entered into the lease, we believe that this lease agreement is on terms at least as favorable to us as could have been obtained from an unaffiliated third party.